Q2 2024 Financial Results
14/08/2024 07:00
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Toronto, Ontario, Aug. 14, 2024 (GLOBE NEWSWIRE) --
(“Amaroq” or the “Corporation” or the “Company”)
Q2 2024 Financial Results
TORONTO, ONTARIO – 14 August 2024 - Amaroq Minerals Ltd. (AIM, TSXV, NASDAQ
Iceland: AMRQ), an independent mine development company with a substantial
land package of gold and strategic mineral assets in Southern Greenland,
presents its Q2 2024 financials. A conference call for analysts and investors
will be held today at 14:00 BST (13:00 GMT, 09:00 EST), details of which can
be found further down in this announcement. All dollar amounts are expressed
in Canadian dollars unless otherwise noted.
Eldur Olafsson, CEO of Amaroq, commented:
"Progress at Nalunaq is advancing smoothly, and we remain on track to achieve
first gold production later this year. The completion of the main building
works marks a significant milestone, and we are now focused on installing the
key components of the processing plant. A standout achievement this quarter
was receiving approval from the Greenlandic Government for our Environmental
and Social Impact Assessments. Upholding the highest standards of
environmental and social responsibility is fundamental to our mission as we
bring Nalunaq into production.
"Our exploration efforts across our gold and strategic minerals targets are
also progressing well. At Nalunaq, the Target Block resource expansion program
is underway, with drill crews now fully mobilized on-site. At Stendalen, we
have successfully completed the camp construction, and drilling operations
have begun, informed by promising results from recently completed ground
geophysics.
"Additionally, we are pleased to announce a significant post-period
development: the successful arrangement of a substantial increase and
extension of our debt financing package with Landsbankinn. This new
arrangement simplifies the structure of the facility while securing more
favorable rates."
Q2 2024 Corporate Highlights
* Amaroq group liquidity of $62.2 million consisting of cash balances, undrawn
revolving credit facilities, undrawn revolving credit overrun facility less
trade payables ($96.3 million as of March 31, 2024).
* Gold business working capital before convertible note liability of $50.5
million that includes prepaid contractors on the Nalunaq project of $19.6
million as of June 30, 2024 ($78.2 million that includes prepaid contractors
on the Nalunaq project of $17.5 million as of March 31, 2024)
* The Gardaq Joint Venture that comprises the Strategic Minerals business has
available liquidity of $13.5 million as of June 30, 2024 ($17 million as of
March 31, 2023).
* Amaroq continues to develop opportunities in Servicing and Hydro to enhance
local procurement options and support the transition towards cleaner energy
sources.
Post-Period Highlights
* In July 2024, the Company agreed heads of terms, subject to final
documentation, with Landsbankinn for US$35 million in three Revolving Credit
Facilities, securing a substantial increase and extension to its current debt
facilities.
* On 6 August 2024, Ellert Arnarson joined the Company as Chief Financial
Officer (CFO).
Q2 2024 Operational Highlights
* Permitting: The Government of Greenland approved the Environmental Impact
Assessment (EIA) and Social Impact Assessment (SIA) for the Nalunaq project in
June 2024. The Company is now working with stakeholders on the Impact Benefit
Agreement (IBA), which it aims to have in place by the end of the year.
* Contracting and Procurement: Procurement of all key contract packages is 92%
complete. Contracts for the flotation recovery and dry stack tailings sections
(“phase two”) building and equipment has commenced and will be completed
by the end of Q3 2024. The remaining contracts are also expected to be
concluded in Q3 2024.
* Engineering: Process plant detail design and engineering for phase one was
96% complete at the end of Q2, with all packages issued to the market.
Engineering for phase two of the process plant building has commenced and will
be completed by the end of Q3 2024.
* Construction: Plant pad earthworks and civil construction was 100% complete.
The plant building structural steel is 100% complete and cladding is 94%
complete. Mechanical installation of the crushing circuit is 68% complete and
installation of the civil foundations for the retaining walls, stockpile
reclaimer and stacker conveyor have commenced. The TMM and light vehicle
workshop construction is complete and electrical installation was 78%
complete. Foundations for the new accommodation unit were 25% complete.
Overall process plant construction is 56% complete.
* Mining: Mine Development has progressed as new equipment has arrived to
site, including two new ST7 scoops and one new Jumbo drill. The ramp has been
completed to 732 m and the first ore round was blasted on June 30th. Amaroq
has continued the sump development which is 75% complete. Both Mine Arc refuge
stations have been commissioned. The leaky feeder communication system was
installed from 300 to the 720 ml. Construction of the underground main heating
system on 300ml portal has commenced. The exhaust raise fans for Target Block
have been commissioned in preparation for the development of the exploration
drift as drilling is planned to commence in September.
* Nalunaq Exploration: All additional 75 vein sampling from historical core
housed at Nalunaq has been completed and submitted to ALS for assaying. Drill
crews and equipment for surface exploration drilling targeting expanded
mineralization at the Target Block, have been mobilised to site.
* Strategic Minerals: Amaroq has mobilised three drill rigs and a
semi-permanent 40 person camp in order to enact an expanded drilling programme
at Stendalen, which has now commenced.
Nalunaq Project KPIs
* 103,680 total hours worked during Q2 2024
* Daily average of 96 people working on site at Nalunaq in Q2 2024
* Ratio of Greenlandic personnel at Nalunaq was 51% in Q2 2024
Outlook
* Activities at Nalunaq remain on track to deliver first gold in Q4 2024. An
additional accommodation wing is due to be added in Q3 2024 to accommodate up
to 120 people on site.
* The Ni-Cu exploration programme continues at the Stendalen copper-nickel
discovery with an expanded drilling programme targeting the sulphide zone.
Exploration activities overview
Gold projects:
* Nalunaq * All additional 75 vein sampling from historical core housed at
Nalunaq has been completed and submitted to ALS for assaying.
* Drill crews and equipment for surface exploration drilling to enlarge the
mineralised zone at the Target Block have mobilised to site.
* Following completion of the underground rehabilitation, exploration will now
be conducted from underground as well as surface. The 2024 exploration
programme aims to provide additional information and data on the Mountain
Block and Target Block extensions to the Main Vein as well as assessing
continuity and form of the 75 Vein. Underground drilling locations have been
designed and a rig is to be mobilised for operations in Q4 2024.
* Vagar and Surrounding Areas * Amaroq intends to continue its target
generation programmes in the regions near to Nalunaq and Vagar licences.
Strategic Minerals:
* Sava Copper Belt (Sava/North Sava) * Geological field team have commenced a
programme of mapping and sampling across the copper belt area assessing both
potential porphyry and magmatic Cu-Ni targets.
* Following the identification of a copper/molybdenum porphyry system at
Target West, the Company intends to continue additional porphyry target
generation across the Sava and North Sava licences as well as regionally
across the Copper Belt targeting areas that hold the greatest potential to
host porphyry related systems.
* Further assessment of the prospectivity of the epithermal copper/gold
mineralisation at Target North is also planned.
* Stendalen * Following the new Copper-Nickel discovery made at Stendalen,
Amaroq has mobilised three drill rigs and a semi-permanent camp to site to
facilitate an expanded drilling programme.
* Following the successful completion of a ground geophysics programme, a more
robust conductive target within the interpreted Feeder Zone has been defined
which will be the focus of the 2024 drilling programme, which commenced
post-period in August.
* In addition, the Company has commenced planning for a downhole geophysics
programme to provide further confidence to the overall extend and geometry of
the intrusion and associated sulphide mineralisation.
* Leveraging off the data from this discovery, ground studies will also assess
the potential for further target areas regionally.
