Polaris Renewable Energy Inc.

Annual Report • Jun 18, 2025

Consolidated Financial Statements as of

December 31, 2024 and 2023

Independent Auditor's Report2
Consolidated Balance Sheets3
Consolidated Statements of Operations and Comprehensive Earnings6
Consolidated Statements of Changes in Shareholders' Equity8
Consolidated Statements of Cash Flows9
Notes to the Consolidated Financial Statements10-38

Independent auditor's report

To the Shareholders of Polaris Renewable Energy Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Polaris Renewable Energy Inc. and its subsidiaries (together, the Company) as at December 31, 2024 and 2023, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

What we have audited

The Company's consolidated financial statements comprise:

• the consolidated balance sheets as at December 31, 2024 and 2023;
• the consolidated statements of operations and comprehensive earnings for the years then ended;
• the consolidated statements of changes in shareholders' equity for the years then ended;
• the consolidated statements of cash flows for the years then ended; and
• the notes to the consolidated financial statements, which include material accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2024. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How our audit addressed the key audit matter

Impairment assessments of the operating Cash Generating Units (CGUs)

Refer to note 3 – Material accounting policies, note 4 – Critical judgments and estimation uncertainties, note 14 – Property, plant and equipment, net, note 15 – Intangible assets and note 16 – Goodwill and impairment of assets to the consolidated financial statements.

As at December 31, 2024, the total carrying value of property, plant and equipment, intangible assets and goodwill amounted to \$352.7 million, \$50.8 million and \$8.6 million, respectively. Goodwill is tested annually for impairment and the carrying values of the long-term assets are reviewed quarterly for indicators of impairment. An impairment loss is recognized if the carrying value of a CGU exceeds its recoverable amount. During the year ended December 31, 2024, management identified indicators of impairment due to external market conditions relating to the current market value of the Company's share prices.

As a result, management performed impairment assessments on the CGUs. After assessing the expansion and the increase in the country risk premium, an impairment charge of \$5.3 million was recorded as of December 31, 2024 for the Ecuador CGU, of which \$3.8 million was allocated to goodwill and the remaining \$1.5 million was allocated on a pro rata basis to the rest of the other assets of the CGU.

Our approach to addressing the matter included the following procedures, among others:

• Tested how management determined the recoverable amounts of the CGUs, which included the following:
  • Evaluated the appropriateness of the method used by management including the use of discounted cash flow models.
  • Tested the mathematical accuracy of the discounted cash flow models.
  • Tested the underlying data used in the discounted cash flow models.
  • Evaluated the reasonableness of significant assumptions relating to future production in connection to the power purchase agreements by (i) comparing future production to current and past performance; and (ii) assessing whether this assumption was consistent with evidence obtained in other areas of the audit.
  • Professionals with specialized skill and knowledge in the field of valuation assisted in testing the reasonableness of the discount rates.
• Tested the disclosures, including the sensitivity analysis, made in the consolidated financial statements with regard to the impairment assessments.

Key audit matter How our audit addressed the key audit matter

Management determined that no further impairment losses were required for other CGUs.

Management assessed the recoverable amounts of the CGUs based on a fair value less cost of disposal method using discounted cash flow models. Significant assumptions used by management in determining the recoverable amount of the CGUs included the following:

• future production in connection to the power purchase agreements; and
• discount rates.

We considered this a key audit matter due to the significant judgment by management in developing assumptions to determine the recoverable amounts. This in turn led to significant audit effort and subjectivity in performing procedures to test the significant assumptions used by management in determining the recoverable amount of the CGUs. The audit effort involved the use of professionals with specialized skill and knowledge in the field of valuation.

Other information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Company as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is James Lusby.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario February 19, 2025

Consolidated Balance Sheets

(expressed in thousands of United States dollars)

	Note Ref	As at December 31, 2024		As at December 31, 2023
Assets
Current assets
Cash and cash equivalents	9(b)	\$	213,306	\$	40,053
Accounts receivable	10		11,279		10,630
Prepaid expenses and other current assets	11(a)		3,978		3,359
			228,563		54,042
Restricted cash	12(a)		4,576		4,630
Other assets, net	11(b)		5,092		5,693
Property, plant and equipment, net	14		352,677		376,887
Intangible assets, net	15		50,842		55,014
Construction in progress	13		5,001		4,135
Goodwill, net	16		8,555		12,355
Deferred tax assets	25(b)		6,799		6,644
Total assets		\$	662,105	\$	519,400
Liabilities and Total Equity
Current liabilities
Accounts payable and accrued liabilities	17	\$	17,120	\$	15,078
Current portion of long-term debt, net	18		16,267		15,846
Current portion of lease liabilities	24		428		399
Other liabilities			20		30
			33,835	\$	31,353
Non-current liabilities
Long-term debt, net	18		312,082		156,533
Lease liabilities	24		2,148		2,346
Deferred tax liability	25(b)		54,514		59,236
Total liabilities			402,579	\$	249,468
Non-controlling interests	21		(221 )		590
Equity attributable to the owners of the Company
Share capital	19		666,380		666,394
Contributed surplus			14,092		14,020
Accumulated deficit			(420,725 )		(411,072 )
Total equity attributable to the owners of the Company			259,747		269,342
Total equity			259,526	\$	269,932
Total liabilities and total equity		\$	662,105	\$	519,400

Subsequent Events (Note 28)

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board of Directors

(signed) Marc Murnaghan (signed) Jaime Guillen Chief Executive Officer Director

Consolidated Statements of Operations and Comprehensive Earnings

(expressed in thousands of United States dollars, except for shares and per share amounts)

	Note	Year Ended
	Ref	December 31, 2024	December 31, 2023
Revenue
Power revenue	6	\$ 75,771 \$	78,522
Carbon emission reduction credits revenue		2	-
Direct costs
Direct costs	7(a)	(13,751 )	(13,658 )
Depreciation and amortization of plant assets	7(a)	(29,209 )	(28,947 )
General and administrative expenses	7(b)	(7,509 )	(7,854 )
Impairment loss	16	(5,278 )	-
Other operating costs		(576 )	(21 )
Operating income		19,450	28,042
Interest income		2,855	1,886
Finance costs	8	(21,881 )	(21,925 )
Other (losses) gains		423	(1,638 )
Earnings and comprehensive earnings before income taxes		847	6,365
Current income tax expense	25	(3,512 )	(388 )
Deferred income tax recovery	25	4,844	5,822
Total earnings and comprehensive earnings		\$ \$ 2,179	11,799
Total earnings and comprehensive earnings attributable to:
Owners of the Company		\$ 2,990 \$	11,744
Non-controlling interests		\$ (811 ) \$	55
Basic earnings per share	20	\$ 0.14 \$	0.56
Diluted earnings per share	20	\$ \$ 0.14	0.56

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Changes in Shareholders' Equity

(expressed in thousands of United States dollars, except for share information)

	Total Attributable
		Common Stock	Share	Contributed	Accumulated	to the Owners	Non-Controlling
	Note Ref	Shares	Capital	Surplus	Deficit	of the Company	Interest (Note 21)	Total Equity
Balance at January 1, 2023		21,025,775	\$ 666,041	\$ 13,836	\$ (410,200 ) \$	269,677	\$ 535	\$ 270,212
Dividends paid		-	-	-	(12,616 )	(12,616 )	-	(12,616 )
Share-based compensation				321		321		321
Shares issued on exercise of stock options	19	60,000	567	(137 )	-	430	-	430
Shares issued on conversion exercise of shares
(NCIB)	19	(22,200 )	(214 )	-	-	(214 )	-	(214 )
Total earnings and comprehensive earnings		-	-	-	11,744	11,744	55	11,799
Balance, December 31, 2023		21,063,575	666,394	14,020	(411,072 )	269,342	590	269,932
Dividends paid		-	-	-	(12,643 )	(12,643 )	-	(12,643 )
Share-based compensation		-		177	-	177	-	177
Shares issued on vesting of RSUs	19	15,067	199	(181 )	-	18	-	18
Shares issued on conversion exercise of shares
(NCIB)		(23,600 )	(213 )	76	-	(137 )	-	(137 )
Total earnings and comprehensive earnings		-	-	-	2,990	2,990	(811 )	2,179
Balance at December 31, 2024		21,055,042	666,380	14,092	(420,725 )	259,747	(221 )	259,526

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Cash Flows

(expressed in thousands of United States dollars)

	Note	Year Ended
	Ref	December 31, 2024	December 31, 2023
Net inflow (outflow) of cash related to the following activities
Operating
Total earnings and comprehensive earnings attributable to owners of the Company		\$ 2,990	\$ 11,744
Add/(Deduct) items not affecting cash:
Non-controlling interests in net earnings of subsidiary		(811 )	55
Current and deferred income tax (recovery)	25	(1,332 )	(5,434 )
Finance costs/interest on debt recognized		19,837	20,039
Depreciation and amortization	7(a)(b)	29,436	29,168
Impairment of Goodwill and intangibles	16	5,278	-
Accretion on debt	6,10	1,250	1,215
Share-based compensation		348	348
Unrealized foreign exchange loss (gain)		40	(85 )
Changes in non-cash working capital:
Accounts receivable	10	(649 )	609
Prepaid expenses and other assets		(532 )	526
Accounts payable and accrued liabilities		(1,836 )	(1,150 )
Interest paid	18	(16,574 )	(17,781 )
Unearned revenue		(2,787 )	3,457
Change in other assets	11	396	1,249
Net cash flow from operating activities		35,054	43,960
Investing
Change in restricted cash		54	10
Additions to construction in progress	13	(341 )	(8,139 )
Additions to property, plant and equipment	14	(3,022 )	(3,248 )
Net cash flow to investing activities		(3,309 )	(11,377 )
Financing
Proceeds from Green Bond debt	9	175,000	-
Debt issuance cost	9	(4,364 )	-
Dividends paid		(12,643 )	(12,616 )
Repayment of debt	18	(15,846 )	(14,922 )
Shares repurchase costs		(213 )	(214 )
Proceeds from exercise of options		-	467
Payments of the outstanding lease liability	24	(427 )	(428 )
Net cash flow to financing activities		141,507	(27,713 )
Foreign exchange (loss) gain on cash held in foreign currency		1	(142 )
Net increase in cash		173,253	4,728
Cash, beginning of the year		40,053	35,325
Cash, end of the year		\$ 213,306	\$ 40,053

The accompanying notes are an integral part of these consolidated financial statements.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

1. Organization

The Company was incorporated under the British Columbia Business Corporations Act but completed the endorsement process to continue as an Ontario Corporation on July 5, 2022. The registered office of the Company is located at 7 St. Thomas Street, Suite 606, Toronto, Ontario M5S 2B7.

Polaris Renewable Energy Inc. is engaged in the acquisition, exploration, development, and operation of renewable energy projects in Latin America and the Caribbean.

The Company, through its subsidiaries Polaris Energy Nicaragua, S.A. ("PENSA") and San Jacinto Power International Corporation ("SJPIC"), owns and operates a 82-megawatt ("MW") capacity geothermal facility (the "San Jacinto Project"), located in northwest Nicaragua, near the city of Leon. PENSA entered into the San Jacinto Exploitation Agreement with the Nicaraguan Ministry of Energy and Mines to develop and operate the San Jacinto Project.

