TIDMAEXG
RNS Number : 7918J
AEX Gold Inc
29 April 2022
2021 Full Year Financial Results and Update
TORONTO, ONTARIO - April 29(th) , 2022 - AEX Gold Inc. ("AEX" or
the "Company" or the "Corporation") (AIM: AEXG; TSXV: AEX), the
independent mining company with an unrivalled land package of gold
and strategic mineral assets covering an area of 4,090 km2 in
Southern Greenland, is pleased to present a Corporate Update and
its 2021 Full Year Financial Results.
Highlights
-- Nalunaq
o The new all-weather 50-person exploration camp was completed
within budget and has been winterized and is fully operational.
o The 2021 exploration program was completed with 11,044m of
core drilling over the South and Valley Blocks at Nalunaq. Drilling
commenced in Q2 2021 and was finalised in Q4 2021. The program
objectives were met by confirming Valley Block as a new, previously
unrecognised, resource area within the Nalunaq project with surface
drill results similar in grade to those historically recorded at
Mountain, Target and South Blocks.
o Results also supported Nalunaq's geological model - the
Dolerite Dyke Model - as an indicator of high grade mineralization.
This model now predicts a total of five resource growth target
areas.
o In collaboration with SRK Consulting, the Company is
constantly assessing and updating the Resource estimate procedures
to incorporate the Dolerite Dyke Model and the surface drilling
Nugget Effect historically recorded. This work will allow AEX to
incorporate the geological results into the outcomes of the Halyard
Inc. ("Halyard") 3rd party engineering study completed in 2021 with
an intention to move the project towards a Prefeasibility Study
(PFS) to support development.
o The 2022 exploration program intends to provide further
resource development through both infill and strike extension
drilling across the Valley Block, informed by the Dolerite Dyke
Model. To facilitate this program the Company will develop a number
of drill access roads from the existing mountain surface
infrastructure .
o AEX is also assessing the option to install a dedicated
on-site sample preparation laboratory which would allow for more
rapid turn-around time for drill results at Nalunaq and samples
from our other exploration work.
o Subject to drill results, the 2022 exploration program will
provide AEX with the optionality of investigating an underground
bulk sample with an option for toll treatment off-site. This would
be used as a development step to increase resource confidence
towards mine construction.
o The Company is in the process of updating its Environmental
Impact Assessment (EIA) and Social Impact Assessment (SIA), which
it expects to complete over the course of the next year.
-- Vagar Ridge and Nanoq Gold Targets
o Considerable exploration was also conducted on both the Vagar
Ridge and Nanoq gold targets as well as regionally across the
Company's expanding portfolio. The result of these activities are
pending and are expected to be announced shortly.
o Subject to these results, AEX intends to conduct a program of
exploration drilling across Vagar Ridge in order to demonstrate the
true extent and depth potential of the Orogenic and Intrusion
Related Gold mineralisation recorded previously.
o Also subject to these results, the Company intends to further
develop its geological understanding of the gold and copper
mineralisation hosted at Nanoq through an airborne geophysical
survey.
-- Strategic Mineral Targets
o The Company acquired an additional 202km(2) of prospective
ground in 2021 taking its total land package to 4,090km(2) and
continues to look to expand its footprint in strategic mineral
areas across Southern Greenland.
o Work programs at Sava have illustrated Iron Ore, Copper, Gold
("IOCG") style signatures across three targets opening up the
opportunity to host copper, gold and rare earth mineralisation.
These will be followed up with additional surface sampling and
scout drilling during 2022.
o At Nørream, a bulk sample has been taken and shipped for
metallurgical test work in the UK.
-- AEX Gold Financial Results
o Cash balance of C$27.3 million at December 31, 2021 (C$61.9
million at December 31, 2020), with no debt, and total working
capital of C$25.5 million ($61.4 million at December 31, 2020).
Eldur Olafsson, CEO of AEX Gold, commented:
"Having set out our revised forward plan, following the
necessary pause in February 2021 in the Nalunaq development, as a
consequence of COVID-related cost increases, I am pleased to report
that the Company has successfully achieved all of the revised goals
that we set out to achieve in 2021.
Notably we have made considerable progress at Nalunaq and across
the portfolio. Halyard completed a 3rd Party Engineering study,
which is a major part of the technical study that will underpin the
development of the Nalunaq project. The last aspect of this study,
which is in progress, is the proving up of a M&I Resource and
underground mine planning which would enable the Company to move
into a Prefeasibility Study (PFS) stage. The 11,044m drilling
program that AEX conducted last year has been central in helping us
further understand the gold mineralization at Nalunaq. As recently
announced, this has provided verification of the 'Dolerite Dyke'
model's ability to predict the high-grade areas in the Nalunaq
Mountain which previous operators had not recognized but directly
correlate with the High Grade zones which they mined.
Our drill results not only identified a new discovery at 'Valley
Block', which returned particularly high grades similar to that
encountered in historical mined areas, but also the potential for a
further zone along strike of this, named 'Welcome Block'. The
Dolerite Dyke Model also predicts further extensions which have not
been identified by previous operators of the asset.
On the wider exploration front, we acquired more land in 2021
which has increased our total land package to 4,090 km2, mostly
focusing on land that has potential for Strategic Minerals.
Strategic minerals are essential for electrification as the world
transitions from hydrocarbon energy sources. The results of our
exploration program conducted in 2021 have exceeded expectation and
lead us to believe that we hold potential resources [of a scale]
that could be of global significance. As we further our
understanding of the geology of Southern Greenland, in a safe OECD
mining jurisdiction, through our exploration work, it is proving
that this is the new frontier, with genuine indications of World
Class deposits of Gold and Strategic Minerals. I look forward to
bringing regular updates to the market on the progress of our
portfolio.
We completed construction of our 50 personnel all weather camp
at Nalunaq which now gives us an operating base to realize the vast
potential our continuing exploration activity has begun to reveal.
To put this in context, ours is the only mining exploration camp of
such a standard and scale currently in Greenland and gives AEX the
advantage of being able to advance its projects all year round.
Finally, I would like to thank the Greenlandic Government for
its efficiency and cooperation. It is based upon these foundations
that I believe we will not only be able to deliver a truly
transformational future for AEX and its shareholders but more
importantly, for the people of Greenland."
Introduction
2021 was a year of consolidation, adjustment and refocus for AEX
Gold, as the COVID-19 pandemic continued to wreak havoc globally,
and on our business. Significantly, and as previously communicated,
the Nalunaq Project was put on hold in February 2021 due to
material unforeseen cost increases associated with the impacts of
COVID, and as per the April 2021 announcement, the Corporation
redirected its focus on four key elements to continue advancing the
Company and de-risking the Nalunaq Project ahead of development:
conducting a third-party engineering study to optimize the Project
costs and de-risk the Project schedule to enable AEX to re-assess
the execution methodology post completion; conducting fully funded
'early works' infrastructure and a significant exploration program
to expand the Nalunaq Resource; continue to advance the EIA and SIA
to obtain all permits; and regional exploration targeting both gold
and strategic minerals through technical research, sampling and
geophysical surveys.
Despite the challenging start to the year 2021 was a successful
year for the Company, delivering considerable progress in line with
our revised goals. Exploration results received so far from the
period have delivered ahead of our expectations, with further
results expected to be announced shortly. In addition, the macro
environment has moved in our direction as the global energy
transition gathers pace and recent geo-political events have shone
a spotlight on the importance and value of large mineral resources
located in safe, OECD jurisdictions, with Greenland probably being
the final frontier.