* Kobberminebugt
* Amaroq continues to review the results of the detailed geophysical
programme conducted over the Kobberminebugt licence in 2023. Specific
geophysical targets will be interpreted, and target generation activities will
take place during Summer 2024.
* Nunarsuit * Geophysical data collected during 2023 is currently being
fully assessed and Amaroq aims to conduct a targeted field programme on the
licence during Summer of 2024. Initial targets will include specific
geophysical anomalies as well as outcropping niobium bearing pegmatites.
Details of conference call
A conference call for analysts and investors will be held today at 14:00 BST
(13:00 GMT, 09:00 EST), including a management presentation and Q&A session.
To join the meeting, please register at the below link:
https://us06web.zoom.us/webinar/register/WN_Vcw3xLPxTP2xvokJBtfQVQ
Amaroq Financial Results
The following selected financial data is extracted from the Financial
Statements for the six months ended June 30, 2024.
Financial Results
Six months ended June 30
2024 2023
$ $
Exploration and evaluation expenses (748,040) (3,459,846)
Site development costs - (1,825,564)
General and administrative (8,294,917) (5,383,216)
Gain on loss of control of subsidiary - 31,340,880
Share of 6-months loss of an equity-accounted joint arrangement (1,909,817) (1,639,482)
Unrealized gain on derivative liability 5,291,615 -
Net (loss) income and comprehensive (loss) income (3,988,193) 19,980,808
Basic and diluted (loss) income per common share (0.013) 0.07
Financial Position
As at June 30 As at March 31
2024 2024
$ $
Cash on hand 31,663,204 65,086,851
Total assets 177,950,773 179,887,713
Total current liabilities (before convertible notes liability) 8,490,107 7,371,146
Total current liabilities (including convertible notes liability) 41,932,965 48,922,487
Shareholders’ equity 135,365,745 130,283,503
Working capital-gold business (before convertible notes liability) 50,534,953 78,210,475
Working capital-gold business (after convertible notes liability) 17,092,095 36,659,134
Gold business liquidity (excludes $17.0 and $18.7M ring-fenced for strategic mineral exploration as of March 31, 2024 and Dec 31, 2023) 62,153,117 96,303,850
Conditional Awards under RSU Plan
Amaroq further announces that it made a conditional award (the “Award”)
under the Restricted Share Unit Plan (the “RSU Plan”) to the Chief
Financial Officer Ellert Arnarson whose appointment became effective on 06
August 2024. The Award consists of a conditional right to receive value if the
future performance targets, applicable to the Award, are met. Any value to
which the participant is eligible in respect of the Award will be granted as
Restricted Share Units (each an “RSU”), with each RSU entitling the
participant to receive common shares in the Company. Each RSU will be granted
under, and governed in accordance with, the rules of the Company's Restricted
Share Unit Plan (the “RSU Plan”) available on the Company's website at
https://www.amaroqminerals.com/about/corporate-governance/
The details of the Award are as follows:
* Initial price: share price on the date of appointment being C$1.04;
* Hurdle rate: 10% p.a. above the Initial Price;
* Pool: value equal to 10% of the growth in value above the Hurdle rate;
* Individual allocation: 12% of the pool;
* Measurement date: 31 December 2025, a single measurement date based on the 3
months average share price;
* RSU Grant date: Q1 2026;
* Vesting: 100% vests Q1 2027.
PDMR Dealing Notification Form of provided in accordance with Article 19 of
the EU Market Abuse Regulation 596/2014 can be found below.
******************
DEALING NOTIFICATION FORM
FOR USE BY PERSONS DISCHARGING MANAGERIAL RESPONSIBILITY
AND THEIR CLOSELY ASSOCIATED PERSONS
1. Details of the person discharging managerial responsibilities/person closely associated
a) Name: Ellert Arnarson
2. Reason for the notification
a) Position/status: Chief Financial Officer
b) Initial notification/Amendment Initial notification
3. Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a) Name Amaroq Minerals Ltd.
b) LEI: 213800Q21S5JQ6WKCE70
4. Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a) Description of the financial instrument, type of instrument: Identification code: Restricted Share Units (“RSU”), with each RSU entitling the participant to receive common shares in the Company
b) Nature of the transaction: Award under Restricted Share Unit Plan
c) Price(s) and volume(s): Price(s) Volume(s)
Nil 12% of the Total Pool
d) Aggregated information: * Aggregated volume: n/a
* Average price:
e) Date of the transaction(s): August 14, 2024
f) Place of the transaction XOFF
Enquiries:
Amaroq Minerals Ltd.
Eldur Olafsson, Executive Director and CEO
eo@amaroqminerals.com
Eddie Wyvill, Corporate Development
+44 (0)7713 126727
ew@amaroqminerals.com
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker)
Callum Stewart
Varun Talwar
Simon Mensley
Ashton Clanfield
+44 (0) 20 7710 7600
Panmure Liberum (UK) Limited (Joint Broker)
Scott Mathieson
Kieron Hodgson
+44 (0) 20 7886 2500
Camarco (Financial PR)
Billy Clegg
Elfie Kent
Fergus Young
+44 (0) 20 3757 4980
For Company updates:
Follow @Amaroq_minerals on X (Formerly known as Twitter)
Follow Amaroq Minerals Inc. on LinkedIn
Further Information:
About Amaroq Minerals
Amaroq Minerals' principal business objectives are the identification,
acquisition, exploration, and development of gold and strategic metal
properties in South Greenland. The Company's principal asset is a 100%
interest in the past producing Nalunaq Gold mine which is due to go into
production towards the end of 2024. The Company has a portfolio of gold and
strategic metal assets in Southern Greenland covering the two known gold belts
in the region as well as advanced exploration projects at Stendalen and the
Sava Copper Belt exploring for Strategic metals such as Copper, Nickel, Rare
Earths and other minerals. Amaroq Minerals is continued under the Business
Corporations Act (Ontario) and wholly owns Nalunaq A/S, incorporated under the
Greenland Public Companies Act.
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.
Glossary
Ag silver
Au gold
Bt Billion tonnes
Cu copper
g grams
g/t grams per tonne
km kilometers
Koz thousand ounces
m meters
Mo molybdenum
MRE Mineral Resource Estimate
MT Magnetotelluric data
Nb niobium
Ni nickel
oz ounces
REE Rare Earth Elements
t tonnes
Ti Titanium
t/m (3) tonne per cubic meter
U uranium
USD/ozAu US Dollar per ounce of gold
V Vanadium
Zn zinc
Inside Information
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No. 596/2014 on Market Abuse ("UK MAR"),
as it forms part of UK domestic law by virtue of the European
Union (Withdrawal) Act 2018, and Regulation (EU) No. 596/2014 on Market Abuse
("EU MAR").
Qualified Person Statement
The technical information presented in this press release has been approved by
James Gilbertson CGeol, VP Exploration for Amaroq Minerals and a Chartered
Geologist with the Geological Society of London, and as such a Qualified
Person as defined by NI 43-101.
Amaroq Minerals Ltd.
UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended June 30, 2024
The attached financial statements have been prepared by Management of Amaroq
Minerals Ltd. and have not been reviewed by the auditor
As at As at
June 30, December 31,
Notes 2024 2023
$ $
ASSETS
Current assets
Cash 31,663,204 21,014,633
Sales tax receivable 199,790 69,756
Prepaid expenses and others 19,593,779 18,681,568
Inventory 7,768,077 680,358
Total current assets 59,224,850 40,446,315
Non-current assets
Deposit 177,944 27,944
Escrow account for environmental rehabilitation 5,716,288 598,939
Financial Asset - Related Party 3,1 3 4,975,422 3,521,938
Investment in equity accounted joint arrangement 3 21,582,994 23,492,811
Mineral properties 4 48,683 48,821
Right of use asset 7 682,555 574,856
Capital assets 5 85,542,037 38,241,559
Total non-current assets 118,725,923 66,506,868
TOTAL ASSETS 177,950,773 106,953,183
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities 8,375,316 6,273,979
Convertible notes 6 33,442,858 35,743,127
Lease liabilities – current portion 7 114,791 80,206
Total current liabilities 41,932,965 42,097,312
Non-current liabilities
Lease liabilities 7 652,063 577,234
Total non-current liabilities 652,063 577,234
Total liabilities 42,585,028 42,674,546
Equity
Capital stock 8 207,202,359 132,117,971
Contributed surplus 6,716,481 6,725,568
Accumulated other comprehensive loss (36,772) (36,772)
Deficit (78,516,323) (74,528,130)
Total equity 135,365,745 64,278,637
TOTAL LIABILITIES AND EQUITY 177,950,773 106,953,183
Subsequent events 1 6
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
Three months Six months
ended June 30 , ended June 30 ,
Notes 202 4 202 3 202 4 202 3
$ $ $ $
Expenses
Exploration and evaluation expenses 10 127,173 (2,278,193) (748,040) (3,459,846)
Site development costs - (1,825,564) - (1,825,564)
General and administrative 11 (4,335,691) (2,806,181) (8,294,917) (5,383,216)
Gain (loss) on disposal of capital assets - - - (37,791)
Foreign exchange gain (loss) 514,521 (171,828) 435,012 25,175
Operating gain (loss) (3,693,997) (7,081,766) (8,607,945) (10,681,242)
Other income (expenses)
Interest income 25,866 240,268 41,192 471,588
Gardaq management income and allocated cost 578,568 506,640 1,214,894 506,640
Gain on loss of control of subsidiary 3 - 31,340,880 - 31,340,880
Share of net loss of joint arrangement 3 (1,263,385) (1,639,482) (1,909,817) (1,639,482)
Unrealized gain on derivative liability 6 9,591,828 - 5,291,615 -
Finance costs 12 (9,558) (8,839) (18,132) (17,576)
Net income (loss) and comprehensive income (loss) 5,229,322 23, 357 ,701 (3,988,193) 19,980,808
Weighted average number of common shares outstanding - basic 326,825,939 263,281,297 308,700,211 263,242,536
Weighted average number of common shares outstanding – diluted 364,748,474 273,398,692 308,700,211 273,359,931
Basic earnings (loss) per share 14 0.016 0.09 (0.013) 0.08
Diluted earnings (loss) per common share 14 0.014 0.09 (0.013) 0.07
Effect of dilution 0.002 - - 0.01
Share options 7,261,353 10,117,395 7,261,353 10,117,395
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
Amaroq Minerals Ltd.
Consolidated Statements of Changes in Equity
(Unaudited, in Canadian Dollars)
Notes Number of common shares outstanding Capital Stock Contributed surplus Accumulated other comprehensive Deficit Total Equity
loss
$ $ $ $ $
Balance at January 1, 2023 263,073,022 131,708,387 5,250,865 (36,772) (73,694,617) 63,227,863
Net income and comprehensive income - - - - 19,980,808 19,980,808
Options exercised, net 208,275 128,758 (150,000) - - (21,242)
Stock-based compensation 9 - - 902,028 - - 902,028
Balance at June 3 0 , 202 3 263,281,297 131,837,145 6 , 002 ,8 93 (36,772) (53,713,809) 84 , 089 ,4 57
Balance at January 1, 202 4 263,670,051 132,117,971 6,725,568 (36,772) (74,528,130) 64,278,637
Net loss and comprehensive loss - - (3,988,193) (3,988,193)
Shares issued under a fundraising 8 62,724,758 75,574,600 - 75,574,600
Shares issuance costs 8 - (1,218,285) - (1,218,285)
Options exercised - net 1,023,918 728,073 (745,500) - (17,427)
Stock-based compensation 9 - - 736,413 - 736,413
Balance at June 3 0 , 202 4 327,418,727 207,202,359 6,716,481 (36,772) (78,516,323) 135,365,745
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
Notes Six months ended June 3 0 ,
2024 2023
$ $
Operating activities
Net (loss) income for the period (3,988,193) 19,980,808
Adjustments for:
Depreciation 5 347,881 352,763
Amortisation of ROU asset 7 53,340 39,774
Stock-based compensation 9 736,413 902,028
Gain on loss of control of subsidiary 3 - (31,340,880)
Unrealized loss on derivative liability 6 (5,291,615) -
Loss on disposal of capital assets - 37,791
Share of net losses of joint arrangement 3 1,909,817 1,639,482
Gardaq management income and allocated cost 3,1 3 (1,214,894) (506,640)
Interest income (41,192) (471,588)
Other expenses (17,427) -
Foreign exchange (667,577) (47,985)
Finance costs 18,132 17,576
(8,155,315) (9,396,871)
Changes in non-cash working capital items:
Sales tax receivable (130,033) 17,004
Due from related party 3,1 3 (175,663) (1,712,863)
Prepaid expenses and others (8,015,367) (1,580,751)
Accounts payable and accrued liabilities 2,100,537 1,734,337
(6,220,526) (1,542,273)
Cash flow used in operating activities (14,3 75 , 841 ) ( 10,939,144 )
Investing activities
Transfer to escrow account for environmental rehabilitation (5,066,193) -
Construction in progress and acquisition of capital assets 5 (45,078,383) -
Prepayment for acquisition of ROU asset (5,825) -
Deposit (150,000) -
Cash flow used in investing activities (50,300,401) -
Financing activities
Proceeds from issuance of shares 8 75,574,600 -
Shares issuance costs 8 (1,218,285) -
Lease payments 7 (63,932) (53,173)
Interest received 41,192 471,588
Cash flow from financing activities 74,3 33 ,5 75 418 , 415
Net change in cash before effects of exchange rate changes on cash during the period 9,657,333 (10,520,729)
Effects of exchange rate changes on cash 991,238 53,012
Net change in cash during the period 10,648,571 (10,467,717)
Cash, beginning of period 21,014,633 50,137,569
Cash, end of period 31,663,204 39,669, 852
Supplemental cash flow information
Borrowing costs capitalised to capital assets (note 5) 2,569,838 -
ROU assets acquired through lease 155,214 -
Options exercised 728,073 -
The accompanying notes are an integral part of these unaudited condensed
interim consolidated financial statements.
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION
Amaroq Minerals Ltd. (the “Corporation”) was incorporated on February 22,
2017, under the Canada Business Corporations Act. As of June 19, 2024, the
Corporation completed its continuance from the Canada Business Corporations
Act into the Province of Ontario under the Business Corporations Act
(Ontario). The Corporation’s head office is situated at 100 King Street
West, Suite 3400, First Canadian Place, Toronto, Ontario, M5X 1A4, Canada. The
Corporation operates in one industry segment, being the acquisition,
exploration and development of mineral properties. It owns interests in
properties located in Greenland. The Corporation’s financial year ends on
December 31. Since July 2017, the Corporation’s shares are listed on the TSX
Venture Exchange (the “TSX-V”). Since July 2020, the Corporation’s
shares are also listed on the AIM market of the London Stock Exchange
(“AIM”) and from November 1, 2022, on Nasdaq First North Growth Market
Iceland which were transferred on September 21, 2023 on Nasdaq Main Market
Iceland (“Nasdaq”) under the AMRQ ticker.
These unaudited condensed interim consolidated financial statements for the
six months ended June 30, 2024 (“Financial Statements”) were approved by
the Board of Directors on August 14, 2024.
