Item 3. Quantitative and Qualitative Disclosures About Market Risk
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Interest rate risk
The Company’s exposure to changes
in market interest rates relates primarily to the Company’s earned interest income on cash deposits and short-term investments.
The Company maintains a balance between the liquidity of cash assets and the interest rate return thereon. The carrying amount
of financial assets, net of any provisions for losses, represents the Company’s maximum exposure to credit risk.
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Foreign currency exchange risk
The Company incurs expenditures in both
U.S. dollars and Canadian dollars. Canadian dollar expenditures are primarily related to certain Common Share-related costs and
corporate professional services. As a result, currency exchange fluctuations may impact the costs of our operating activities.
To reduce this risk, we maintain sufficient cash balances in Canadian dollars to fund expected near-term expenditures.
Commodity price risk
The Company is exposed to commodity price
risk related to the elements associated with the Elk Creek Project. A significant decrease in the global demand for these elements
may have a material adverse effect on our business. The Elk Creek Project is not in production, and the Company does not currently
hold any commodity derivative positions.
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