Nalunaq
51 drillholes for 11,044m were completed during the 2021 field
season. This drilling was designed to assess the along strike and
down dip extensions of the mineralized Main Vein structure away
from the previously explored South, Target and Mountain Blocks
mined between 2004 to 2013. The program was also designed to assess
AEX's geological and structural models and to test new target areas
of the project.
The results announced on April 4 2022 provided further evidence
that the Valley Block is a new high-grade zone, unrecognized or
developed by previous operators and corroborating the Dolerite Dyke
Model. The Valley Block is now a key target for initial resource
growth at Nalunaq.
The 2021 program also targeted a downdip extension of the South
Block and identified a potential further high-grade zone, the
'Welcome Block' (which would take the total high-grade zones to
five), which was predicted by the Dolerite Dyke Model.
In parallel to the exploration program, Halyard completed its
3rd party engineering study, focusing on the Nalunaq development
cost including the process plant, mobile equipment, surface
infrastructure, permanent camp and associated logistics and
engineering. The study concluded that the advanced engineering of
the overall project is now to Feasibility Study level based on the
Canadian Standards of Disclosure for Mineral Project NI43-101
requirements.
AEX continues to work with SRK Consulting to develop the most
robust Mineral Resource estimation technique for Nalunaq possible,
incorporating the Dolerite Dyke Model as well as the high-grade
variability from core sampling (the 'nugget effect') to better
reflect the full resource potential at the Valley Block and the
rest of the Nalunaq project. This work will allow AEX to
incorporate the geological results into the outcomes of the Halyard
3rd party engineering study completed in 2021 with a plan to move
the project towards a Preliminary Economic Assessment (PEA) or
Pre-Feasibility Study to support further development.
Alongside the exploration and technical studies, AEX has
continued its ESG mandate on the project, with the Company working
to update its Environmental Impact Assessment (EIA) and Social
Impact Assessment (SIA) over the course of 2022 in line with the
terms of its exploitation licence.
AEX, in conjunction with its technical advisors, has developed a
further exploration plan for Nalunaq for 2022. This will involve
both the infill drilling of the Valley Block as well as the
drilling of the up dip extension of this Block from the Dolerite
Dyke Model. This program aims to allow for the continual resource
development from the Valley Block. In order to access this up dip
portion, AEX will first construct two new drilling access roads
from the existing mountain surface infrastructure.
AEX is also assessing the option to commission a dedicated
on-site sample preparation facility to allow the Company to better
manage its sample steam and ensure a timely return of assay results
to facilitate rapid action following exploration results.
It is the aim of this 2022 program, subject to the drill
results, to provide the Company with the optionality to assess the
viability of taking an underground bulk sample from a new mine
development in the Valley Block. This bulk sample, which would
potential be toll treated off-site, would facilitate increase
confidence in the resource as the project moves towards mine
construction.
Vagar Ridge, Nanoq and Tartoq
A significant exploration program was also conducted across
AEX's gold portfolio in 2021, chiefly at our highly prospective
Vagar Ridge asset but also at the Nanoq gold/copper licence and our
other exciting regional gold targets. This program included
airborne geophysics, surface hyperspectral imagery, structural
mapping and surface rock chip sampling.
The results for the 84km(2) airborne magnetics and radiometrics
survey over Tartoq were announced on November 23, 2021 and
successfully identified and refined prospective structures for
hosting of economic mineralization. AEX continues to await results
and interpretations from the rest of its gold portfolio and it is
the Company's intension to announce these results to the market as
soon as they are available.
Dependent upon these results, AEX intends to implement a new
core drilling program at Vagar Ridge to test and demonstrate the
full potential in terms of scale and depth potential of both
Orogenic and Intrusion Related Gold mineralization across the
target.
Further, and again dependent upon results, AEX intends to target
prospective targets and increase its geological knowledge across
the mineral system at Nanoq through implementing a high resolution
geophysical survey across the license.
The Company will provide further detail on its 2022 exploration
plans in due course.
Strategic Mineral Targets
AEX conducted exploration on it strategic minerals targets
during 2021, most notably at the Sava target where initial
assessments suggest the potential for IOCG mineralization. The 2021
exploration season completed remote sensing, airborne geophysics,
geological mapping, rock chip and ionic geochemistry studies and
hyperspectral imagery across the Sava license. The results
confirmed the presence of three key significant and coherent multi
element anomalies potentially indicative of IOCG mineralization
with grab sample grades of up to 0.9% copper.
AEX intends to conduct further surface sampling across the
license and a short scout drilling program into these target areas
of Sava during 2022 in order to provide further geological evidence
of the extent of the mineralizing system at surface and at
depth.
Finally, a bulk sample was successfully taken from the Nørream
graphite target and has been shipped to Wardell Armstrong in the
United Kingdom for initial metallurgical test work, which is
ongoing.
Team
During the year, we further invested in the team. Jaco Crouse
was appointed CFO and Director. Mr. Crouse has nearly 20 years'
experience in financial management, mine financial planning,
business optimization and strategy development. Prior to joining
AEX, Mr. Crouse held the position of CFO of Detour Gold Corp.,
where he facilitated the successful financial and operational
turnaround and sale of the corporation to Kirkland Lake Gold for
US$3.7 billion.
James Gilbertson has been appointed as Vice President of
Exploration and oversees all of the Company's exploration
activities. James has been working with AEX as a consultant for the
past six years. James has over 20 years of experience in mineral
exploration and resource development with 17 years as a Principal
Exploration Geologist and, until recently, as Managing Director of
SRK Exploration. He specialises in mineral exploration design,
planning and management, specifically for lode and epithermal gold
deposits, porphyry related, and orthomagmatic deposits. James is a
Chartered Geologist and Competent Person (CP) with the Geological
Society London.
In addition, the exploration team has been further bolstered by
a number of additional appointments . Jane Lund Plesner, a
Greenlander, a newly qualified geologist with a Bachelor's degree
from the University of Aarhus, and a Master's from the University
of Copenhagen. Prior to joining AEX, Jane was a multibeam operator
at the Greenland Institute of Natural Resources. Jascha Wille, a
Danish national, graduated from Durham University in 2015 with an
MSci in geology and has worked previously in open-pit production in
Greenland, and in exploration across Canada and Sweden. And finally
, AEX is soon to welcome Warrick Fuchsloch from AfriTin Mining.
Warrick has 10 year experience specializing in exploration geology,
data analysis, resource estimation and 3D modelling of
multi-commodities including many critical minerals. Warrick holds
specific experience of being within a team that has taken an early
stage project through exploration and into pilot processing.
The Board would like to thank the entire AEX Gold team for their
hard work and dedication.
Financial results
The Corporation had a cash balance of C$27.3 million at December
31, 2021 (C$61.9 million at December 31, 2020), with no debt, and
total working capital of C$25.5 million ($61.4 million at December
31, 2020). Exploration and evaluation expenses during the year were
C$14.3 million (2020: C$7.0 million), representing costs of
geological work, project engineering and drilling at Nalunaq
Project. Capital assets increased by C$13.6 million as we took
delivery of 60% of the process plant equipment and surface mobile
equipment. The Corporation reported a net loss of C$24.8 million in
2021 (2020: C$12.3 million), driven by exploration and evaluation
activities and corporate activity during the period, as well as
non-cash foreign exchange loss. General and administrative expenses
during the year were C$9.3 million (2020: C$3.3 million),
reflecting higher salaries and benefits of a fully on-boarded
organization post-AIM listing, travel expenses related to the 2021
Nalunaq Project work program, as well as the establishment of a
larger investor relations function and the retention of
communications services.
