TIDMAEXG

RNS Number : 7982F

AEX Gold Inc

19 November 2020

("AEX" or the "Corporation")

AEX Gold Inc. Reports Third Quarter Financial Results

TORONTO, ONTARIO - NOVEMBER 19, 2020 - AEX Gold Inc. (AIM: AEXG; TSXV: AEX), an independent gold company with a portfolio of gold licences in Greenland, announces its unaudited condensed interim consolidated financial statements ("Financial Statements") for the quarter ended September 30, 2020. All figures are in Canadian dollars unless otherwise noted.

The Financial Statements and the accompanying Management Discussion and Analysis are available on the Corporation's website at www.aexgold.com and will be filed under the Corporation's SEDAR profile at

www.sedar.com    later today . 

Financial Highlights

-- The Corporation reported a net loss of $4.6 million in Q3 2020 (Q3 2019: $2.6 million), driven by increased exploration and evaluation activities and corporate activity during the period, as well as non-cash foreign exchange loss.

-- Exploration and evaluation expenses during the quarter were $2.9 million (Q3 2019: $1.8 million), driven by increased activity on the Nalunaq Property and its regional exploration portfolio.

-- General and administrative expenses during the quarter were $1.1 million (Q3 2019: $0.2 million), with the increase a result of higher management, consulting and professional fees associated with its AIM listing and as the Corporation moves towards development at Nalunaq.

-- On July 31, 2020, the Corporation completed its AIM Admission in addition to its existing TSX-V listing, with the issue of 94,444,445 common shares at a price of GBP 0.45 ($0.77) per share for an equity placing raising gross proceeds of $74.6 million.

-- The Corporation had a cash balance of $68.7 million at September 30, 2020 ($1.5 million at December 31, 2019), with no debt, and total working capital of $67.5 million ($1.2 million at December 31, 2019).

Selected Financial Information

The following selected financial data is extracted from the Financial Statements for the three and nine months ended September 30, 2020.

Financial Results

 
                                   Three months              Nine months 
                                ended September 30,       ended September 30, 
                                    2020         2019         2020         2019 
                                       $            $            $            $ 
                             -----------  -----------  -----------  ----------- 
Exploration and evaluation 
 expenses                      2,908,340    1,754,353    4,432,791    2,320,175 
General and administrative     1,104,822      227,751    1,986,372      721,547 
Net loss and comprehensive 
 loss                        (4,609,492)  (2,561,629)  (8,018,061)  (3,636,759) 
Basic and diluted loss per 
 common share                     (0.03)       (0.04)       (0.08)       (0.06) 
                             -----------  -----------  -----------  ----------- 
 

Financial Position

 
                            As at September 30,  As at December 31, 
                                           2020                2019 
                                              $                   $ 
                            -------------------  ------------------ 
Cash on hand                         68,742,384           1,515,406 
Total assets                         70,444,243           2,720,473 
Total current liabilities             1,840,222             645,933 
Shareholders' equity                 68,604,021           2,074,540 
Working capital                      67,475,882           1,157,012 
                            -------------------  ------------------ 
 

Operational and Corporate Highlights

-- The Corporation successfully managed the mobilization and demobilization of a small crew based at Nalunaq from August to the end of October to accomplish key activities at Nalunaq and the other exploration licenses. The procedure for mitigating the risks related to COVID-19 proved to be effective, and the local authorities were very supportive.

-- The 2020 surface drilling program at Nalunaq commenced during the period in August and was finalized following the end of the period, in the second half of October, with eleven drill holes for a total of 2,191 metres drilled. The Main Vein was identified in six of the eleven holes drilled, with some of the intersects yielding the thickest interceptions (1.50 meters) ever recorded at Nalunaq. Initial results from the drilling were announced on October 21, 2020, and the remaining results will be reported when received during Q4 2020.

-- Terms of Reference of the environmental impact assessment ("EIA") and social impact assessment ("SIA") have been accepted by the authorities in October 2020 and will now progress to public consultation.

-- A business readiness program was continued internally during the period as the Corporation increases its overall readiness for transitioning towards project execution, including human resources, recruiting, environmental and social impact assessment scoping, organizational structuring, project and cost control, and accounting.

