NOTE 15 LEASES

The Company’s lease obligations primarily consist of an office lease, equipment and vehicles. Upon adoption of ASC 842 on January 1, 2019, the Company recorded a cumulative-effect adjustment to the opening accumulated deficit balance as of January 1, 2019 of less than $0.1 million and these leases are now reported as a part of the Company’s plant and equipment with amortization booked on a straight-line basis over the estimated useful life of the asset. Lease liabilities representing the future lease payments for the assets are recorded within accounts payable and accrued liabilities with related amortization expense and interest expense recorded within the Consolidated Statements of Operations.

The following tables summarize the Company’s leases as at March 31, 2019:


	March 31, 2019
	Operating lease		Finance leases
Leased asset, cost	$	1,167	$	6,879
Accumulated amortization		(386)		(138)
Net book value	$	781	$	6,741


	March 31, 2019			Total discounted
	Weighted	Weighted		lease liability
	average	average remaining		March 31,		December 31,
	discount rate	lease term		2019		2018
Operating lease	8.73%	5	years	$	983	$	—
Finance leases	7.70%	3	years		6,338		6,429
				$	7,321	$	6,429

The terms and conditions contained within the Company’s leases do not contain variable components. Residual values for leased assets are factored into the leases’ analysis when it is reasonably certain that the Company will purchase the asset at the end of the lease term.

The Company has elected to use hindsight on the adoption of the new accounting policy and has used it to determine the lease term for its operating lease. Facts and circumstances indicated that the Company would be reasonably certain not to utilize the early termination option in the lease and accordingly assigned the lease a ten-year term upon initial assessment. The Company’s other leases did not contain options to extend the lease beyond the lease term or terminate the lease before the lease term.

Significant judgment was used by the Company in applying the new lease standard in the determination of the incremental borrowing rate (“IBR”) that is used as the discount rate for the Company’s leases. IBR represents the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. IBR is used for calculating the present value of all the leases. Each lease’s IBR was determined by using the average bond yield ratings for comparable companies. It is updated on a continual basis in order to be applied to new leases. Significant judgement is applied in determining the Company’s credit rating that is an input to IBR.

The Company has the following undiscounted lease payment obligations under its leases as of March 31, 2019:


	Payments due by period
	2019		2020		2021		2022		2023		Thereafter		Total
	(in thousands)
Operating lease obligations	$	168	$	226	$	231	$	233	$	238	$	158	$	1,254
Finance lease obligations		1,502		1,990		2,055		1,695		10		—		7,252
Total	$	1,670	$	2,216	$	2,286	$	1,928	$	248	$	158	$	8,506

Three months ended March 31, 2019

Operating lease

Finance leases

Interest expense