REG - Amaroq Minerals Ltd - 2022 Full Year Financial Results and Update
31/03/2023 07:00
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RNS Number : 8613U Amaroq Minerals Ltd 31 March 2023
("Amaroq" or the "Corporation" or the "Company")
2022 Full Year Financial Results and Update
TORONTO, ONTARIO - 31 March, 2023 - Amaroq Minerals Ltd. (AIM, TSXV, NASDAQ
First North: AMRQ), an independent mine development company with a substantial
land package of gold and strategic mineral assets covering an area of
7,866.85 km(2) in Southern Greenland, its Q3 2022 financials and provides an
update on its exploration and development activities.
The Financial Statements and the accompanying Management Discussion and
Analysis are available on the Corporation's website at www.amaroqminerals.com
(http://www.amaroqminerals.com/) and will be filed under the Corporation's
SEDAR profile at www.sedar.com (http://www.sedar.com/) later today. All
figures are in Canadian dollars unless otherwise noted.
A remote presentation for sell-side analysts and investors will be held
remotely today, at 15:00 BST, followed by an opportunity to ask questions.
Analysts and investors who wish to participate in the webcast are requested to
register via the link here: https://brrmedia.news/AMRQ_FY22
(https://brrmedia.news/AMRQ_FY22)
FY 2022 Highlights
· Rebrand from AEX Gold to Amaroq Minerals to reflect incorporation of
strategic minerals portfolio and focus on Greenland.
· Completion of £30m Capital Fundraising (circa C$46.4 million) in
London and Iceland to accelerate development of the Company's precious metals
portfolio.
· Established joint venture with strategic investor ACAM for the
exploration and development of Amaroq's strategic mineral assets and receipt
of initial £18 million funding (circa C$28.5 million), expected to close in
April 2023.
· Listing of Icelandic Depository Receipts on the Nasdaq First North
Growth Market in Iceland.
· Updated Nalunaq Mineral Resource Estimate (MRE), prepared by SRK
Consulting (UK) Limited and announced on September 6, 2022 and reported in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM) Definition Standards on Mineral Resources and Mineral Reserves (May
2014), resulting in a Inferred Mineral Resource of 355.0 Kt @ 28.0 g/t Au for
320 Koz gold , and confirming the project within the top 2% of global deposits
in terms of grade globally. Doubling of the size of the footprint of the
Valley Block following 2022 Nalunaq exploration results.
· Completion of most active exploration programme to date, with
drilling across three projects, mineralisation expansion and discovery of new
copper/gold/molybdenum mineralisation targets, in addition to completion of
two new geophysical surveys in preparation for the 2023 exploration season.
Post-period Highlights
· Non-binding term sheets signed for US$49.5 million senior secured
financing package, announced in March 2023, to bring forward production at
Nalunaq, with completion expected in the coming months.
· Preparation for 2023 field season highly advanced with additional
drill rig in transit as well as other consumables in readiness for the
programme to commence in early May.
· Contracts and quotes in place for camp upgrades, fuel storage,
on-site assaying laboratory, and all equipment and facilities required for
trial mining and processing.
· Strengthened the team with senior hires including Nalunaq Project
Director Axel Schultz, a professional engineer with over 30 years' experience
in the mining industry, including surface and underground equipment,
construction, installations, EPC, financial and project management (EPCM).
FY 2023 Outlook
Gold Projects
· Nalunaq: Further project development to commence in May 2023 with
resource drilling along strike from the initial mining face. Site and mine
preparation activities will commence shortly ahead of commencing new trial
mining operations within the Mountain Block from 2024.
· Vagar Ridge: Additional data collection and further geological
mapping and sampling aimed at constructing a robust geological and
mineralisation model to inform future exploration. Ground preparation and
drill readiness preparations will occur in 2023 ahead of the 2024 season.
· Nanoq: Following 2022 geophysical work, the results of which are
expected to be published in Q2, surface exploration will be conducted to
evaluate additional structural targets as well as site preparation ahead of
initial drilling in 2024.
Strategic Minerals
· Sava Copper Belt:
o Expansion of drilling and geological mapping programmes across observed
mineralisation at Sava to two drill rigs guided by external Iron-Oxide Copper
Gold (IOCG) experts.
o Incorporation of North Sava licence and additional targets in 2023
programme.
o Detailed airborne geophysical survey across Kobberminebugt licence area.
· Stendalen: Conducting of detailed magnetotellurics (MT) geophysical
survey across the extension of layered intrusion, ahead of a deep
stratigraphic drillhole to intersect the known Titanium and Vanadium
mineralisation as well as potential Nickel sulphide mineralisation.
· Saqqaa Dyke: Concentrated drilling campaign to be conducted from the
valley floor to intersect the platinum group element hosting ultramafic dyke
along strike from outcropping mineralisation.
· Paatusoq: Planned reconnaissance exploration programme across
Paatusoq and previously identified targets to define areas of potential
economic Rare Earth and Niobium mineralisation.
Operational priorities
· Amaroq plans to conduct prefeasibility studies on renewable energy
potential to determine the feasibility of using hydropower to supply Nalunaq
and the nearby South Greenland community.
· Amaroq continues to work with ABD Solutions on the potential
integration of autonomous vehicles at Nalunaq, with proposals for the design
and offsite construction of an operations centre and associated infrastructure
expected in the next twelve months.
· The Company plans to work with a Group Purchasing Organisation supply
chain management partner to develop a strategic execution model for operating
effectively in remote and logistically challenging conditions.
Eldur Olafsson, CEO of Amaroq, commented:
"2022 was a transformational year for Amaroq in terms of the repositioning of
our business. We completed our most active exploration program to date, and
with our partners we are planning an even more aggressive programme for this
year, drilling seven targets across our gold and strategic minerals portfolio.
We continue to carry out impactful surface sampling and geophysical studies,
uncovering additional significant targets.
"Following our recent financing announcement, we now have the funding in place
to bring Nalunaq onstream, and I look forward to providing updates as we
progress with our development plans.
"We remain committed to being a responsible operator in Greenland, and a
partner to our local community. We are now establishing the potential to build
up hydropower infrastructure near our sites, both to power our operations and
to provide renewable energy to our local community for the future."
Selected Financial Information
The following selected financial data is extracted from the Financial
Statements for the three and nine months ended December 31, 2022.
Financial Performance
Three months ended December 31 Year ended
December 31
2022 2021 2022 2021
C$ C$ C$ C$
Exploration and evaluation expenses 1,697,334 6,838,840 12,700,526 14,280,055
General and administrative 3,203,588 2,641,811 10,150,020 9,703,198
Net loss and comprehensive loss 4,426,345 9,814,256 21,898,963 24,689,239
Basic and diluted loss per common share 0.02 0.05 0.11 0.14
Financial Position
As at December 31, 2022 As at December 31, 2021
$ $
Cash on hand 50,137,569 27,324,459
Total assets 65,096,061 42,781,664
Total current liabilities 1,210,758 2,100,084
Shareholders' equity 63,227,863 39,968,502
Working capital 49,472,990 25,542,242
Qualified Person Statement
The Mineral Resource Estimate was prepared by Dr Lucy Roberts, MAusIMM(CP),
Principal Consultant (Resource Geology), SRK Consulting (UK) Limited., an
independent Qualified Person in accordance with the requirements of National
Instrument 43-101 ("NI 43-101"). Dr Roberts has approved the disclosure
herein.
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.
Use of a Standard
The resource information included within this announcement is reported in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum
(CIM) Definition Standards on Mineral Resources and Mineral Reserves (May
2014) as required by CIM Definition Standards.
Enquiries:
Amaroq Minerals Ltd.
Eldur Olafsson, Executive Director and CEO
+354 665 2003
eo@amaroqminerals.com
Eddie Wyvill, Investor Relations
+44 (0)7713 126727
ew@amaroqminerals.com
Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)
Callum Stewart
Varun Talwar
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
Elfie Kent
Charlie Dingwall
+44 (0) 20 3757 4980
For Company updates:
Follow @Amaroq_minerals on 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 Greenland. The Company'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 and strategic metal assets
covering 7,866.85km(2), the largest mineral portfolio in Southern Greenland
covering the two known gold belts in the region. Amaroq Minerals is
incorporated under the Canada Business Corporations Act and wholly owns
Nalunaq A/S, incorporated under the Greenland Public Companies Act.
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").
Glossary
Au gold
g/t grams per tonne
km kilometers
Koz thousand ounces
Kt thousand tonnes
m meters
MT magnetotellurics
oz ounces
t tonnes
Amaroq Minerals Ltd.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2022 and 2021
http://www.rns-pdf.londonstockexchange.com/rns/8613U_1-2023-3-31.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8613U_1-2023-3-31.pdf)
As at December 31, As at December 31,
Notes 2022 2021
$ $
ASSETS
Current assets
Cash 50,137,569 27,324,459
Sales tax receivable 95,890 51,250
Prepaid expenses and others 450,290 266,617
Total current assets 50,683,749 27,642,326
Non-current assets
Deposit 27,944 9,805
Escrow account for environmental monitoring 5 427,120 424,637
Mineral properties 6 85,579 62,244
Capital assets 7 13,871,669 14,642,652
Total non-current assets 14,412,312 15,139,338
TOTAL ASSETS 65,096,061 42,781,664
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 1,138,961 2,049,249
Lease liabilities - current portion 8 71,797 50,835
Total current liabilities 1,210,758 2,100,084
Non-current liabilities
Lease liabilities 8 657,440 713,078
Total non-current liabilities 657,440 713,078
Total liabilities 1,868,198 2,813,162
Equity
Capital stock 9 131,708,387 88,500,205
Contributed surplus 5,250,865 3,300,723
Accumulated other comprehensive loss (36,772) (36,772)
Deficit (73,694,617) (51,795,654)
Total equity 63,227,863 39,968,502
TOTAL LIABILITIES AND EQUITY 65,096,061 42,781,664
Subsequent events 20
The accompanying notes are an integral part of these consolidated financial
statements.