-- During the period, the Corporation conducted exploration activities over the exploration licence areas, as well as its wider regional portfolio, as part of the 2020 summer work program announced on August 24, 2020 and the results of these exploration activities will be announced as soon as received in Q4 2020.

-- On July 27, 2020, the Corporation appointed Sigurbjorn ("Siggi") Thorkelsson as an independent non-executive director of the Corporation and Chair of the Audit and Risk Committee. Mr. Thorkelsson brings a wealth of experience in the financial markets, having worked at major financial institutions throughout his career.

Post Period-End

-- Early in November 2020, the Corporation was granted an addendum to the Anoritooq Licence, increasing the size of the licence to 1,889km(2) .

-- Following the period end, the Corporation was granted one new Mineral Exploration Licence in South Greenland, namely Kangerluarsuk, covering an area totalling 335km(2) , taking the Corporations full license area to 3,870km(2) .

Eldur Olafsson, CEO of AEX, commented:

"I'm pleased to announce our third quarter 2020 financial results, which demonstrate the significant increase in activity across our portfolio as our business transitions towards development.

"Following the successful $72.7 million fundraise and AIM listing in July 2020, the Company was able to leverage its strong cash balance and the remaining months of Greenlandic autumn to front-end surface drilling initially planned for 2021.

"Furthermore, the launch of the request for proposal process for underground development contractors, and front-end engineering and surface drilling all provided significant advancement to the project during Q3 and puts us in an excellent position ahead of our onsite development activities in 2021.

"We look forward to providing updates to the market on our many exciting workstreams in due course."

Enquiries:

AEX Gold Inc.

George Fowlie, Director and CFO

1-416-587-9801

gf@aexgold.com

Eldur Olafsson, Director and CEO

+354 665 2003

eo@aexgold.com

Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)

Callum Stewart

Simon Mensley

Ashton Clanfield

+44 (0) 20 7710 7600

Camarco (Financial PR)

Gordon Poole

Nick Hennis

+44 (0) 20 3757 4980

AEX Gold Inc: Unaudited Condensed Interim Consolidated Financial Statements for the three and nine Months Ended September 30, 2020

AEX Gold Inc.

Consolidated Statements of Financial Position

( Unaudited, i n Canadian Dollars)

 
                                                          As at        As at December 
                                                       September 30,         31, 
                                              Notes        2020             2019 
--------------------------------------------  -----  ---------------  --------------- 
                                                            $                $ 
ASSETS 
Current assets 
Cash                                                      68,742,384        1,515,406 
Escrow account for environmental monitoring                        -          174,864 
Sales tax receivable                                          98,349           17,792 
Prepaid expenses and others                                  475,371           94,883 
Total current assets                                      69,316,104        1,802,945 
 
Non-current assets 
Deferred share issuance costs                                      -          166,348 
Deposit                                                       27,944                - 
Escrow account for environmental monitoring                  461,383          342,132 
Mineral properties                              3             55,682           41,945 
Property and equipment                          4            583,130          367,103 
Total non-current assets                                   1,128,139          917,528 
--------------------------------------------  -----  ---------------  --------------- 
TOTAL ASSETS                                              70,444,243        2,720,473 
--------------------------------------------  -----  ---------------  --------------- 
 
LIABILITIES AND EQUITY 
Current liabilities 
Trade and other payables                                   1,840,222          471,069 
Environmental monitoring provision                                 -          174,864 
--------------------------------------------  -----  ---------------  --------------- 
 
Total liabilities                                          1,840,222          645,933 
--------------------------------------------  -----  ---------------  --------------- 
 
Equity 
Capital stock                                   5         88,500,205       13,883,611 
Warrants                                        6                  -        1,459,604 
Contributed surplus                                        2,925,952        1,535,400 
Accumulated other comprehensive loss                        (36,772)         (36,772) 
Deficit                                                 (22,785,364)     (14,767,303) 
--------------------------------------------  -----  ---------------  --------------- 
Total equity                                              68,604,021        2,074,540 
--------------------------------------------  -----  ---------------  --------------- 
TOTAL LIABILITIES AND EQUITY                              70,444,243        2,720,473 
--------------------------------------------  -----  ---------------  --------------- 
 
 

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

AEX Gold Inc.