1.1 Basis of presentation and consolidation
The Financial Statements include the accounts of the Corporation and those of
its 100% owned subsidiary Nalunaq A/S, company incorporated under the
Greenland Public Companies Act. The Financial Statements also include the
Corporation’s 51% equity share of Gardaq A/S, a joint venture with GCAM LP
(Note 3).
The Financial Statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) including International Accounting
Standard (“IAS”) 34, Interim Financial Reporting. The Financial Statements
have been prepared under the historical cost convention.
The Financial Statements should be read in conjunction with the audited annual
financial statements for the year ended December 31, 2023, which have been
prepared in accordance with IFRS as issued by the IASB. The accounting
policies, methods of computation and presentation applied in these Financial
Statements are consistent with those of the previous financial year ended
December 31, 2023.
2. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS
The preparation of the Financial Statements requires Management to make
judgments and form assumptions that affect the reported amounts of assets and
liabilities at the date of the Financial Statements and reported amounts of
expenses during the reporting period. On an ongoing basis, Management
evaluates its judgments in relation to assets, liabilities and expenses.
Management uses past experience and various other factors it believes to be
reasonable under the given circumstances as the basis for its judgments.
Actual outcomes may differ from these estimates under different assumptions
and conditions.
In preparing the Financial Statements, the significant judgements made by
Management in applying the Corporation accounting policies and the key sources
of estimation uncertainty were the same as those that applied to the
Corporation’s audited annual financial statements for the year ended
December 31, 2023.
3. INVESTMENT IN AN ASSOCIATE OR JOINT VENTURE CORPORATION
As at As at
June 3 0 , June 3 0 ,
202 4 2023
$ $
Balance at beginning of period 23,492,811 -
Original investment in Gardaq ApS - 7,422
Transfer of non-gold strategic minerals licences at cost - 36,896
Investment at conversion of Gardaq ApS to Gardaq A/S - 55,344
Gain on FV recognition of equity accounted investment in joint venture - 31,285,536
Share of joint venture’s net losses for six months ended June30 (1,909,817) (1,639,482)
Balance at end of period 21,582,994 29,745,716
Original investment in Gardaq ApS 7,422 7,422
Transfer of non-gold strategic minerals licences at cost 36,896 36,896
Investment at conversion of Gardaq ApS to Gardaq A/S 55,344 55,344
Gain on FV recognition of equity accounted investment in joint venture 31,285,536 31,285,536
Investment retained at fair value- 51% share 31,385,198 31,385,198
Share of joint venture’s cumulative net losses (9,802,204) (1,639,482)
Balance at end of period 21,582,994 29,745,716
The following tables summarize the unaudited financial information of Gardaq
A/S.
As at As at
June 3 0 , June 3 0 ,
202 4 202 3
$ $
Cash and cash equivalent 13,483,026 29,337,924
Prepaid expenses and other 2,741,424 64,645
Total current assets 16,224,450 29,402,569
Mineral property 117,576 92,240
Total a ssets 16,342,026 29,494,809
Accounts payable and accrued liabilities 339,675 243,939
Financial liability - related party 4,975,422 2,218,604
Total liabilities 5,315,097 2,462,543
Capital stock 30,246,937 30,246,937
Deficit (19,220,008) (3,214,671)
Total equity 11,026,929 27,032,266
Total liabilities and equity 16,342,026 29,494,809
3. INVESTMENT IN AN ASSOCIATE OR JOINT VENTURE CORPORATION
(CONT’d)
As at As at
June 3 0 , June 3 0 ,
202 4 202 3
$ $
Exploration and Evaluation expenses 2,799,464 2,751,253
Interest expense (income) (4,640) -
Foreign exchange loss (gain) (369,405) (43,222)
Operating loss 2,425,419 2,708,031
Other expenses 1,319,319 506,640
Net loss and comprehensive loss 3,744,738 3,214,671
3.1 Financial Asset – Related Party
Subject to a Subscription and Shareholder Agreement dated 13 April 2023, the
Corporation undertakes to subscribe to two ordinary shares in Gardaq (the
“Amaroq shares”) at a subscription price of GBP 5,000,000 no later than 10
business days after the third anniversary of the completion of the
subscription agreement.
Amaroq’s subscription will be completed by the conversion of Gardaq’s
related party balance into equity shares. Gardaq’s related party payable
balance consists of overhead, management, general and administrative expenses
payable to the Corporation. In the event that the related party payable
balance is less than GBP 5,000,000, the Corporation shall, no later than 10
business days after the third anniversary of Completion:
(a) subscribe to one Amaroq share by conversion of the amount payable to
the Corporation,
(b) subscribe to one Amaroq share at a subscription price equal to GBP
5,000,000 less the amount payable to the Corporation
In the event that the amount payable to the Corporation exceeds GBP 5,000,000,
the Corporation shall subscribe to the Amaroq shares at a subscription price
equal to GBP 5,000,000 by conversion of GBP 5,000,000 of the amount due from
Gardaq. Gardaq shall not be liable to repay any of the balance payable to the
Corporation that exceeds GBP 5,000,000 (equivalent to CAD 8,647,100 as at 30
June 2024). See note 13.1.
During the six-month period ended 30 June 2024, the Corporation determined
that the financial asset should be reclassified to the non-current asset
category since the amount will be settled during April 2026. As a result, an
amount of $4,975,422 has been reclassified to non-current assets as at 30 June
2024 ($3,521,938 reclassified as at 31 December 2023, nil as at 31 December
2022).
4. MINERAL PROPERTIES
As at December 31, Transfer As at June 3 0 ,
2023 2024
$ $ $
Nalunaq - Au 1 - 1
Tartoq - Au 18,431 - 18,431
Vagar - Au 11,103 - 11,103
Nuna Nutaaq - Au 6,076 - 6,076
Anoritooq - Au 6,389 - 6,389
Siku - Au 6,821 (138) 6,683
Total mineral properties 48,821 (138) 48,683
4. MINERAL PROPERTIES (CONT’d)
As at December 31, Transfers As at June 3 0 ,
2022 2023
$ $ $
Nalunaq - Au 1 - 1
Tartoq - Au 18,431 - 18,431
Vagar - Au 11,103 - 11,103
Nuna Nutaaq - Au 6,076 - 6,076
Anoritooq - Au 6,389 - 6,389
Siku - Au 6,821 - 6,821
Naalagaaffiup Portornga - Strategic Minerals 6,334 (6,334) -
Saarloq - Strategic Minerals 7,348 (7,348) -
Sava - Strategic Minerals 6,562 (6,562) -
Kobberminebugt - Strategic Minerals 6,840 (6,840) -
Stendalen - Strategic Minerals 4,837 (4,837) -
North Sava - Strategic Minerals 4,837 (4,837) -
Total mineral properties 85,579 (36,758) 48,821
5. CAPITAL ASSETS
Field equipment and Vehicles and rolling stock Equipment (including software) Construc tion i n p rogress Total
infrastructure
$ $ $ $ $
Six months ended June 3 0 , 2024
Openingnetbookvalue 1,537,379 3,312,118 108,822 33,283,240 38,241,559
Additions - 47,254 138 47,600,967 47,648,359
Depreciation (99,187) (217,499) (31,195) - (347,881)
Closing net book value 1,438,192 3,141,873 77,765 80,884,207 85,542,037
Field equipment and Vehicles and rolling stock Equipment (including software) Construc tion i n p rogress Total
infrastruc ture
$ $ $ $ $
As at June 3 0 , 2024
Cost 2,351,042 4,514,225 232,231 80,884,207 87,981,705
Accumulated depreciation (912,850) (1,372,352) (154,466) - (2,439,668)
Closing net book value 1,438,192 3,141,873 77,765 80,884,207 85,542,037
5. CAPITAL ASSETS (CONT’d)
Field equipment and Vehicles and rolling stock Equipment (including software) Construc tion In progress Total
infrastruc ture
$ $ $ $ $
December 31, 2023
Openingnetbookvalue 1,735,752 3,742,384 216,385 7,522,085 13,216,606
Additions - - - 25,761,155 25,761,155
Disposals - - (80,983) - (80,983)
Adjustment - - 43,054 - 43,054
Depreciation (198,373) (430,266) (69,634) - (698,273)
Closing net book value 1,537,379 3,312,118 108,822 33,283,240 38,241,559
Field equipment and Vehicles and rolling stock Equipment (including software) Construc tion In progress Total
infrastruc ture
$ $ $ $ $
As at December 31, 2023
Cost 2,351,041 4,466,971 232,231 33,283,240 40,333,483
Accumulated depreciation (813,662) (1,154,853) (123,409) - (2,091,924)
Closing net book value 1,537,379 3,312,118 108,822 33,283,240 38,241,559
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 $316,879 ($321,265 for the six months ended June 30, 2023) was expensed as
exploration and evaluation expenses during the six months ended June 30, 2024.
