TIDMAEXG

RNS Number : 9516J

AEX Gold Inc

27 August 2021

("AEX" or the "Corporation")

AEX Gold Inc. Reports Second Quarter Financial Results, Operational Update and Board Changes

TORONTO, ONTARIO - AUGUST 27, 2021 - AEX Gold Inc. (AIM: AEXG; TSXV: AEX), an independent gold Corporation with a portfolio of exploration licences in Greenland, announces its unaudited condensed interim consolidated financial statements ("Financial Statements") for the quarter ended June 30, 2021. 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 . 

As previously communicated, the Nalunaq Project was put on hold in February 2021 due to unforeseen cost increases associated with the impacts of the COVID-19 global pandemic and as per the April 2021 announcement, the Corporation was focussing on four elements to continue advancing and de-risking the Nalunaq Project:

-- Conducting a third-party engineering study to optimize the Project costs and de-risk the Project schedule that will enable AEX to re-assess the execution methodology (self-execution vs. EPC) post completion;

-- Conducting fully funded 'early works' infrastructure and a 20,000-30,000m exploration program to expand the Nalunaq Resource;

   --    Continue to advance the EIA and SIA to obtain all permits; 

-- Regional exploration targeting both gold and Green/Strategic minerals through technical research, sampling and geophysical surveys.

Corporate and Operational Update

-- The Corporation completed a tender process for the third-party engineering study and have appointed Halyard Inc. ('Halyard') a boutique engineering consulting firm based out of Toronto, Canada. Halyard was involved in the engineering and design of most of the components in the Nalunaq processing plant and comes with Greenlandic, project execution experience. The engineering study on the process plant and associated infrastructure are progressing according to plan and we still expect completion by Q4 2021. The study will advance engineering and significantly de-risk project cost and schedule.

-- Legacy procurement and contracting commitments have been reviewed and orders that were placed for the Process Plant and Site Mobile fleet prior to the February 2021 announcement are ready for delivery, and a strategy for logistics/storage is being considered.

-- The third-party review of the Nalunaq Resource Model by InnovExplo, a specialist in a wide range of exploration and technical services in the metals and mining industry, has been completed and has concluded that the existing resource model contains no fatal flaws. The results of the review and recommendations formed the framework of the 2021 exploration program at Nalunaq. The drilling program will also leverage the latest findings from the drilling campaigns of 2019 and 2020 to test the down-dip extension of Main Vein in the Kirkspir Valley, nearby the South and Valley Blocks. The drilling campaign has got off to a slow start given the influence of COVID-19 and the high demand placed on drilling contractors which has been caused by high Commodity prices. Negotiations are currently underway with additional international drilling companies to support our exploration efforts this year, which will extend to our 2022 campaign.

-- A condition assessment of the Bulkhead will be conducted in October 2021 to confirm the design parameters and the quality of construction after which a remediation plan will be developed. The assessment will include non-destructive pile integrity and ultrasound tests to determine the Bulkhead thickness as well as an unconfined compressive strength test of cored concrete samples.

-- In June 2021, site preparation for the 50-person exploration camp commenced. Construction of the camp is progressing according to plan with estimated completion by September 2021. The camp will support continuing exploration activities at Nalunaq as the weather conditions turn towards winter in the coming months. Following the camp construction, the bridge crossing the Kirkespir River will be upgraded to provide reliable access between the exploration camp and historical mine site.

-- The Environmental Impact Assessment ("EIA") and Social Impact Assessment ("SIA") are being advanced with no material update at this stage.

-- In parallel to the exploration being conducted at Nalunaq, regional exploration is predominately focused on the Vagar and Nanoq gold targets as well as other evolving targets in licences around Nalunaq. Furthermore, we are exploring for copper/base metals and rare earth elements ("REE") in the Sava licence, platinum group elements ("PGEs") in the Sagga dyke, graphite at Norrearm and base metals across the Tartoq licences.

Strengthening of the Board

The Corporation is pleased to announce the further strengthening of its Board of Directors with the appointment of two additional Non-Executive Directors, Liane Kelly and Warwick Morley-Jepson.

