AEX Gold Inc.
ANNUAL REPORT AND
FINANCIAL STATEMENTS 2021
CONTENTS
CORPORATE INFORMATION
STRATEGIC REPORT
PRINCIPAL RISKS AND UNCERTAINTIES FACING THE BUSINESS
DIRECTORS’ REPORT
CORPORATE SOCIAL RESPONSIBILITY
CORPORATE GOVERNANCE
REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE
REPORT OF THE CORPORATE GOVERNANCE AND NOMINATION COMMITTEE
REPORT OF THE TECHNICAL SAFETY AND SUSTAINABILITY COMMITTEE
REPORT OF THE COMPENSATION COMMITTEE. DIRECTORS’ COMPENSATION REPORT
REPORT OF THE DISCLOSURE COMMITTEE
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF AEX GOLD INC.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
2
4
7
12
17
19
27
28
29
30
42
43
45
48
1
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 CORPORATE INFORMATION
DIRECTORS:
Graham Stewart, Non-Executive Chairman
Eldur Olafsson, Founder and Chief Executive Officer
Jaco Crouse, Chief Financial Officer from 25 January 2021 and Director from 27 April 2021
Liane Kelly, Director from 26thAugust 2021
Sigurbjorn (‘Siggi’) Thorkelsson, Non-Executive Director
Line Frederiksen, Director from 9thJune 2021
David Neuhauser, Director from 9thJune 2021
Warwick Morley-Jepson, Director from 26thAugust 2021
Robert Ménard, Non-Executive Director to 27 April 2021
George Fowlie, Director to 26thAugust 2021, Chief Financial Officer to 25 January 2021
Georgia Quenby, Non-Executive Director to 9thJune 2021
CORPORATE SECRETARY:
Joan Plant
HEAD OFFICE, REGISTERED AND RECORDS OFFICE:
3400 One First Canadian Place,
PO Box 130 Toronto, ON, M5X 1A4,
Canada
Corporation Number: 1011468-5
CORPORATE WEBSITE:
www.aexgold.com
ADVISORS
AUDITORS:
BDO Canada LLP
1000 De La Gauchetière Street West
Suite 200
Montréal, Québec H3B 4W5
Canada
(took over from PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.
02nd February 2022)
BROKER
Panmure Gordon & Co
One New Change
London, EC4M 9AF
United Kingdom
SOLICITORS IN ENGLISH LAW:
K&L Gates LLP
One New Change
London EC4M 9AF
United Kingdom
NOMINATED ADVISER & BROKER:
Stifel Nicolaus Europe Limited
150 Cheapside
London EC2V 6ET
United Kingdom
BROKER
SI Capital
6 Bridge Street, Godalming
Surrey, GU7 1HL
United Kingdom
SOLICITORS IN CANADIAN LAW:
Bennett Jones LLP
3400 One First Canadian Place
PO Box 130
Toronto, Ontario M5X 1A4
Canada
2
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 SOLICITORS IN GREENLAND LAW:
Nuna Law Firm ApS
Quillilerfik 2, 6.
Postbox 59
Nuuk 3900
Greenland
COMPETENT PERSON:
SRK Exploration Services Ltd
12 St Andrew’s Crescent
Cardiff
CF10 3DD
United Kingdom
FINANCIAL PR:
Camarco
107 Cheapside
London
EC2V 6DN
United Kingdom
REGISTRARS:
Computershare Trust Company of Canada
650 de Maisonneuve West 7th Floor
Montreal QC H3A 3S8
Canada
Computershare Investor Services Plc
The Pavilion, Bridgewater Road
Bristol
BS13 8AE
United Kingdom
3
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 STRATEGIC REPORT
Business model and Strategy
AEX is an independent mining corporation engaged in the identification, acquisition, exploration and development
of gold properties and other strategic mineral assets in Greenland. The Corporation’s strategy is to leverage its first
mover advantage in Greenland, underpinned by the previously producing Nalunaq Project, to build a full-cycle gold
mining company in Greenland, delivering long term shareholder value and providing significant upside potential
through its land bank of high-impact exploration assets, which include gold and other strategic minerals.
Strategic Review of 2021
2021 was a year of consolidation, adjustment and refocus for the Corporation, as the COVID-19 pandemic continued
to wreak havoc globally, and on our business. The Nalunaq Project was put on hold in February 2021 due to material
unforeseen cost increases associated with the impacts of COVID, and as per the April 2021 announcement, the
Corporation redirected its focus on four key elements to continue advancing and de-risking the Nalunaq Project
ahead of development: conducting a third-party engineering study to optimize the Project costs and de-risk the
Project schedule to enable AEX to re-assess the execution methodology post completion; conducting fully funded
‘early works’ infrastructure and a significant exploration program to expand the Nalunaq Resource; continue to
advance the EIA and SIA to obtain all permits; and regional exploration targeting both gold and strategic minerals
through technical research, sampling and geophysical surveys.
Despite the challenging start to the year 2021 was a successful year for the Corporation, delivering considerable
progress in line with our revised goals. Exploration results received so far from the period have delivered ahead of
our expectations, with further results expected to be announced shortly. In addition, the macro environment has
moved in our direction as the global energy transition gathers pace and recent geo-political events have shone a
spotlight on the importance and value of large mineral resources located in safe, OECD jurisdictions, with Greenland
probably being the final frontier.
Nalunaq
51 drillholes for 11,044m were completed during the 2021 field season. This drilling was designed to assess the
along strike and down dip extensions of the mineralized Main Vein structure away from the previously explored
South, Target and Mountain Blocks mined between 2004 to 2013. The program was also designed to assess AEX’s
geological and structural models and to test new target areas of the project.
The results announced on April 4, 2022, provided further evidence that the Valley Block is a new high-grade zone,
unrecognized or developed by previous operators and corroborating the Dolerite Dyke Model. The Valley Block is
now a key target for initial resource growth at Nalunaq.
The 2021 program also targeted a downdip extension of the South Block and identified a potential further high-
grade zone, the ‘Welcome Block’ (which would take the total high-grade zones to five), which was predicted by the
Dolerite Dyke Model.
In parallel to the exploration program, Halyard completed its 3rd party engineering study, focusing on the Nalunaq
development cost including the process plant, mobile equipment, surface infrastructure, permanent camp and
associated logistics and engineering. The study concluded that the advanced engineering of the overall project
is now to Feasibility Study level based on the Canadian Standards of Disclosure for Mineral Project NI43-101
requirements.
AEX continues to work with SRK Consulting to develop the most robust Mineral Resource estimation technique for
Nalunaq possible, incorporating the Dolerite Dyke Model as well as the high-grade variability from core sampling
(the ‘nugget effect’) to better reflect the full resource potential at the Valley Block and the rest of the Nalunaq project.
This work will allow AEX to incorporate the geological results into the outcomes of the Halyard 3rd party engineering
study completed in 2021 with a plan to move the project towards a Preliminary Economic Assessment (PEA) or Pre-
Feasibility Study to support further development.
Alongside the exploration and technical studies, AEX has continued its ESG mandate on the project, with the
Corporation working to update its Environmental Impact Assessment (EIA) and Social Impact Assessment (SIA) over
the course of 2022 in line with the terms of its exploitation licence.
AEX, in conjunction with its technical advisors, has developed a further exploration plan for Nalunaq for 2022. This
will involve both the infill drilling of the Valley Block as well as the drilling of the up-dip extension of this Block from
the Dolerite Dyke Model. This program aims to allow for the continual resource development from the Valley Block.
4
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 To access this up dip portion, AEX will first construct two new drilling access roads from the existing mountain
surface infrastructure.
AEX is also assessing the option to commission a dedicated on-site sample preparation facility to allow the
Corporation to better manage its sample steam and ensure a timely return of assay results to facilitate rapid action
following exploration results.
It is the aim of the 2022 program, subject to the drill results, to provide the Corporation with the optionality to assess
the viability of taking an underground bulk sample from a new mine development in the Valley Block. This bulk
sample, which would potentially be toll treated off-site, would facilitate increased confidence in the resource as the
project moves towards mine construction.
Vagar Ridge, Nanoq and Tartoq
A significant exploration program was also conducted across AEX’s gold portfolio in 2021, chiefly at our highly
prospective Vagar Ridge asset but also at the Nanoq gold/copper licence and our other exciting regional gold
targets. This program included airborne geophysics, surface hyperspectral imagery, structural mapping, and surface
rock chip sampling.
Vagar is a large gold exploration licence containing multiple high priority targets including the ‘Vagar Ridge’ in
the heart of the Nanortalik Gold Belt in close proximity to the Corporation’s flagship Nalunaq project. The 2021
program comprised Mineral System Modelling, high resolution airborne geophysics, surface hyperspectral imagery
and reconnaissance sampling designed to assess, define and prepare a number of key targets for more substantial
exploration into 2022.
The exploration results more than double the Vagar Ridge footprint, confirming its potential to be a multi-million
ounce prospect. As a result of the 2021 exploration results, AEX believes that Vagar Ridge may host up to four
Orogenic gold veins with new rock chip samples giving up to 86.7 g/t gold.
The 2021 program included hyperspectral imaging, reconnaissance sampling and a 385 km2 high resolution
airborne magnetic survey, interpreted by SRK Consulting, which has defined a significant deformation zone which
extends for more than 50 km across the licence and into AEX’s neighbouring licences, highlighting five further high
priority targets.
Vagar Ridge was historically sampled and drilled across 2km discovering up to 2,533 g/t gold in vein material and
13m at 70.1 g/t gold from follow up channel sampling and a core drilling program. It also identified granodiorite-
hosted mineralisation up to 14.4 g/t gold therefore opening up the potential for a large scale Intrusion Related Gold
mineralisation.
2021 results also confirmed gold mineralisation within the host rock, verifying the presence of widespread
granodiorite-hosted mineralisation including 9.25 g/t gold in scree samples from a previously unexplored northern
target.
Ground-based hyperspectral imaging, a powerful tool for areas with limited vegetation such as in Southern
Greenland, is proving to be an effective method for identifying hydrothermal alteration and altered granodiorite, the
preferential host of both Orogenic and Intrusion Related Gold mineralisation in the Vagar licence.
Strategic Mineral Targets
AEX conducted exploration on it strategic minerals targets during 2021, most notably at the Sava target where initial
assessments suggest the potential for iron oxide copper gold (“IOCG”) mineralization. The 2021 exploration season
completed remote sensing, airborne geophysics, geological mapping, rock chip and ionic geochemistry studies
and hyperspectral imagery across the Sava licence. The results confirmed the presence of three key significant and
coherent multi element anomalies potentially indicative of IOCG mineralization with grab sample grades of up to
0.9% copper.
AEX intends to conduct further surface sampling across the licence and a short scout drilling program into these
target areas of Sava during 2022 in order to provide further geological evidence of the extent of the mineralizing
system at surface and at depth.
Finally, a bulk sample was successfully taken from the Nørream graphite target and has been shipped to Wardell
Armstrong in the United Kingdom for initial metallurgical test work, which is ongoing.
The Corporation believes its assets provide an opportunity to develop a balanced, full-cycle portfolio capable of
delivering long-term shareholder returns either through operation or through ultimate sale of the Corporation to an
established player.
5
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Subsidiaries
The Corporation has one subsidiary, Nalunaq A/S. There are no additional reporting requirements for this subsidiary
at present.
Eldur Olafsson
Chief Executive Officer
May 13, 2022
6
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 PRINCIPAL RISKS AND UNCERTAINTIES FACING THE BUSINESS
Overview
The mining and mineral exploration industry is risky in nature as companies have to deal with various local and
global risks associated with, but not limited to: environmental and social, political, regulatory, health and safety,
logistical, financial, and operational.
The following discussions review a number of important risks which management believes could impact the
Corporation’s business. There are other risks, not identified below, which currently, or may in the future exist in the
Corporation’s operating environment.
Environmental and Social
The Corporation’s operations are subject to environmental and social regulations as a result of increased societal
and local communities’ pressure in the jurisdictions in which it operates. Environmental and social legislation
is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of
responsibility for companies and their officers, directors and employees. There is no assurance that future changes
in environmental and social regulations, if any, will not adversely affect the Corporation’s operations. The Corporation
recognizes the importance of social and environment responsibility, close co-operation and building long-lasting
partnerships with the host communities. Therefore, the Corporation has adopted a Greenlandic procurement policy
to encourage the host community suppliers participating in local operations and contributing to the economy of
Greenlandic society. The Corporation is committed to maintaining high standards of environmental stewardship and
incorporating environmental protection as part of its strategy and decision-making process. AEX recognizes that
appropriate environmental management is essential to the proper conduct of its mining operations and activities.
Accordingly, our goal is to minimize the environmental impacts of our projects and activities.
Regulatory
The Corporation’s future operations on the properties, including exploration and any development activities or
commencement of production on its properties, require permits from various governmental authorities and
such operations are and will be governed by laws and regulations governing prospecting, development, mining,
production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use,
environmental protection, protection of endangered and protected species, treatment of indigenous people, mine
safety and other matters. To the extent that such permits are required and not obtained, the Corporation may be
delayed or prohibited from proceeding with planned exploration or development of its mineral properties. The costs
and delays associated with obtaining necessary permits and complying with these permits and applicable laws may
have a material adverse effect on the operations, financial conditions and results of the Corporation.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions
thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or to be
curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment,
or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or
damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations
of applicable laws or regulations.
Political
The Corporation’s underlying business interests are located and carried out in Greenland. As a result, the Corporation
is subject to political and other uncertainties, including but not limited to, changes in politics or the personnel
administering them, nationalisation or expropriation of property, cancellation or modification of contractual rights,
foreign exchange restrictions, currency fluctuations, royalty and tax increases and other risks arising out of foreign
governmental sovereignty over the areas in which the Corporation’s operations are conducted.
The Greenland Home Rule Government has responsibility for the mineral resources area in Greenland. The political
condition in Greenland is generally stable; however, changes in exchange rates, control of fiscal regulations and
regulatory regimes, labour unrest, inflation or economic recession could affect the Corporation’s business. The
management of the Corporation will closely monitor events and take advice, if necessary, from experts to prepare
for any eventualities.
Dependence on key individuals
The Corporation’s success depends to a certain degree upon key members of the management. These individuals
are a significant factor in the Corporation’s growth and success and the Corporation does not have key man
7
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 insurance in place in respect of any of its directors, management or employees. The loss of the service of members
of the management and certain key employees could have a material adverse effect on the Corporation.
Additionally, the Corporation’s prospects depend in part on the ability of its executive officers and senior management
to operate effectively, both independently and as a group. Investors must be willing to rely to a significant extent on
management’s discretion and judgment, as well as the expertise and competence of outside contractors. Recruiting
and retaining qualified personnel is critical to the Corporation’s success. The number of persons skilled in the
acquisition, exploration and development of mining properties is limited and competition for such persons is intense.
To manage its growth, the Corporation may have to attract and retain additional highly qualified management,
financial and technical personnel and continue to implement and improve operational, financial and management
information systems. Although the Corporation believes that it will be successful in attracting and retaining qualified
personnel, there can be no assurance of such success.
Difficulty attracting and retaining qualified staff
Recruiting and retaining qualified personnel is critical to the Corporation’s success. The number of persons skilled
in the acquisition, exploration and development of mining properties is limited and competition for such persons is
intense. To manage its growth, the Corporation may have to attract, develop and retain additional highly qualified
management, financial and technical personnel and continue to implement and improve operational, financial
and management information systems. Although the Corporation believes that it will be successful in attracting
and retaining qualified personnel, through the development of comprehensive multi-year talent management and
succession planning measures to ensure continuity and minimum interruptions to the operations of the Corporation
there can be no assurance of such success.
Dependence on third party services
The Corporation will rely on products and services provided by third parties. If there is any interruption to the
products or services provided by such third parties, the Corporation may be unable to find adequate replacement
services on a timely basis or at all.
The Corporation is unable to predict the risk of insolvency or other managerial failure by any of the contractors or
other service providers currently or in the future used by the Corporation in its activities. COVID and recent war
conflicts, sanctions have demonstrated that heavy reliance on global supply chain and logistics is a risk as well. One
very effective way of mitigating that risk is to balance it out where possible with procuring locally and reducing the
logistical routes crossing continents. There is increased risk of global supply chain disruptions, prolonged logistical
delays due to overall global unrest and conflicts.
Any of the foregoing may have a material adverse effect on the results of operations or the financial condition of
the Corporation. In addition, the termination of these arrangements, if not replaced on similar terms, could have a
material adverse effect on the results of operations or the financial condition of the Corporation.
External contractors and sub-contractors
When the world mining industry is buoyant there is increased competition for the services of suitably qualified and/
or experienced sub-contractors, such as mining and drilling contractors, assay laboratories, metallurgical test work
facilities and other providers of engineering, project management and mineral processing services.
As a result, the Corporation may experience difficulties in sourcing and retaining the services of suitably qualified
and/or experienced sub-contractors, and the Corporation may find this more challenging given its Greenlandic
operations with most third-party service providers located in other countries. The loss or diminution in the services
of suitably qualified and/or experienced sub-contractors or an inability to source or retain necessary sub-contractors
or their failure to properly perform their services could have a material and adverse effect on the Corporation’s
business, results of operations, financial condition and prospects.
Access to properties and renewal of licences
The Corporation cannot guarantee that title to its mineral properties will not be challenged. Title insurance is generally
not available for mineral properties and the Corporation’s ability to ensure that it has obtained a secure claim
to individual mineral properties or mining concessions may be severely constrained. The Corporation’s mineral
properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by,
among other things, undetected defects. The Corporation has not conducted surveys of all of the mineral rights in
which it holds direct or indirect interests. A successful challenge to the precise area and location of these mineral
rights could result in the Corporation being unable to operate on its properties as permitted or being unable to
enforce its rights with respect to its properties.
