("Amaroq" or the "Corporation" or the "Company")
2022 Full Year Financial Results and Update
The Financial Statements and the accompanying Management Discussion and Analysis are available on the Corporation's website at www.amaroqminerals.com and will be filed under the Corporation's SEDAR profile at www.sedar.com later today. All figures are in Canadian dollars unless otherwise noted.
A remote presentation for sell-side analysts and investors will be held remotely today, at
Analysts and investors who wish to participate in the webcast are requested to register via the link here: https://brrmedia.news/AMRQ_FY22
FY 2022 Highlights
- Rebrand from AEX Gold to
Amaroq Minerals to reflect incorporation of strategic minerals portfolio and focus onGreenland . -
Completion of
£30m Capital Fundraising (circaC$46.4 million ) inLondon andIceland to accelerate development of the Company's precious metals portfolio. -
Established joint venture with strategic investor ACAM for the exploration and development of Amaroq's strategic mineral assets and receipt of initial
£18 million funding (circaC$28.5 million ), expected to close inApril 2023 . -
Listing of Icelandic Depository Receipts on the Nasdaq First North Growth Market in
Iceland . -
Updated Nalunaq Mineral Resource Estimate (MRE), prepared by
SRK Consulting (UK) Limited and announced onSeptember 6, 2022 and reported in accordance with theCanadian Institute of Mining , Metallurgy and Petroleum (CIM) Definition Standards on Mineral Resources and Mineral Reserves (May 2014 ), resulting in a Inferred Mineral Resource of 355.0 Kt @ 28.0 g/t Au for 320 Koz gold , and confirming the project within the top 2% of global deposits in terms of grade globally. Doubling of the size of the footprint of the Valley Block following 2022 Nalunaq exploration results. - Completion of most active exploration programme to date, with drilling across three projects, mineralisation expansion and discovery of new copper/gold/molybdenum mineralisation targets, in addition to completion of two new geophysical surveys in preparation for the 2023 exploration season.
Post-period Highlights
- Non-binding term sheets signed for
US$49.5 million senior secured financing package, announced inMarch 2023 , to bring forward production at Nalunaq, with completion expected in the coming months. - Preparation for 2023 field season highly advanced with additional drill rig in transit as well as other consumables in readiness for the programme to commence in early May.
- Contracts and quotes in place for camp upgrades, fuel storage, on-site assaying laboratory, and all equipment and facilities required for trial mining and processing.
-
Strengthened the team with senior hires including
Nalunaq Project DirectorAxel Schultz , a professional engineer with over 30 years' experience in the mining industry, including surface and underground equipment, construction, installations, EPC, financial and project management (EPCM).
FY 2023 Outlook
Gold Projects
- Nalunaq: Further project development to commence in
May 2023 with resource drilling along strike from the initial mining face. Site and mine preparation activities will commence shortly ahead of commencing new trial mining operations within the Mountain Block from 2024. Vagar Ridge : Additional data collection and further geological mapping and sampling aimed at constructing a robust geological and mineralisation model to inform future exploration. Ground preparation and drill readiness preparations will occur in 2023 ahead of the 2024 season.- Nanoq: Following 2022 geophysical work, the results of which are expected to be published in Q2, surface exploration will be conducted to evaluate additional structural targets as well as site preparation ahead of initial drilling in 2024.
Sava Copper Belt :
- Expansion of drilling and geological mapping programmes across observed mineralisation at Sava to two drill rigs guided by external Iron-Oxide Copper Gold (IOCG) experts.
- Incorporation of North Sava licence and additional targets in 2023 programme.
- Detailed airborne geophysical survey across Kobberminebugt licence area.
- Stendalen: Conducting of detailed magnetotellurics (MT) geophysical survey across the extension of layered intrusion, ahead of a deep stratigraphic drillhole to intersect the known Titanium and Vanadium mineralisation as well as potential Nickel sulphide mineralisation.
- Saqqaa Dyke: Concentrated drilling campaign to be conducted from the valley floor to intersect the platinum group element hosting ultramafic dyke along strike from outcropping mineralisation.
- Paatusoq: Planned reconnaissance exploration programme across Paatusoq and previously identified targets to define areas of potential economic Rare Earth and Niobium mineralisation.
Operational priorities
- Amaroq plans to conduct prefeasibility studies on renewable energy potential to determine the feasibility of using hydropower to supply Nalunaq and the nearby
South Greenland community. - Amaroq continues to work with ABD Solutions on the potential integration of autonomous vehicles at Nalunaq, with proposals for the design and offsite construction of an operations centre and associated infrastructure expected in the next twelve months.
-
The Company plans to work with a
Group Purchasing Organisation supply chain management partner to develop a strategic execution model for operating effectively in remote and logistically challenging conditions.
Eldur Olafsson, CEO of Amaroq, commented:
"2022 was a transformational year for Amaroq in terms of the repositioning of our business. We completed our most active exploration program to date, and with our partners we are planning an even more aggressive programme for this year, drilling seven targets across our gold and strategic minerals portfolio. We continue to carry out impactful surface sampling and geophysical studies, uncovering additional significant targets.
"Following our recent financing announcement, we now have the funding in place to bring Nalunaq onstream, and I look forward to providing updates as we progress with our development plans.
"We remain committed to being a responsible operator in
Selected Financial Information
The following selected financial data is extracted from the Financial Statements for the three and nine months ended December 31, 2022.
Financial Performance
Three months ended | Year endedDecember 31 | |||
2022C$ | 2021C$ | 2022C$ | 2021C$ | |
Exploration and evaluation expenses | 1,697,334 | 6,838,840 | 12,700,526 | 14,280,055 |
General and administrative | 3,203,588 | 2,641,811 | 10,150,020 | 9,703,198 |
Net loss and comprehensive loss | 4,426,345 | 9,814,256 | 21,898,963 | 24,689,239 |
Basic and diluted loss per common share | 0.02 | 0.05 | 0.11 | 0.14 |
Financial Position
As at December 31, 2022$ | As at December 31, 2021$ | |||
Cash on hand | 50,137,569 | 27,324,459 | ||
Total assets | 65,096,061 | 42,781,664 | ||
Total current liabilities | 1,210,758 | 2,100,084 | ||
Shareholders' equity | 63,227,863 | 39,968,502 | ||
Working capital | 49,472,990 | 25,542,242 |
Qualified Person Statement
The Mineral Resource Estimate was prepared by Dr
The technical information presented in this press release has been approved by James Gilbertson CGeol, VP Exploration for
Use of a Standard
The resource information included within this announcement is reported in accordance with the
Enquiries:
Eldur Olafsson, Executive Director and CEO
+354 665 2003
eo@amaroqminerals.com
+44 (0)7713 126727
ew@amaroqminerals.com
Simon Mensley
+44 (0) 20 7710 7600
+44 (0) 20 7886 2500
SI
+44 (0) 1483 413500
Camarco (Financial PR)
+44 (0) 20 3757 4980
For Company updates:
Follow @Amaroq_minerals on Twitter
Further Information:
About
Inside Information
This announcement contains inside information for the purposes of Article 7 of the
Glossary
Au | gold |
g/t | grams per tonne |
km | kilometers |
Koz | thousand ounces |
Kt | thousand tonnes |
m | meters |
MT | magnetotellurics |
oz | ounces |
t | tonnes |
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the years ended
http://www.rns-pdf.londonstockexchange.com/rns/8613U_1-2023-3-31.pdf
As at | As at | ||
Notes | 2022 | 2021 | |
$ | $ | ||
ASSETS | |||
Current assets | |||
Cash | 50,137,569 | 27,324,459 | |
Sales tax receivable | 95,890 | 51,250 | |
Prepaid expenses and others | 450,290 | 266,617 | |
Total current assets | 50,683,749 | 27,642,326 | |
Non-current assets | |||
Deposit | 27,944 | 9,805 | |
Escrow account for environmental monitoring | 5 | 427,120 | 424,637 |
Mineral properties | 6 | 85,579 | 62,244 |
Capital assets | 7 | 13,871,669 | 14,642,652 |
Total non-current assets | 14,412,312 | 15,139,338 | |
TOTAL ASSETS | 65,096,061 | 42,781,664 | |
LIABILITIES AND EQUITY | |||
Current liabilities | |||
Trade and other payables | 1,138,961 | 2,049,249 | |
Lease liabilities - current portion | 8 | 71,797 | 50,835 |
Total current liabilities | 1,210,758 | 2,100,084 | |
Non-current liabilities | |||
Lease liabilities | 8 | 657,440 | 713,078 |
Total non-current liabilities | 657,440 | 713,078 | |
Total liabilities | 1,868,198 | 2,813,162 | |
Equity | |||
Capital stock | 9 | 131,708,387 | 88,500,205 |
Contributed surplus | 5,250,865 | 3,300,723 | |
Accumulated other comprehensive loss | (36,772) | (36,772) | |
Deficit | (73,694,617) | (51,795,654) | |
Total equity | 63,227,863 | 39,968,502 | |
TOTAL LIABILITIES AND EQUITY | 65,096,061 | 42,781,664 | |
Subsequent events | 20 | ||
The accompanying notes are an integral part of these consolidated financial statements.
