Quarterly Report • Aug 29, 2023
Quarterly Report
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TORONTO, ONTARIO - 29 August 2023 - Amaroq Minerals Ltd. (AIM, TSXV, NASDAQ First North: AMRQ), an independent mine development company with a substantial land package of gold and strategic mineral assets in Southern Greenland, is pleased to present its Q2 2023 Financial Results.
"I am pleased to provide an update on our activities in Q2 2023. Most notably during this period, we have been focused on preparations for initial mining activities at Nalunaq. Our programme is progressing on plan and to budget, with rehabilitation works due to commence shortly, and first gold production anticipated next year.
"Exploration activities within our strategic minerals JV are ramping up, most notably across the Sava Copper Belt, where we have established a new 20-person camp and are commencing drilling at our first target, as we look to improve our understanding of this emerging high potential resource."
◦ Amaroq is progressing the construction of a robust geological and mineralisation model to inform future exploration at Vagar, including additional data collection and review and further
◦ Completion of a high-resolution MT survey over the entire licence, with results expected in Q3 2023.
◦ Reconnaissance exploration conducted over licence area, with the assistance of the University of St Andrews, to assess REE and critical metal potential. Full results and interpretations are expected through Q3 and Q4 2023.
The following selected financial data is extracted from the Financial Statements for the three months ended June 30, 2023.
| Six months ended June 30 | ||
|---|---|---|
| 2023\$ | 2022\$ | |
| Exploration and evaluation expenses | 3,459,846 | 5,435,831 |
| Site development costs | 1,825,563 | - |
| General and administrative | 5,383,216 | 5,086,708 |
| (Gain) on loss of control of subsidiary | (31,340,880) | - |
| Share of 6-months loss of an equity-accounted joint arrangement |
1,639,482 | - |
| Net income (loss) and comprehensive income (loss) |
19,980,808 | (10,460,137) |
| Basic and diluted income (loss) per common share |
0.07 | (0.06) |
| As at June 30 | As at March 31 | |
|---|---|---|
| 2023\$ | 2023\$ | |
| Cash on hand | 39,669,852 | 46,784,407 |
| Total assets | 87,686,844 | 62,010,593 |
| Total current liabilities | 2,980,657 | 1,729,851 |
| Shareholders' equity | 84,089,457 | 60,280,742 |
| Working capital | 41,017,725 | 46,738,567 |
Ends
Amaroq Minerals Ltd. Eldur Olafsson, Executive Director and CEO [email protected]
Eddie Wyvill, Corporate Development +44 (0)7713 126727 [email protected]
Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)
Callum Stewart Varun Talwar Simon Mensley Ashton Clanfield
+44 (0) 20 7710 7600
John Prior Hugh Rich Dougie Mcleod +44 (0) 20 7886 2500
Landsbankinn hf. (Listing Agent) Ellert Arnarson [email protected]
Billy Clegg Elfie Kent Charlie Dingwall +44 (0) 20 3757 4980
Follow @Amaroq_minerals on Twitter Follow Amaroq Minerals Inc. on LinkedIn
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.
| Ag | silver |
|---|---|
| Au | gold |
| Bt | Billion tonnes |
| Cu | copper |
| g | grams |
| g/t | grams per tonne |
| km | kilometers |
| Koz | thousand ounces |
| m | meters |
| Mo | molybdenum |
| MRE | Mineral Resource Estimate |
| Nb | niobium |
| Ni | nickel |
| oz | ounces |
| REE | Rare Earth Elements |
| t | tonnes |
| Ti | Titanium |
| t/m3 | tonne per cubic meter |
| U | uranium |
| USD/ozAu | US Dollar per ounce of gold |
| V | Vanadium |
| Zn | zinc |
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").
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.