Approved on Behalf of the Board of Directors
(s) Eldur Ólafsson (s) Line Frederiksen
Eldur Ólafsson Line Frederiksen
Director Director
Notes 2022 2021
$ $
Expenses
Exploration and evaluation expenses 13 12,700,526 14,280,055
General and administrative 14 10,150,020 9,703,198
Loss on disposal of capital assets 100,536 -
Foreign exchange loss (gain) (849,773) 809,751
Operating loss 22,101,309 24,793,004
Other expenses (income)
Interest income (239,869) (143,759)
Finance costs 15 37,523 39,994
Net loss and comprehensive loss (21,898,963) (24,689,239)
Weighted average number of common shares outstanding - 191,575,781 177,098,737
basic and diluted
Basic and diluted loss per common share 17 (0.11) (0.14)
The accompanying notes are an integral part of these consolidated financial
statements.
Number of common shares Capital Contributed surplus Accumulated other comprehensive loss Deficit Total
outstanding stock equity
Notes
$ $ $ $ $
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 10.1 - - 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
Balance, January 1, 2022 177,098,737 88,500,205 3,300,723 (36,772) (51,795,654) 39,968,502
Net loss and comprehensive loss - - - - (21,898,963) (21,898,963)
Share issuance under a fundraising 9 85,714,285 46,313,551 - - - 46,313,551
Share issuance costs 9 - (3,331,569) - - - (3,331,569)
Options exercised 260,000 226,200 (96,200) - - 130,000
Stock-based compensation 10.1 - - 2,046,342 - - 2,046,342
Balance, December 31, 2022 263,073,022 131,708,387 5,250,865 (36,772) (73,694,617) 63,227,863
The accompanying notes are an integral part of these consolidated financial
statements.
Notes 2022 2021
$ $
Operating activities
Net loss (21,898,963) (24,689,239)
Adjustments for:
Depreciation 7, 8 850,699 389,953
Stock-based compensation 10.1 2,046,342 374,771
Loss on disposal of capital assets 100,536 -
Other expenses 2,785 -
Foreign exchange (882.897) 377,674
(19,781,498) (23,546,841)
Changes in non-cash working capital items:
Sales tax receivable (44,640) 11,500
Prepaid expenses and others (183,673) 104,641
Trade and other payables (864,477) 1,141,384
(1,092,790) 1,257,525
Cash flow used in operating activities (20,874,288) (22,289,316)
Investing activities
Acquisition of mineral properties 6 (23,335) -
Acquisition of capital assets, net of deposit on order (301,957) (11,875,926)
Disposition of capital assets 63,325 -
Cash flow used in investing activities (261,967) (11,875,926)
Financing activities
Shares issuance 9 46,313,551 -
Share issuance costs 9 (3,331,569) -
Principal repayment - lease liabilities 8 (50,722) (65,900)
Exercise of stock options 130,000 -
Cash flow from financing activities 43,061,260 (65,900)
Net change in cash before effects of exchange rate changes on cash 21,925,005 (34,231,142)
Effects of exchange rate changes on cash 888,105 (319,398)
Net change in cash 22,813,110 (34,550,540)
Cash, beginning 27,324,459 61,874,999
Cash, ending 50,137,569 27,324,459
Supplemental cash flow information
Deposit on order for acquisition of capital assets - 1,702,165
Interest received 239,869 143,759
Additions in capital assets included in trade and other payables - 53,500
The accompanying notes are an integral part of these consolidated financial
statements.
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Amaroq Minerals Ltd. (the "Corporation") (previously known as AEX Gold Inc.)
was incorporated on February 22, 2017 under the Canada Business Corporations
Act. The Corporation's head office is situated at 3400, One First Canadian
Place, P.O. Box 130, Toronto, Ontario, M5X 1A4, Canada. The Corporation
operates in one industry segment, being the acquisition, exploration and
development of mineral properties. It owns interests in properties located in
Greenland. The Corporation's financial year ends on December 31. Since July
2017, the Corporation's shares are listed on the TSX Venture Exchange (the
"TSX-V"), 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 ("Nasdaq") under the AMRQ ticker
(note 9).
These consolidated financial statements ("Financial Statements") were reviewed
and authorized for issue by the Board of Directors on March 30, 2023.
1.1 Basis of presentation and consolidation
The Financial Statements have been prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The Financial Statements include the accounts
of the Corporation and those of its subsidiaries Nalunaq A/S, corporation
incorporated under the Greenland Public Companies Act, owned at 100%.
Control is defined by the authority to direct the financial and operating
policies of a business in order to obtain benefits from its activities. The
amounts presented in the consolidated financial statements of subsidiary have
been adjusted, if necessary, so that they meet the accounting policies adopted
by the Corporation.
Profit or loss or other comprehensive loss of subsidiary set up, acquired or
sold during the year are recorded from the actual date of acquisition or until
the effective date of the sale, if any. All intercompany transactions,
balances, income and expenses are eliminated at consolidation.
The Financial Statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB") and interpretations issued by the
International Financial Reporting Interpretations Committee. ("IFRIC").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of measurement
The Financial Statements have been prepared on the historical cost basis.
2.2 Functional and presentation currency - Foreign currency
transactions
The functional and presentation currency of the Corporation is Canadian
dollars ("CAD"). The functional currency of Nalunaq A/S is CAD. The functional
currency of Nalunaq A/S is determined using the currency of the primary
economic environment in which the entity evolves and using the currency which
is more representative of the economic effect of the underlying financings,
transactions, events and conditions.
Foreign currency transactions are translated into the functional currency of
the underlying entity using appropriate rates of exchange prevailing on the
dates of such transactions. Monetary assets and liabilities denominated in
foreign currencies are translated at the functional currency rate of exchange
in effect at the end of each reporting period. Foreign exchange gains and
losses resulting from the settlement of such transactions are recognized in
the net profit or loss.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.3 Deposit on order
The deposit on order represents the sum of money disbursed to a supplier to
start or continue the fulfillment of a purchase order for capital assets. This
deposit will be transferred to capital assets when the asset has been
completed and delivered.
2.4 Mineral properties and exploration and evaluation expenses
Mineral properties include rights in mining properties, paid or acquired
through a business combination or an acquisition of assets, and costs related
to the initial search for mineral deposits with economic potential or to
obtain more information about existing mineral deposits.
All costs incurred prior to obtaining the legal rights to undertake
exploration and evaluation on an area of interest are expensed as incurred.
Mining rights are recorded at acquisition cost or at its recoverable amount in
the case of a devaluation caused by an impairment of value. Mining rights and
options to acquire undivided interests in mining rights are depreciated only
as these properties are put into commercial production. Proceeds from the sale
of mineral properties are applied as a reduction of the related carrying costs
and any excess or shortfall is recorded as a gain or loss in the consolidated
statement of comprehensive loss.
Exploration and evaluation expenses ("E&E expenses") also typically
include costs associated with prospecting, sampling, trenching, drilling and
other work involved in searching for ore such as topographical, geological,
geochemical and geophysical studies. Generally, expenditures relating to
exploration and evaluation activities are expensed as incurred. Capitalization
of E&E expenses commences when a mineral resource estimate has been
obtained for an area of interest.
E&E expenses include costs related to establishing the technical and
commercial viability of extracting a mineral resource identified through
exploration or acquired through a business combination or asset acquisition.
E&E include the cost of:
● establishing the volume and grade of deposits through drilling of
core samples, trenching and sampling activities in an ore body that is
classified as either a mineral resource or a proven and probable reserve;
● determining the optimal methods of extraction and metallurgical
and treatment processes, including the separation process, for Corporation'
mining properties;
● studies related to surveying, transportation and infrastructure
requirements;
● permitting activities; and
● economic evaluations to determine whether development of the
mineralized material is commercially justified, including scoping,
prefeasibility and final feasibility studies.
When a mine project moves into the development phase, E&E expenses are
capitalized to mine development costs. An impairment test is performed before
reclassification and any impairment loss is recognized in the consolidated
statement of comprehensive loss.
E&E include overhead expenses directly attributable to the related
activities.
The Corporation has taken steps to verify the validity of title to mineral
properties on which it is conducting exploration activities and is acquiring
interests in accordance with industry standards that apply to the current
stage of exploration and evaluation of such property. However, these
procedures do not guarantee the Corporation' title, as property title may be
subject to unregistered prior agreements, aboriginal claims or noncompliance
with regulatory requirements.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.5 Capital assets
Capital assets are stated at cost less accumulated depreciation and
accumulated impairment losses. Cost includes expenditures that are directly
attributable to the acquisition of an asset. Subsequent costs are included in
the asset's carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefit associated with the item
will flow to the Corporation and the cost can be measured reliably. The
carrying amount of a replaced asset is derecognized when replaced.
The intangible assets include software with a definite useful life. The assets
are capitalized and amortized on a straight-line basis in the consolidated
statement of comprehensive loss. The intangible assets are assessed for
impairment whenever there is an indication that the intangible assets may be
impaired.
Repairs and maintenance costs are charged to the consolidated statement of
comprehensive loss during the period in which they are incurred.