8
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 The properties are the only material properties of the Corporation. Any material adverse development affecting the
progress of the properties, or both, will have a material adverse effect on the Corporation’s financial condition and
results of operations.
If the Corporation loses or abandons its interest in its properties, there is no assurance that it will be able to acquire
another mineral property of merit.
Interests in licences in Greenland are for specific terms and carry with them estimated annual expenditure and
reporting commitments, as well as other conditions requiring compliance. The MLSA is largely focused on the
activities completed by an exploitation licence holder and ensuring that a project is advancing towards production.
The Corporation could lose title to or its interest in licences relating to the properties if licence conditions are not
met.
In particular, the Nalunaq Exploration Project is currently within the Nalunaq Licence. Under the current terms
of this licence, Nalunaq A/S is required to commence mine production by January 1, 2023, although the scale
of this production is not specified. There is no guarantee that this will be possible within this timeframe, and the
government has reserved the right to revoke the licence if these conditions are nota met.
Failure to satisfy any of the conditions set forth in the addendums to the Nalunaq Licence for example, the
commitment to perform specific exploration activities for sub period 3 as set out in Addendum No. 4) may result in
the MLSA revoking the Nalunaq Licence, however the MLSA has stated as an objective that there is no automatic
revocation of a licence when a condition has not been achieved, rather they have committed to, at all times, act
reasonably and in accordance with the general rules and regulations of Greenlandic administrative law, including
the principles of objectiveness, proportionality and equal treatment.
In response to COVID 19 pandemic, the Government of Greenland approved a proposal (i) adjusting required
exploration expenses in years 2020 and 2021 for all mineral exploration licences to zero (0 DKK), (ii) postponing of
the transferred unfulfilled exploration obligations by two years, and (iii) extending of the licence period for all mineral
exploration licences by two years.
Exploration
The properties are in remote locations in a global context, although not in a Greenlandic context. The costs of
logistics and staffing are high. The climatic conditions allow a relatively short period for surface exploration activities,
although this should not affect underground exploration.
The Nalunaq Gold Mine and areas of exploration potential lie within a steep mountain. Regularized surface diamond
drilling for structure is impractical in many parts, resulting in a greater reliance on underground exploration.
Significant and increasing competition exists for the limited number of mineral acquisition opportunities available. As
a result of this competition, some of which is with large established mining companies with substantial capabilities
and greater financial and technical resources than the Corporation, the Corporation may be unable to acquire
attractive mineral properties on terms it considers acceptable. The Corporation also competes with other companies
for the recruitment and retention of qualified employees and other personnel.
Development risks and substantial funding requirements to assess commercial mineral deposits
There can be no assurance that the Corporation will be able to manage effectively the expansion of its operations or
that the Corporation’s personnel, systems, procedures and controls will be adequate to support the Corporation’s
operations. In particular, although certain of the Directors and Senior Management have experience of bringing
mineral assets into production, the Corporation itself does not and its ability to do so will be dependent upon
using the services of appropriately experienced personnel or entering into agreements with service providers that
can provide such expertise. The Group’s ability to commence, maintain or increase its annual production of ore in
the future will be dependent in significant part on its ability to bring the properties into production. Any failure of
the Board to manage effectively the Corporation’s growth and development could have a material adverse effect
on its business, financial conditions and results of operations. There is no certainty that all or, indeed, any of the
elements of the Board’s strategy will develop as anticipated. The Corporation’s profitability will depend, in part, on
the actual economic returns and the actual costs of developing the properties, which may differ significantly from
the Corporation’s current estimates. The development of the properties may be subject to unexpected problems
and delays.
For example, on November 12th, 2020, and following a site visit by geotechnical experts, Golder, a recognized third-
party engineering company, submitted its report following the investigation of the underground tailings bulkhead.
The result of the report was that measurements indicated that the length of the concrete bulkhead is likely smaller
9
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 than what would be expected to withstand the current tailings bearing pressure at an acceptable safety factor.
The result of this assessment produced a response by the Corporation to review its mining plan and prevent mine
development in the existing underground workings due to health and safety hazards until finding a solution to
mitigate and solve the problem. The Corporation worked with geotechnical experts and its selected underground
mining contractor to finalize the proper scheme to de-risk access in the existing underground workings.
The Corporation requires substantial funds to determine whether commercial mineral deposits exist on its properties
beyond the Inferred Mineral Resource. Any potential development and production of the Corporation’s properties
depends upon the results of exploration programmes and/or feasibility studies and the recommendations of duly
qualified engineers and geologists. Such programmes require substantial additional funds. Any decision to further
expand the Corporation’s operations on these properties is anticipated to involve consideration and evaluation of
several significant factors including, but not limited to:
• costs of bringing a property into production, including exploration work, preparation of production feasibility
studies, and construction of production facilities;
• availability and costs of financing;
• ongoing costs of production;
• market prices for the minerals to be produced;
• environmental compliance regulations and restraints; and
• political climate and/or governmental regulation and control
Resource Estimate
The Corporation is an exploration stage company and cannot give assurance that a commercially viable deposit,
or “reserve”, exists on any properties for which the Corporation currently has or may have (through potential future
joint venture agreements or acquisitions) an interest. Therefore, determination of the existence of a reserve depends
on appropriate and sufficient exploration work and the evaluation of legal, economic and environmental factors. If
the Corporation fails to find a commercially viable deposit on any of its properties, its operations, financial condition
and results of operations will be materially adversely affected.
Market Conditions
If the Corporation commences production, profitability will be dependent upon the market price of gold. Gold prices
historically have fluctuated widely and are affected by numerous external factors beyond the Corporation’s control,
including industrial and retail demand, central bank lending, sales and purchases of gold, forward sales of gold
by producers and speculators, levels of gold production, short-term changes in supply and demand because of
speculative hedging activities, confidence in the global monetary system, expectations of the future rate of inflation,
the strength of the U.S. dollar (the currency in which the price of gold is generally quoted), interest rates, terrorism
and war, and other global or regional political or economic events.
Additionally, the Corporation is exposed to foreign exchange fluctuations as its undertakings are in Greenland
and is serviced through a web of international service providers in various currencies. As a result, revenues,
cash flows, expenses, capital expenditure and commitments are primarily denominated in Danish Krone, Euros,
Canadian dollars, U.S. dollars and U.K. Pound Sterling. This results in the income, expenditure and cash flows of the
Corporation being exposed to fluctuations and volatilities in exchange rates, as determined in international markets.
The amount of revenue generated by the Corporation in Canadian dollars to pay dividends and operating costs will
fluctuate with changes in exchange rates. Changes in exchange rates are outside the Corporation’s control.
Another important market condition to consider in relation to the ability of the Corporation to undertake activities on
its properties is the current COVID-19 pandemic being resolved. AEX’s key individuals and strategic advisors are not
all Greenlandic citizens, and as such, cannot be dispatched to site as straightforwardly as before given the risk of
various global travel bans and restrictions, including in Greenland. Additionally, the supply and demand equilibrium
point has been impacted by COVID, as can be observed through various indexes for goods and services.
COVID-19
As a result of the Coronavirus outbreak, there are currently travel restrictions in place in many countries with many
land borders closed and suspension of flights. These restrictions may have an immediate impact on the operations
of the Corporation in terms of access to resources and supplies from neighbouring countries, access to its projects
by key management personnel, disruption to operations and delays or increased costs in accessing resources and
supplies. The outbreak of Coronavirus has demonstrated the need to have contingency plans in place in relation to
10
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 the outbreak of pandemics and has also resulted with a number of companies across the globe being essentially
shut down for an extended period of time. The impact of this is that the Corporation will have to ensure that its future
plans include an appropriate amount of contingency planning for the current Coronavirus and future pandemics
but are also likely to result in some prices from suppliers being higher than previously thought, as they too include
contingencies into their pricing models and work to ensure they remain profitable despite the period of lock down.
As such, costs could escalate from the level originally anticipated. While the Corporation will seek to manage the
effect of Coronavirus on its personnel and operations, if and when necessary, there can be no assurance that
Coronavirus will not have an adverse effect on the future operations of the Corporation’s projects in Greenland or
an investment in the Corporation.
Insurance Risks
Exploration, development and production operations on mineral properties involve numerous risks, including:
• unexpected or unusual geological operating conditions;
•
•
rock bursts, cave-ins, ground, slope and bulkhead failures ;
fires, floods, earthquakes and other environmental occurrences;
• political and social instability that could result in damage to or destruction of mineral properties or producing
facilities, personal injury or death, environmental damage;
• delays in mining caused by industrial accidents or labour disputes;
• changes in regulatory environment;
• monetary losses; and
• possible legal liability.
It is not always possible to obtain insurance against all such risks and the Corporation may decide not to insure
against certain risks because of high premiums or other reasons. Moreover, insurance against risks such as
environmental pollution or other hazards as a result of exploration and production is not generally available to the
Corporation or to other companies in the mining industry on acceptable terms. Should such liabilities arise, they
could reduce or eliminate any further profitability and result in increasing costs and a decline in the value of the
securities of the Corporation.
Information Systems Security Threats
The Corporation’s operations depend upon information technology systems which may be subject to disruption,
damage, or failure from different sources, including, without limitation, installation of malicious software, computer
viruses, security breaches, cyber-attacks, and defects in design.
Although to date the Corporation has not experienced any material losses relating to cyber-attacks or other
information security breaches, there can be no assurance that the Corporation will not incur such losses in the future.
The Corporation’s risk and exposure to these matters cannot be fully mitigated because of, among other things,
the evolving nature of these threats. As a result, cyber security and the continued development and enhancement
of controls, processes and practices designed to protect systems, computers, software, data and networks from
attach, damage or unauthorized access remain a priority. As cyber threats continue to evolve, the Corporation may
be required to expend additional resources to continue to modify or enhance protective measures or to investigate
and remediate any security vulnerabilities.
Risk mitigation
In order to mitigate those risks, The Corporation has put in place a number of policies and processes detailed
in Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout the
organization of the Corporate Governance section below.
Approved on behalf of the Board
Eldur Olafsson
Chief Executive Officer
on May 13, 2022
11
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 DIRECTORS’ REPORT
The Directors present their report with the financial statements of the Corporation for the period from 1 January
2021 to 31 December 2021.
Incorporation and listings
AEX was incorporated and registered under the Canada Business Corporations Act on February 22, 2017. The
Corporation’s shares have been listed on the TSX-V in Canada since July 13, 2017 and on the UK’s AIM Market
of the London Stock Exchange since July 31, 2020. The Corporation’s assets are located in Southern Greenland.
Directors
The Directors who have held office during the year and to the date of this report are listed below.
• Graham Duncan Stewart – Chairman and Non-Executive Director (62)
Graham Stewart has worked in the international oil & gas industry for 30 years. Throughout his career, Graham
has created a reputation for generating significant shareholder value for the companies he acts for. He founded
Faroe Petroleum, which he became the CEO of in 2002 and listed on AIM in 2003. He proceeded to grow Faroe
into a highly successful independent full-cycle exploration and production company with portfolios in the UK
and Norway. The company was sold in January 2019 for USD 800 million to DNO. Graham has engineering and
business degrees from Heriot Watt and Edinburgh University and is currently also chairman of Longboat Energy
plc.
• Eldur Olafsson – Founder, Director and Chief Executive Officer (36)
Eldur Olafsson founded AEX Gold in 2017, having previously worked for over seven years on integrated
mining projects in Greenland. He has had an extensive career in the geothermal and mining industries, during
which he built the largest geothermal district heating company in the world alongside Sinopac Group. Eldur
has a successful track record of leading companies from exploration to production, as shown by his time at
Orka Energy, where Eldur was responsible for securing the acquisition, and subsequent development, of the
company’s geothermal energy in both China and the Philippines. Prior to this, he worked with Geysir Green
Energy, a geothermal investment company, where he led their business development. He later became the
Technical Director of energy company Enex, a 100% owned subsidiary of Geysir, where he grew the Company
from its inception to a position where it was operating in three Chinese provinces. Eldur holds a BSc Geology
degree from the University of Iceland.
• Jaco Crouse – Chief Financial Officer (45)
Jaco Crouse is a seasoned mining executive with 20 years’ experience in financial management, mine financial
planning, business optimization and strategy development. He most recently occupied the position of CFO
of Detour Gold Corp., where he facilitated the successful financial and operational turnaround and sale of the
corporation to Kirkland Lake Gold for US$3.7 billion. Prior to that, Mr. Crouse was Chief Financial Officer & Vice
President-Finance of Triple Flag Mining Finance Ltd. (“Triple Flag”) a Toronto-based private metal streaming
business. From 2015- 2016 Mr. Crouse was Vice President Business Planning & Optimization at Barrick Gold
Corp. where he was instrumental in resetting the cost structure and improving the capital allocation discipline
to deliver free cash flow improvements from underperforming assets during a period of low gold prices. Mr.
Crouse is a Chartered Professional Accountant (Ontario), a Chartered Accountant (South Africa), and a certified
Financial Risk Manager (FRM) with a BComs (Honours) in Accounting Sciences from the University of South
Africa. Jaco is also the CFO of Metals Acquisition Corp.
• Sigurbjorn (‘Siggi’) Thorkelsson – Non-Executive Director (55)
Siggi Thorkelsson has over 25 years’ experience in the banking and securities industry across New York,
London, Tokyo, Hong Kong and his native Iceland. Mr. Thorkelsson has previously served as Managing Director
at Nomura International (Hong Kong) Limited and as Head of Asia-Pacific Equities before becoming Senior
Managing Director of the Nomura Group. In 2010, Mr. Thorkelsson moved to Barclays Capital (Hong Kong) as
Managing Director and Head of Asia-Pacific Equities before becoming Managing Director (Head of Equities
EMEA) at Barclays Capital in London in 2011. More recently, Mr. Thorkelsson has co-founded investment and
securities companies in Iceland and in the UK.
12
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
• Line Frederiksen – Non-executive Director (42)
Line Frederiksen has substantial experience in Greenlandic infrastructure and is currently CFO at Tuass (formerly
Tele Greenland A/S), the leading provider of telecom solutions in Greenland, as well as being responsible for
cybersecurity governance. Prior to being promoted to CFO, Ms. Frederiksen was the Head of Finance at Tele
Greenland A/S and has previously had roles at Air Greenland.
• David Neuhauser – Non-executive Director (51)
David Neuhauser has extensive capital markets and M&A experience and is the founder and managing director
of event-driven hedge fund Livermore Partners in Chicago. He has invested in and advised global public
companies for the past 21 years and has a strong track record of enhancing intrinsic value. Mr. Neuhauser
currently sits on the board of Shareholders Gold Council, a Canadian corporation promoting best practices in
the gold mining industry, AIM-quoted Jadestone Energy Plc, and Kolibri Global Energy Inc.
• Liane Kelly – Non-executive Director (58)
Liane Kelly is a corporate social responsibility professional with extensive experience in environment, social
and governance (ESG) oversight. Her expertise focuses on sustainability strategies, social risk management,
and methodologies for effective community investment outcomes. Her professional career includes working as
an exploration geophysicist in the global mining sector. Liane currently sits on the board of B2Gold Corp., is a
member of their HSESS (health, safety, environment, social and security) Committee, and has worked with other
boards in areas of governance, board performance and diversity, and employee ownership.
• Warwick Morley – Jepson- Non-executive Director (64)
Warwick Morley-Jepson is mining professional with a track record of increasing responsibility over a 39-year
career in the hard rock, capital intensive resource industry. Currently is the Chairman of Wesdome Gold Mines
(TSX:WDO) and director of Karora Resources (TSX:KRR). Held executive and management positions within deep
level and open pit Gold, Platinum and Base Metal mining operations and undertaken several mine development
projects at a senior level. Served as Executive Vice President and Chief Operating Officer of Ivanhoe Mines (2019
to 2020) and Kinross Gold Corporation (2014 to 2016), and as Senior Vice President, Operations, and Regional
Vice President – Russia, (2009 to 2014). Warwick served as Chief Executive Officer of SUN Gold and Managing
Director of Barrick Africa, Barrick Platinum South Africa and three Russian-based companies in the Barrick
group. Warwick graduated in the faculty of Mechanical Engineering (HND) at the Technicon Witwatersrand and
completed programs at the Graduate School of Business at Cape Town University, Witwatersrand School of
Business at the University of the Witwatersrand and Harvard Business School.
Directors who left office during 2021:
• George Fowlie stepped down as Chief Financial Officer on January 25, 2021, and left office as Director of the
Corporation on 26 August 2021.
George Fowlie (77) has extensive experience in the banking and finance industry following a successful 40-year
career working for several high-quality global companies and setting up his own consulting company to manage
private company investments and advise companies through capital raising and M&A mandates.
• Robert Ménard stepped down as Non-executive Director on April 27, 2021.
Robert Ménard (72) has over 40 years’ experience in project management, both as a contractor and an executive.
He has used this extensive knowledge in his role as a VP for Engineering and Construction on a number of
notable projects.
• Georgia Quenby left office as Non-executive Director on 9th June 2021.
Georgia Margaret Quenby (51) is a highly experienced commercial lawyer who throughout her career has worked
on a number of cross-border transactions, both in financings and M&A, in many industries including natural
resources and the defense sector. She is regulated by the Institute of Chartered Accountants of England and
Wales as a non-appointment taking Insolvency Practitioner.
Status and activities
AEX is an independent gold mining corporation engaged in the identification, acquisition, exploration and
development of gold properties and other strategic mineral assets in Greenland.
13
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
AEX is leveraging first mover advantage to deliver shareholder value by redeveloping the past-producing Nalunaq
mine and is generating significant upside from the Corporation’s portfolio of high-impact exploration assets in
Southern Greenland.
AEX is committed to operating to the highest international standards and to leading responsible mining in Greenland.
Results and Dividend
The Corporation has not paid any dividends since its incorporation.
