(“Amaroq” or the “Corporation” or the “Company”)
2023 Full Year Financial
Results
Well-funded and on track to progress
development of Nalunaq in 2024
TORONTO, ONTARIO – 26 March 2024 - Amaroq
Minerals Ltd. (AIM, TSXV, NASDAQ Iceland: AMRQ), an independent
mine development company with a substantial land package of gold
and strategic mineral assets in Southern Greenland, is presents its
Q4 and FY 2023 financials and provide an update on its planned
operational activities for 2024. All dollar amounts are expressed
in Canadian dollars unless otherwise noted.
A remote presentation for sell-side analysts
and investors will be held remotely at 14:00 GMT today,
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_FY23
Eldur Olafsson, CEO of Amaroq,
commented:
“Following our successful Fundraising in
February 2024, we have increased the scope of the Nalunaq gold
project development to account for accelerating the transition of
the process plant to nameplate capacity of 300 tonnes per day.
“We experienced some operational and procurement
delays towards the end of 2023 due to adverse weather conditions,
which continued into the start of 2024. This situation has now
significantly improved and we are making good operational
progress.
“Greenland offers significant potential for
improving the security of supply of raw materials for Europe. We
are particularly encouraged by recent developments following the
recent signing of two new collaboration agreements to strengthen
the EU-Greenland Partnership and the opening of a new EU office in
Nuuk. 2024 is a crucial year for Amaroq as we focus on bringing
Nalunaq into production, whilst accelerating exploration activities
across our wider precious and strategic metals portfolio. We look
forward to providing further updates on the Nalunaq development
programme at a planned Capital Markets event in early Summer.”
FY 2023 Corporate
Highlights
- Amaroq group liquidity of C$78.2
million (cash (gold and strategic minerals businesses) loan and
overrun facility) as of December 31, 2023
- Gold business working capital of
C$37.6 million as of December 31, 2023 (C$59 million as at
September 30, 2023)
- Strategic minerals business
available liquidity of C$18.7 million as of December 31 (C$22.5
million as at September 30, 2023)
- Successful transfer of Icelandic
listing to Iceland Nasdaq Main Market in 2023 and admission to the
OMX Iceland 15 Index, effective in January 2024
- Completion of most successful
drilling program at Nalunaq to date and discovery of new 75 vein,
underpinning potential for faster resource growth
- Awarded two additional licences in
South Greenland, increasing the Corporation's total licence holding
to 9,785.56 km2, making it the largest licence holder any mining
company in Greenland
- Geological interpretation and
advanced data science at the Nanoq target have expanded its
potential size and have indicated a 25km corridor linking it to the
Jokum's Shear project
- Promising results from 2023
Strategic Minerals exploration programme, with significant new
nickel-copper discovery at Stendalen
- Post-period, in February 2024, the
Company completed a Fundraising, raising net proceeds of
approximately $75 million, to accelerate mining of the Target Block
at the Nalunaq and associated works to enable a smoother transition
of the process plant to nameplate capacity of 300 tonnes of ore
processed per day.
- Amaroq achieved score of “Good” by
Icelandic ratings agency Reitun it their first ESG assessment of
the Company. Amaroq was placed it in category B3, with a score of
68 points. The rating is based on the Company’s performance in
environmental, social and governance (ESG) matters.
Q4 2023 Operational
Highlights
- Contracting and
Procurement: At the end of Q4 2023, 80% of the key
contracts for the processing plant were concluded and procurement
was 80% completed. Thyssen Schachtbau GMBH is contracted on the
underground development and mining while Halyard Inc. is the
engineering consultant in the staged construction of the processing
plant
- Engineering:
Process plant engineering was 77% complete at the end of Q4 2023
based on the updated project scope
- Construction:
Two wings were added to the camp, increasing the accommodation
capacity by 60 beds. The overall construction status of the
processing plant was 16% at the end of Q4 2023 based on the updated
project scope and 23% as at the end of February 2024
- Mining: Mine
rehabilitation works were continued in Q4 2023. This work lays the
foundation for safe and efficient trial mining to commence at the
end of Q1 2024 or early Q2 2024
- Nalunaq
Exploration: New underground samples beyond the
historically mined areas of Target Block, Nalunaq's largest
historic mining block, confirmed continuation of high-grade
mineralisation into modelled extension area with grades of up to
48.3g/t Au over 1m. Additional intersections of the newly
discovered 75 Vein provide further confidence in its thickness and
continuity
- Strategic
Minerals: Provisional results from Sava 2023 Drilling
programme further indicate the existence of a new 120km long copper
district in South Greenland. The Stendalen Drilling programme in
2023 resulted in a significant new Ni-Cu discovery at the Stendalen
Project.
Nalunaq Project KPIs
- 45,384 hours worked during Q4
2023. 107,184 total hours worked during FY 2023
- Daily average of 33 people
working on site at Nalunaq in Q4 2023
- One Lost Time Injury (LTI) in
2023
- Amaroq remains committed to
ensuring local representation among the workforce, with the ratio
of Greenlandic personnel at Nalunaq standing at 61% for 2023
2024
Outlook
- Permitting:
The public consultation for the Environmental Impact Assessment
(EIA) and Social Impact Assessment (SIA) for Nalunaq closed on 1st
March 2024. The Company is following the process agreed with the
Government of Greenland to respond to the small number of comments
received
- Engineering:
Engineering for the processing plant is expected to be completed in
Q2 2024
- Contracting and
Procurement: The remaining contracts are expected to be
concluded in Q2 2024. The only outstanding major contract is the
installation of the processing plant components. The quotes of
different bidders are currently being evaluated and the contract
will then be awarded
- Construction:
Placement of the process plant foundations is nearing completion.
The erection of the steel structure of the process plant building
is expected to commence in April 2024 and the installation of the
mechanical and electrical process plant components is scheduled for
the second half of 2024
- Mining: The
rehabilitation of the ramp from the 300 level portal to the
Mountain Block is nearing completion and will be followed by the
development of a ramp extending higher up into the Mountain Block.
Rehabilitation of the mine will progress based on the location of
future planned mining activities. The Company expects to mine first
gold in 2024 and plans to provide a progress update with timings
for guidance for the project at an investor event in June 2024.
First production guidance for 2025 will be provided towards the end
of 2024.
- Support
Infrastructure: In 2024 additional containers will be
added, which will allow Amaroq to accommodate in total up to 120
persons
- Nalunaq
Exploration: Underground focused exploration will continue
to target extension of the Mountain and Target Blocks as well as
further delineating the newly discovered 75 Vein
- Strategic Minerals: Ni-Cu exploration will
continue at the Stendalen discovery with an expanded drilling
programme targeting sulphide zone. Exploration at Target West will
look to further expand the identified copper mineralisation and
assess high grade potential. Regional exploration will focus on
additional copper targeting within the Copper belt, Ni-Cu sulphide
target similar to Stendalen and rare earth element (REE) targeting
at Nunarsuit
2024 Operational
Workplan
Nalunaq Development
Workplan
- Nalunaq
- The main ramp will be developed
from 720 level upwards into the Mountain Block. Starting from the
ramp, crosscuts will be driven into the main vein at different
levels and then drifts will be developed following the strike of
the vein. At a later stage the ore between these ore drifts will be
mined using the long-hole stoping method. Later in 2024,
development and exploration drilling activities will be carried out
in the Target Block in parallel to the aforementioned works.
Rehabilitation of the mine will continue depending on the
locations, where future mining activities are planned.
Gold Exploration Projects
- Nalunaq
- Following the underground rehabilitation, exploration will now
switch to underground drilling to target continued extensions of
both the Mountain and Target Blocks while simultaneously targeting
further intersections into the 75 vein.
- Nanoq
- Following the expansion of the mineral potential at Nanoq in
2023, the Company will construct facilities and finalise
exploration plans allowing Amaroq the option to conduct a maiden
core drilling programme across the first target at Nanoq. In
addition, ground studies will be conducted to further establish the
additional targets generated by the geophysical and modelling work
completed in 2023.
- Vagar and Surrounding
Areas
- Amaroq intends to conduct a target generation programme across
the Vagar licence, including Vagar Ridge and other priority areas
in the local vicinity such as Eagle’s Nest, aimed at delineating
accessible high-grade material. Management believes that this
material could constitute future high-grade feed to the Nalunaq
plant as it develops and expands.
Strategic Minerals Projects (Amaroq
51%)
- Sava Copper Belt
(Sava/North Sava)
- Exploration at Target West will concentrate on further defining
Unit 1, which hosts observed copper mineralisation. Mapping,
sampling and a limited drilling programme will look to expand the
footprint of Unit 1 and test for higher grade material at
depth.
- Target generation programmes will continue across Sava, North
Sava and the full extent of the Copper Belt assessing high priority
porphyry and IOCG targets on the ground. The aim of this programme
will be to define new areas for scout drilling.
- Stendalen
- Following the new Ni-Cu discovery made at Stendalen, Amaroq
intends to mobilise three drill rigs and a semi-permanent camp to
site to facilitate an expanded drilling programme. Drilling will
focus on intersecting further target areas at the base of the
Stendalen intrusion including the interpreted Feeder Zone targeting
massive sulphide mineralisation.
- The Company plans to conduct further ground geophysics to
provide further confidence to the overall extend and geometry of
the intrusion and associated sulphide mineralisation.
- Leveraging off the data from this discovery, ground studies
will also assess the potential for further target areas with
Stendalen and more regionally.
- Kobberminebugt
- Amaroq will continue to review the results of the detailed
geophysical programme conducted over the Kobberminebugt licence in
2023. Specific geophysical targets will be followed up in the field
with detailed mapping and surface sampling ahead of defining more
definitive targets for future scout drilling.
- Nunarsuit
- Geophysical data collected during 2023 is currently being fully
assessed and Amaroq aim to conduct a targeted field programme on
the licence during the summer of 2024. Initial targets will include
specific geophysical anomalies as well as outcropping niobium
bearing pegmatites.
Amaroq Financial
Results
The following selected financial data is extracted from the
Financial Statements for the three months ended December 31,
2023.