The following selected financial data is extracted from the
Financial Statements for the year ended December 31, 2021.
Financial Performance
Three months Years
ended December 31, ended December 31,
2021 2020 2021 2020
C$ C$ C$ C$
----------- ----------- ------------ ------------
Exploration and evaluation
expenses 6,838,840 2,622,916 14,280,055 7,055,707
General and administrative 2,627,040 1,304,804 9,328,427 3,291,176
Net loss and comprehensive ( 9,814,256 ( 24,793,004
loss ) (4,321,051) ) (12,339,112)
Basic and diluted loss per
common share (0.05) (0.03) (0.14) (0.10)
----------- ----------- ------------ ------------
Financial Position
As at December 31, As at December 31,
2021 2020
C$ C$
------------------ ------------------
Cash on hand 27,324,459 61,874,999
Total assets 27,642,326 65,944,682
Total current liabilities 2,100,084 897,799
Shareholders' equity 39,968,502 64,282,970
Working capital 25,542,242 61,411,208
------------------ ------------------
Outlook
The company is very well placed for the year ahead and investors
will have a lot of news to digest as we announce the remaining
exploration results for 2021 and our investment plans for 2022.
With the rapid development of the energy transition and recent
geo-political events, Greenland is emerging as one of the final
frontiers in safe OECD jurisdictions with the mineral resource
potential to play a vital role in these mega-trends in the decades
ahead. With the largest ice-free land package of assets, AEX is
very well placed to benefit from this and as such the Board looks
to the future with confidence.
Qualified Person Statement
The technical information presented in this press release has
been approved by James Gilbertson CGeol, VP Exploration for AEX
Gold and a Chartered Geologist with the Geological Society of
London, and as such a Qualified Person as defined by NI 43-101.
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
SI Capital Limited (Joint Broker)
Nick Emerson
Charlie Stephenson
+44 (0) 1483 413500
Camarco (Financial PR)
Billy Clegg
Emily Hall
Charlie Dingwall
+44 (0) 20 3757 4980
For Company updates:
Follow @AexGold on Twitter
Follow AEX Gold Inc. on LinkedIn
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
4,090 km(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
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Corporation's obligations under
Article 17 of those Regulations. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
AEX Gold Inc.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
Using the following link, please see the Independent Auditor's
Report
http://www.rns-pdf.londonstockexchange.com/rns/7918J_1-2022-4-29.pdf
AEX Gold Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)
As at December As at December
31, 31,
Notes 2021 2020
--------------------------------------------- ------ --------------- ---------------
$ $
ASSETS
Current assets
Cash 27,324,459 61,874,999
Sales tax receivable 51,250 62,750
Prepaid expenses and others 266,617 371,258
Total current assets 27,642,326 62,309,007
Non-current assets
Deposit on order 9,805 1,711,970
Escrow account for environmental monitoring 5 424,637 460,447
Mineral properties 6 62,244 62,244
Capital assets 7 14,642,652 1,401,014
Total non-current assets 15,139,338 3,635,675
--------------------------------------------- ------ --------------- ---------------
TOTAL ASSETS 42,781,664 65,944,682
--------------------------------------------- ------ --------------- ---------------
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 2,049,249 831,899
Lease liabilities - current portion 8 50,835 65,900
Total current liabilities 2,100,084 897,799
Non-current liabilities
Lease liabilities 8 713,078 763,913
Total non-current liabilities 713,078 763,913
--------------------------------------------- ------ --------------- ---------------
Total liabilities 2,813,162 1,661,712
--------------------------------------------- ------ --------------- ---------------
Equity
Capital stock 10 88,500,205 88,500,205
Warrants 11 - -
Contributed surplus 3,300,723 2,925,952
Accumulated other comprehensive loss (36,772) (36,772)
Deficit (51,795,654) (27,106,415)
--------------------------------------------- ------ --------------- ---------------
Total equity 39,968,502 64,282,970
--------------------------------------------- ------ --------------- ---------------
TOTAL LIABILITIES AND EQUITY 42,781,664 65,944,682
--------------------------------------------- ------ --------------- ---------------
Subsequent events 22
The accompanying notes are an integral part of these
consolidated financial statements.
Approved by the Board of Directors
(s) Eldur Ólafsson (s) Sigurbjorn Thorkelsson
Eldur Ólafsson Sigurbjorn Thorkelsson
Director Director
AEX Gold Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)
Notes 2021 2020
----------------------------------------- ------ ------------- -------------
$ $
Expenses
Exploration and evaluation expenses 15 14,280,055 7,055,707
General and administrative 16 9,328,427 3,291,176
Stock-based compensation 12 374,771 1,031,650
Foreign exchange 809,751 1,130,808
Operating loss 24,793,004 12,509,341
Other expenses (income)
Interest income (143,759) (84,214)
Finance costs 17 39,994 12,831
Other expenses (income) 9 - (98,846)
Net loss and comprehensive loss (24,689,239) (12,339,112)
----------------------------------------- ------ ------------- -------------
Weighted average number of common
shares outstanding - basic and diluted 177,098,737 119,729,081
Basic and diluted loss per common
share 19 (0.14) (0.10)
----------------------------------------- ------ ------------- -------------
The accompanying notes are an integral part of these
consolidated financial statements.
AEX Gold Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)
Number Accumulated
of common other
shares Capital Contributed comprehensive Total
Notes outstanding stock Warrants surplus loss Deficit equity
--------------- ------- ------------ ------------ ------------ ------------ -------------- ------------- -------------
Balance,
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 - - - - - (12,339,112) (12,339,112)
Share issuance
under a
fundraising 10 94,444,445 74,550,202 - - - - 74,550,202
Share issuance
costs 10 - (6,312,546) - - - - (6,312,546)
Warrants
exercised 11 11,607,898 6,318,938 (1,078,702) - - - 5,240,236
Warrants
expired 11 - - (380,902) 380,902 - - -
Options
exercised 12 100,000 60,000 - (22,000) - - 38,000
Stock-based
compensation 12 - - - 1,031,650 - - 1,031,650
--------------- ------- ------------ ------------ ------------ ------------ -------------- ------------- -------------
Balance,
December 31,
2020 177,098,737 88,500,205 - 2,925,952 (36,772) (27,106,415) 64,282,970
--------------- ------- ------------ ------------ ------------ ------------ -------------- ------------- -------------
Balance,
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 - - - - - (24,689,239) (24,689,239)
Stock-based
compensation 12 - - - 374,771 - - 374,771
Balance,
December 31,
2021 177,098,737 88,500,205 - 3,300,723 (36,772) (51,795,654) 39,968,502
--------------- ------- ------------ ------------ ------------ ------------ -------------- ------------- -------------
The accompanying notes are an integral part of these
consolidated financial statements.