Whilst the Directors propose that earnings are re-invested into the development of the Corporation’s asset base
in the short to medium term, the Board will consider commencing the payment of dividends as and when the
development and profitability of the Corporation allows, and the Board considers it commercially prudent to do
so. The declaration and payment of dividends and the quantum of such dividends will, in any event, be dependent
upon the Corporation’s financial condition, cash requirements and future prospects, the level of profits available for
distribution and other factors regarded by the Board as relevant at the time.
Future developments
The Directors continue to identify opportunities which meet the Corporation’s strategy, which is set out on pages
4 to 6.
Share capital
Details of shares issued by the Corporation during the period are set out in Note 10 to the financial statements.
Directors’ interests in shares
Director interests in the shares of the Corporation, including those of connected parties and those indirectly held at
the 31 December 2021:
David Neuhauser1
Graham Stewart
Eldur Olafsson2
Jaco Crouse
Sigurbjorn Thorkelsson3
Ordinary
shares
11,764,910
2,043,058
8,006,385
100,000
6,727,834
(1) This holding is held through Livermore Partners LLC, a company in which David Neuhauser is Managing Director
(2) This holding is held through Vatnar Sarl and Vatnar EHF
(3)
This holding is held through Fossar Holdings Ltd, a company that is jointly owned by Sigurbjorn Thorkelsson and his spouse. It is the holding
company for Fossar Ltd and Fossar ehf.
Directors’ Compensation
Details of the compensation of each Director are provided in the Compensation Committee Report on pages 30 to
41.
14
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Substantial shareholdings
At 31 December 2021, with updates in the notes below.
Shareholder
Livermore Partners LLC (1)
First Pecos, LLC
Chelverton Asset Management
Amati Global Investors
Eldur Ólafsson (2)
Sigurbjorn Thorkelsson (3)
JCAM Investments
Regal Funds Management
Libra Advisors
Greenland Venture A/S
SISA (Greenland Pension Fund)
Vaekstfonden (Danish Growth Fund)
Crossroads Holdings Sarl
Shareholding
(%)
6.64
6.27
5.42
5.03
4.52
3.80
3.78
3.76
3.76
3.39
3.39
3.39
3.05
(1)
Livermore Partners LLP is a company in which David Neuhauser, Non-Executive Director of AEX, is Managing Director. In February 2022
Livermore Partners increased their holdings to 6.69%.
(2) This holding is held through Vatnar Sarl and Vatnar EHF.
(3)
This holding is held through Fossar Holdings Ltd, a company that is jointly owned by Sigurbjorn Thorkelsson and his spouse. It is the holding
company for Fossar Ltd and Fossar ehf.
Engagement with Employees Statement
The employees are fundamental to the delivery of the Corporation’s operating plans. AEX Gold aims to be a
responsible employer in our approach to pay and benefits whilst the health safety and wellbeing of our employees
is one of the primary considerations in the way in which we undertake our business.
A large part of the Corporation’s activities are centred upon what needs to be an open and respectful dialogue
with employees. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the
Corporation to successfully achieve its corporate objectives. The Board places great import on this aspect of
corporate life and seeks to ensure that this flows through all that the Corporation does. The Directors consider that
at present the Corporation has an open culture facilitating comprehensive dialogue and feedback and enabling
positive and constructive challenge.
Engagement with Stakeholders Statement
The Corporation continuously interacts with a variety of stakeholders important to its success, such as equity
investors, workforce, government bodies, local community & vendor partners. The Corporation strives to strike the
right balance between engagement and communication. Furthermore, the Corporation works within the limitations
of what can be disclosed to the various stakeholders with regards to maintaining confidentiality of market and/or
commercially sensitive information.
Political donations
The Corporation did not make any political donations or incur any political expenditure during the period.
Independent Auditors
PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l (‘PwC’), a partnership of Chartered Professional Accountants, were
appointed as auditors during the financial year.
In November 2021 PwC advised the Corporation that owing to a change in client profile they wished to work with in
terms of size they would be tendering their resignation once an arrangement with a new Auditor was agreed.
BDO Canada LLP (“BDO”) tendered their Audit Proposal on January 14, 2022.
Upon mutual agreement PwC resigned on their own initiative as the Corporation’s auditor effective February 01,
2022. BDO was appointed as successor auditor effective February 02, 2022.
15
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 There were no reservations contained, and no modified opinion was expressed, in PwC’s report on any of the
Corporation’s financial statements for the period commencing at the beginning of the Corporation’s two most
recently completed financial years and ending on the date of resignation of PwC. There were no “reportable events”,
as defined in section 4.11 of NI 51-102.
The Directors have reason to believe that BDO Canada LLP (‘BDO’) conducted an effective audit. The Directors
have provided the auditors with full access to all the books and records of the Corporation. BDO has expressed
their willingness to continue to act as auditors to the Corporation and a resolution to re-appointment them will be
proposed at the forthcoming Annual and Special Meeting of Shareholders.
Directors’ indemnities
As permitted by the Corporation By-laws and subject to the Canada Business Corporations Act, the Directors and
Officers have the benefit of an indemnity. Each Director and Officer has signed a Director and Officer Indemnification
Agreement, which came into effect at the date of listing on AIM on 31 July 2020 or, their appointment, if after listing.
The indemnity is currently in force. The Corporation also purchased and maintained throughout the financial year
Directors’ and Officers’ liability insurance in respect of itself and its Directors as well as Public Offering Securities
Insurance put in place at the date of listing.
16
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 CORPORATE SOCIAL RESPONSIBILITY
AEX Values
AEX aims to perform as a responsible mining company and uphold high standards of governance, responsibility,
social and ethical behaviour which are reflected in the Corporation’s values:
• Leading through professionalism – an experienced board and management team with diverse backgrounds
delivering on commitments to all stakeholders.
• Collaborative and caring – building strong, long-term relationships to allow sustainable mining practices and an
empowered local community.
•
Innovative and agile – finding creative solutions for the redevelopment of the past-producing Nalunaq mine and
further resource growth.
• Long term perspective – the largest licence holder in Southern Greenland with 7,616 km2 of high-grade gold
and wider mineral projects building a full cycle portfolio.
• Execute and deliver – Nalunaq development plan and exploration programme on wider portfolio are both well
underway with regular updates planned.
These values are applied throughout the business internally and also in our dealings with external suppliers and
stakeholders and we regularly evaluate how successfully we are operating against these standards.
SOCIAL RESPONSIBILITY
Wider ESG concerns are at the forefront of the Corporation’s strategy, with a particular focus on the social aspect,
which considers the wellbeing of AEX employees, the communities in which we operate, and our suppliers. AEX
is committed to building a sustainable business and empowering the communities in which we operate to play a
leading role in their own development.
From a more local perspective, the Corporation is committed to contributing to the continuous development of
the communities in which it operates, ensuring a continuous dialog with both local leaders and the Greenlandic
government to provide the highest level of care and security. Additionally, AEX is committed to responsible
business practices in terms of quality management, environmental responsibility, community giving and care of its
professionals both within the Corporation and throughout its partners and consultants.
People and equal opportunities and discrimination
The Corporation is an equal opportunities employer and will recruit, employ and develop employees in line with best
practice and based on the qualifications, experience and skills required for the work. Over 50% of staff employed by
the Corporation during 2021 field season were Greenlandic. We consider applications for employment from people
regardless of gender, race, age, disability, marital status, sexual orientation or religious belief. We have respect for
human dignity and the rights of the individual. We support the principles of, and promote respect for, the Universal
Declaration of Human Rights.
Societal contribution
As our assets are in Greenland, the Corporation is focusing on positive interaction between it and local stakeholders
in order to foster long term, sustainable relationships. Our aim is that our projects are socially sustainable and meet
high international standards with regard to financial planning, health, safety, the environment as well as social and
cultural initiatives.
We have defined our Core Purpose as “Creating a Greenlandic Legacy”. We will:
• Take time to understand Greenlandic culture and respect traditions
• Engage with local stakeholders to establish how we can collaborate positively
• Be an active member of the community empowering it to grow
• Encourage skills and knowledge transfer to Greenlanders from internal and external sources
• Prioritise Greenlandic laws, guidelines and practices in all our work
• Recognise and celebrate successes
• Ensure all our impacts are positive
•
Inspire loyalty and pride
17
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 As part of the Social Impact Assessment (SIA) process which the Corporation is currently undertaking, it is required
to describe and assess the direct and indirect impacts of the Nalunaq Project on social conditions. The process
includes a period of eight week public consultation hearings so local stakeholders have an opportunity to contribute
to the process and make sure their opinions are taken into consideration.
Once the SIA report is approved, an Impact Benefit Agreement will be negotiated between the Corporation, the
relevant local stakeholders and the Greenland Government to ensure the greatest possible Greenlandic involvement
in the Nalunaq Project going forward.
Occupational health & safety
The Corporation has endeavoured to protect its employees during the COVID-19 pandemic by implementing the
strict measures at its sites in Southern Greenland.
ENVIRONMENTAL STEWARDSHIP
The Corporation is committed to maintaining high standards of environmental stewardship and incorporating
environmental protection as part of its strategy and decision-making process. AEX recognizes that appropriate
environmental management is essential to the proper conduct of its mining operations and activities. Accordingly,
our goal is to minimize the environmental impacts of our projects and activities.
The Corporation’s Environmental Policy is integrated into the design of its projects, including exploration,
development and construction. AEX employees are trained to comply with environmental regulations and provided
the tools to apply the Corporation’s policies to all areas of their work. AEX will continue to explore options to
reduce its environmental impact, such as rehabilitation, impact on wildlife, energy alternatives (local wind and hydro
potential to support the mine and reduce the project’s environmental footprint), or responsible suppliers. Nalunaq
gold mine is a significant distance from local communities.
The board and management team have set measurable targets for environmental practice, which include limiting
the disposal of waste, implementing rigorous reuse and recycle programmes and encouraging the prudent use of
natural resources such as water and power.
The Environmental Policy is available on our website.
Greenhouse gas emissions
The Corporation recognises the effects greenhouse gas emissions are having on the environment and is therefore
committed to reducing emissions throughout every aspect of the organisation. AEX is reviewing its pollution,
greenhouse gas and other emissions disclosure and exploring how this can be improved to increase transparency.
The board and management team are committed to working with stakeholders to promote increased energy
efficiency and are continually exploring new ways for the Corporation to reduce its emissions. We have seen a
positive momentum on the topic of the global climate and growing scrutiny on businesses to play their part in
reducing the world’s emissions. AEX’s goal is to ensure it is playing its part in reducing the world’s carbon footprint
and it is evaluating practical ways it can do this.
The Corporation is committed to working with stakeholders to promote actions that contribute to increased energy
efficiencies, including monitoring and adopting management processes to reduce greenhouse gas emissions.
The Corporation’s Environmental Policy benefits all the Corporation’s employees, suppliers, shareholders and the
communities in which it operates.
One of the Corporation’s guiding principles is to implement an effective environmental management system by
establishing measurable targets for environmental practices, in particular limiting pollution, greenhouse gases and
other emissions.
18
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 CORPORATE GOVERNANCE
Chairman’s Governance Statement
As Chairman of the Board of Directors of the Corporation, it is my responsibility to ensure that AEX has both sound
corporate governance and an effective Board. I continue to provide leadership and to ensure that the Board is
performing its role effectively and has the capacity, ability, structures, corporate governance systems and support
to enable it to function effectively and continue to do so.
The Corporation operates to the highest applicable regulatory standards and the Board recognises the value and
importance of high standards of corporate governance and believes that our systems provide the most appropriate
framework for a corporation of our size and stage of development.
The Corporation is subject, among other laws and regulations, to instruments published by relevant Canadian
securities regulators. One such instrument, NI 58-101 Disclosure of Corporate Governance Practices, prescribes
certain disclosure by the Corporation of its corporate governance practices and NP 58-201 Corporate Governance
Guidelines provides non-prescriptive guidelines on corporate governance practices for reporting issuers such as
the Corporation.
As a result of the Corporation’s listing on the TSX-V and being a reporting issuer in the Canadian province of Ontario,
the Corporation has established corporate governance practices and procedures appropriate for a publicly listed
Corporation in Canada. The Corporation complies with Canadian corporate governance standards appropriate for
publicly listed companies.
Since listing on AIM on July 31, 2020, the Board further complies with the recommendations set out in the corporate
governance guidelines for smaller quoted companies published by the Quoted Companies Alliance (‘QCA’) Corporate
Governance Code, as amended from time to time. It requires AIM-quoted companies to adopt a ‘comply or explain’
approach in respect of the application of guidance contained within. This report follows the structure of these
guidelines and explains how we have applied the guidance. The Board considers that the Corporation complies
with the QCA Code in all respects.
This Governance section of the Annual Report also includes reports from our five committees: the Audit and Risk
Management Committee, the Corporate Governance and Nomination Committee, and the Technical, Safety and
Sustainability Committee, the Compensation Committee and the Disclosure Committee, all with formally delegated
duties and responsibilities.
The disclosures required to be included in the Corporation’s website in respect of the QCA Corporate Governance
Code can be found at www.aexgold.com/about/qca-code-disclosures/.
There have been changes to the Corporation’s corporate governance arrangements over the past year, including
significant changes to the composition of the Board of Directors: resignation of three directors (Robert Ménard,
George Fowlie and Georgia Quenby) and appointment of four new non-executive directors (and one executive
Director, Jaco Crouse, who joined the Corporation as CFO in January 2021 to replace George Fowlie.
Ultimate responsibility for the quality of, and approach to, corporate governance lies with me as Chairman of the
Board, and an effective Board is at the heart of the governance structure. Sound corporate governance begins with
engaged, capable, and experienced directors; and I believe that outstanding professionals on Board of AEX is a
well-functioning and balanced team.
Principle 1 – Establish a strategy and business model which promote long-term value for the
shareholders
The board has a shared view of the Corporation’s purpose, business model and strategy which are stated and
explained on pages 4 to 6 of this Annual Report.
The Corporation has established an unrivalled footprint and the largest gold licence portfolio in Greenland.
As with many other countries in the world the Government of Greenland implemented travel bans and restrictions
during 2021. In May 2021 the Corporation agreed a plan with the Greenlandic Covid Commission which meant that
it could mobilize personnel to undertake work in its licence areas during 2021.
The Corporation maintains a Risk Matrix which focuses on the risks facing the business both from an operational and
corporate perspective. As a result of the revised strategy and business model, the risks facing the Corporation were
also reviewed to ensure the Corporation continued to be positioned to promote long-term value for its shareholders.
The Board takes steps to mitigate the risks. Various challenges to the execution of the Corporation’s strategy are
highlighted in the section covering Principal risks and uncertainties facing the business.
19
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 The Corporation has implemented remuneration policies that reinforce this strategy, by rewarding Executive
directors and senior management in a manner that ensures that they are properly incentivised and motivated to
perform in the best interests of shareholders.
Principle 2 – Seek to understand and meet shareholder needs and expectations
Directors put much effort in developing a good understanding of the needs and expectations of the shareholders to
form a clear view of the motivations behind their voting decisions.
The Corporation has engaged corporate brokers, in-house investor relations adviser, and an external PR firm. The
Corporation believes these appointments facilitate regular dialogue with shareholders to provide a good awareness
and understanding of shareholders and their expectations. The Corporation’s Nominated Advisor and Broker, Stifel
Europe, is briefed regularly and updates the directors during the year on shareholder expectations.
The Board is committed to maintaining good communication and having constructive dialogue with shareholders by
providing effective communication through our Annual Reports along with Regulatory News Service announcements.
All shareholders have the opportunity to attend the Annual and Special Meetings of Shareholders and participate
in a question-and-answer session to allow direct access to the Board members in attendance and provide an
opportunity to ask questions directly to the Corporation. The Annual General Meeting is regarded as an opportunity
to meet, listen and present to shareholders, and shareholders are encouraged to attend and ask questions. The
results are subsequently published on the Corporation’s website.
Due to the public health impact of the COVID-19 pandemic, and to mitigate risks to the health and safety of our
community, shareholders, employees and other stakeholders, in 2021 AEX conducted an online only shareholders’
meeting. Registered Shareholders and duly appointed proxyholders attended the meeting online and were able to
participate, vote, or submit questions during the meeting’s live webcast. The AGM in 2021 will also be held online.
The Corporation has included a contact section on the website including a form and email address which shareholders
can use to make contact, and these questions are passed on to the most appropriate member of the team to ensure
a fast and accurate response to stakeholder questions.
The Corporation continues to have regular communications with its investor base through investor roadshows,
conferences, and direct conversations as appropriate, as well as ensuring regular communication with its broker
and PR firms, to ensure it is aware of shareholder views in a timely and accurate manner.
The Corporation issues regular press releases, and quarterly financial statements alongside management discussion
and analysis, to ensure that shareholders are informed of the latest operational and corporate developments.
We also use the Corporation’s website, www.aexgold.com, for both financial and general news relevant to
shareholders. The Corporation has established an AIM Rule 26 website page which includes the details of all its key
advisors, providing shareholders with a point of contact in addition to the website form for communications.
Principle 3 – Take into account wider stakeholder and social responsibilities and their implications for
long-term success
The Board recognises that the long-term success of the Corporation is reliant upon the efforts of all its stakeholders,
both internal and external. The Corporation’s main stakeholder groups are the Government of Greenland, the local
communities surrounding licence areas, and the Corporation’s employees, contractors, suppliers and customers.
AEX seeks to be a socially responsible corporation which has a positive impact on the community in which it
operates. We have defined our Core Purpose as “Creating a Greenlandic Legacy”. We will:
• Take time to understand Greenlandic culture and respect traditions
• Engage with local stakeholders to establish how we can collaborate positively
• Be an active member of the community empowering it to grow
• Encourage skills and knowledge transfer to Greenlanders from internal and external sources
• Prioritise Greenlandic laws, guidelines and practices in all our work
• Recognise and celebrate successes
• Ensure all our impacts are positive
•
Inspire loyalty and pride
20
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 The Corporation has an excellent relationship with various departments of the Government of Greenland, including
Licencing, Inspection and Technical, Geology and the Environment Agency for Mineral Resource Activities.