Consolidated Statements of Comprehensive Loss

( Unaudited, i n Canadian Dollars)

 
                                                         Three months               Nine months 
                                                      ended September 30,        ended September 30, 
------------------------------------  -----  -----------------------------  ------------------------- 
                                      Notes        2020           2019           2020         2019 
------------------------------------  -----  --------------  -------------  ------------  ----------- 
                                                    $               $             $             $ 
 
Expenses 
Exploration and evaluation expenses     8         2,908,340      1,754,353     4,432,791    2,320,175 
General and administrative              9         1,104,822        227,751     1,986,372      721,547 
Stock-based compensation                7                 -        578,600     1,031,650      578,600 
Foreign exchange loss                               717,577         14,696       696,010       32,631 
Operating loss                                    4,730,739      2,575,400     8,146,823    3,652,953 
 
  Other expenses (income) 
Interest income                                    (25,960)       (15,939)      (35,875)     (23,004) 
Finance costs (income)                             (95,287)          2,168      (92,887)        6,810 
------------------------------------  -----  --------------  -------------  ------------  ----------- 
 
Net loss and comprehensive loss                 (4,609,492)    (2,561,629)   (8,018,061)  (3,636,759) 
------------------------------------  -----  --------------  -------------  ------------  ----------- 
 
 
 
 
Weighted average number of common 
 shares outstanding - basic and 
 diluted                                        146,280,087     70,946,394   100,466,279   62,367,254 
Basic and diluted loss per common 
 share                                               (0.03)         (0.04)        (0.08)       (0.06) 
------------------------------------  -----  --------------  -------------  ------------  ----------- 
 
 

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

AEX Gold Inc.

Consolidated Statements of Changes in Equity

( Unaudited, i n Canadian Dollars)

 
                                                                              Accumulated 
                            Number of                                            other 
                          common shares   Capital               Contributed  comprehensive 
                  Notes    outstanding      Stock    Warrants     surplus        loss         Deficit     Total Equity 
--------------  --------  -------------  ----------  ---------  -----------  -------------  ------------  ------------ 
                                              $          $           $             $              $             $ 
Balance at January 1, 
 2019                        57,788,499  10,058,355    321,788      956,800       (36,772)   (9,665,197)     1,634,974 
Net loss and 
 comprehensive 
 loss                                 -           -          -            -              -   (3,636,759)   (3,636,759) 
 
Share and warrants 
 issuance 
 under a private 
 placement                   13,157,895   3,853,718  1,146,282            -              -             -     5,000,000 
Share issuance costs                  -    (28,462)    (8,466)            -              -             -      (36,928) 
Stock-based compensation              -           -          -      578,600              -             -       578,600 
Balance at September 30, 
 2019                        70,946,394  13,883,611  1,459,604    1,535,400       (36,772)  (13,301,956)     3,539,887 
------------------------  -------------  ----------  ---------  -----------  -------------  ------------  ------------ 
 
 
 
Balance at January 1, 2020     70,946,394   13,883,611    1,459,604   1,535,400  (36,772)  (14,767,303)    2,074,540 
Net loss and comprehensive 
 loss                                   -            -            -           -         -   (8,018,061)  (8,018,061) 
 
Share issuance under a 
 fundraising                 5 94,444,445   74,550,202            -           -         -             -   74,550,202 
Share issuance costs         5             (6,312,546)            -           -         -             -  (6,312,546) 
Warrants exercised           6 11,607,898    6,318,938  (1,078,702)           -         -             -    5,240,236 
Warrants expired             6          -            -    (380,902)     380,902         -             -            - 
Options exercised            7    100,000       60,000            -    (22,000)         -             -       38,000 
Stock-based compensation     7          -            -            -   1,031,650         -             -    1,031,650 
---------------------------   -----------  -----------  -----------  ----------  --------  ------------  ----------- 
Balance at September 30, 
 2020                         177,098,737   88,500,205            -   2,925,952  (36,772)  (22,785,364)   68,604,021 
---------------------------   -----------  -----------  -----------  ----------  --------  ------------  ----------- 
 

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

AEX Gold Inc.