Financial Results
|
Three months ended December 31 |
Year ended December 31 |
|
2023$ |
2022$ |
2023$ |
2022$ |
Exploration and evaluation expenses |
879,326 |
1,697,334 |
6,616,652 |
12,700,526 |
Site development costs |
690,179 |
- |
1,825,564 |
- |
General and administrative |
5,616,655 |
3,203,588 |
8,015,257 |
6,946,431 |
(Gain) on loss of control of subsidiary |
- |
- |
(31,340,880) |
- |
Share of 3 and 12-months loss of an equity-accounted joint
arrangement |
2,871,156 |
- |
5,021,231 |
- |
Net income (loss) and comprehensive income (loss) |
(14,259,099) |
(4,426,345) |
13,425,586 |
(17,472,618) |
Basic and diluted income (loss) per common share |
(0.050) |
(0.020) |
0.047 |
(0.100) |
Financial Position
|
As at December 31 |
As at September 30 |
|
2023$ |
2023$ |
Cash on hand |
21,014,633 |
53,655,954 |
Total assets |
106,953,183 |
111,193,232 |
Total current liabilities (before convertible notes liability) |
6,354,185 |
2,818,672 |
Shareholders’ equity |
64,278,637 |
77,982,519 |
Working capital (before convertible notes liability) |
37,614,068 |
58,690,730 |
Gold business liquidity (excludes $18.7M and $22.5M ring-fenced for
strategic mineral exploration as of Dec 31, 2023 and Sept 30, 2023
respectively) |
59,514,633 |
92,353,824 |
Ends
Enquiries: Amaroq Minerals
Ltd. Eldur Olafsson, Executive Director and
CEO eo@amaroqminerals.com Eddie
Wyvill, Corporate Development+44 (0)7713
126727 ew@amaroqminerals.com Stifel
Nicolaus Europe Limited (Nominated Adviser and Joint
Broker) Callum Stewart Varun
Talwar Simon Mensley Ashton
Clanfield +44 (0) 20 7710
7600 Panmure Gordon (UK) Limited
(Joint Broker) Hugh Rich Dougie
Mcleod +44 (0) 20 7886
2500 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, a
development stage property with an exploitation license including
the previously operating Nalunaq gold mine. The Corporation has a
portfolio of gold and strategic metal assets 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.
Certain statements in this release constitute
"forward-looking statements" or "forward-looking information"
within the meaning of applicable securities laws. Such statements
and information involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or
achievements of the company, its projects, or industry results, to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements or information. Such statements can be identified by the
use of words such as "may", "would", "could", "will", "intend",
"expect", "believe", "plan", "anticipate", "estimate", "scheduled",
"forecast", "predict" and other similar terminology, or state that
certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. These statements reflect
the Company's current expectations regarding future events,
performance and results and speak only as of the date of this
release.
Forward-looking statements and information
involve significant risks and uncertainties, should not be read as
guarantees of future performance or results and will not
necessarily be accurate indicators of whether or not such results
will be achieved. A number of factors could cause actual results to
differ materially from the results discussed in the forward-looking
statements or information, including, but not limited to: material
adverse changes, unexpected changes in laws, rules or regulations,
or their enforcement by applicable authorities; the failure of
parties to contracts with the company to perform as agreed; social
or labour unrest; changes in commodity prices; and the failure of
exploration, refurbishment, development or mining programs or
studies to deliver anticipated results or results that would
justify and support continued exploration, studies, development or
operations.
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Glossary
Ag |
silver |
Au |
gold |
Cu |
copper |
EIA |
Environmental Impact Assessment |
EU |
European Union |
g |
grams |
g/t |
grams per tonne |
IOCG |
Iron Ore, Copper, Gold |
km |
kilometers |
Koz |
thousand ounces |
LTI |
Lost Time Injury |
m |
meters |
Mo |
molybdenum |
MRE |
Mineral Resource Estimate |
Nb |
niobium |
Ni |
nickel |
oz |
ounces |
REE |
Rare Earth Elements |
SIA |
Social Impact Assessment |
t |
tonnes |
Ti |
Titanium |
t/m3 |
tonne per cubic meter |
U |
uranium |
V |
Vanadium |
Zn |
zinc |
Inside Information
This announcement contains inside information
for the purposes of Article 7 of the UK version of
Regulation (EU) No. 596/2014 on Market Abuse ("UK MAR"), as it
forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018, and Regulation
(EU) No. 596/2014 on Market Abuse ("EU MAR").
Qualified Person Statement
The technical information presented in this
press release has been approved by James Gilbertson CGeol, VP
Exploration for Amaroq Minerals and a Chartered Geologist with the
Geological Society of London, and as such a Qualified Person as
defined by NI 43-101.
Amaroq Minerals Ltd.
AUDITED CONSOLIDATED FINANCIAL
STATEMENTSFor the years ended December 31, 2023 and
2022
|
|
As at December 31, |
As at December 31, |
|
Notes |
2023 |
2022 |
|
|
$ |
$ |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash |
|
21,014,633 |
50,137,569 |
Due from a
related party |
21.1 |
3,521,938 |
- |
Sales tax
receivable |
|
69,756 |
95,890 |
Prepaid
expenses and others |
5 |
18,681,568 |
450,290 |
Inventory |
|
680,358 |
- |
Total current assets |
|
43,968,253 |
50,683,749 |
|
|
|
|
Non-current assets |
|
|
|
Deposit |
|
27,944 |
27,944 |
Escrow account
for environmental monitoring |
6 |
598,939 |
427,120 |
Investment in
equity-accounted joint arrangement |
7 |
23,492,811 |
- |
Mineral
properties |
8 |
48,821 |
85,579 |
Right of use
asset |
11.1 |
574,856 |
655,063 |
Capital
assets |
9 |
38,241,559 |
13,216,606 |
Total non-current assets |
|
62,984,930 |
14,412,312 |
TOTAL ASSETS |
|
106,953,183 |
65,096,061 |
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities |
|
|
|
Accounts
payable and accrued liabilities |
|
6,273,979 |
1,138,961 |
Convertible
notes |
10 |
35,743,127 |
- |
Lease
liabilities – current portion |
11 |
80,206 |
71,797 |
Total current liabilities |
|
42,097,312 |
1,210,758 |
|
|
|
|
Non-current liabilities |
|
|
|
Lease
liabilities |
11 |
577,234 |
657,440 |
Total non-current liabilities |
|
577,234 |
657,440 |
Total liabilities |
|
42,674,546 |
1,868,198 |
|
|
|
|
Equity |
|
|
|
Capital
stock |
12 |
132,117,971 |
131,708,387 |
Contributed
surplus |
13 |
6,725,568 |
5,250,865 |
Accumulated
other comprehensive loss |
|
(36,772) |
(36,772) |
Deficit |
|
(74,528,130) |
(73,694,617) |
Total equity |
|
64,278,637 |
63,227,863 |
TOTAL LIABILITIES AND EQUITY |
|
106,953,183 |
65,096,061 |
|
|
|
|
Subsequent
events |
23 |
|
|
|
|
|
|
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 |
2023 |
2022 |
|
|
$ |
$ |
|
|
|
|
Expenses |
|
|
|
Exploration
and evaluation expenses |
16 |
6,616,652 |
12,700,526 |
Site
development costs |
|
2,515,743 |
- |
General and
administrative |
17 |
13,631,912 |
10,150,020 |
Loss on
disposal of capital assets |
|
37,791 |
100,536 |
Foreign
exchange loss (gain) |
|
(306,705) |
(849,773) |
Operating loss |
|
22,495,393 |
22,101,309 |
Other
expenses (income) |
|
|
|
Interest
income |
|
(1,069,559) |
(239,869) |
Project
management income |
21.1 |
(1,714,559) |
- |
Gain on loss
of control of subsidiary |
7 |
(31,340,880) |
- |
Share of net
losses of joint arrangement |
7 |
7,892,387 |
- |
Unrealised
loss on derivative liability |
10 |
4,536,411 |
- |
Finance
costs |
18 |
34,320 |
37,523 |
|
|
|
|
Net loss and comprehensive loss |
|
(833,513) |
(21,898,963) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares
outstanding - basic
and diluted |
|
272,623,548 |
191,575,781 |
Basic and diluted loss per common share |
20 |
(0.003) |
(0.11) |
|
|
|
|
The accompanying notes are an integral part of
these consolidated financial statements.
|
Notes |
Number of common
sharesoutstanding |
Capital stock |
Contributed surplus |
Accumulated other comprehensive loss |
Deficit |
Totalequity |
|
|
|
$ |
$ |
$ |
$ |
$ |
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 |
|
85,714,285 |
46,313,551 |
- |
- |
- |
46,313,551 |
Share issuance
costs |
|
- |
(3,331,569) |
- |
- |
- |
(3,331,569) |
Options
exercised |
|
260,000 |
226,200 |
(96,200) |
- |
- |
130,000 |
Stock-based
compensation |
13.1 |
- |
- |
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 |
|
|
|
|
|
|
|
|
Balance, January 1, 2023 |
|
263,073,022 |
131,708,387 |
5,250,865 |
(36,772) |
(73,694,617) |
63,227,863 |
Net loss and
comprehensive loss |
|
- |
- |
- |
- |
(833,513) |
(833,513) |
|
|
- |
- |
- |
- |
- |
- |
Share issuance
under a fundraising |
|
- |
- |
- |
- |
- |
- |
Share issuance
costs |
|
- |
- |
- |
- |
- |
- |
Options
exercised, net |
|
597,029 |
409,584 |
(433,600) |
- |
- |
(24,016) |
Stock-based
compensation |
13.1 |
- |
- |
1,908,303 |
- |
- |
1,908,303 |
Balance, December 31, 2023 |
|
263,670,051 |
132,117,971 |
6,725,568 |
(36,772) |
(74,528,130) |
64,278,637 |
The accompanying notes are an integral part of these
consolidated financial statements.
|
Notes |
2023 |
2022 |
|
|
$ |
$ |
|
|
|
|
Operating activities |
|
|
|
Net loss |
|
(833,513) |
(21,898,963) |
Adjustments
for: |
|
|
|
Depreciation |
9 |
698,273 |
770,492 |
Amortisation of ROU
asset |
11.1 |
80,207 |
80,207 |
Stock-based
compensation |
13.1 |
1,908,303 |
2,046,342 |
Unrealized loss on
derivative liability |
10 |
4,536,411 |
- |
Convertible note
transaction cost expensed |
10.2 |
641,528 |
- |
Gain on loss of
control of subsidiary |
7 |
(31,340,880) |
- |
Share of net losses
of joint arrangement |
7 |
7,892,387 |
- |
Other expenses |
|
- |
2,785 |
Loss on disposal of
capital assets |
|
37,791 |
100,536 |
Foreign
exchange |
|
(365,324) |
(882,897) |
|
|
(16,744,817) |
(19,781,498) |
Changes in
non-cash working capital items: |
|
|
|
Sales tax
receivable |
|
26,133 |
(44,640) |
Due from a related
party |
|
(3,521,938) |
- |
Prepaid expenses
and others |
|
(19,043,990) |
(183,673) |
Escrow account for
environmental monitoring |
6 |
(168,140) |
- |
Trade and other
payables |
|
5,093,572 |
(864,477) |
|
|
(17,614,363) |
(1,092,790) |
Cash flow used in operating activities |
|
(34,359,180) |
(20,874,288) |
|
|
|
|
Investing activities |
|
|
|
Acquisition of
mineral properties |
8 |
- |
(23,335) |
Acquisition of
capital assets |
9 |
(24,303,517) |
(301,957) |
Disposition of
capital assets |
9 |
- |
63,325 |
Cash flow used in investing activities |
|
(24,303,517) |
(261,967) |
|
|
|
|
Financing activities |
|
|
|
Shares
issuance |
|
- |
46,313,551 |
Share issuance
costs |
|
- |
(3,331,569) |
Convertible
note issue |
10 |
30,431,180 |
- |
Convertible
note transaction costs |
10.2 |
(1,004,030) |
- |
Principal
repayment – lease liabilities |
11 |
(71,797) |
(50,722) |
Exercise of
stock options |
|
- |
130,000 |
Cash flow from financing activities |
|
29,355,353 |
43,061,260 |
|
|
|
|
Net change in
cash before effects of exchange rate changes on cash |
|
(29,307,344) |
21,925,005 |
Effects of exchange rate changes on cash |
|
184,408 |
888,105 |
Net change in cash |
|
(29,122,936) |
22,813,110 |
Cash, beginning |
|
50,137,569 |
27,324,459 |
Cash, ending |
|
21,014,633 |
50,137,569 |
|
|
|
|
Supplemental cash flow information |
|
|
|
Borrowing
costs capitalised to capital assets (note 9,10) |
|
1,457,638 |
- |
Interest
received |
|
1,069,559 |
239,869 |
|
|
|
|
|
|
|
|
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”) 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 which were transferred on
September 21, 2023 on Nasdaq Main Market Iceland
(“Nasdaq”) under the AMRQ ticker.