Approved on Behalf of the Board of Directors
(s) Eldur Ólafsson | (s) | |
Eldur Ólafsson | ||
Director | Director |
Notes | 2022 | 2021 | |
$ | $ | ||
Expenses | |||
Exploration and evaluation expenses | 13 | 12,700,526 | 14,280,055 |
General and administrative | 14 | 10,150,020 | 9,703,198 |
Loss on disposal of capital assets | 100,536 | - | |
Foreign exchange loss (gain) | (849,773) | 809,751 | |
Operating loss | 22,101,309 | 24,793,004 | |
Other expenses (income) | |||
Interest income | (239,869) | (143,759) | |
Finance costs | 15 | 37,523 | 39,994 |
Net loss and comprehensive loss | (21,898,963) | (24,689,239) | |
Weighted average number of common shares outstanding - basic and diluted | 191,575,781 | 177,098,737 | |
Basic and diluted loss per common share | 17 | (0.11) | (0.14) |
The accompanying notes are an integral part of these consolidated financial statements.
Notes | Number of common sharesoutstanding | Capitalstock | Contributed surplus | Accumulated other comprehensive loss | Deficit | Totalequity | |
$ | $ | $ | $ | $ | |||
Balance, | 177,098,737 | 88,500,205 | 2,925,952 | (36,772) | (27,106,415) | 64,282,970 | |
Net loss and comprehensive loss | - | - | - | - | (24,689,239) | (24,689,239) | |
Stock-based compensation | 10.1 | - | - | 374,771 | - | - | 374,771 |
Balance, | 177,098,737 | 88,500,205 | 3,300,723 | (36,772) | (51,795,654) | 39,968,502 | |
Balance, | 177,098,737 | 88,500,205 | 3,300,723 | (36,772) | (51,795,654) | 39,968,502 | |
Net loss and comprehensive loss | - | - | - | - | (21,898,963) | (21,898,963) | |
Share issuance under a fundraising | 9 | 85,714,285 | 46,313,551 | - | - | - | 46,313,551 |
Share issuance costs | 9 | - | (3,331,569) | - | - | - | (3,331,569) |
Options exercised | 260,000 | 226,200 | (96,200) | - | - | 130,000 | |
Stock-based compensation | 10.1 | - | - | 2,046,342 | - | - | 2,046,342 |
Balance, | 263,073,022 | 131,708,387 | 5,250,865 | (36,772) | (73,694,617) | 63,227,863 |
The accompanying notes are an integral part of these consolidated financial statements.
Notes | 2022 | 2021 | |
$ | $ | ||
Operating activities | |||
Net loss | (21,898,963) | (24,689,239) | |
Adjustments for: | |||
Depreciation | 7, 8 | 850,699 | 389,953 |
Stock-based compensation | 10.1 | 2,046,342 | 374,771 |
Loss on disposal of capital assets | 100,536 | - | |
Other expenses | 2,785 | - | |
Foreign exchange | (882.897) | 377,674 | |
(19,781,498) | (23,546,841) | ||
Changes in non-cash working capital items: | |||
Sales tax receivable | (44,640) | 11,500 | |
Prepaid expenses and others | (183,673) | 104,641 | |
Trade and other payables | (864,477) | 1,141,384 | |
(1,092,790) | 1,257,525 | ||
Cash flow used in operating activities | (20,874,288) | (22,289,316) | |
Investing activities | |||
Acquisition of mineral properties | 6 | (23,335) | - |
Acquisition of capital assets, net of deposit on order | (301,957) | (11,875,926) | |
Disposition of capital assets | 63,325 | - | |
Cash flow used in investing activities | (261,967) | (11,875,926) | |
Financing activities | |||
Shares issuance | 9 | 46,313,551 | - |
Share issuance costs | 9 | (3,331,569) | - |
Principal repayment - lease liabilities | 8 | (50,722) | (65,900) |
Exercise of stock options | 130,000 | - | |
Cash flow from financing activities | 43,061,260 | (65,900) | |
Net change in cash before effects of exchange rate changes on cash | 21,925,005 | (34,231,142) | |
Effects of exchange rate changes on cash | 888,105 | (319,398) | |
Net change in cash | 22,813,110 | (34,550,540) | |
Cash, beginning | 27,324,459 | 61,874,999 | |
Cash, ending | 50,137,569 | 27,324,459 | |
Supplemental cash flow information | |||
Deposit on order for acquisition of capital assets | - | 1,702,165 | |
Interest received | 239,869 | 143,759 | |
Additions in capital assets included in trade and other payables | - | 53,500 | |
The accompanying notes are an integral part of these consolidated financial statements.
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
These consolidated financial statements ("Financial Statements") were reviewed and authorized for issue by the Board of Directors on
1.1 Basis of presentation and consolidation
The Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Financial Statements include the accounts of the Corporation and those of its subsidiaries Nalunaq A/S, corporation incorporated under the Greenland Public Companies Act, owned at 100%.
Control is defined by the authority to direct the financial and operating policies of a business in order to obtain benefits from its activities. The amounts presented in the consolidated financial statements of subsidiary have been adjusted, if necessary, so that they meet the accounting policies adopted by the Corporation.
Profit or loss or other comprehensive loss of subsidiary set up, acquired or sold during the year are recorded from the actual date of acquisition or until the effective date of the sale, if any. All intercompany transactions, balances, income and expenses are eliminated at consolidation.
The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of measurement
The Financial Statements have been prepared on the historical cost basis.
2.2 Functional and presentation currency - Foreign currency transactions
The functional and presentation currency of the Corporation is Canadian dollars ("CAD"). The functional currency of Nalunaq A/S is CAD. The functional currency of Nalunaq A/S is determined using the currency of the primary economic environment in which the entity evolves and using the currency which is more representative of the economic effect of the underlying financings, transactions, events and conditions.
Foreign currency transactions are translated into the functional currency of the underlying entity using appropriate rates of exchange prevailing on the dates of such transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange in effect at the end of each reporting period. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the net profit or loss.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.3 Deposit on order
The deposit on order represents the sum of money disbursed to a supplier to start or continue the fulfillment of a purchase order for capital assets. This deposit will be transferred to capital assets when the asset has been completed and delivered.