Through its subsidiary Empresa de Generación Eléctrica Canchayllo SAC ("EGECSAC"), the Company owns and operates a run-of-river hydroelectric project with a rated capacity of approximately 5 MW located in the Canchayllo district of Peru. Also in Peru, through its subsidiary Generación Andina SAC ("GASAC"), the Company owns and operates two run-of-river hydroelectric projects, with capacity of approximately 8 MW and 20 MW.

The Company, through its subsidiary Emerald Solar Energy SRL ("Emerald"), owns and operates a solar plant, Canoa 1, with 25 MW capacity, located in the Barahona Province, Dominican Republic.

The Company also owns 83.16% of the shares issued and outstanding of Hidroelectrica San Jose de Minas ("HSJM"), a subsidiary that operates a hydroelectric plant with 6 MW capacity, located along the Cubi river in San Jose de Minas, Ecuador.

Through its subsidiary Polaris Renewable Energy SA, the Company constructed, owns and operates two solar projects located in Vista Hermosa, in the Coclé Province in Panama. The solar projects, named Vista Hermosa Solar Park I and II, have a capacity of approximately 10 MW and began operations in April 2023.

2. Basis of Preparation and Presentation

The Company's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards").

These consolidated financial statements have been prepared on a going concern basis, using historical cost convention, except for certain financial assets and liabilities measured at fair value as explained in Note 3. Accounting policies are consistently applied to all years presented, unless otherwise stated.

The Company reviewed new and revised accounting pronouncements that have been issued and are effective for periods beginning on or after January 1, 2024.

IFRS 18 Presentation and Disclosure in Financial Statements was issued in April 2024. IFRS 18 supersedes IAS 1 Presentation of Financial Statements. It is mandatorily effective for annual reporting periods beginning on or after 1 January 2027 with early application permitted. IFRS 18 introduces significant changes to numerous requirements, primarily how an entity presents its statement of profit or loss; aggregates and disaggregates information disclosed in financial statements; and discloses information about management-defined performance measures. Management is currently evaluating the impact IFRS 18 will have on our financial statements.

There are currently no other pronouncements that are expected to have a significant impact on the Company's consolidated financial statements upon adoption.

In these consolidated financial statements, unless otherwise indicated, all dollar amounts are expressed in United States ("US") dollars, the Company's functional and reporting currency.

These consolidated financial statements were approved and authorized for issuance by the Board of Directors of the Company (the "Board") on February 19, 2025.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

3. Material Accounting Policies

a. Principles of consolidation

These consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All intercompany balances and transactions are eliminated upon consolidation.

b. Non-controlling interests

Non-controlling interests in the Company's subsidiaries are classified as a separate component of equity. Each period, net income or loss and components of other comprehensive income or loss are attributed to both the Company and non-controlling interest based on their respective percentage interest.

c. Foreign currency translation

The functional and reporting currency of the Company and its wholly owned subsidiaries is the US dollar, as a significant portion of revenue, assets, liabilities and financing are denominated in US dollars. Foreign currency transactions are translated using the exchange rate in effect on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are included in the consolidated statements of operations and comprehensive earnings.

At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates in effect on that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates in effect on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.

d. Business combinations or asset acquisitions

When a project is acquired, management is required to exercise its judgment to determine whether the transaction constitutes a business combination under IFRS 3, Business Combinations, or an asset acquisition. Management determines that a transaction is defined as a business combination by analyzing the inputs, processes and outputs existing at the date of the transaction.

Business combinations are accounted for using the acquisition method. The consideration transferred by the Company to obtain control of a subsidiary is calculated as the sum of the fair values of assets transferred, liabilities assumed, and the equity instruments issued by the Company, which includes the fair value of any asset or liability arising from a contingent consideration arrangement.

When the Company acquires less than 100% of a controlled subsidiary, the Company elects on a transaction-bytransaction basis, whether to measure non-controlling interest at its fair value or at its proportionate share of the recognized amount of the identifiable net assets, at the acquisition date.

Acquisition costs are expensed to earnings as incurred. The Company recognizes identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have previously been recognized in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are measured at their acquisition-date fair values.

Goodwill is determined after separate recognition of identifiable assets acquired. It is calculated as the excess of the sum of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any existing equity interest in the acquiree over the acquisition-date fair value of identifiable net assets. If the fair value of identifiable net assets exceeds the sum calculated above, the excess amount (gain on a bargain purchase) is recognized through earnings immediately.

If the business combination is achieved in stages, the acquisition-date carrying amount of the acquirer's previously held interest in the acquiree is re-measured at its acquisition-date fair value with any resulting gain or loss recognized in net earnings (loss).

e. Goodwill

After initial recognition, goodwill is not amortized but is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

the carrying amount may be impaired, at the CGU level. For the purpose of impairment testing, goodwill acquired in an acquisition is, from the date of acquisition, allocated to each of the Company's CGUs that are expected to benefit from the acquisition.

Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained.

f. Impairment loss and reversal of impairment of long-lived assets and impairment of goodwill

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. The carrying value of long-term assets is reviewed quarterly for indicators of impairment and impairment reversal in order to assess if an asset or cash-generating unit ("CGU") may not be recoverable or if a previous impairment charge needs to be reversed. If indicators of impairment exist, the recoverable amount of the asset or CGU is estimated. If the carrying value of the asset or CGU exceeds the recoverable amount, the asset or CGU is written down, first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset. The impairment is recognized in the consolidated statements of operations and comprehensive loss.

Construction in progress ("CIP") and property, plant, and equipment ("PP&E") are aggregated into CGUs based on their ability to generate largely independent cash flows, usually on a project-by-project basis.

For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU, or the group of CGUs, which is expected to benefit from the synergies of the combination. This allocation reflects the lowest level at which goodwill is monitored for internal reporting purposes.

The recoverable amount of an asset or CGU is identified as the greater of its fair value, less costs to disposal, and its value in use. Fair value is determined to be the amount for which the asset could be sold in an arm's length transaction. Value in use is calculated by estimating the discounted present value of the future net cash flows expected to be derived from the continued use of the asset or CGU. As of December 31, 2024 and 2023 the recoverable amounts of the CGUs were based on a fair value less cost of disposal ("FVLCD") method using discounted cash flow models. Significant assumptions assessed by management in determining the recoverable amount of the CGUs included the following:

• future production and pricing in connection to the power purchase agreements;
• operating costs;
• capital and sustaining capital expenditures; and
• discount rates

The recoverable amount is the value in use determined by estimating future net cash flows on a discounted basis. Significant assumptions assessed by management in determining the impairment and impairment reversal test are i) future production and pricing, ii) relevant operating costs, iii) sustaining capital expenditures and iv) terminal value, discounted using a pre-tax market-based asset-specific rate, if available, or if not available, an estimated risk-adjusted weighted average cost of capital. Key assumptions used in the calculation of the fair value less cost to disposal are based on pricing and production information from the Company's Power Purchase Agreements ("PPA") and management's assumptions derived from past experience and future expectations.

In addition, if Polaris believes, following interventions from regulatory agencies, that certain costs of property, plant and equipment and of intangible assets related to rate-regulated activities are no longer likely to be recovered or returned through future rate adjustments, the carrying amounts of these assets would be adjusted accordingly.

Reversals of impairments, excluding goodwill, are recognized when there has been a subsequent increase in the recoverable amount. An impairment reversal occurs if there has been a significant change to the estimates used in determining the original impairment loss. In this event, the carrying amount of the asset or CGU is increased with an impairment reversal recognized in the consolidated statements of operations and comprehensive loss.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

The new carrying amount is limited to the original carrying amount less depreciation, depletion and amortization, as if no impairment had been recognized for the asset or CGU for prior periods.

g. Financial instruments

The Company classifies and measures all financial assets as either fair value or amortized cost.

The Company determines the classification of its financial assets at initial recognition. Financial assets are classified and measured at amortized cost when they meet the following criteria:

• The Company plans to hold the financial assets in order to collect contractual cash flows; and
• Payments received on the financial assets are solely payments of principal and interest on the principal amount outstanding.

Financial assets are classified and measured at fair value unless they meet the criteria for amortized cost.

The Company measures its financial liabilities initially at fair value net of transaction costs, and subsequently at amortized cost using the effective interest method, except for financial liabilities measured at fair value through profit or loss ("FVTPL"). For trade receivables that are classified as financial assets at amortized cost, the Company applies the simplified approach based on IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

The Company may designate financial liabilities at FVTPL when doing so results in more relevant information because:

• It eliminates or reduces measurement or recognition inconsistency that would arise from measuring the liabilities and recognizing gains and losses on them on different bases, or
• A group of financial liabilities is managed and evaluated on a fair value basis, in accordance with the Company's risk management or investment strategy.

This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IFRS 9, "Financial Instruments", as well as embedded derivatives.

Financial assets and liabilities at amortized cost are subsequently measured at amortized cost using the effective interest rate method, with any gains or losses recognized in the statement of operations and comprehensive loss. The Company has no financial assets or liabilities measured at FVTPL.

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments are recognized at the proceeds received, net of direct issue costs.

Determination of fair value

In estimating the fair value of an asset or a liability, the Company uses Level 1 inputs, which are quoted prices in active markets for identical assets or liabilities the Company can access at the measurement date to the extent it is available. Where Level 1 inputs are not available, the Company engages third-party qualified valuation specialists to perform the valuation. The Company works closely with qualified external valuation specialists to establish the appropriate valuation techniques and inputs to the model. Information about the valuation techniques and inputs used in determining the fair value of various assets and liabilities is disclosed in the notes to these consolidated financial statements.

Derivatives

Derivatives embedded in other financial instruments or executory contracts are accounted for as separate derivatives when their risks and characteristics are not closely related to their host financial instrument or contract.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

Transaction costs

Transaction costs related to other liabilities including green bonds, loans and receivables are capitalized, deducted from the carrying amount of the related instrument and amortized over the expected life of the instrument using the effective interest method.

Transaction costs related to share issuances are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

h. Revenue recognition

Revenue is recognized when control of the promised goods or services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company's revenue consists of the sale of electricity and, to a lesser extent, Carbon emission reduction credits ("CERs") and is recorded net of applicable sales taxes.

Revenue related to the sale of electricity is recognized over time as the electricity is delivered. Electricity represents a single performance obligation that represents a promise to transfer to the customer a series of distinct goods that are substantially the same and that have the same pattern of transfer to the customer. This is in accordance with each specific PPA.

When there is a significant financing component in the contract, the Company presents the effects of financing (interest revenue or interest expense) separately from revenue in the statement of comprehensive income.

Qualifying renewable energy projects receive CERs for the generation and delivery of renewable energy to the power grid. The CER certificates represent proof that 1 MW of electricity was generated from an eligible energy source. The CERs can be traded, and the owner can claim to have purchased renewable energy. CERs are primarily sold under contracts, and revenue for these contracts is recognized when the CER is transferred to the buyer.

i. Share-based compensation

The Company measures the compensation cost to be recognized for share-based awards based on the estimated fair value of the award on the date of grant. Share-based compensation expense is recognized over the applicable vesting period. The Company uses the Black-Scholes option valuation model to estimate the fair value of options awards. In estimating this fair value, the Company uses certain assumptions, consisting of the expected life of the option, risk-free interest rate, dividend yield, and volatility. The use of a different estimate for any one of these components could have a material impact on share-based compensation expenses.

j. Income taxes

Income tax is recognized in the consolidated statements of operations and comprehensive loss except to the extent that it relates to items recognized directly in shareholders' equity. Income taxes for the current and prior periods are measured at the amount expected to be recoverable from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period.