Liane brings a wealth of ESG experience to the Board having enjoyed a successful career focused on advising companies on sustainability and CSR initiatives. She currently sits on the Board of B2Gold Corporation and acts as a CSR Advisor to Middle Ground Consulting. Liane specialises in advising companies on community engagement and social impact, both of which will be vital for AEX as the Corporation continues to build on its strong engagement with its Greenlandic stakeholders. Liane replaces George Fowlie, who steps down from the Board, but will continue to provide his invaluable expertise in corporate and business development to the Corporation as well as supporting our Investor Relations in Canada.

Warwick has significant experience in mining having spent just under 40 years' in the industry, holding various managerial and executive positions including his current roles as Chairman and Independent Director of Wesdome Gold Mines and Karora Minerals respectively. Warwick was previously the Executive Vice President and Chief Operating Officer at Ivanhoe Mines and before that held the same positions at Kinross Gold Corporation. His experience in mine development and operations at global mining firms is highly relevant to AEX as the Corporation continues to progress both the Nalunaq mine and its various exploration targets.

Q2 2021 Financial Highlights

-- The Corporation had a strong cash balance of $49.6 million at June 30, 2021 ($61.9 million at December 31, 2020), with no debt, and total working capital of $48.5 million ($61.4 million at December 31, 2020).

-- Capital asset purchase commitments, net of deposits on order as at June 30, 2021 was $6.0 million. These commitments, as previously reported, relate predominantly to the purchase of components of the process plant and surface mobile vehicles. Available liquidity, net of commitments as at June 30, 2021 was $43.6 million.

-- Construction in progress increased by $2.1 million in H1 2021 (zero at December 31, 2020), as a result of capitalized engineering costs on the Nalunaq Project prior to suspension on February 10, 2021.

-- Exploration and evaluation expenses during the quarter was $2.0 million (Q2 2020: $0.9 million), predominantly on the Nalunaq Property.

-- General and administrative expenses during the period were $2.1 million (Q2 2020: $0.5 million), the result of increased headcount, consulting and professional fees associated with right-sizing the organizational structure to develop Nalunaq.

Selected Financial Information

The following selected financial data is extracted from the Financial Statements for the three and six months ended June 30, 2021.

Financial Results

 
                                   Three months               Six months 
                                  ended June 30,            ended June 30, 
                                    2021         2020         2021         2020 
                                       $            $            $            $ 
                             -----------  -----------  -----------  ----------- 
Exploration and evaluation 
 expenses                      1,998,049      912,676    3,245,196    1,524,451 
General and administrative     2,093,578      498,639    3,678,649      881,550 
Net loss and comprehensive 
 loss                        (4,576,963)  (2,442,132)  (7,866,015)  (3,408,569) 
Basic and diluted loss per 
 common share                     (0.03)       (0.03)       (0.04)       (0.04) 
                             -----------  -----------  -----------  ----------- 
 

Financial Position

 
                            As at June 30, 2021  As at December 31, 
                                                               2020 
                                              $                   $ 
                            -------------------  ------------------ 
Cash on hand                         49,593,636          61,874,999 
Total assets                         58,772,695          65,944,682 
Total current liabilities             1,248,048             897,799 
Shareholders' equity                 56,776,955          64,282,970 
Working capital                      48,500,792          61,411,208 
                            -------------------  ------------------ 
 

Eldur Olafsson, CEO of AEX, commented:

"I am pleased to report a strong set of results, with the Company currently well capitalised and advancing on all our key workstreams. In addition to the considerable progress made in the de-risking and development of the Nalunaq project, we are very excited to report on the wider scale exploration efforts that are ongoing alongside the work on our gold targets, targeting green and strategic minerals.

We believe that the current efforts to expand the Nalunaq resource, in addition to the focus on our exploration portfolio presents a unique opportunity to investors and we look forward to updating the market in due course.

I would also like to welcome Liane and Warwick onto the AEX Board. On behalf of the Corporation, we look forward to leveraging their experience as we continue to execute our development strategy.

Warwick's experience across the mining value chain will be essential as the Corporation advances the engineering study and evaluates the Nalunaq Project execution methodology in the near future.

Liane's appointment together with the promotion of Joan Plant to Vice President - Environmental, Social & Governance is a strong recognition of AEX's commitment to being a responsible corporate citizen of Greenland. I would also like to thank George for the incredible work he has done throughout the years as a Board member and I look forward to continuing working with him as AEX develops"

AIM Rule Disclosures

In relation to the appointment to the board, there is no further information required to be disclosed pursuant to paragraph (g) of Schedule 2 of the AIM Rules for Companies save what is disclosed below.