| 2023 \$ 39,669,852 2,218,604 78,885 2,031,041 43,998,382 27,944 29,745,716 424,640 48,821 13,441,341 43,688,462 87,686,844 |
2022 \$ 50,137,569 - 95,890 450,290 50,683,749 27,944 - 427,120 85,579 13,871,669 14,412,312 65,096,061 |
|---|---|
| 2,903,747 | 1,138,961 |
| 76,910 | 71,797 |
| 2,980,657 | 1,210,758 |
| 616,730 | 657,440 |
| 616,730 | 657,440 |
| 3,597,387 | 1,868,198 |
| 131,708,387 | |
| 5,250,865 | |
| (36,772) | |
| (73,694,617) | |
| 63,227,863 | |
| 65,096,061 | |
| 131,837,145 6,002,893 (36,772) (53,713,809) 84,089,457 87,686,844 |
Subsequent events 14
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| Three monthsended June 30, | Six monthsended June 30, | ||||
|---|---|---|---|---|---|
| Notes | 2023 | 2022 | 2023 | 2022 | |
| \$ | \$ | \$ | \$ | ||
| Expenses | |||||
| Exploration and evaluation expenses | 8 | 2,278,193 | 4,425,501 | 3,459,846 | 5,435,831 |
| Site development costs | 9 | 1,825,564 | - | 1,825,564 | - |
| General and administrative | 10 | 2,806,181 | 2,097,937 | 5,383,216 | 5,086,708 |
| Loss on disposal of capital assets | - | - | 37,791 | - | |
| Foreign exchange loss (gain) | 171,828 | (173,880) | (25,175) | (26,693) | |
| Operating loss | 7,081,766 | 6,349,558 | 10,681,242 | 10,495,846 | |
| Other expenses (income) | |||||
| Interest income | (240,268) | (34,392) | (471,588) | (54,717) | |
| Project management income | 11 | (506,640) | - | (506,640) | - |
| Gain on loss of control of subsidiary | 3 | (31,340,880) | - | (31,340,880) | - |
| Share of loss of an equity-accounted | |||||
| joint arrangement | 3 | 1,639,482 | - | 1,639,482 | - |
| Finance costs | 8,839 | 9,473 | 17,576 | 19,008 | |
| Net income (loss) and | 23,357,701 | (6,324,639) | 19,980,808 | (10,460,137) |
| comprehensive income (loss) | |||||
|---|---|---|---|---|---|
| Weighted average number of | |||||
| common shares outstanding - basic Weighted average number of |
263,281,297 | 177,109,616 | 263,242,536 | 177,104,206 | |
| common shares outstanding - diluted | 273,398,692 | 188,107,949 | 273,359,931 | 188,102,539 | |
| Basic earnings (loss) per share | 12 | 0.09 | (0.04) | 0.08 | (0.06) |
| Diluted earnings (loss) per common | |||||
| share | 12 | 0.09 | (0.04) | 0.07 | (0.06) |
| Effect of dilution | - | - | 0.01 | - | |
| Share options | 10,117,395 | 10,998,333 | 10,117,395 | 10,998,333 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| Number of | Accumulated other |
|||||||
|---|---|---|---|---|---|---|---|---|
| common | Contributed | comprehensive | ||||||
| Notes | sharesoutstandingCapitalStock | surplus | loss | Deficit | TotalEquity | |||
| \$ | \$ | \$ | \$ | \$ | ||||
| Balance at 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 |
- | - | - | -(10,460,137)(10,460,137) | ||||
| Options exercised |
110,000 | 95,700 | (40,700) | - - |
55,000 | |||
| Stock-based compensation |
- | - | 1,480,560 | - - |
1,480,560 | |||
| Balance at June 30, 2022 |
177,208,737 | 88,595,905 | 4,740,583 | (36,772)(62,255,791) | 31,043,925 | |||
| Balance at January 1, 2023 Net income and |
263,073,022 131,708,387 | 5,250,865 | (36,772)(73,694,617) | 63,227,863 | ||||
| comprehensive income |
- | - | - | - 19,980,808 |
19,980,808 | |||
| Options exercised, net Stock-based |
7 | 208,275 | 128,758 | (150,000) | - - |
(21,242) | ||
| compensation | 7 | - | - | 902,028 | - - |
902,028 | ||
| Balance at June 30, 2023 |
263,281,297 131,837,145 | 6,002,893 | (36,772)(53,713,809) | 84,089,457 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| Notes | Six monthsended June 30, | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| \$ | \$ | |||
| Operating activities | ||||
| Net income (loss) for the period | 19,980,808 | (10,460,137) | ||
| Adjustments for: | ||||
| Depreciation | 5 | 392,537 | 418,075 | |
| Stock-basedcompensation | 7 | 902,028 | 1,480,560 | |
| Gain on loss of control of subsidiary | 3 | (31,340,880) | - | |
| Share of loss of an associate | 3 | 1,639,482 | - | |
| Loss on disposal of capital assets | 37,791 | - | ||
| Other expenses | 17,576 | 9,048 | ||
| Foreign exchange | (48,884) | (13,571) |
| (8,419,542) | (8,566,025) | ||
|---|---|---|---|
| Changes in non-cash working capital items: | |||
| Sales tax receivable | 17,004 | (33,179) | |
| Due from related party | (2,218,604) | - | |
| Prepaid expenses and others | (1,580,751) | 182,383 | |
| Accounts payable and accrued liabilities | 1,734,337 | 815,210 | |
| (2,048,014) | 964,414 | ||
| Net Cash used in operating activities | (10,467,556) | (7,601,611) | |
| Investing activities | |||
| Acquisition of capital assets | 5 | - | (301,958) |
| Net Cash used in investing activities | - | (301,958) | |
| Financing activities | |||
| Principal repayment - lease liabilities | 6 | (53,172) | (22,551) |
| Exercise of stock options | - | 55,000 | |
| Net Cash (used in) provided by financing activities | (53,172) | 32,449 | |
| Net change in cash before effects of exchange rate changes on | |||
| cash during the period | (10,520,728) | (7,871,120) | |
| Effects of exchange rate changes on cash | 53,011 | 40,661 | |