The Company follows the liability method of accounting for deferred income taxes. Under this method, deferred income taxes are recorded for the effect of any temporary difference between the accounting and income tax basis of an asset or liability.

Deferred income tax is calculated using the enacted or substantively enacted income tax rates expected to apply when the assets are realized, or liabilities are settled. The effect of a change in enacted or substantively enacted tax rates is recognized in the consolidated statements of operations and comprehensive loss or in shareholders' equity, depending upon the item to which the adjustment relates.

Deferred income tax assets are recognized to the extent future recovery is probable. Deferred income tax assets are reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the assets to be recovered.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

Deferred income tax liabilities and assets are not recognized for temporary differences arising on:

• Investments in subsidiaries and associates and interest in joint ventures where the timing of the reversal of the temporary difference can be controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future;
• The initial recognition of non-deductible goodwill; or
• The initial recognition of an asset or liability in a transaction which is not a business combination and, at the time of the transaction, affects neither accounting net income nor taxable income.

k. Earnings per share

The Company presents basic and diluted earnings per share ("EPS") data for its common shares. Basic EPS is calculated by dividing the income or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the income or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for own shares held, and for the effects of all dilutive potential common shares.

l. Cash

Cash includes deposit accounts, liquid short-term US Bonds and cash restricted for current use. Restricted cash is classified as a long-term asset and includes project guarantees and bonds, which either are required to be held for longer than 12 months under the various contracts and agreements to develop and operate the Company's projects, or require to meet certain conditions precedent for its release and usage.

m. Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the agreement on the inception date. As a lessee, the Company recognizes a lease obligation and a right-of-use asset in the consolidated statements of financial position on a present-value basis at the date when the leased asset is available for use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation. Finance charges are recognized in finance cost in the consolidated statements of earnings (loss). The right-of-use asset is included in property, plant and equipment and is depreciated over the shorter of the estimated useful life of the asset and the lease term on a straight-line basis.

Lease obligations are initially measured at the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• variable lease payments that are based on an index or a rate;
• amounts expected to be payable under residual value guarantees;
• the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.

The lease payments are discounted using the interest rate implicit in the lease, or if this rate cannot be determined, the Company's incremental borrowing rate.

Right-of-use assets are initially measured at cost comprising the following:

• the amount of the initial measurement of the lease obligation;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and rehabilitation costs.

Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the consolidated statements of earnings (loss). Short-term leases are leases with a lease term of 12 months or less at the inception of the lease. Low-value assets comprise primarily small equipment.

n. Property, Plant and Equipment ("PP&E")

PP&E is recorded at cost and includes assets available for use. Assets available for use are depreciated over their estimated useful lives. Capital spare parts are included in PP&E and are valued at acquisition cost less a provision for obsolescence.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

For divestitures of PP&E, a gain or loss is recognized in the consolidated statements of operations and comprehensive loss.

Expenditures related to renewals or betterments that improve the productive capacity or extend the life of an asset are capitalized, and any part of an asset that has been replaced is de-recognized.

Costs associated with office furniture, fixtures, leasehold improvements and information technology are carried at cost and depreciated on a straight-line basis over the estimated lives of the assets, which range from three to seven years.

The useful lives of hydroelectric project property, plant and equipment assets currently in service are assigned by major asset categories summarized as follows:

• Facilities (Dam, Charging chamber, House machine and others) 100 years
• Channel and driving tunnel 50 years
• Turbines 50 years
• Generators 20 years.

The useful lives of geothermal property, plant and equipment assets currently in service are assigned by major asset categories summarized as follows:

• Pipelines and Turbines– 20 years
• Wells 25 years
• Condenser 20 years
• Cooling Tower and Switchyard 25 years

The useful lives of solar property, plant and equipment assets currently in service are assigned by major asset categories summarized as follows:

• Solar plant 20 years
• Inverters 10 years
• Weather towers 5 years

Construction in progress ("CIP")

Direct costs related to projects in development, including the fair value of assets under construction acquired in a business combination, are capitalized during the development stage as CIP provided that completion of the project is considered by management to be probable.

Costs of unsuccessful projects are written off in the period when management determines that the successful completion of the project or the recovery of such costs can no longer be reasonably regarded as probable. The recovery of power project development costs included in CIP is dependent upon the successful completion or the sale of the project. The successful completion of the power project is dependent upon receiving the necessary environmental and other licenses, being awarded a PPA, obtaining the necessary project financing to successfully complete the development and construction of the project, and the long-term generation and sale of sufficient electricity on a profitable basis. The recurring costs of maintaining the Company's development properties not currently under active development are recognized as an expense.

Costs capitalized as construction in progress are assessed for impairment when facts and circumstances suggest that the carrying amount of the project may exceed its recoverable amount.

For divestitures of properties, a gain or loss is recognized in the consolidated statements of operations and comprehensive loss.

Borrowing costs

Borrowing costs directly attributable to the construction phase of qualifying assets are capitalized as part of the cost of the asset until the asset is substantially ready for its intended use. Borrowing costs related to corporate financings are generally expensed unless the proceeds are directly used to fund specific CIP and PP&E.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

o. Service concession arrangements

IFRIC Interpretation 12, "Service Concession Arrangements", ("IFRIC 12") provides guidance on the accounting for certain qualifying public-private partnership arrangements, whereby the grantor:

• controls or regulates what services the operator must provide with the infrastructure, to whom it must provide them, and at what price; and
• controls through ownership, beneficial entitlement or otherwise any significant residual interest in the infrastructure at the end of the term of the arrangement.

IFRIC 12 is based on a "control of use" model as opposed to "risks and rewards", therefore under such concession arrangements the operator accounts for the infrastructure asset by applying one of the accounting models depending on the allocation of the demand risk through the usage of the infrastructure between the grantor and the operator:

• Financial asset model The operator recognizes a financial asset to the extent that it has an unconditional contractual right to receive cash or other financial asset from or at the direction of the grantor for the services.
• Intangible asset model The operator recognizes an intangible to the extent that it receives a right (license) to charge users of the public service. Demand risk and/or performance risk is borne by the operator.

Accounting for concession arrangements requires the application of judgment in determining if the project falls within the scope of IFRIC 12. Additional judgments are needed when determining, among other things, the accounting model to be applied under IFRIC 12, the allocation of the consideration receivable between revenuegenerating activities, the classification of costs incurred on such activities, as well as the effective interest rate to be applied to the financial asset. As the accounting for concession arrangements under IFRIC 12 requires the use of estimates over the term of the arrangement, any changes to these long-term estimates could result in a significant variation in the accounting for the concession arrangement.

The Company has classified the assets that are part of HSJM's plant as intangible asset under the intangible asset model. The intangible asset is then amortized over its expected useful life, which is the concession period in a service concession arrangement. The amortization period begins when the infrastructure is available for use.

p. Intangible assets

Intangible assets are developed internally or acquired as part of a business combination. Internally developed assets are recognized at cost and primarily arise as a result of the rights retained after donating transmission assets constructed as part of the development of geothermal or solar properties to public utility companies. Intangible assets acquired as part of a business combination are recognized separately from goodwill if the asset is separable or arises from contractual or legal rights. Intangible assets are also recognized when acquired individually or with a group of other assets. Intangible assets are initially recorded at their estimated fair value. Intangible assets with finite lives are amortized over their useful economic lives reflecting the related PPA, on a straight-line basis and are reviewed for impairment when an indicator of possible impairment exists. Intangible assets with indefinite lives are not amortized but are reviewed for impairment when indications exist.

q. Provisions

Provisions are recognized when present obligations, as a result of a past event, will probably lead to an outflow of required economic resources, and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. All provisions are measured, and reviewed at each reporting date, on the basis of the discounted expected future cash outflows and adjusted to reflect the current best estimate.

r. Contingencies

When a contingency is substantiated by confirming events, can be reliably measured, and will likely result in an economic outflow, a liability is recognized in the consolidated financial statements as the best estimate required to settle the obligation. A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events, or where the amount of a present obligation cannot be measured reliably or will likely not result in an economic outflow. Contingent assets are only disclosed when the inflow of economic benefits is

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

probable. When the economic benefit becomes virtually certain, the asset is no longer contingent and is recognized in the consolidated financial statements.

s. Decommissioning liabilities

The Company recognizes decommissioning liabilities in the period in which they are incurred. The associated decommissioning costs before salvage values are capitalized as part of the carrying amount of the long-lived asset. The liability is accreted over the estimated time period until the settlement of the obligation, and the asset is amortized over its estimated useful life. The decommissioning liability is classified based on expected timing of settlement. The discount rate selected by the Company is based on the relevant risk-free rate.

Decommissioning liabilities include present obligations where the Company will be required to retire tangible long-lived assets such as producing well sites and power plants. The decommissioning liability is measured at the present value of the expenditure expected to be incurred. Changes in the estimated liability resulting from revisions to estimated timing or amount of cash flows, or changes in the discount rate are recognized as a change in the decommissioning liability and the related long-lived asset.

Increases in decommissioning liabilities resulting from the passage of time are recorded as accretion of decommissioning liabilities included in finance costs in the consolidated statements of operations and comprehensive loss. Actual expenditures incurred are charged against the accumulated decommissioning liability.

t. New Accounting Policies effective January 1, 2024

The amendments listed did not have any impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods

• Amendments to IAS 1: Presentation of Financial Statements: Amended to clarify how to classify debt and other liabilities as either current or non-current.
• Amendments to IFRS 16: Leases, on lease liability in a sale and leaseback: Amended to address the accounting for a lease liability in a sale and leaseback transaction after the date of the transaction.
• Amendments to IAS 7: Cash Flow Statement, on supplier finance arrangements: Amended to require specific disclosures about supplier finance arrangements.

v. New Accounting Policies effective January 1, 2025 and after

Certain amendments to accounting standards have been published that are not mandatory for December 31, 2024, reporting periods and have not been early adopted by the Company. These new accounting policies and amendments, except by IFRS 18 whose impact in the financial statements the company is still assessing, as explained in Note 2, are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

4. Critical Judgments and Estimation Uncertainties

The timely preparation of consolidated financial statements requires that management make estimates and use judgment regarding the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the period. Such estimates primarily relate to unsettled transactions and events as at the date of the consolidated financial statements. Accordingly, actual results may differ from estimated amounts as future confirming events occur. Critical estimates and judgments made by management in the preparation of these consolidated financial statements are outlined below.

a. Critical accounting judgments

CIP, PP&E, Assets under concession and intangible assets are aggregated into CGUs usually on a project-by-project basis based on their ability to generate largely independent cash inflows and are used for long-lived asset impairment testing. The determination of the Company's CGUs is subject to management's judgment.

The decision to cease capitalization of costs and transfer assets from CIP to PP&E is based on the asset being in the location and condition necessary for it to be capable of operating in the manner intended by management.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

Management uses judgment in determining the point at which this has occurred, which is generally when the asset reaches commercial operation post commissioning.

Estimates and assumptions utilized in the preparation of the Company's consolidated financial statements include:

• depreciation and amortization rates and useful lives (Note 3(o));
• contingent liabilities (Note 3(s));
• ability to utilize tax losses and other tax measurements (Note 3(k));
• determining fair value of assets and liabilities acquired in business combinations (Note 3(d)). In connection to the valuation of the intangibles recognized in connection with the business acquisitions management used an acceptable valuation technique, which involved the use of discounted cash flow models. Management developed significant assumptions related to future production, pricing (in relation to the PPA and spot price), discount rates, and the potential extension of the term of the power purchase agreements.
• assessment and determination of net recoverable amounts of cash-generating units for impairment loss or reversal of long-lived and intangible assets (Note 3(e)). The recoverable amounts of the CGUs were based on a FVLCD method using discounted cash flow models.