2.4 Mineral properties and exploration and evaluation expenses
Mineral properties include rights in mining properties, paid or acquired through a business combination or an acquisition of assets, and costs related to the initial search for mineral deposits with economic potential or to obtain more information about existing mineral deposits.
All costs incurred prior to obtaining the legal rights to undertake exploration and evaluation on an area of interest are expensed as incurred.
Mining rights are recorded at acquisition cost or at its recoverable amount in the case of a devaluation caused by an impairment of value. Mining rights and options to acquire undivided interests in mining rights are depreciated only as these properties are put into commercial production. Proceeds from the sale of mineral properties are applied as a reduction of the related carrying costs and any excess or shortfall is recorded as a gain or loss in the consolidated statement of comprehensive loss.
Exploration and evaluation expenses ("E&E expenses") also typically include costs associated with prospecting, sampling, trenching, drilling and other work involved in searching for ore such as topographical, geological, geochemical and geophysical studies. Generally, expenditures relating to exploration and evaluation activities are expensed as incurred. Capitalization of E&E expenses commences when a mineral resource estimate has been obtained for an area of interest.
E&E expenses include costs related to establishing the technical and commercial viability of extracting a mineral resource identified through exploration or acquired through a business combination or asset acquisition. E&E include the cost of:
- establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable reserve;
- determining the optimal methods of extraction and metallurgical and treatment processes, including the separation process, for Corporation' mining properties;
- studies related to surveying, transportation and infrastructure requirements;
- permitting activities; and
- economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.
When a mine project moves into the development phase, E&E expenses are capitalized to mine development costs. An impairment test is performed before reclassification and any impairment loss is recognized in the consolidated statement of comprehensive loss.
E&E include overhead expenses directly attributable to the related activities.
The Corporation has taken steps to verify the validity of title to mineral properties on which it is conducting exploration activities and is acquiring interests in accordance with industry standards that apply to the current stage of exploration and evaluation of such property. However, these procedures do not guarantee the Corporation' title, as property title may be subject to unregistered prior agreements, aboriginal claims or noncompliance with regulatory requirements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.5 Capital assets
Capital assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of an asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Corporation and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced.
The intangible assets include software with a definite useful life. The assets are capitalized and amortized on a straight-line basis in the consolidated statement of comprehensive loss. The intangible assets are assessed for impairment whenever there is an indication that the intangible assets may be impaired.
Repairs and maintenance costs are charged to the consolidated statement of comprehensive loss during the period in which they are incurred.
Depreciation is calculated to amortize the cost of the capital assets less their residual values over their estimated useful lives using the straight-line method and following periods by major categories:
Field equipment and infrastructure related to exploration and evaluation activities | 3 to 10 years |
Vehicles and rolling stock | 3 to 10 years |
Equipment | 3 to 10 years |
Software | 3 to 10 years |
Right-of-use assets | Lease term |
Depreciation of capital assets, if related to exploration activities, is expensed consistently with the policy for exploration and evaluation expenses. For those which are not related to exploration and evaluation activities, depreciation expense is recognized directly in the consolidated statement of comprehensive loss. Assets capitalized under Construction in Progress are not depreciated as they are not available for use yet.
Depreciation of an asset ceases when it is classified as held for sale (or included in a disposal group that is classified as held for sale) or when it is derecognized. Therefore, depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.
Residual values, methods of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.
Gains and losses on disposals of capital assets are determined by comparing the proceeds with the carrying amount of the asset and are recorded in the consolidated statement of comprehensive loss.
2.6 Leases
At the commencement date of a lease, a liability is recognized to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset) is also recognized. The interest expense on the lease liability is recognized separately from the depreciation expense on the right-of-use asset.
The lease liability is remeasured upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). This remeasurement is generally recognized as an adjustment to the right-of-use asset. Leases of "low-value" assets and short-term leases (12 months or less) are recognized on a straight-line basis as an expense in the consolidated statement of comprehensive loss.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.7 Impairment of non-financial assets
Mineral properties and capital assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. Assets under Construction in Progress are subject to an annual impairment test since it they are not depreciated yet. Mineral properties and capital assets are reviewed by area of interest. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Corporations estimates the recoverable amount of the asset group to which the asset belongs.
An asset's recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or asset group is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized immediately in the consolidated statement of comprehensive loss. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal is recognized as a reduction in the impairment charge for the period.
2.8 Environmental monitoring provision
Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The Corporation is subject to laws and regulations relating to environmental matters, including land reclamation and discharge of hazardous materials and environmental monitoring. The Corporation may be found to be responsible for damage caused by prior owners and operators of its unproven mineral interests and in relation to interests previously held by the Corporation.
On initial recognition, the estimated net present value of a provision is recorded as a liability and a corresponding amount is added to the capitalized cost of the related non-financial asset or charged to consolidated statement of comprehensive loss if the property has been written off. Discount rates using a pre-tax rate that reflects the time value of money and the risk associated with the liability are used to calculate the net present value. The provision is evaluated at the end of each reporting period for changes in the estimated amount or timing of settlement of the obligation.
2.9 Taxation
Income tax expense represents the sum of tax currently payable and deferred tax.
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are substantively enacted by the date of the consolidated statement of financial position.
Deferred income taxes are provided using the liability method on temporary differences at the date of the consolidated statement of financial position between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary differences, except:
- where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable earnings; and
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized except:
- where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable earnings; and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
The carrying amount of deferred income tax assets is reviewed at each date of the consolidated statement of financial position and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each date of the consolidated statement of financial position and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the date of the consolidated statement of financial position.
Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statement comprehensive loss.
Deferred income tax assets and deferred income tax liabilities are offset if, and only if, a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to either settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.
2.10 Equity
Capital stock represents the amount received on the issue of shares. Warrants represent the allocation of the amount received for units issued as well as the charge recorded for the broker warrants relating to financing. Options represent the charges related to stock options until they are exercised. Contributed surplus includes charges related to stock options and the warrants that are expired and not yet exercised. Contributed surplus also includes contributions from shareholders. Deficit includes all current and prior period retained profits or losses and share issue expenses.
Share and warrant issue expenses are accounted for in the year in which they are incurred and are recorded as a deduction to equity in the year in which the shares and warrants are issued.
Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate to, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.
Proceeds from unit placements are allocated between shares and warrants issued on a pro-rata basis of their value within the unit using the Black-Scholes pricing model.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.11 Interest income
Interest income from financial assets is accrued, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.
2.12 Stock-based compensation
Employees and consultants of the Corporation may receive a portion of their compensation in the form of share-based payment transactions, whereby employees or consultants render services as consideration for equity instruments ("equity-settled transactions").
The costs of equity-settled transactions with employees and others providing similar services are measured by reference to the fair value at the date on which they are granted.
The costs of equity-settled transactions are recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("the vesting date"). The cumulative expense is recognized for equity-settled transactions at each reporting date until the vesting date reflects the Corporation' best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and the corresponding amount is represented in contributed surplus.
No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional amount is recognized on the same basis as the amount of the original award for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.
2.13 Loss per share
The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding options, restricted share unit and warrants, in the weighted average number of common shares outstanding during the year, if dilutive. During 2022 and 2021, all the outstanding common share equivalents were anti-dilutive.
2.14 Financial instruments
Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the financial instrument.
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial position when there is an unconditional and legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
All financial instruments are required to be measured at fair value on initial recognition. The fair value is based on quoted market prices, unless the financial instruments are not traded in an active market. In this case, the fair value is determined by using valuation techniques like the Black-Scholes option pricing model or other valuation techniques.
2.14.1 Financial assets
Financial assets are derecognized when the contractual rights to receive the cash flows from the financial asset have expired, or when the financial asset and all substantial risks and rewards have been transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires.
Financial assets are initially measured at fair value. If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset's acquisition or origination. On initial recognition, the Corporation classifies its financial instruments in the following categories depending on the purpose for which the instruments were acquired.