| Net change in cash during the period | (10,467,717) | (7,830,459) | |
| Cash, beginning of period | 50,137,569 | 27,324,459 | |
| Cash, end of period | 39,669,852 | 19,494,000 | |
| Supplemental cash flow information | |||
| Interest received | 471,587 | 54,717 |
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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 ("Nasdaq") under the AMRQ ticker.
These unaudited condensed interim consolidated financial statements for the six months ended June 30, 2023 ("Financial Statements") were approved by the Board of Directors on August 29, 2023.
The Financial Statements include the accounts of the Corporation and those of its 100% subsidiary Nalunaq A/S, corporation incorporated under the Greenland Public Companies Act. The Financial Statements also include the Corporation's 51% equity pick-up of Gardaq A/S, a joint venture with GCAM LP. (Note 3).
The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") including International Accounting Standard ("IAS") 34, Interim Financial Reporting. The Financial Statements have been prepared under the historical cost convention.
The Financial Statements should be read in conjunction with the annual financial statements for the year ended December 31, 2022 which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in these Financial Statements are consistent with those of the previous financial year ended December 31, 2022, except for the policy described below.
The financial results of the Corporation's investments in its joint arrangement is 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 associates after the date of acquisition. The Corporation's share of profits or losses is recognized in the condensed interim statement of income (loss).
Unrealized gains on transactions between the Corporation and an associate or joint venture are eliminated to the extent of the Corporation's interest in the associate. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Dilution gains and losses arising from changes in interests in investments in associates are 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 associates or joint venture are impaired. If impaired, the carrying value of the Corporation's share of the underlying assets of associates or 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).
There are two main instances when the Corporation recognizes an investment in associate or joint venture. In first case the entity recognizes an acquisition of new investment, has a significant influence over the investee but does not control it. In the second case, the Corporation loses control over the subsidiary because of a sale of a share in subsidiary that results in losing control over that subsidiary. If the Corporation loses control over the subsidiary, then
The functionaland presentation currencyof the Corporation is Canadiandollars ("CAD"). The functional currencyof Nalunaq A/S is CAD. The functional currency of Nalunaq A/S is determined using the currency of the primary economic environment in which the entity evolves and using the currency which is more representative of the economic effect of the underlying financings, transactions, events and conditions.
Foreign currency transactions are translated into the functional currency of the underlying entity using appropriate rates of exchange prevailing on the dates of such transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange in effect at the end of each reporting period. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the net profit or loss.
The preparation of the Financial Statements requires Management to make judgments and form assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and reported amounts of expenses during the reporting period. On an ongoing basis, Management evaluates its judgments in relation to assets, liabilities and expenses. Management uses past experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments. Actual outcomes may differ from these estimates under different assumptions and conditions.
In preparing the Financial Statements, the significant judgements made by Management in applying the Corporation accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Corporation's audited annual financial statements for the year ended December 31, 2022.
Management has exercised a significant judgement in assessing whether the Corporation still has control over its subsidiary Gardaq A/S or whether it lost control over the subsidiary but still has significant influence or joint control over Gardaq A/S. The result of this assessment is described under Note 3 below. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
| As at June 30, 2023 | As atDecember 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 6 months ended Jun 30, | ||
| 2023 | (1,639,482) | - |
| Balance at end of period | 29,745,716 | - |
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. An option for further future funding of \$16.0 million (GBP 10.0 million) is also potentially available on the achievement of agreed milestones.