Significant assumptions assessed by management in determining the recoverable amount of the CGUs included the following:

• future production and pricing in connection to the PPAs and the spot market;
• operating costs;
• capital and sustaining capital expenditures; and
• discount rates.

During the year ended December 31, 2024, management identified indicators of impairment due to external market conditions relating to the current market value of the Company's share price. As a result, management performed impairment assessments on the CGUs (based on the assumptions noted above). It identified an impairment loss for the Ecuadorian CGU (Note 16) with the \$5.3 million loss impacting the consolidated statement of operations. No further impairment losses were required for other CGUs.

b. Sources of measurement uncertainty

Amounts used for long-lived asset and intangible impairment reversal/loss calculations are based on estimates of future cash flows of the Company. By their nature, estimates of cash flows, including estimates of future capital expenditures, revenue, operating expenses, plant capacity, discount rates and market pricing are subject to measurement uncertainty, while climate change matters, becoming more visible, widespread and severe, adds complexity and heightens these uncertainties. Accordingly, the impact on the consolidated financial statements of future periods could be material.

Estimated future cash flows are used in determining the fair value of certain exploration and development properties, geothermal, hydroelectric, and solar properties and PP&E, and for use in the final purchase price allocation of business combinations and impairment analysis.

Tax interpretations, regulations and legislation in the various jurisdictions in which the Company and its subsidiaries operate are subject to change. As such, income taxes are subject to measurement uncertainty. Deferred income tax assets are assessed by management at the end of each reporting period to determine the likelihood that they will be realized from future taxable income.

In assessing whether the going concern assumption is appropriate, management must estimate future cash flows for a period of at least twelve months following the end of the reporting period by considering available information about the future. Management has considered a wide range of factors relating to expected cash flows from its operating projects, estimated operating and capital expenditures, debt repayment schedules, and potential sources of replacement financing. These cash flow estimates are subject to uncertainty.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

5. Segment Information

The Company currently operates in five reportable operating segments:

• Nicaragua Acquisition, exploration, development and operation of a geothermal project;
• Peru Acquisition, development and operation of hydroelectric projects;
• Panama Acquisition, development and operation of solar projects;
• Dominican Republic Acquisition, development and operation of solar projects;
• Ecuador Acquisition, development and operation of hydroelectric projects.

The Company has designated its Chief Executive Officer as the chief operating decision maker, who evaluates the performance of the Company's reportable operating segments and makes recommendations to the Board to allocate available resources based on various criteria, including the availability of proven resources, costs of development, availability of financing, actual and expected financial performance, and existing debt covenants. The reported segment earnings, including revenue and expenses, as well as assets and liabilities are presented below. Corporate represent expenses, assets and liabilities for Canada, not related to the Company's reportable operating segments. These represent corporate headquarters and other minor North America holdings, which are not considered individually as reportable operating segments, but are presented below for reconciliation purposes to the Company's total loss, revenue, expenses, assets and liabilities in these condensed consolidated interim financial statements are not considered individually as reportable operating segments, but are presented below for reconciliation purposes to the Company's total loss, revenue, expenses, assets and liabilities in these consolidated financial statements.

	As at December 31,	As at December 31,
Assets and liabilities	2024	2023
Corporate	\$ 200,265 \$	25,265
Nicaragua	275,288	297,497
Peru	94,961	101,248
Dominican Republic	61,819	58,768
Ecuador	19,786	25,910
Panama	9,985	10,712
Total assets	\$ 662,104 \$	519,400
Corporate	\$ 4,137 \$	7,536
Nicaragua	252,442	274,834
Peru	89,396	92,286
Dominican Republic	58,197	55,278
Ecuador	18,797	24,725
Panama	10,572	10,699
Total non-current assets	\$ 433,541 \$	465,358
Corporate	\$ 172,718 \$	1,243
Nicaragua	137,359	148,364
Peru	48,562	53,062
Dominican Republic	39,049	40,507
Ecuador	4,465	5,988
Panama	425	301
Total liabilities	\$ 402,578 \$	249,465

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

					Dominican
	Nicaragua		Peru		Republic		Ecuador			Panama	Corporate		Total
For the Year Ended
December 31,	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
Revenue
Power
revenue		\$ 52,151 \$ 55,503 \$11,018 \$11,258 \$ 7,864 \$ 7,267 \$ 2,687 \$2,862 \$2,051 \$1,632									-		- \$ 75,771 \$ 78,522
Carbon Credits
revenue											2	-	2 \$	-
Direct costs
Direct costs	(7,551 )	(7,897 )	(3,738 )			(3,599 ) (1,457 ) (1,370 )	(469 )	(493 )	(536 )	(375 )	-	76		(13,751 ) (13,658 )
Depreciation
and
amortization
of plant assets		(22,933 ) (22,797 )	(2,766 )			(2,854 ) (2,290 ) (1,642 )	(727 )	(730 )	(493 )	(290 )	-		(634 ) (29,209 ) (28,947 )
General and
administrative
expenses	(1,268 )	(1,127 )	(490 )	(555 )	(530 )	(571 )	(385 )	(402 )	(113 )	(94 )	(4,723 )	(5,105 )	(7,509 )	(7,854 )
Impairment
loss	-	-		-	-	-	(5,278 )	-	-	-	-	-	(5,278 )	-
Other
operating costs	-	-	-	-	-	-	-	-	-	-	(576 )	(21 )	(576 )	(21 )
Operating
income	20,399	23,682	4,024	4,250	3,587	3,684	(4,172 ) 1,237		909	873	(5,297 )	(5,684 )	19,450	28,042
		-		-		-		-		-		-
Interest
income	965	980	30	-	86	68	23	62	3	3	1,748	773	2,855	1,886
Finance costs		(12,556 ) (14,028 )	(4,835 )			(4,555 ) (2,654 ) (2,762 )	(425 )	(499 )	(5 )	(29 )	(1,406 )		(52 ) (21,881 ) (21,925 )
Other (losses)
gains	(31 )	(40 )	134	(464 )	(82 )	(94 )	48	(847 )	12	49	342	(242 )	423	(1,638 )
Earnings (loss) and
comprehensive
earnings (loss)
before income
taxes	8,777	10,594	(647 )	(769 )	937	896	(4,526 )	(47 )	919	896	(4,613 )	(5,205 )	847	6,365
		-		-		-		-		-		-
Current Income
Tax (expense)	(3,093 )	-	(81 )	(280 )	(113 )	4	(68 )	-	(158 )	(108 )	1	(4 )	(3,512 )	(388 )
Deferred
Income Tax
recovery
(expense)	4,419	3,738	318	2,635	(46 )	(665 )	243	52	-	-	(90 )	62	4,844	5,822
		-		-		-		-		-		-
Total earnings
(loss) and
comprehensive
earnings (loss) \$ 10,103 \$ 14,332 \$				(410 )\$ 1,586 \$	778 \$		235 \$(4,351 )\$						5 \$ 761 \$ 788 \$(4,702 )\$(5,147 )\$ 2,179 \$11,799

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

6. Revenue

Revenue by type is summarized in the following table:

	Year Ended
Project	December 31, 2024	December 31, 2023
Canada
Carbon Credits	\$ 2 \$	-
Nicaragua (i)
San Jacinto (Geothermal)	\$ 52,151 \$	55,503
Peru (ii)
Generación Andina (Hydroelectric)	9,159	9,219
Canchayllo (Hydroelectric)	1,859	2,039
Dominican Republic (iii)
Canoa 1 (Solar)	7,864	7,267
Ecuador (iv)
San Jose de Minas (Hydroelectric)	2,687	2,862
Panama (v)
Vista Hermosa (Solar)	2,051	1,632
Total power revenue	75,771	78,522
Total power revenue	\$ 75,773 \$	78,522

(i) The Company sells energy to two Nicaraguan power distributors Distribuidora De Electricidad del Norte, S.A. ("Disnorte") and Distribuidora De Electricidad del Sur, S.A. ("Dissur"). Energy is billed 5 days after the delivery month and the receivable is collected 45 days after billing.

• (ii) For Peru, under the terms of the PPAs, the Company bills at the spot rate for current energy generation. The difference between the spot rate and the PPA rate (plus an effective annual interest rate of 12%) is calculated annually each May for the previous 12 months and is paid evenly over the following 12 months.Energy is billed 10 business days after the delivery month and the receivable is collected 30 days after billing.
• (iii) In the Dominican Republic, the Company bills energy 30 days after delivery and collects it 30 days after billing.
• (iv) For Ecuador, energy is billed 10 days after delivery and the receivable is collected approximately 45 days after billing.

(v) For Panama, energy is sold at spot, billed 18 days after delivery and collected up to 30 days after billing.

The Company has determined that it has one performance obligation which is the delivery of electricity to its customers. There is no revenue recognized from unfulfilled performance obligations. Note 10 to these financial consolidated statements provides details on the Company's contract balances related to this revenue.

7. Direct Costs, General and Administrative and Other Expenses

Direct costs related to the production of energy	Year Ended
	December 31, 2024	December 31, 2023
Direct costs other than amortization:
Employee costs	5,524	5,231
General liability insurance	3,102	2,998
Land, building and other Municipal and Federal Taxes	2,227	2,422
Maintenance	2,141	2,146
Other direct costs	757	861
	13,751	13,658
Depreciation and amortization	\$ 29,209 \$	28,947
Direct Costs	\$ 42,960 \$	42,605

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

(b) General and administrative expenses

	Year Ended
	December 31, 2024	December 31, 2023
Salaries and benefits	\$ 3,531 \$	3,173
Share-based compensation	290	326
Facilities and support	1,133	1,105
Professional fees	1,589	2,298
Insurance	172	183
Minimum asset taxes	261	348
Depreciation of other assets	227	228
Other general and administrative expenses	306	193
	\$ 7,509 \$	7,854
Total allocation to exploration and development and geothermal properties	-	-
	7,509	7,854

8. Finance Costs

	Year Ended
	December 31, 2024	December 31, 2023
Interest on debt	\$ 19,562 \$	19,664
Accretion on debt	1,250	1,214
Banking fees and other finance costs	1,069	1,378
Borrowing costs capitalized to qualifying assets (i)	-	(331 )
	\$ 21,881 \$	21,925

Interest and accretion on debt includes comprise credit agreements and green bond financial instruments. Note 18.

9. Green Bond

a) Issuance

During the quarter ended December 31, 2024 ,the Company closed a private placement of \$175 million senior secured green bonds (the "Green Bonds"), the settlement of which occurred on December 3, 2024. The process was led by a Nordic broker and marketed not only as a Green Bond but as a Nordic bond. Key features of Nordic bonds include registration within six months of bond issuance in either a regulated or unregulated market (such as Nordic ABM) not being subject to European Economic Area securities legislation and not requiring to issue a listing prospectus and the appointment of a bond trustee to act as an intermediary between the issuer and the bondholders.

The Green Bonds have a tenor of five years and a fixed coupon rate of 9.5% percent per annum, payable in semiannual installments. The Green Bonds also include a tap feature, allowing the Company to access up to an additional \$50 million in funding for potential future uses.

The Green Bonds were issued within the Company's Green Financing Framework (the "Framework"), which has been reviewed by Sustainalytics, a Morningstar company and a globally recognized provider of ESG research, ratings and data. Sustainalytics evaluated Polaris' Framework and the alignment thereof with relevant industry standards and provided views on the robustness and credibility of the Framework.