Depreciation is calculated to amortize the cost of the capital assets less
their residual values over their estimated useful lives using the
straight-line method and following periods by major categories:
Field equipment and infrastructure related to exploration and evaluation 3 to 10 years
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. Assets capitalized under Construction in Progress are not
depreciated as they are not available for use yet.
Depreciation of an asset ceases when it is classified as held for sale (or
included in a disposal group that is classified as held for sale) or when it
is derecognized. Therefore, depreciation does not cease when the asset becomes
idle or is retired from active use unless the asset is fully depreciated.
Residual values, methods of depreciation and useful lives of the assets are
reviewed annually and adjusted if appropriate.
Gains and losses on disposals of capital assets are determined by comparing
the proceeds with the carrying amount of the asset and are recorded in the
consolidated statement of comprehensive loss.
2.6 Leases
At the commencement date of a lease, a liability is recognized to make lease
payments (i.e., the lease liability) and an asset representing the right to
use the underlying asset during the lease term (i.e., the right-of-use asset)
is also recognized. The interest expense on the lease liability is recognized
separately from the depreciation expense on the right-of-use asset.
The lease liability is remeasured upon the occurrence of certain events (e.g.,
a change in the lease term, a change in future lease payments resulting from a
change in an index or rate used to determine those payments). This
remeasurement is generally recognized as an adjustment to the right-of-use
asset. Leases of "low-value" assets and short-term leases (12 months or less)
are recognized on a straight-line basis as an expense in the consolidated
statement of comprehensive loss.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.7 Impairment of non-financial assets
Mineral properties and capital assets are reviewed for impairment if there is
any indication that the carrying amount may not be recoverable. Assets under
Construction in Progress are subject to an annual impairment test since it
they are not depreciated yet. Mineral properties and capital assets are
reviewed by area of interest. If any such indication is present, the
recoverable amount of the asset is estimated in order to determine whether
impairment exists. Where the asset does not generate cash flows that are
independent from other assets, the Corporations estimates the recoverable
amount of the asset group to which the asset belongs.
An asset's recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated future
cash flows are discounted to their present value, using a pre-tax discount
rate that reflects current market assessments of the time value of money and
the risks specific to the asset for which estimates of future cash flows have
not been adjusted.
If the recoverable amount of an asset or asset group is estimated to be less
than its carrying amount, the carrying amount is reduced to the recoverable
amount. Impairment is recognized immediately in the consolidated statement of
comprehensive loss. Where an impairment subsequently reverses, the carrying
amount is increased to the revised estimate of recoverable amount but only to
the extent that this does not exceed the carrying value that would have been
determined if no impairment had previously been recognized. A reversal is
recognized as a reduction in the impairment charge for the period.
2.8 Environmental monitoring provision
Provisions are recorded when a present legal or constructive obligation exists
as a result of past events where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a
reliable estimate of the amount of the obligation can be made. The Corporation
is subject to laws and regulations relating to environmental matters,
including land reclamation and discharge of hazardous materials and
environmental monitoring. The Corporation may be found to be responsible for
damage caused by prior owners and operators of its unproven mineral interests
and in relation to interests previously held by the Corporation.
On initial recognition, the estimated net present value of a provision is
recorded as a liability and a corresponding amount is added to the capitalized
cost of the related non-financial asset or charged to consolidated statement
of comprehensive loss if the property has been written off. Discount rates
using a pre-tax rate that reflects the time value of money and the risk
associated with the liability are used to calculate the net present value. The
provision is evaluated at the end of each reporting period for changes in the
estimated amount or timing of settlement of the obligation.
2.9 Taxation
Income tax expense represents the sum of tax currently payable and deferred
tax.
Current income tax assets and liabilities for the current and prior periods
are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount
are those that are substantively enacted by the date of the consolidated
statement of financial position.
Deferred income taxes are provided using the liability method on temporary
differences at the date of the consolidated statement of financial position
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary
differences, except:
● where the deferred income tax liability arises from the initial
recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable earnings; and
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
● in respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures, where
the timing of the reversal of the temporary differences can be controlled and
it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred income tax assets are recognized for all deductible temporary
differences, carry forward of unused tax credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry forward of unused tax
credits and unused tax losses can be utilized except:
● where the deferred income tax asset relating to the deductible
temporary difference arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable
earnings; and
● in respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures,
deferred income tax assets are recognized only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences
can be utilized.
The carrying amount of deferred income tax assets is reviewed at each date of
the consolidated statement of financial position and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available
to allow all or part of the deferred income tax asset to be utilized.
Unrecognized deferred income tax assets are reassessed at each date of the
consolidated statement of financial position and are recognized to the extent
that it has become probable that future taxable profit will allow the deferred
tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realized or the liability
is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the date of the consolidated statement of financial
position.
Deferred income tax relating to items recognized directly in equity is
recognized in equity and not in the consolidated statement comprehensive loss.
Deferred income tax assets and deferred income tax liabilities are offset if,
and only if, a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend to either
settle current tax liabilities and assets on a net basis, or to realize the
assets and settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax assets or liabilities are expected
to be settled or recovered.
2.10 Equity
Capital stock represents the amount received on the issue of shares. Warrants
represent the allocation of the amount received for units issued as well as
the charge recorded for the broker warrants relating to financing. Options
represent the charges related to stock options until they are exercised.
Contributed surplus includes charges related to stock options and the warrants
that are expired and not yet exercised. Contributed surplus also includes
contributions from shareholders. Deficit includes all current and prior period
retained profits or losses and share issue expenses.
Share and warrant issue expenses are accounted for in the year in which they
are incurred and are recorded as a deduction to equity in the year in which
the shares and warrants are issued.
Costs related to shares not yet issued are recorded as deferred share issuance
costs. These costs are deferred until the issuance of the shares to which the
costs relate to, at which time the costs will be charged against the related
share capital or charged to operations if the shares are not issued.
Proceeds from unit placements are allocated between shares and warrants issued
on a pro-rata basis of their value within the unit using the Black-Scholes
pricing model.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.11 Interest income
Interest income from financial assets is accrued, by reference to the
principal outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset's net carrying amount.
2.12 Stock-based compensation
Employees and consultants of the Corporation may receive a portion of their
compensation in the form of share-based payment transactions, whereby
employees or consultants render services as consideration for equity
instruments ("equity-settled transactions").
The costs of equity-settled transactions with employees and others providing
similar services are measured by reference to the fair value at the date on
which they are granted.
The costs of equity-settled transactions are recognized, together with a
corresponding increase in equity, over the period in which the performance
and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award ("the vesting date").
The cumulative expense is recognized for equity-settled transactions at each
reporting date until the vesting date reflects the Corporation' best estimate
of the number of equity instruments that will ultimately vest. The profit or
loss charge or credit for a period represents the movement in cumulative
expense recognized as at the beginning and end of that period and the
corresponding amount is represented in contributed surplus.
No expense is recognized for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether or not the market condition is satisfied
provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense
recognized is the expense as if the terms had not been modified. An additional
amount is recognized on the same basis as the amount of the original award for
any modification which increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee as measured at
the date of modification.
2.13 Loss per share
The basic loss per share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period. The diluted
loss per share reflects the potential dilution of common share equivalents,
such as outstanding options, restricted share unit and warrants, in the
weighted average number of common shares outstanding during the year, if
dilutive. During 2022 and 2021, all the outstanding common share equivalents
were anti-dilutive.
2.14 Financial instruments
Financial assets and financial liabilities are recognized when the Corporation
becomes a party to the contractual provisions of the financial instrument.
Financial assets and liabilities are offset and the net amount is reported in
the consolidated statement of financial position when there is an
unconditional and legally enforceable right to offset the recognized amounts
and there is an intention to settle on a net basis, or realize the asset and
settle the liability simultaneously.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
All financial instruments are required to be measured at fair value on initial
recognition. The fair value is based on quoted market prices, unless the
financial instruments are not traded in an active market. In this case, the
fair value is determined by using valuation techniques like the Black-Scholes
option pricing model or other valuation techniques.
2.14.1 Financial assets
Financial assets are derecognized when the contractual rights to receive the
cash flows from the financial asset have expired, or when the financial asset
and all substantial risks and rewards have been transferred. A financial
liability is derecognized when it is extinguished, discharged, cancelled or
when it expires.
Financial assets are initially measured at fair value. If the financial asset
is not subsequently accounted for at fair value through profit or loss, then
the initial measurement includes transaction costs that are directly
attributable to the asset's acquisition or origination. On initial
recognition, the Corporation classifies its financial instruments in the
following categories depending on the purpose for which the instruments were
acquired.
Amortized cost:
Financial assets at amortized cost are non-derivative financial assets with
fixed or determinable payments constituted solely of payments of principal and
interest that are held within a "held to collect" business model. Financial
assets at amortized cost are initially recognized at the amount expected to be
received, less, when material, a discount to reduce the financial assets to
fair value. Subsequently, financial assets at amortized cost are measured
using the effective interest method less a provision for expected losses. The
Corporation's cash and escrow account for environmental monitoring are
classified within this category.
Any gain or loss arising on derecognition is recognized directly in profit or
loss and presented in other gains/(losses), together with foreign exchange
gains and losses. Impairment losses are presented as separate line item in the
consolidated statement comprehensive loss.
2.14.2 Financial liabilities
A financial liability is derecognized when extinguished, discharged,
terminated, cancelled or expired.
Financial liabilities measured at amortized cost
Trade and other payables are initially measured at the amount required to be
paid, less, when material, a discount to reduce the payables to fair value.
Subsequently, financial liabilities are measured at amortized cost using the
effective interest method.