AEX Gold Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)
Notes 2021 2020
-------------------------------------------------- ------ ------------- -------------
$ $
Operating activities
Net loss (24,689,239) (12,339,112)
Adjustments for:
Depreciation 7 389,953 228,267
Stock-based compensation 12 374,771 1,031,650
Finance costs 17 - 5,959
Other expenses (Income) 9 - (98,846)
Payment from cash held in escrow account
for environmental monitoring 5 - (95,102)
Escrow account for environmental monitoring 9 - 95,102
Foreign exchange 377,674 1,119,240
-------------------------------------------------- ------ ------------- -------------
(23,546,841) (10,052,842)
Changes in non-cash working capital items:
Sales tax receivable 11,500 (44,958)
Prepaid expenses and others 104,641 (276,316)
Trade and other payables 1,141,384 508,094
-------------------------------------------------- ------ ------------- -------------
1,257,525 186,820
-------------------------------------------------- ------ ------------- -------------
Cash flow used in operating activities (22,289,316) (9,866,022)
-------------------------------------------------- ------ ------------- -------------
Investing activities
Acquisition of mineral properties 6 - (20,299)
Acquisition of capital assets 7 (11,875,926) (421,098)
Deposit on order - (1,711,970)
-------------------------------------------------- ------ ------------- -------------
Cash flow used in investing activities (11,875,926) (2,153,367)
-------------------------------------------------- ------ ------------- -------------
Financing activities
Shares and warrants issuance 10 - 74,550,202
Share issuance costs 10 - (6,266,929)
Principal repayment - lease liabilities 8 (65,900) (11,267)
Exercise of warrants - 5,240,236
Exercise of stock options - 38,000
Cash flow from financing activities (65,900) 73,550,242
-------------------------------------------------- ------ ------------- -------------
Net change in cash before effects of exchange
rate changes on cash (34,231,142) 61,530,853
Effects of exchange rate changes on cash (319,398) (1,171,260)
-------------------------------------------------- ------ ------------- -------------
Net change in cash (34,550,540) 60,359,593
Cash, beginning 61,874,999 1,515,406
-------------------------------------------------- ------ ------------- -------------
Cash, ending 27,324,459 61,874,999
-------------------------------------------------- ------ ------------- -------------
Supplemental cash flow information
Deposit on order for acquisition of capital
assets 1,702,165 -
Interest received 143,759 84,214
Additions in capital assets included in trade
and other payables 53,500 -
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
consolidated financial statements .
AEX Gold Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
(In 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 have been listed on the TSX Venture
Exchange (the "TSX-V") under the AEX ticker and since July 2020,
the Corporation's shares have also been listed on the AIM market of
the London Stock Exchange ("AIM") under the AEXG ticker (note
10).
These consolidated financial statements ("Financial Statements")
were reviewed and authorized for issue by the Board of Directors on
April 28, 2022.
1.1 Basis of presentation and consolidation
The Financial Statements include the accounts of the Corporation
and those of its subsidiary Nalunaq A/S, a corporation incorporated
under the Greenland Public Companies Act, owned 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 the 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 a 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 on consolidation.
The Financial Statements have been prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS").
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.
When a foreign operation is sold, such exchange differences are
recognized in the statement of comprehensive loss as part of the
gain or loss on sale.
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.
2.5 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 3 to 10 years
and evaluation activities
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.
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.
2.7 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. 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 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
-- 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 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.
2.11 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 and
warrants, in the weighted average number of common shares
outstanding during the year, if dilutive. During 2021 and 2020, 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.
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 and payables to shareholders 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.
2.15 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 Greenland.
3. CHANGES IN ACCOUNTING POLICIES
3.1 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 January 1,
2022. Many of these updates are not expected to have any
significant impact on the Corporation and are therefore not
discussed herein.
Amendments to IAS 16 Property, plant and equipment
The IASB has made amendments to IAS 16 Property, plant and
equipment, which will be effective for financial years beginning on
or after January 1, 2022. Proceeds from selling items before the
related item of Property, plant and equipment is available for use
should be recognized in profit or loss, together with the costs of
producing those items. The Corporation will therefore need to
distinguish between the costs associated with producing and selling
items before the item of Property, plant and equipment
(pre-production revenue) is available for use and the costs
associated with making the item of Property, plant and equipment
available for its intended use. For the sale of items that are not
part of a Corporation's ordinary activities, the amendments will
require the Corporation to disclose separately the sales proceeds
and related production cost recognized in profit or loss and
specify the line items in which such proceeds and costs are
included in the consolidated statement of comprehensive loss. These
amendments will have an impact on the Corporation's consolidated
financial statements.
Amendments to IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors
In February 2021, the IASB issued amendments to IAS 8, which
added the definition of Accounting Estimates in IAS 8. The
amendments also clarified that the effects of a change in an input
or measurement technique are changes in accounting estimates,
unless resulting from correction of prior period errors. The
Corporation is currently evaluating the impact of these amendments
on its consolidated financial statements.
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
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.
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.
4.2 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.
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 Greenland as beneficiary. The funds in the
escrow account have been provided in favour of the Government of
Greenland as security for fulfilling the environmental monitoring
expenses following the closure of the Nalunaq mine. This
environmental monitoring program was completed in 2020.
2021 2020
-------------------------------------------------------- ---------- ----------
$ $
Balance beginning 460,447 516,996
Effect of translation (35,810) 38,553
Payment for environmental monitoring work - (95,102)
-------------------------------------------------------- ---------- ----------
Balance ending 424,637 460,447
Non-current portion - escrow account for environmental
monitoring (424,637) (460,447)
Current portion - escrow account for environmental - -
monitoring
-------------------------------------------------------- ---------- ----------
6. MINERAL PROPERTIES
As at As at
December 31, December 31,
2020 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 As at
December 31, December 31,
2019 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
-------------------------------- -------------- ---------- --------------
6.1 Nalunaq
Nalunaq A/S holds the gold exploitation licence number 2003/05
on the Nalunaq property (the "Nalunaq Licence") located in South
West Greenland. The licence expires in April 2033 with an extension
possible up to 20 years.
6.1.1 Collaboration agreement and project schedule
Cyrus Capital Partners LP was the main creditor of Angel Mining
PLC, the parent company of Angel Mining (Gold) A/S. Angel Mining
PLC went into administration in February 2013 and as part of the
Administrator's restructuring process, FBC Mining (Holdings) Ltd.
("FBC Mining") and Arctic Resources Capital S.à r.l. ("ARC") agreed
to enter into a collaboration agreement ("Collaboration Agreement")
(signed July 15, 2015) to progress the Nalunaq exploration project.
FBC Mining is a 100% subsidiary of FBC Holdings S.à r.l which is
managed by Cyrus Capital Partners LP.
In addition, ARC, FBC Mining and AEX Gold Limited (previously
known as FBC Mining (Nalunaq) Limited) (a 100% subsidiary of FBC
Mining) signed on July 17, 2015 the Nalunaq project schedule ("2015
Project Schedule") which was continued following the signature with
Nalunaq A/S on March 31, 2017 of the 2016-2017 Nalunaq Project
Schedule ("2016-2017 Project Schedule"), (collectively "Project
Schedules").
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 March 31, 2017 and the conditions are
as follows:
a) AEX Gold Limited transfers the Processing Plant to Nalunaq A/S under the following conditions:
i) An initial purchase price of US$1;
ii) 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.
iii) 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.
iv) 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 AEX Gold Limited a 1% royalty on
Nalunaq A/S' net revenue generated on the Nalunaq Licence (total
revenue minus production, transportation and refining costs),
provided that in respect to the last completed calendar year, the
operating profit per ounce of gold exceeded US$500. The cumulative
royalty payments over the life of mine are capped at a maximum of
US$1,000,000.
6.1.2 Government of Greenland royalty
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 July 1, 2014, the Greenland Government may
set terms on the licensee's payment of royalty or consideration, if
the Greenland Government and the licensee agree, since the Nalunaq
Licence was granted before July 1, 2014. Nalunaq A/S may have to
pay to the Government of Greenland a sales royalty of up to 2.5% of
the value of the minerals. Nalunaq A/S may on certain terms offset
an amount equal to paid corporate income tax and corporate dividend
tax against the sales royalty to be paid.