The Corporation adheres to the published government process for executing activities in the field in an environmental
and socially responsible manner.
There is a published process for Environmental Impact Assessment, Social Impact Assessment and negotiating an
Impact Benefit Agreement in Greenland, which the Corporation is following.
In the longer term, the Corporation is looking at opportunities to utilise green energy (for example, hydroelectricity)
to provide power for its projects. Should this be successful, excess renewable energy could be provided to the local
communities.
AEX has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity
to raise issues and provide feedback which is an essential part of all control mechanisms. The Corporation holds
information meetings with the local communities each year to provide updates about the project and take questions.
It also meets monthly with representatives from the local business associations.
The Corporation targets significant local employment and in the 2021 field season, 61% of the workforce were
local. It uses local contractors wherever possible and has agreed a Greenlandic procurement policy to ensure
transparency of process. No discrimination is tolerated and the Corporation endeavours to give all employees the
opportunity to develop their capabilities. Everyone within the Corporation is a valued member of the team and our
aim is to help every individual achieve his/her full potential. Weekly team meetings are held where members of the
team can raise issues as required with colleagues and the CEO.
The Corporation has a Code of Business Conduct and Ethics and an Integrity Program for directors, officers,
employees, consultants and agents which sets out standards and processes for ethical behaviour, as well as the
process for raising concerns confidentially.
Principle 4 – Embed effective risk management, considering both opportunities and threats, throughout
the organisation
The Board recognises the need for an effective and well-defined risk management process. Risk management
is integral to the ability of the Corporation to deliver on its strategic objectives. The key risks to the business are
outlined on pages 7 to 11 of this Annual Report. The Corporation has embedded in its organization various risk
management schemes and procedures.
First and foremost, the Corporation maintains a Risk Matrix which covers the principal risks of the business both
from an operational and corporate perspective, and which also provides mitigation measures to attenuate such
risks to the extent possible. The Risk Matrix is presented to the Audit and Risk Management Committee on a
quarterly basis. Additionally, the Corporation develops its projects according to the industry standards regarding
project controls. As such, any development project is supported by a specific Risk Register. The Risk Register is
used to identify threats by qualifying the probability of occurrence of each risk, as well as quantifying its adverse
consequence. The Risk Matrix and Risk Register are periodically reviewed internally.
Both the Risk Matrix and the Risk Register are maintained to support the decisions of the Corporation to recruit
key individuals and strategic advisors at various levels to assist AEX in mitigating the principal risks as effectively
as possible.
The Board is also responsible for developing and adopting policies and procedures to ensure the integrity of the
internal controls and management information systems.
The Corporation currently has a relatively simple control environment given its size and stage of development. As it
moves towards development and production, the Board will continue to strengthen and build on the existing control
environment.
Principle 5 – Maintain the Board as a well-functioning, balanced team led by the Chairman
During 2021 and currently, the Board is comprised of two executive officers (Eldur Olafsson and Jaco Crouse) and
six non-executive directors. Of the non-executive directors, the Board considers that Line Frederiksen, Liane Kelly,
Warwick Morley-Jepson and Sigurbjorn Thorkelsson are “independent” in accordance with Canadian corporate
governance standards, but Graham Stewart and David Neuhauser are not (as a result of being the chairman of the
Corporation and as a result of David’s interest in Common Shares, held through Livermore Partners, being over
three percent of the Corporation). The Board considers that Graham Stewart, Line Frederiksen, Liane Kelly, Warwick
Morley-Jepson and Sigurbjorn Thorkelsson are “independent” from a UK corporate governance perspective,
21
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 notwithstanding the interests in Common Shares held by Graham Stewart and Sigurbjorn Thorkelsson (through
Fossar Holdings Ltd, a company that is jointly owned by Sigurbjorn Thorkelsson and his spouse and is the holding
company for Fossar Ltd and Fossar ehf.) but David Nuehauser is not (as a result of his interest in Common Shares,
held through Livermore Partners, being over three percent of the Corporation).The Directors’ interests in shares can
be found on page 14.
The board believes that it has an appropriate balance between executive and non-executive directors.
Director Name
Graham Stewart
Eldur Olafsson
Jaco Crouse
Sigurbjorn Thorkelsson
Line Frederiksen
David Neuhauser
Liane Kelly
Warwick Morley-Jepson
Independent
in the UK
Independent
in Canada
Yes
No
No
Yes
Yes
No
Yes
Yes
No
No
No
Yes
Yes
No
Yes
Yes
Date of
Appointment to
the Corporation
14th April 2017
14th April 2017
27th April 2021
27th July 2020
9th June 2021
9th June 2021
26th August 2021
26th August 2021
Length of Service
5 years
5 years
1 year
1.5 years
< 1 year
< 1 year
< 1 year
< 1 year
Non-executive directors are expected to dedicate the time and attention necessary to perform and carry out such
duties and obligations as is typical for a director. As a minimum, the non-executive directors are expected to spend
at least 12 days per year on working for the Corporation however, in practice all the Non-Executives spend more
than the minimum number of days on Corporation business. Board meetings are open and constructive, with every
director participating fully. Senior management can frequently be invited to meetings, providing the Board with a
thorough overview of the Corporation.
The following is a table of Board and Committee meetings held during the year to December 31, 2021 and Directors’
attendance1:
Board
Meetings
Audit and Risk
Management
Committee
Compensation
Committee
Corporate
Governance
and
Nomination
Committee
Technical,
Safety and
Sustainability
Committee
11
4
2
3
1
11 / 11
6 / 62
11 / 11
11 / 11
5 / 52
4 / 52
2 / 22
2 / 22
3 / 32
4 / 4
2 / 32
2 / 32
2 / 2
2 / 2
1 / 12
3 / 3
3 / 3
1 / 12
1 / 1
1 / 1
1 / 1
Total meetings held during
the year
Member Attendance:
Executive Directors
Eldur Olafsson
Jaco Crouse
Non-Executive Directors
Graham Stewart
Sigurbjorn Thorkelsson
David Neuhauser
Line Frederiksen
Liane Kelly
Warwick Morley-Jepson
1. Does not include directors attending as invitees.
2.
The total number of Board / Committee meetings held after the director joined the Board / the Committee or before he or she stepped down
from the Committee.
22
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Principle 6 – Ensure that between them the Directors have the necessary up-to-date experience, skills
and capabilities
The Directors have both a breadth and depth of skills and experience to fulfil their roles. The Corporation believes
that the current balance of skills in the Board as a whole reflects a very broad range of commercial and professional
skills across geographies and industries and each of the Directors has experience in public markets.
An annual review of the skills among the Board was conducted by the Corporate Governance and Nomination
Committee (the ‘Committee’). The Committee identified that the Board has a competent mix of industry experience,
change management, regulatory, legal, risk management, ESG and financial experience. During the year there has
been a further strengthening of the Board with the appointment of four new Non Executive Directors.
Line Fredriksen has substantial experience in Greenlandic infrastructure and is currently CFO at Tuass (previously
Tele Greenland A/S), the leading provider of telecom solutions in Greenland, as well as being responsible for
cybersecurity governance. Prior to being promoted to CFO, Ms. Fredriksen was the Head of Finance at Tele
Greenland A/S and has previously had roles at Air Greenland.
David Neuhauser has extensive capital markets and M&A experience and is the founder and managing director of
event-driven hedge fund Livermore Partners in Chicago. He has invested in and advised global public companies
for the past 21 years and has a strong track record of enhancing intrinsic value. Mr. Neuhauser currently sits on the
board of Shareholders Gold Council, a Canadian corporation promoting best practices in the gold mining industry,
AIM-quoted Jadestone Energy Plc, and Kolibri Global Energy Inc
Liane Kelly brings a wealth of ESG experience to the Board having enjoyed a successful career focused on advising
natural resource companies on sustainability and CSR initiatives. Her expertise focuses on community engagement
and social impact, both of which will be vital for AEX as the Corporation continues to build on its strong engagement
with its Greenlandic stakeholders.
Warwick Morley-Jepson has significant experience in mining having spent just under 40 years’ in the industry,
holding various managerial and executive positions. His experience in mine development and operations at global
mining firms is highly relevant to AEX as the Corporation continues to progress both the Nalunaq mine and its
various exploration targets.
The Board are able to seek external advice should it be required to enable them to appropriately perform their
duties. The Board have access to Joan Plant, Corporate Secretary who is also a Director of Nalunaq A/S, the wholly
owned subsidiary of the Corporation; she has 12 years of experience operating in Greenland and advises and
supports the Board and Management on any matter involving Government liaison or Greenland matters in general.
The Corporation is satisfied that the Board composition is appropriate given the size and stage of development
of the Corporation. The Board will keep this matter under regular review. The Board shall also review annually the
appropriateness and opportunity for continuing professional development of Directors whether formal or informal.
The biographies of the Board can be found on pages 12 to 13, and details of the experienced management team
can be found on “Team” section of the website https://www.aexgold.com/about/the-team/management.
Principle 7 – Evaluate Board performance based on clear and relevant objectives, seeking continuous
improvement
The Corporate Governance and Nomination Committee is responsible for carrying out an annual evaluation of the
performance of the Board, Board Committees, the Chair, and individual Directors. The Board evaluation process is
designed to provide Directors with an opportunity to examine how the Board is operating and to make suggestions
for improvement.
Considering that five of the eight directors joined the Board during 2021, the Committee recommended carrying
out internal evaluation to review 2021 performance. Rationale for external Board performance evaluation will be
considered in 2023.
The performance evaluation took the form of questionnaires that were completed by the Board and committee
members. The areas covered were: Board organization, managing the affairs of the Board, strategy and planning,
management and human resources, business and risk management, financial and corporate issues, shareholder
and corporate communications, policies and procedures. Each Board Committee was evaluated separately.
The performance evaluation results demonstrated that overall, the Board and its Committees are effectively
organised and perform well as a whole with each Director contributing well. Respondents highly rated the Board’s
performance for 2021 as 7.8 out of 10 (with 1 being very poor and 10 being excellent). The Board understands
the vision for the future and the Corporation’s long-term strategic direction, cooperation with the management is
23
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 viewed as excellent. It was concluded that overall, effectiveness and performance of the Board had improved during
the past year, with the Board being more diverse, with a competent mix of industry experience, regulatory, risk
management, ESG and financial expertise.
The directors identified certain areas for improvement and recommended further steps to enhance the Board
performance, such increasing the number of in-person meetings to ensure higher quality discussions, enhancing
the Corporation’s KPI system and Risk metrics and developing an ESG-focused training program for the Board
members.
Overall, each of the Board committees agreed they were operating effectively in line with its Charter, provided
useful reporting to the Board, and that there was an appropriate balance of technical skills and expertise among
the members of each committee.
Principle 8 – Promote a corporate culture that is based on ethical values and behaviours
One of our values is leading through professionalism and we encourage employees, officers, consultants and
directors to show this through the quality of their work, behaving in an ethical manner and always seeking to be a
positive ambassador of the organization.
The Corporate Governance and Nomination Committee is responsible for ensuring the “right tone at the top” and
that the ethical and compliance commitments of management and employees are understood throughout the
Corporation. This is achieved through written Codes of Business Conduct and Ethics addressing such matters as
the group’s policy on bribery, political contributions, conflicts of interest and unauthorised payments and the ability
to report violations without fear of reprisal.
The Integrity Program provides guidance for every director, officer, consultant and employee of AEX to maintain
the highest integrity and it provides procedures to follow when the integrity of any person’s actions or perceived
actions are not in accordance with the responsibilities outlined in the Corporation’s Code of Business Conduct and
Ethics, Insider Trading and Share Dealing Policy, or other policies and procedures as outlined to directors, officers,
consultants and employees. For many companies this program is called a Whistleblower Policy. For the Corporation
it is more encompassing and is called the Integrity Program.
Every director, officer, consultant and employee of AEX and its subsidiaries has an ongoing responsibility to report
any activity or suspected activity of which he or she may have knowledge relating to the integrity of the Corporation’s
financial reporting or which might otherwise be considered sensitive in preserving the reputation of the Corporation.
It is the responsibility of each employee, officer, consultant and director to report such activities whenever he or
she has reasonable and bona fide grounds to believe that such an incident has occurred, is occurring or is likely to
occur.
Principle 9 – Maintain governance structures and processes that are fit for purpose and support good
decision-making by the Board
The role of the Board is to focus on governance and stewardship of the business as a whole. The Board recognises
that its decisions regarding strategy and risk will impact the corporate culture of the Corporation as a whole and
that this will impact the performance of the Corporation. Good governance requires the Board to be involved in
strategic planning, risk management, internal control integrity and external financial and regulatory reporting and
compliance. The Board is responsible for the supervision of management and must act in the best interests of the
Corporation, its shareholders and greater stakeholders. The Board acts in accordance with the laws of Canada, the
articles and by-laws of the Corporation, and the specific terms of reference as laid out for each committee and the
Board as a whole.
The Corporate Governance and Nomination Committee establishes and monitors the application of the corporate
governance principles and practices of the Corporation and ensures that it adheres to best practices, as well as the
laws and regulations on corporate governance.
The Corporate Governance and Nomination Committee ensures that the Corporation, its management, directors
and members serve in the best interest of its shareholders as detailed in the Integrity Program and that actions are
conducted in a professional and transparent manner and in conformity with applicable laws and regulations, as well
as internal policies.
The Board meets quarterly with additional meetings as required, and the Board has five committees, as detailed
below, which meet during the year at different frequencies.
24
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Audit and Risk Management Committee: The primary function of the Audit and Risk Management Committee
is to assist the Board in fulfilling its financial reporting and controls responsibilities to shareholders. The Terms
of Reference for the Audit and Risk Management Committee can be found at the Corporation’s website at
https://www.aexgold.com/about/corporate-governance/.
A report from the Audit and Risk Management Committee can be found on page 27.
Compensation Committee: The primary function of the Compensation Committee is to determine executive
remuneration packages and to ensure that the remuneration policy and practices of the Corporation reward fairly
and responsibly, with a clear link to corporate and individual performance.
The Terms of Reference for the Compensation Committee can be found at the Corporation’s website at
https://www.aexgold.com/about/corporate-governance/.
A report from the Compensation Committee can be found on page 27.
Corporate Governance and Nomination Committee: The Corporate Governance and Nomination Committee is
responsible for reviewing the structure, size and composition of the Board and identifying and nominating, for the
approval of Board, candidates to fill vacancies on the Board as and when they arise.
The Terms of Reference for the Corporate Governance and Nomination Committee can be found at the Corporation’s
website at https://www.aexgold.com/about/corporate-governance/.
A report from the Corporate Governance and Nomination Committee can be found on page 28.
Technical, Safety and Sustainability Committee: The role of the Safety and Environmental Committee is to assist
the Corporation and the Board in fulfilling their respective obligations relating to technical, health and safety,
environmental and social matters concerning the corporation.
The Terms of Reference for the Technical, Safety and Sustainability Committee can be found at the Corporation’s
website at https://www.aexgold.com/about/corporate-governance/.
A report from the Safety and Environmental Committee can be found on page 29.
Disclosure Committee: The purpose of the Disclosure Committee is to assist the Board in fulfilling its responsibilities
in respect of timely and accurate disclosure of all information and establishing and maintaining adequate procedures
to comply with these obligations.
The Terms of Reference for the Disclosure Committee can be found at the Corporation’s website at
https://www.aexgold.com/about/corporate-governance/.
A report from the Disclosure Committee can be found on page 42.
Principle 10 – Communicate how the Corporation is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders
The Board believes that a healthy dialogue exists between the board and all of its stakeholders, including
shareholders, to enable all interested parties to come to informed decisions about the Corporation. The Board is
committed to maintaining effective communication and having constructive dialogue with its shareholders.
The website of the Corporation is regularly updated to include all relevant reports and information required under
AIM Rule 26.
The Corporation holds an Annual and Special Meeting of Shareholders where annual results are presented. A
Management Information Circular is distributed to shareholders to notify them of this annual event. The results of
voting on all resolutions at general meetings are posted to the Corporation’s website on a timely basis, including any
actions to be taken as a result of resolutions which receive a high percentage of votes against from shareholders
(which has not yet been the case).
The Corporation’s website provides access to historic press releases, financial information, and other corporate
documents including quarterly unaudited interim accounts and MDA and audited annual financial information.
Investors can request to join the Corporation’s mailing list to provide direct access to press releases, updates of the
corporate presentation and other information.
The Corporation regularly engages with its shareholders through roadshows, calls and meetings, has various contact
methods published on its website, and maintains a presence on LinkedIn, Twitter and Instagram. The Corporations’
only subsidiary Nalunaq A/S maintains a Facebook page.
25
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 As required by the QCA Code, the Corporation has implemented additional reporting in its annual reporting cycle in
relation to the governance of the Corporation, which will continue to evolve over time.
Share Dealing
With effect from Admission on AIM, the Corporation has adopted a revised insider trading and share dealing policy
for Directors and applicable employees of the Corporation for the purpose of ensuring compliance by such persons
with the provisions of the AIM Rules relating to dealings in the Corporation’s securities (including, in particular,
Rule 21 of the AIM Rules) and MAR, as well as applicable Canadian securities laws. The Directors consider that
this insider trading and share dealing policy is appropriate for a Corporation whose shares are admitted to trading
on AIM and the TSX-V, and will take all reasonable steps to ensure compliance by the Directors and any relevant
employees with such policy.
Relations with shareholders
The Chief Executive Officer and the Chairman are available for communication with shareholders and all shareholders
have the opportunity, and are encouraged, to attend and vote at the Annual and Special Meeting of Shareholders
of the Corporation during which the Board will be available to discuss issues affecting the Corporation. The Board
stays informed of shareholders’ views via regular meetings and other communications with shareholders.