These consolidated financial statements
(“Financial Statements”) were reviewed and authorized for issue by
the Board of Directors on March 26, 2024.
2. ADOPTION
OF NEW AND REVISED STANDARDS
2.1 New
and amended accounting standards effective for the current
year
In the current year, the Corporation has applied
a number of amendments to IFRS Accounting Standards issued by the
International Accounting Standards Board (IASB) that have an
effective date of 1 January 2023. The adoption of these standards
has not had any material impact on the disclosures and amounts
reported in these financial statements.
Amendments to IAS 1 Presentation of Financing
Statements and IFRS Practice Statement 2 Making Materiality
Judgments – Disclosure of Accounting Policies
The amendments change the requirements in IAS 1
with regard to disclosure of accounting policies. The amendments
replace the term ‘significant accounting policies’ with ‘material
accounting policy information’. Accounting policy information is
material if, when considered together with other information in the
Corporation’s consolidated financial statements, can reasonable be
expected to influence decisions that the primary users of general
purpose financial statements make on the basis of those financial
statements. IFRS Practice Statement 2 offers additional optional
guidance using a systematic four-step process to help companies
make material judgments when preparing financial statements.
The Corporation has adopted the amendments to
IAS 1 by disclosing material accounting policy information.
2. ADOPTION
OF NEW AND REVISED STANDARDS (CONT’D)
Amendments to IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors – Definition of Accounting
Estimates
This amendment to IAS 8 eliminate the definition
of a change in accounting estimate and replaces it with a
definition of accounting estimates. Under the new definition,
accounting estimates are “monetary amounts in financial statements
that are subject to estimation uncertainty”.
2.2 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.
- Amendment to IFRS 10 and IAS 28
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
- Amendments to IAS 1 Classification
of Liabilities as Current or Non-current
- Amendments to IAS 1 Non-current
Liabilities with Covenants
- Amendments to IAS 7 and IFRS 7
Supplier Finance Arrangements
- Amendments to IFRS 16 Lease
Liability in a Sale and Leaseback
The Corporation does not expect that the
adoption of the Standards listed above will have a material impact
on the financial statements except as indicated below.
Amendments to IFRS 10 Consolidated Financial
Statements and IAS 28 Investments in Associates and Joint Ventures
- Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
These amendments apply to situations in which
there is a sale or contribution of assets between an investor and
its associate or joint venture. According to the amendments, gains
or losses arising from the loss of control of a subsidiary that
does not contain a business in a transaction with an associate or a
joint venture accounted for under the equity method, are recognised
in the parent’s profit or loss only to the extent of the unrelated
investors’ interest in that associate or joint venture. Similarly,
gains and losses resulting from the remeasurements of an investment
retained in a former subsidiary are recognised in the former
parent’s profit or loss only to the extent of the unrelated
investors’ interests in the new associate or joint venture.
An effective date for these amendments has not
been set yet. The Corporation anticipates that these amendments may
impact the Corporation’s consolidated financial statements in
future periods if such transactions were to occur.
Amendments to IAS 1 Presentation of Financial
Statements – Classification of Liabilities as Current or
Non-current
These amendments, published in January 2020,
only affect the presentation of liabilities in the statement of
financial position by clarifying that the classification of
liabilities as current or non-current should be based on rights
that are in existence at the end of the reporting period,
regardless of expectations regarding the exercise of the right to
defer settlement. Furthermore, the amendments explain that are
rights are in existence if covenants are complied with at the end
of the reporting period and define settlement as the transfer to
the counter party of cash, equity instruments, other assets or
services.
The amendments are applied retrospectively for
annual periods beginning on or after 1 January 2024. Earlier
application is permitted but requires that the 2022 IAS 1
amendments are applied early as well.
2. ADOPTION
OF NEW AND REVISED STANDARDS (CONT’D)
The Corporations expects that the application of
these amendments may have an impact on the consolidated financial
statements.
Amendments to IAS 1 Presentation of Financial
Statements – Non-current Liabilities with Covenants
These amendments, published in October 2022,
indicate that only covenants that must be complied with on or
before the end of the reporting period affect the right to defer
settlement of a liability for at least twelve months after the
reporting date and must be considered in assessing the
classification of the liability as current or non-current. The
right to defer settlement is not affected if the covenants must be
complied with after the reporting period, however, if the right to
defer settlement of a liability is subject to complying with
covenants within twelve months after the reporting period,
disclosures must be made to enable users to understand the risk of
the liabilities becoming repayable within twelve months after the
reporting period.
The amendments are applied retrospectively for
annual periods beginning on or after 1 January 2024. Earlier
application is permitted but requires that the 2020 IAS 1
amendments are applied early as well.
The Corporations expects that the application of
these amendments may have an impact on the consolidated financial
statements.
3. MATERIAL
ACCOUNTING POLICIES
3.1 Basis
of accounting
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”).
The Financial Statements have been prepared on
the historical cost basis, except for financial instruments at fair
value.
3.2 Going
concern
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.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.3 Basis
of consolidation
The Financial Statements include the accounts of
the Corporation and those of its subsidiary 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.
3.4 Investments in joint
venture
The financial results of the Corporation’s
investments in its joint arrangement are included in the
Corporation’s results using the equity method. Under the equity
method, the investment is initially recognized at cost, and the
carrying amount is increased or decreased to recognize the
Corporation’s share of comprehensive income or loss of the joint
venture after the date of acquisition. The Corporation’s share of
profits or losses is recognized in the condensed interim statement
of income (loss).
The Corporation assesses at each period-end
whether there is any objective evidence that its investments in
joint ventures are impaired. If impaired, the carrying value of the
Corporation’s share of the underlying assets of the joint venture
is written down to its estimated recoverable amount (being the
higher of fair value less costs of disposal and value in use) and
charged to the statement of income (loss).
3.5
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 and Gardaq A/S is CAD. The functional currency of
Nalunaq A/S and Gardaq A/S is determined using the currency of the
primary source of economic activity 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.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.6 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.
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.
Technical feasibility and commercial viability
of an exploration and evaluation asset are demonstrated when
considering the facts and circumstances relating to the asset under
assessment. These facts and circumstances include, but are not
limited to, the following:
- The life of mine plan and economic
modeling support the economic extraction of such resources and/or
reserves;
- The operating and environment
permits for the area to be mined exist or are reasonably assured as
obtained; and
- The Board has approved the decision
to proceed to the development phase
E&E include overhead expenses directly
attributable to the related activities.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.7 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.
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
activities |
3 to 10 years |
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.
Residual values, methods of depreciation and
useful lives of the assets are reviewed annually and adjusted if
appropriate.
Proceeds from selling items before the related
item of Property, plant and equipment is available for use are
recognized in profit or loss, together with the costs of producing
those items. The Corporation therefore distinguishes 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 the Corporation’s ordinary
activities, the Corporation discloses 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.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.7.1 Nalunaq mine project
Management established that effective September
1, 2023, the Nalunaq Project is in the development phase.
Accordingly, all expenditures related to the restart of the Nalunaq
mine and the associated development of the initial processing plant
and surface infrastructure are capitalized under Construction in
Progress within Capital assets (see note 9). Capitalized
expenditures will be carried at cost until the Nalunaq Project is
placed into commercial production, sold, abandoned, or determined
by management to be impaired in value. The mine and mobile
equipment, process plant building and the Nalunaq mine are not yet
available for use as intended by Management as at December 31,
2023, therefore, depreciation has not yet commenced.
3.8 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.
3.9 Borrowing costs
Borrowing costs directly attributable to the
acquisition, construction or production of qualifying assets are
added to the cost of those assets. Qualifying assets are assets
that take a substantial period of time until they are ready for
their intended use. Borrowing costs, less any temporary investment
income on those borrowings, that are directly attributable to the
acquisition, construction or production of a qualifying asset are
included in the cost of that asset if it is probable that they will
result in future economic benefits to the Corporation and the costs
can be measured reliably. Borrowing costs that are incurred for
general purposes are allocated to qualifying assets by applying a
capitalisation rate to the expenditures on that asset. The
capitalisation rate shall be the weighted average of the borrowing
costs appliable to all borrowings of the Corporation that are
outstanding during the period. Capitalisation of borrowing costs
ceases when the all the activities necessary to prepare the
qualifying asset for its intended use or sale are substantially
complete.
All other borrowing costs are recognised in
profit or loss in the period in which they are incurred.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.10 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.
3.11 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.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.12 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
- 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.
3.13 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.
3.14 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.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.15 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.
3.16 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 2023 and 2022, all the outstanding common
share equivalents were anti-dilutive.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.17 Financial
instruments
Financial assets and financial liabilities are
recognized when the Corporation becomes a party to the contractual
provisions of the financial instrument.
Financial assets and liabilities are offset and
the net amount is reported in the consolidated statement of
financial position when there is an unconditional and legally
enforceable right to offset the recognized amounts and there is an
intention to settle on a net basis, or realize the asset and settle
the liability simultaneously.
All financial instruments are required to be
measured at fair value on initial recognition. The fair value is
based on quoted market prices, unless the financial instruments are
not traded in an active market. In this case, the fair value is
determined by using valuation techniques like the Black-Scholes
option pricing model or other valuation techniques.
3.17.1 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, due
from a related party, 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.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.17.2 Financial
liabilities and equity
A financial liability is derecognized when
extinguished, discharged, terminated, cancelled or expired.
Classification as debt or equityDebt and equity
instruments are classified as either financial liabilities or as
equity in accordance with the contractual arrangements and the
definitions of a financial liability and an equity instrument.
Financial liabilities measured at amortized cost
Financial liabilities are initially measured at fair value.
Transaction costs directly attributable to the issuance of the
financial liability, other than financial liabilities at fair value
through profit or loss, are deducted from the financial liability’s
fair value on initial recognition. Transaction costs directly
attributable to the issuance of financial liabilities at fair value
through profit or loss are recognised immediately in profit or
loss.