The carrying historical value of the transferred strategic non-precious mineral licenses to Gardaq A/S is \$36,758 (Note 4). Gardaq A/S is the Corporation's only joint venture. Gardaq's share capital consists solely of ordinary shares, which are held directly by the Corporation. Gardaq is incorporated in Greenland where its exploration and evaluation activities on bearing properties are carried out. The proportion of ownership interest is the same as the proportion of voting rights held. The investment in Gardaq is accounted for under the equity method. The Corporation's interest in Gardaq is 51% as of June 30, 2023.
Upon execution of the Subscription and Shareholders' Agreement ("SSHA") on April 13, 2023, the Corporation has ceased the control of Gardaq on that date. 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 investment retained in Gardaq A/S was determined to be \$31,385,198 (GBP 18.7million) for 51% retained equity share of Gardaq A/S. 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 period ended June 30, 2023 the Corporation recorded the 51% proportion of net loss from Gardaq of \$1,639,482.
The following tables summarize the unaudited financial information of Gardaq A/S as of June 30, 2023.
| As at June 30, 2023 | |
|---|---|
| \$ | |
| Cash and cash equivalent | 29,337,924 |
| Accounts receivables | - |
| Prepaid expenses and other | 64,645 |
| Total current assets | 29,402,569 |
| Mineral property | 92,240 |
| Total Assets | 29,494,809 |
| Accounts payable and accrued liabilities | 2,462,543 |
| Capital stock | 30,246,937 |
| Deficit | (3,214,671) |
| Total equity | 27,032,266 |
| Total liabilities and equity | 29,494,809 |
| As at June 30, 2023 | |
| \$ | |
| Exploration and Evaluation expenses | 2,751,253 |
| Foreign exchange loss (gain) | (43,222) |
| Operating loss | 2,708,031 |
| Other expenses (income) | 506,640 |
| Net loss and comprehensive loss | 3,214,671 |
| As at December | As at June 30,2023 | ||
|---|---|---|---|
| 31,2022 | Transfers (note | ||
| 3) | |||
| \$ | \$ | \$ | |
| 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 |
| As at | |||
| December 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 |
| Field equipment andinfrastruc-ture \$ |
Vehiclesand rolling stock \$ |
Equipment (including software) \$ |
Construc- tion In Progress \$ |
Right-of use assets \$ |
Total \$ |
|
|---|---|---|---|---|---|---|
| Six months endedJune 30, 2023 |
||||||
| Opening net | ||||||
| book value | 1,735,752 | 3,742,384 | 216,385 | 7,522,085 | 655,063 13,871,669 | |
| Disposals | - | - | (37,791) | - | - | (37,791) |
| Depreciation | (99,187) | (215,136) | (38,440) | - | (39,774) | (392,537) |
| Closing net | ||||||
| book value | 1,636,565 | 3,527,248 | 140,154 | 7,522,085 | 615,289 13,441,341 | |
| As at June 30, 2023 |
||||||
| Cost | 2,351,041 | 4,466,971 | 232,231 | 7,522,085 | 735,270 15,307,598 | |
| Accumulated | ||||||
| depreciation | (714,476) | (939,723) | (92,077) | - | (119,981) (1,866,257) | |
| Closing net | ||||||
| book value | 1,636,565 | 3,527,248 | 140,154 | 7,522,085 | 615,289 13,441,341 |
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 \$321,265 (\$363,461 for the six months ended June 30, 2022) was expensed as exploration and evaluation expenses during the six months ended June 30, 2023.
As of June 30, 2023, the amount of \$7,522,085 (\$7,522,085 as of 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 atJune 302023 | As atDecember 312022 |
||
|---|---|---|---|
| \$ | \$ | ||
| Balance beginning | 729,237 | 763,913 | |
| Principal repayment | (35,597) | (50,722) | |
| Balance ending | 693,640 | 729,237 | |
| Non-current portion - lease liabilities | (616,730) | (657,440) | |
| Current portion - lease liabilities | 76,910 | 71,797 |
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.
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 threemonth period. The Corporation has no legal or constructive obligation to repurchase or settle the options in cash.