Amortized cost:
Financial assets at amortized cost are non-derivative financial assets with fixed or determinable payments constituted solely of payments of principal and interest that are held within a "held to collect" business model. Financial assets at amortized cost are initially recognized at the amount expected to be received, less, when material, a discount to reduce the financial assets to fair value. Subsequently, financial assets at amortized cost are measured using the effective interest method less a provision for expected losses. The Corporation's cash and escrow account for environmental monitoring are classified within this category.
Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated statement comprehensive loss.
2.14.2 Financial liabilities
A financial liability is derecognized when extinguished, discharged, terminated, cancelled or expired.
Financial liabilities measured at amortized cost
Trade and other payables are initially measured at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, financial liabilities are measured at amortized cost using the effective interest method.
2.14.3 Impairment of financial assets
Amortized cost:
At each reporting date, the Corporation assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
The expected loss is the difference between the amortized cost of the financial asset and the present value of the expected future cash flows, discounted using the instrument's original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account. Provisions for expected losses are adjusted upwards or downwards in subsequent periods if the amount of the expected loss increases or decreases.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.15 Segment disclosures
The Corporation operates in one industry segment, being the acquisition, exploration and evaluation of mineral properties. All of the Corporation' activities are conducted in
3. CHANGES IN ACCOUNTING POLICIES
3.1 New accounting standard adopted
Amendments to IAS 16 Property, plant and equipment
The IASB has made amendments to IAS 16 Property, plant and equipment, which is effective for financial years beginning on or after
3.2 Accounting standards issued but not yet effective
The Corporation has not yet adopted certain standards, interpretations to existing standards and amendments which have been issued but have an effective date of later than
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS
The preparation of these Financial Statements requires Management to make judgments and form assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. On an ongoing basis, Management evaluates its judgments in relation to assets, liabilities and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments. Actual outcomes may differ from these estimates under different assumptions and conditions. Critical judgments exercised in applying accounting policies with the most significant effect on the amounts recognized in the Financial Statements are described below.
JUDGMENTS
4.1 Impairment of mineral properties and capital assets
Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and interpretations in many cases.
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT'D)
4.1.1 Impairment of mineral properties
Determining whether to test for impairment of mineral properties requires Management's judgment, among others, regarding the following: the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed; substantive expenditure on further exploration and evaluation of mineral resources in a specific area is neither budgeted nor planned; exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; or sufficient data exists to indicate that, although a development in a specific area is likely to proceed, the carrying amount of the mineral properties is unlikely to be recovered in full from successful development or by sale.
When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset must be estimated. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs must be determined. Identifying the cash-generating units requires considerable management judgment. In testing an individual asset or cash-generating unit for impairment and identifying a reversal of impairment losses, Management estimates the recoverable amount of the asset or the cash-generating unit. This requires management to make several assumptions as to future events or circumstances. These assumptions and estimates are subject to change if new information becomes available. Actual results with respect to impairment losses or reversals of impairment losses could differ in such a situation and significant adjustments to the Corporation' assets and earnings may occur during the next period.
4.1.2 Impairment of capital assets
Determining whether to test for impairment of capital assets requires Management's judgement, among other factors, regarding the following: whether capital assets have been in use and depreciated, did market value of capital assets decline, whether net assets of the Corporation are higher than the market capitalization, was there any obsolescence or physical damage recorded to the capital assets, was there an increase to market interest rates.
When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset must be estimated. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs must be determined. Identifying the cash-generating units requires considerable management judgment. In testing an individual asset or cash-generating unit for impairment and identifying a reversal of impairment losses, Management estimates the recoverable amount of the asset or the cash-generating unit. This requires management to make several assumptions as to future events or circumstances. These assumptions and estimates are subject to change if new information becomes available. Actual results with respect to impairment losses or reversals of impairment losses could differ in such a situation and significant adjustments to the Corporation' assets and earnings may occur during the next period.
With regards to the annual impairment test on Construction in Progress, the Management has assessed that the replacement cost approach is the most appropriate for determining the recoverable value of individual assets under CIP. The Corporation has conducted the analysis based on the enquiry of the current market prices obtained from suppliers for each asset under the CIP category as well as the assessment of the recoverable value based on the general Machinery and Equipment as well as Industrial Producer Price index changes from 2022 to 2021. As a result of this analysis, the replacement value of the assets under CIP category has produced a recoverable value that was at least 15% higher than the carrying value of assets under CIP as of
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT'D)
4.2 Recognition of deferred income tax assets and the measurement of income tax expense
Periodically, the Corporation evaluates the likelihood of whether some portion of the deferred tax assets will not be realized. Once the evaluation is completed, if the Corporation believes that it is probable that some portion of the deferred tax assets will fail to be realized, the Corporation records only the remaining portion for which it is probable that there will be available future taxable profit against which the temporary differences can be utilized. Assessing the recoverability of deferred income tax assets requires Management to make significant judgment.
To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Corporation to realize the net deferred tax assets recorded at the statement of financial position date could be impacted. Significant judgment is required in determining the income tax recovery as there are transactions and calculations for which the ultimate tax determination is uncertain.
4.3 Determination of functional currency
In accordance with IAS 21 "The Effects of Changes in Foreign Exchange Rates", Management determined that the functional currency of the Corporation and its subsidiary is the Canadian dollar.
ESTIMATES AND ASSUMPTIONS
4.4 Environmental monitoring costs
The provisions for environmental monitoring costs are based on estimated future costs using information available at the financial reporting date. Determining these obligations requires significant estimates and assumptions due to the numerous factors that affect the amount ultimately payable. Such factors include estimates of the scope and cost of restoration activities, legislative amendments, known environmental impacts, the effectiveness of reparation and restoration measures and changes in the discount rate. This uncertainty may lead to differences between the actual expense and the provision. At the date of the consolidated statement of financial position, environmental monitoring costs represent Management's best estimate of the charge that will result when the actual obligation is terminated.
4.5 Restricted Share Units ("RSU")
For the purpose of determining the fair market value of restricted share unit awards a number of assumptions are required for input in the pricing model. Determining these assumptions requires significant level of estimates and Management's judgement. For equity-settled awards, assumptions must be determined at the date of the grant. Such assumptions include grant calculation date, projection period, share price at grant, exercise price, risk-free rate of interest, dividends, share price volatility and forfeitures. The uncertainty related to the choice of assumptions may lead to difference between the actual value of restricted share unit awards and its estimated fair value based on the Monte-Carlo simulation run. At the date of the consolidated statement of financial position, restricted share units award value represents Management's best estimate of awards fair value vesting at measurement dates stipulated under the RSU award contract.