Financial liabilities are measured subsequently
at amortised cost using the effective interest
method.
Equity instrumentsAn equity instrument is a
contract that evidences a residual interest in the assets of an
entity net of its liabilities.
Compound instrumentsThe terms of a convertible
note are evaluated to determine whether it contains both a
liability and an equity component. These components are classified
separately as financial liabilities, financial assets or equity
instruments. A conversion option that will be settled by the
exchange of a fixed amount of cash or another financial asset for a
fixed number of the parent company’s equity instruments is an
equity instrument
The fair value of the liability component of the
convertible note instrument is estimated using market interest
rates for similar non-convertible instruments. This amount is
recorded as a liability on an amortised cost basis using the
effective interest method until the instrument’s maturity date or
conversion.
The value of the conversion option classified as
equity is determined by subtracting the financial liability
component’s fair value from the compound instrument as a whole. The
conversion option is then included in equity and is not
subsequently re-measured.
Transaction costs that relate to the issue of
the convertible notes are allocated to the liability and equity
components in proportion to the allocation of the gross proceeds,
with the transaction costs related to the equity component being
allocated to equity, while the transaction costs related to the
liability component are included in the carrying amount of the
liability component and amortised over the life of the convertible
loan note.
Embedded derivativesEmbedded derivatives are
components of hybrid contracts. Hybrid contracts contain a
non-derivative host and an embedded derivative which impacts the
combined instrument in a way similar to a stand-alone
derivative.
Derivatives that are embedded in hybrid
contracts whose non-derivative host is not a financial asset (for
example, a financial liability) are recognised as separate
derivatives if they meet the definition of a derivative and their
risks and characteristics are not closely related to those of the
host contracts and the host contracts are not measured at fair
value through profit or loss. Embedded derivatives that are
separated from a financial liability host contract are measured at
fair value. The residual value of the hybrid contract is then
allocated to the financial liability host contract.
3. MATERIAL
ACCOUNTING POLICIES (CONT’D)
3.17.3 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.
3.18 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.
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.
4.1.2 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.
4. CRITICAL
ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT’D)
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 2021 to 2023. As a result of this
analysis, the replacement value of the assets under CIP category
has produced a recoverable value that was at least 20% higher than
the carrying value of assets under CIP as of December 31,
2023.
4.2 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.
4.3 Capitalisation
of borrowing costs
The Corporation makes judgments on the amount of
borrowing costs that are directly attributable to the acquisition
of a qualifying asset.
4.4 Technical Feasibility and Commercial
Viability (“TFCV”)
Management uses significant judgment to
determine when TFCV is demonstrable. Technical feasibility refers
to the ability to physically construct and operate a mineral
project in a technically sound manner to produce a saleable mineral
product while commercial viability refers to the ability to mine
the mineral asset to generate a reasonable return on investment.
Key considerations used to determine if TFCV has been reached
included the establishment of confidence about mineralization,
results and status of studies, probability of obtaining key
permits, the existence of other barriers that may impact mining and
the ability to generate a return on investment, confidence of
project potential by the Management and the Board of Directors.
Based on the criteria described above,
Management has concluded that sufficient evidence existed on
September 1, 2023, for the Corporation to declare TFCV for the
Nalunaq Project. September 1, 2023, was aligned with the date that
the Board of Directors approved and closed the Financing package
deal (note 10), thus supporting the commercial viability of the
project.
4. CRITICAL
ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT’D)
ESTIMATES AND ASSUMPTIONS
4.5 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.
4.6 Restricted Share Units
(“RSU”)
For the purpose of determining the fair market
value of restricted share unit awards and 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 differences between the actual value of
restricted share unit awards and their estimated fair value based
on the Monte-Carlo simulation run. At the date of the consolidated
statement of financial position, restricted share units award and
embedded derivative value represents Management's best estimate of
awards fair value vesting at measurement dates stipulated under the
RSU award contract.
4.7 Embedded Derivative
For the purpose of determining the fair market
value of the embedded derivative a number of assumptions are
required for input in the pricing model. Determining these
assumptions requires significant level of estimates and
Management’s judgement.
Assumptions must be determined at the reporting
date. Such assumptions include term, share price on the reporting
date, risk-free rate of interest and volatility.
The uncertainty related to the choice of
assumptions may lead to differences between the actual value of the
embedded derivative and its estimated fair value based on the
Black-Scholes pricing model.
5. PREPAID
EXPENSES AND OTHERS
|
2023 |
2022 |
|
$ |
$ |
Advance
payments to suppliers and mining contractors |
17,848,780 |
157,501 |
Prepaid credit
facility costs |
408,792 |
- |
Prepaid
insurance |
169,416 |
160,876 |
Prepaid
exploration work |
87,968 |
87,968 |
Other
prepayments |
166,612 |
43,945 |
Total prepaid expenses and others |
18,681,568 |
450,290 |
6. 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.
|
2023 |
2022 |
|
$ |
$ |
Balance
beginning |
427,120 |
424,637 |
Additions |
168,140 |
|
Effect of
translation |
3,679 |
2,483 |
Balance ending |
598,939 |
427,120 |
Non-current
portion – escrow account for environmental monitoring |
(598,939) |
(427,120) |
Current portion – escrow account for environmental
monitoring |
- |
- |
7. INVESTMENT
IN EQUITY-ACCOUNTED JOINT ARRANGEMENT
|
As at December 31,
2023 |
As at December 31,
2022 |
|
$ |
$ |
Balance at
beginning of period |
- |
- |
Original Investment
in Gardaq ApS |
7,422 |
- |
Transfer of
non-gold strategic minerals licences at cost |
36,896 |
- |
Investment at
conversion of Gardaq ApS to Gardaq A/S |
55,344 |
- |
Gain on FV
recognition of equity accounted investment in joint venture |
31,285,536 |
- |
Investment retained
at fair value- 51% share |
31,385,198 |
- |
Share of joint venture’s net losses- for the year ended December
31, 2023 |
(7,892,387) |
- |
Balance at end of period |
23,492,811 |
- |
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 created a joint venture
(the "JV") for the exploration and development of its Strategic
Mineral assets for a combined contribution of $62.0 million (GBP
36.7 million). Subject to the final terms of the JV, ACAM invested
$30.1 million (GBP 18 million) in exchange for a 49% shareholding
in the SPV, with Amaroq holding 51%. Amaroq contributed its
strategic non- precious mineral (i.e., non-gold) licenses, and will
be required to provide a contribution in kind over a three-year
period, valued, in aggregate, at $31.4 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
licenses has been approved by the Greenland Government on April 13,
2023.
The carrying value of the strategic non-precious
mineral licenses transferred to Gardaq A/S is $36,896 (Note 7).
7. INVESTMENT
IN EQUITY-ACCOUNTED JOINT ARRANGEMENT (CONT’D)
Upon execution of the Subscription and
Shareholders’ Agreement (“SSHA”) on April 13, 2023, the Corporation
has ceased the control of Gardaq on that date. As a result of the
Corporation losing control over the subsidiary:
- The Corporation derecognizes the
assets and liabilities of the subsidiary from the consolidated
statement of financial position,
- Recognizes the fair value of the
consideration received from the transaction that has resulted in
the loss of control,
- Recognizes any investment retained
in the former subsidiary at its fair value once control is lost and
subsequently accounts for it and any amounts owed by or to the
former subsidiary in accordance with the relevant IFRS. The fair
value shall be regarded as a fair value of the initial recognition
of the investment in the joint venture.
- Subsequently recognizes joint
venture’s share of net profits or losses proportionately to the
retained share of investment for the reporting periods.
Given that the relevant activities of Gardaq
require unanimous consent of its shareholders in accordance with
the SSHA, Management has determined that it has joint control and
as such the Corporation performed deconsolidation of Gardaq A/S as
at April 13, 2023, the date when control was lost. The fair value
of the 51% equity investment retained in Gardaq A/S was determined
to be $31,385,198 (GBP 18.7million). The fair value of Gardaq A/S
was measured based on the cash consideration received in exchange
for 49% of the outstanding shares.
The Corporation has determined that it has a
joint control in Gardaq A/S as decisions around relevant activities
require unanimous shareholder approval. Effective April 13, 2023,
the Corporation’s investment was accounted for as an investment in
joint venture using the equity method. The equity method involves
recording the initial investment at cost and subsequently adjusting
the carrying value of the investment for the Corporation’s
proportionate share of the profit or loss, other comprehensive
income or loss and any other changes in the joint venture’s net
assets, such as further investments or dividends. For the year
ended December 31, 2023 the Corporation recorded the 51% proportion
of net loss from Gardaq of $7,892,387.
7. INVESTMENT
IN EQUITY-ACCOUNTED JOINT ARRANGEMENT (CONT’D)
The following tables summarize the financial
information of Gardaq A/S as of December 31, 2023.
|
As at December 31,
2023 |
|
$ |
Cash and cash
equivalent |
18,377,850 |
Prepaid expenses and other |
351,752 |
Total current assets |
18,729,602 |
Mineral property |
92,239 |
Total Assets |
18,821,841 |
Accounts payable and accrued liabilities |
4,036,532 |
Due to related parties |
13,641 |
Capital stock |
30,246,937 |
Deficit |
(15,475,269) |
Total equity |
14,771,668 |
Total liabilities and equity |
18,821,841 |
|
For the year ended December
31, 2023 |
|
$ |
Exploration and
Evaluation expenses |
13,950,672 |
Interest
expense (income) |
(2,651) |
Foreign
exchange loss (gain) |
(187,011) |
Operating loss |
13,761,010 |
Other expenses (income) |
1,714,260 |
Net loss and comprehensive loss |
15,475,270 |
8. MINERAL
PROPERTIES
|
|
As atDecember
31,2022 |
Transfers (Note 6) |
As atDecember
31,2023 |
|
|
$ |
$ |
$ |
Nalunaq -
Au |
|
1 |
- |
1 |
Tartoq -
Au |
|
18,431 |
- |
18,431 |
Vagar -
Au |
|
11,103 |
- |
11,103 |
Nuna Nutaaq -
Au |
|
6,076 |
- |
6,076 |
Anoritooq -
Au |
|
6,389 |
- |
6,389 |
Siku - Au |
|
6,821 |
- |
6,821 |
Naalagaaffiup
Portornga - Strategic Minerals |
|
6,334 |
(6,334) |
- |
Saarloq -
Strategic Minerals |
|
7,348 |
(7,348) |
- |
Sava -
Strategic Minerals |
|
6,562 |
(6,562) |
- |
Kobberminebugt
- Strategic Minerals |
|
6,840 |
(6,840) |
- |
Stendalen -
Strategic Minerals |
|
4,837 |
(4,837) |
- |
North Sava -
Strategic Minerals |
|
4,837 |
(4,837) |
- |
Total mineral properties |
|
85,579 |
(36,758) |
48,821 |
8. MINERAL
PROPERTIES (CONT’D)
|
|
As atDecember
31,2021 |
Additions |
As atDecember
31,2022 |
|
|
$ |
$ |
$ |
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 |
8.1 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.