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 Greenland has been confirmed with Addendum No.
5 dated March 2020 which was signed by the Government of Greenland
and therefore became effective on March 13, 2020, to extend the
requirement dates to perform the following tasks. No later than
December 31, 2022, the licensee shall prepare an environmental
impact assessment, make a social impact assessment and perform an
impact benefit agreement. The time limit for commencement of
exploitation is January 1, 2023.
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
6.2.1 Purchase of the Tartoq Licence
Nalunaq A/S signed on July 6, 2016 a sale and purchase
agreement, to purchase from Nanoq Resources Ltd. the Tartoq
exploration licence number 2015/17 located in Southwest Greenland,
for a total consideration of $7,221. The licence originally expired
December 31, 2024 with an entitlement to a 5-year extension. The
renewal for a period of five years has been confirmed with Addendum
No. 3 dated February 2020 which was signed by Nalunaq A/S on
February 13, 2020 and became effective on March 13, 2020 when it
was signed by the Government of Greenland. In response to the COVID
19 pandemic, the Government of Greenland gave an extension of the
licence period for all exploration licences by two years, therefore
the licence expires December 31, 2026.
6.2.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. For the
exploration licence, Nalunaq A/S was required to complete DKK nil
of exploration activities in 2021, adding the non-fulfilled
exploration obligation 2020 of DKK 514,901, for a total of DKK
514,901 ($99,702 using the exchange rate as at December 31, 2021)
exploration obligation in 2021 which was confirmed by MLSA and
postponed to 2022. For the purpose of crediting expenditures
against the amounts set forth in the Tartoq 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
Tartoq exploration licence for the 2021 year to the MLSA by April
1, 2022.
6.3 Naalagaaffiup Portornga (Land Adjacent to Existing Tartoq Licence)
6.3.1 Purchase of the Naalagaaffiup Portornga Licence
The Corporation acquired the right to conduct exploration
activities on approximately 170km(2) 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 December 31, 2022 with an entitlement to a 5-year extension. The
licence application has been approved and all required
documentation was signed by the Corporation on January 16, 2018 and
the licence became effective on February 19, 2018 when it was
signed by the Greenland authorities. In response to the COVID 19
pandemic, the Government of Greenland gave an extension of the
licence period for all exploration licences by two years, therefore
the licence expires December 31, 2024.
6.3.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. For the
exploration licence, Nalunaq A/S was required to complete DKK nil
of exploration activities in 2021, reducing by the total credit
from 2020 of DKK 16,400, for a total credit of DKK 16,400 (credit
of $3,176 using the exchange rate as at December 31, 2021) so there
is no exploration obligation in 2021 which was confirmed by MLSA.
For the purpose of crediting expenditures against 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 2021 year to
the MLSA by April 1, 2022.
6.4 Vagar
6.4.1 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
February 6, 2017 to acquire the Vagar exploration licence number
2006/10 ("Vagar Licence") located in Western Greenland, along with
all mineral exploration and mining-related data, maps and reports
pertaining to the Vagar Licence, studies and reports, for a
purchase price of $9,465 (DKK 50,000). Upon the approval of the
Greenland authorities received on October 30, 2017, Nalunaq A/S
signed the paperwork to complete the licence transfer, which became
effective upon the Greenland authorities executing the document on
January 18, 2018. The licence originally expired December 31, 2021
with a possible 6-year extension. In response to the COVID 19
pandemic, the Government of Greenland gave an extension of the
licence period for all exploration licences by two years, therefore
the licence expires December 31, 2023.
6.4.2 Exploration commitments
Nalunaq A/S asked in December 2019 for a reduction of the size
of the area covered by the licence to 292km(2) . This reduction of
the size of the area has been confirmed with Addendum No. 9 dated
January 2020 which was signed by Nalunaq A/S in January 23, 2020
and became effective on March 13, 2020 when it was signed by the
Government of Greenland.
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. For the
exploration licence, Nalunaq A/S was required to complete DKK nil
of exploration activities in 2021, reducing by the total credit
from 2020 of DKK 2,517,299, for a total credit of DKK 2,517,299
(credit of $487,432 using the exchange rate as at December 31,
2021) so there is no exploration obligation in 2021 which was
confirmed by MLSA. For the purpose of crediting expenditures
against the amounts set forth in the Vagar 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
Vagar exploration licence for the 2021 year to the MLSA by April 1,
2022.
6.5 Nuna Nutaaq
6.5.1 Purchase of the Nuna Nutaaq Licence
The Corporation acquired the right to conduct exploration
activities on approximately 266km(2) of land in an area of
Itillersuaq near Narsaq in South Greenland. The exploration rights
have been granted to the Corporation under a new separate
Exploration Licence 2019/113 Nuna Nutaaq. The licence application
has been approved and all required documentation was signed by the
Corporation on September 13, 2019 and the licence became effective
on September 26, 2019 when it was signed by the Government of
Greenland. The licence originally expired December 31, 2023 with an
entitlement to a 5-year extension. In response to the COVID 19
pandemic, the Government of Greenland gave an extension of the
licence period for all exploration licences by two years, therefore
the licence expires December 31, 2025.
6.5.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. For the
exploration licence, Nalunaq A/S was required to complete DKK nil
of exploration activities in 2021, reducing by the total credit
from 2020 of DKK 96,972, for a total credit of DKK 96,972 (credit
of $18,777 using the exchange rate as at December 31, 2021) so
there is no exploration obligation in 2021 which was confirmed by
MLSA. For the purpose of crediting expenditures against the amounts
set forth in the Nuna Nutaaq 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
Nuna Nutaaq exploration licence for the 2021 year to the MLSA by
April 1, 2022.
6.6 Saarloq
6.6.1 Purchase of the Saarloq Licence
The Corporation acquired the right to conduct exploration
activities on approximately 818km(2) of land in the areas of
Quassugaarsuk and Sermeq Kangilleq in South Greenland. The
exploration rights have been granted to the Corporation under a new
separate Exploration Licence 2020/31, referred to as Saarloq. The
licence application has been approved and all required
documentation was signed by the Corporation on May 15, 2020 and the
licence became effective on May 28, 2020 when it was signed by the
Government of Greenland. The licence originally expired December
31, 2024 with an entitlement to a 5-year extension. In response to
the COVID 19 pandemic, the Government of Greenland gave an
extension of the licence period for all exploration licences by two
years, therefore the licence expires December 31, 2026.
6.6.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. For the
exploration licence, Nalunaq A/S was required to complete DKK nil
of exploration activities in 2021, reducing by the total credit
from 2020 of DKK 271,382, for a total credit of DKK 271,382 (credit
of $52,549 using the exchange rate as at December 31, 2021) so
there is no exploration obligation in 2021 which was confirmed by
MLSA. For the purpose of crediting expenditures against the amounts
set forth in the Saarloq 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
Saarloq exploration licence for the 2021 year to the MLSA by April
1, 2022.
6.7 Anoritooq
6.7.1 Purchase of the Anoritooq Licence
The Corporation acquired the right to conduct exploration
activities on approximately 1,710km(2) of land in the areas of
Anoritooq and Kangerluluk in South Greenland. The exploration
rights have been granted to the Corporation under a new separate
Exploration Licence 2020/36, referred to as Anoritooq. The licence
application has been approved and all required documentation was
signed by the Corporation on June 11, 2020 and the licence became
effective on June 24, 2020 when it was signed by the Government of
Greenland. In October 2020, the Corporation was granted an addendum
to the Anoritooq Licence, increasing the size of the licence to
1,889km(2) and became effective November 6, 2020 when it was signed
by the Government of Greenland. The licence originally expired
December 31, 2024 with a possible 5-year extension. In response to
the COVID 19 pandemic, the Government of Greenland gave an
extension of the licence period for all exploration licences by two
years, therefore the licence expires December 31, 2026.