Business Principles Ethics
The Corporation has implemented Code of Business Conduct and Ethics and Integrity Program that apply to all
employees and contractors and which provide a framework for conducting business, dealing with other employees,
clients and suppliers, and reflect the Corporation’s commitment to a culture of honesty, integrity and accountability.
The Corporation is committed to conduct all activities with the highest standards of fairness, honesty and integrity and
in compliance with all legal and regulatory requirements. The Corporation expects all directors, officers, employees,
consultants and agents of the Corporation to conduct dealings in accordance with the Code of Business Conduct
and Ethics.
The Code of Business Conduct and Ethics policy is available on our website.
Internal control
The Board is responsible for establishing and maintaining the Corporation’s system of internal control and reviewing
their effectiveness. Internal control systems are designed to meet the particular needs of the Corporation and the
particular risks to which it is exposed. The procedures are designed to manage rather than eliminate risk and by
their nature can only provide reasonable but not absolute assurance against material misstatement or loss.
The Board has reviewed the Corporation’s risk management and control systems and believes that the controls are
satisfactory given the nature and size of the Corporation.
26
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Report of the Audit and Risk Management Committee
Audit and Risk Management Committee Members:
Line Frederiksen (Chair) (from June 09, 2021)
Sigurbjorn Thorkelsson
David Neuhauser (from June 09, 2021)
Georgia Quenby (to June 09, 2021)
Graham Stewart (to August 26, 2021)
The Audit and Risk Management Committee (‘the Committee’) is pleased to present its 2021 report to shareholders.
During the year there have been a number of changes to membership, which was driven by new non-executive
directors joining the Board.
Audit and Risk Management Committee Membership changes during the year
Line Frederiksen was appointed as the Chair from June 09, 2021. Prior to that Sigurbjorn Thorkelsson was Chair of
the Committee from July 31, 2020. Georgia Quenby served as a member of the Committee until the Corporation’s
AGM on June 09, 2021. Graham Stewart stepped down from the Committee on August 26, 2021.
The primary function of the Committee is to assist the Board in fulfilling its financial reporting, internal controls
and risk management responsibilities to shareholders. In line with the Committee Charter, it shall meet at least
three times a year, at appropriate times in the financial reporting and audit calendar, or more frequently if required.
During the year, the Committee met three times and the external auditors attended one of these meetings. The
Committee’s Charter is available on the Corporation’s website www.aexgold.com.
Activity during the year
The Committee monitored the integrity of the annual and quarterly financial statements and management’s
discussion and analysis. It reviewed them for significant financial reporting matters and accounting policies and
disclosures in financial reporting. The Committee was also responsible for reviewing the Corporation’s Risk Matrix,
which was updated during the year to reflect current strategic developments. The Committee was also responsible
for agreeing policies specific to the Committees remit, as well as various arrangements for implementation of a new
accounting system which was put in place in February 2022.
The external auditor PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l (‘PwC’) attended one Committee meeting which
covered the year end approval process where the meeting considered reports from the external auditor in respect
of their audit approach, independence and subsequent findings in respect of the audit of the year end results.
In November 2021 the external auditor PwC advised the Corporation that owing to a change in client profile they
wished to work with in terms of size, they gave notice they would be tendering their resignation once an arrangement
with a new Auditor was agreed.
BDO Canada LLP (“BDO”) tendered their Audit Proposal on January 14, 2022. It was reviewed by the Committee
and the Committee on January 21, 2022 recommended the Board to approve the change in auditor from PwC to
BDO.
The resolution of appointment of a new external auditor was passed by the Board on February 02, 2022.
External audit
The Committee is responsible for managing the relationship with the external auditor, which the Corporation renews
annually. The objectivity and independence of the external auditors is safeguarded by reviewing the auditors’ formal
declarations, monitoring relationships between key audit staff and the Corporation and reviewing the non-audit
fees payable to the auditor. Non-audit services are not performed by the auditor if such services would impair their
independence under relevant professional standards.
During the year, amounts billed by PwC for audit fees totaled CAD 53,000, for audit related services in relation to
accounting advice totaled CAD 12,375, and CAD 455 and CAD 95,111 for other fees in relation to CPAB fees and
for assistance with the design and implementation of new long-term incentive arrangement were billed respectively.
These audit related services were performed by a team separate from the audit team and did not involve any
subjective judgements impacting the Corporation’s financial reporting.
Internal audit
In light of the size of the Corporation and its current stage of development, the committee did not consider it
necessary or appropriate to operate an internal audit function during the year.
27
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Report of the Corporate Governance and Nomination Committee
The Corporate Governance and Nomination Committee (the “Committee”) is pleased to present its 2021 report to
shareholders.
Corporate Governance and Nomination Committee Members:
Liane Kelly, Chair (from August 26, 2021)
Graham Stewart
David Neuhauser (from June 09, 2021)
Sigurbjorn Thorkelsson (from June 09, 2021 to August 26, 2021)
Georgia Quenby (to June 09, 2021)
The Committee’s members are Liane Kelly who chairs the Committee, and Graham Stewart and David Neuhauser
who are both Non-Executive Directors. In line with the corporate governance guidelines for smaller quoted companies
published by the Quoted Companies Alliance (‘QCA’) Liane Kelly and Graham Stewart are considered independent
but David Neuhauser is not considered independent.
The Committee shall meet at least once a year. The Committee’s Charter is available on the Corporation’s website
www.aexgold.com.
Activity during the year
During the year the Committee considered the Corporation’s requirement to appoint new Non-Executive Directors
and commissioned a search for these appointments. The Committee was actively engaged in recruitment and
nomination of new directors.
The Committee was also involved in recommending compensation packages for Executive Directors and the Non-
Executive Directors. More information about the packages and the Corporation’s Compensation Report and Policy
can be found on pages 30 to 41.
The Committee also considered the appointment of the new Chief Financial Officer, Jaco Crouse who joined the
Corporation as the CFO on January 25, 2021 and the Board as executive director on April 27, 2021 on recommendation
by the Committee.
28
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Report of the Technical Safety and Sustainability Committee
The Technical Safety and Sustainability Committee (the “Committee”) is pleased to present its 2021 report to
shareholders.
Technical Safety and Sustainability Committee Members:
Warwick Morley-Jepson, Chair (from August 26, 2021)
Liane Kelly (from August 26, 2021)
Line Frederiksen (from August 26, 2021)
George Fowlie (from June 09, 2021 to August 26, 2021)
Robert Ménard (to April 27, 2021)
Eldur Olafsson (to August 26, 2021)
Graham Stewart (from April 27, 2021 to June 09, 2021)
The Committee’s members are Warwick Morley-Jepson who chairs the Committee, Line Frederiksen and Liane
Kelly. All Committee members are considered “independent” within the meaning of NI 52-110 and in line with the
QCA.
Activity during the year
The Committee was reconfigured in August 2021 as the Technical, Safety and Sustainability Committee to replace
the Safety and Environmental Committee and to assist the Corporation and the Board in fulfilling their respective
obligations relating to technical, health and safety, environmental and social matters concerning the Corporation.
As a consequence, a new Committee Mandate was adopted to reflect the revised scope. By suggestion of the
Committee’s Chair Warwick Morley-Jepson it was also agreed that the Committee should meet at least four times
a year given the current point in the Corporation’s development.
The Committee’s Charter is available on the Corporation’s website www.aexgold.com.
29
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Report of the Compensation Committee. Directors’ Compensation Report
The Compensation Committee (the ‘Committee’) is pleased to present its 2021 report to shareholders. The period
covered by this report is January 1 to December 31, 2021.
Compensation Committee Members:
Sigurbjorn Thorkelsson, Chair (from June 09, 2021)
Graham Stewart
Warwick Morley-Jepson (from August 26, 2021)
Line Frederiksen (from June 09, 2021 to August 26, 2021)
Georgia Quenby (to June 09, 2021)
In the relevant period the Committee’s members were Sigurbjorn Thorkelsson, Chair, who replaced Georgia Quenby
who chaired the Committee until the Corporation’s AGM on June 09, 2021, Graham Stewart and Warwick Morley-
Jepson, all of whom are Non-Executive Directors. Each of its members are considered “independent” within the
meaning of the QCA and Sigurbjorn Thorkelsson and Warwick Morley-Jepson also within the meaning of NI 52-110.
The Committee meets at least twice a year. The Committee’s Charter is available on the Corporation’s website
www.aexgold.com.
The Committee met three times during the year to discuss compensation matters and to consider and approve the
proposed compensation packages for the Executive Directors and the Non-Executive Directors. The Committee
also met informally on December 16, 2021 to discuss compensation related issues.
The main elements of compensation agreed by the Committee for the period from January 1 to December 31, 2021
are summarised in the table below.
Eldur Olafsson
George Fowlie3
Georgie Quenby4
Robert Menard5
Jaco Crouse6
Graham Stewart
Non-Executive Directors2
Notes
Pension
contributions (as
a percentage of
base salary)
11.5%
N/A
N/A
N/A
10%
N/A
N/A
Base salary/
fee
CA$348,000
CA$250,000
CA$60,000
CA$60,000
CA$288,200
CA$155,000
CA$60,000
Share
options (as a
percentage of
base salary)1
Bonus
opportunity
(as a
percentage of
base salary)
Up to 100% N/A
Up to 75%
N/A
N/A
Up to 75%
N/A
N/A
200%
N/A
N/A
N/A
N/A
N/A
1.
2.
Additionally the Committee agreed to establish a share based long-term incentive plan further details of which are set out in the Directors’
compensation policy from page 30
An additional fee of CA$13,000 was payable for each Committee membership from the date a respective director became a member of one
of the committees till December 31, 2021 or the date he or she stepped down
3. George Fowlie stepped down from the Board on 26 August 2021
4. Georgie Quenby stepped down from the Board on 9 June 2021
5. Robert Menard stepped down from the Board on 27 April 2021
6. Jaco Crouse became a Director on 27 April 2021
A total of CA$193,557 in bonuses was paid for 2021, and 4,100,000 options were issued. The bonuses were
awarded in early 2022 following a performance review of all AEX Gold objectives.
The primary function of the Committee is to determine executive compensation packages and to ensure that the
compensation policy and practices of the Corporation reward executives both fairly and responsibly, with a clear link
to corporate and individual performance. The Committee may make recommendations regarding the compensation
of Non-Executive Directors, but this is ultimately a matter for the Chairman and the Executive Directors. No Director
will be involved in any decision as to his or her own compensation.
In determining the compensation to be paid or awarded to the Executive Directors, the Committee will seek to
encourage the advancement of the Corporation’s projects and the growth of its resource base, with a view to
enhancing shareholder value. To achieve these objectives, the Committee believes it is critical to maintain a
compensation programme that has the appropriate balance of fixed and variable elements to attract and retain
30
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 committed, highly qualified executives that both align the interests of the executives with those of its shareholders
and encourage executives to operate within the risk parameters set by the Board. The Committee believes that the
compensation package is appropriate for the Corporation given its stage of development, in particular, the use of
market priced share options and cash bonuses which are only awarded if performance metrics are met to focus the
executives on achieving long-term growth.
The Committee welcomes the views of shareholders on compensation and these views will be influential in shaping
the Directors’ compensation policy and practice. Shareholder views will be considered when evaluating and setting
the ongoing compensation strategy and the Committee commits to consulting with major shareholders before any
significant changes to its Directors’ compensation policy.
In preparing this report the Committee was guided by the QCA’s remuneration committee guide and has made
the disclosures recommended in that guide for smaller AIM listed corporations. The Committee is mindful of the
need to provide clear disclosure to shareholders in relation to compensation matters and it will therefore keep
its disclosures under review. In particular, a detailed overview of the new value creation plan, if the Committee
determines to recommend the adoption of such a plan, will be provided to shareholders with sufficient information
for shareholders to approve both the plan and the compensation policy and will disclose any changes to the policy
as appropriate.
Directors’ compensation policy
Following Admission, the Committee has established the compensation policy for the Executive Directors and the
Chairman, and the Board has established a compensation policy for the other Non-Executive Directors.
Executive Directors
The policy on Directors’ compensation is that the overall compensation package should be sufficiently competitive
to attract and retain individuals of a quality capable of achieving the Corporation’s objectives and be in line with
other companies considered by the Committee to be comparable to the Corporation. The compensation policy is
designed such that individuals are remunerated on a basis that is appropriate to their position, experience, and
value to the Corporation.
The current terms and conditions of the Directors’ service contracts and letters of appointment have been set to
reflect the Corporation’s strategy and operations and are detailed on page 40 of this report. The main components
of the compensation policy and how they are linked to and support the Corporation’s business strategy are
summarised on the following pages.
31
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Operation
Maximum opportunity
Performance assessment
Salary increases will be
determined in accordance
with the rationale set out
under the column entitled
‘Operation’.
When determining salary
increases of the Executive
Directors, the Committee
takes into account the
employment conditions and
salary increases awarded to
employees throughout the
Corporation.
There is no maximum salary
opportunity.
Salaries will be reviewed
annually, with any changes
being effective from January
1 each year.
When determining salaries
for the Executive Directors
the Committee takes into
consideration:
– Corporate performance;
– the performance of the
individual Executive
Director;
– the individual Executive
Director’s experience and
responsibilities;
– pay and conditions
throughout the
Corporation.
Salaries together with
other fixed benefits
including pension will be
benchmarked periodically
against comparable
roles at companies of a
similar size, complexity
and in the Exploration
& Development sector
with the objective that
total fixed compensation
will be in line with other
companies considered
by the Committee to
be comparable to the
Corporation.
Objective and
link to strategy
Base salary
Core element of
compensation,
set at a level
which is
sufficiently
competitive to
recruit and retain
individuals of
the appropriate
calibre and
experience.
32
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Objective and
link to strategy
Benefits
Support
individuals in
carrying out their
roles including
in different
locations as may
be required.
Annual bonus
Incentivises the
achievement
of a range of
short-term
performance
targets that
are key to the
success of the
Corporation.
Operation
Maximum opportunity
Performance assessment
Benefits will be reviewed
periodically to reflect
the Directors’ individual
circumstances and to
ensure they remain market
competitive.
Benefits are similar to
those of other employees
and typically include life
assurance cover, private
health care arrangements,
car allowance in lieu of a
Corporation car, housing
allowance, relocation
and expatriate benefits
and reimbursed business
expenses (including any
tax liability) incurred when
travelling overseas in
performance of duties.
Executive Directors
participate in a discretionary
annual performance related
bonus scheme which can
be payable in cash, shares
or share options.
Bonus scheme awards are
made annually at the year-
end (and will be pro- rated
for time served).
Performance period is
one financial year with
payment determined by the
Committee following the
year end.
There is no provision for
malus and clawback of
bonus payments however if
a recipient of stock options
ceases to be employed
for Cause then the options
terminate.
Not applicable.
Benefit values vary year
on year depending on their
cost and the maximum
potential value is the cost
of the provision of these
benefits.
The maximum bonus
potential is 100% of base
salary and the minimum
payment is nil.
Executive Director Bonus
opportunity, as a percentage
of base salary is outlined
above on page 30.
There is no contractual
obligation to pay bonuses.
A performance scorecard
has been devised and will
be used by the Committee
to determine the bonus
payment. The Committee
reserves the right to override
the formulaic outturn based
on a broader assessment
of overall Corporation
performance.
Performance targets
are based on a range of
corporate, operational,
financial and personal and
executive team performance
measures.
The precise allocation
between measures (as
well as the weightings
within these measures)
will be determined by the
Committee at the start of
each year.
33
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Objective and
link to strategy
Operation
Maximum opportunity
Performance assessment
Long-term incentives
The maximum potential
grant is 200% of salary
and the minimum potential
grant is nil and the grant will
depend on the Executive
Directors’ performance in
the previous year.
There is no contractual
obligation to grant options.
There are no specific
performance conditions
attached to the options
however the Committee
considers annual
performance against the
corporation’s objectives
in making option awards.
The Committee considers
that granting market priced
options aligns the interests
of Executive Directors and
shareholders since the
options only deliver value if
the share price rises.
Not applicable.
Executive Directors receive
a contribution to a personal
pension scheme or cash
allowance in lieu of pension
benefits up to 14% of
salary.
Executive Directors can
participate in a share based
long-term incentive plan:
AEX’s Gold Inc. Stock
Option Plan
The Share Option Plan
is a share-based plan
and options are granted
annually. The exercise price
of the option is not less
than the closing price of
shares on the last trading
day preceding the grant
date. Options granted under
the plan vest and become
exercisable at such time or
times as determined by the
Committee but typically vest
immediately on the date of
grant and are subject to a
maximum term of ten years.
There is no provision for
malus or clawback of
the options however if a
recipient of stock options
ceases to be employed
for Cause then the options
terminate.
The Corporation does not
operate a pension scheme
but does, at the Directors’
preference, contribute to
the personal pension plans
of each Executive Director
or pays cash in lieu of such
contributions.
Additionally, the Corporation
may make statutory
contributions to mandatory
pension arrangements in
the country in which they
are based in line with local
requirements.
These arrangements are
similar to those of other
employees.
Incentivises the
achievement
of long-term
financial
performance
and sustainable
returns to
shareholders in
a way that aligns
the interests
of Executive
Directors and
shareholders.
Pension
To provide
competitive
levels of
retirement
benefit.
34
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Objective and
link to strategy
Operation
Maximum opportunity
Performance assessment
Shareholding requirement
Not applicable.
Not applicable.
Executive Directors are
not required to hold shares
however they may have
market-priced stock options
under the stock option plan.
To align
Executive
Directors’
interests
with those of
shareholders
through
build-up and
retention of
a personal
shareholding.