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 weighted assumptions at the measurement date:
| June | June | |
|---|---|---|
| 30, 2023 | 30, 2022 | |
| Risk free rate | - | 2.7% |
| Expected life (years) | - | 5 years |
| Volatility | - | 68.9% |
| Underlying stock price | - | 0.75 |
| Strike price | - | \$0.44 |
The total share-based payment expenses related to the options and the amount credited to contributed surplus for the six months ended June 30, 2023, were \$4,028 (June 30, 2022-\$ 1,480,560). The following table outlines the activity for stock options for the six months ended June 30,2023, and 2022:
Changes in stock options are as follows:
| Six months endedJune 30, | ||||||
|---|---|---|---|---|---|---|
| 2023 | Six months endedJune 30, 2022 | |||||
| Weighted | Weighted | |||||
| Number | averageexercise | Number | averageexercise | |||
| of options | price | of options | price | |||
| \$ | ||||||
| Balance, beginning | 10,717,395 | 0.57 | 6,935,000 | 0.51 | ||
| Granted | - | - | 4,173,333 | 0.60 | ||
| Exercised | (600,000) | 0.43 | (110,000) | 0.50 | ||
| Balance, end | 10,117,395 | 0.58 | 10,998,333 | 0.55 | ||
| Balance, end exercisable | 10,050,728 | 0.58 | 10,865,000 | 0.55 |
From the options exercised during the period ended June 30, 2023, 391,725 shares were withheld to cover the stock option grant price and related taxes.
Stock options outstanding and exercisable as at June 30, 2023 are as follows:
| Number of options outstanding |
Number of options exercisable |
Exercise price | Expiry date | |
|---|---|---|---|---|
| \$ | ||||
| 910,000 | 910,000 | 0.45 | August 22, 2023 | |
| 1,670,000 | 1,670,000 | 0.38 | December 31, 2025 | |
| 100,000 | 33.333 | 0.50 | September 13, 2026 | |
| 1,495,000 | 1,495,000 | 0.70 | December 31, 2026 | |
| 3,600,000 | 3,600,000 | 0.60 | January 17, 2027 | |
| 73,333 | 73,333 | 0.75 | April 20, 2027 | |
| 39,062 | 39,062 | 0.64 | July 14, 2027 | |
| 1,330,000 | 1,330,000 | 0.70 | December 30, 2027 | |
| 900,000 | 900,000 | 0.59 | December 31, 2027 | |
| 10,117,395 | 10,050,728 |
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 incentivizing 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:
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:
The maximum term of the awards is therefore four years from grant.
The Corporation's starting market capitalization is based on a fixed share price of \$0.552. Value created by share price growth and dividends paid at each measurement date will be calculated with reference to the average closing share price over the three months ending on that date.
· After December 31, 2023, 100% of the pool value at the First Measurement Date is delivered as restricted share units under the RSU Plan, subject to the maximum number of shares that can be allotted not being exceeded.
· 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.
The fair value of the award granted in December 2022 is \$5,408,800 based on 80% of the available pool being awarded. A charge of \$898,000 was recorded during the six months ended June 30, 2023.
| Three monthsended June 30, | Six monthsended June 30, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| \$ | \$ | \$ | \$ | |
| Geology | (138,599) | 651,211 | (25,494) | 805,632 |
| Lodging and on-site support | 51,714 | 35,255 | 51,714 | 35,255 |
| Drilling | 1,036,653 | 1,250,066 | 1,036,653 | 1,290,527 |
| Analysis | (26,355) | - | (26,355) | 141,382 |
| Geophysical survey | (416,177) | - | (416,177) | - |
| Transport | 320,553 | 54,076 | 624,753 | 143,215 |
| expenses | 2,278,193 | 4,425,501 | 3,459,846 | 5,435,831 |
|---|---|---|---|---|
| Exploration and evaluation | ||||
| Depreciation | 157,254 | 181,628 | 321,265 | 363,461 |
| expenses before depreciation | 2,120,939 | 4,243,873 | 3,138,581 | 5,072,370 |
| Exploration and evaluation | ||||
| Government fees | 25,615 | - | 25,615 | 7,894 |
| Project Engineering | - | 55,792 | - | |
| Supplies and equipment | 432,460 | 360,158 | 603,017 | 360,158 |
| Maintenance infrastructure | 284,769 | 1,373,127 | 578,890 | 1,743,375 |
| Insurance | - | (13,200) | - | - |
| Logistic support | (51,509) | 90,356 | (51,509) | 102,108 |
| Helicopter charter | 601,815 | 442,824 | 681,682 | 442,824 |
Exploration and Evaluation expenses for the period of three and six months ended June 30, 2023 are net of \$1,398,912 of Exploration and Evaluation expenses incurred by Nalunaq A/S during the period from June 9 to Dec 31 2022 for the six non-gold strategic mineral licenses that have been transferred from Nalunaq A/S to Gardaq A/S.