5. ESCROW ACCOUNT FOR ENVIRONMENTAL MONITORING
On behalf of Nalunaq's licence holder, an escrow account has been set up with the holder of the licence as holder of the account and the Government of
2022 | 2021 | |
$ | $ | |
Balance beginning | 424,637 | 460,447 |
Effect of translation | 2,483 | (35,810) |
Balance ending | 427,120 | 424,637 |
Non-current portion - escrow account for environmental monitoring | (427,120) | (424,637) |
Current portion - escrow account for environmental monitoring | - | - |
6. MINERAL PROPERTIES
As at | Additions | As at | ||
$ | $ | $ | ||
Nalunaq - Au | 1 | - | 1 | |
Tartoq - Au | 18,431 | - | 18,431 | |
Vagar - Au | 11,103 | - | 11,103 | |
Nuna Nutaaq - Au | 6,076 | - | 6,076 | |
Anoritooq - Au | 6,389 | - | 6,389 | |
Siku - Au | - | 6,821 | 6,821 | |
Naalagaaffiup Portornga - | 6,334 | - | 6,334 | |
Saarloq - | 7,348 | - | 7,348 | |
Sava - | 6,562 | - | 6,562 | |
Kobberminebugt - | - | 6,840 | 6,840 | |
Stendalen - | - | 4,837 | 4,837 | |
North Sava - | - | 4,837 | 4,837 | |
Total mineral properties | 62,244 | 23,335 | 85,579 |
As at | Additions | As at | ||
$ | $ | $ | ||
Nalunaq | 1 | - | 1 | |
Tartoq | 18,431 | - | 18,431 | |
Vagar | 11,103 | - | 11,103 | |
Naalagaaffiup Portornga | 6,334 | - | 6,334 | |
Nuna Nutaaq | 6,076 | - | 6,076 | |
Saarloq | 7,348 | - | 7,348 | |
Anoritooq | 6,389 | - | 6,389 | |
Sava | 6,562 | - | 6,562 | |
Total mineral properties | 62,244 | - | 62,244 |
6. MINERAL PROPERTIES (CONT'D)
6.1 Nalunaq - Au
Nalunaq A/S holds the gold exploitation licence number 2003/05 on the Nalunaq property (the "Nalunaq Licence") located in
6.1.1 Collaboration agreement and project schedule
In addition, ARC,
Finally, the conditions relating to a processing plant located on the Nalunaq Licence ("Processing Plant") and a royalty payment were outlined in the 2015 Project Schedule and formalized in the processing plant and royalty agreement ("Processing Plant and Royalty Agreement") signed on
a)
- An initial purchase price of
US$1 ; -
A deferred consideration of
US$1,999,999 ("Deferred Consideration") on a pay as you go basis until the Deferred Consideration is paid in full. If only part of the Processing Plant is used, then the Deferred Consideration payable shall be reduced by an amount to be agreed by the parties to reflect the value of the part of the Processing Plant used. - The Deferred Consideration may be reduced to the extent that the Processing Plant or any part which is being used requires repairs, is not in good working condition or will not be capable of doing the work for which it was designed.
-
Nalunaq A/S may dispose or otherwise deal with the Processing Plant or any part of it at its own cost. If any disposal proceeds (defined as proceeds received minus costs of dealing with the disposal) are received, that disposal proceeds shall be paid to
AEX Gold Limited and such amount shall be deemed to be Deferred Consideration. If there are any disposal proceeds remaining after the Deferred Consideration has been paid in full, the disposal proceeds remaining may be retained by Nalunaq A/S.
b) Nalunaq A/S shall pay to
6.1.2 Government of
The Nalunaq Licence and subsequent Addendums does not have a royalty clause. However, according to the Addendum 3 of the Mineral Resources Act enacted on
6. MINERAL PROPERTIES (CONT'D)
6.1.3 Exploration commitments and exploitation milestones
After Nalunaq A/S has submitted its statements of expenses for the Nalunaq Licence for the 2017 and 2018 years, the MLSA has approved Nalunaq A/S' transition to the subsequent period (sub period 4) without a rollover of the unspent amount.
The Government of
The Government of
Failure to satisfy any of the conditions set forth in the addendums to the Nalunaq Licence may result in the MLSA revoking the Nalunaq Licence without further notice.
6.2 Tartoq - Au
6.2.1 Purchase of the Tartoq Licence
Nalunaq A/S signed on
6.2.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
6.3 Vagar - Au
6.3.1 Purchase of the Vagar Licence
Nalunaq A/S entered into a sale and purchase agreement with NunaMinerals A/S, acting through its bankruptcy receiver, on
6.3.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Vagar exploration licence for the 2022 year to the MLSA by
6.4 Nuna Nutaaq - Au
6.4.1 Purchase of the Nuna Nutaaq Licence
The Corporation has acquired the right to conduct exploration activities on approximately 266km2 of land in an area of Itillersuaq near Narsaq in
6.4.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Nuna Nutaaq exploration licence for the 2022 year to the MLSA by
6.5 Anoritooq - Au
6.5.1 Purchase of the Anoritooq Licence
The Corporation acquired the right to conduct exploration activities on approximately 1,710km2 of land in the areas of Anoritooq and Kangerluluk in
6.5.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
shall complete
6.6 Siku - Au
6.6.1 Purchase of the Siku Licence
The Corporation acquired the right to conduct exploration activities on approximately 251km2 of land in an areas between the Nanoq and Jokum's Shear project on the east coast of
6.6.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Siku exploration licence for the 2022 year to the MLSA by
6.7 Naalagaaffiup Portornga (Land Adjacent to Existing Tartoq Licence) -
6.7.1 Purchase of the Naalagaaffiup Portornga Licence
The Corporation has acquired the right to conduct exploration activities on approximately 170km2 of land in an area adjacent to the Tartoq Licence. The exploration rights have been granted to the Corporation under a new separate exploration Licence 2018/17 Naalagaaffiup Portornga and the licence had an original expiry date of
6.7.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
the amounts set forth in the Naalagaaffiup Portornga Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Naalagaaffiup Portornga exploration licence for the 2022 year to the MLSA by
6.8 Saarloq -
6.8.1 Purchase of the Saarloq Licence
The Corporation acquired the right to conduct exploration activities on approximately 818km2 of land in the areas of Quassugaarsuk and Sermeq Kangilleq in
6.8.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
shall complete
6.9 Sava -
6.9.1 Purchase of the Sava Licence
The Corporation acquired the right to conduct exploration activities on approximately 335km2 of land in the area of Eqaluit Iluat in
6.9.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6.10 Kobberminebugt -
6.10.1 Purchase of the Kobberminebugt Licence
The Corporation acquired the right to conduct exploration activities on approximately 220km2 of land in an areas of Aputaajuitsoq in
6.10.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
expenditures against the amounts set forth in the Kobberminebugt Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Kobberminebugt exploration licence for the 2022 year to the MLSA by
6.11 Stendalen Licence -
6.11.1 Purchase of the Stendalen Licence
The Corporation acquired the right to conduct exploration activities on approximately 2,486km2 of the existing 2021/11 licence split into two areas around the Qasinngortoq and Kangerlussuatsiaq areas of
6.11.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6.12 North
6.12.1 Purchase of the North
The Corporation acquired the right to conduct exploration activities on approximately 1,042km2 of the existing 2020/41 licence split into two areas around the Akuliarutsip and Narsaviarsuasiit areas of
6.12.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
6. MINERAL PROPERTIES (CONT'D)
activities in 2022 (
6.13 Genex
On
On
7. CAPITAL ASSETS
Field equipment and infrastruc-ture | Vehicles and rolling stock | Equipment (including software) | Construc-tion In Progress | Right-of-use assets (note 8) | Total | |
$ | $ | $ | $ | $ | $ | |
2021 | ||||||
Opening net book value | 146,203 | 256,865 | 177,052 | - | 820,894 | 1,401,014 |
Additions | 1,983,718 | 4,195,205 | - | 7,452,668 | - | 13,631,591 |
Depreciation | (140,807) | (147,361) | (21,041) | - | (80,744) | (389,953) |
Closing net book value | 1,989,114 | 4,304,709 | 156,011 | 7,452,668 | 740,150 | 14,642,652 |
As at | ||||||
Cost | 2,371,041 | 4,729,005 | 185,878 | 7,452,668 | 841,080 | 15,579,672 |
Accumulated depreciation | (381,927) | (424,296) | (29,867) | - | (100,930) | (937,020) |
Closing net book value | 1,989,114 | 4,304,709 | 156,011 | 7,452,668 | 740,150 | 14,642,652 |
2022 | ||||||
Opening net book value | 1,989,114 | 4,304,709 | 156,011 | 7,452,668 | 740,150 | 14,642,652 |
Additions | - | - | 179,040 | 69,417 | - | 248,457 |
Disposals | - | (123,360) | (40,501) | - | - | (163,861) |
Adjustment | - | - | - | - | (4,880) | (4,880) |
Depreciation | (253,362) | (438,965) | (78,165) | - | (80,207) | (850,699) |
Closing net book value | 1,735,752 | 3,742,384 | 216,385 | 7,522,085 | 655,063 | 13,871,669 |
As at | ||||||
Cost | 2,351,041 | 4,466,971 | 313,214 | 7,522,085 | 836,200 | 15,489,511 |
Accumulated depreciation | (615,289) | (724,587) | (96,829) | - | (181,137) | (1,617,842) |
Closing net book value | 1,735,752 | 3,742,384 | 216,385 | 7,522,085 | 655,063 | 13,871,669 |
7. CAPITAL ASSETS (CONT'D)
Depreciation of capital assets related to exploration and evaluation properties is being recorded in exploration and evaluation expenses in the consolidated statement of comprehensive loss, under depreciation. Depreciation of
As of
8. LEASE LIABILITIES
As at | As at | |
$ | $ | |
Balance beginning | 763,913 | 829,813 |
Principal repayment | (50,722) | (65,900) |
Adjustment | 16,046 | - |
Balance ending | 729,237 | 763,913 |
Non-current portion - lease liabilities | (657,440) | (713,078) |
Current portion - lease liabilities | 71,797 | 50,835 |
The Corporation has one lease for its office. In
A right-of-use asset of
9. SHARE CAPITAL
9.1 Share Capital
The Corporation is authorized to issue an unlimited number of common voting shares and an unlimited number of preferred shares issuable in series, all without par value.