The focus of the proceeds from the Green Bonds will be to finance or refinance investments in renewable energy production and storage, including:

• Fund investment focused on four renewable energy categories: windfarms, solar panel installations, geothermal power, and small run-of-river hydro;

-Fund development including studies, licenses, permits, engineering, design and capital expenditures associated with the advancement of eligible Green Projects.

Eligible projects allocation decisions under the Framework are screened by performing individual environmental and social impact assessments and approved by the ESG Steering Committee.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

b) Funds

As of December 31, 2024 cash in the amount of \$170.3 million was held by the trustee of the Green Bonds in Norway (2023-\$Nil), to be used according to the allocation shown below. These funds represent a demand deposit subject to contractual restriction on use and available for current use. The allocation of net proceeds from the Green Bonds is as follows:

Bond Issuance - December, 2024	\$ 175,000
Transaction costs paid	(4,364 )
Transaction costs payable	(1,715 )
Net Proceeds, December 31, 2024	\$ 168,921
Debt Repayment in January 2025 (Note 28 (a))	(120,625 )
Reserve for PLWF acquisition in Puerto Rico	(20,000 )
Earned interest	919
Balance available February, 2025	\$ 29,215

The Green Bonds have been classified as a financial liability at amortized cost under IFRS 9 (described in Note 3 (g)).

Total issuance costs amounted to \$6.1 million and have been accounted for as part of the Green Bond's initial measurement. Interest expense of \$1.3 million related to the Green Bonds has been recognized in the statement of profit or loss for the period, calculated using the effective interest rate method.

Key financial covenants, described on Note 18 (i), include a minimum liquidity of \$15.0 million during the term of the Green Bonds and a Debt Service Coverage Ratio ("DSCR") of no less than 1.75:1. Additionally, the terms of the Green Bonds impose an incurrence test in respect of any distribution, including dividends payment and share repurchase. The incurrence test is met if the DSCR is higher than 2.00:1.

The calculation of the DSCR with respect to both the financial covenants and the incurrence test, shall be adjusted so that all Debt Service related to the Existing Debt shall be excluded from the calculation whereas the Debt Service shall be adjusted to include Debt Service related to the initial issue amount of the Green Bonds, pro forma. Similarly, adjustments will apply for acquisitions or dispositions of operations.

	December 31, 2024	December 31, 2023
Nicaragua (i)
San Jacinto (Geothermal)	\$ 9,429 \$	8,474
Peru (ii)
Generación Andina (Hydroelectric)	179	228
Canchayllo (Hydroelectric)	5	8
Dominican Republic (iii)
Canoa 1 (Solar)	1,161	1,063
Ecuador (iv)
San Jose de Minas (Hydroelectric)	383	481
Panama (v)
Vista Hermosa I (Solar)	61	188
Vista Hermosa II (Solar)	61	188
	\$ 11,279 \$	10,630

10. Accounts Receivable

(i) Balance comprised of amounts due by Disnorte - Dissur, which have 45 days payment term from invoice date.

(ii) The average credit period granted to customers is 30 days from the invoice date.

(iii) The balance is due by EDESUR and has a credit period of 30 days from the issuance of the invoice (Note 6).

(iv) The average credit period granted to customers is 45 days from invoice date.

(v) The balance has a credit period of 30 days from the issuance of the invoice

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

The Company assessed the risk of credit losses for its accounts receivable and concluded it is immaterial, therefore it has not recorded a loss allowance (Note 26 (b) Credit Risk).

11. Prepaid expenses and Other Assets

(a) Prepaid expenses and current portion of other assets

	December 31, 2024	December 31, 2023
Prepaid insurance	\$ 1,189 \$	919
Current portion of recoverable taxes	2,115	1,565
Other assets and prepaids	674	875
	\$ 3,978 \$	3,359

(b) Other assets

	December 31, 2024	December 31, 2023
Recoverable taxes	\$ 856 \$	941
Contractor advances and others (i)	1,796	1,951
Non-financial assets
Fixed assets, net	111	151
Right-of-use-asset, net (ii)	2,329	2,650
	\$ 5,092 \$	5,693

(i) Includes a long-term receivable from the sale of the transmission line in Dominican Republic as well as advances related to the CER certifications.

(ii) Right-of-use-asset includes rights and agreements to use land in Dominican Republic and Peru, respectively, and four office space leases, which are amortized over the term of such leases:

Right-of-Use Asset	December 31, 2024
Opening balance	\$ 2,650
Additions/(disposals)	(43 )
Accumulated Amortization	(278 )
Ending balance as of	\$ 2,329

12. Restricted Cash

	December 31, 2024	December 31, 2023
San Jacinto guarantees	\$ 1,080 \$	1,080
Ecuador guarantee	46	-
Peru guarantees and bonds	450	450
Reclamation bonds - US and Canada	-	100
Dominican Republic guarantee	3,000	3,000
	\$ 4,576 \$	4,630

(i) In addition o the amounts recorded as restricted cash described above cash in the amount of \$14.4 million and \$17.8 million held by the Company as at December 31, 2024 and 2023, respectively, is for use in the San Jacinto project and governed by the terms of the trust and the credit agreements, where the process to withdraw is considered perfunctory to the agreement, as long as the required covenants and balances are met. Therefore, as these amounts are demand deposits that are held for the purpose of meeting short-term cash commitments of the San Jacinto project, the Company considers them as available cash, since they are available for current use.

Notes to the Consolidated Financial Statements December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

13. Construction in Progress

		2024			2024
	December 31,	Transfers			Transfers to	December 31,
	2023	from PPE (1)	2024 Activity		PP&E	2024
San Jacinto improvements	\$ 25 \$		- \$	664 \$	(497 ) \$	192
HSJM	579			25	-	604
Canoa 1 Improvement (i)	3,531	4,172		1,674	(5,172 )	4,205
	\$ 4,135 \$	4,172 \$		2,363 \$	(5,669 ) \$	5,001

(i) Improvements to the Canoa 1 solar started in 2023 were completed in 2024. Transfers from PPE consist of over 40,000 PV solar panels with book value of \$5,172 and accumulated depreciation of \$1,000, replaced by newer technology. These panels are to be used in a future expansion of the solar park with expected economic benefits that exceeds its carrying value.

					2023
	December 31,	2023			Transfers to	December 31,
	2022	Write-off		2023 Activity	PP&E	2023
San Jacinto improvements	\$ 38 \$		- \$	(13 ) \$	- \$	25
Vista Hermosa Solar Park I and II (i)	9,298			1,366	(10,664 )	-
HSJM	46			533	-	579
Canoa Improvement (ii)	-			3,531		3,531
Others	516			(516 )	-	-
	\$ 9,898 \$		- \$	4,901 \$	(10,664 ) \$	4,135

14. Property, Plant and Equipment, net

The following is a summary of the activity related to the Company's PP&E:

							2024
	December 31,			Transferred	2024		Transfers		December 31,
		2023		to CIP	Activity		from CIP		2024
San Jacinto geothermal project	\$	547,001 \$		- \$	349 \$		497 \$		547,847
Generación Andina hydroelectric projects		64,804		-	109		-		64,913
Canchayllo hydroelectric project		10,365		-	53		-		10,418
Canoa 1 solar project		37,283		(5,172 )	81		5,172		37,364
Vista Hermosa Solar Park, I and II		11,205		-	69		-		11,274
Accumulated depreciation		(299,886 )		1,000	(26,366 )		-		(325,252 )
Capital spares		6,115		-	(2 )		-		6,113
	\$	376,887 \$		(4,172 ) \$	(25,707 ) \$		5,669 \$		352,677

	2023
		December 31, 2022		2023 Acquisitions		2023 Activity		Transfers from CIP		December 31, 2023
San Jacinto geothermal project	\$	550,765 \$		(5,747 ) \$		1,983 \$			- \$	547,001
Generación Andina hydroelectric projects		64,382		-		422		-		64,804
Canchayllo hydroelectric project		10,276		-		89		-		10,365
Canoa 1 solar project		37,119		-		164		-		37,283
Vista Hermosa Solar Park, I and II		-		-		541		10,664		11,205
Accumulated depreciation		(279,470 )		5,747		(26,163 )		-		(299,886 )
Capital spares		6,066		-		49		-		6,115
	\$	389,138 \$		- \$		(22,915 ) \$		10,664 \$		376,887

PP&E assets currently in operation are being depreciated on a straight-line basis over the remaining term of their estimated useful lives, detailed in Note 3 (o).

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

15. Intangible Assets

	December 31,	2024	Impairment	2024	December 31,
	2023	Activity	(viii)	Amortization	2024
San Jacinto transmission assets (i)	\$ 2,721 \$	-		\$ (209 )\$	2,512
Generación Andina PPA (ii)	15,740	-		(986 )	14,754
Canchayllo PPA (ii)	1,790	-		(163 )	1,627
Canoa 1 PPA (iii)	12,883	-		(606 )	12,277
Canoa 1 - other intangibles	671	24		(26 )	669
Assets under development, Canoa (iv)	948	-		-	948
Assets under concession, San Jose de Minas (v)	14,335	(2 )		(566 )	13,767
Assets under development, San Jose de Minas
(vi)	1,026		(78 )		948
HSJM PPA (vii)	4,900		(1,400 )	(160 )	3,340
	\$ 55,014 \$	22 \$	(1,478 )\$	(2,716 )\$	50,842

(i) Balance represents the transmission assets for the San Jacinto project donated to the Nicaraguan utility company, ENATREL in December 2011 which are amortized over 25 years.

(ii) Balances represent the fair values of the Canchayllo and Generación Andina PPAs recognized as intangible assets on acquisition which are amortized over the 20-year life of the PPA.

(iii) Fair value assigned to Canoa 1 PPA upon acquisition, which is amortized over the remaining life of the PPA.

(iv) Balance represents the fair values assigned upon acquisition to other assets under development in Dominican Republic. (v) Carrying value of HSJM's plant and equipment, which will be transferred to the government at the end of the contract, and is amortized over the 40 years term of the concession.

(vi) Fair value assigned upon acquisition to a project currently under development and partially impaired in 2024.Note 16

(vii) Fair value assigned to HSJM's PPA upon acquisition, which is amortized over the remaining life of the PPA.

(viii) In Q4 2024 the Company performed an impairment assessment of its assets and determined that an impairment of \$5.3 million was required for the Ecuadorian CGU . Accordingly, an impairment charge of \$3.8 million was allocated first to Goodwill and then the remaining amount on a pro-rata basis to the other assets. Key assumptions underlying recoverable amounts are described in Note 16 Goodwill and impairment of assets.

16. Goodwill and Impairment of Assets

The Company reported Goodwill from the business combinations of 2022 a follows:

	HSJM (1)	Canoa	Total
As at December 31, 2023 \$	3,800 \$	8,555 \$	12,355
Impairment loss \$	(3,800 ) \$	- \$	(3,800 )
As at December 31, 2024 \$	- \$	8,555 \$	8,555

The Company conducts annual impairment testing, which includes Goodwill. The impairment testing considered grouping Goodwill with the other components of the CGU's carrying value, following the FVLCD calculation. The recoverable amount of the CGUs was based on a FVLCD method determined by estimating future net cash flows on a discounted basis.