6.7.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. For the
exploration licence, Nalunaq A/S was required to complete DKK nil
of exploration activities in 2021, reducing by the total credit
from 2020 of DKK 516,903, for a total credit of DKK 516,903 (credit
of $100,089 using the exchange rate as at December 31, 2021) so
there is no exploration obligation in 2021 which was confirmed by
MLSA. For the purpose of crediting expenditures against the amounts
set forth in the Anoritooq 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
Anoritooq exploration licence for the 2021 year to the MLSA by
April 1, 2022.
6.8 Sava (previously called Kangerluarsuk)
6.8.1 Purchase of the Sava Licence
The Corporation acquired the right to conduct exploration
activities on approximately 335km(2) of land in the area of Eqaluit
Iluat in South Greenland. The exploration rights have been granted
to the Corporation under a new separate Exploration Licence
2021/02, referred to as Sava. The licence application has been
approved and all required documentation was signed by the
Corporation on October 13, 2020 and the licence became effective on
November 6, 2020 when it was signed by the Government of Greenland.
The licence originally expired December 31, 2025 with a possible
5-year extension. In response to the COVID 19 pandemic, the
Government of Greenland gave in December 2020, an extension of the
licence period for all exploration licences by one year, therefore
the licence expires December 31, 2026.
6.8.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of
Greenland set the exploration obligation for years 2020 and 2021 to
DKK nil which also means that the transferred non-fulfilled
exploration obligation will be postponed by two years. The
exploration commitments for this new exploration licence are DKK
nil ($nil using the exchange rate as at December 31, 2021) in 2021.
For the purpose of crediting expenditures against the amounts set
forth in the Sava 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
Sava exploration licence for the 2020 and 2021 years to the MLSA by
April 1, 2022.
6.9 Genex
On October 16, 2017, Nalunaq A/S was awarded a prospecting
licence number 2017/45 covering West Greenland, in this context
defined as areas south of 78 N and west of 44 W. It is valid for a
term of five years until December 31, 2021. This licence has
expired and Nalunaq A/S is in the process of applying for a
replacement licence with the Government of Greenland. Nalunaq A/S
is not obligated to spend exploration expenses regarding this
licence area during this period.
On September 26, 2019, Nalunaq A/S was granted a prospecting
licence number 2019/146 covering East Greenland, in this context
defined as areas south of 75 N and east of 44 W. It is valid for a
term of five years until December 31, 2023. Nalunaq A/S is not
obligated to spend exploration expenses regarding this licence area
during this period.
7. CAPITAL ASSETS
Field equipment Vehicles Equipment Right-of-use Total
and infrastructure and rolling (including assets
stock software) (note 8)
$ $ $ $ $
-------------------------- -------------------- ------------- ------------ ------------- ----------
2020
Opening net book
value 271,977 86,656 8,470 - 367,103
Additions - 245,734 175,364 841,080 1,262,178
Depreciation (125,774) (75,525) (6,782) (20,186) (228,267)
-------------------------- -------------------- ------------- ------------ ------------- ----------
Closing net book
value 146,203 256,865 177,052 820,894 1,401,014
As at December 31,
2020
Cost 387,323 533,800 185,878 841,080 1,948,081
Accumulated depreciation (241,120) (276,935) (8,826) (20,186) (547,067)
-------------------------- -------------------- ------------- ------------ ------------- ----------
Closing net book
value 146,203 256,865 177,052 820,894 1,401,014
-------------------------- -------------------- ------------- ------------ ------------- ----------
Field Vehicles Equipment Construc-tion Right-of-use Total
equipment and rolling (including In Progress assets
and infrastruc-ture stock software) (note
8)
$ $ $ $ $ $
---------------------- --------------------- ------------- ------------ -------------- ------------- -----------
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 December 31,
2021
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
---------------------- --------------------- ------------- ------------ -------------- ------------- -----------
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 $299,771 ($206,153 -
2020) was expensed as exploration and evaluation expenses in
2021.
As at December 31, 2021, the Corporation had capital asset
purchase commitments, net of deposits on order, of $nil ($8,796,288
as at December 31, 2020). These commitments related to purchases of
equipment, infrastructure and vehicles.
As of December 31, 2021, the amount of $7,452,668 of
construction in progress is related to equipment and infrastructure
received or in storage and which will be installed at the
appropriate time.
8. LEASE LIABILITIES
As at As at
December December
31, 31,
2021 2020
----------------------------------------- ---------- ----------
$ $
Balance beginning 829,813 -
Additions - 841,080
Principal repayment (65,900) (11,267)
----------------------------------------- ---------- ----------
Balance ending 763,913 829,813
Non-current portion - lease liabilities (713,078) (763,913)
----------------------------------------- ---------- ----------
Current portion - lease liabilities 50,835 65,900
----------------------------------------- ---------- ----------
The Corporation has presently only one lease for its office. In
October 2020, the Corporation started the lease for five years and
five months including five free rent months during this period. The
monthly rent is $8,825 until March 2024 and $9,070 for the balance
of the lease. The Corporation has the option to renew the lease for
an additional five-year period at $9,070 monthly rent indexed
annually to the increase of the consumer price index of the
previous year for the Montreal area.
A right-of-use asset of $841,080 and an equivalent long term
lease liability was recorded as of October 1, 2020, with a 5%
incremental borrowing rate and considering that the renewal option
would be exercised. Depreciation of right-of-use assets is being
recorded in general and administrative expenses in the consolidated
statement of comprehensive loss, under depreciation. Depreciation
of $80,744 ($20,186 in 2020) was expensed as general and
administration expenses in 2021.
9. ENVIRONMENTAL MONITORING PROVISION
2021 2020
------------------------------------------------ ------ ---------
$ $
Balance beginning - 174,864
Effect of foreign exchange translation - 13,125
Payment from cash held in escrow account
for environmental monitoring - (95,102)
Accretion expense - 5,959
Change in estimates - (98,846)
------------------------------------------------ ------ ---------
Balance ending - -
Non-current portion - environmental monitoring
provision - -
Current portion - environmental monitoring
provision - -
------------------------------------------------ ------ ---------
In September 2020, a final payment to settle the environmental
monitoring obligations attached to the Nalunaq Licence was
completed and no further payments are expected to be made regarding
this obligation.
10. SHARE CAPITAL
10.1 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.
10.2 AIM Admission
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.
10.3 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 (note 20). The
officers and directors of the Corporation subscribed to the
Fundraising under the same terms and conditions as set forth for
all subscribers.
11. WARRANTS
11.1 Warrants
Changes in the Corporation's warrants are as follow:
2021 2020
-------------------- --------------------------------------- -------------------------------------
Weighted Weighted
average average
Number Carrying exercise Number Carrying exercise
of warrants Value price of warrants Value price
-------------------- -------------- ---------- ----------- ------------- ---------- ----------
$ $ $ $
Balance, beginning - - - 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 - - - - - -
-------------------- -------------- ---------- ----------- ------------- ---------- ----------
In 2020, the Corporation 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. The remaining Warrants
amounting to 1,885,624 expired.
