Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Interest Rate Risk
We have both fixed-rate and variable-rate debt.
Fixed-rate debt. Our fixed rate debt at March 31, 2026 consisted of a $34.5 million convertible bond that has a fixed interest rate of 8.0% per annum. The convertible bond is accounted for at amortized cost. Any changes in the market interest rates associated with this financial instruments would not impact our net loss, comprehensive loss or future cash flows.
Variable-rate debt. Our variable-rate debt at March 31, 2026 was $nil. However, we have an undrawn $200.0 million Bridge Facility at March 31, 2026, related to the Santa Cruz Copper Project, which if drawn will have an interest rate equal to the secured overnight financing rate plus 5.0%.
Foreign Currency Risk
Our functional currency is the U.S. dollar. The majority of our expenditure is incurred in U.S. dollars at our exploration projects located in the United States and are not subject to foreign currency risk. Outside of the United States, we are subject to foreign currency risk when we undertake transactions in foreign currencies, particularly certain operating expenditures incurred in Canada. As the exchange rates between the U.S. dollar and our foreign currencies fluctuate, we experience foreign exchange gains and losses.
The carrying amounts of our Canadian dollar denominated monetary assets and liabilities at March 31, 2026 are as follows:
March 31, 2026
Canadian Dollar Balance (in 000’s USD Equivalent)
Cash
$ 5,276
Other receivables
434
Accounts payable and accrued liabilities
(366)
Other liabilities
(224)
$ 5,120
Three Months Ended March 31, 2026
Opening exchange rate (1 U.S. dollar to Canadian dollars)
1.3706
Closing exchange rate (1 U.S. dollar to Canadian dollars)
1.3939
Appreciation/(devaluation) of Canadian dollar
(1.7) %
As at March 31, 2026, a 10% depreciation or appreciation of the Canadian dollar against the U.S. dollar would have resulted in an approximate $0.5 million increase or decrease in the Company’s net income for the three months ended March 31, 2026.
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