As at June 30, 2024, the Corporation had capital commitments, of $50,977,087.
These commitments relate to the development of Nalunaq Project, rehabilitation
of the Nalunaq mine, construction of processing plant, purchases of mobile
equipment and establishment of surface infrastructure.
During the first six months of 2024 the Corporation capitalised borrowing
costs of $2,569,838 to construction in progress, which are included in
additions.
6. CONVERTIBLE NOTES
Convertible notes loan Embedded Derivatives at FVTPL Total
$ $ $
Balance as at December 31, 2023 11,763,053 23,980,074 35,743,127
Accretion of discount 1,811,142 - 1,811,142
Accrued interest 758,696 - 758,696
Fair value change - (5,291,615) (5,291,615)
Foreign exchange loss 421,508 - 421,508
Balance as at June 30, 2024 14,754,399 18,688,459 33,442,858
Non-current portion - - -
Current portion 14,754,399 18,688,459 33,442,858
6. CONVERTIBLE NOTES (CONT’d)
Convertible notes loan Embedded Derivatives at FVTPL Total
$ $ $
Balance as at December 31, 2022 - - -
Gross proceeds from issue 30,431,180 - 30,431,180
Embedded derivative component (19,443,663) 19,443,663 -
Transaction costs (362,502) - (362,502)
Accretion of discount 949,062 - 949,062
Accrued interest 508,576 - 508,576
Fair value change - 4,536,411 4,536,411
Foreign exchange loss (gain) (319,600) - (319,600)
Balance as at December 31, 2023 11,763,053 23,980,074 35,743,127
Non-current portion - - -
Current portion 11,763,053 23,980,074 35,743,127
6.1 Revolving Credit Facility
A $25 million (US$18.5 million) Revolving Credit Facility (“RCF”) was
entered into with Landsbankinn hf. and Fossar Investment Bank on September 1,
2023, with a two-year term expiring on September 1, 2025 and priced at the
Secured Overnight Financing Rate (“SOFR”) plus 950bps. Interest is
capitalized and payable at the end of the term.
The RCF is denominated in US Dollars and the SOFR interest rate is determined
with reference to the CME Term SOFR Rates published by CME Group Inc. The RCF
carries (i) a commitment fee of 0.40% per annum calculated on the undrawn
facility amount and (ii) an arrangement fee of 2.00% on the facility amount
where 1.5% has been paid on the closing date of the facility and 0.50% is to
be paid on or before the first draw down. The facility is not convertible into
any securities of the Corporation.
The facility will be secured by (i) a bank account pledge from the Corporation
and Nalunaq A/S, (ii) share pledges over all current and future acquired
shares in Nalunaq A/S and Gardaq A/S held by the Corporation pursuant to the
terms of share pledge agreements, (iii) a proceeds loan assignment agreement,
(iv) a pledge agreement in respect of owner’s mortgage deeds and (v) a
licence transfer agreement. The Corporation has not yet drawn on this
facility.
This facility will be replaced by the new revolving credit facilities that are
expected to be finalized subsequent to the interim financial reporting date
(see note 16).
6. CONVERTIBLE NOTES (CONT’d)
6.2 Convertible notes
Convertible notes represent $30.4 million (US$22.4 million) notes issued to
ECAM LP (US$16 million), JLE Property Ltd. (US$4 million) and Livermore
Partners LLC (US$2.4 million) on September 1, 2023 with a four-year term and a
fixed interest rate of 5%. The conversion price of $0.90 per common share is
the closing Canadian market price of the Amaroq shares on the day, prior to
the closing day of the Debt Financing.
The convertible notes are denominated in US Dollars and will mature on
September 30, 2027, being the date that is four years from the convertible
note offering closing date. The principal amount of the convertible notes will
be convertible, in whole or in part, at any time from one month after issuance
into common shares of the Corporation ("Common Shares") at a conversion price
of $0.90 (£0.525) per Common Share for a total of up to 33,812,401 Common
Shares. The Corporation may repay the convertible notes and accrued interest
at any time, in cash, subject to providing 30 days’ notice to the relevant
noteholders, with such noteholders having the option to convert such
convertible notes into Common Shares at the conversion price up to 5 days
prior to the redemption date. If the Corporation chooses to redeem some but
not all of the outstanding convertible notes, the Corporation shall redeem a
pro rata share of each noteholder's holding of convertible notes. The
Corporation shall pay a commitment fee to the holders of the convertible notes
of, in aggregate, $5,511,293 (US$4,484,032), which shall be paid pro rata to
each noteholder's holding of convertible notes. The commitment fee is payable
on the earlier of (a) the date falling 20 business days after all amounts
outstanding under the Bank Revolving Credit Facility have been repaid in full,
but no earlier than the date that is 24 months after the date of issuance of
the notes; and (b) the date falling 30 (thirty) months after the date of the
subscription agreement in respect of the notes, irrespective of whether or not
notes have converted at that date or been repaid.
The convertible notes will be secured by (i) bank account pledge agreements
from the Corporation and Nalunaq A/S, (ii) share pledges over all current and
future acquired shares in Nalunaq A/S and Gardaq A/S held by the Corporation
pursuant to the terms of share pledge agreements, (iii) a proceeds loan
assignment agreement, (iv) a pledge agreement in respect of owner’s mortgage
deeds and (v) a licence transfer agreement.
The convertible notes represent hybrid financial instruments with embedded
derivatives requiring separation. The debt host portion (the “Host”) of
the instrument is initially recognised at fair value and subsequently measured
at amortized cost, whereas the aggregate conversion and repayment options (the
“Embedded Derivatives”) are classified at fair value through profit and
loss (FVTPL).
The fair value of the convertible notes at inception was recognized at $30.4
million (US$22.4 million) and $19.4 million (US$14.3 million) embedded
derivative component was isolated and determined using a Black Scholes
valuation model which required the use of significant unobservable inputs. As
of June 30, 2024, the Corporation identified the fair value of embedded
derivative associated with the early conversion option to be $18.7 million
($24.0 million as of December 31, 2023). The change in fair value of embedded
derivative in the period from January 1, 2024 to June 30, 2024 has been
recognized in the consolidated statement of comprehensive loss. The Host
liability component at inception, before deducting transaction costs, was
recognized to be the residual amount of $10.9 million (US$8.1 million) which
is subsequently measured at amortized cost. Transaction costs incurred on the
issuance of the convertible note amounted to $1,004,030, of which $362,502 was
allocated to, and deducted from, the host liability component, and $641,528
was allocated to the embedded derivative component and charged to profit and
loss.