| Three monthsended June 30, | Six monthsended June 30, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| \$ | \$ | \$ | \$ | |
| Project Engineering and management | 1,017,205 | - | 1,017,205 | - |
| Infrastructure | 658,507 | - | 658,507 | - |
| Other costs (travel, logistics) | 149,851 | - | 149,851 | - |
| Site development costs | 1,825,563 | - | 1,825,563 | - |
| Three monthsended June 30, | Six monthsended June 30, | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| \$ | \$ | \$ | \$ | |
| Salaries and benefits | 620,073 | 601,769 | 1,237,662 | 1,241,768 |
| Director's fees | 157,000 | 157,000 | 314,000 | 314,000 |
| Professional fees | 910,879 | 748,904 | 1,522,757 | 1,024,612 |
| Marketing and industry involvement | 164,719 | 133,811 | 306,686 | 302,678 |
| Insurance | 67,602 | 104,651 | 135,204 | 205,670 |
| Travel and other expenses | 219,782 | 238,656 | 521,052 | 384,571 |
| Regulatory fees | 179,614 | 43,971 | 372,554 | 78,235 |
| General and administration before | ||||
| following elements | 2,319,669 | 2,028,762 | 4,409,915 | 3,551,534 |
| Stock-based compensation | 451,014 | 36,698 | 902,028 | 1,480,560 |
| Depreciation | 35,498 | 32,477 | 71,272 | 54,614 |
| General and administration | 2,806,181 | 2,097,937 | 5,383,215 | 5,086,708 |
| Three monthsended June 30, | Six monthsended June 30, | ||||
|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | ||
| \$ | \$ | \$ | \$ | ||
| Project management fees | 506,640 | - | 506,640 | - | |
| E&E expenses (Note 8) | 1,711,964 | - | 1,711,964 | - | |
| 2,218,604 | - | 2,218,604 | - |
As at June 30, 2023, the balance receivable from Gardaq amounted to \$2,218,604 (\$nil as at December 31, 2022). This receivable balance represents all exploration and evaluation costs incurred by the Corporation prior to the completion of the SSHA for six strategic minerals licenses transferred from Nalunaq A/S to Gardaq A/S. The exploration and evaluation costs incurred prior to completion of the Gardaq JV agreement have been transferred to Gardaq A/S from Nalunaq A/S post-closing of the deal in accordance with the respective clauses of the SSHA. (Note 3).
In addition to Landsbankinn hf. acting as project manager and advisor on the admission to Nasdaq Main Market, the Corporation has engaged Fossar Investment Bank hf. ("Fossar") to assist in introducing Amaroq to investors, organizing investor meetings, and advising and analyzing potential effect the Admission has on the liquidity and formation of the share price of the Corporation.
Fossar is a related party of Amaroq as it is a company in which Sigurbjorn Thorkelsson, Non-Executive Director, is Chairman of the Board and indirectly controls over 30% of the capital. Amaroq has agreed to pay Fossar for their services \$25,000 (GBP15,000) and Amaroq will be responsible for any ancillary expenses on the planned engagement. The Engagement will end upon the completion of Admission.
The engagement with Fossar constitutes a related party transaction in accordance with AIM Rule 13. The Independent Directors, being the Amaroq Directors other than Sigurbjorn Thorkelsson, having consulted with the Corporation's Nominated Adviser, are confident that the terms of the engagement with the related party are fair and reasonable insofar as the Corporation's shareholders are concerned.
\$25,000 cost of engagement is included under Marketing and Industry involvement cost category under the General and Administrative expenses (Note 10) which is outstanding as of June 30, 2023 and recorded under the accounts payable and accrued liabilities.