Liane Catherine Kelly, aged 57, has held the following directorships and/or partnerships in the past five years:

 
 Current Directorships/Partnerships   Previous Directorships/Partnerships 
 
 B2Gold Corporation                   Geosoft Inc now Seequent Ltd 
 
  Cheetah Conservation Fund 
 

Warwick Peter Morley-Jepson, aged 63, has held the following directorships and/or partnerships in the past five years:

 
 Current Directorships/Partnerships   Previous Directorships/Partnerships 
  Wesdome Gold Mines Limited 
 
  Karora Resources Inc (formally 
  RNC Minerals) 
 
 

Enquiries:

AEX Gold Inc.

Eldur Olafsson, Executive Director and CEO

+354 665 2003

eo@aexgold.com

Eddie Wyvill, Investor Relations

+44 (0)7713 126727

ew@aexgold.com

Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)

Callum Stewart

Simon Mensley

Ashton Clanfield

+44 (0) 20 7710 7600

Panmure Gordon (UK) Limited (Joint Broker)

John Prior

Hugh Rich

Dougie Mcleod

+44 (0) 20 7886 2500

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 six Months Ended June 30, 2021

AEX Gold Inc.

Consolidated Statements of Financial Position

(Unaudited, in Canadian Dollars)

 
                                                         As at      As at December 
                                                        June 30,         31, 
                                              Notes      2021            2020 
--------------------------------------------  -----  ------------  --------------- 
                                                           $              $ 
ASSETS 
Current assets 
Cash                                                   49,593,636       61,874,999 
Sales tax receivable                                       64,482           62,750 
Prepaid expenses and others                                90,722          371,258 
Total current assets                                   49,748,840       62,309,007 
 
Non-current assets 
Deposit on order                                4       5,186,000        1,711,970 
Escrow account for environmental monitoring               434,159          460,447 
Mineral properties                              3          62,244           62,244 
Capital assets                                  4       3,341,452        1,401,014 
Total non-current assets                                9,023,855        3,635,675 
--------------------------------------------  -----  ------------  --------------- 
TOTAL ASSETS                                           58,772,695       65,944,682 
--------------------------------------------  -----  ------------  --------------- 
 
LIABILITIES AND EQUITY 
Current liabilities 
Trade and other payables                                1,198,466          831,899 
Lease liabilities - current portion             5          49,582           65,900 
--------------------------------------------  -----  ------------  --------------- 
Total current liabilities                               1,248,048          897,799 
 
Non-current liabilities 
Lease liabilities                               5         747,692          763,913 
Total non-current liabilities                             747,692          763,913 
Total liabilities                                       1,995,740        1,661,712 
 
Equity 
Capital stock                                          88,500,205       88,500,205 
Contributed surplus                                     3,285,952        2,925,952 
Accumulated other comprehensive loss                     (36,772)         (36,772) 
Deficit                                              (34,972,430)     (27,106,415) 
--------------------------------------------  -----  ------------  --------------- 
Total equity                                           56,776,955       64,282,970 
--------------------------------------------  -----  ------------  --------------- 
TOTAL LIABILITIES AND EQUITY                           58,772,695       65,944,682 
--------------------------------------------  -----  ------------  --------------- 
 
 
 
 

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                      Six months 
                                             ended June 30,                   ended June 30, 
-----------------------------  -----  ----------------------------  ------------------------------- 
                               Notes       2021           2020              2021            2020 
-----------------------------  -----  ---------------  -----------  ------------------  ----------- 
                                             $              $                $                $ 
 
Expenses 
Exploration and evaluation 
 expenses                        7          1,998,049      912,676           3,245,196    1,524,451 
General and administrative       8          2,093,578      498,639           3,678,649      881,550 
Stock-based compensation         6            360,000    1,031,650             360,000    1,031,650 
Foreign exchange loss (gain)                  157,092        3,830             647,691     (21,567) 
Operating loss                              4,608,719    2,446,795           7,931,536    3,416,084 
 