8.1.1
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”).
8. MINERAL
PROPERTIES (CONT’D)
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.
8.1.2 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.
8.1.3
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.
8. MINERAL
PROPERTIES (CONT’D)
On the 14th and 15th December 2022 the
Corporation signed Addendum 6 to the Nalunaq licence which amended
certain of the milestone dates pertaining to the licence including
commencing exploitation by 1 January 2026; preparing an
Environmental Impact Assessment (EIA) and Social Impact Assessment
(SIA) by December 2023; negotiating, concluding and performing an
Impact Benefit Agreement (“IBA”) by 31 December 2024. Prior to
commencement of exploitation and no later than December 31, 2025
the licence will be amended to include terms on royalty.
On September 21, 2023 and October 13, 2023 the
Corporation signed Addendum 7 to the Nalunaq Licence which amended
certain of the Milestones pertaining to the licence including
preparing an Environmental Impact Assessment (EIA) and Social
Impact Assessment (SIA) by 30 June 2024. . The addendum became
effective on November 6, 2023, when it was signed by the Government
of Greenland. 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.
8.2 Tartoq - Au
8.2.1 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.
8.2.2 Exploration
commitments
For the exploration licence, Nalunaq A/S 2023
obligation is DKK 2.031.600 of exploration activities in 2023,
which together with the carried forward 2022 licence obligation of
DKK 742,143 will result in DKK 2,773,743 ($543,942 using the
exchange rate as at December 31, 2023) exploration
obligation in 2023 before an approval of 2023 incurred expenses 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 will submit statements of expenses for the
Tartoq exploration licence for the 2023 year to the MLSA by
April 1, 2024.
8.3 Vagar
- Au
8.3.1 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
expired December 31, 2023.
8. MINERAL
PROPERTIES (CONT’D)
The Corporation has applied for an additional 3
years extension and a licence reduction to a total area of 197 km2
and are awaiting final documentation from the Government.
8.3.2 Exploration
commitments
For the exploration licence, Nalunaq A/S shall
complete DKK 16,353,000 of exploration activities in 2023.
2022 carried forward balance was DKK5,716,001, resulting in
DKK 22,069,001 ($4,327,819 using the exchange rate as at
December 31, 2023) exploration obligation in 2023 before
an approval of 2023 incurred expenditures by MLSA. For the purpose
of crediting expenditures against the amounts set forth in the
Vagar Licence, actual expenditures are multiplied by a factor of
between 1.5 and 3, depending upon the type of expenditures made. If
these obligations are not met, certain measures may be taken by the
licence holder to rectify the situation, including reducing the
area of the licence proportionately to the spending shortfall or
rolling over the exploration commitment to the next period subject
to approval from the MLSA. Nalunaq A/S will submit its statements
of expenses for the Vagar exploration licence for the 2023 year to
the MLSA by April 1, 2024.
8.4 Nuna
Nutaaq - Au
8.4.1 Purchase
of the Nuna Nutaaq Licence
The Corporation has acquired the right to
conduct exploration activities on approximately 244km2 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.
8.4.2 Exploration
commitments
In 2023 Nalunaq A/S shall complete
DKK 2,637,920 of exploration activities, received an approval
of 2022 exploration expenses of 3,832,527 and 2022 carried forward
credits of 2,344,489 which results in a total credit of
DKK 3,229,826 for 2023 (credit of $633,382 using the exchange
rate as at December 31, 2023) so there is no exploration
obligation in 2023 which was confirmed by MLSA. For the purpose of
crediting expenditures against the amounts set forth in the Nuna
Nutaaq Licence, actual expenditures are multiplied by a factor of
between 1.5 and 3, depending upon the type of expenditures made. If
these obligations are not met, certain measures may be taken by the
licence holder to rectify the situation, including reducing the
area of the licence proportionately to the spending shortfall or
rolling over the exploration commitment to the next period subject
to approval from the MLSA. Nalunaq A/S will submit statements
of expenses for the Nuna Nutaaq exploration licence for the 2023
year to the MLSA by April 1, 2024.
8.
MINERAL PROPERTIES (CONT’D)
8.5 Anoritooq
- Au
8.5.1 Purchase
of the Anoritooq Licence
The Corporation acquired the right to conduct
exploration activities on approximately 1,185km2 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 1,889km2 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.
8.5.2 Exploration
commitments
In 2023 Nalunaq A/S shall complete
DKK 3,421,080 of exploration activities, received an approval
of 2022 exploration expenses of DKK 969,834 and carry forward of
2022 credits of DKK 738,610 which results in total of
DKK 2,682,470 ($526,043 using the exchange rate as at
December 31, 2023) exploration obligation in 2023 before
an approval of 2023 expenses 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 will submit its
statements of expenses for the Anoritooq exploration licence for
the 2023 year to the MLSA by April 1, 2024.
8.6 Siku
- Au
8.6.1 Purchase
of the Siku Licence
The Corporation acquired the right to conduct
exploration activities on approximately 251km2 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.
8.6.2 Exploration
commitments
For the exploration licence, Nalunaq A/S shall
complete DKK 603,720 of exploration activities in 2023 and
carried forward DKK 296,595 from 2022 resulting in total obligation
balance of DKK 900,315 ($176,555 using the exchange rate as at
December 31, 2023). For the purpose of crediting
expenditures against the amounts set forth in the Siku 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 will submit its
statements of expenses for the Siku exploration licence for the
2023 year to the MLSA by April 1, 2024.
8.
MINERAL PROPERTIES (CONT’D)
8.7 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 intends to reapply
for the prospecting license over East Greenland. 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.
9. CAPITAL
ASSETS
|
Field equipment and infrastructure |
Vehicles and rolling stock |
Equipment (including software) |
Construction In Progress |
Total |
|
$ |
$ |
$ |
$ |
$ |
2022 |
|
|
|
|
|
Opening net
book value |
1,989,114 |
4,304,709 |
156,011 |
7,452,668 |
13,902,502 |
Additions |
- |
- |
179,040 |
69,417 |
248,457 |
Disposals |
- |
(123,360) |
(40,501) |
- |
(163,861) |
Adjustment |
- |
- |
- |
- |
- |
Depreciation |
(253,362) |
(438,965) |
(78,165) |
- |
(770,492) |
Closing net book value |
1,735,752 |
3,742,384 |
216,385 |
7,522,085 |
13,216,606 |
|
|
|
|
|
|
As at
December 31, 2022 |
|
|
|
|
|
Cost |
2,351,041 |
4,466,971 |
313,214 |
7,522,085 |
$14,653,311 |
Accumulated depreciation |
(615,289) |
(724,587) |
(96,829) |
- |
(1,436,705) |
Closing net book value |
1,735,752 |
3,742,384 |
216,385 |
7,522,085 |
13,216,606 |
2023 |
|
|
|
|
|
Opening net
book value |
1,735,752 |
3,742,384 |
216,385 |
7,522,085 |
13,216,606 |
Additions |
- |
- |
- |
25,761,155 |
25,761,155 |
Disposals |
- |
- |
(80,983) |
- |
(80,983) |
Adjustment |
- |
- |
43,054 |
- |
43,192 |
Depreciation |
(198,373) |
(430,266) |
(69,634) |
- |
(698,273) |
Closing net book value |
1,537,379 |
3,312,118 |
108,822 |
33,283,240 |
38,241,559 |
|
|
|
|
|
|
As at
December 31, 2023 |
|
|
|
|
|
Cost |
2,351,041 |
4,466,971 |
232,231 |
33,283,240 |
$40,333,483 |
Accumulated depreciation |
(813,662) |
(1,154,853) |
(123,409) |
- |
(2,091,786) |
Closing net book value |
1,537,379 |
3,312,118 |
108,822 |
33,283,240 |
38,241,559 |
9. 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 $635,773
($721,072 – 2022) was expensed as exploration and evaluation
expenses in 2023.
As of December 31, 2023, the amount of
$33,283,240 ($7,522,085 as at December 31, 2022) 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.
As at December 31, 2023, the Corporation had
capital commitments, of $56,681,735. These commitments relate to
the development of Nalunaq Project, rehabilitation of the Nalunaq
mine, construction of processing plant, purchases of mobile
equipment and establishment of surface infrastructure.
During 2023 the Company capitalised borrowing
costs of $1,457,638 to construction in progress, which are included
in additions.
10. CONVERTIBLE
NOTES
|
Convertible notes loan |
Embedded Derivatives at FVTPL |
Total |
|
$ |
$ |
$ |
Balance as at
December 31, 2022 |
- |
- |
- |
Gross proceeds from
issue |
30,431,180 |
- |
30,431,180 |
Embedded derivative
component |
(19,443,663) |
19,443,663 |
- |
Transaction costs
(note 10.2) |
(362,502) |
- |
(362,502) |
Accretion of
discount |
949,062 |
- |
949,062 |
Accrued
interest |
508,576 |
- |
508,576 |
Fair value
change |
- |
4,536,411 |
4,536,411 |
Foreign exchange loss (gain) |
(319,600) |
- |
(319,600) |
Balance as at December 31, 2023 |
11,763,053 |
23,980,074 |
35,743,127 |
Non-current portion |
- |
- |
- |
Current portion |
11,763,053 |
23,980,074 |
35,743,127 |
10.1 Revolving Credit
Facility
A $25 million (US$18.5 million) Revolving Credit Facility
(“RCF”) provided by Landsbankinn hf. and Fossar Investment Bank,
with a two-year term and priced at SOFR plus 950bps. Interest is
capitalized and payable at the end of the term.
The credit facility is denominated in US Dollars and the SOFR
interest rate is determined with reference to the CME Term SOFR
Rates published by CME Group Inc. The Landsbankinn hf. and Fossar
revolving credit facility carries (i) a commitment fee of 0.40% per
annum calculated on the undrawn facility amount and (ii) an
arrangement fee of 2.00% on the facility amount where 1.5% is to be
paid on or before the closing date of the facility and 0.50% is to
be paid on or before the first draw down. The facility is not
convertible into any securities of the Corporation.
The facility will be secured by (i) a bank account pledge from
the Corporation and Nalunaq A/S, (ii) share pledges over all
current and future acquired shares in Nalunaq A/S and Gardaq A/S
held by the Corporation pursuant to the terms of share pledge
agreements, (iii) a proceeds loan assignment agreement, (iv) a
pledge agreement in respect of owner’s mortgage deeds and (v) a
licence transfer agreement. The Corporation has not yet drawn on
this facility.
10. CONVERTIBLE
NOTES (CONT’D)
10.2 Convertible notes
Convertible notes represent $30.4 million (US$22.4 million)
notes issued to ECAM LP (US$16 million), JLE Property Ltd.