New appointments
The same principles as described in the policy above will be applied in setting the compensation of a new Executive
Director. Additionally, the Committee may:
• allow a new Executive Director to retain any outstanding awards and/or other contractual arrangements that
they held on their appointment (which may or may not have been made under plans listed in this policy) and
those awards will remain subject to the terms and conditions applied to them when they were awarded;
• consider compensating a newly appointed Executive Director for other relevant contractual rights forfeited when
leaving their previous employer using either a plan listed in this policy or, in exceptional circumstances, under
a new arrangement if for any reason, like-for-like replacement awards on recruitment could not be made under
plans listed in this policy.
On January 25, 2021, the Corporation appointed Jaco Crouse as the new Chief Financial Officer of the Corporation
replacing Mr Fowlie who had stepped down as the Chief Financial Officer but remained on the Board as a Director
to August 26, 2021. Mr Crouse joined the Board as an executive director on April 27, 2021.
The Committee applied the same principles as described in the policy above in setting the compensation of the new
Executive Director and further details will be disclosed in the Directors’ compensation report for 2021.
35
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Non-Executive Directors
The table below sets out the key elements of the policy for Non-Executive Directors:
Objective and link to
strategy
Fees
Core element of
compensation, set at a
level sufficient to
attract individuals with
appropriate knowledge
and experience.
Benefits
Support individuals in
carrying out their roles
including in different
locations as may be
required.
Operation
Maximum opportunity
Performance
assessment
Whilst there is no
performance element to
the compensation paid
to the Non-Executive
Directors, fees will be
determined
in accordance with the
rationale set out under
the column headed
‘Operation’.
Fee levels reflect
market conditions
and are sufficient to
attract individuals with
appropriate knowledge
and experience.
NEDs are paid a base
fee and additional fees
for Committees to reflect
the time commitment and
duties involved.
Fees may be paid in cash
or shares or both.
Fees are reviewed
annually with changes
effective from January 1
each year.
Whilst there is no
maximum individual fee
level, fees are set at a
level which is considered
appropriate to attract
and retain the calibre
of individual required
by the Corporation.
The Corporation
avoids paying more
than necessary for this
purpose.
Fee increases may be
made in line with market
movements and to take
into account the time
commitment and duties
involved.
Not applicable
Not applicable
Non-Executive Directors
do not receive benefits or
a pension allowance.
Travel and business
expenses for Non-
Executive Directors are
incurred in the normal
course of business, for
example, in relation to
attendance at Board and
Committee meetings. The
costs associated with
these are all met by the
Corporation including any
tax liabilities arising on
these business expenses.
36
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Objective and link to
strategy
Shares and share awards
To align Non-Executive
Directors’ interests with
those of shareholders
through build-up and
retention of a personal
shareholding.
Operation
Maximum opportunity
Performance
assessment
Not applicable
Not applicable
Non-Executive Directors
will not participate in any
variable compensation
elements or any other
such arrangements.
Historically the Non-
Executive Directors have
participated in the Share
Option Plan and they
will be entitled to retain
these options but since
Admission, they will
not be granted further
options.
Non-executive Directors
are encouraged to hold
shares in the Corporation
while they are a Director.
New appointments
The same principles as described in the policy above will be applied in setting the compensation of a new Non-
Executive Director. Compensation will comprise fees only, to be paid at the prevailing rates of the Corporation’s
existing Non-Executive Directors.
Compensation policy for other employees
The compensation arrangements for employees will be designed to ensure that they are, insofar as is practicable,
aligned with the Executive Directors’ compensation and the Corporation’s objectives and in particular:
•
the approach to salary reviews will be consistent across the Corporation with consideration given to level of
responsibility, experience, individual performance, salary levels in comparable companies and the Corporation’s
ability to pay;
• all employees will participate in the same annual bonus scheme as the Executive Directors with opportunities
varying by organisational level;
• pension and benefits arrangements may vary according to location and so different arrangements may be put
in place in different jurisdictions.
The relationship between the Chief Executive’s, Chief Financial Officer’s and all employees’
compensation
The Committee was mindful of the alignment of executive compensation arrangements with those of the wider
workforce when reviewing salaries and assessing bonus outcomes for the Executive Directors. The table below
shows how the Chief Executive’s and Chief Financial Officer’s salary in the year to December 31, 2021 compares
with the salary earned by the average employee of the Corporation in the year to December 31, 2021.
Salary/fees
CA$348,000
CA$288,200
CA$128,815
Chief Executive
Chief Financial Officer
Average employee1
Note
1.
The average employee salary figure includes all employees and officers of the Corporation, other than the Chief Executive, the Chief
Financial Officer and the Non-Executive Directors, and has been annualised to provide a comparison with the Chief Executive’s and Chief
Financial Officer’s salary/fees.
The Committee will annually review the pay arrangements of the wider workforce as part of its consideration of the
Executive Directors’ compensation.
37
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Annual report on compensation
Executive Directors
The salary, taxable benefits, pension, and annual bonus received by the Executive Directors, for the period which
they were Directors during the year, are detailed in the compensation table below. Details of the options that were
granted during the year are also set out in the table below.
Compensation table
Executive
Director
Salary and
fees
Taxable
benefits2
Annual
bonus3
Long-term
incentives4
Eldur Olafsson1
CA$345,000 —
CA$69,600
George Fowlie6
CA$79,547
CA$372
—
Jaco Crouse5
CA$271,886
CA$3,430
CA$59,441
—
—
—
Pension
Total
CA$57,215
CA$471,815
—
—
CA$79,919
CA$334,757
Notes
1. Mr Olafsson was a Director throughout the year and the compensation shown is for the period from January 1 to December 31, 2021.
2. The taxable benefits received by Mr Fowlie and Mr Crouse was pension/medical/health insurance.
3. More details on the annual bonus that was paid in respect of the year ended December 31, 2021 are set out below.
4. No share options were exercised by the Directors during the year to December 31, 2021.
5.
6.
Mr Crouse joined the Corporation as Chief Finance Officer on January 25, 2021, and Director on 27 April 2021, and the compensation shown
is for the period from January 25 to December 31, 2021.
Mr Fowlie resigned from his role as Chief Finance Officer on January 24, 2021, and stepped down from Director on 26 August 2021, and the
compensation shown is for the period from January 1 to August 26, 2021.
Annual bonus scheme
Bonuses were paid in 2022 at the discretion of the Board based on the delivery of operational and financial targets
during 2021. Key performance metrics in the period included; completion of IFS, completion of the 2021 drilling
programme, the resource model review, and the completion of the exploration programme. A total of CA$193,557
in bonuses was paid and 4,100,000 options were issued in early 2022 for 2021 performance.
The maximum bonus amount that could be awarded was 30% of pro-rated annual salary with awards made at the
discretion of the Board to reward financial and operational delivery with reference to comparable companies and
looking at each remuneration package in total and the Board believes that the bonus payments for performance in
2021 are reasonable in the context.
There is no deferral period associated with the 2021 bonus payments.
38
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Non-Executive Directors
The fees received by the Non-Executive Directors during the year or as otherwise indicated, are shown below.
Details of the options that were granted during the year are also set out in the table below.
Non-Executive Director
Graham Stewart
Sigurbjorn Thorkelsson
Line Frederiksen 1
Liane Kelly
David Neuhauser 1
Warwick Morley-Jepson 2
Robert Menard 3
Georgia Quenby 4
Notes
Fees
CA$195,228
CA$94,478
CA$47,962
CA$29,913
CA$47,962
CA$138,904
CA$30,417
CA$43,788
1.
Mr Neuhauser and Ms Frederiksen were appointed Directors on June 09, 2021 and the fees shown are for the period from this date to 31
December 2021.
2. Mr Morley-Jepson was appointed Director on August 26, 2021 and the fees shown are for the period from this date to 31 December 2021.
3. Mr Menard was Director to April 27, 2021, and the fees shown are for the period from January 1 to this date
4. Ms Quenby was Director to the Corporation’s AGM to June 09, 2021, and the fees shown are for the period from January 1 to this date
Share options granted during the year table
Details of the share options granted during the year are shown below.
Director
Date of grant
Number of
shares under
option
Exercise price
of option
Date from
which
exercisable
Expiry date of
option
Jaco Crouse
06/09/2021
900,000
CA$0.59
06/09/2021
12/31/2027
Directors’ shareholding and share interests’ table
Directors’ shareholding as at December 31, 2021 can be found on page 14.
39
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 The table below sets out details of the share options held by the Directors either in their own name or through
separate entities at the end of the reporting year.
Director
Eldur Olafsson
Graham Stewart
Number of
outstanding share
options1
Exercise prices of
outstanding share
options1
Expiry dates of
outstanding share
options1
500,000
550,000
1,500,000
450,000
250,000
150,000
250,000
100,000
150,000
100,000
400,000
150,000
100,000
100,000
CAN$0.500
CAN$0.450
CAN$0.380
CAN$0.700
CAN$0.450
CAN$0.380
CAN$0.700
CAN$0.500
CAN$0.450
CAN$0.380
CAN$0.700
CAN$0.450
CAN$0.380
CAN$0.700
07/13/2022
08/22/2023
12/31/2025
12/31/2026
08/22/2023
12/31/2025
12/31/2026
07/13/2022
08/22/2023
12/31/2025
12/31/2026
08/22/2023
12/31/2025
12/31/2026
Notes
1. All the options have vested and are therefore exercisable.
The implementation of the Directors’ compensation policy in 2021
The policy was implemented consistently with the approach used in 2020. The Committee has determined that there
will be no change in the salary and the fees paid to each of the Directors in 2021. All the Executive Directors will be
eligible for an annual bonus and the payment of this bonus will depend on Corporation and personal performance
during 2021. The Committee proposes to award share options to each of the Executive Directors in accordance
with the policy.
Service contracts and termination payment policy
The service contracts of the Executive Directors are not of a fixed duration and therefore they have no unexpired
terms, but continuation in office as a Director is subject to annual re-election by shareholders as required under the
Corporation’s By-Laws.
The Corporation’s policy is for the Executive Directors to have service and employment contracts with provision for
termination of no longer than twelve months’ notice.
The circumstances of a termination of an Executive Director’s contract, including the individual’s performance and
an individual’s duty and opportunity to mitigate losses, will be taken into account in every case of termination. The
Committee’s policy is to stop or reduce compensatory payments to former Executive Directors to the extent that
they receive compensation from other employment during the compensation period. A robust line on reducing
compensation is applied and payments to departing Executive Directors may be phased in order to mitigate loss.
The Non-Executive Directors do not have service contracts. Each Non-Executive Director has a letter of appointment
and provides for termination of the appointment with 30 days’ notice by the Director.
40
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 The details of the current Directors’ service contract and letters of appointment are set out below.
Date of
appointment
as a Director
Date of service
Contract/letter
of appointment Notice period
April 28, 2017
July 27, 2020
Twelve months by the Corporation without cause or by
the Director for good reason following a change of control
and otherwise three months by the Director
April 28, 2017
July 27, 2020
Thirty days by the Director
July 27, 2020
July 27, 2020
Thirty days by the Director
March 18, 2021
June 9, 2021
Thirty days by the Director
Director
Eldur
Olafsson
Graham
Stewart
Sigurbjorn
Thorkelsson
Line
Frederiksen
Jaco Crouse
April 27, 2021
April 28, 2021
Twelve months by the Corporation without cause or by
the Director for good reason following a change of control
and otherwise three months by the Director
David
Neuhauser
June 9, 2021
June 8, 2021
Thirty days by the Director
Liane Kelly
August 26, 2021 August 10, 2021
Thirty days by the Director
August 26, 2021 August 24, 2021
Thirty days by the Director
Warwick
Morley-
Jepson
41
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Report of the Disclosure Committee
The Disclosure Committee (the “Committee”) is pleased to present its 2021 report to shareholders.
Disclosure Committee Members:
Eldur Olafsson, CEO
Jaco Crouse, CFO
The Committee’s members are executive directors Eldur Olafsson, the Corporation’s CEO and Jaco Crouse, CFO.
The purpose of the Disclosure Committee is to assist the Board in fulfilling its responsibilities in respect of (i) the
requirement to make timely and accurate disclosure of all information that is required to be disclosed to meet legal
and regulatory obligations and requirements, and (ii) the requirement to take reasonable steps to establish and
maintain adequate procedures, systems and controls to enable compliance with these obligations. The Disclosure
Committee meets as required but at least annually to review the operation, adequacy and effectiveness of the
disclosure procedures.
Activity during the year
The Disclosure Committee is comprised of the executive management only and is involved in the Corporation’s
regulatory disclosure process on a day-to-day basis. The disclosure committee met to discuss the effectiveness of
the Corporation’s disclosure procedures in 2022 prior to the AGM and agreed that the procedures were adequate
and appropriate to the Corporation’s size and complexity.
The Committee’s Charter is available on the Corporation’s website www.aexgold.com.
42
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 Statement of Directors’ responsibilities
The directors are responsible for preparing the Annual Report and the Corporation financial statements in accordance
with applicable law and regulations.
Corporation law requires the Directors to prepare Corporation financial statements for each financial year.
Under the AIM Rules for Companies of the London Stock Exchange the Directors are required to prepare the
Corporation financial statements 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”).
Under Corporation law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Corporation and of their profit or loss for that period. In preparing
each of the Corporation financial statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
• state whether they have been prepared in accordance with IFRS;
• assess the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern; and
• use the going concern basis of accounting unless they either intend to liquidate the Corporation or to cease
operations or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Corporation’s transactions and disclose with reasonable accuracy at any time the financial position of the
Corporation and enable them to ensure that its financial statements comply with the Canada Business Corporations
Act. They are responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Corporation and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report and a
Directors’ Report that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Corporation’s website. Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
43
AEX GOLD INC. ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 AEX Gold Inc.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
- 1 -
44 Independent Auditor’s Report
To the Shareholders of
AEX Gold Inc.
Opinion
We have audited the consolidated financial statements of AEX Gold Inc. and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at December 31, 2021,
and the consolidated statements of comprehensive loss, changes in equity and cash flows for the year
then ended, and notes to the consolidated financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material
respects, the consolidated financial position of the Group as at December 31, 2021, and its
consolidated financial performance and its consolidated cash flows for the year then ended in
accordance with International Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Group in accordance with the ethical requirements that are relevant to our audit of the consolidated
financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Other Matter
The consolidated financial statements as at and for the year ended December 31, 2020 were audited
by another auditor, who expressed an unmodified opinion on those consolidated financial statements
on April 28, 2021.
Other Information
Management is responsible for the other information. The other information comprises:
•
•
The information, other than the consolidated financial statements and our auditor’s report
thereon, included in the Annual Report; and
The information included in the Management’s Discussion and Analysis.
Our opinion on the consolidated financial statements does not cover the other information and we do
not and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information identified above and, in doing so, consider whether the other information is
materially inconsistent with the consolidated financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
- 2 -
BDO Canada s.r.l./S.E.N.C.R.L., une société canadienne à responsabilité limitée/société en nom collectif à responsabilité limitée, est membre de BDO International Limited,société de droit anglais, et fait partie du réseau international de sociétés membres indépendantes BDO.BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDOnetwork of independent member firms.BDO Canada s.r.l./S.E.N.C.R.L./LLP 1000, rue De La Gauchetière O. Bureau 200 Montréal QC H3B 4W5 CanadaTél./Tel: 514 931 0841 Téléc./Fax: 514 931 9491 www.bdo.ca45 Independent Auditor’s Report
We obtained the Management’s Discussion and Analysis prior to the date of this auditor’s report. If,
based on the work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in this auditor’s report.
We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If,
based on the work we will perform on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact to those charged with
governance.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRSs, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Canadian generally accepted
auditing standards will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
- 3 -
46 Independent Auditor’s Report
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group’s
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Anne-Marie
Henson.
Montréal, Québec
April 28, 2022
1
1 CPA auditor, CA, public accountancy permit No. A129869
- 4 -
47 AEX Gold Inc.
Consolidated Statements of Financial Position
As at December 31, 2021 and 2020
(In Canadian Dollars)
ASSETS
Current assets
Cash
Sales tax receivable
Prepaid expenses and others
Total current assets
Non-current assets
Deposit on order
Escrow account for environmental monitoring
Mineral properties
Capital assets
Total non-current assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Lease liabilities – current portion
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Equity
Capital stock
Warrants
Contributed surplus
Accumulated other comprehensive loss
Deficit
Total equity
TOTAL LIABILITIES AND EQUITY
Subsequent events
Notes
As at
December 31,
2021
$
As at
December 31,
2020
$
27,324,459
51,250
266,617
27,642,326
61,874,999
62,750
371,258
62,309,007
9,805
424,637
62,244
14,642,652
15,139,338
42,781,664
1,711,970
460,447
62,244
1,401,014
3,635,675
65,944,682
2,049,249
50,835
2,100,084
831,899
65,900
897,799
713,078
713,078
2,813,162
763,913
763,913
1,661,712
88,500,205
-
3,300,723
(36,772)
(51,795,654)
39,968,502
42,781,664
88,500,205
-
2,925,952
(36,772)
(27,106,415)
64,282,970
65,944,682
5
6
7
8
8
10
11
22
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board of Directors
(s) Eldur Ólafsson
Eldur Ólafsson
Director
(s) Sigurbjorn Thorkelsson
Sigurbjorn Thorkelsson
Director
- 5 -
48 AEX Gold Inc.
Consolidated Statements of Comprehensive Loss
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)
Expenses
Exploration and evaluation expenses
General and administrative
Stock-based compensation
Foreign exchange
Operating loss
Other expenses (income)
Interest income
Finance costs
Other expenses (income)
Notes
2021
$
2020
$
15
16
12
17
9
14,280,055
9,328,427
374,771
809,751
24,793,004
7,055,707
3,291,176
1,031,650
1,130,808
12,509,341
(143,759)
39,994
-
(84,214)
12,831
(98,846)
Net loss and comprehensive loss
(24,689,239)
(12,339,112)
Weighted average number of common shares
outstanding - basic and diluted
Basic and diluted loss per common share
19
177,098,737
(0.14)
119,729,081
(0.10)
The accompanying notes are an integral part of these consolidated financial statements.