2.14.3 Impairment of financial assets
Amortized cost:
At each reporting date, the Corporation assesses, on a forward‐looking
basis, the expected credit losses associated with its debt instruments carried
at amortized cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk.
The expected loss is the difference between the amortized cost of the
financial asset and the present value of the expected future cash flows,
discounted using the instrument's original effective interest rate. The
carrying amount of the asset is reduced by this amount either directly or
indirectly through the use of an allowance account. Provisions for expected
losses are adjusted upwards or downwards in subsequent periods if the amount
of the expected loss increases or decreases.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
2.15 Segment disclosures
The Corporation operates in one industry segment, being the acquisition,
exploration and evaluation of mineral properties. All of the Corporation'
activities are conducted in Greenland.
3. CHANGES IN ACCOUNTING POLICIES
3.1 New accounting standard adopted
Amendments to IAS 16 Property, plant and equipment
The IASB has made amendments to IAS 16 Property, plant and equipment, which is
effective for financial years beginning on or after 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 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 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. The
Corporation adopted IAS 16 on January 1, 2022, which did not have a
significant impact on the consolidated financial statements disclosures.
3.2 Accounting standards issued but not yet effective
The Corporation has not yet adopted certain standards, interpretations to
existing standards and amendments which have been issued but have an effective
date of later than January 1, 2023. Many of these updates are not expected to
have any significant impact on the Corporation and are therefore not discussed
herein.
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS
The preparation of these Financial Statements requires Management to make
judgments and form assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and reported amounts of
expenses during the reporting period. On an ongoing basis, Management
evaluates its judgments in relation to assets, liabilities and expenses.
Management uses historical experience and various other factors it believes to
be reasonable under the given circumstances as the basis for its judgments.
Actual outcomes may differ from these estimates under different assumptions
and conditions. Critical judgments exercised in applying accounting policies
with the most significant effect on the amounts recognized in the Financial
Statements are described below.
JUDGMENTS
4.1 Impairment of mineral properties and capital assets
Determining if there are any facts and circumstances indicating impairment
loss or reversal of impairment losses is a subjective process involving
judgment and a number of estimates and interpretations in many cases.
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT'D)
4.1.1 Impairment of mineral properties
Determining whether to test for impairment of mineral properties requires
Management's judgment, among others, regarding the following: the period for
which the entity has the right to explore in the specific area has expired
during the period or will expire in the near future, and is not expected to be
renewed; substantive expenditure on further exploration and evaluation of
mineral resources in a specific area is neither budgeted nor planned;
exploration for and evaluation of mineral resources in a specific area have
not led to the discovery of commercially viable quantities of mineral
resources and the entity has decided to discontinue such activities in the
specific area; or sufficient data exists to indicate that, although a
development in a specific area is likely to proceed, the carrying amount of
the mineral properties is unlikely to be recovered in full from successful
development or by sale.
When an indication of impairment loss or a reversal of an impairment loss
exists, the recoverable amount of the individual asset must be estimated. If
it is not possible to estimate the recoverable amount of the individual asset,
the recoverable amount of the cash-generating unit to which the asset belongs
must be determined. Identifying the cash-generating units requires
considerable management judgment. In testing an individual asset or
cash-generating unit for impairment and identifying a reversal of impairment
losses, Management estimates the recoverable amount of the asset or the
cash-generating unit. This requires management to make several assumptions as
to future events or circumstances. These assumptions and estimates are subject
to change if new information becomes available. Actual results with respect to
impairment losses or reversals of impairment losses could differ in such a
situation and significant adjustments to the Corporation' assets and earnings
may occur during the next period.
4.1.2 Impairment of capital assets
Determining whether to test for impairment of capital assets requires
Management's judgement, among other factors, regarding the following: whether
capital assets have been in use and depreciated, did market value of capital
assets decline, whether net assets of the Corporation are higher than the
market capitalization, was there any obsolescence or physical damage recorded
to the capital assets, was there an increase to market interest rates.
When an indication of impairment loss or a reversal of an impairment loss
exists, the recoverable amount of the individual asset must be estimated. If
it is not possible to estimate the recoverable amount of the individual asset,
the recoverable amount of the cash-generating unit to which the asset belongs
must be determined. Identifying the cash-generating units requires
considerable management judgment. In testing an individual asset or
cash-generating unit for impairment and identifying a reversal of impairment
losses, Management estimates the recoverable amount of the asset or the
cash-generating unit. This requires management to make several assumptions as
to future events or circumstances. These assumptions and estimates are subject
to change if new information becomes available. Actual results with respect to
impairment losses or reversals of impairment losses could differ in such a
situation and significant adjustments to the Corporation' assets and earnings
may occur during the next period.
With regards to the annual impairment test on Construction in Progress, the
Management has assessed that the replacement cost approach is the most
appropriate for determining the recoverable value of individual assets under
CIP. The Corporation has conducted the analysis based on the enquiry of the
current market prices obtained from suppliers for each asset under the CIP
category as well as the assessment of the recoverable value based on the
general Machinery and Equipment as well as Industrial Producer Price index
changes from 2022 to 2021. As a result of this analysis, the replacement value
of the assets under CIP category has produced a recoverable value that was at
least 15% higher than the carrying value of assets under CIP as of December
31, 2022.
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT'D)
4.2 Recognition of deferred income tax assets and the measurement
of income tax expense
Periodically, the Corporation evaluates the likelihood of whether some portion
of the deferred tax assets will not be realized. Once the evaluation is
completed, if the Corporation believes that it is probable that some portion
of the deferred tax assets will fail to be realized, the Corporation records
only the remaining portion for which it is probable that there will be
available future taxable profit against which the temporary differences can be
utilized. Assessing the recoverability of deferred income tax assets requires
Management to make significant judgment.
To the extent that future cash flows and taxable income differ significantly
from estimates, the ability of the Corporation to realize the net deferred tax
assets recorded at the statement of financial position date could be impacted.
Significant judgment is required in determining the income tax recovery as
there are transactions and calculations for which the ultimate tax
determination is uncertain.
4.3 Determination of functional currency
In accordance with IAS 21 "The Effects of Changes in Foreign Exchange Rates",
Management determined that the functional currency of the Corporation and its
subsidiary is the Canadian dollar.
ESTIMATES AND ASSUMPTIONS
4.4 Environmental monitoring costs
The provisions for environmental monitoring costs are based on estimated
future costs using information available at the financial reporting date.
Determining these obligations requires significant estimates and assumptions
due to the numerous factors that affect the amount ultimately payable. Such
factors include estimates of the scope and cost of restoration activities,
legislative amendments, known environmental impacts, the effectiveness of
reparation and restoration measures and changes in the discount rate. This
uncertainty may lead to differences between the actual expense and the
provision. At the date of the consolidated statement of financial position,
environmental monitoring costs represent Management's best estimate of the
charge that will result when the actual obligation is terminated.
4.5 Restricted Share Units ("RSU")
For the purpose of determining the fair market value of restricted share unit
awards a number of assumptions are required for input in the pricing model.
Determining these assumptions requires significant level of estimates and
Management's judgement. For equity-settled awards, assumptions must be
determined at the date of the grant. Such assumptions include grant
calculation date, projection period, share price at grant, exercise price,
risk-free rate of interest, dividends, share price volatility and forfeitures.
The uncertainty related to the choice of assumptions may lead to difference
between the actual value of restricted share unit awards and its estimated
fair value based on the Monte-Carlo simulation run. At the date of the
consolidated statement of financial position, restricted share units award
value represents Management's best estimate of awards fair value vesting at
measurement dates stipulated under the RSU award contract.
5. ESCROW ACCOUNT FOR ENVIRONMENTAL MONITORING
On behalf of Nalunaq's licence holder, an escrow account has been set up with
the holder of the licence as holder of the account and the Government of
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.
2022 2021
$ $
Balance beginning 424,637 460,447
Effect of translation 2,483 (35,810)
Balance ending 427,120 424,637
Non-current portion - escrow account for environmental monitoring (427,120) (424,637)
Current portion - escrow account for environmental monitoring - -
6. MINERAL PROPERTIES
As at Additions As at
December 31, December 31,
2021 2022
$ $ $
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 62,244 23,335 85,579
As at Additions As at
December 31, December 31,
2020 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 6,562 - 6,562
Total mineral properties 62,244 - 62,244
6. MINERAL PROPERTIES (CONT'D)
6.1 Nalunaq - Au
Nalunaq A/S holds the gold exploitation licence number 2003/05 on the Nalunaq
property (the "Nalunaq Licence") located in 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. MINERAL PROPERTIES (CONT'D)
6.1.3 Exploration commitments and exploitation milestones
After Nalunaq A/S has submitted its statements of expenses for the Nalunaq
Licence for the 2017 and 2018 years, the MLSA has approved Nalunaq A/S'
transition to the subsequent period (sub period 4) without a rollover of the
unspent amount.
The Government of 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. As these deadlines have passed, the
Government of Greenland has completed Addendum No. 6.
The Government of Greenland has been confirmed with Addendum No. 6 dated
November 2022 which has not yet been signed by the Government of Greenland and
therefore has not officially entered into force, to extend the requirement
dates to perform the following tasks. No later than December 31, 2023, the
licensee shall prepare an environmental impact assessment and make a social
impact assessment. No later than December 31, 2024, the licensee shall
negotiate, conclude and perform an impact benefit agreement. Prior to
commencement of exploitation, and no later than December 31, 2025, the
Licence shall be amended to include terms on royalty. The time limit for
commencement of exploitation is January 1, 2026.