(US$4 million) and Livermore Partners LLC (US$2.4 million)
with a four-year term and a fixed interest rate of 5%. The
conversion price of $0.90 per common share is the closing Canadian
market price of the Amaroq shares on the day, prior to the closing
day of the Debt Financing.
The convertible notes are denominated in US Dollars and will
mature on September 30, 2027, being the date that is four years
from the convertible note offering closing date. The principal
amount of the convertible notes will be convertible, in whole or in
part, at any time from one month after issuance into common shares
of the Corporation ("Common Shares") at a conversion price of $0.90
(£0.525) per Common Share for a total of up to 33,812,401 Common
Shares. The Corporation may repay the convertible notes and accrued
interest at any time, in cash, subject to providing 30 days’ notice
to the relevant noteholders, with such noteholders having the
option to convert such convertible notes into Common Shares at the
conversion price up to 5 days prior to the redemption date. If the
Corporation chooses to redeem some but not all of the outstanding
convertible notes, the Corporation shall redeem a pro rata share of
each noteholder's holding of convertible notes. The Corporation
shall pay a commitment fee to the holders of the convertible notes
of, in aggregate, $5,511,293 (US$4,484,032), which shall be paid
pro rata to each noteholder's holding of convertible notes. The
commitment fee is payable on the earlier of (a) the date falling 20
business days after all amounts outstanding under the Bank
Revolving Credit Facility have been repaid in full, but no earlier
than the date that is 24 months after the date of issuance of the
notes; and (b) the date falling 30 (thirty) months after the date
of the subscription agreement in respect of the notes, irrespective
of whether or not notes have converted at that date or been
repaid.
The convertible notes will be secured by (i) bank account pledge
agreements from the Corporation and Nalunaq A/S, (ii) share pledges
over all current and future acquired shares in Nalunaq A/S and
Gardaq A/S held by the Corporation pursuant to the terms of share
pledge agreements, (iii) a proceeds loan assignment agreement, (iv)
a pledge agreement in respect of owner’s mortgage deeds and (v) a
licence transfer agreement.
The convertible notes represent hybrid financial instruments
with embedded derivatives requiring separation. The debt host
portion (the “Host”) of the instrument is classified at amortized
cost, whereas the aggregate conversion and repayment options (the
“Embedded Derivatives”) are classified at fair value through profit
and loss (FVTPL).
The fair value of the convertible notes at inception was
recognized at $30.4 million (US$22.4 million) and $19.4 million
(US$14.3 million) embedded derivative component was isolated and
determined using a Black Scholes valuation model which required the
use of significant unobservable inputs (note 22.4). As of December
31, 2023 the Corporation identified the fair value of embedded
derivative associated with the early conversion option to be $24.0
million. The change in fair value of embedded derivative in the
period from September 1, 2023 to December 31, 2023 has been
recognized in the statement of Income (loss) and comprehensive
income (loss). The Host liability component at inception, before
deducting transaction costs, was recognized to be the residual
amount of $10.9 million (US$8.1 million) which is subsequently
measured at amortized cost. Transaction costs incurred on the
issuance of the convertible note amounted to $1,004,030, of which
$362,502 was allocated to, and deducted from, the host liability
component, and $641,528 was allocated to the embedded derivative
component and charged to profit and loss.
10. CONVERTIBLE
NOTES (CONT’D)
10.3 Cost Overrun Facility
$13.5 million (US$10 million) Revolving Cost Overrun Facility
from JLE Property Ltd. on the same terms as the Bank Revolving
Credit Facility.
The Overrun Facility is denominated in US Dollars with a
two-year term and will bear interest at the CME Term SOFR Rates by
CME Group Inc. and have a margin of 9.5% per annum. The Overrun
Facility carries a stand-by fee of 2.5% on the amount of committed
funds. The Overrun Facility is not convertible into any securities
of the Corporation.
The Overrun Facility will be secured by (i) bank account pledge
agreements from the Corporation and Nalunaq A/S, (ii) share pledges
over all current and future acquired shares in Nalunaq A/S and
Gardaq A/S held by the Corporation pursuant to the terms of share
pledge agreements, (iii) a proceeds loan assignment agreement, (iv)
a pledge agreement in respect of owner’s mortgage deeds and (v) a
licence transfer agreement. The Corporation has not yet
drawn on this facility.
11. LEASE
LIABILITIES
|
As atDecember
31,2023 |
As atDecember
31,2022 |
|
$ |
$ |
Balance
beginning |
729,237 |
763,913 |
Lease
payment |
(105,894) |
(88,245) |
Interest |
34,097 |
37,523 |
Adjustment |
- |
16,046 |
Balance ending |
657,440 |
729,237 |
Non-current portion – lease liabilities |
(577,234) |
(657,440) |
Current portion – lease liabilities |
80,206 |
71,797 |
Maturity analysis:
2024 |
108,345 |
2025 |
108,836 |
2026 |
108,836 |
2027 |
108,836 |
2028 |
108,836 |
Onwards |
235,809 |
Undiscounted lease payments |
779,498 |
Less: unearned interest |
(122,058) |
|
657,440 |
11. LEASE
LIABILITIES (CONT’D)
11.1
Right of use asset
|
As at |
As at |
|
December 31, |
December 31, |
|
2023 |
2022 |
|
$ |
$ |
Opening net book value |
655,063 |
740,150 |
Additions |
- |
- |
Disposals |
- |
- |
Adjustment |
- |
(4,880) |
Amortisation |
(80,207) |
(80,207) |
Closing net book value |
574,856 |
655,063 |
|
|
|
Cost |
836,200 |
836,200 |
Accumulated amortisation |
(261,344) |
(181,137) |
Closing net book value |
574,856 |
655,063 |
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.
Amortisation of right-of-use assets is being recorded in general
and administrative expenses in the consolidated statement of
comprehensive loss, under depreciation. Amortisation of $80,207
($80,207 in 2022) was expensed as general and administration
expenses in 2023.
12. SHARE
CAPITAL
12.1 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.
12.2 Nasdaq
Main Market Listing in Iceland
Subsequent to the approval by the Central Bank of Iceland (the
“FSA”) and satisfaction of all Nasdaq Main Market requirements the
Corporation transferred all depository receipts from the Nasdaq
First North Growth Market to the Nasdaq Main Market with the first
day of trading on September 21, 2023. The mainboard
listing in Iceland do not affect any shares traded on AIM or the
TSX-V.
13. STOCK-BASED
COMPENSATION
13.1
Stock options
An incentive stock option plan (the “Plan”) was
approved initially in 2017 and renewed by shareholders on
June 15, 2023. 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 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.
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.
On July 24, 2023, the Corporation granted an
on-hire incentive stock option award to a new senior employee of
Amaroq. The option award gives the employee the right to acquire up
to 19,480 common shares under the Corporation's stock option Plan.
The option has an exercise price of $0.77 per share which vested on
October 24, 2023. The option will expire if it remains unexercised
five years from the date of the award.
13. STOCK-BASED
COMPENSATION (CONT’D)
On December 20, 2023, the Corporation granted
its employees 61,490 stock options with an exercise price of $1.09
and expiry date of December 20, 2028. 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 $36,894
for an estimated fair value of $0.60 per option.
The fair value of each option granted was
estimated at the time of grant using the Black-Scholes option
pricing model. Black-Scholes is a pricing model used to determine
the fair price or theoretical value for a call or a put option
based on the following assumptions at the measurement date:
|
December 31, 2023 |
December 31,2022 |
Risk free rate |
3.1% - 3.7% |
1.5% - 3.3% |
Expected life
(years) |
5 years |
5 years |
Volatility |
68.0% - 61.6% |
68.9% - 69.4% |
Share price at date
of grant |
$0.77 - $1.09 |
$0.60 - $0.75 |
Fair value per option |
$0.46 - $0.60 |
$0.35 - $0.44 |
The total share-based payment expenses related
to the options and the amount credited to contributed surplus were
$52,303 ($2,046,342 for the year ended December 31, 2022). The
following table outlines the activity for stock options for the
years ended December 31, 2023, and 2022:
Changes in stock options are as follow:
|
2023 |
2022 |
|
Number of options |
Weighted average exercise price |
Number of options |
Weighted average exercise price |
|
|
$ |
|
$ |
Balance,
beginning |
10,717,395 |
0.57 |
6,935,000 |
0.51 |
Granted |
80,970 |
1.01 |
5,542,395 |
0.63 |
Expired |
- |
- |
(1,500,000) |
0.53 |
Exercised |
(1,610,000) |
0.46 |
(260,000) |
0.50 |
Balance, end |
9,188,365 |
0.59 |
10,717,395 |
0.57 |
Balance, end exercisable |
9,188,365 |
0.59 |
10,684,062 |
0.57 |
From the options exercised during the period ended December 31,
2023, 1,012,971 shares were withheld to cover the stock option
grant price and related taxes.
13. STOCK-BASED
COMPENSATION (CONT’D)
Stock options outstanding and exercisable as at December 31,
2023 are as follows:
Number of options outstanding |
Number of options exercisable |
Exerciseprice |
Expiry date |
|
|
$ |
|
1,670,000 |
1,670,000 |
0.38 |
December 31, 2025 |
1,395,000 |
1,395,000 |
0.70 |
December 31, 2026 |
100,000 |
100,000 |
0.50 |
September 13, 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 |
19,480 |
19,480 |
0.77 |
July 24, 2028 |
61,490 |
61,490 |
1.09 |
December 20, 2028 |
9,188,365 |
9,188,365 |
|
|
13.2
Restricted Share Unit
Conditional awards under the
RSU
13.2.1 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.
13. STOCK-BASED
COMPENSATION (CONT’D)
The Corporation’s starting market capitalization
is based on a fixed share price of $0.552. Value created by share
price growth and dividends paid at each measurement date will be
calculated with reference to the average closing share price over
the three months ending on that date.
- After December 31, 2023, 100%
of the pool value at the First Measurement Date is delivered as
restricted share units under the RSU Plan, subject to the maximum
number of shares that can be allotted not being exceeded.
- After December 31, 2024, the
pool value at the Second Measurement Date is reduced by the pool
value from the First Measurement Date (increased in line with share
price movements between the First and Second Measurement Dates).
100% of the remaining pool value, if any, is delivered as
restricted share units under the RSU Plan.
- After December 31, 2025, the
pool value at the Third Measurement Date is reduced by the pool
value from the Second Measurement Date (increased in line with
share price movements between the Second and Third Measurement
Dates), and then further reduced by the pool value from the First
Measurement Date (increased in line with share price movements
between the First Measurement Date and the Third Measurement Date).
100% of the remaining pool value, if any, is delivered as
restricted share units under the RSU Plan.
13.2.2 RSU Plan Amendment
The RSU Plan was amended by a shareholders
General Meeting on June 15, 2023. As a result of the amendment the
number of shares that could be issued under the RSU Plan to satisfy
the conditional awards and other share awards was increased from
10% of a fixed share capital amount of 177,098,740 shares to 10% of
share capital at the time of award, amounting to 10% of 263,073,022
shares, reduced by the number of outstanding options at each
calculation date. As a result, an additional expense based on the
difference between the fair value of the conditional awards before
and after the modification will be recognised over the service
period. The incremental fair value was determined and incorporated
info the valuation in 12.2.2.