- 6 -
49
,
0
4
5
4
7
0
2
,
,
)
3
0
3
7
6
7
4
1
(
,
,
)
2
1
1
9
3
3
2
1
(
,
)
6
4
5
,
2
1
3
6
(
,
,
2
0
2
0
5
5
4
7
,
,
6
3
2
0
4
2
5
,
-
0
0
0
8
3
,
,
0
5
6
1
3
0
1
,
-
-
-
-
-
-
,
)
2
1
1
9
3
3
2
1
(
,
,
0
7
9
2
8
2
4
6
,
,
)
5
1
4
6
0
1
7
2
(
,
,
0
7
9
2
8
2
4
6
,
,
)
9
3
2
9
8
6
4
2
(
,
,
)
5
1
4
6
0
1
7
2
(
,
,
)
9
3
2
9
8
6
4
2
(
,
1
7
7
,
4
7
3
-
,
2
0
5
8
6
9
9
3
,
,
)
4
5
6
5
9
7
1
5
(
,
-
-
-
-
-
-
-
)
2
7
7
6
3
(
,
-
-
)
2
7
7
6
3
(
,
)
2
7
7
6
3
(
,
)
2
7
7
6
3
(
,
-
-
-
-
)
0
0
0
2
2
(
,
2
0
9
,
0
8
3
,
0
0
4
5
3
5
1
,
,
0
5
6
1
3
0
1
,
,
2
5
9
5
2
9
2
,
-
1
7
7
,
4
7
3
,
2
5
9
5
2
9
2
,
,
3
2
7
0
0
3
3
,
-
-
-
-
-
-
-
-
-
-
)
2
0
7
,
8
7
0
1
(
,
)
2
0
9
0
8
3
(
,
-
-
l
d
e
t
a
u
m
u
c
c
A
r
e
h
t
o
l
a
t
o
T
y
t
i
u
q
e
i
e
v
s
n
e
h
e
r
p
m
o
c
d
e
t
u
b
i
r
t
n
o
C
t
i
c
i
f
e
D
s
s
o
l
l
s
u
p
r
u
s
s
t
n
a
r
r
a
W
l
a
t
i
p
a
C
k
c
o
t
s
f
o
r
e
b
m
u
N
n
o
m
m
o
c
s
e
r
a
h
s
i
g
n
d
n
a
t
s
t
u
o
s
e
t
o
N
)
s
r
a
l
l
i
o
D
n
a
d
a
n
a
C
n
I
(
y
t
i
u
q
E
n
i
s
e
g
n
a
h
C
f
o
s
t
n
e
m
e
t
a
t
S
d
e
t
a
d
i
l
o
s
n
o
C
0
2
0
2
d
n
a
1
2
0
2
,
1
3
r
e
b
m
e
c
e
D
d
e
d
n
e
s
r
a
e
y
e
h
t
r
o
F
.
c
n
I
l
d
o
G
X
E
A
,
4
0
6
9
5
4
1
,
,
1
1
6
3
8
8
3
1
,
,
4
9
3
6
4
9
0
7
,
0
2
0
2
,
1
y
r
a
u
n
a
J
,
e
c
n
a
a
B
l
-
-
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
d
n
a
s
s
o
l
t
e
N
)
6
4
5
,
2
1
3
6
(
,
,
2
0
2
0
5
5
4
7
,
-
,
5
4
4
4
4
4
4
9
,
,
8
3
9
8
1
3
6
,
,
8
9
8
7
0
6
1
1
,
-
-
0
0
0
0
6
,
0
0
0
,
0
0
1
-
-
,
5
0
2
0
0
5
8
8
,
,
5
0
2
0
0
5
8
8
,
-
-
7
3
7
,
8
9
0
,
7
7
1
7
3
7
,
8
9
0
,
7
7
1
0
1
0
1
1
1
1
1
2
1
2
1
2
1
i
i
g
n
s
a
r
d
n
u
f
a
r
e
d
n
u
e
c
n
a
u
s
s
i
e
r
a
h
S
s
t
s
o
c
e
c
n
a
u
s
s
i
e
r
a
h
S
i
d
e
s
c
r
e
x
e
s
t
n
a
r
r
a
W
d
e
r
i
p
x
e
s
t
n
a
r
r
a
W
i
d
e
s
c
r
e
x
e
s
n
o
i
t
p
O
0
2
0
2
,
1
3
r
e
b
m
e
c
e
D
1
2
0
2
,
1
y
r
a
u
n
a
J
,
e
c
n
a
a
B
l
,
e
c
n
a
a
B
l
s
s
o
l
i
e
v
s
n
e
h
e
r
p
m
o
c
d
n
a
s
s
o
l
t
e
N
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
k
c
o
S
t
n
o
i
t
a
s
n
e
p
m
o
c
d
e
s
a
b
-
k
c
o
S
t
-
7
-
.
s
t
n
e
m
e
t
a
t
s
l
i
a
c
n
a
n
i
f
d
e
t
a
d
i
l
o
s
n
o
c
e
s
e
h
t
f
o
t
r
a
p
l
a
r
g
e
n
t
i
n
a
e
r
a
s
e
t
o
n
i
g
n
y
n
a
p
m
o
c
c
a
e
h
T
,
5
0
2
0
0
5
8
8
,
7
3
7
,
8
9
0
,
7
7
1
1
2
0
2
,
1
3
r
e
b
m
e
c
e
D
,
e
c
n
a
a
B
l
50
AEX Gold Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)
Operating activities
Net loss
Adjustments for:
Depreciation
Stock-based compensation
Finance costs
Other expenses (Income)
Payment from cash held in escrow account for environmental monitoring
Escrow account for environmental monitoring
Foreign exchange
Changes in non-cash working capital items:
Sales tax receivable
Prepaid expenses and others
Trade and other payables
Cash flow used in operating activities
Investing activities
Acquisition of mineral properties
Acquisition of capital assets, net of deposit on order
Deposit on order
Cash flow used in investing activities
Financing activities
Shares and warrants issuance
Share issuance costs
Principal repayment – lease liabilities
Exercise of warrants
Exercise of stock options
Cash flow from financing activities
Net change in cash before effects of exchange rate changes on cash
Effects of exchange rate changes on cash
Net change in cash
Cash, beginning
Cash, ending
Supplemental cash flow information
Deposit on order for acquisition of capital assets
Interest received
Additions in capital assets included in trade and other payables
Exercise of warrants credited to capital stock
Exercise of stock options credited to capital stock
Notes
2021
$
2020
$
7
12
17
9
5
9
6
7
10
10
8
(24,689,239)
(12,339,112)
389,953
374,771
-
-
-
-
377,674
(23,546,841)
11,500
104,641
1,141,384
1,257,525
(22,289,316)
228,267
1,031,650
5,959
(98,846)
(95,102)
95,102
1,119,240
(10,052,842)
(44,958)
(276,316)
508,094
186,820
(9,866,022)
-
(11,875,926)
-
(11,875,926)
(20,299)
(421,098)
(1,711,970)
(2,153,367)
-
-
(65,900)
-
-
(65,900)
(34,231,142)
(319,398)
(34,550,540)
61,874,999
27,324,459
74,550,202
(6,266,929)
(11,267)
5,240,236
38,000
73,550,242
61,530,853
(1,171,260)
60,359,593
1,515,406
61,874,999
1,702,165
143,759
53,500
-
-
-
84,214
-
1,078,702
22,000
The accompanying notes are an integral part of these consolidated financial statements.
- 8 -
51
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION
AEX Gold Inc. (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”) under the AEX ticker and since July 2020, the Corporation’s shares are
also listed on the AIM market of the London Stock Exchange (“AIM”) under the AEXG ticker (note 10).
These consolidated financial statements (“Financial Statements”) were reviewed and authorized for issue by the
Board of Directors on April 28, 2022.
1.1 Basis of presentation and consolidation
The Financial Statements have been prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The Financial Statements include the
accounts of the Corporation and those of its subsidiary Nalunaq A/S, a corporation incorporated under the
Greenland Public Companies Act, owned at 100%.
Control is defined by the authority to direct the financial and operating policies of a business in order to obtain
benefits from its activities. The amounts presented in the consolidated financial statements of subsidiary have
been adjusted, if necessary, so that they meet the accounting policies adopted by the Corporation.
Profit or loss or other comprehensive loss of subsidiary set up, acquired or sold during the year are recorded
from the actual date of acquisition or until the effective date of the sale, if any. All intercompany transactions,
balances, income and expenses are eliminated at consolidation.
The Financial Statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the
International Financial Reporting Interpretations Committee. (“IFRIC”).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of measurement
The Financial Statements have been prepared on the historical cost basis.
2.2 Functional and presentation currency – Foreign currency transactions
The functional and presentation currency of the Corporation is Canadian dollars (“CAD”). The functional currency
of Nalunaq A/S is CAD. The functional currency of Nalunaq A/S is determined using the currency of the primary
economic environment in which the entity evolves and using the currency which is more representative of the
economic effect of the underlying financings, transactions, events and conditions.
Foreign currency transactions are translated into the functional currency of the underlying entity using
appropriate rates of exchange prevailing on the dates of such transactions. Monetary assets and liabilities
denominated in foreign currencies are translated at the functional currency rate of exchange in effect at the end
of each reporting period. Foreign exchange gains and losses resulting from the settlement of such transactions
are recognized in the net profit or loss.
- 9 -
52
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.3 Deposit on order
The deposit on order represents the sum of money disbursed to a supplier to start or continue the fulfillment of
a purchase order for capital assets. This deposit will be transferred to capital assets when the asset has been
completed and delivered.
2.4 Mineral properties and exploration and evaluation expenses
Mineral properties include rights in mining properties, paid or acquired through a business combination or an
acquisition of assets, and costs related to the initial search for mineral deposits with economic potential or to
obtain more information about existing mineral deposits.
All costs incurred prior to obtaining the legal rights to undertake exploration and evaluation on an area of interest
are expensed as incurred.
Mining rights are recorded at acquisition cost or at its recoverable amount in the case of a devaluation caused
by an impairment of value. Mining rights and options to acquire undivided interests in mining rights are
depreciated only as these properties are put into commercial production. Proceeds from the sale of mineral
properties are applied as a reduction of the related carrying costs and any excess or shortfall is recorded as a
gain or loss in the consolidated statement of comprehensive loss.
Exploration and evaluation expenses (“E&E expenses”) also typically include costs associated with prospecting,
sampling, trenching, drilling and other work involved in searching for ore such as topographical, geological,
geochemical and geophysical studies. Generally, expenditures relating to exploration and evaluation activities
are expensed as incurred. Capitalization of E&E expenses commences when a mineral resource estimate has
been obtained for an area of interest.
E&E expenses include costs related to establishing the technical and commercial viability of extracting a mineral
resource identified through exploration or acquired through a business combination or asset acquisition. E&E
include the cost of:
● establishing the volume and grade of deposits through drilling of core samples, trenching and sampling
activities in an ore body that is classified as either a mineral resource or a proven and probable reserve;
● determining the optimal methods of extraction and metallurgical and treatment processes, including the
separation process, for Corporation’ mining properties;
● studies related to surveying, transportation and infrastructure requirements;
● permitting activities; and
● economic evaluations to determine whether development of the mineralized material is commercially
justified, including scoping, prefeasibility and final feasibility studies.
When a mine project moves into the development phase, E&E expenses are capitalized to mine development
costs. An impairment test is performed before reclassification and any impairment loss is recognized in the
consolidated statement of comprehensive loss.
E&E include overhead expenses directly attributable to the related activities.
The Corporation has taken steps to verify the validity of title to mineral properties on which it is conducting
exploration activities and is acquiring interests in accordance with industry standards that apply to the current
stage of exploration and evaluation of such property. However, these procedures do not guarantee the
Corporation’ title, as property title may be subject to unregistered prior agreements, aboriginal claims or
noncompliance with regulatory requirements.
- 10 -
53
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.5 Capital assets
Capital assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost
includes expenditures that are directly attributable to the acquisition of an asset. Subsequent costs are included
in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that
future economic benefit associated with the item will flow to the Corporation and the cost can be measured
reliably. The carrying amount of a replaced asset is derecognized when replaced.
The intangible assets include software with a definite useful life. The assets are capitalized and amortized on a
straight-line basis in the consolidated statement of comprehensive loss. The intangible assets are assessed for
impairment whenever there is an indication that the intangible assets may be impaired.
Repairs and maintenance costs are charged to the consolidated statement of comprehensive loss during the
period in which they are incurred.
Depreciation is calculated to amortize the cost of the capital assets less their residual values over their estimated
useful lives using the straight-line method and following periods by major categories:
Field equipment and infrastructure related to exploration and evaluation
activities
Vehicles and rolling stock
Equipment
Software
Right-of-use assets
3 to 10 years
3 to 10 years
3 to 10 years
3 to 10 years
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.
Depreciation of an asset ceases when it is classified as held for sale (or included in a disposal group that is
classified as held for sale) or when it is derecognized. Therefore, depreciation does not cease when the asset
becomes idle or is retired from active use unless the asset is fully depreciated.
Residual values, methods of depreciation and useful lives of the assets are reviewed annually and adjusted if
appropriate.
Gains and losses on disposals of capital assets are determined by comparing the proceeds with the carrying
amount of the asset and are recorded in the consolidated statement of comprehensive loss.
2.6 Leases
At the commencement date of a lease, a liability is recognized to make lease payments (i.e., the lease liability)
and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset)
is also recognized. The interest expense on the lease liability is recognized separately from the depreciation
expense on the right-of-use asset.
The lease liability is remeasured upon the occurrence of certain events (e.g., a change in the lease term, a
change in future lease payments resulting from a change in an index or rate used to determine those payments).
This remeasurement is generally recognized as an adjustment to the right-of-use asset. Leases of “low-value”
assets and short-term leases (12 months or less) are recognized on a straight-line basis as an expense in the
consolidated statement of comprehensive loss.
- 11 -
54
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.7 Impairment of non-financial assets
Mineral properties and capital assets are reviewed for impairment if there is any indication that the carrying
amount may not be recoverable. Mineral properties and capital assets are reviewed by area of interest. If any
such indication is present, the recoverable amount of the asset is estimated in order to determine whether
impairment exists. Where the asset does not generate cash flows that are independent from other assets, the
Corporations estimates the recoverable amount of the asset group to which the asset belongs.
An asset’s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for which
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or asset group is estimated to be less than its carrying amount, the carrying
amount is reduced to the recoverable amount. Impairment is recognized immediately in the consolidated
statement of comprehensive loss. Where an impairment subsequently reverses, the carrying amount is
increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the
carrying value that would have been determined if no impairment had previously been recognized. A reversal is
recognized as a reduction in the impairment charge for the period.
2.8 Environmental monitoring provision
Provisions are recorded when a present legal or constructive obligation exists as a result of past events where
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate of the amount of the obligation can be made. The Corporation is subject to laws and
regulations relating to environmental matters, including land reclamation and discharge of hazardous materials
and environmental monitoring. The Corporation may be found to be responsible for damage caused by prior
owners and operators of its unproven mineral interests and in relation to interests previously held by the
Corporation.
On initial recognition, the estimated net present value of a provision is recorded as a liability and a corresponding
amount is added to the capitalized cost of the related non-financial asset or charged to consolidated statement
of comprehensive loss if the property has been written off. Discount rates using a pre-tax rate that reflects the
time value of money and the risk associated with the liability are used to calculate the net present value. The
provision is evaluated at the end of each reporting period for changes in the estimated amount or timing of
settlement of the obligation.
2.9 Taxation
Income tax expense represents the sum of tax currently payable and deferred tax.
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected
to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount
are those that are substantively enacted by the date of the consolidated statement of financial position.
Deferred income taxes are provided using the liability method on temporary differences at the date of the
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
- 12 -
55
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
●
in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be
utilized except:
● where the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable earnings; and
in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred income tax assets are recognized only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and taxable profit will be
available against which the temporary differences can be utilized.
●
The carrying amount of deferred income tax assets is reviewed at each date of the consolidated statement of
financial position and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax
assets are reassessed at each date of the consolidated statement of financial position and are recognized to
the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the date of the statement of financial position.
Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the
consolidated statement comprehensive loss.
Deferred income tax assets and deferred income tax liabilities are offset if, and only if, a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate
to income taxes levied by the same taxation authority on either the same taxable entity or different taxable
entities which intend to either settle current tax liabilities and assets on a net basis, or to realize the assets and
settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or
liabilities are expected to be settled or recovered.
2.10 Equity
Capital stock represents the amount received on the issue of shares. Warrants represent the allocation of the
amount received for units issued as well as the charge recorded for the broker warrants relating to financing.
Options represent the charges related to stock options until they are exercised. Contributed surplus includes
charges related to stock options and the warrants that are expired and not yet exercised. Contributed surplus
also includes contributions from shareholders. Deficit includes all current and prior period retained profits or
losses and share issue expenses.
Share and warrant issue expenses are accounted for in the year in which they are incurred and are recorded as
a deduction to equity in the year in which the shares and warrants are issued.
Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred
until the issuance of the shares to which the costs relate to, at which time the costs will be charged against the
related share capital or charged to operations if the shares are not issued.
Proceeds from unit placements are allocated between shares and warrants issued on a pro-rata basis of their
value within the unit using the Black-Scholes pricing model.
- 13 -
56
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.11 Interest income
Interest income from financial assets is accrued, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount.
2.12 Stock-based compensation
Employees and consultants of the Corporation may receive a portion of their compensation in the form of share-
based payment transactions, whereby employees or consultants render services as consideration for equity
instruments (“equity-settled transactions”).
The costs of equity-settled transactions with employees and others providing similar services are measured by
reference to the fair value at the date on which they are granted.