Failure to satisfy any of the conditions set forth in the addendums to the
Nalunaq Licence may result in the MLSA revoking the Nalunaq Licence without
further notice.
6.2 Tartoq - Au
6.2.1 Purchase of the Tartoq Licence
Nalunaq A/S signed on 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 year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S shall complete DKK 996,600 of exploration activities in
2022, reducing by the total credit from 2021 of DKK 254,457, for a total of
DKK 742,143 ($144,543 using the exchange rate as at December 31, 2022)
exploration obligation in 2022 which was confirmed by MLSA. 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 2022 year to the MLSA by
April 1, 2023.
6. MINERAL PROPERTIES (CONT'D)
6.3 Vagar - Au
6.3.1 Purchase of the Vagar Licence
Nalunaq A/S entered into a sale and purchase agreement with NunaMinerals A/S,
acting through its bankruptcy receiver, on 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.
6.3.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the
exploration obligation for year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S shall complete DKK 11,205,000 of exploration activities
in 2022, reducing by the total credit from 2021 of DKK 9,203,442, for a total
of DKK 2,001,558 ($389,833 using the exchange rate as at December 31, 2022)
exploration obligation in 2022 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,
6. MINERAL PROPERTIES (CONT'D)
depending upon the type of expenditures made. If these obligations are not
met, certain measures may be taken by the licence holder to rectify the
situation, including reducing the area of the licence proportionately to the
spending shortfall or rolling over the exploration commitment to the next
period subject to approval from the MLSA. Nalunaq A/S submitted its statements
of expenses for the Vagar exploration licence for the 2022 year to the MLSA by
April 1, 2023.
6.4 Nuna Nutaaq - Au
6.4.1 Purchase of the Nuna Nutaaq Licence
The Corporation has acquired the right to conduct exploration activities on
approximately 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.
6.4.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the
exploration obligation for year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S shall complete DKK 309,270 of exploration activities in
2022, reducing by the total credit from 2021 of DKK 2,344,489, for a total
credit of DKK 2,035,219 (credit of $396,389 using the exchange rate as at
December 31, 2022) so there is no exploration obligation in 2022 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
6. MINERAL PROPERTIES (CONT'D)
obligations are not met, certain measures may be taken by the licence holder
to rectify the situation, including reducing the area of the licence
proportionately to the spending shortfall or rolling over the exploration
commitment to the next period subject to approval from the MLSA. Nalunaq A/S
submitted its statements of expenses for the Nuna Nutaaq exploration licence
for the 2022 year to the MLSA by April 1, 2023.
6.5 Anoritooq - Au
6.5.1 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.
6.5.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the
exploration obligation for year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S
6. MINERAL PROPERTIES (CONT'D)
shall complete DKK 1,680,705 of exploration activities in 2022, reducing by
the total credit from 2021 of DKK 1,449,481, for a total of DKK 231,224
($45,034 using the exchange rate as at December 31, 2022) exploration
obligation in 2022 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 2022 year to the MLSA
by April 1, 2023.
6.6 Siku - Au
6.6.1 Purchase of the Siku Licence
The Corporation acquired the right to conduct exploration activities on
approximately 251km(2) of land in an areas between the Nanoq and Jokum's Shear
project on the east coast of South Greenland. The exploration rights have been
granted to the Corporation under a new separate Exploration Licence 2022/08,
referred to as Siku. The licence application has been approved and all
required documentation was signed by the Corporation on May 10, 2022 and the
licence became effective on June 3, 2022 when it was signed by the Government
of Greenland. The licence expires December 31, 2026 with a possible 5-year
extension.
6.6.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland reduced by
50% the exploration obligation for year 2022. For the exploration licence,
Nalunaq A/S shall complete DKK 296,595 of exploration activities in 2022
($57,766 using the exchange rate as at December 31, 2022). For the purpose
of crediting expenditures against the amounts set forth in the Siku Licence,
actual expenditures are multiplied by a factor of
6. MINERAL PROPERTIES (CONT'D)
between 1.5 and 3, depending upon the type of expenditures made. If these
obligations are not met, certain measures may be taken by the licence holder
to rectify the situation, including reducing the area of the licence
proportionately to the spending shortfall or rolling over the exploration
commitment to the next period subject to approval from the MLSA. Nalunaq A/S
submitted its statements of expenses for the Siku exploration licence for the
2022 year to the MLSA by April 1, 2023.
6.7 Naalagaaffiup Portornga (Land Adjacent to Existing Tartoq
Licence) - Strategic Minerals
6.7.1 Purchase of the Naalagaaffiup Portornga Licence
The Corporation has 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.
6.7.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the
exploration obligation for year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S shall complete DKK 886,400 of exploration activities in
2022, reducing by the total credit from 2021 of DKK 24,912, for a total of
DKK 861,488 ($167,788 using the exchange rate as at December 31, 2022)
exploration obligation in 2022 which was confirmed by MLSA. For the purpose of
crediting expenditures against
6. MINERAL PROPERTIES (CONT'D)
the amounts set forth in the Naalagaaffiup Portornga Licence, actual
expenditures are multiplied by a factor of between 1.5 and 3, depending upon
the type of expenditures made. If these obligations are not met, certain
measures may be taken by the licence holder to rectify the situation,
including reducing the area of the licence proportionately to the spending
shortfall or rolling over the exploration commitment to the next period
subject to approval from the MLSA. Nalunaq A/S submitted its statements of
expenses for the Naalagaaffiup Portornga exploration licence for the 2022 year
to the MLSA by April 1, 2023.
6.8 Saarloq - Strategic Minerals
6.8.1 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.
6.8.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the
exploration obligation for year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S
6. MINERAL PROPERTIES (CONT'D)
shall complete DKK 775,710 of exploration activities in 2022, reducing by the
total credit from 2021 of DKK 321,617, for a total of DKK 454,093 ($88,441
using the exchange rate as at December 31, 2022) exploration obligation in
2022 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 2022 year to the MLSA by April 1, 2023.
6.9 Sava - Strategic Minerals
6.9.1 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.
6.9.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the
exploration obligation for year 2021 to DKK nil and reduced by 50% for the
year 2022, which also means that the balance of the transferred non-fulfilled
exploration obligation from 2021 is carried over to 2022. For the exploration
licence, Nalunaq A/S shall complete DKK 367,575 of exploration activities in
2022, reducing by the total credit from 2021 of DKK 6,673,960, for a total
credit of DKK 6,306,385 (credit of $1,228,263 using the exchange rate as at
December 31, 2022) so there is no exploration obligation in 2022 which was
confirmed by MLSA. 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
2022 year to the MLSA by April 1, 2023.
6.10 Kobberminebugt - Strategic Minerals
6.10.1 Purchase of the Kobberminebugt Licence
The Corporation acquired the right to conduct exploration activities on
approximately 220km(2) of land in an areas of Aputaajuitsoq in South
Greenland. The exploration rights have been granted to the Corporation under a
new separate Exploration Licence 2022/01, referred to as Kobberminebugt. The
licence application has been approved and all required documentation was
signed by the Corporation on November 24, 2021 and the licence became
effective on February 23, 2022 when it was signed by the Government of
Greenland. The licence expires December 31, 2026 with a possible 5-year
extension.
6.10.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland reduced by
50% the exploration obligation for year 2022. For the exploration licence,
Nalunaq A/S shall complete DKK 270,400 of exploration activities in 2022
($52,664 using the exchange rate as at December 31, 2022). For the purpose
of crediting
6. MINERAL PROPERTIES (CONT'D)
expenditures against the amounts set forth in the Kobberminebugt Licence,
actual expenditures are multiplied by a factor of between 1.5 and 3, depending
upon the type of expenditures made. If these obligations are not met, certain
measures may be taken by the licence holder to rectify the situation,
including reducing the area of the licence proportionately to the spending
shortfall or rolling over the exploration commitment to the next period
subject to approval from the MLSA. Nalunaq A/S submitted its statements of
expenses for the Kobberminebugt exploration licence for the 2022 year to the
MLSA by April 1, 2023.
6.11 Stendalen Licence - Strategic Minerals
6.11.1 Purchase of the Stendalen Licence
The Corporation acquired the right to conduct exploration activities on
approximately 2,486km(2) of the existing 2021/11 licence split into two areas
around the Qasinngortoq and Kangerlussuatsiaq areas of South Greenland through
the acquisition from the Orano Group ("Orano") as announced May 12, 2022 and
are referred to as Stendalen. This acquisition from Orano was for zero upfront
consideration but in exchange for a 0.5% contractual, gross revenue royalty
(GRR), based on potential future sales of minerals exploited on the Stendalen
and North Sava licences. The GRR is paid annually and capped at US$10 million
("Royalties Cap"). The Royalties Cap is subject to an annual inflation
adjustment, with an ultimate cap limited to the market capitalisation of the
Corporation at the time of signature. Orano has a right of first refusal on
any sales or transfer of licenses. All related transfer application documents
have been signed by the Corporation and have been approved by the Government
of Greenland on November 14, 2022. The licence expired December 31, 2026
with a possible 5-year extension.
6.11.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland reduced by
50% the exploration obligation for year 2022. For the exploration licence,
Nalunaq A/S shall complete DKK 2,185,170 of exploration activities in 2022
($425,595 using the exchange rate as at December 31, 2022). For the purpose
of crediting expenditures against the amounts set forth in the Stendalen
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 Stendalen exploration licence for the 2022 year
to the MLSA by April 1, 2023.