6. CONVERTIBLE NOTES (CONT’D)
6.3 Cost Overrun Facility
$13.5 million (US$10 million) Revolving Cost Overrun Facility was entered into
with JLE Property Ltd. on September 1, 2023, on the same terms as the Bank
Revolving Credit Facility.
The Overrun Facility is denominated in US Dollars with a two-year term,
expiring on September 1, 2025, and will bear interest at the CME Term SOFR
Rates by CME Group Inc. and have a margin of 9.5% per annum. The Overrun
Facility carries a stand-by fee of 2.5% on the amount of committed funds. The
Overrun Facility is not convertible into any securities of the Corporation.
The Overrun Facility will be secured by (i) bank account pledge agreements
from the Corporation and Nalunaq A/S, (ii) share pledges over all current and
future acquired shares in Nalunaq A/S and Gardaq A/S held by the Corporation
pursuant to the terms of share pledge agreements, (iii) a proceeds loan
assignment agreement, (iv) a pledge agreement in respect of owner’s mortgage
deeds and (v) a licence transfer agreement. The Corporation has not yet
drawn on this facility.
This facility will be replaced by the new revolving credit facilities that are
expected to be finalized subsequent to the interim financial reporting date
(see note 16).
7. LEASE LIABILITIES
As at As at
June 3 0 , December 3 0 ,
202 4 2023
$ $
Balance beginning 657,440 729,237
Lease additions 155,214 -
Lease payment (63,932) (105,894)
Interest 18,132 34,097
Balance ending 766,854 657,440
Non-current portion – lease liabilities (652,063) (577,234)
Current portion – lease liabilities 114,791 80,206
The Corporation has two leases for its offices. In October 2020, the
Corporation started a 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. In March 2024, the Corporation started a new lease
for a two-year term with the option to extend for two more years. The monthly
rent is $5,825 until March 2025 after which the monthly rent may increase as
per the lease terms.
7. LEASE LIABILITIES (CONT’d)
7.1 Right of use asset
As at As at
June 3 0 , December 31,
202 4 2023
$ $
Opening net book value 574,856 655,063
Additions 161,039 -
Amortisation (53,340) (80,207)
Closing net book value 682,555 574,856
Cost 997,239 836,200
Accumulated amortisation (314,684) (261,344)
Closing net book value 682,555 574,856
8. SHARE CAPITAL
On February 23, 2024, the Corporation successfully completed its
oversubscribed fundraising which resulted in a total of 62,724,758 new common
shares being placed with new and existing institutional investors at a placing
price of 74 pence (CAD $1.25 at the closing exchange rate on 9 February 2024).
The placing price represents a 5.7% premium to the closing share price on 9
February 2024 on the AIM exchange. The fundraising consisted of:
* A placing of new common shares with new and existing institutional investors
at the placing price (the “UK Placing”). Stifel Nicolaus Europe Limited
acted as the sole bookrunner and broker on the UK Placing.
* A placing of new depository receipts representing new common shares with new
and existing investors at the placing price (the “Icelandic Placing”).
Landsbankinn hf. and Fossar fjarfestingarbanki hf. acted as joint bookrunners
on the Icelandic Placing and Landsbankinn hf. acted as underwriter.
* A private placement of new common shares by certain existing institutional
investors and a director of the Company at the placing price (the “Canadian
Subscription”). The Director subscribed to approximately CAD $3.4 million
(equivalent to GBP 2.0 million) in the fundraising.
As a result of the subscription, net proceeds of approximately GBP 44 million
(CAD 75.6 million) have been raised, exceeding the initial targeted amount of
GBP 30 million. The shares subscribed to were credited as fully paid and rank
pari passu in all respects with the existing common shares of the Corporation.
9. STOCK-BASED COMPENSATION
9.1 Stock options
An incentive stock option plan (the “Plan”) was approved initially in 2017
and renewed by shareholders on June 14, 2024. 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, directors,
employees and consultants. The Board of directors attributes that 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 May 14, 2024, and June 3, 2024, the Corporation granted its employees
22,988 stock options with an exercise price ranging from $1.30 to $1.31 per
share. The stock options vested 100% at the grant date. The options were
granted at an exercise price equal to the closing market price of the shares
the day prior to the grant. Total stock-based compensation costs amounted to
$18,163 for an estimated fair value of $0.72 per share.
On January 5, 2024, a former director of the Corporation exercised his
options. As a result, 150,000 options were exercised which resulted in the
former director receiving 60,637 shares net of applicable withholdings. On May
23, 2024, the former Chief Financial Officer (“CFO”) of the Corporation
exercised his options. As a result, 1,800,000 options were exercised which
resulted in the former CFO receiving 963,281 shares net of applicable
withholdings.
Changes in stock options are as follows:
Six months ended June 3 0 , 202 4 December 31, 2023
Number of options Weighted average exercise price Number of options Weighted average exercise price
$ $
Balance, beginning 9,188,365 0.59 10,717,395 0.57
Granted 22,988 1.30 80,970 1.01
Exercised (1,950,000) 0.60 (1,610,000) 0.46
Balance, end 7,261,353 0.5 9 9,188,365 0.59
Balance, end exercisable 7,259,522 0.59 9,188,365 0.59
9. STOCK-BASED COMPENSATION (CONT’d)
Stock options outstanding and exercisable as at June 30, 2024 are as follows:
Number of options outstanding Number of options exercisable Exercise price Expiry date
$
1,670,000 1,670,000 0.38 December 31, 2025
100,000 98,169 0.50 September 13, 2026
1,245,000 1,245,000 0.70 December 31, 2026
2,700,000 2,700,000 0.60 January 17, 2027
73,333 73,333 0.75 April 20, 2027
39,062 39,062 0.64 July 14, 2027
1,330,000 1,330,000 0.70 December 30, 2027
19,480 19,480 0.77 July 24, 2028
61,490 61,490 1.09 December 20, 2028
11,538 11,538 1.30 May 14, 2029
11,450 11,450 1.31 June 3, 2029
7 , 261 ,3 53 7 , 259 , 522
9.2 Restricted Share Unit
9.2.1 Description
Conditional awards were made in 2022 that give participants the opportunity to
earn restricted share unit awards under the Corporation’s Restricted Share
Unit Plan (“RSU Plan”) subject to the generation of shareholder value over
a four-year performance period.
The awards are designed to align the interests of the Corporation’s
employees and shareholders, by incentivising the delivery of exceptional
shareholder returns over the long-term. Participants receive a 10% share of a
pool which is defined by the total shareholder value created above a 10% per
annum compound hurdle.
The awards comprise three tranches, based on performance measured from
January 1, 2022, to the following three measurement dates:
* First Measurement Date: December 31, 2023;
* Second Measurement Date: December 31, 2024; and
* Third Measurement Date: December 31, 2025.
Restricted share unit awards granted under the RSU Plan as a result of
achievement of the total shareholder return performance conditions are subject
to continued service, with vesting as follows:
* Awards granted after the First Measurement Date - 50% vest after one year,
50% vest after three years.
* Awards granted after the Second Measurement Date - 50% vest after one year,
50% vest after two years.
* Awards granted after the Third Measurement Date - 100% vest after one year.
The maximum term of the awards is therefore four years from grant.
9. STOCK-BASED COMPENSATION (CONT’d)
The Corporation’s starting market capitalization is based on a fixed share
price of $0.552. Value created by share price growth and dividends paid at
each measurement date will be calculated with reference to the average closing
share price over the three months ending on that date.