Factors assessed by management in determining the impairment testing include the following:

• Future production and pricing in connection to the relevant power purchase agreements

• and planned expansions
• Relevant operating costs,

• Capital expenditures,

• Terminal value assessment, and

• Discount rates (post tax) as follows:

San Jacinto (Nicaragua)		Generacion Andina (Peru)			Canchayllo (Peru)		Canoa (Dominican Rep.)	HSJM (Ecuador)		Panama	Panama
2024	2023	2024	2023	2024	2023	2024	2023	2024	2023	2024	2023
11.2 %	13.0 %	8.4 %	8.9 %	8.5 %	8.9 %	11.6 %	11.0 %	13.4 %	11.1 %	8.4 %	8.9 %

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

During Q4 2024, management engaged various stakeholders to determine the viability of restarting the halted construction in progress for the expansion in Perlabi. It was determined that based on the current socio-political environment of Ecuador, the expected construction and launch date of the canal expansion was to be deferred. Additionally, due to incremental country risk premium, the post tax discount rate used as input in the forecasted discounted cash flows increased from 11.1% to 13.4% further impacting the recoverable amount of the CGU comprised of the operating company HSJM (with no indication of impairment) and the Ecuadorian parent company.

Accordingly, an impairment charge of \$5,278 million was required for the period ending December 31, 2024 to be allocated first to Goodwill (\$3.8 million) and the remaining \$1.474 million was allocated on a pro rata basis to the rest of intangible assets of the Ecuadorian CGU.

After the impairment recognition, the fair value of the Ecuadorian CGU approximates its net carrying value. A hypothetical increase of 5% on the discount rate used to calculate recoverable value, will trigger and additional \$1.0 million impairment in this CGU. The same impact would have a continued decline of 6% in average production for the next 30 years. On the other hand, a 5% increase on average production over the next 30 years or a 5% decrease in the discount rate, will trigger an impairment reversal of \$1.0 million.

For the Nicaraguan CGU, the Company determined that a 16.7% increase in the discount rate used or a sustained decrease of 11% of the production forecasted for the next 15 years, would approximate FVLCD of the CGUs to their carrying value, as of December 31, 2024.

For Generacion Andina in Peru, the Company determined that a 9.6% increase in the discount rate used or a sustained decrease of 4% of the production forecasted for the next 15 years, would approximate FVLCD of the CGUs to their carrying value, as of December 31, 2024.

For the Canchayllo CGU, the Company determined that a 31.8% increase in the discount rate used or a sustained decreased of 16% of the production forecasted for the next 10 years, would approximate FVLCD of the CGUs to their carrying value, as of December 31, 2024.

For Canoa, the Dominican Republic CGU, the Company determined that a 27.9% increase in the discount rate used, or a sustained decreased of 18% of the production forecasted for the next 30 years, would approximate FVLCD of the CGUs to their carrying value, as of December 31, 2024.

Forthe Panamanian CGU, the Company determined that a 11.1% increase in the discount rate used, or a sustained decreased by 5% of the production forecasted for the next 30 years, would approximate FVLCD of the CGUs to their carrying value, as of December 31, 2024.

17. Accounts Payable and Accrued Liabilities

	December 31, 2024	December 31, 2023
Trade payables & Other accrued liabilities	\$ 10,093 \$	11,965
Construction payables	-	21
Construction accrued liabilities	306	626
Share-based compensation liability	303	226
Interest payable	1,715	595
Income taxes and other tax payable	4,703	1,645
	\$ 17,120 \$	15,078

Notes to the Consolidated Financial Statements December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

18. Long-term Debt, net

				Generación
			San Jacinto	Andina		Canoa 1	HSJM
	Green Bond		Debt	Debt	APG Debt	Debt	Debt	Total
Loans and other borrowings –
December 31, 2023	\$	- \$	93,765 \$	19,470 \$	22,800 \$	31,674 \$		4,670 \$172,379
Proceeds from loan	\$ 175,000							175,000
Accrued interest expense	-		-	1,645	-	-	-	1,645
Deferred transaction costs	(6,079 )		-	-	-	-	-	(6,079 )
Accretion of deferred transaction costs
and debt discount	100		540	-	445	165	-	1,250
Repayments of debt principal			(10,000 )	(2,071 )	(950 )	(1,621 )	(1,204 )	(15,846 )
Loans and other borrowings –
December 31, 2024	\$ 169,021 \$		84,305 \$	19,044 \$	22,295 \$	30,218 \$		3,466 \$328,349
Current	\$	- \$	10,000 \$	2,092 \$	950 \$	1,770 \$		1,455 \$ 16,267
Non-current	169,021		74,305	16,952	21,345	28,448	2,011	312,082
Unamortized debt discount	5,979		2,795	15,760	1,455	1,140	-	27,129
Principal balance	\$ 175,000 \$		87,100 \$	34,804 \$	23,750 \$	31,358 \$		3,466 \$355,478
Fair value as of December 31,2024 (i)	176,370		93,531	16,589	21,911	29,558	3,115	164,704
							7.95%
	9.5%		11.96%	No	8.75%	7.00%	(fixed)
	(fixed)		(variable)	interest	(fixed)	(fixed)	10.80%
Annual Interest rate							(variable)
Maturity dates	12/3/2029		9/15/2036	6/15/2038	6/5/2028	9/30/2037 7/25/2028

(i) Fair value is calculated based on discounted future cash flow of debt service using the rates published by the Central bank in each country the debt is held, for similar loans.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

		Year Ended
	December 31, 2024		December 31, 2023
San Jacinto Debt
Facility
Interest paid & recorded as financing cost		11,574	12,691
Accretion recorded as financing cost		540	597
Generación Andina Debt
Interest paid & recorded as financing cost		1,646	1,678
APG Debt
Interest paid & recorded as financing cost		2,185	2,213
Accretion recorded as financing cost		445	445
Green Bond			-
Interest paid & recorded as financing cost		1,247
Accretion recorded as financing cost		100	-
Canoa Debt
Interest paid & recorded as financing cost		2,300	2,403
Accretion recorded as financing cost		165	172
SJM Debt
Interest paid & recorded as financing cost		401	476
Other
Interest paid & recorded as financing cost		484	(128 )
Total
Interest recorded as financing cost	\$	19,837 \$	19,333
Accretion recorded as financing cost		1,250	1,214

(i) Summary of Senior Secured Green Bond Agreement

On December 3, 2024, the Company settled a private placement of USD 175 million senior secured green bonds. The Green Bonds have a tenor of five years and a fixed coupon rate of 9.5% percent per annum, with interest payable in semi-annual installments. The Green Bonds includes a tap feature, allowing the Company to access up to an additional \$50 million in funding for potential future uses.

Under the terms of the Green Bonds, the Company is required to comply with the following financial covenants at the end of each interim and annual reporting period:

• Debt Service Coverage Ratio (>= 1.75:1)
• Minimum liquidity >= \$15.0 million

For the period ending December 31, 2024, while certain third party debts have not been settled ("Existing Debt"), the Company is allowed to adjust DSCR calculation so that all Debt Service related to the Existing

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

Debt shall be excluded from the calculation whereas the Debt Service shall be adjusted to include Debt Service related to the initial issue amount of the Green Bonds, pro forma, annualized for the period.

As of December 31, 2024, the Company is in line with all the covenants related to the Green Bonds and there is no indication that it may have difficulties complying with the covenants when they will be tested at the end of the next reporting period.

(ii) Summary of San Jacinto Credit Agreement ("San Jacinto Credit Agreement")

During the first part of 2023 the interest rate on the refinanced debt facility was LIBOR plus 7%. As at December 31, 2024,in the absence of LIBOR, the interest rate is 90-day SOFR plus 7.01% index spread, resulting in 11.96% for Q4 2024, whereas the effective interest rate was estimated to be 12.94% for the twelve months ended December 31, 2024.

Under the terms of the agreement, which has a carrying amount of \$87,100 (2023-\$97,100) PENSA is required to comply with the following financial covenants at the end of each interim and annual reporting period:

• Debt Service Coverage Ratio (>1.40:1)
• Debt to Assets Ratio (Financial Debt to total Assets < 50%)

As of December 31, 2024, PENSA is compliant with all the financial and operational covenants related to San Jacinto Credit Agreement the which has been repaid in full as of January 15, 2025 ( Note 28).

(iii) Summary of Andean Power Generation Ltd. (BVI) ("APG") Credit Agreement ("APG Credit Agreement")

The APG debt has an 8.75% fixed annual interest rate, payable semi-annually and a term of 8 years. Repayment of the principal occurs in instalments with various amounts due throughout the term of the loan, and \$20.2 million due on maturity.

Under the terms of the agreement, which has a carrying amount of \$23,750 (2023-\$24,700) APG is required to comply with the following financial covenants at the end of each interim and annual reporting period:

• Debt Service Coverage Ratio (>1.05:1)

As of December 31, 2024, APG is compliant with all the financial and operational covenants related to this Credit Agreement and has communicated to the lender its intention to repay in full the existing debt in the next reporting period. See Note 28 for details on the extinguishment of this debt.

As of December 31, 2024, the Company is compliant with all covenants related to this Credit Agreement the which has been repaid in full as of January 8, 2025 ( Note 28).

(iv) Summary of Generación Andina Credit Agreement ("GA Credit Agreement")

As at December 31, 2024, the Generación Andina ("GA") loans bear no interest. No interest will be charged during the life of the loan, except for default interest on any overdue amount. The loan is payable in 36 semi-annual instalments, ending June 15, 2038, the termination date.

Under the terms of the agreement, which has a carrying amount of \$19,672 (2023-\$20,079) GASAC is required to comply with the following financial covenants at the end of each interim and annual reporting period:

• Debt Service Coverage Ratio (>1.1:1)

As of December 31, 2024, GASAC is in line with all the covenants related to this Credit Agreement and there is no indication that it may have difficulties complying with the covenants when they will be tested at the end of the next reporting period.

(v) Summary of Canoa 1 Credit Agreement ("Canoa 1 Credit Agreement")

The Canoa 1 loan has a term of 17 years, a 7% fixed interest rate, and requires quarterly payments of principal and interest.

Under the terms of the agreement, which has a carrying amount of \$30,442 (2023-\$31,846) Emerald is required to comply with the following financial covenants at the end of each interim and annual reporting period:

• Debt Service Coverage Ratio (>1.20:1)
• Financial Debt to Equity Ratio (< =85:15)

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

As of December 31, 2024, Emerald is in line with all the covenants related to this Credit Agreement and there is no indication that it may have difficulties complying with the covenants when they will be tested at the end of the next reporting period.

(vi) Summary of HSJM Credit Agreement

HSJM has two credit facilities which are due on May 7, 2026 and July 25, 2028. These loans have a fixed interest rate (7.95%) and variable (9.26% as of December 31, 2023), respectively and require monthly payments of principal and interest. There are no covenants from these credit facilities. These two credit agreements have been repaid in full as of January 8, 2025 ( Note 28).

19. Share Capital

	Number of Shares Authorized, Issued and Fully Paid	Number of Shares Reserved for Issue Under LTIP (RSU.DSU)	Number of Shares Reserved for Issue Under Stock Options (Exercisable)
Balance at January 1, 2023	21,025,775	200,000	148,000
Stock options vested	-	-	40,000
Stock options vested	-	-	-
Shares issued on exercise of stock options	60,000	-	(60,000 )
Stock options forfeited or expired	-	-	(18,000 )
Repurchase and cancellation of shares (NCIB)(1)	(22,200 )	-	-
Balance at December 31, 2023	21,063,575	200,000	110,000
Shares issued in connection with RSUs vested	15,067	(15,067 )	-
Stock options vested	-	-	57,943
Repurchase and cancellation of shares (NCIB)(1)	(23,600 )	-	-
Balance at December 31,2024	21,055,042	184,933	167,943

1. During the year ended December 31, 2024, and 2023, the Company purchased and cancelled 23,600 shares and 22,200 shares, respectively under Normal Course Issuer Bid program.