6.12 North Sava Licence - Strategic Minerals
6.12.1 Purchase of the North Sava Licence
The Corporation acquired the right to conduct exploration activities on
approximately 1,042km(2) of the existing 2020/41 licence split into two areas
around the Akuliarutsip and Narsaviarsuasiit areas of South Greenland through
the acquisition from the Orano as announced May 12, 2022 and are referred to
as North Sava. This acquisition from Orano was for zero upfront consideration
but in exchange for a 0.5% contractual, gross revenue royalty (GRR), based on
potential future sales of minerals exploited on the Stendalen and North Sava
licences. The GRR is paid annually and capped at US$10 million ("Royalties
Cap"). The Royalties Cap is subject to an annual inflation adjustment, with an
ultimate cap limited to the market capitalisation of the Corporation at the
time of signature. Orano has a right of first refusal on any sales or transfer
of licenses. All related transfer documents have been signed by the
Corporation and have been approved by the Government of Greenland on
November 14, 2022. The licence expires on December 31, 2026 with a possible
5-year extension.
6.12.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland reduced by
50% the exploration obligation for year 2022. For the exploration licence,
Nalunaq A/S shall complete DKK 964,990 of exploration
6. MINERAL PROPERTIES (CONT'D)
activities in 2022 ($187,946 using the exchange rate as at
December 31, 2022). For the purpose of crediting expenditures against the
amounts set forth in the North 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 North Sava
exploration licence for the 2022 year to the MLSA by April 1, 2023.
6.13 Genex
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
75ºN and east of 44ºW. 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.
On October 28, 2022, Nalunaq A/S was awarded a prospecting licence number
2022/77 covering West Greenland, in this context defined as areas south of
78ºN and west of 44ºW. It is valid for a term of five years until
December 31, 2027. Nalunaq A/S is not obligated to spend exploration
expenses regarding this licence area during this period.
7. CAPITAL ASSETS
Field equipment and infrastruc-ture Vehicles and rolling stock Equipment (including software) Construc-tion In Progress Right-of-use assets (note 8) Total
$ $ $ $ $ $
2021
Opening net book value 146,203 256,865 177,052 - 820,894 1,401,014
Additions 1,983,718 4,195,205 - 7,452,668 - 13,631,591
Depreciation (140,807) (147,361) (21,041) - (80,744) (389,953)
Closing net book value 1,989,114 4,304,709 156,011 7,452,668 740,150 14,642,652
As at 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
2022
Opening net book value 1,989,114 4,304,709 156,011 7,452,668 740,150 14,642,652
Additions - - 179,040 69,417 - 248,457
Disposals - (123,360) (40,501) - - (163,861)
Adjustment - - - - (4,880) (4,880)
Depreciation (253,362) (438,965) (78,165) - (80,207) (850,699)
Closing net book value 1,735,752 3,742,384 216,385 7,522,085 655,063 13,871,669
As at December 31, 2022
Cost 2,351,041 4,466,971 313,214 7,522,085 836,200 15,489,511
Accumulated depreciation (615,289) (724,587) (96,829) - (181,137) (1,617,842)
Closing net book value 1,735,752 3,742,384 216,385 7,522,085 655,063 13,871,669
7. CAPITAL ASSETS (CONT'D)
Depreciation of capital assets related to exploration and evaluation
properties is being recorded in exploration and evaluation expenses in the
consolidated statement of comprehensive loss, under depreciation. Depreciation
of $721,072 ($299,771 - 2021) was expensed as exploration and evaluation
expenses in 2022.
As of December 31, 2022, the amount of $7,522,085 ($7,452,668 as at
December 31, 2021) of construction in progress is related to equipment and
infrastructure received or in storage and which will be installed at the
appropriate time. Equipment and infrastructure include process plant
components that are not yet available for use.
8. LEASE LIABILITIES
As at As at
December 31, December 31,
2022 2021
$ $
Balance beginning 763,913 829,813
Principal repayment (50,722) (65,900)
Adjustment 16,046 -
Balance ending 729,237 763,913
Non-current portion - lease liabilities (657,440) (713,078)
Current portion - lease liabilities 71,797 50,835
The Corporation has one lease for its office. In 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 $80,207 ($80,744 in 2021) was expensed as general and
administration expenses in 2022.
9. SHARE CAPITAL
9.1 Share Capital
The Corporation is authorized to issue an unlimited number of common voting
shares and an unlimited number of preferred shares issuable in series, all
without par value.
9.2 Fundraising and First North Listing
On November 3, 2022, the Corporation successfully completed a capital
fundraising as well as a listing on the Nasdaq First North Growth Iceland
Exchange. The Corporation completed the fundraising by issuing 85,714,285
common shares at a price of GBP 0.35 per share for subscriptions made in
British pounds sterling, $0.54 per share for subscription made in Canadian
dollars and ISK 56.77 per share for subscription made in Icelandic Krona, for
a gross proceeds to the Corporation of $46,313,551.
The Fundraising is complemented by the joint venture between the Corporation
and ACAM LP ("ACAM"), announced on June 10, 2022 and finalized on October
19, 2022 under which the Corporation will establish a strategic mineral
focused exploration subsidiary to hold certain licences in which the majority
of resource is expected to relate to non-gold minerals (note 20.1). In
addition to the Fundraising, the Corporation has now
9. SHARE CAPITAL (CONT'D)
executed final documentation in relation to the ACAM joint venture, with
closing and receipt of the initial $28.5 million (GBP 18 million) funding
now only subject to certain regulatory conditions precedent, and is expected
to close in Q1 2023.
Arion Bank hf. and Landsbankinn hf. acted as agents in connection with the
Icelandic Fundraising. In consideration for their services, the agents
received a cash commission equal to $1,668,318. Stifel Nicolaus Europe Limited
("Stifel") acted as sole bookrunner, nominated adviser and broker on the UK
Placing and Panmure Gordon (UK) Limited ("Panmure Gordon"; together with
Stifel, the "UK Banks") acted as manager and broker in relation to the UK
Placing. In consideration for their services, they received a cash commission
equal to $451,311. The Corporation incurred total issuance costs of $3,331,569
in relation to this process.
Certain officers and directors of the Corporation purchased an aggregate of
4,972,871 common shares for gross proceeds of $2,700,132 (note 18). The
officers and directors of the Corporation subscribed to the Fundraising under
the same terms and conditions as set forth for all subscribers.
10. STOCK-BASED COMPENSATION
10.1 Stock options
An incentive stock option plan (the "Plan") was approved initially in 2017 and
renewed by shareholders on June 16, 2022. 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 grants the stock options and the
exercise price of the options shall not be less than the closing price on the
last trading day, preceding the grant date. The options have a maximum term of
ten years. Options granted pursuant to the Plan shall vest and become
exercisable at such time or times as may be determined by the Board, except
options granted to consultants providing investor relations activities shall
vest in stages over a 12-month period with a maximum of one-quarter of the
options vesting in any three-month period. The Corporation has no legal or
constructive obligation to repurchase or settle the options in cash.
On June 9, 2021, the Corporation granted 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.
10. STOCK-BASED COMPENSATION (CONT'D)
On January 17, 2022, the Corporation granted its officers, employees and
consultant 4,100,000 stock options with an exercise price of $0.60 and expiry
date of January 17, 2027. 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 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 a 5-year term. The expected life and expected
volatility were estimated by benchmarking comparable companies to the
Corporation. On July 29, 2022 500,000 out of 4,100,000 stock options have been
canceled due to employees departure.
On April 20, 2022, the Corporation granted a senior employee 73,333 stock
options with an exercise price of $0.75 and expiry date of April 20, 2027.
The stock options vested 100% at the grant date. The options were granted with
an exercise price equal to the closing market price of the shares the day
prior to the grant. Total stock-based compensation costs amount to $32,267 for
an estimated fair value of $0.44 per option. The fair value of the options
granted was estimated using the Black-Scholes model with no expected dividend
yield, 68.9% expected volatility, 2.7% risk-free interest rate and a 5-year
term. The expected life and expected volatility were estimated by benchmarking
comparable companies to the Corporation.
On July 14, 2022, the Corporation granted an employee 39,062 stock options
with an exercise price of $0.64 and expiry date of July 14, 2027. The stock
options vested 100% at the grant date. The options were granted with an
exercise price equal to the closing market price of the shares the day prior
to the grant. Total stock-based compensation costs amount to $14,844 for an
estimated fair value of $0.38 per option. The fair value of the options
granted was estimated using the Black-Scholes model with no expected dividend
yield, 69% expected volatility, 3.1% risk-free interest rate and a 5-year
term. The expected life and expected volatility were estimated by benchmarking
comparable companies to the Corporation.
On December 30, 2022, the Corporation granted its employees and consultant
1,330,000 stock options with an exercise price of $0.70 and expiry date of
December 30, 2027. 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
amount to $545,300 for an estimated fair value of $0.41 per option. The fair
value of the options granted was estimated using the Black-Scholes model with
no expected dividend yield, 68.07% expected volatility, 3.27% risk-free
interest rate and a 5-year term. The expected life was estimated by
benchmarking comparable companies to the Corporation. The expected volatility
was determined by calculating the historical volatility of the Corporation's
share price back from the date of grant and for a period corresponding to the
expected life of the options.