9.2 Fundraising and First North Listing
On
The Fundraising is complemented by the joint venture between the Corporation and
9. SHARE CAPITAL (CONT'D)
executed final documentation in relation to the ACAM joint venture, with closing and receipt of the initial
Certain officers and directors of the Corporation purchased an aggregate of 4,972,871 common shares for gross proceeds of
10. STOCK-BASED COMPENSATION
10.1 Stock options
An incentive stock option plan (the "Plan") was approved initially in 2017 and renewed by shareholders on
On
On
On
10. STOCK-BASED COMPENSATION (CONT'D)
On
On
On
On
Changes in stock options are as follow:
2022 | 2021 | |||
Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |
$ | $ | |||
Balance, beginning | 6,935,000 | 0.51 | 7,745,000 | 0.51 |
Granted | 5,542,395 | 0.63 | 1,100,000 | 0.57 |
Expired | (1,500,000) | 0.53 | (1,910,000) | 0.52 |
Exercised | (260,000) | 0.50 | - | - |
Balance, end | 10,717,395 | 0.57 | 6,935,000 | 0.51 |
Balance, end exercisable | 10,684,062 | 0.57 | 6,801,666 | 0.51 |
10. STOCK-BASED COMPENSATION (CONT'D)
Stock options outstanding and exercisable as at
Number of options outstanding | Number of options exercisable | Exerciseprice | Expiry date |
$ | |||
1,360,000 | 1,360,000 | 0.45 | |
1,820,000 | 1,820,000 | 0.38 | |
100,000 | 66,667 | 0.50 | |
1,495,000 | 1,495,000 | 0.70 | |
3,600,000 | 3,600,000 | 0.60 | |
73,333 | 73,333 | 0.75 | |
39,062 | 39,062 | 0.64 | |
1,330,000 | 1,330,000 | 0.70 | |
900,000 | 900,000 | 0.59 | |
10,717,395 | 10,684,062 |
10.2 Restricted Share Unit
Conditional awards under the RSU
10.2.1 Description
Conditional awards were made in 2022 that give participants the opportunity to earn restricted share unit awards under the Corporation's Restricted Share Unit Plan ("RSU Plan") subject to the generation of shareholder value over a four year performance period.
The awards are designed to align the interests of the Corporation's employees and shareholders, by incentivising the delivery of exceptional shareholder returns over the long-term. Participants receive a 10% share of a pool which is defined by the total shareholder value created above a 10% per annum compound hurdle.
The awards comprise three tranches, based on performance measured from
- First Measurement Date:
December 31, 2023 ; -
Second Measurement Date:
December 31, 2024 ; and -
Third Measurement Date:
December 31, 2025 .
Restricted share unit awards granted under the RSU Plan as a result of achievement of the total shareholder return performance conditions are subject to continued service, with vesting as follows:
- Awards granted after the First Measurement Date - 50% vest after one year, 50% vest after three years.
- Awards granted after the Second Measurement Date - 50% vest after one year, 50% vest after two years.
- RSUs granted after the Third Measurement Date - 100% vest after one year.
The maximum term of the awards is therefore four years from grant.
The Corporation's starting market capitalization is based on a fixed share price of
- After
December 31, 2023 , 100% of the pool value at the First Measurement Date is delivered as restricted share units under the RSU Plan, subject to the maximum number of shares that can be allotted not being exceeded.
10. STOCK-BASED COMPENSATION (CONT'D)
- After
December 31, 2024 , the pool value at the Second Measurement Date is reduced by the pool value from the First Measurement Date (increased in line with share price movements between the First and Second Measurement Dates). 100% of the remaining pool value, if any, is delivered as restricted share units under the RSU Plan. -
After
December 31, 2025 , the pool value at the Third Measurement Date is reduced by the pool value from the Second Measurement Date (increased in line with share price movements between the Second and Third Measurement Dates), and then further reduced by the pool value from the First Measurement Date (increased in line with share price movements between the First Measurement Date and the Third Measurement Date). 100% of the remaining pool value, if any, is delivered as restricted share units under the RSU Plan.
10.2.2 Valuation
The fair value of the award granted in
The fair value was obtained through the use of a Monte Carlo simulation model which calculates a fair value based on a large number of randomly generated projections of the Corporation's share price.
Assumption | Value |
Grant date | |
Projection period (years) | 3 |
Expected life (years) | 5 |
Share price at grant date | |
Exercise price | N/A |
Dividend yield | 0% |
Risk-free rate | 3.60% |
Volatility | 72% |
Fair value of awards - First Measurement Date | |
Fair value of awards - Second Measurement Date | |
Fair value of awards - Third Measurement Date | |
Total fair value of awards (80% of pool) |
Expected volatility was determined from the daily share price volatility over a historical period prior to the date of grant with length commensurate with the expected life. A zero dividend yield has been used based on the dividend yield as at the date of grant.
11. CAPITAL MANAGEMENT
The capital of the Corporation consists of the items included in equity and balances thereof and changes therein are depicted in the consolidated statement of changes in equity.
The Corporation' objectives are to safeguard the Corporation' ability to continue as a going concern in order to pursue its acquisition, exploration and evaluation activities and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. As the Corporation does not have cash flow from operations, to maintain or adjust the capital structure, the Corporation may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash. In order to maximize ongoing development efforts and to continue operations, the Corporation does not pay out dividends. The Corporation is not subject to externally imposed restrictions on capital.