(i) Stock options

The Company's Omnibus Long-Term Incentive Plan (the "LTIP") adopted in June 2012 and most recently amended and approved in June 2024, provides that stock options may be granted to directors, senior officers, employees and consultants of the Company or any of its affiliates and employees of management companies engaged by the Company. The LTIP was amended to convert the limit on the number of common shares in the capital of the Corporation issuable under the LTIP, from a rolling limit of 7.5% of the issued and outstanding common shares to a fixed number of 1,000,000 common shares (representing 4.7% of the issued and outstanding common shares as of the amendment date). Options granted under the LTIP are for a contractual term not to exceed five years from the date of their grant, and vesting is determined by the Company's Board.

Stock options granted during the year ended December 31, 2024 and in previous periods were valued using pricing models. Where relevant, the expected life used in the model was adjusted based on management's best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioural considerations. Volatility is estimated based on the historical volatility of the Company's common shares. Inputs into the model are as follows:

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

Options Series	Grant date	Grant Date Share Price (CDN)	Exercise Price (CDN)	Volatility	Expected Life	Risk-Free Interest Rate	Expected Dividend Yield	Revised Forfeiture Percentage
(18) (a)	August 9, 2021	\$ 18.44 \$	18.44	46%	4.00	0.88%	4.20%	0%
(19) (a)	March 23, 2022	\$ 17.45 \$	17.45	25%	4.00	2.20%	4.33%	0%
(20) (a)	April 1, 2022 \$	16.90 \$	16.98	25%	4.00	2.46%	4.44%	0%
(21) (a)	June 28, 2022 \$	20.07 \$	19.80	25%	4.00	3.24%	3.81%	0%
(22) (b)	August 10, 2023	\$ 14.77 \$	14.77	30%	5.00	3.91%	5.40%	0%
(23) (b)	Febraury 9, 2024	\$ 13.10 \$	13.10	27%	4.00	3.73%	6.11%	0%
(a)	Series 18 to 21 vest 25% immediately and 25% on each one-year anniversary thereafter.

(b) Series 22 vests 33% on each one-year anniversary after grant date.

On February 9, 2024 the Company granted 9,271 options to certain officers, with a three year vesting period and exercise price of \$13.10 (CAD). Options were valued using a Black-Scholes pricing model. For the periods ended September 30, 2024 and 2023, the Company recognized shared-based compensation expense associated with options, with a corresponding increase in contributed surplus, of \$0.3million.

The following table sets out activity with respect the Company's outstanding stock options:

	Weighted Average	Weighted Average
	Year ended	Exercise Price	Year ended	Exercise Price
	December 31,2024	(CDN)	December 31,2023	(CDN)
Balance at beginning of year	213,828 \$	17.46	238,000 \$	16.36
Granted	9,271	13.10	53,828	14.77
Exercised	-	-	(60,000)	9.93
Forfeited	-	-	(18,000)	13.50
Ending balance	223,099 \$	17.28	213,828 \$	17.46

The table below summarizes the information related to stock options outstanding and exercisable as at December 31, 2024:

	Outstanding Options		Exercisable Options
		Weighted
		Average	Weighted
	Number of	Remaining	Average	Number of	Weighted Average
	Options	Contractual Life	Exercise Price	Options	Exercise Price
Range \$CDN	Outstanding	(Years)	(\$CDN)	Outstanding	(\$CDN)
0.00 - 99.99	223,099	2.28 \$	17.28	167,943 \$	18.00

For the years ended December 31, 2024 and 2023, the Company recognized shared-based compensation expense associated with options, with a corresponding increase in contributed surplus, of \$0.3 million in each year.

(ii) Restricted Share Units ("RSUs")

On February 9, 2024, the Company granted 13,570 RSUs to certain officers, with a three years vesting period starting on the first anniversary of the grant.

On January 31, 2023 and in August 10, 2023 the Company issued 38,100 and 8,003 RSUs, respectively, to a group of employees and a consultant, with a three-year vesting period. On July 5, 2023, of the afore-mentioned units, 2,400 were forfeited.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

	Number of
	RSUs Outstanding
Balance at January 1, 2023	-
RSUs awarded	38,100
RSU forfeited	(2,400 )
RSUs awarded	8,003
Balance at December 31, 2023	43,703
RSUs vested	(15,668 )
RSUs awarded	13,570
Balance at December 31,2024	41,605

(iii) Deferred Share Units ("DSUs")

	Number of DSUs Outstanding	Fair Value of DSU's end of period
Balance at January 1, 2023	17,248 \$		179
DSUs awarded in lieu of Directors Fees	4,332
Dividend reinvestment DSUs	1,043
Balance at December 31, 2023	22,623 \$		226
DSUs awarded in lieu of Directors Fees	8,340
Dividend reinvestment DSUs	1,782
Balance at December 31,2024	32,745 \$		303

(iv) Repurchase and cancellation of shares: Normal Course Issuer Bid (NCIB)

On August 21, 2023, the Company announced that it had received approval from the Toronto Stock Exchange to establish a normal course issuer bid program ("NCIB"). Under the NCIB, Polaris could purchase for cancellation up to an aggregate of 2,048,273 common shares in the capital of the Company during the twelve-month period commencing on August 23, 2023 and ending on August 22, 2024, representing 10% of the Company's public float as at August 21, 2023. During the year ended December 31, 2023, the Company repurchased and cancelled 22,000 common shares, for total consideration of \$214 at an average price of C\$13.21 per share.

On August 20, 2024, the Company announced that the Toronto Stock Exchange accepted its notice of intention to renew its NCIB, under which Polaris could purchase up to 2,045,613 of its common shares for a period of twelve-months commencing on August 23, 2024. During the year ended December 31, 2024, the Company repurchased and cancelled 23,600 common shares, for total consideration of \$0.2 million at an average price of C\$12.16 per share.

The calculation of basic and diluted weighted average common shares for the year ended December 31, 2024 included the impact of the cancellation of these common shares.

20. Earnings per Share

The following table summarizes the common shares used in calculating net loss per common share. Basic and diluted weighted average number of shares outstanding includes RSUs and DSUs issued by the Company.

	Year Ended
	December 31,	December 31,
	2024	2023
Total earnings attributable to owners of the Company	\$ 2,990 \$	11,744
Basic weighted average number of shares outstanding	21,155,652	21,049,775
Basic earnings per share	\$ 0.14 \$	0.56

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

	Year Ended
	December 31,	December 31,
	2024	2023
Total earnings attributable to owners of the Company	\$ 2,990 \$	11,744
Diluted weighted average number of shares outstanding	21,156,932	21,074,839
Diluted earnings per share	\$ 0.14 \$	0.56

Stock options have anti-dilutive effect in the calculation of earnings per share and therefore not included:

	Year Ended
	December 31,
	2024	December 31, 2023
Stock options - 2/09/2024 grant date	9,271	-
Stock options - 8/10/2023 grant date	53,828	53,828
Stock options - 6/28/2022 grant date	15,000	15,000
Stock options - 4/01/2022 grant date	15,000	15,000
Stock options - 3/23/2022 grant date	10,000	10,000
Stock options - 8/9/2021 grant date	120,000	120,000
Total anti-dilutive instruments	223,099	213,828

21. Non-controlling Interest

The Company owns 99.34% of Polaris Energy Corp ("PEC"), while PEC owns 95% of Cerro Colorado Corp. ("CCC"), both of which are Panamanian companies. CCC owns 90% of Cerro Colorado Power S.A., a Nicaraguan company, which holds the concession to the Casita geothermal project. Earnings attributed to the non-controlling interest owners in these subsidiaries for the year ended December 31, 2024 and 2023 were \$0.03 million.

The Company owns 83.16% of HSJM (Note 1), an Ecuadorian company which is the sole owner of the HSJM hydroelectric project. A loss of \$0.6 million was attributed to the non-controlling interest owners in HSJM for the year ended December 31, 2024 while for 2023 it was \$0.1 million. The increment in the loss attributable to NCI in Ecuador was driven by the recording of the Impairment loss described in Note 16.

22. Related Party Transactions.

The following amounts related to transactions and compensation of key management and the Company's Directors:

	Year Ended
	December 31, 2024		December 31, 2023
Salaries and benefits	\$ 1,186 \$		1,209
Share-based payment compensation	130		144
DSUs	75		42
Total key management compensation	\$ 1,391 \$		1,395

23. Commitments

The Company enters into agreements for geothermal concessions, which minimum annual payment requirements are summarized as follows:

	December 31, 2024
No later than one year	\$	30
For years 2 - 5		120
Thereafter		300
Total commitments for expenditures	\$	450

Notes to the Consolidated Financial Statements December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

24. Leases

The following table is a summary of the carrying amounts of the Company's lease liabilities measured at the present value of the remaining lease payments that are recognized in the Consolidated Statements of Financial Position as of:

	Year ended December 31, 2024
Opening balance		2,745
Lease payments		(427 )
Contract change adjustment		51
Amortization of discount		207
Ending balance as of	\$	2,576

Lease liabilities included within current and long-term liabilities in the Consolidated Statements of Financial Position:

Lease Obligation	December 31, 2024
Lease obligation, Current	\$ 428
Lease obligation, Long-term	2,148
Ending balance as of	\$ 2,576

25. Income Taxes

(a) Recognized deferred tax expense/(recovery)

The Company has recorded the following deferred tax expense / (recovery) for the years ended December 31, 2024 and 2023:

	December 31,	December 31,
	2024	2023
Current tax expense
Current period	\$ 3,512 \$	388
Deferred tax expense
Origination and reversal of temporary differences	(4,163)	(3,217)
Change in tax rates	50	(1)
Change in unrecognized deductible temporary differences	(839)	(2,740)
Other	108	136
Total income tax (benefit) expense from continuing operations	\$ (1,332) \$	(5,434)

The actual income tax provision differs from the expected amount calculated by applying the Canadian combined federal and provincial corporate tax rates to earnings and comprehensive earnings before income tax. These differences result from the following:

	December 31,	December 31,
	2024	2023
Earning and comprehensive earnings before income tax	\$ 847 \$	6,365
Statutory income tax rate	26.50%	26.50%
Expected income tax	224	1,687
Increase (decrease) resulting from:
Non-taxable items	(464)	(39)
Change in unrecognized deferred tax assets	(839)	(2,740)
Change in tax rates and rate differences	69	(1)
Effect of tax rate in foreign jurisdictions	(1,088)	(5,154)
Expiration of tax attributes	42	1,469
Foreign exchange differences	2,074	(592)
Other	(1,458)	(200)
Prior period tax adjustment	108	136
Income tax (benefit) expense	\$ (1,332) \$	(5,434)

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

(b) Recognized deferred tax assets and liabilities

Deferred tax assets are attributable to the following:

	December 31,	December 31,
	2024	2023
Property, plant and equipment	\$ 11,104 \$	9,935
Deferred charges	24,880	24,191
Other	225	82
Lease obligation	630	713
Capital losses	828	481
Non-capital losses	345	39
Deferred tax assets	38,012	35,441
Set off of tax	(31,213)	(28,797)
Net deferred tax assets	\$ 6,799 \$	6,644

Deferred tax liabilities are attributable to the following:

	December 31, 2024	December 31, 2023
Property, plant and equipment	\$ (67,060 ) \$	(70,922 )
Right-of-use assets	(604 )	(678 )
Intangibles	(10,902 )	(9,946 )
Investment in Polaris Energy Peru Corp.	(481 )	(481 )
Long-term debt	(6,680 )	(6,006 )
Deferred tax liabilities	(85,727 )	(88,033 )
Set off of tax	31,213	28,797
Net deferred tax liabilities	\$ (54,514 ) \$	(59,236 )

(c) Movement in deferred tax balances during the year

	Net Balance at December 31, 2023	Recognized in Profit or Loss	Net Balance at December 31, 2024
Property, plant and equipment	\$ (60,987) \$	5,032 \$	(55,955)
Intangibles	(9,946)	(956)	(10,902)
Right-of-use assets	(678)	74	(604)
Deferred costs	24,191	689	24,880
Unrealized FX and Other	83	143	226
Lease obligation	713	(84)	629
Capital losses	480	347	827
Non-capital losses	39	306	345
Investment in UEG	(481)	-	(481)
Long-term debt	(6,006)	(674)	(6,680)
Net tax assets (liabilities)	\$ (52,592) \$	4,877 \$	(47,715)

(d) Unrecognized deferred tax assets

Deferred tax assets have not been recognized in respect of the following items because it is not probable that future taxable profit will be available against which the Company can utilize the benefits.