Changes in stock options are as follow:
2022 2021
Number of options Weighted average exercise price Number of options Weighted average exercise price
$ $
Balance, beginning 6,935,000 0.51 7,745,000 0.51
Granted 5,542,395 0.63 1,100,000 0.57
Expired (1,500,000) 0.53 (1,910,000) 0.52
Exercised (260,000) 0.50 - -
Balance, end 10,717,395 0.57 6,935,000 0.51
Balance, end exercisable 10,684,062 0.57 6,801,666 0.51
10. STOCK-BASED COMPENSATION (CONT'D)
Stock options outstanding and exercisable as at December 31, 2022 are as
follows:
Number of options outstanding Number of options exercisable Exercise Expiry date
price
$
1,360,000 1,360,000 0.45 August 22, 2023
1,820,000 1,820,000 0.38 December 31, 2025
100,000 66,667 0.50 September 13, 2026
1,495,000 1,495,000 0.70 December 31, 2026
3,600,000 3,600,000 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
900,000 900,000 0.59 December 31, 2027
10,717,395 10,684,062
10.2 Restricted Share Unit
Conditional awards under the RSU
10.2.1 Description
Conditional awards were made in 2022 that give participants the opportunity to
earn restricted share unit awards under the Corporation's Restricted Share
Unit Plan ("RSU Plan") subject to the generation of shareholder value over a
four year performance period.
The awards are designed to align the interests of the Corporation's employees
and shareholders, by incentivising the delivery of exceptional shareholder
returns over the long-term. Participants receive a 10% share of a pool which
is defined by the total shareholder value created above a 10% per annum
compound hurdle.
The awards comprise three tranches, based on performance measured from
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.
· RSUs granted after the Third Measurement Date - 100% vest after one
year.
The maximum term of the awards is therefore four years from grant.
The Corporation's starting market capitalization is based on a fixed share
price of $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.
·
10. STOCK-BASED COMPENSATION (CONT'D)
· After December 31, 2024, the pool value at the Second Measurement
Date is reduced by the pool value from the First Measurement Date (increased
in line with share price movements between the First and Second Measurement
Dates). 100% of the remaining pool value, if any, is delivered as restricted
share units under the RSU Plan.
· After December 31, 2025, the pool value at the Third Measurement
Date is reduced by the pool value from the Second Measurement Date (increased
in line with share price movements between the Second and Third Measurement
Dates), and then further reduced by the pool value from the First Measurement
Date (increased in line with share price movements between the First
Measurement Date and the Third Measurement Date). 100% of the remaining pool
value, if any, is delivered as restricted share units under the RSU Plan.
10.2.2 Valuation
The fair value of the award granted in December 2022 is $5,408,800 based on
80% of the available pool being awarded. There is no charge to be recognized
in the year to December 31, 2022 on the grounds of materiality given the
awards were granted at the end of the year.
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
Projection period (years) 3
Expected life (years) 5
Share price at grant date $0.70
Exercise price N/A
Dividend yield 0%
Risk-free rate 3.60%
Volatility 72%
Fair value of awards - First Measurement Date $3,080,800
Fair value of awards - Second Measurement Date $1,416,000
Fair value of awards - Third Measurement Date $912,000
Total fair value of awards (80% of pool) $5,408,800
Expected volatility was determined from the daily share price volatility over
a historical period prior to the date of grant with length commensurate with
the expected life. A zero dividend yield has been used based on the dividend
yield as at the date of grant.
11. CAPITAL MANAGEMENT
The capital of the Corporation consists of the items included in equity and
balances thereof and changes therein are depicted in the consolidated
statement of changes in equity.
The Corporation' objectives are to safeguard the Corporation' ability to
continue as a going concern in order to pursue its acquisition, exploration
and evaluation activities and to maintain a flexible capital structure which
optimizes the costs of capital at an acceptable risk. The Corporation manages
the capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of the underlying assets. As
the Corporation does not have cash flow from operations, to maintain or adjust
the capital structure, the Corporation may attempt to issue new shares, issue
debt, acquire or dispose of assets or adjust the amount of cash. In order to
maximize ongoing development efforts and to continue operations, the
Corporation does not pay out dividends. The Corporation is not subject to
externally imposed restrictions on capital.
12. EMPLOYEE REMUNERATION
Salaries
2022 2021
$ $
Salaries 3,502,513 5,343,482
Director's fees 628,000 628,652
Benefits 590,407 878,580
4,720,920 6,850,714
Less : salaries and benefits presented in E&E expenses (904,888) (3,569,124)
Salaries and directors' fees disclosed in general and administrative 3,816,032 3,281,590
expenses
13. EXPLORATION AND EVALUATION EXPENSES
2022 Nalunaq Vagar Nuna Nutaaq Anoritooq Saarloq Sava Kobberminebugt Stendalen North Sava Total
$ $ $ $ $ $ $ $ $ $
Geology 1,001,263 54,524 30,992 17,966 1,919 75,596 16,914 20,202 34,912 1,254,288
Lodging and on-site support 170,024 20,900 4,546 6,652 854 29,413 5,737 5,676 8,791 252,593
Drilling 2,962,491 611,610 - - - 144,019 - - - 3,718,120
Analysis 205,304 86,765 - 1,208 87 25,060 1,035 173 - 319,632
Geophysics survey - - 364,827 - - - - - 416,177 781,004
Transport 222,546 84,644 2,028 3,052 442 37,154 2,450 2,290 3,256 357,862
Supplies and equipment 484,461 21,247 5,211 7,178 661 20,959 7,148 7,779 13,575 568,219
Helicopter Charter 221,039 424,586 - 19,850 - 267,957 13,072 - - 946,504
Logistic support 904,310 62,777 11,530 18,478 3,316 16,275 12,479 9,796 9,643 1,048,604
Maintenance infrastructure 2,401,358 62,431 16,437 21,886 1,544 83,558 23,521 26,700 48,770 2,686,205
Project Engineering costs 35,946 - - - - - - - - 35,946
Government fees 2,584 7,893 - - - - - - - 10,477
Exploration and evaluation expenses before 8,611,326 1,437,377 435,571 96,270 8,823 699,991 82,356 72,616 535,124 11,979,454
depreciation
Depreciation 721,072 - - - - - - - - 721,072
Exploration and evaluation expenses 9,332,398 1,437,377 435,571 96,270 8,823 699,991 82,356 72,616 535,124 12,700,526
2021 Nalunaq Vagar Tartoq Naalagaaffiup Portornga Nuna Nutaaq Saarloq Anoritooq Sava Genex Total
$ $ $ $ $ $ $ $ $ $
Geochemistry - 227,764 80,631 - - - - 292,883 - 601,278
Geology 2,332,281 427,903 19,413 1,105 113,309 6,620 57,905 219,458 11,039 3,189,033
Lodging and on-site support 479,921 - 248 - - - - - - 480,169
Underground works 118,017 - - - - - - - - 118,017
Drilling 3,647,452 - 130 - - - - - - 3,647,582
Analysis 120,548 1,250 - - 469 - - - - 122,267
Transport 35,324 - 957 - - - - - - 36,281
Supplies and equipment 1,998 - - - - - - - - 1,998
Helicopter Charter 181,069 124,843 - - 128,328 - 11,772 295,147 33,302 774,461
Logistic support 1,009,553 - - - - - - - - 1,009,553
Insurance 41,197 - - - - - - - - 41,197
Project Engineering costs 3,753,320 20,461 - - 21,039 - 1,927 - 5,461 3,802,208
Government fees 137,453 8,419 8,419 - - - - - 1,949 156,240
Exploration and evaluation expenses before 11,858,133 810,640 109,798 1,105 263,145 6,620 71,604 807,488 51,751 13,980,284
depreciation
Depreciation 299,771 - - - - - - - - 299,771
Exploration and evaluation expenses 12,157,904 810,640 109,798 1,105 263,145 6,620 71,604 807,488 51,751 14,280,055
14. GENERAL AND ADMINISTRATIVE
2022 2021
$ $
Salaries and benefits 3,188,032 2,652,938
Director's fees 628,000 628,652
Professional fees 2,258,660 2,382,916
Marketing and industry involvement 598,447 791,722
Insurance 341,793 571,364
Travel and other expenses 746,180 1,884,189
Regulatory fees 212,939 326,464
General and administration before following elements 7,974,051 9,238,245
Stock-based compensation 2,046,342 374,771
Depreciation 129,627 90,182
General and administrative 10,150,020 9,703,198
15. FINANCE COSTS
2022 2021
$ $
Financing fees lease 37,523 39,994
Finance costs 37,523 39,994
16. INCOME TAXES
Tax expense differs from the amount computed by applying the combined Canadian
Statutory and Greenlandic income tax rates, applicable to the Corporation, to
the loss before income taxes due to the following:
2022 2021
$ $
Net loss before income taxes (21,898,963) (24,689,239)
Income tax rates 26.5% 26.5%
Income tax recovery (5,803,225) (6,542,648)
Increase (decrease) attributable to:
Non deductible expenses 547,829 104,109
Difference in statutory tax rate 213,652 265,772
Changes in unrecognized deferred tax assets 5,041,744 6,172,767
Tax recovery - -
The analysis of the Corporation's deferred tax assets and liabilities as at
December 31, 2022 and 2021 is as follows:
2022 2021
$ $
Deferred tax assets (liabilities):
Capital assets (636,131) (437,033)
Non-capital losses 636,131 437,033
- -
16. INCOME TAXES (CONT'D)
The Corporation records deferred income tax assets to the extent that it is
probable that sufficient taxable income will be realized during the
carry-forward period to utilize these net future tax assets.
The significant components of deductible temporary differences and unused tax
losses for which the benefits have not been recorded on the consolidated
statement of financial position as at December 31, 2022 are as follows:
Greenland As at
December 31,
2022
$
Non-capital losses carry forwards 50,408,928
As the Corporation is a mineral licence holder, the non-capital losses in
Greenland have no expiration date.