12. EMPLOYEE REMUNERATION
Salaries
2022 | 2021 | |
$ | $ | |
Salaries | 3,502,513 | 5,343,482 |
Director's fees | 628,000 | 628,652 |
Benefits | 590,407 | 878,580 |
4,720,920 | 6,850,714 | |
Less : salaries and benefits presented in E&E expenses | (904,888) | (3,569,124) |
Salaries and directors' fees disclosed in general and administrativeexpenses | 3,816,032 | 3,281,590 |
13. EXPLORATION AND EVALUATION EXPENSES
2022 | Nalunaq | Vagar | Nuna Nutaaq | Anoritooq | Saarloq | Sava | Kobberminebugt | Stendalen | North Sava | Total |
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |
Geology | 1,001,263 | 54,524 | 30,992 | 17,966 | 1,919 | 75,596 | 16,914 | 20,202 | 34,912 | 1,254,288 |
Lodging and on-site support | 170,024 | 20,900 | 4,546 | 6,652 | 854 | 29,413 | 5,737 | 5,676 | 8,791 | 252,593 |
Drilling | 2,962,491 | 611,610 | - | - | - | 144,019 | - | - | - | 3,718,120 |
Analysis | 205,304 | 86,765 | - | 1,208 | 87 | 25,060 | 1,035 | 173 | - | 319,632 |
Geophysics survey | - | - | 364,827 | - | - | - | - | - | 416,177 | 781,004 |
Transport | 222,546 | 84,644 | 2,028 | 3,052 | 442 | 37,154 | 2,450 | 2,290 | 3,256 | 357,862 |
Supplies and equipment | 484,461 | 21,247 | 5,211 | 7,178 | 661 | 20,959 | 7,148 | 7,779 | 13,575 | 568,219 |
Helicopter Charter | 221,039 | 424,586 | - | 19,850 | - | 267,957 | 13,072 | - | - | 946,504 |
Logistic support | 904,310 | 62,777 | 11,530 | 18,478 | 3,316 | 16,275 | 12,479 | 9,796 | 9,643 | 1,048,604 |
Maintenance infrastructure | 2,401,358 | 62,431 | 16,437 | 21,886 | 1,544 | 83,558 | 23,521 | 26,700 | 48,770 | 2,686,205 |
Project Engineering costs | 35,946 | - | - | - | - | - | - | - | - | 35,946 |
Government fees | 2,584 | 7,893 | - | - | - | - | - | - | - | 10,477 |
Exploration and evaluation expenses before depreciation | 8,611,326 | 1,437,377 | 435,571 | 96,270 | 8,823 | 699,991 | 82,356 | 72,616 | 535,124 | 11,979,454 |
Depreciation | 721,072 | - | - | - | - | - | - | - | - | 721,072 |
Exploration and evaluation expenses | 9,332,398 | 1,437,377 | 435,571 | 96,270 | 8,823 | 699,991 | 82,356 | 72,616 | 535,124 | 12,700,526 |
2021 | Nalunaq | Vagar | Tartoq | Naalagaaffiup Portornga | Nuna Nutaaq | Saarloq | Anoritooq | Sava | Genex | Total |
$ | $ | $ | $ | $ | $ | $ | $ | $ | $ | |
Geochemistry | - | 227,764 | 80,631 | - | - | - | - | 292,883 | - | 601,278 |
Geology | 2,332,281 | 427,903 | 19,413 | 1,105 | 113,309 | 6,620 | 57,905 | 219,458 | 11,039 | 3,189,033 |
Lodging and on-site support | 479,921 | - | 248 | - | - | - | - | - | - | 480,169 |
Underground works | 118,017 | - | - | - | - | - | - | - | - | 118,017 |
Drilling | 3,647,452 | - | 130 | - | - | - | - | - | - | 3,647,582 |
Analysis | 120,548 | 1,250 | - | - | 469 | - | - | - | - | 122,267 |
Transport | 35,324 | - | 957 | - | - | - | - | - | - | 36,281 |
Supplies and equipment | 1,998 | - | - | - | - | - | - | - | - | 1,998 |
Helicopter Charter | 181,069 | 124,843 | - | - | 128,328 | - | 11,772 | 295,147 | 33,302 | 774,461 |
Logistic support | 1,009,553 | - | - | - | - | - | - | - | - | 1,009,553 |
Insurance | 41,197 | - | - | - | - | - | - | - | - | 41,197 |
Project Engineering costs | 3,753,320 | 20,461 | - | - | 21,039 | - | 1,927 | - | 5,461 | 3,802,208 |
Government fees | 137,453 | 8,419 | 8,419 | - | - | - | - | - | 1,949 | 156,240 |
Exploration and evaluation expenses before depreciation | 11,858,133 | 810,640 | 109,798 | 1,105 | 263,145 | 6,620 | 71,604 | 807,488 | 51,751 | 13,980,284 |
Depreciation | 299,771 | - | - | - | - | - | - | - | - | 299,771 |
Exploration and evaluation expenses | 12,157,904 | 810,640 | 109,798 | 1,105 | 263,145 | 6,620 | 71,604 | 807,488 | 51,751 | 14,280,055 |
14. GENERAL AND ADMINISTRATIVE
2022 | 2021 | |
$ | $ | |
Salaries and benefits | 3,188,032 | 2,652,938 |
Director's fees | 628,000 | 628,652 |
Professional fees | 2,258,660 | 2,382,916 |
Marketing and industry involvement | 598,447 | 791,722 |
Insurance | 341,793 | 571,364 |
Travel and other expenses | 746,180 | 1,884,189 |
Regulatory fees | 212,939 | 326,464 |
General and administration before following elements | 7,974,051 | 9,238,245 |
Stock-based compensation | 2,046,342 | 374,771 |
Depreciation | 129,627 | 90,182 |
General and administrative | 10,150,020 | 9,703,198 |
15. FINANCE COSTS
2022 | 2021 | |
$ | $ | |
Financing fees lease | 37,523 | 39,994 |
Finance costs | 37,523 | 39,994 |
16. INCOME TAXES
Tax expense differs from the amount computed by applying the combined Canadian Statutory and Greenlandic income tax rates, applicable to the Corporation, to the loss before income taxes due to the following:
2022 | 2021 | |
$ | $ | |
Net loss before income taxes | (21,898,963) | (24,689,239) |
Income tax rates | 26.5% | 26.5% |
Income tax recovery | (5,803,225) | (6,542,648) |
Increase (decrease) attributable to: | ||
Non deductible expenses | 547,829 | 104,109 |
Difference in statutory tax rate | 213,652 | 265,772 |
Changes in unrecognized deferred tax assets | 5,041,744 | 6,172,767 |
Tax recovery | - | - |
The analysis of the Corporation's deferred tax assets and liabilities as at
2022 | 2021 | |
$ | $ | |
Deferred tax assets (liabilities): | ||
Capital assets | (636,131) | (437,033) |
Non-capital losses | 636,131 | 437,033 |
- | - |
16. INCOME TAXES (CONT'D)
The Corporation records deferred income tax assets to the extent that it is probable that sufficient taxable income will be realized during the carry-forward period to utilize these net future tax assets.
The significant components of deductible temporary differences and unused tax losses for which the benefits have not been recorded on the consolidated statement of financial position as at
As at | ||
$ | ||
Non-capital losses carry forwards | 50,408,928 |
As the Corporation is a mineral licence holder, the non-capital losses in
As at | ||
$ | ||
Non-capital losses carry forwards expiring in 2038 | 965,032 | |
Non-capital losses carry forwards expiring in 2039 | 1,272,338 | |
Non-capital losses carry forwards expiring in 2040 | 1,210,348 | |
Non-capital losses carry forwards expiring in 2041 | 5,622,490 | |
Non-capital losses carry forwards expiring in 2042 | 8,261,231 | |
Non-capital losses carry forwards expiring in 2043 | 7,660,784 |
17. NET LOSS PER SHARE
The calculation of basic and diluted net loss per share for the year ended
18. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
The Corporation's key management are the members of the board of directors, the President and Chief Executive Officer, the Chief Financial Officer, the Vice President Exploration and the Corporate Secretary. Key management compensation is as follows:
2022 | 2021 | |
$ | $ | |
Short-term benefits | ||
Professional fees | - | 64,162 |
Salaries and benefits | 2,104,440 | 1,639,334 |
Salaries and benefits included in the E&E expenses | - | 71,349 |
Director's fees | 628,000 | 628,652 |
Long-term benefits | ||
Stock-based compensation (note 10.1) | 1,117,000 | 365,909 |
Total compensation | 3,849,440 | 2,769,406 |
18. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION (CONT'D)
In addition to the amounts listed above in the compensation to key management, following are the related party transactions, in the normal course of operations:
- A firm in which
Georgia Quenby (director untilJune 9, 2021 ) is a partner charged legal professional fees for $nil ($9,934 in 2021); -
A company controlled by Martin Ménard (Chief Operating Officer from
July 9, 2019 toJune 30, 2021 ) charged engineering professional fees of $nil for his staff ($12,240 in 2021). The Chief Operating Officer is the son of Robert Ménard, director untilApril 27, 2021 ; -
Nicolas and Catherine Ménard and
Samuel Martel , engineering consultants, (the son, the daughter and the son-in-law of Robert Ménard, director untilApril 27, 2021 and the brother, the sister and brother-in-law of Martin Ménard, Chief Operating Officer untilJune 30, 2021 ) were paid $nil ($324,799 in 2021); -
As at
December 31, 2022 , the balance due to those related parties listed above and in the compensation to key management amounted to $nil ($173,254 as atDecember 31 , 2021).