* After December 31, 2023, 100% of the pool value at the First Measurement
Date is delivered as restricted share units under the RSU Plan, subject to the
maximum number of shares that can be allotted not being exceeded.
* After December 31, 2024, the pool value at the Second Measurement Date is
reduced by the pool value from the First Measurement Date (increased in line
with share price movements between the First and Second Measurement Dates).
100% of the remaining pool value, if any, is delivered as restricted share
units under the RSU Plan.
* After December 31, 2025, the pool value at the Third Measurement Date is
reduced by the pool value from the Second Measurement Date (increased in line
with share price movements between the Second and Third Measurement Dates),
and then further reduced by the pool value from the First Measurement Date
(increased in line with share price movements between the First Measurement
Date and the Third Measurement Date). 100% of the remaining pool value, if
any, is delivered as restricted share units under the RSU Plan.
9.2.2 RSU Plan Amendment
The RSU Plan was amended by a shareholders General Meeting on June 15, 2023.
As a result of the amendment the number of shares that could be issued under
the RSU Plan to satisfy the conditional awards and other share awards was
increased from 10% of a fixed share capital amount of 177,098,740 shares to
10% of share capital at the time of award, amounting to 10% of 263,073,022
shares, reduced by the number of outstanding options at each calculation date.
As a result, an additional expense based on the difference between the fair
value of the conditional awards before and after the modification will be
recognised over the service period. The incremental fair value was determined
and incorporated info the valuation in 9.2.4.
9.2.3 New Conditional Award under RSU Plan
On October 13, 2023, Amaroq made an award (the “Award”) under the RSU Plan
as detailed below. The Award consists of a conditional right to receive value
if the future performance targets, applicable to the Award, are met. Any value
to which the participants are eligible in respect of the Award will be granted
as Restricted Share Units (each an “RSU”), with each RSU entitling a
participant to receive common shares in the Corporation. Each RSU will be
granted under, and governed in accordance with, the rules of the Corporation's
Restricted Share Unit Plan.
Award Date October 13, 2023
Initial Price CAD 0.552
Hurdle Rate 10% p.a. above the Initial Price
Total Pool 10% of the growth in value above the Hurdle rate, not exceeding 10% of the Corporation’s share capital.
The number of shares will be determined at the Measurement Dates.
Participant proportion Edward Wyvill, Corporate Development 10%
Performance Period January 1, 2022 to December 31, 2025 (inclusive)
Normal Measurement Dates First Measurement Date: December 31, 2023, 50% vesting on the first anniversary of grant, with the remaining 50% vesting on the third anniversary of grant.
Second Measurement Date: December 31, 2024, 50% vesting on the first anniversary of grant, with the remaining 50% vesting on the second anniversary of grant.
Third Measurement Date: December 31, 2025, vesting on the first anniversary of grant.
9. STOCK-BASED COMPENSATION (CONT’d)
9.2.4 Valuation
The fair value of the award granted in December 2022 and modified June 2023,
in addition to the award granted October 13, 2023, increased to $7,378,000
based on 90% of the available pool being awarded.
During June 2024, some of the awards were forfeited due to the departure of
Jaco Crouse, CFO of the Corporation, effective June 3, 2024 (see note 9.2.5).
As a result of the departure, previously recognised RSU award vesting charges
of $566,875 were reversed and the percentage of the pool that was allocated
was reduced to 70%.
A charge of $6,750 and $718,250 was recorded during the three and six months
ended June 30, 2024 respectively, including the reduction of $566,875 of
previously recognized RSU vesting charges which were reversed during the
period as a result of the forfeiture of the RSU awards (a charge of $449,000
and $898,000 was recorded during the three and six months ended June 30,
2023).
The fair value was obtained through the use of a Monte Carlo simulation model
which calculates a fair value based on a large number of randomly generated
projections of the Corporation’s share price.
Assumption Value
Grant date December 30, 2022
Amendment date June 15, 2023
Additional award date October 13, 2023
Forfeiture of 20% of the awards date June 3, 2024
Expected life (years) 2.22 – 3.00
Share price at grant date $0.70 - $0.97
Exercise price N/A
Dividend yield 0%
Risk-free rate 3.60% - 4.71%
Volatility 55% - 72%
Fair value of awards - First Measurement Date $ 3 , 538 ,000
Fair value of awards - Second Measurement Date $1, 52 6 ,000
Fair value of awards - Third Measurement Date $ 786 ,000
Total fair value of awards ( 7 0% of pool) $ 5 , 850 ,000
Expected volatility was determined from the daily share price volatility over
a historical period prior to the date of grant with length commensurate with
the expected life. A zero-dividend yield has been used based on the dividend
yield as at the date of grant.
9. STOCK-BASED COMPENSATION (CONT’d)
9.2.5 Awards under Restricted Share Unit Plan (the “RSU”)
On February 23, 2024, in alignment with the Company’s RSU plan dated 15
June 2023, the Company granted an award (the “Award”) to directors and
employees of the Company as listed below.
Award Date February 23, 2024
Initial Price CAD 0.552
Hurdle Rate 10% p.a. above the Initial Price
Total Pool 10% of the growth in value above the Hurdle rate, not exceeding 10% of the Company’s share capital
The number of shares is determined at the Measurement Dates
Participant proportions and Number of shares Eldur Olafsson, CEO 40% 3,805,377 shares
subject to RSU
Jaco Crouse (1), CFO 20% 1,902,688 shares
Joan Plant, Executive VP 10% 951,344 shares
James Gilbertson, VP Exploration 10% 951,344 shares
Edward Wyvill, Corporate Development 10% 951,344 shares
First Measurement Date: 31 December 2023
50% of the Shares will vest on the first anniversary of grant, with the remaining 50% vesting on the third anniversary of grant.
(1)The shares awarded under the RSU to Jaco Crouse, CFO, have been forfeited
as a result of his departure effective June 3, 2024.
10. EXPLORATION AND EVALUATION EXPENSES (RECOVERY)
Three months ended June 30, Six months ended June 30 ,
2024 2023 2024 2023
$ $ $ $
Geology 119,346 (138,599) 133,343 (25,494)
Drilling - 1,036,653 - 1,036,653
Lodging and on-site support (184,469) 51,714 - 51,714
Analysis 127,877 (26,355) 132,910 (26,355)
Geophysical survey - (416,177) - (416,177)
Transport 8,112 320,553 4,909 624,753
Helicopter charter - 601,815 - 681,682
Logistic support - (51,509) - (51,509)
Insurance - - - -
Maintenance infrastructure (463,922) 284,769 16,832 578,890
Supplies and equipment 75,586 432,460 110,511 603,017
Project Engineering - - - 55,792
Government fees 30,873 25,615 32,849 25,615
Exploration and evaluation expenses before depreciation (286,597) 2,120,939 431,354 3,138,581
Depreciation 159,424 157,254 316,686 321,265
Exploration and evaluation expenses (127,173) 2,278,193 748,040 3,459,846
11. GENERAL AND ADMINISTRATION
Three months ended June 30, Six months ended June 30 ,
2024 2023 2024 2023
$ $ $ $
Salaries and benefits 2,121,857 620,073 2,991,272 1,237,662
Director’s fees 159,000 157,000 318,000 314,000
Professional fees 912,159 910,879 1,851,968 1,522,757
Marketing and investor relations 147,134 164,719 313,171 306,686
Insurance 93,917 67,602 172,833 135,204
Travel and other expenses 639,947 219,782 1,244,459 521,053
Regulatory fees 188,726 179,614 582,459 372,554
General and administration before following elements 4,262,740 2,319,669 7,474,162 4,409,916
Stock-based compensation 24,107 451,014 736,413 902,028
Depreciation 48,844 35,498 84,342 71,272
General and administration 4,335,69 1 2,806,181 8,294,917 5,383,21 6
12. FINANCE COSTS
Three months ended June 30, Six months ended June 30,
2024 2023 2024 2023
$ $ $ $
Lease interest 9,558 8,839 18,132 17,576
9,558 8, 839 18,132 17,576
13. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
13.1 Gardaq Joint Venture
Three months ended June 30, Six months ended June 30,
2024 2023 2024 2023
$ $ $ $
Gardaq management fees and allocated cost 578,568 506,640 1,214,894 506,640
Other allocated costs 139,765 1,712,863 175,663 1,712,863
Foreign exchange revaluation 56,710 (899) 62,927 (899)
775,043 2,218,604 1,453,484 2,218,604
As at June 30, 2024, the balance receivable from Gardaq amounted to $4,975,422
($3,521,938 as at December 31, 2023). This receivable balance represents
allocated overhead and general administration costs to manage the exploration
work programmes and day-to-day activities of the joint venture. This balance
will be converted to shares in Gardaq within 10 business days after the third
anniversary of the completion of the Subscription and Shareholder Agreement
dated April 13, 2023 (See note 3.1).