Consolidated Statements of Cash Flows

( Unaudited, i n Canadian Dollars)

 
                                                                   Nine months 
                                                    Notes       ended September 30, 
--------------------------------------------------  -----  ------------------------- 
                                                                2020          2019 
--------------------------------------------------  -----  ------------  ----------- 
                                                                  $            $ 
 
Operating activities 
Net loss for the period                                     (8,018,061)  (3,636,759) 
Adjustments for: 
   Depreciation                                       4         157,513      125,025 
   Stock-based compensation                           7       1,031,650      578,600 
   Finance costs (income)                                      (92,887)        6,810 
   Payment from cash held in escrow account for 
    environmental monitoring                                   (95,102)     (28,846) 
   Escrow account for environmental monitoring                   95,102       28,846 
   Foreign exchange loss                                        685,401       34,926 
--------------------------------------------------  -----  ------------  ----------- 
                                                            (6,236,384)  (2,891,398) 
Changes in non-cash working capital items: 
   Sales tax receivable                                        (80,557)      (7,287) 
   Prepaid expenses and others                                (380,430)     (44,916) 
   Deposit                                                     (27,944)            - 
   Trade and other payables                                   1,377,889      378,013 
   Payables to shareholders                                           -     (13,295) 
--------------------------------------------------  -----  ------------  ----------- 
                                                                888,958      312,515 
--------------------------------------------------  -----  ------------  ----------- 
Cash flow used in operating activities                      (5,347,426)  (2,578,883) 
--------------------------------------------------  -----  ------------  ----------- 
 
Investing activities 
Acquisition of mineral properties                     3        (13,737)      (6,076) 
Acquisition of property and equipment                 4       (373,540)    (133,036) 
Cash flow used in investing activities                        (387,277)    (139,112) 
--------------------------------------------------  -----  ------------  ----------- 
 
Financing activities 
Shares and warrants issuance                          5      74,550,202    5,000,000 
Share issuance costs                                  5     (6,140,329)     (36,928) 
Exercise of warrants                                  6       5,240,236            - 
Exercise of stock options                             7          38,000            - 
Cash flow from financing activities                          73,688,109    4,963,072 
--------------------------------------------------  -----  ------------  ----------- 
 
Net change in cash before effects of exchange 
 rate changes on cash during the period                      67,953,406    2,245,077 
Effects of exchange rate changes on cash                      (726,428)      (9,691) 
--------------------------------------------------  -----  ------------  ----------- 
Net change in cash during the period                         67,226,978    2,235,386 
Cash, beginning of period                                     1,515,406      963,788 
--------------------------------------------------  -----  ------------  ----------- 
Cash, end of period                                          68,742,384    3,199,174 
--------------------------------------------------  -----  ------------  ----------- 
 
Supplemental cash flow information 
Interest received                                                35,875       23,004 
S hare issuance costs included in trade and other 
 payables                                                       126,600            - 
Exercise of warrants credited to capital stock                1,078,702            - 
Exercise of stock options credited to capital 
 stock                                                           22,000            - 
 
 

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

AEX Gold Inc.

Condensed Notes to the interim Consolidated Financial Statements

Three and nine months ended September 30, 2020 and 2019

( Unaudited, i n Canadian Dollars)

   1.    NATURE OF OPERATIONS AND BASIS OF PRESENTATION 

AEX Gold Inc. (the "Corporation") was incorporated on February 22, 2017 under the Canada Business Corporations Act. The Corporation's head office is situated at 3400, One First Canadian Place, P.O. Box 130, Toronto, Ontario, M5X 1A4, Canada . The Corporation operates in one industry segment, being the acquisition, exploration and development of mineral properties. It owns interests in properties located in Greenland. The Corporation's financial year ends on December 31. Since July 2017, the Corporation's shares are listed on the TSX Venture Exchange (the "TSX-V") under the AEX ticker and since July 2020, the Corporation's shares are also listed on the AIM market of the London Stock Exchange ("AIM") under the AEXG ticker (note 5).

These unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2020 ("Financial Statements") were approved by the Board of Directors on November 18, 2020.

   1.1   Basis of presentation 

The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") including International Accounting Standard ("IAS") 34, Interim Financial Reporting. The Financial Statements have been prepared under the historical cost convention.

The Financial Statements should be read in conjunction with the annual financial statements for the year ended December 31, 2019 which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in these Financial Statements are consistent with those of the previous financial year ended December 31, 2019.