11.2 Agent warrants
Changes in the Corporation's agent and finders warrants are as
follow:
2021 2020
-------------------- --------------------------------------- -------------------------------------
Weighted Weighted
average average
Number Carrying exercise Number Carrying exercise
of warrants Value price of warrants Value price
-------------------- -------------- ---------- ----------- ------------- ---------- ----------
$ $ $ $
Balance, beginning - - - 1,067,739 321,788 0.49
Exercised - - - (335,627) (103,944) 0.50
Expired - - - (732,112) (217,844) 0.49
Balance, end - - - - - -
-------------------- -------------- ---------- ----------- ------------- ---------- ----------
12. 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 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.
On June 9, 2021, the Corporation granted the CFO with 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.
On July 5, 2021, the Corporation granted to an employee 100,000
stock options exercisable at an exercise price of $0.50, with an
expiry date of July 5, 2026. The stock options vest in three equal
annual tranches from 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 $29,000 for an estimated fair value of $0.29 per option.
The fair value of the options granted was estimated using the
Black-Scholes model with no expected dividend yield, 71.40%
expected volatility, 1.01% risk-free interest rate and 5 years
options expected life. The expected life and expected volatility
were estimated by benchmarking comparable companies to the
Corporation.
On September 13, 2021, the Corporation granted to an employee
100,000 stock options exercisable at an exercise price of $0.50,
with an expiry date of September 13, 2026. The stock options vest
in three equal annual tranches from 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 $29,000 for an estimated fair value of
$0.29 per option. The fair value of the options granted was
estimated using the Black-Scholes model with no expected dividend
yield, 69.49% expected volatility, 0.86% risk-free interest rate
and 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:
2021 2020
-------------------------- ------------------------ ----------------------
Weighted Weighted
average average
Number of exercise Number of exercise
options price options price
-------------------------- ------------ ---------- ---------- ----------
$ $
Balance, beginning 7,745,000 0.51 5,650,000 0.43
Granted 1,100,000 0.57 2,195,000 0.70
Expired (1,910,000) 0.52 - -
Exercised - - (100,000) 0.38
Balance, end 6,935,000 0.51 7,745,000 0.51
-------------------------- ------------ ---------- ---------- ----------
Balance, end exercisable 6,801,666 0.51 7,745,000 0.51
-------------------------- ------------ ---------- ---------- ----------
Stock options outstanding and exercisable as at December 31,
2021 are as follows:
Number of options Number of options Exercise
outstanding exercisable price Expiry date
------------------ ------------------ --------- --------------------
$
1,160,000 1,160,000 0.50 July 13, 2022
1,360,000 1,360,000 0.45 August 22, 2023
1,820,000 1,820,000 0.38 December 31, 2025
100,000 33,333 0.50 July 5, 2026
100,000 33,333 0.50 September 13 , 2026
1,495,000 1,495,000 0.70 December 31, 2026
900,000 900,000 0.59 December 31, 2027
6,935,000 6,801,666
------------------ ------------------ --------- --------------------
13. 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.
14. EMPLOYEE REMUNERATION
Salaries
2021 2020
-------------------------------------------------- ------------ ------------
$ $
Salaries 5,343,482 1,154,302
Director's fees 628,652 252,083
Benefits 878,580 218,740
-------------------------------------------------- ------------ ------------
6,850,714 1,625,125
Less : salaries and benefits presented in
E&E expenses (3,569,124) (1,024,094)
-------------------------------------------------- ------------ ------------
Salaries disclosed in general and administrative
expenses 3,281,590 601,031
-------------------------------------------------- ------------ ------------
15. EXPLORATION AND EVALUATION EXPENSES
Sava
(previously
Naalagaaffiup Nuna called
2021 Nalunaq Vagar Tartoq Portornga Nutaaq Saarloq Anoritooq Kangerluarsuk) 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
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
-------------- ----------- -------- -------- -------------- -------- -------- ---------- --------------- ------- -----------
Sava
(previously
Naalagaaffiup Nuna called
2020 Nalunaq Vagar Tartoq Portornga Nutaaq Saarloq Anoritooq Kangerluarsuk) Genex Total
---------------- ---------- -------- ------- -------------- ------- -------- ---------- --------------- ------ ----------
$ $ $ $ $ $ $ $ $ $
Geology 1,968,010 158,392 11,426 14,110 18,630 32,549 55,760 9,937 - 2,268,814
Lodging and
on-site
support 278,440 7,088 - - - - - - - 285,528
Underground
works 75,396 - - - - - - - - 75,396
Drilling 186,955 - - - - - - - - 186,955
Safety and
environment 21,402 - - - - - - - - 21,402
Analysis 259,188 263 - - - - - - - 259,451
Transport 638,533 519 - - 104 156 259 - - 639,571
Helicopter
Charter 4,922 40,451 - - 30,115 - 6,789 - - 82,277
Logistic
support 339,200 19,652 19,652 19,652 19,652 - - - - 417,808
Insurance 37,990 - - - - - - - - 37,990
Maintenance
infrastructure 2,434,862 14,116 - - 2,823 4,235 7,058 - - 2,463,094
Government fees 87,224 8,468 14,615 - - - - - 961 111,268
Depreciation 206,153 - - - - - - - - 206,153
---------------- ---------- -------- ------- -------------- ------- -------- ---------- --------------- ------ ----------
Exploration
and evaluation
expenses 6,538,275 248,949 45,693 33,762 71,324 36,940 69,866 9,937 961 7,055,707
---------------- ---------- -------- ------- -------------- ------- -------- ---------- --------------- ------ ----------
16. GENERAL AND ADMINISTRATIVE
2021 2020
---------------------------------- ---------- ----------
$ $
Salaries and benefits 2,652,938 348,948
Management and consulting fees - 633,220
Director's fees 628,652 252,083
Professional fees 2,382,916 1,077,541
Marketing and investor relations 791,722 466,465
Insurance 571,364 218,355
Travel and other expenses 1,884,189 140,135
Regulatory fees 326,464 132,315
Depreciation 90,182 22,114
---------------------------------- ---------- ----------
General and administrative 9,328,427 3,291,176
---------------------------------- ---------- ----------
17. FINANCE COSTS
2021 2020
---------------------------------------------- ------- -------
$ $
Accretion expense - environmental monitoring
provision - 5,959
Financing fees lease 39,994 6,872
---------------------------------------------- ------- -------
Finance costs 39,994 12,831
---------------------------------------------- ------- -------
18. 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:
2021 2020
------------------------------------------------ ------------- -------------
$ $
Net loss before income taxes (24,689,239) (12,339,112)
Income tax rates 26.5% 26.5%
Income tax recovery (6,542,648) (3,269,865)
Increase (decrease) attributable to:
Non deductible expenses 104,109 274,878
Difference in statutory tax rate 265,772 111,110
Changes in unrecognized deferred tax assets 6,172,767 2,883,877
Tax recovery - -
------------------------------------------------ ------------- -------------
The analysis of the Corporation's deferred tax assets and
liabilities as at December 31, 2021 and 2020 is as follows:
2021 2020
------------------------------------ ---------- ---------
$ $
Deferred tax assets (liabilities):
Capital assets (437,033) (25,949)
Non-capital losses 437,033 25,949
- -
------------------------------------ ---------- ---------
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 December
31, 2021 are as follows:
Greenland As at
December
31,
2021
----------------------------------- ---- -----------
$
Non-capital losses carry forwards 36,398,528
----------------------------------------- -----------
As the Corporation is a mineral licence holder, the non-capital
losses in Greenland have no expiration date.