Canada As at
December 31, 2022
$
Non-capital losses carry forwards expiring in 2038 965,032
Non-capital losses carry forwards expiring in 2039 1,272,338
Non-capital losses carry forwards expiring in 2040 1,210,348
Non-capital losses carry forwards expiring in 2041 5,622,490
Non-capital losses carry forwards expiring in 2042 8,261,231
Non-capital losses carry forwards expiring in 2043 7,660,784
17. NET LOSS PER SHARE
The calculation of basic and diluted net loss per share for the year ended
December 31, 2022, was based on the net loss attributable to shareholders of
$21,898,963 ($24,689,239 for the year ended December 31, 2021) and the
weighted average number of common shares outstanding for the year ended
December 31, 2022 of 191,575,781 (177,098,737 for the year ended
December 31, 2021). As a result of the net loss for the years ended
December 31, 2022 and 2021, 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.
18. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
The Corporation's key management are the members of the board of directors,
the President and Chief Executive Officer, the Chief Financial Officer, the
Vice President Exploration and the Corporate Secretary. Key management
compensation is as follows:
2022 2021
$ $
Short-term benefits
Professional fees - 64,162
Salaries and benefits 2,104,440 1,639,334
Salaries and benefits included in the E&E expenses - 71,349
Director's fees 628,000 628,652
Long-term benefits
Stock-based compensation (note 10.1) 1,117,000 365,909
Total compensation 3,849,440 2,769,406
18. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
(CONT'D)
In addition to the amounts listed above in the compensation to key management,
following are the related party transactions, in the normal course of
operations:
● A firm in which Georgia Quenby (director until June 9, 2021) is
a partner charged legal professional fees for $nil ($9,934 in 2021);
● A company controlled by Martin Ménard (Chief Operating Officer
from July 9, 2019 to June 30, 2021) charged engineering professional fees of
$nil for his staff ($12,240 in 2021). The Chief Operating Officer is the son
of Robert Ménard, director 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
$nil ($324,799 in 2021);
● As at December 31, 2022, the balance due to those related parties
listed above and in the compensation to key management amounted to $nil
($173,254 as at December 31, 2021).
Following are the related party transactions, outside of the normal course of
operations:
● Directors and officers of the Corporation participated in the
November 3, 2022 fundraising for $2,700,132 ($nil in 2021). The directors and
officers subscribed to the fundraising in 2022 under the same terms and
conditions set forth all subscribers.
● Key management are subject to employment agreements which provide
for payments on termination, without cause or following a change of control,
providing for payments up to one base salary.
The compensation of directors is as follows:
2022 2021
Short-term benefits ((a)) Stock-based compensation Total compensation Short-term benefits ((a)) Stock-based compensation Total compensation
$ $ $ $ $ $
Eldur Olafsson 801,935 385,000 1,186,935 471,815 - 471,815
George Fowlie ((1)) - - - 79,919 - 79,919
Jaco Crouse 496,699 315,000 811,699 334,757 360,000 694,757
Graham Stewart 181,000 - 181,000 195,228 - 195,228
Georgia Quenby ((2)) - - - 43,788 - 43,788
Sigurbjorn Thorkelsson 86,000 - 86,000 94,478 - 94,478
Robert Ménard ((3)) - - - 30,417 - 30,417
Liane Kelly 86,000 - 86,000 29,913 - 29,913
Line Frederiksen 86,000 - 86,000 47,962 - 47,962
David Neuhauser 86,000 - 86,000 47,962 - 47,962
Warwick Morley-Jepson 103,000 - 103,000 138,904 - 138,904
Total compensation 1,926,634 700,000 2,626,634 1,515,143 360,000 1,875,143
(a) Short-term benefits comprise salary, director fees as applicable, annual
bonus and pension.
((1) 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)
18. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
(CONT'D)
The directors participated in the November 3, 2022 fundraising for $2,700,132
($nil in 2021). The director participation is as follows:
2022 2021
Number of new shares Number of new shares
Eldur Olafsson 814,162 -
Jaco Crouse 285,714 -
Graham Stewart 142,857 -
Sigurbjorn Thorkelsson 1,444,424 -
David Neuhauser 2,285,714 -
Total 4,972,871 -
19. FINANCIAL INSTRUMENTS
The Corporation is exposed to various financial risks resulting from both its
operations and its investment activities. The Management manages financial
risks. The Corporation does not enter into financial instruments agreements,
including derivative financial instruments, for speculative purposes. The
Corporation's main financial risks exposure and its financial policies are
described below.
19.1 Credit risk
Credit risk is the risk that one party to a financial instrument will cause a
financial loss for the other party by failing to discharge an obligation. The
Corporation's cash and escrow account for environmental monitoring are exposed
to credit risk. Management believes the credit risk on cash and escrow account
for environmental monitoring is small because the counterparties are chartered
Canadian and Greenlandic banks.
19.2 Liquidity risk
Liquidity risk is the risk that the Corporation will encounter difficulty in
meeting obligations associated with financial liabilities. The Corporation
seeks to ensure that it has sufficient capital to meet short-term financial
obligations after taking into account its exploration and operating
obligations and cash on hand. The Corporation anticipates seeking additional
financing in order to fund general and administrative costs and exploration
and evaluation costs. The Corporation' options to enhance liquidity include
the issuance of new equity instruments or debt.
The following table summarizes the carrying amounts and contractual maturities
of financial liabilities:
As at December 31, 2022 As at December 31, 2021
Trade and other payables Lease liabilities Trade and other payables Lease liabilities
$ $ $ $
Within 1 year 1,138,961 105,894 2,049,249 88,245
1 to 5 years - 434,852 - 431,910
5 to 10 years - 344,646 - 435,343
Total 1,138,961 885,392 2,049,249 955,498
19. FINANCIAL INSTRUMENTS (CONT'D).
19.3 Currency risk
As at December 31, 2022 and 2021, 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, 2022 In DKK In Euros In US$ In GBP
Cash 1,493,645 72,577 6,372,862 5,580,141
Escrow account for environmental monitoring 2,193,001 - - -
Prepaid expenses and others 207,465 - - -
Trade and other payables (1,440,197) (81,970) (112,718) (57,639)
2,453,914 (9,393) 6,260,144 5,522,502
Exchange rate 0.1948 1.4487 1.3541 1.6370
Equivalent to CAD 478,022 (13,608) 8,476,861 9,040,336
Based on the above net exposures as at December 31, 2022, 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 $1,798,162.
As at December 31, 2021 In DKK In Euros In US$ 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.
19.4 Fair value risk
Fair value estimates are made at the consolidated statement of financial
position date, based on relevant market information and other information
about financial instruments. As at December 31, 2022, 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.
20. SUBSEQUENT EVENTS
20.1 ACAM LP Joint Venture
On June 10, 2022, the Corporation announced that it had signed a non-binding
head of terms with ACAM to establish a special purpose vehicle (the "SPV") and
create a joint venture (the "JV") for the exploration and development of its
Strategic Mineral assets for a combined contribution of $58.0 million (GBP
36.7 million). Subject to negotiation of the final terms of the JV, ACAM will
invest $28.5 million (GBP 18 million) in exchange for a 49% shareholding in
the SPV, with Amaroq holding 51%. Amaroq is expected to contribute its
strategic non-precious mineral (i.e. non-gold) licences as well as a
contribution in kind, valued, in aggregate, at $29.5 million (GBP 18.7
million) in the form of site support, logistics and overhead costs associated
with utilizing its existing infrastructure in Southern Greenland to support
the JV's activities. The transfer of these licences is subject to approval
from the Greenland Government. An option for further future funding of $16.0
million (GBP 10.0 million) is also potentially available on the achievement
of agreed milestones. The final documentation of the deal was executed on
October 19, 2022. Written approval by the Government of Greenland pursuant
to section 88(1) of the Mineral Resources Act of the transfer of the Initial
JV Company Licences by Nalunaq A/S to the JV Company has been received and
upon the resolution of the final administrative matters, the Company expects
to satisfy the remaining conditions needed to complete the ACAM Transaction
before 30 April 2023
20.2 US$49.5M Debt Financing (the "Financing") and Potential Main
Market Listing in Iceland
On March 28, 2023, the Corporation has signed non-binding term sheets for a
US$49.5 million senior secured financing package consisting of:
· US$18.5 million Senior Debt Revolving Credit Facility ("RCF") with
Icelandic banks Landsbanki and Fossar Investment Bank, with a two-year term
and interest at the Secured Overnight Financing Rate (SOFR) plus 950bps. The
RCF has a 2% arrangement fee and a 0.4% commitment fee on unutilized amounts.
· Up to US$21 million Syndicated Convertible Notes ("Convertible Note")
with an affiliate of ACAM LP, JLE Property Ltd, Livermore Partners and First
Pecos with a four-year term, payment-in-kind interest of 5% per annum and a
conversion price of 42 pence/share.
o ACAM LP's main investors are the majority ultimate beneficial owners of
GCAM LP.
· US$10 million, two-year Cost Overrun loan by JLE Property Limited on
the same terms as the Convertible Note, plus a 2.5% commitment fee on
unutilized amounts, to insure against any potential unexpected cost increases.
The Financing, together with existing capital, is expected to enable the
transition from bulk sample stage to trial mining, processing and production
of gold doré on site at Nalunaq in a staged approach, ahead of full-scale
production. The Corporation will finalise the Financing's legally binding
documentation and expects to be in a position to sign binding documents within
the next three months.
Alongside the Financing, the Corporation intends to explore the possibility of
a main market listing on Iceland's Nasdaq Exchange and will update on progress
and timing in due course.
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