During the first three quarters of 2020, an outbreak of a new strain of coronavirus (COVID-19) resulted in a major global health crisis which continues to have impacts on the global economy and the financial markets at the date of completion of the Financial Statements. These events may cause significant changes on the Corporation's ability to complete planned exploration and evaluation activities in the future, meet its other obligations and existing commitments for the exploration and evaluation programs or our ability to obtain debt and equity financing. Following these events, the Corporation has taken and will continue to take action to minimize the impact of the COVID-19 pandemic. However, it is impossible to ultimately determine the financial implications of these events.

   2.    CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS 

The preparation of the 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.

In preparing the Financial Statements, the significant judgements made by Management in applying the Corporation accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Corporation's audited annual financial statements for the year ended December 31, 2019. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

   3.    MINERAL PROPERTIES 
 
                           As at December 
                              31, 2019                    As at 
                                                       September 30, 
                                           Additions       2020 
-------------------------  --------------  ---------  -------------- 
                                 $             $            $ 
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 
Total mineral properties           41,945     13,737          55,682 
-------------------------  --------------  ---------  -------------- 
 
 
                           As at December             As at December 
                              31, 2018                      31, 
                                           Additions       2019 
-------------------------  --------------  ---------  -------------- 
                                 $             $            $ 
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 
Total mineral properties           35,869      6,076          41,945 
-------------------------  --------------  ---------  -------------- 
 
   4.    PROPERTY AND EQUIPMENT 
 
                                                  Exploration and evaluation 
                                       Field equipment and        Vehicles and rolling stock   Equipment     Total 
                                         infrastructure 
                                                $                             $                    $           $ 
-------------------------------  ------------------------------  ---------------------------  ----------  ---------- 
 
  Nine months ended September 
            30, 2020 
     Opening net book value                             271,977                       86,656       8,470     367,103 
           Additions                                          -                      245,734     127,806     373,540 
          Depreciation                                 (95,164)                     (59,720)     (2,629)   (157,513) 
-------------------------------  ------------------------------  ---------------------------  ----------  ---------- 
     Closing net book value                             176,813                      272,670     133,647     583,130 
 
    As at September 30, 2020 
              Cost                                      387,323                      533,800     138,320   1,059,443 
    Accumulated depreciation                          (210,510)                    (261,130)     (4,673)   (476,313) 
-------------------------------  ------------------------------  ---------------------------  ----------  ---------- 
     Closing net book value                             176,813                      272,670     133,647     583,130 
-------------------------------  ------------------------------  ---------------------------  ----------  ---------- 
 
 

Depreciation of property and equipment 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 $43,196 for the three months ended September 30, 2020 ($157,513 for the nine months ended September 30, 2020) was expensed as exploration and evaluation expenses.

   5.    SHARE CAPITAL 

AIM listing

During the quarter ended September 30, 2020, the Corporation completed the admission of its entire issued share capital to trading on the AIM market of the London Stock Exchange and trading commenced on AIM on July 31, 2020 ("Admission") under the ticker AEXG.

Completion of the fundraising

On July 31, 2020, the Corporation completed the fundraising by issuing 94,444,445 common shares at a price of $0.77 per share for subscription made in Canadian dollars and GBP 0.45 per share for subscriptions made in British pounds sterling, for gross proceeds to the Corporation of $74,550,202 (the "Fundraising").

The Corporation incurred total issuance costs of $6,312,546 in relation to this process.

Certain officers and directors of the Corporation purchased an aggregate of 1,177,581 common shares for $906,737. The officers and directors of the Corporation subscribed to the Fundraising under the same terms and conditions as set forth for all subscribers.

   6.    WARRANTS 
   6.1   Warrants 

Changes in the Corporation's warrants are as follow:

 
                        Nine months ended September              As at December 31, 2019 
                                  30, 2020 
-------------------  ----------------------------------  ---------------------------------------- 
                                              Weighted 
                                               average                              Weighted 
                      Number of    Carrying    exercise  Number of   Carrying    average exercise 
                       warrants      Value      price     warrants     Value          price 
-------------------  ------------  ---------  ---------  ----------  ---------  ----------------- 
                                       $          $                      $              $ 
Balance, beginning     13,157,895  1,137,816       0.45           -          -                  - 
Issued                          -          -          -  13,157,895  1,137,816               0.45 
Exercised            (11,272,271)  (974,758)       0.45           -          -                  - 
Expired               (1,885,624)  (163,058)       0.45           -          -                  - 
                                                         ----------  ---------  ----------------- 
Balance, end                    -          -          -  13,157,895  1,137,816               0.45 
-------------------  ------------  ---------  ---------  ----------  ---------  ----------------- 
 