13.2 Key Management Compensation
The Corporation’s key management are the members of the board of directors,
the President and Chief Executive Officer, the Chief Financial Officer, the
Vice President Exploration, and the Executive Vice President. Key management
compensation is as follows:
Three months ended June 30, Six months ended June 30,
2024 2023 2024 2023
$ $ $ $
Short-term benefits
Salaries and benefits 394,843 312,513 840,566 654,817
Director’s fees 159,000 157,000 318,000 314,000
Long-term benefits
Stock-based compensation 806 2,014 1,612 4,028
Stock-based compensation - RSU (153,250) 449,000 398,250 898,000
Total compensation 401,399 920,527 1,558,428 1,870,845
14. NET EARNINGS (LOSS) PER COMMON SHARE
The calculation of net loss per share is shown in the table below.
Three months ended June 30, Six months ended June 30,
2024 2023 2024 2023
$ $ $ $
Net income (loss) and comprehensive income (loss) 5,229,322 23,357,701 (3,988,193) 19,980,808
Weighted average number of common shares outstanding - basic 326,825,939 263,281,297 308,700,211 263,242,536
Weighted average number of common shares outstanding – diluted 364,748,474 273,398,692 308,700,211 273,359,931
Basic earnings (loss) per share 0.016 0.09 (0.013) 0.08
Diluted earnings (loss) per common share 0.014 0.09 (0.013) 0.07
15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Corporation is exposed to various risks through its financial instruments.
The following analysis provides a summary of the Corporation's exposure to and
concentrations of risk at June 30, 2024:
15.1 Credit Risk
Credit risk is the risk that one party to a financial instrument will cause
financial loss for the other party by failing to discharge an obligation. The
Corporation’s main credit risk relates to its prepaid amounts to suppliers
for placing orders, manufacturing and delivery of process plant equipment, as
well as an advance payment to a mining contractor. The Corporation performed
expected credit loss assessment and assessed the amounts to be fully
recoverable.
15.2 Fair Value
Financial assets and liabilities recognized or disclosed at fair value are
classified in the fair value hierarchy based upon the nature of the inputs
used in the determination of fair value. The levels of the fair value
hierarchy are:
• Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities
• Level 2 - Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (i.e., as prices)
or indirectly (i.e., derived from prices)
• Level 3 - Inputs for the asset or liability that are not based on
observable market data (i.e., unobservable inputs)
15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONT’d)
The following table summarizes the carrying value of the Corporation’s
financial instruments:
June 30, December 31, 2023
2024
$ $
Cash 31,663,204 21,014,633
Sales tax receivable 199,790 69,756
Prepaid expenses and others 19,593,779 18,681,568
Deposit 177,944 27,944
Escrow account for environmental monitoring 5,716,288 598,939
Financial Asset – Related Party 4,975,422 3,521,938
Investment in equity-accounted joint arrangement 21,582,994 23,492,811
Accounts payable and accrued liabilities (8,375,316) (6,273,979)
Convertible notes (33,442,858) (35,743,127)
Lease liabilities (766,854) (657,440)
Due to the short-term maturities of cash, prepaid expenses, and accounts
payable and accrued liabilities, the carrying amounts of these financial
instruments approximate fair value at the respective balance sheet date.
The carrying value of the convertible note instrument approximates its fair
value at maturity and includes the embedded derivative associated with the
early conversion option and the host liability at amortized cost.
The carrying value of lease liabilities approximate its fair value based upon
a discounted cash flows method using a discount rate that reflects the
Corporation’s borrowing rate at the end of the period.
15.3 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 is currently negotiating new
Head of Terms with Landsbankinn in order to fund general and administrative
costs, exploration and evaluation costs and Nalunaq project development 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 June 30, 2024 As at December 31, 202 3
Trade and other payables Convertible Notes Lease liabilities Trade and other payables Convertible Notes Lease liabilities
$ $ $ $ $ $
Within 1 year 8,375,316 - 149,650 6,273,979 - 108,345
1 to 5 years - 33,442,858 556,236 - 35,743,127 544,178
5 to 10 years - - 181,393 - - 126,975
Total 8,375,316 33,442,858 887,279 6,273,97 9 35,743,127 779,498
The Corporation has assessed that it is not exposed to significant liquidity
risk due to its cash balance in the amount of $31,663,204 million at the
period end.
16. SUBSEQUENT EVENTS
On July 2, 2024, the Corporation announced that it agreed a Head of Terms,
subject to final approval and documentation, with Landsbankinn for US$35
million in three Revolving Credit Facilities, securing a substantial increase
and extension to its existing debt facilities.
* The financing package will replace the existing undrawn credit and cost
overrun facilities, simplifying the structure of the debt package and
increasing financial flexibility and liquidity for the Company.
* Amaroq has signed term sheets for a US$35 million debt financing package
with Landsbankinn consisting of: * US$28.5 million facility with a margin of
9.5% per annum, reducing to 7.5% once the full amount has been drawn and the
Company’s cumulative EBITDA over a three-month period exceeds CAD 6 million.
This facility will replace the Company’s existing revolving credit and cost
overrun facilities entered into on September 1, 2023, but not the convertible
debt facilities. US$18.5 million of the facility is to be used towards the
completion of the Nalunaq development with the balance available for general
corporate purposes.
* US$6.5 million facility with a margin of 7.5% per annum, available for
general corporate purposes once all other facilities have been fully drawn.
* The new facilities will have a 1.5% arrangement fee, a 0.4% commitment fee
on unutilised amounts, and an expected maturity date of October 1, 2026.
* The new facilities will be subject to certain ongoing covenant tests,
further detail of which will be provided on closing of definitive
documentation.
* Amaroq will finalise the new facilities’ legally binding documentation and
expects to be in a position to sign binding documents before the end of the
year. The Corporation’s currently undrawn US$28.5 million debt facilities
will remain in place until this time.
* The financing package with Landsbankinn will be finalised in agreement with
current debt holders, which include Fossar Investment Bank, GCAM LP, JLE
Property Ltd., First Pecos LLC and Linda Investments Limited.
Attachment
* AMRQ - Q2 2024 RNS combined with FS- Aug 14 2024 ENG
(https://ml-eu.globenewswire.com/Resource/Download/e857b58c-8dbe-4047-9ab0-1388fcb89d39)
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