  Other expenses (income) 
Interest income                              (41,859)      (4,873)            (85,929)      (9,915) 
Finance costs                                  10,103          210              20,408        2,400 
-----------------------------  -----  ---------------  -----------  ------------------  ----------- 
 
Net loss and comprehensive 
 loss                                     (4,576,963)  (2,442,132)         (7,866,015)  (3,408,569) 
-----------------------------  -----  ---------------  -----------  ------------------  ----------- 
 
 
 
 
Weighted average number of 
 common shares outstanding 
 - basic and diluted                      177,098,737   81,176,725         177,098,737   77,307,646 
Basic and diluted loss per 
 common share                                  (0.03)       (0.03)              (0.04)       (0.04) 
-----------------------------  -----  ---------------  -----------  ------------------  ----------- 
 
 
 

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                    Total 
                  Notes   outstanding      Stock     Warrants      surplus        loss         Deficit         Equity 
--------------  -------  -------------  ----------  -----------  -----------  -------------  ------------  ----------- 
                                            $            $            $             $             $              $ 
 
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                                -           -            -            -              -   (3,408,569)  (3,408,569) 
 
Warrants 
 exercised                  11,387,626   6,140,518  (1,010,418)            -              -             -    5,130,100 
Warrants 
 expired                             -           -    (210,437)      210,437              -             -            - 
Options 
 exercised                     100,000      60,000            -     (22,000)              -             -       38,000 
Stock-based 
 compensation                        -           -            -    1,031,650              -             -    1,031,650 
--------------  -------  -------------  ----------  -----------  -----------  -------------  ------------  ----------- 
Balance at 
 June 30, 2020              82,434,020  20,084,129      238,749    2,755,487       (36,772)  (18,175,872)    4,865,721 
--------------  -------  -------------  ----------  -----------  -----------  -------------  ------------  ----------- 
 
Balance at 
 January 1, 
 2021                      177,098,737  88,500,205            -    2,925,952       (36,772)  (27,106,415)   64,282,970 
Net loss and 
 comprehensive 
 loss                                -           -            -            -              -   (7,866,015)  (7,866,015) 
 
Stock-based 
 compensation      6                 -           -                   360,000              -             -      360,000 
--------------  -------  -------------  ----------  -----------  -----------  -------------  ------------  ----------- 
Balance at 
 June 30, 2021             177,098,737  88,500,205            -    3,285,952       (36,772)  (34,972,430)   56,776,955 
--------------  -------  -------------  ----------  -----------  -----------  -------------  ------------  ----------- 
 

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)

 
                                                                Six months 
                                                Notes         ended June 30, 
----------------------------------------------  -----  ------------------------- 
                                                            2021          2020 
----------------------------------------------  -----  ------------  ----------- 
                                                              $            $ 
 
Operating activities 
Net loss for the period                                 (7,866,015)  (3,408,569) 
Adjustments for: 
   Depreciation                                   4         143,723      114,317 
   Stock-based compensation                       6         360,000    1,031,650 
   Finance costs                                                  -        2,400 
   Foreign exchange loss (gain)                             644,430     (19,112) 
----------------------------------------------  -----  ------------  ----------- 
                                                        (6,717,862)  (2,279,314) 
Changes in non-cash working capital items: 
   Sales tax receivable                                     (1,732)     (14,067) 
   Prepaid expenses and others                              280,536       93,561 
   Trade and other payables                                 231,188      293,916 
                                                            509,992      373,410 
----------------------------------------------  -----  ------------  ----------- 
Cash flow used in operating activities                  (6,207,870)  (1,905,904) 
----------------------------------------------  -----  ------------  ----------- 
 
Investing activities 
Acquisition of mineral properties                 3               -     (13,737) 
Acquisition of capital assets                     4     (2,084,161)            - 
Deposit on order                                  4     (3,474,030)            - 
Cash flow used in investing activities                  (5,558,191)     (13,737) 
----------------------------------------------  -----  ------------  ----------- 
 
Financing activities 
Principal repayment - lease liabilities           5        (32,539)            - 
Exercise of warrants                                              -    5,130,100 
Exercise of stock options                                         -       38,000 
Deferred share issuance costs                                     -    (324,293) 
Cash flow from (used in) financing activities              (32,539)    4,843,807 
----------------------------------------------  -----  ------------  ----------- 
 