18. INCOME TAXES (CONT'D)
Canada As at
December
31,
2021
-------------------------------------------- ---- ----------
$
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 1,210,346
Non-capital losses carry forwards expiring
in 2041 5,622,490
Non-capital losses carry forwards expiring
in 2042 8,302,287
-------------------------------------------------- ----------
19. NET LOSS PER SHARE
The calculation of basic and diluted net loss per share for the
year ended December 31, 2021, was based on the net loss
attributable to shareholders of $24,689,239 ($12,339,112 for the
year ended December 31, 2020) and the weighted average number of
common shares outstanding for the year ended December 31, 2021 of
177,098,737 (119,729,081 for the year ended December 31, 2020). As
a result of the net loss for the years ended December 31, 2021 and
2020, all potentially dilutive common shares are deemed to be
antidilutive and thus diluted net loss per share is equal to the
basic net loss per share for these periods.
20. 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 Chief Operating Officer, the Vice President
Exploration and the Corporate Secretary. Key management
compensation is as follows:
2021 2020
--------------------------------------------------- ---------- ----------
$ $
Short-term benefits
Management and consulting fees - 633,220
Professional fees 64,162 -
Salaries and benefits 1,639,334 292,562
Salaries and benefits included in the E&E
expenses 71,349 72,170
Professional fees included in the E&E expenses - 261,292
Director's fees 628,652 252,083
Long-term benefits
Stock-based compensation (note 12) 365,909 916,500
--------------------------------------------------- ---------- ----------
Total compensation 2,769,406 2,427,827
--------------------------------------------------- ---------- ----------
The compensation for Joan Plant (Corporate Secretary) was
charged through FBC BA for $nil for 2021 ($161,925 for 2020).
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 until June 9, 2021)
is a partner charged legal professional fees for $9,934 ($168,309
in 2020);
-- A company controlled by Martin Ménard (Chief Operating
Officer from July 9, 2019 to June 30, 2021) charged engineering
professional fees of $12,240 for his staff ($765,235 in 2020).
Martin Ménard is the son of Robert Ménard, director until April 27,
2021;
-- Nicolas and Catherine Ménard and Samuel Martel, engineering
consultants (the son, the daughter and the son-in-law of Robert
Ménard, director until April 27, 2021 and the brother, the sister
and brother-in-law of Martin Ménard, Chief Operating Officer until
June 30, 2021) were paid $324,799 ($464,896 in 2020);
-- As at December 31, 2021, the balance due to those related
parties listed above and in the compensation to key management
amounted to $173,254 ($150,829 as at December 31, 2020).
Following are the related party transactions, outside of the
normal course of operations:
-- Directors and officers of the Corporation participated in the
July 31, 2020 fundraising for $906,737 ($nil in 2021). The
directors and officers subscribed to the fundraising in 2020 under
the same terms and conditions set forth to 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:
2021 2020
------------------- ----------------------------------------------- ------------------------------------------------
Short-term Short-term
benefits Stock-based Total benefits Stock-based
(a) compensation compensation (a) compensation Total compensation
------------------- ----------- -------------- ------------------ ----------- -------------- -------------------
$ $ $ $ $ $
Eldur Olafsson 471,815 - 471,815 406,265 211,500 617,765
George Fowlie
(1) 79,919 - 79,919 270,888 117,500 388,388
Jaco Crouse 334,757 360,000 694,757 - - -
Graham Stewart 195,228 - 195,228 110,000 188,000 298,000
Georgia Quenby
(2) 43,788 - 43,788 55,833 47,000 102,833
Sigurbjorn
Thorkelsson 94,478 - 94,478 41,250 - 41,250
Robert Ménard
(3) 30,417 - 30,417 45,000 47,000 92,000
Liane Kelly 29,913 - 29,913 - - -
Line Frederiksen 47,962 - 47,962 - - -
David Neuhauser 47,962 - 47,962 - - -
Warwick
Morley-Jepson 138,904 - 138,904 - - -
Total compensation 1,515,143 360,000 1,875,143 929,236 611,000 1,540,236
------------------- ----------- -------------- ------------------ ----------- -------------- -------------------
(a) Short-term benefits comprise salary, director fees as
applicable, annual bonus and pension.
(1) George Fowlie ceased to be Director 26th August 2021
(2) Georgia Quenby ceased to be Non-Executive Director 9th June
2021
(3) Robert Ménard ceased to be Non-Executive Director 27 April
2021
The directors participated in the July 31, 2020 fundraising for
$836,596 ($nil in 2021). The director participation was as
follows:
2021 2020
------------------------ ------------- ------------
Number of Number of
new shares new shares
------------------------ ------------- ------------
Eldur Olafsson - 222,222
George Fowlie - 100,000
Graham Stewart - 222,222
Georgia Quenby - -
Sigurbjorn Thorkelsson - 444,444
Robert Ménard - 97,600
Total - 1,086,488
------------------------ ------------- ------------
21. 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.
21.1 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.
21.2 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's 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 December As at December
31, 2021 31, 2020
Trade Trade
and other Lease and other Lease
payables liabilities payables liabilities
-------------- ----------- ------------- ----------- -------------
$ $ $ $
Within 1 year 2,049,249 88,245 831,899 105,894
1 to 5 years - 431,910 - 411,320
5 to 10 years - 435,343 - 544,178
--------------- ----------- ------------- ----------- -------------
Total 2,049,249 955,498 831,899 1,061,392
--------------- ----------- ------------- ----------- -------------
21.3 Currency risk
As at December 31, 2021 and 2020, a portion of the Corporation's
transactions are denominated in DKK, Euros, US$ and British Pounds
(GBP) to the extent such currencies are different from the relevant
group entities' functional currency.
The Corporation had the following balances in currencies:
As at December 31, 2021 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 December 31, 2021, and
assuming that all other variables remain constant, a 10%
appreciation or depreciation of the Canadian dollar against the
DKK, Euro, US$ and GBP by 10% would decrease/increase profit or
loss by $747,306.
As at December 31, 2020 In DKK In Euros In US$ In GBP
--------------------------------- ---------- ---------- ---------- ---------
Cash 324,536 3,178,405 6,658,837 2,142
Escrow account for environmental
monitoring 2,193,001 - - -
Trade and other payables (977,053) - (2,214) (40,603)
1,540,484 3,178,405 6,656,623 (38,461)
Exchange rate 0.2100 1.5625 1.2741 1.7390
---------------------------------- ---------- ---------- ---------- ---------
Equivalent to CAD 323,502 4,966,258 8,481,203 (66,884)
---------------------------------- ---------- ---------- ---------- ---------
Based on the above net exposures as at December 31, 2020, and
assuming that all other variables remain constant, a 10%
appreciation or depreciation of the Canadian dollar against the
DKK, Euro, US$ and GBP by 10% would decrease/increase profit or
loss by $1,370,409.
21.4 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 December 31
2021, the Corporation' financial instruments are cash, escrow
account for environmental monitoring, trade and other payables and
lease liabilities. For all the financial instruments, the amounts
reflected in the consolidated statement of financial position are
carrying amounts and approximate their fair values due to their
short-term nature.
22. S UBSEQUENT EVENTS
On January 17, 2022, the Corporation granted to its directors,
officers, employees and consultant 4,100,000 stock options
exercisable at an exercise price of $0.60, with an expiry date of
January 17, 2027. 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 $1,435,000 for an
estimated fair value of $0.35 per option. The fair value of the
options granted was estimated using the Black-Scholes model with no
expected dividend yield, 69.38% expected volatility, 1.51%
risk-free interest rate and 5 years options expected life. The
expected life and expected volatility were estimated by
benchmarking comparable companies to the Corporation.
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