The Corporation has accelerated the expiry of certain common share purchase warrants ("Warrants"), bearing an expiration date of June 28, 2022. The certificate evidencing the Warrants ("Warrant Certificate") provided for acceleration in certain circumstances, which were met during the period. From the period February 6, 2020 to March 5, 2020, the daily volume weighted average price of the Corporation's common shares on the TSX-V was equal to or greater than $0.50, thus satisfying the acceleration requirements under the Warrants. Accordingly, Warrant holders were provided with notification that any Warrants that were not exercised before April 20, 2020, being the 30(th) trading day following the occurrence of the acceleration event, would expire and be cancelled. Certain Warrant holders exercised 11,272,271 Warrants, each entitling the holder to receive one common share of the Corporation, at an exercise price per warrant of $0.45, representing gross proceeds of $5,072,522.

   6.    WARRANTS (CONT'D) 
   6.2   Agent warrants 

Changes in the Corporation's agent and finders warrants are as follow:

 
                       Nine months ended September           As at December 31, 2019 
                                 30, 2020 
-------------------  -------------------------------  -------------------------------------- 
                                           Weighted 
                                            average                            Weighted 
                     Number of  Carrying    exercise  Number of  Carrying   average exercise 
                      warrants    Value      price     warrants    Value         price 
-------------------  ---------  ---------  ---------  ---------  --------  ----------------- 
                                    $          $                    $              $ 
Balance, beginning   1,067,739    321,788       0.49  1,067,739   321,788               0.49 
Exercised            (335,627)  (103,944)       0.50          -         -                  - 
Expired              (732,112)  (217,844)       0.49          -         -                  - 
-------------------  ---------  ---------  ---------  ---------  --------  ----------------- 
Balance, end                 -          -          -  1,067,739   321,788               0.49 
-------------------  ---------  ---------  ---------  ---------  --------  ----------------- 
 
   7.    STOCK OPTIONS 

An incentive stock option plan (the "Plan") was approved initially in 2017 and renewed by shareholders on June 17, 2020. The Plan is a "rolling" plan whereby a maximum of 10% of the issued shares at the time of the grant are reserved for issue under the Plan to executive officers and directors, employees and consultants. The Board of directors attributes the stock options and the exercise price of the options shall not be less than the closing price on the last trading day preceding the grant date. The options have a maximum term of ten years. Options granted pursuant to the Plan shall vest and become exercisable at such time or times as may be determined by the Board, except options granted to consultants providing investor relations activities shall vest in stages over a 12 month period with a maximum of one-quarter of the options vesting in any three-month period. The Corporation has no legal or constructive obligation to repurchase or settle the options in cash.

On June 17, 2020, the Corporation granted to its directors, officers and consultants 2,195,000 stock options exercisable at an exercise price of $0.70, with an expiry date of December 31, 2026. The stock options vested 100% at the grant date. Those options were granted at an exercise price equal to the closing market value of the shares the previous day of the grant. Total stock-based compensation costs amount to $1,031,650 for an estimated fair value of $0.47 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 76.41% expected volatility, 0.41% risk-free interest rate and 6.5 years options expected life. The expected life and expected volatility were estimated by benchmarking comparable companies to the Corporation.

Changes in stock options are as follow:

 
                          Nine months ended 
                          September 30, 2020          As at December 31,2019 
-------------------  ----------------------------  ---------------------------- 
                                    Weighted                      Weighted 
                     Number of   average exercise  Number of   average exercise 
                      options         price         options         price 
-------------------  ---------  -----------------  ---------  ----------------- 
                                        $                             $ 
Balance, beginning   5,650,000               0.43  3,020,000               0.47 
Granted              2,195,000               0.70  2,630,000               0.38 
Exercised            (100,000)               0.38          -                  - 
Balance, end         7,745,000               0.51  5,650,000               0.43 
-------------------  ---------  -----------------  ---------  ----------------- 
 