Following are the related party transactions, outside of the normal course of operations:
- Directors and officers of the Corporation participated in the
November 3, 2022 fundraising for$2,700,132 ($nil in 2021). The directors and officers subscribed to the fundraising in 2022 under the same terms and conditions set forth all subscribers. - Key management are subject to employment agreements which provide for payments on termination, without cause or following a change of control, providing for payments up to one base salary.
The compensation of directors is as follows:
2022 | 2021 | |||||
Short-term benefits (a) | Stock-based compensation | Total compensation | Short-term benefits (a) | Stock-based compensation | Total compensation | |
$ | $ | $ | $ | $ | $ | |
Eldur Olafsson | 801,935 | 385,000 | 1,186,935 | 471,815 | - | 471,815 |
- | - | - | 79,919 | - | 79,919 | |
496,699 | 315,000 | 811,699 | 334,757 | 360,000 | 694,757 | |
181,000 | - | 181,000 | 195,228 | - | 195,228 | |
- | - | - | 43,788 | - | 43,788 | |
86,000 | - | 86,000 | 94,478 | - | 94,478 | |
Robert Ménard (3) | - | - | - | 30,417 | - | 30,417 |
86,000 | - | 86,000 | 29,913 | - | 29,913 | |
86,000 | - | 86,000 | 47,962 | - | 47,962 | |
86,000 | - | 86,000 | 47,962 | - | 47,962 | |
103,000 | - | 103,000 | 138,904 | - | 138,904 | |
Total compensation | 1,926,634 | 700,000 | 2,626,634 | 1,515,143 | 360,000 | 1,875,143 |
(a) Short-term benefits comprise salary, director fees as applicable, annual bonus and pension.
(1)
(2)
(3) Robert Ménard ceased to be Non-Executive Director
18. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION (CONT'D)
The directors participated in the
2022 | 2021 | |
Number of new shares | Number of new shares | |
Eldur Olafsson | 814,162 | - |
285,714 | - | |
142,857 | - | |
1,444,424 | - | |
2,285,714 | - | |
Total | 4,972,871 | - |
19. FINANCIAL INSTRUMENTS
The Corporation is exposed to various financial risks resulting from both its operations and its investment activities. The Management manages financial risks. The Corporation does not enter into financial instruments agreements, including derivative financial instruments, for speculative purposes. The Corporation's main financial risks exposure and its financial policies are described below.
19.1 Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Corporation's cash and escrow account for environmental monitoring are exposed to credit risk. Management believes the credit risk on cash and escrow account for environmental monitoring is small because the counterparties are chartered Canadian and Greenlandic banks.
19.2 Liquidity risk
Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities. The Corporation seeks to ensure that it has sufficient capital to meet short-term financial obligations after taking into account its exploration and operating obligations and cash on hand. The Corporation anticipates seeking additional financing in order to fund general and administrative costs and exploration and evaluation costs. The Corporation' options to enhance liquidity include the issuance of new equity instruments or debt.
The following table summarizes the carrying amounts and contractual maturities of financial liabilities:
As at | As at | |||||
Trade and other payables | Lease liabilities | Trade and other payables | Lease liabilities | |||
$ | $ | $ | $ | |||
Within 1 year | 1,138,961 | 105,894 | 2,049,249 | 88,245 | ||
1 to 5 years | - | 434,852 | - | 431,910 | ||
5 to 10 years | - | 344,646 | - | 435,343 | ||
Total | 1,138,961 | 885,392 | 2,049,249 | 955,498 | ||
19. FINANCIAL INSTRUMENTS (CONT'D).
19.3 Currency risk
As at
The Corporation had the following balances in currencies:
As at | In DKK | In Euros | In US$ | In GBP | |
Cash | 1,493,645 | 72,577 | 6,372,862 | 5,580,141 | |
Escrow account for environmental monitoring | 2,193,001 | - | - | - | |
Prepaid expenses and others | 207,465 | - | - | - | |
Trade and other payables | (1,440,197) | (81,970) | (112,718) | (57,639) | |
2,453,914 | (9,393) | 6,260,144 | 5,522,502 | ||
Exchange rate | 0.1948 | 1.4487 | 1.3541 | 1.6370 | |
Equivalent to CAD | 478,022 | (13,608) | 8,476,861 | 9,040,336 |
Based on the above net exposures as at
As at | In DKK | In Euros | In US$ | In GBP | |
Cash | 2,145,132 | 526,043 | 5,314,298 | 882 | |
Escrow account for environmental monitoring | 2,193,001 | - | - | - | |
Trade and other payables | (3,740,924) | (20,987) | (44,301) | (36,563) | |
597,209 | 505,056 | 5,269,997 | (35,681) | ||
Exchange rate | 0.1936 | 1.4401 | 1.2697 | 1.7155 | |
Equivalent to CAD | 115,620 | 727,331 | 6,691,315 | (61,211) |
Based on the above net exposures as at
19.4 Fair value risk
Fair value estimates are made at the consolidated statement of financial position date, based on relevant market information and other information about financial instruments. As at
20. SUBSEQUENT EVENTS
20.1
On
20.2
On
- ·
US$18.5 million Senior Debt Revolving Credit Facility ("RCF") with Icelandic banksLandsbanki and Fossar Investment Bank , with a two-year term and interest at the Secured Overnight Financing Rate (SOFR) plus 950bps. The RCF has a 2% arrangement fee and a 0.4% commitment fee on unutilized amounts.
-
Up to
US$21 million Syndicated Convertible Notes ("Convertible Note") with an affiliate ofACAM LP ,JLE Property Ltd ,Livermore Partners and First Pecos with a four-year term, payment-in-kind interest of 5% per annum and a conversion price of42 pence /share.
-
ACAM LP's main investors are the majority ultimate beneficial owners of
GCAM LP .
US$10 million , two-year Cost Overrun loan byJLE Property Limited on the same terms as the Convertible Note, plus a 2.5% commitment fee on unutilized amounts, to insure against any potential unexpected cost increases.
The Financing, together with existing capital, is expected to enable the transition from bulk sample stage to trial mining, processing and production of gold doré on site at Nalunaq in a staged approach, ahead of full-scale production. The Corporation will finalise the Financing's legally binding documentation and expects to be in a position to sign binding documents within the next three months.
Alongside the Financing, the Corporation intends to explore the possibility of a main market listing on
This information is provided by RNS, the news service of the
https://news.cision.com/amaroq-minerals-ltd/r/2022-full-year-financial-results-and-update,c3744425
https://mb.cision.com/Main/21957/3744425/1957577.pdf
(c) 2023 Cision. All rights reserved., source