13.2.3 New Conditional Award under RSU
Plan
On 13 October 2023, Amaroq made an award (the
“Award”) under the RSU Plan as detailed below. The Award consists
of a conditional right to receive value if the future performance
targets, applicable to the Award, are met. Any value to which the
participants are eligible in respect of the Award will be granted
as Restricted Share Units (each an “RSU”), with each RSU entitling
a participant to receive common shares in the Corporation. Each RSU
will be granted under, and governed in accordance with, the rules
of the Corporation's Restricted Share Unit Plan.
Award Date |
October 13, 2023 |
Initial Price |
CAD 0.552 |
Hurdle Rate |
10% p.a. above the Initial Price |
Total Pool |
10% of the growth in value above the Hurdle rate, not exceeding 10%
of the Corporation’s share capital.The number of shares will be
determined at the Measurement Dates. |
Participant proportion |
Edward Wyvill, Corporate Development 10% |
Performance Period |
January 1, 2022 to December 31, 2025 (inclusive) |
Normal Measurement Dates |
First Measurement Date: December 31, 2023, 50% vesting on the
first anniversary of grant, with the remaining 50% vesting on the
third anniversary of grant. Second Measurement Date:
December 31, 2024, 50% vesting on the first anniversary of
grant, with the remaining 50% vesting on the second anniversary of
grant. Third Measurement Date: December 31, 2025, vesting on
the first anniversary of grant. |
13. STOCK-BASED
COMPENSATION (CONT’D)
13.2.4 Valuation
The fair value of the award granted in December
2022 and modified June 2023, in addition to the award granted
October 13, 2023, increased to $7,378,000 based on 90% of the
available pool being awarded. A charge of $1,856,000 was recorded
during the year ended December 31, 2023 (nil in the year ended
December 31, 2022).
The fair value was obtained through the use of a
Monte Carlo simulation model which calculates a fair value based on
a large number of randomly generated projections of the
Corporation’s share price.
Assumption |
Value |
Grant date |
December 30, 2022 |
Amendment date |
June 15, 2023 |
Additional award date |
October 13, 2023 |
Expected life (years) |
2.22 – 3.00 |
Share price at grant date |
$0.70 - $0.97 |
Exercise price |
N/A |
Dividend yield |
0% |
Risk-free rate |
3.60% - 4.71% |
Volatility |
55% - 72% |
Fair value of
awards - First Measurement Date |
$4,420,000 |
Fair value of
awards - Second Measurement Date |
$1,946,000 |
Fair value of
awards - Third Measurement Date |
$1,012,000 |
Total fair value of awards (90% of pool) |
$7,378,000 |
Expected volatility was determined from the
daily share price volatility over a historical period prior to the
date of grant with length commensurate with the expected life. A
zero dividend yield has been used based on the dividend yield as at
the date of grant.
14. 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.
15. EMPLOYEE
REMUNERATION
Salaries
|
2023 |
2022 |
|
$ |
$ |
Salaries |
4,635,391 |
3,502,513 |
Director’s
fees |
631,667 |
628,000 |
Benefits |
380,839 |
590,407 |
|
5,647,897 |
4,720,920 |
Less: salaries and benefits presented in E&E expenses |
(704,620) |
(904,888) |
Salaries and directors’ fees disclosed in general and
administrativeexpenses |
4,943,277 |
3,816,032 |
16. EXPLORATION
AND EVALUATION EXPENSES
2023 |
Nalunaq |
Vagar |
Nuna Nutaaq |
Anoritooq |
Saarloq |
Sava |
Kobberminebugt |
Stendalen |
North Sava |
Total |
|
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
Geology |
385,796 |
- |
30,056 |
- |
(1,921) |
(59,660) |
(16,914) |
(20,202) |
(34,913) |
282,242 |
Lodging and
on-site support |
305,808 |
- |
- |
- |
(854) |
(29,413) |
(5,737) |
(5,676) |
(8,791) |
255,337 |
Drilling |
1,354,447 |
- |
- |
- |
- |
(144,019) |
- |
- |
- |
1,210,428 |
Analysis |
32,177 |
156 |
- |
- |
(87) |
(25,060) |
(1,035) |
(173) |
- |
5,978 |
Geophysics
survey |
- |
- |
- |
- |
- |
- |
- |
- |
(416,177) |
(416,177) |
Transport |
800,247 |
3,922 |
- |
- |
(442) |
(37,154) |
(2,450) |
(2,290) |
(3,256) |
758,577 |
Supplies and
equipment |
1,498,097 |
- |
- |
- |
(661) |
(18,736) |
(7,148) |
(7,779) |
(13,575) |
1,450,198 |
Helicopter
Charter |
1,210,601 |
14,007 |
- |
- |
- |
(241,390) |
(13,072) |
- |
- |
970,146 |
Logistic
support |
- |
- |
- |
- |
(3,316) |
(16,275) |
(12,479) |
(9,796) |
(9,643) |
(51,509) |
Maintenance
infrastructure |
1,641,203 |
1,569 |
- |
- |
(1,544) |
(83,364) |
(23,521) |
(26,700) |
(48,770) |
1,458,873 |
Project
Engineering costs |
55,792 |
- |
- |
- |
- |
- |
- |
- |
- |
55,792 |
Government fees |
- |
994 |
- |
- |
- |
- |
- |
- |
- |
994 |
Exploration and evaluation
expenses
before
depreciation |
7,284,168 |
20,648 |
30,056 |
- |
(8,825) |
(655,071) |
(82,356) |
(72,616) |
(535,125) |
5,980,879 |
Depreciation |
635,773 |
- |
- |
- |
- |
- |
- |
- |
- |
635,773 |
Exploration and
evaluation
expenses |
7,919,941 |
20,648 |
30,056 |
- |
(8,825) |
(655,071) |
(82,356) |
(72,616) |
(535,125) |
6,616,652 |
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
depreciation |
8,611,326 |
1,437,377 |
435,571 |
96,270 |
8,823 |
699,991 |
82,356 |
72,616 |
535,124 |
11,979,454 |
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 |
16.
EXPLORATION AND EVALUATION EXPENSES (CONT’D)
Exploration and Evaluation expenses for the
period of twelve months ended December 31, 2023 are net of
$1,353,993 of Exploration and Evaluation expenses incurred by
Nalunaq A/S during the period from June 9 2022 to April 13, 2023
for the six non-gold strategic mineral licenses that have been
transferred from Nalunaq A/S to Gardaq A/S (Note 21.1).
17. GENERAL
AND ADMINISTRATIVE
|
2023 |
2022 |
|
$ |
$ |
Salaries and
benefits |
4,311,610 |
3,188,032 |
Director’s
fees |
631,667 |
628,000 |
Professional
fees |
3,298,134 |
2,258,660 |
Marketing and
industry involvement |
713,161 |
598,447 |
Insurance |
289,042 |
341,793 |
Travel and
other expenses |
1,383,767 |
746,180 |
Regulatory fees |
953,521 |
212,939 |
General and administration before following
elements |
11,580,902 |
7,974,051 |
Stock-based
compensation (note 13.1) |
1,908,303 |
2,046,342 |
Depreciation |
142,707 |
129,627 |
General and administrative |
13,631,912 |
10,150,020 |
18. FINANCE
COSTS
|
2023 |
2022 |
|
$ |
$ |
Lease interest
(note 11) |
34,097 |
37,523 |
Other finance costs |
223 |
- |
Finance costs |
34,320 |
37,523 |
19. 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:
|
2023 |
2022 |
|
$ |
$ |
Net loss
before income taxes |
(833,513) |
(21,898,963) |
Income tax
rates |
26.5% |
26.5% |
Income tax
recovery |
(220,881) |
(5,803,225) |
|
|
|
Increase
(decrease) attributable to: |
|
|
Non deductible
expenses |
1,971,160 |
547,829 |
Difference in
statutory tax rate |
(234,138) |
213,652 |
Changes in
unrecognized deferred tax assets |
(1,516,141) |
5,041,744 |
Tax recovery |
- |
- |
19. INCOME
TAXES (CONT’D)
The analysis of the Corporation’s deferred tax
assets and liabilities as at December 31, 2023 and 2022 is as
follows:
|
2023 |
2022 |
|
$ |
$ |
Deferred tax
assets (liabilities): |
|
|
Capital
assets |
(718,851) |
(636,131) |
Non-capital
losses |
718,851 |
636,131 |
|
- |
- |
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, 2023 are as follows:
Greenland |
|
As atDecember 31,
2023 |
|
|
$ |
Non-capital losses carry forwards |
|
58,120,333 |
As the Corporation is a mineral licence holder,
the non-capital losses in Greenland have no expiration date.
Canada |
|
As atDecember 31, 2023 |
|
|
$ |
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 |
|
7,680,772 |
Non-capital losses carry forwards expiring in 2044 |
|
10,153,386 |
20. NET LOSS PER
SHARE
The calculation of basic and diluted net loss
per share for the year ended December 31, 2023, was based
on the net loss attributable to shareholders of $833,513
($21,898,963 for the year ended December 31, 2022) and
the weighted average number of common shares outstanding for the
year ended December 31, 2023 of 272,623,548 (191,575,781
for the year ended December 31, 2022). As a result of the
net loss for the years ended December 31, 2023 and 2022,
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.
|
|
2023 |
2022 |
|
|
$ |
$ |
Net income (loss) and comprehensive income
(loss) |
|
(833,513) |
(21,898,963) |
|
|
|
|
Weighted average
number of common shares outstanding - basic |
|
272,623,548 |
191,575,781 |
Weighted average
number of common shares outstanding – diluted |
|
272,623,548 |
191,575,781 |
Basic earnings
(loss) per share |
|
(0.003) |
(0.11) |
Diluted earnings (loss) per common share |
|
(0.003) |
(0.11) |
21. RELATED
PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
21.1 Gardaq Joint Venture
|
|
|
2023 |
2022 |
|
$ |
$ |
Project
management income |
1,714,559 |
- |
E&E
expenses (Note 16) |
4,352,897 |
- |
|
6,067,456 |
- |
As at December 31, 2023, the balance receivable
from Gardaq amounted to $3,521,938 ($nil as at
December 31, 2022). This receivable balance represents
the current balance of project management costs and exploration and
evaluation costs incurred by the Corporation for six strategic
minerals licenses transferred from Nalunaq A/S to Gardaq A/S. The
exploration and evaluation costs incurred by the Corporation are
transferred to Gardaq A/S from Nalunaq A/S in accordance with the
respective clauses of the SSHA. (Note 16).