Net change in cash before effects of exchange 
 rate changes on cash during the period                (11,798,600)    2,924,166 
Effects of exchange rate changes on cash                  (482,763)        1,517 
----------------------------------------------  -----  ------------  ----------- 
Net change in cash during the period                   (12,281,363)    2,925,683 
Cash, beginning of period                                61,874,999    1,515,406 
----------------------------------------------  -----  ------------  ----------- 
Cash, end of period                                      49,593,636    4,441,089 
----------------------------------------------  -----  ------------  ----------- 
 
Supplemental cash flow information 
Interest received                                            85,929        9,915 
Exercise of warrants credited to capital 
 stock                                                            -    1,010,418 
Exercise of stock options credited to capital 
 stock                                                            -       22,000 
Deferred share issuance costs included in 
 trade and other payables                                         -      851,228 
 
 

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 six months ended June 30, 2021 and 2020

( Unaudited, i n Canadian Dollars)

   1.    NATURE OF OPERATIONS, 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.

These unaudited condensed interim consolidated financial statements for the three and six months ended June 30, 2021 ("Financial Statements") were approved by the Board of Directors on August 26, 2021.

   1.1   Basis of presentation 

The Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") 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, 2020 which have been prepared in accordance with IFRS. 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, 2020.

   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, 2020. 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, 2020                  As at 
                                                                     June 30, 
                                                         Additions     2021 
---------------------------------------  --------------  ---------  --------- 
                                               $             $          $ 
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 (previously called Kangerluarsuk)            6,562          -      6,562 
Total mineral properties                         62,244          -     62,244 
---------------------------------------  --------------  ---------  --------- 
 

.

 
                                         As at December 
                                            31, 2019                    As at 
                                                                     December 31, 
                                                         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 
Sava (previously called Kangerluarsuk)                -      6,562          6,562 
Total mineral properties                         41,945     20,299         62,244 
---------------------------------------  --------------  ---------  ------------- 
 
   4.    CAPITAL ASSETS 
 
                                  Field           Vehicles      Equipment     Construc-tion   Right-of-use     Total 
                                 equipment       and rolling    (including     In Progress       assets 
                              and infrastruc-       stock       intangible) 
                                   ture 
                                    $                $              $               $              $             $ 
--------------------------  -----------------  -------------  -------------  --------------  -------------  ---------- 
 
 Six months ended 
  June 30, 2021 
 Opening net book 
  value                               146,203        256,865        177,052               -        820,894   1,401,014 
 Additions                                  -              -              -       2,084,161              -   2,084,161 
 Depreciation                        (61,220)       (31,610)       (10,521)               -       (40,372)   (143,723) 
--------------------------  -----------------  -------------  -------------  --------------  -------------  ---------- 
 Closing net book 
  value                                84,983        225,255        166,531       2,084,161        780,522   3,341,452 
 
 As at June 30, 
  2021 
 Cost                                 387,323        533,800        185,878       2,084,161        841,080   4,032,242 
 Accumulated depreciation           (302,340)      (308,545)       (19,347)               -       (60,558)   (690,790) 
--------------------------  -----------------  -------------  -------------  --------------  -------------  ---------- 
 Closing net book 
  value                                84,983        225,255        166,531       2,084,161        780,522   3,341,452 
--------------------------  -----------------  -------------  -------------  --------------  -------------  ---------- 
 
   4.    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 $98,632 ($ 114,317 for the six months ended June 30, 2020) was expensed as exploration and evaluation expenses during the six months ended June 30, 2021.

As at June 30, 2021, the Corporation had capital asset purchase commitments, net of deposit on order, of $6,030,167. These commitments relate to purchases of equipment, infrastructure and vehicles.

   5.    LEASE LIABILITIES 
 
                                               As at 
                                              June 30, 
                                                2021 
----------------------------------------  ------------ 
                                                  $ 
Balance beginning                              829,813 
Principal repayment                           (32,539) 
----------------------------------------  ------------ 
Balance ending                                 797,274 
Non-current portion - lease liabilities      (747,692) 
Current portion - lease liabilities             49,582 
----------------------------------------  ------------ 
 
   6.    STOCK OPTIONS 

An incentive stock option plan (the "Plan") was approved initially in 2017 and renewed by shareholders on June 9, 2021. 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 9, 2021, the Corporation granted to the CFO 900,000 stock options exercisable at an exercise price of $0.59, with an expiry date of December 31, 2027. The stock options vested 100% at the grant date. Those options were granted at an exercise price equal the closing market value of the shares the previous day of the grant. Total stock-based compensation costs amount to $360,000 for an estimated fair value of $0.40 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 75.85% expected volatility, 1.07% risk-free interest rate and 6.6 years options expected life. The expected life and expected volatility were estimated by benchmarking comparable companies to the Corporation.

