2023 Full Year Financial Results
TORONTO, ONTARIO, March 26, 2024 (GLOBE NEWSWIRE) -- *(“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 km^2, 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 1^st 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/m^3 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 STATEMENTS*
For the years ended December 31, 2023 and 2022
*As at December 31,* *As at December 31,* *Notes* *2023* *2022* *$* *$*
*ASSETS*
*Current assets*
Cash 21,014,633 50,137,569
Due from a related party *21.1* 3,521,938 -
Sales tax receivable 69,756 95,890
Prepaid expenses and others *5* 18,681,568 450,290
Inventory 680,358 -
*Total current assets* 43,968,253 50,683,749
*Non-current assets*
Deposit 27,944 27,944
Escrow account for environmental monitoring *6* 598,939 427,120
Investment in equity-accounted joint arrangement *7* 23,492,811 -
Mineral properties *8* 48,821 85,579
Right of use asset *11.1* 574,856 655,063
Capital assets *9* 38,241,559 13,216,606
*Total non-current assets* 62,984,930 14,412,312
*TOTAL ASSETS* *106,953,183* *65,096,061*
*LIABILITIES AND EQUITY*
*Current liabilities*
Accounts payable and accrued liabilities 6,273,979 1,138,961
Convertible notes *10* 35,743,127 -
Lease liabilities – current portion *11* 80,206 71,797
*Total current liabilities* 42,097,312 1,210,758
*Non-current liabilities*
Lease liabilities *11* 577,234 657,440
*Total non-current liabilities* 577,234 657,440
*Total liabilities* *42,674,546* *1,868,198*
*Equity*
Capital stock *12* 132,117,971 131,708,387
Contributed surplus *13* 6,725,568 5,250,865
Accumulated other comprehensive loss (36,772) (36,772)
Deficit (74,528,130) (73,694,617)
*Total equity* 64,278,637 63,227,863
*TOTAL LIABILITIES AND EQUITY* *106,953,183* *65,096,061*
Subsequent events *23*
The accompanying notes are an integral part of these consolidated financial statements.
*Approved on Behalf of the Board of Directors*
(s) Eldur Ólafsson (s) Line Frederiksen
Eldur Ólafsson Line Frederiksen
Director Director
*Notes* *2023* *2022* *$* *$*
*Expenses*
Exploration and evaluation expenses *16* 6,616,652 12,700,526
Site development costs 2,515,743 -
General and administrative *17* 13,631,912 10,150,020
Loss on disposal of capital assets 37,791 100,536
Foreign exchange loss (gain) (306,705) (849,773)
Operating loss 22,495,393 22,101,309*Other expenses (income)*
Interest income (1,069,559) (239,869)
Project management income *21.1* (1,714,559) -
Gain on loss of control of subsidiary *7* (31,340,880) -
Share of net losses of joint arrangement *7* 7,892,387 -
Unrealised loss on derivative liability *10* 4,536,411 -
Finance costs *18* 34,320 37,523
*Net loss and comprehensive loss* *(833,513)* *(21,898,963)*
Weighted average number of common shares outstanding - basic and diluted 272,623,548 191,575,781
Basic and diluted loss per common share *20* (0.003) (0.11)
The accompanying notes are an integral part of these consolidated financial statements.
*Notes* *Number of common shares*
*outstanding* *Capital *
*stock* *Contributed surplus* *Accumulated other comprehensive loss* *Deficit* *Total*
*equity* *$* *$* *$* *$* *$*
*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 equity
Debt 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 instruments
An equity instrument is a contract that evidences a residual interest in the assets of an entity net of its liabilities.
Compound instruments
The 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 derivatives
Embedded 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 circumstan