21.2 Key Management Compensation
The Corporation’s key management are the members
of the board of directors, the President and Chief Executive
Officer, the Chief Financial Officer, the Vice President
Exploration and the Corporate Secretary. Key management
compensation is as follows:
|
2023 |
2022 |
|
$ |
$ |
Short-term
benefits |
|
|
Professional
fees |
- |
- |
Salaries and
benefits |
3,209,409 |
2,104,440 |
Salaries and
benefits included in the E&E expenses |
- |
- |
Director’s
fees |
631,667 |
628,000 |
Long-term
benefits |
|
|
Stock-based
compensation (note 13.1) |
1,716,000 |
1,117,000 |
Total compensation |
5,557,076 |
3,849,440 |
21. RELATED
PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
(CONT’D)
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:
|
2023 |
2022 |
|
Short-term benefits (a) |
Stock-based compensation |
Total compensation |
Short-term benefits (a) |
Stock-based compensation |
Total compensation |
|
$ |
$ |
$ |
$ |
$ |
$ |
Eldur
Olafsson |
1,553,155 |
- |
1,553,155 |
801,935 |
385,000 |
1,186,935 |
Jaco Crouse |
841,207 |
- |
841,207 |
496,699 |
315,000 |
811,699 |
Graham Stewart |
181,000 |
- |
181,000 |
181,000 |
- |
181,000 |
Sigurbjorn Thorkelsson |
86,000 |
- |
86,000 |
86,000 |
- |
86,000 |
Liane Kelly |
89,667 |
- |
89,667 |
86,000 |
- |
86,000 |
Line Frederiksen |
86,000 |
- |
86,000 |
86,000 |
- |
86,000 |
David Neuhauser |
86,000 |
- |
86,000 |
86,000 |
- |
86,000 |
Warwick Morley-Jepson |
103,000 |
- |
103,000 |
103,000 |
- |
103,000 |
Total compensation |
3,026,029 |
- |
3,026,029 |
1,926,634 |
700,000 |
2,626,634 |
(a) Short-term
benefits comprise salary, director fees as applicable, annual bonus
and pension.
During 2023 certain directors acquired
additional shares (net of shares withheld) by exercising their
options. During 2022, the directors participated in the
November 3, 2022 fundraising for $2,700,132. The director
participation is as follows:
|
2023 |
2022 |
|
Number of new shares |
Number of new shares |
Eldur Olafsson |
228,571 |
814,162 |
Jaco
Crouse |
- |
285,714 |
Graham Stewart |
57,534 |
142,857 |
Sigurbjorn Thorkelsson |
- |
1,444,424 |
David Neuhauser |
- |
2,285,714 |
Total |
286,105 |
4,972,871 |
During 2024, a director of the Company participating in the 13
February 2024 fundraiser and acquired an additional 2,700,000 new
common shares in the Company as a result (Note 23).
22. 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.
22.1
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.
22.2
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, 2023 |
As at December 31, 2022 |
|
Trade and other payables |
Convertible Notes |
Lease liabilities |
Trade and other payables |
Lease liabilities |
|
$ |
$ |
$ |
$ |
$ |
Within 1 year |
6,273,978 |
- |
108,345 |
1,138,961 |
105,894 |
1 to 5 years |
- |
35,743,127 |
544,178 |
- |
434,852 |
5 to 10 years |
- |
- |
126,975 |
- |
344,646 |
Total |
6,273,978 |
35,743,127 |
779,498 |
1,138,961 |
885,392 |
22. FINANCIAL
INSTRUMENTS (CONT’D)
22.3
Currency risk
As at December 31, 2023 and 2022, 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, 2023 |
|
In DKK |
In Euros |
In US$ |
In GBP |
|
|
|
|
|
|
Cash |
|
3,307,004 |
511,458 |
9,913,039 |
3,106,964 |
Escrow account for
environmental monitoring |
|
3,054,191 |
- |
- |
- |
Prepaid expenses
and others |
|
7,868,890 |
7,637,896 |
680,855 |
3,092 |
Trade and other
payables |
|
(8,242,210) |
(107,103) |
(282,634) |
(20,476) |
Convertible notes
loan (note 10) |
|
- |
- |
(8,879,786) |
- |
|
|
5,987,875 |
8,042,251 |
1,431,474 |
3,089,580 |
Exchange rate |
|
0.1961 |
1.4620 |
1.3247 |
1.6863 |
Equivalent to CAD |
|
1,174,222 |
11,757,771 |
1,896,274 |
5,209,959 |
Based on the above net exposures as at December
31, 2023, 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 $2,003,823.
As at December 31, 2022 |
|
In DKK |
In Euros |
In US$ |
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.
22.4
Fair value
Financial assets and liabilities recognized or
disclosed at fair value are classified in the fair value hierarchy
based upon the nature of the inputs used in the determination of
fair value. The levels of the fair value hierarchy are:
• Level 1 - Quoted
prices (unadjusted) in active markets for identical assets or
liabilities • Level
2 - Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices)
• Level 3 - Inputs
for the asset or liability that are not based on observable market
data (i.e., unobservable inputs)
22. FINANCIAL
INSTRUMENTS (CONT’D)
The following table summarizes the carrying value of the
Corporation’s financial instruments:
|
December 31, 2023 |
December 31, 2022 |
|
$ |
$ |
Cash |
21,014,633 |
50,137,569 |
Trade and other receivables |
3,521,938 |
- |
Sales tax receivable |
69,756 |
95,890 |
Deposit |
27,944 |
27,944 |
Investment in equity-accounted joint arrangement |
23,492,811 |
- |
Escrow account for environmental monitoring |
598,939 |
427,120 |
Accounts payable and accrued liabilities |
(6,273,979) |
(1,138,961) |
Convertible notes |
(35,743,127) |
- |
Lease liabilities |
(657,440) |
(729,237) |
Due to the short-term maturities of cash, trade
and other receivables, and accounts payable and accrued
liabilities, the carrying amounts of these financial instruments
approximate fair value at the respective balance sheet date.
The carrying value of the convertible note
instrument approximates its fair value at maturity and includes the
embedded derivative associated with the early conversion option and
the host liability at amortized cost. The embedded derivative’s
valuation model uses historical volatility as an estimate of
current market expectations of volatility. Volatility is an
unobservable input and changes in the estimate of volatility
impacts the fair value of the embedded derivative and profit and
loss. The follow table displays the sensitivity of the embedded
derivative’s fair value to changes in the volatility estimate as of
December 31, 2023:
Change in volatility |
Volatility |
Fair Value of Embedded Derivative |
Change in Fair Value |
Impact on Profit and Loss |
% |
% |
$ |
$ |
$ |
0 |
63.73% |
23,980,074 |
- |
- |
+5% |
66.92% |
24,575,411 |
595,336 |
(595,336) |
+15% |
73.29% |
25,741,602 |
1,761,527 |
(1,761,527) |
+25% |
79.67% |
26,869,400 |
2,889,325 |
(2,889,325) |
-5% |
60.55% |
23,378,006 |
(602,068) |
602,068 |
-15% |
54.17% |
22,159,072 |
(1,821,003) |
1,821,003 |
-25% |
47.80% |
20,931,967 |
(3,048,107) |
3,048,107 |
The carrying value of lease liabilities
approximate their fair value based upon a discounted cash flows
method using a discount rate that reflects the Corporation’s
borrowing rate at the end of the period.
23. SUBSEQUENT
EVENTS
23.1
Fundraising
On February 13, 2024, the Company announced the
successful completion of its oversubscribed fundraising which
resulted in a total of 62,724,758 new common shares being
conditionally placed with new and existing institutional investors
at a placing price of 74 pence (CAD $1.25 at the closing exchange
rate on 9 February 2024). The placing price represents a 5.7%
premium to the closing share price on 9 February 2024 on the AIM
exchange. The fundraising will consist of:
- A placing of new common shares with
new and existing institutional investors at the placing price (the
“UK Placing”). Stifel Nicolaus Europe Limited is acting as the sole
bookrunner and broker on the UK Placing.
- A placing of new depository
receipts representing new common shares with new and existing
investors at the placing price (the “Icelandic Placing”).
Landsbankinn hf. And Fossar fjarfestingarbanki hf. Are acting as
joint bookrunners on the Icelandic Placing and Landsbankinn hf. Is
acting as underwriter.
- A private placement of new common
shares by certain existing institutional investors and a director
of the Company at the placing price (the “Canadian Subscription”).
The Director has committed to subscribe to approximately CAD $3.4
million (equivalent to GBP 2.0 million) in the fundraising.
As a result of the subscription, net proceeds of
approximately GBP 44 million (CAD 75 million) have been raised,
exceeding the initial targeted amount of GBP 30 million. The shares
subscribed to, when issued, will be credited as fully paid and will
rank pari passu in all respects with the existing common shares of
the Company. Following the admission of the subscribed shares,
Amaroq’s total issued share capital will consist of 326,455,446
common shares.
The proceeds of the fund will be used to further
advance exploration at the Company’s Vagar and Nanoq licenses and
to fund an additional capital injection into its Gardaq joint
venture, as well as to accelerate mining and development of the
Company’s Nalunaq gold project.
The Fundraising closed on February 23, 2024.
23.1.1 Related party
transaction
Amaroq director, Sigurbjorn Throkelsson, has
participated in the Canadian Subscription acquiring a total of
2,700,000 new common shares representing gross proceeds of CAD 3.4
million (GBP 2.0 million) via Klettar LP (in which he is a sole
beneficiary).
23. SUBSEQUENT
EVENTS (CONT’D)
23.2 Awards under Restricted Share Units
Plan (“RSU”)
On 23 February
2024, in alignment with the Company’s RSU plan dated 15 June 2023,
the Company granted an award (the “Award”) to directors and
employees of the Company as listed in the table below.
Conditional
awards were granted to participants on 30 December 2022 and 13
October 2023. The performance period runs from 1 January 2022 to 31
December 2025 with measurement dates at 31 December 2023, 31
December 2024 and 31 December 2025.
The details of the Award are as follows:
Award Date |
23 February 2024 |
Initial Price |
CAD 0.552 |
Hurdle Rate |
10% p.a. above the Initial Price |
Total Pool |
10% of the growth in value above the Hurdle rate, not exceeding 10%
of the Company’s share capitalThe number of shares is determined at
the Measurement Dates |
Participants, proportions and number of shares subject to RSU |
Participant |
Proportion (%) |
Number of shares subject to RSU |
Eldur Olafsson, CEO |
40% |
3,805,377 shares |
Jaco Crouse, CFO
|
20% |
1,902,688 shares |
Joan Plant, Executive VP |
10% |
951,344 shares |
James Gilbertson, VP Exploration
|
10% |
951,344 shares |
Edward Wyvill, Corporate Development |
10% |
951,344 shares |
First Measurement Date: |
31 December 202350% of the Shares will vest on the first
anniversary of grant, with the remaining 50% vesting on the third
anniversary of grant. |
Amaroq Minerals (TSXV:AMRQ)
과거 데이터 주식 차트
부터 4월(4) 2024 으로 5월(5) 2024
Amaroq Minerals (TSXV:AMRQ)
과거 데이터 주식 차트
부터 5월(5) 2023 으로 5월(5) 2024