	December 31,	December 31,
	2024	2023
Deductible temporary differences	\$ 9,586 \$	39,916
Tax losses	182,414	267,329
	\$ 192,000 \$	307,245

Tax losses include capital losses that do not expire as well as net operating losses that expire between 2025 and 2043. Under the tax laws related to the commercial production of electricity from renewable resources, the Company's Nicaraguan subsidiary was granted a tax-free holiday for a period of 10 years, with a subsequent extension of 2 years, which ended in February 2024 for the Unit 3, will end in March 2025 for Unit 4, and for the

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

Binary Unit will end December 31, 2032. Net operating losses incurred during the tax-free holiday cannot be used to offset taxable income after expiry of the holiday and as such no deferred tax asset has been recognized for these losses nor are they included in the unrecognized deferred tax assets disclosed above.

Deferred tax assets have been recognized to the extent that it is probable that taxable income will be available against which the deductible temporary difference can be utilized. The Company has recognized deferred tax assets in the amount of \$6.8 million (2023 - \$6.6 million) the utilization of which is dependent on future taxable profits in excess of the profits arising from the reversal of existing temporary differences. The recognition of these deferred tax assets is based on taxable income forecasts that incorporate existing circumstances that will result in taxable income against which net operating losses can be utilized.

26. Financial Instruments and Risk Management

(a) Fair value of financial assets and liabilities

IFRS requires disclosure about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The following are the three levels of the fair value hierarchy:

• Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.
• Level 2 Inputs other than quoted prices that are directly or indirectly observable for the asset or liability.
• Level 3 Inputs that are not based on observable market data.

As at December 31, 2024 and 2023, respectively, the carrying amounts of accounts receivable, restricted cash, accounts payable and accrued liabilities and current portion of long-term debt are measured at fair value or approximate fair value due to the short term to maturity, and therefore classified as Level 1.

The fair value of long-term debt approximates carrying value. The carrying value of the long-term debt is net of unamortized transaction costs and debt discounts further explained in Note 18.

All the assets and liabilities that the Company has identified as financial assets and financial liabilities are measured at fair value through the Statement of Profit or amortized costs under IFRS Financial Instruments. The Company currently has no financial assets and financial liabilities to be measured at fair value through the Statement of Comprehensive Income.

(b) Financial risk management

The Company is exposed to financial risks arising from its financial assets and liabilities. The financial risks include market risks relating to interest rates, foreign exchange rates and commodity prices.

Interest rate risk

PENSA Debt Facility bears interest at 90-day SOFR plus 6.75%. The total rate as at December 31, 2024, was 11.9%. The Company determined that a hypothetical 10 basis point increase in the 90-day SOFR would have resulted in an increase of \$0.1 million in financing costs for the year ended December 31, 2024.

Currency risk

The Company operates internationally and is exposed to risks from changes in foreign currency rates. The functional currency of the Company is the US dollar and currently most of the Company's transactions are denominated in US dollars. Further, the Company translates significant amounts received in local currency to US dollars immediately. As at December 31, 2024 and 2023, the Company had cash and accounts payable of CDN\$(178,169) and CDN\$2,289,352, respectively. The Company determined that a 10% change in the Canadian dollar against the US dollar would have impacted total earnings and comprehensive earnings by \$(0.0) million for the year ended December 31, 2024.

As at December 31, 2024, and 2023, the Company had current assets and accounts payable of PEN\$ 4,383,433 and PEN\$2,335,323, respectively held in its Peruvian subsidiaries. The Company determined that a 10% change in

Notes to the Consolidated Financial Statements December 31, 2024 and 2023 (expressed in thousands of United States dollars unless otherwise noted)

the Peruvian Soles against the US dollar would have impacted total loss and comprehensive loss by \$0.1 million for the year ended December 31, 2024.

As at December 31, 2024, and 2023, the Company had the Company had current assets and accounts payable of DOP\$36,053,339 and DOP\$54,234,612 respectively, held in its Dominican Republic subsidiaries. The Company determined that a 10% change in the Dominican Republic peso against the US dollar would have impacted total loss and comprehensive loss by \$0.1 million for the year ended December 31, 2024.

The Company does not enter into any foreign exchange contracts to mitigate this risk.

Commodity prices

The Company's commodities consist of power produced and CERs earned. The Company is not exposed to commodity price risk with respect to the power it produces as 97% of the power currently produced is sold under the terms of a PPA which establishes a fixed price and escalator.

The prices of CERs have fluctuated widely during recent years and are determined by economic and geopolitical factors. Any movement in CER prices could have an effect on the Company's consolidated financial statements.

Credit risk

The Company is exposed to credit risk with respect to amounts receivable from its customers. Credit risk is the potential loss from the customer failing to perform payment of the amount receivable, defined in the invoice. The Company manages credit risk with policies and procedures for customer analysis, exposure measurement, and exposure monitoring and mitigation.

The Company considers that "default" occurs when the account receivable balance is 90 days past due, from the date of payment stated in the invoice.

Once a balance receivable has been identified as in default, the Company assesses the alternatives to recover such balances, with reasonable effort. If the Company concludes the balances cannot be recovered, the amounts are then written off.

In estimating expected credit losses on trade receivables, the Company has estimated the probability of default to be 0.1% based on the Company's historical default rates, as the Company does not expect these rates to significantly increase in the future. Historically, the Company has not suffered losses for balances identified as in default and does not expect to incur significant losses in the future due to the nature of its customers (distribution utilities). The Company applies the simplified approach to assessing expected credit losses for trade receivables, whereby the loss allowance for the account receivable is measured at an amount equal to the lifetime expected credit losses. The Company shall recognize in the statements of earnings, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

From the credit risk assessment performed during the year, the Company has concluded that exposure to credit risk related to the amounts receivable from customers is not material, as of December 31, 2024.

The Company is also exposed to credit risk with respect to its amounts of cash and cash equivalents. The Company deposits its cash with reputable financial institutions, mostly based in North America, for which management believes the risk of loss to be remote.

Liquidity risk

Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they become due. The Company manages liquidity risk by ensuring that it has sufficient cash, credit facilities and other financial resources available to meet its obligations. The Company forecasts cash flows for a period of 12 months to identify financial requirements. These requirements are met through a combination of cash flows from operations, credit facilities and accessing capital markets.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

The following are maturities for the Company's financial liabilities as at December 31, 2024:

	Less than 1		More than 5
	Year	1-3 Years	4-5 Years	Years	Total
Accounts payable and accrued liabilities \$	17,120 \$	- \$	- \$	- \$	17,120
Debt, current and long-term (i)	15,757	30,412	394,147	90,162	530,478
Interest obligations	48,710	91,273	81,110	24,863	245,956
Lease liabilities	428	785	828	535	2,576
\$	82,015 \$	122,470 \$	476,085 \$	115,560 \$	796,130

The following are maturities for the Company's financial liabilities as at December 31, 2023:
	Less than 1				More than 5
		Year		1-3 Years		4-5 Years		Years		Total
Accounts payable and accrued liabilities \$		15,078 \$			- \$		- \$		- \$	15,078

Accounts payable and accrued liabilities \$	15,078 \$	- \$	- \$	- \$	15,078
Debt, current and long-term	15,825	32,614	46,585	101,300	196,324
Interest obligations	16,576	28,329	21,634	33,030	99,569
Lease liabilities	404	897	806	637	2,744
\$	47,883 \$	61,840 \$	69,025 \$	134,967 \$	313,715

As at December 31, 2024, the Company is in compliance with all of its covenants.

27. Capital Management

The Company's capital structure is comprised of net long-term debt, as further disclosed in Note 18, and shareholders' equity (consisting of issued capital and contributed surplus offset by accumulated deficit). The Company's objectives when managing its capital structure are to:

• i) maintain financial flexibility to preserve the Company's access to capital markets and its ability to meet its financial obligations; and
• ii) finance internally generated growth as well as potential acquisitions.

In order to facilitate the management of capital, the Company prepares annual expenditure budgets, which are updated as necessary and are reviewed by the Company's Board.

In preparing its budgets, the Company considers externally imposed capital requirements pursuant to the terms of the PENSA Debt Refinancing Agreements, the loan agreements for the Canchayllo and GA projects, the Canoa Debt agreement and the senior secured green bond agreement (Note 18). These externally imposed capital requirements will affect the Company's approach to capital management. The Company's externally imposed capital requirements include restrictions on the use of revenue from some projects and from the proceeds of the green bond, maintaining minimum debt service coverage and solvency ratios for PENSA, SJPIC, EGECSAC, GASAC, Emerald and the Company.

28. Subsequent Events

Early repayment of Debt

In January 2025 the Company settled four (4) of its outstanding debts listed on Note 18. The early settlement was part of the terms and purpose of the Green Bonds issued on December 3, 2024 and part of the Company's debt optimization strategy to reduce borrowing costs.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023

(expressed in thousands of United States dollars unless otherwise noted)

The early settlements were executed through the repayment of the outstanding principal amounts, plus accrued interest and a prepayment penalty, in accordance with the debt agreements.

	San Jacinto Credit Agreement Note 18 (ii)		APG Credit Agreement Note 18 (iii)		HSJM Credit Agreement 1 Note 18 (vi)		HSJM Credit Agreement 2 Note 18 (vi)		Total
Date of debt repayment in full	1/15/2025		1/08/2025		1/08/2025		1/08/2025
Outstanding principal amount	87,100		23,750		1,917		1,473		114,240
Accrued interest	455		46		5		2		508
Prepayment penalty	4,662		1,188		-		28		5,878
Total paid	\$ 92,217 \$		24,984 \$		1,922 \$		1,503 \$		120,625
Debt carrying amount	84,326		22,322		1,917		1,473		110,038
Loss on extinguishment of debt	\$ 7,436 \$		2,616 \$			- \$	28 \$		10,078

As a result of the early settlement, the Company will recognize a loss on extinguishments of debt of approximately \$10.0 million in the first quarter of fiscal year 2025.