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:
| Three months ended June 30,\$ |
Six months ended June 30, \$ |
||||
|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | ||
| \$ | \$ | \$ | \$ | ||
| Short-term benefits | |||||
| Salaries and benefits | 312,513 | 325,435 | 654,817 | 642,184 | |
| Director's fees | 157,000 | 157,000 | 314,000 | 314,000 | |
| Long-term benefits | |||||
| Stock-based compensation | 2,014 | 4,431 | 4,028 | 1,111,362 | |
| Total compensation | 471,527 | 486,866 | 972,845 | 2,067,546 |
The following table provides a reconciliation between basic and diluted net earnings (loss) per share:
| Three monthsended June 30, | Six monthsended June 30, | ||||
|---|---|---|---|---|---|
| Notes | 2023 | 2022 | 2023 | 2022 | |
| \$ | \$ | \$ | \$ | ||
| Net income (loss) and comprehensive income (loss) |
23,357,701 | (6,324,639) | 19,980,808 | (10,460,137) | |
| Weighted average number of common shares outstanding - basic Weighted average number of |
263,281,297 | 177,109,616 | 263,242,536 | 177,104,206 | |
| common shares outstanding - diluted Basic earnings (loss) per share Diluted earnings (loss) per common |
273,398,692 0.09 |
188,107,949 (0.04) |
273,359,931 0.08 |
188,102,539 (0.06) |
|
| share | 0.09 | (0.04) | 0.07 | (0.06) | |
| Effect of dilution Share options outstanding |
- 10,117,395 |
- 10,998,333 |
0.01 10,117,395 |
- 10,998,333 |
The Corporation is exposed to various risks through its financial instruments. The following analysis provides a summary of the Corporation's exposure to and concentrations of risk at June 30, 2023:
Credit risk is the risk that one party to a financial instrument will cause financial loss for the other party by failing to discharge an obligation. The Corporation's main credit risks relate to its amounts due from a related party. The Corporation performed expected credit loss assessment and assesses the amount to be fully recoverable.
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)
The following table summarizes the carrying value of the Company's financial instruments:
| June 30,2023 | December 31, 2022 |
|
|---|---|---|
| \$ | \$ | |
| Cash | 39,669,852 | 50,137,569 |
| Due from a related party | 2,218,604 | - |
| Sales tax receivable | 78,885 | 95,890 |
| Deposit | 27,944 | 27,944 |
| Investment in equity-accounted joint arrangement | 29,745,716 | - |
| Escrow account for environmental monitoring | 424,640 | 427,120 |
| Accounts payable and accrued liabilities | (2,903,747) | (1,138,961) |
| Lease liabilities | (693,640) | (729,237) |
Due to the short-term maturities of cash, due from a related party, 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 lease liabilities approximate its fair value based upon a discounted cash flows method using a discount rate that reflects the Corporation's borrowing rate at the end of the period.
Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities. The Corporation manages this risk by managing its working capital and ensuring that sufficient cash is available. The following are the contractual maturities of financial liabilities as at June 30, 2023:
| June 30, 2023 | |||
|---|---|---|---|
| < 1 year | 2 - 5 years |
Over 5 years | |
| Lease liabilities | \$ 76,910 | \$ 616,730 |
\$ - |
| Accounts payable and accrued liabilities | 2,903,747 | - | - |
| \$ 2,980,657 | \$ 616,730 |
\$ - |
The Corporation has assessed that it is not exposed to significant liquidity risk due to its cash balance in the amount of \$39.7 million at the period end.
The Corporation continues to finalize the terms and conditions of the debt financing announced on March 28, 2023 and on August 11, 2023 the Corporation announced that it expected to close the transaction by the end of August 2023.
The debt financing consists of an increased US\$50.9 million senior secured package, including:
The financing remains subject to the completion of final documentation and agreement by the parties to all terms and conditions. In addition, the debt financing remains subject to the final approval of the TSX Venture Exchange and satisfaction by the Corporation of all the requirements of the TSX Venture Exchange.
On March 28, 2023, the Corporation announced its intention to explore the possibility of transfer of the Corporation's depositary receipts from Nasdaq First North Growth Market in Iceland to the regulated Nasdaq Main Market. On 28 July 2023, Amaroq submitted a request to Nasdaq Iceland to formally begin the procedure for admission, with the first day of trading expected to be in September 2023. The final application for admission is subject to the Financial Supervisory Authority of the Central Bank of Iceland (the FSA), approval of the Prospectus and all Nasdaq Main Market requirements being satisfied.
On July 24, 2023, the Corporation granted an on-hire incentive stock option award to a new senior employee of Amaroq Minerals. The option award gives the employee the right to acquire up to 19,480 common shares under the Company's stock option plan ("Amaroq Minerals Stock Option Plan"). The option has an exercise price of \$0.77 per share and will vest on October 24, 2023. The option will expire if it remains unexercised five years from the date of the award.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
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