   7.    STOCK OPTIONS (CONT'D) 

Stock options outstanding and exercisable as at September 30, 2020 are as follows:

 
Number of options 
 outstanding and   Exercise 
   exercisable       price      Expiry date 
-----------------  --------  ----------------- 
                      $ 
 
        1,360,000    0.50      July 13, 2022 
        1,660,000    0.45     August 22, 2023 
        2,530,000    0.38    December 31, 2025 
        2,195,000    0.70    December 31, 2026 
-----------------  --------  ----------------- 
        7,745,000 
-----------------  --------  ----------------- 
 
   8.    EXPLORATION AND EVALUATION EXPENSES 
 
                                      Three months           Nine months ended 
                                   ended September 30,         September 30, 
----------------------------  -------------------------  ---------------------- 
                                   2020          2019        2020        2019 
----------------------------  ------------  -----------  ----------  ---------- 
                                     $            $            $           $ 
Geology                            936,988      379,524   1,732,412     741,252 
Lodging and on-site support        182,783      194,895     186,446     194,895 
Underground works                   19,440            -      65,287           - 
Drilling                           134,913       83,023     168,227      83,023 
Safety and environment              14,045       27,787      20,613      27,787 
Analysis                           132,211        4,057     199,280      18,637 
Transport                          330,084      228,391     400,740     234,116 
Helicopter Charter                  70,167       27,898      70,167      27,898 
Logistic support                   215,281      108,418     377,991     188,307 
Insurance                           29,260       18,301      33,773      18,301 
Maintenance infrastructure         790,631      630,877     977,928     630,877 
Government fees                      9,341        9,020      42,414      30,057 
Depreciation                        43,196       42,162     157,513     125,025 
----------------------------  ------------  -----------  ----------  ---------- 
Exploration and evaluation 
 expenses                        2,908,340    1,754,353   4,432,791   2,320,175 
----------------------------  ------------  -----------  ----------  ---------- 
 
   9.    GENERAL AND ADMINISTRATION 
 
                                   Three months             Nine months 
                                ended September 30,      ended September 30, 
---------------------------  -----------------------  ----------------------- 
                                 2020         2019        2020         2019 
---------------------------  ------------  ---------  ------------  --------- 
                                   $           $            $           $ 
Salaries and benefits              62,380          -        64,832          - 
Management and consulting 
 fees                             353,231     79,224       633,220    219,024 
Director's fees                    85,833     18,750       135,833     37,500 
Professional fees                 318,897     67,502       637,001    254,207 
Marketing and industry 
 involvement                      152,044     34,739       299,025     96,560 
Insurance                          51,402     10,561        72,524     30,741 
Travel and other expenses          30,306     13,115        61,486     61,380 
Regulatory fees                    50,729      3,860        82,451     22,135 
---------------------------  ------------  ---------  ------------  --------- 
General and administration      1,104,822    227,751     1,986,372    721,547 
---------------------------  ------------  ---------  ------------  --------- 
 

Further Information:

About AEX

AEX's principal business objectives are the identification, acquisition, exploration and development of gold properties in Greenland. The Corporation's principal asset is a 100% interest in the Nalunaq Project, an advanced exploration stage property with an exploitation license including the previously operating Nalunaq gold mine. The Corporation has a portfolio of gold assets covering 3,870km(2) , the largest portfolio of gold assets in Southern Greenland covering the two known gold belts in the region. AEX is incorporated under the Canada Business Corporations Act and wholly owns Nalunaq A/S, incorporated under the Greenland Public Companies Act.

Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the Corporation's current expectations regarding future events and the future growth of the Corporation's business. In this press release there is forward-looking information based on a number of assumptions and subject to a number of risks and uncertainties, many of which are beyond the Corporation's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to the factors discussed under "Risk Factors" in the Final Prospectus available under the Corporation's profile on SEDAR at www.sedar.com. Any forward-looking information included in this press release is based only on information currently available to the Corporation and speaks only as of the date on which it is made. Except as required by applicable securities laws, the Corporation assumes no obligation to update or revise any forward-looking information to reflect new circumstances or events. No securities regulatory authority has either approved or disapproved of the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Inside Information

This announcement contains inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR").

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November 19, 2020 02:00 ET (07:00 GMT)