   6.    STOCK OPTIONS (CONT'D) 

Changes in stock options are as follows:

 
                           Six months ended            Year ended December 
                             June 30, 2021                   31, 2020 
-------------------  ----------------------------  ---------------------------- 
                                    Weighted                      Weighted 
                     Number of   average exercise  Number of   average exercise 
                      options         price         options         price 
-------------------  ---------  -----------------  ---------  ----------------- 
                                        $                             $ 
Balance, beginning   7,745,000               0.51  5,650,000               0.43 
Granted                900,000               0.59  2,195,000               0.70 
Exercised                    -                  -  (100,000)               0.38 
Expired               (10,000)               0.38          -                  - 
-------------------  ---------  -----------------  ---------  ----------------- 
Balance, end         8,635,000               0.52  7,745,000               0.51 
-------------------  ---------  -----------------  ---------  ----------------- 
 

Stock options outstanding and exercisable as at June 30, 2021 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 
        2,520,000    0.38    December 31, 2025 
        2,195,000    0.70    December 31, 2026 
          900,000    0.59    December 31, 2027 
-----------------  --------  ----------------- 
        8,635,000 
-----------------  --------  ----------------- 
 
   7.    EXPLORATION AND EVALUATION EXPENSES 
 
                                   Three months           Six months 
                                   ended June 30,        ended June 30, 
----------------------------  --------------------  -------------------- 
                                 2021       2020      2021       2020 
----------------------------  -----------  -------  ---------  --------- 
                                   $          $         $          $ 
Geology                           562,416  524,863    705,954    795,423 
Lodging and on-site support        64,523    3,663     64,523      3,663 
Underground work                   18,588   23,040     18,589     45,847 
Drilling                          287,760   33,950    287,760     33,315 
Safety and environment                  -    6,568          -      6,568 
Analysis                            5,362   43,205     84,581     67,068 
Transport                          21,455    9,923     22,413     70,656 
Helicopter charter                109,024        -    109,024          - 
Logistic support                   64,913   84,223     86,114    162,710 
Insurance                              45    3,287      8,707      4,513 
Project Engineering costs         804,267  102,442  1,736,133    187,297 
Government fees                    10,380   20,353     22,766     33,074 
Depreciation                       49,316   57,159     98,632    114,317 
----------------------------  -----------  -------  ---------  --------- 
Exploration and evaluation 
 expenses                       1,998,049  912,676  3,245,196  1,524,451 
----------------------------  -----------  -------  ---------  --------- 
 
   8.    GENERAL AND ADMINISTRATION 
 
                                  Three months           Six months 
                                  ended June 30,        ended June 30, 
---------------------------  --------------------  -------------------- 
                                2021       2020       2021       2020 
---------------------------  -----------  -------  -----------  ------- 
                                  $          $          $          $ 
Salaries and benefits            667,453        -    1,054,961        - 
Management and consulting 
 fees                                  -  166,369            -  282,441 
Director's fees                  116,879   25,000      236,379   50,000 
Professional fees                690,594  194,349    1,246,949  318,104 
Marketing and industry 
 involvement                     190,609   60,606      356,332  146,981 
Insurance                        148,377   10,561      266,342   21,122 
Travel and other expenses        172,156   16,606      302,365   31,180 
Regulatory fees                   84,965   25,148      170,230   31,722 
Depreciation                      22,545        -       45,091        - 
General and administration     2,093,578  498,639    3,678,649  881,550 
---------------------------  -----------  -------  -----------  ------- 
 

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 for the purposes of Article 7 of the UK version of Regulation (EU) No. 596/2014 on Market Abuse ("UK MAR"), as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, and Regulation (EU) No. 596/2014 on Market Abuse ("EU MAR").

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August 27, 2021 02:00 ET (06:00 GMT)

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