The costs of equity-settled transactions are recognized, together with a corresponding increase in equity, over
the period in which the performance and/or service conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (“the vesting date”). The cumulative expense is
recognized for equity-settled transactions at each reporting date until the vesting date reflects the Corporation’
best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for
a period represents the movement in cumulative expense recognized as at the beginning and end of that period
and the corresponding amount is represented in contributed surplus.
No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition, which are treated as vesting irrespective of whether or not the market condition is
satisfied provided that all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the minimum expense recognized is the expense as
if the terms had not been modified. An additional amount is recognized on the same basis as the amount of the
original award for any modification which increases the total fair value of the share-based payment arrangement,
or is otherwise beneficial to the employee as measured at the date of modification.
2.13 Loss per share
The basic loss per share is computed by dividing the net loss by the weighted average number of common
shares outstanding during the period. The diluted loss per share reflects the potential dilution of common share
equivalents, such as outstanding options and warrants, in the weighted average number of common shares
outstanding during the year, if dilutive. During 2021 and 2020, all the outstanding common share equivalents
were anti-dilutive.
2.14 Financial instruments
Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual
provisions of the financial instrument.
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial
position when there is an unconditional and legally enforceable right to offset the recognized amounts and there
is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
- 14 -
57
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
All financial instruments are required to be measured at fair value on initial recognition. The fair value is based
on quoted market prices, unless the financial instruments are not traded in an active market. In this case, the
fair value is determined by using valuation techniques like the Black-Scholes option pricing model or other
valuation techniques.
2.14.1 Financial assets
Financial assets are derecognized when the contractual rights to receive the cash flows from the financial
asset have expired, or when the financial asset and all substantial risks and rewards have been transferred.
A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires.
Financial assets are initially measured at fair value. If the financial asset is not subsequently accounted for
at fair value through profit or loss, then the initial measurement includes transaction costs that are directly
attributable to the asset’s acquisition or origination. On initial recognition, the Corporation classifies its
financial instruments in the following categories depending on the purpose for which the instruments were
acquired.
Amortized cost:
Financial assets at amortized cost are non-derivative financial assets with fixed or determinable payments
constituted solely of payments of principal and interest that are held within a “held to collect” business model.
Financial assets at amortized cost are initially recognized at the amount expected to be received, less, when
material, a discount to reduce the financial assets to fair value. Subsequently, financial assets at amortized
cost are measured using the effective interest method less a provision for expected losses. The Corporation’s
cash and escrow account for environmental monitoring are classified within this category.
Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other
gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as
separate line item in the consolidated statement comprehensive loss.
2.14.2 Financial liabilities
A financial liability is derecognized when extinguished, discharged, terminated, cancelled or expired.
Financial liabilities measured at amortized cost
Trade and other payables and payables to shareholders are initially measured at the amount required to be
paid, less, when material, a discount to reduce the payables to fair value. Subsequently, financial liabilities
are measured at amortized cost using the effective interest method.
2.14.3 Impairment of financial assets
Amortized cost:
At each reporting date, the Corporation assesses, on a forward‐looking basis, the expected credit losses
associated with its debt instruments carried at amortized cost. The impairment methodology applied depends
on whether there has been a significant increase in credit risk.
The expected loss is the difference between the amortized cost of the financial asset and the present value
of the expected future cash flows, discounted using the instrument’s original effective interest rate. The
carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an
allowance account. Provisions for expected losses are adjusted upwards or downwards in subsequent
periods if the amount of the expected loss increases or decreases.
- 15 -
58
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
2.15 Segment disclosures
The Corporation operates in one industry segment, being the acquisition, exploration and evaluation of mineral
properties. All of the Corporation’ activities are conducted in Greenland.
3. CHANGES IN ACCOUNTING POLICIES
3.1 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, 2022. Many of these updates are
not expected to have any significant impact on the Corporation and are therefore not discussed herein.
Amendments to IAS 16 Property, plant and equipment
The IASB has made amendments to IAS 16 Property, plant and equipment, which will be effective for financial
years beginning on or after January 1, 2022. Proceeds from selling items before the related item of Property,
plant and equipment is available for use should be recognized in profit or loss, together with the costs of
producing those items. The Corporation will therefore need to distinguish between the costs associated with
producing and selling items before the item of Property, plant and equipment (pre-production revenue) is
available for use and the costs associated with making the item of Property, plant and equipment available for
its intended use. For the sale of items that are not part of a Corporation’s ordinary activities, the amendments
will require the Corporation to disclose separately the sales proceeds and related production cost recognized in
profit or loss and specify the line items in which such proceeds and costs are included in the consolidated
statement of comprehensive loss. These amendments will have an impact on the Corporation’s consolidated
financial statements.
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
In February 2021, the IASB issued amendments to IAS 8, which added the definition of Accounting Estimates
in IAS 8. The amendments also clarified that the effects of a change in an input or measurement technique are
changes in accounting estimates, unless resulting from correction of prior period errors. The Corporation is
currently evaluating the impact of these amendments on its consolidated financial statements.
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
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.
- 16 -
59
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS (CONT’D)
Determining whether to test for impairment of mineral properties requires Management’s judgment, among
others, regarding the following: the period for which the entity has the right to explore in the specific area has
expired during the period or will expire in the near future, and is not expected to be renewed; substantive
expenditure on further exploration and evaluation of mineral resources in a specific area is neither budgeted nor
planned; exploration for and evaluation of mineral resources in a specific area have not led to the discovery of
commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in
the specific area; or sufficient data exists to indicate that, although a development in a specific area is likely to
proceed, the carrying amount of the mineral properties is unlikely to be recovered in full from successful
development or by sale.
When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the
individual asset must be estimated. If it is not possible to estimate the recoverable amount of the individual asset,
the recoverable amount of the cash-generating unit to which the asset belongs must be determined. Identifying
the cash-generating units requires considerable management judgment. In testing an individual asset or cash-
generating unit for impairment and identifying a reversal of impairment losses, Management estimates the
recoverable amount of the asset or the cash-generating unit. This requires management to make several
assumptions as to future events or circumstances. These assumptions and estimates are subject to change if
new information becomes available. Actual results with respect to impairment losses or reversals of impairment
losses could differ in such a situation and significant adjustments to the Corporation’ assets and earnings may
occur during the next period.
4.2 Recognition of deferred income tax assets and the measurement of income tax expense
Periodically, the Corporation evaluates the likelihood of whether some portion of the deferred tax assets will not
be realized. Once the evaluation is completed, if the Corporation believes that it is probable that some portion
of the deferred tax assets will fail to be realized, the Corporation records only the remaining portion for which it
is probable that there will be available future taxable profit against which the temporary differences can be
utilized. Assessing the recoverability of deferred income tax assets requires Management to make significant
judgment.
To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the
Corporation to realize the net deferred tax assets recorded at the statement of financial position date could be
impacted. Significant judgment is required in determining the income tax recovery as there are transactions and
calculations for which the ultimate tax determination is uncertain.
4.3 Determination of functional currency
In accordance with IAS 21 “The Effects of Changes in Foreign Exchange Rates”, Management determined that
the functional currency of the Corporation and its subsidiary is the Canadian dollar.
ESTIMATES AND ASSUMPTIONS
4.4 Environmental monitoring costs
The provisions for environmental monitoring costs are based on estimated future costs using information
available at the financial reporting date. Determining these obligations requires significant estimates and
assumptions due to the numerous factors that affect the amount ultimately payable. Such factors include
estimates of the scope and cost of restoration activities, legislative amendments, known environmental impacts,
the effectiveness of reparation and restoration measures and changes in the discount rate. This uncertainty may
lead to differences between the actual expense and the provision. At the date of the consolidated statement of
financial position, environmental monitoring costs represent Management’s best estimate of the charge that will
result when the actual obligation is terminated.
- 17 -
60
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
5. ESCROW ACCOUNT FOR ENVIRONMENTAL MONITORING
On behalf of Nalunaq’s licence holder, an escrow account has been set up with the holder of the licence as
holder of the account and the Government of Greenland as beneficiary. The funds in the escrow account have
been provided in favour of the Government of Greenland as security for fulfilling the environmental monitoring
expenses following the closure of the Nalunaq mine. This environmental monitoring program was completed in
2020.
Balance beginning
Effect of translation
Payment for environmental monitoring work
Balance ending
Non-current portion – escrow account for environmental monitoring
Current portion – escrow account for environmental monitoring
6. MINERAL PROPERTIES
2021
$
460,447
(35,810)
-
424,637
(424,637)
-
2020
$
516,996
38,553
(95,102)
460,447
(460,447)
-
Nalunaq
Tartoq
Vagar
Naalagaaffiup Portornga
Nuna Nutaaq
Saarloq
Anoritooq
Sava (previously called Kangerluarsuk)
Total mineral properties
Nalunaq
Tartoq
Vagar
Naalagaaffiup Portornga
Nuna Nutaaq
Saarloq
Anoritooq
Sava (previously called Kangerluarsuk)
Total mineral properties
6.1 Nalunaq
As at
December 31,
2020
$
Additions
$
As at
December 31,
2021
$
1
18,431
11,103
6,334
6,076
7,348
6,389
6,562
62,244
As at
December 31,
2019
$
1
18,431
11,103
6,334
6,076
-
-
-
41,945
-
-
-
-
-
-
-
-
-
Additions
$
-
-
-
-
-
7,348
6,389
6,562
20,299
1
18,431
11,103
6,334
6,076
7,348
6,389
6,562
62,244
As at
December 31,
2020
$
1
18,431
11,103
6,334
6,076
7,348
6,389
6,562
62,244
Nalunaq A/S holds the gold exploitation licence number 2003/05 on the Nalunaq property (the “Nalunaq
Licence”) located in South West Greenland. The licence expires in April 2033 with an extension possible up to
20 years.
- 18 -
61
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
6. MINERAL PROPERTIES (CONT’D)
6.1.1 Collaboration agreement and project schedule
Cyrus Capital Partners LP was the main creditor of Angel Mining PLC, the parent company of Angel Mining
(Gold) A/S. Angel Mining PLC went into administration in February 2013 and as part of the Administrator’s
restructuring process, FBC Mining (Holdings) Ltd. (“FBC Mining”) and Arctic Resources Capital S.à r.l. (“ARC”)
agreed to enter into a collaboration agreement (“Collaboration Agreement”) (signed July 15, 2015) to progress
the Nalunaq exploration project. FBC Mining is a 100% subsidiary of FBC Holdings S.à r.l which is managed by
Cyrus Capital Partners LP.
In addition, ARC, FBC Mining and AEX Gold Limited (previously known as FBC Mining (Nalunaq) Limited) (a
100% subsidiary of FBC Mining) signed on July 17, 2015 the Nalunaq project schedule (“2015 Project
Schedule”) which was continued following the signature with Nalunaq A/S on March 31, 2017 of the 2016-2017
Nalunaq Project Schedule (“2016-2017 Project Schedule”), (collectively “Project Schedules”).
Finally, the conditions relating to a processing plant located on the Nalunaq Licence (“Processing Plant”) and a
royalty payment were outlined in the 2015 Project Schedule and formalized in the processing plant and royalty
agreement (“Processing Plant and Royalty Agreement”) signed on March 31, 2017 and the conditions are as
follows:
a) AEX Gold Limited transfers the Processing Plant to Nalunaq A/S under the following conditions:
i) An initial purchase price of US$1;
ii) A deferred consideration of US$1,999,999 (“Deferred Consideration”) on a pay as you go
basis until the Deferred Consideration is paid in full. If only part of the Processing Plant is
used, then the Deferred Consideration payable shall be reduced by an amount to be
agreed by the parties to reflect the value of the part of the Processing Plant used.
iii) The Deferred Consideration may be reduced to the extent that the Processing Plant or any
part which is being used requires repairs, is not in good working condition or will not be
capable of doing the work for which it was designed.
iv) Nalunaq A/S may dispose or otherwise deal with the Processing Plant or any part of it at
its own cost. If any disposal proceeds (defined as proceeds received minus costs of dealing
with the disposal) are received, that disposal proceeds shall be paid to AEX Gold Limited
and such amount shall be deemed to be Deferred Consideration. If there are any disposal
proceeds remaining after the Deferred Consideration has been paid in full, the disposal
proceeds remaining may be retained by Nalunaq A/S.
b) Nalunaq A/S shall pay to AEX Gold Limited a 1% royalty on Nalunaq A/S’ net revenue generated on the
Nalunaq Licence (total revenue minus production, transportation and refining costs), provided that in
respect to the last completed calendar year, the operating profit per ounce of gold exceeded US$500.
The cumulative royalty payments over the life of mine are capped at a maximum of US$1,000,000.
6.1.2 Government of Greenland royalty
The Nalunaq Licence and subsequent Addendums does not have a royalty clause. However, according to the
Addendum 3 of the Mineral Resources Act enacted on July 1, 2014, the Greenland Government may set terms
on the licensee’s payment of royalty or consideration, if the Greenland Government and the licensee agree,
since the Nalunaq Licence was granted before July 1, 2014. Nalunaq A/S may have to pay to the Government
of Greenland a sales royalty of up to 2.5% of the value of the minerals. Nalunaq A/S may on certain terms offset
an amount equal to paid corporate income tax and corporate dividend tax against the sales royalty to be paid.
6.1.3 Exploration commitments and exploitation milestones
After Nalunaq A/S has submitted its statements of expenses for the Nalunaq Licence for the 2017 and 2018
years, the MLSA has approved Nalunaq A/S’ transition to the subsequent period (sub period 4) without a rollover
of the unspent amount.
- 19 -
62
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
6. MINERAL PROPERTIES (CONT’D)
The Government of Greenland has been confirmed with Addendum No. 5 dated March 2020 which was signed
by the Government of Greenland and therefore became effective on March 13, 2020, to extend the requirement
dates to perform the following tasks. No later than December 31, 2022, the licensee shall prepare an
environmental impact assessment, make a social impact assessment and perform an impact benefit agreement.
The time limit for commencement of exploitation is January 1, 2023.
Failure to satisfy any of the conditions set forth in the addendums to the Nalunaq Licence may result in the
MLSA revoking the Nalunaq Licence without further notice.
6.2 Tartoq
6.2.1 Purchase of the Tartoq Licence
Nalunaq A/S signed on July 6, 2016 a sale and purchase agreement, to purchase from Nanoq Resources Ltd.
the Tartoq exploration licence number 2015/17 located in Southwest Greenland, for a total consideration of
$7,221. The licence originally expired December 31, 2024 with an entitlement to a 5-year extension. The renewal
for a period of five years has been confirmed with Addendum No. 3 dated February 2020 which was signed by
Nalunaq A/S on February 13, 2020 and became effective on March 13, 2020 when it was signed by the
Government of Greenland. In response to the COVID 19 pandemic, the Government of Greenland gave an
extension of the licence period for all exploration licences by two years, therefore the licence expires
December 31, 2026.
6.2.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. For the exploration licence, Nalunaq A/S shall complete DKK nil of exploration activities
in 2021, adding the non-fulfilled exploration obligation 2020 of DKK 514,901, for a total of DKK 514,901 ($99,702
using the exchange rate as at December 31, 2021) exploration obligation in 2021 which was confirmed by MLSA
and postponed to 2022. For the purpose of crediting expenditures against the amounts set forth in the Tartoq
Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of
expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to
rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling
over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted
its statements of expenses for the Tartoq exploration licence for the 2021 year to the MLSA by April 1, 2022.
6.3 Naalagaaffiup Portornga (Land Adjacent to Existing Tartoq Licence)
6.3.1 Purchase of the Naalagaaffiup Portornga Licence
The Corporation has acquired the right to conduct exploration activities on approximately 170km2 of land in an
area adjacent to the Tartoq Licence. The exploration rights have been granted to the Corporation under a new
separate exploration Licence 2018/17 Naalagaaffiup Portornga and the licence had an original expiry date of
December 31, 2022 with an entitlement to a 5-year extension. The licence application has been approved and
all required documentation was signed by the Corporation on January 16, 2018 and the licence became effective
on February 19, 2018 when it was signed by the Greenland authorities. In response to the COVID 19 pandemic,
the Government of Greenland gave an extension of the licence period for all exploration licences by two years,
therefore the licence expires December 31, 2024.
- 20 -
63
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
6. MINERAL PROPERTIES (CONT’D)
6.3.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. For the exploration licence, Nalunaq A/S shall complete DKK nil of exploration activities
in 2021, reducing by the total credit from 2020 of DKK 16,400, for a total credit of DKK 16,400 (credit of $3,176
using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was
confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Naalagaaffiup
Portornga Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the
type of expenditures made. If these obligations are not met, certain measures may be taken by the licence
holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall
or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S
submitted its statements of expenses for the Naalagaaffiup Portornga exploration licence for the 2021 year to
the MLSA by April 1, 2022.
6.4 Vagar
6.4.1 Purchase of the Vagar Licence
Nalunaq A/S entered into a sale and purchase agreement with NunaMinerals A/S, acting through its bankruptcy
receiver, on February 6, 2017 to acquire the Vagar exploration licence number 2006/10 (“Vagar Licence")
located in Western Greenland, along with all mineral exploration and mining-related data, maps and reports
pertaining to the Vagar Licence, studies and reports, for a purchase price of $9,465 (DKK 50,000). Upon the
approval of the Greenland authorities received on October 30, 2017, Nalunaq A/S signed the paperwork to
complete the licence transfer, which became effective upon the Greenland authorities executing the document
on January 18, 2018. The licence originally expired December 31, 2021 with a possible 6-year extension. In
response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for
all exploration licences by two years, therefore the licence expires December 31, 2023.
6.4.2 Exploration commitments
Nalunaq A/S asked in December 2019 for a reduction of the size of the area covered by the licence to 292km2.
This reduction of the size of the area has been confirmed with Addendum No. 9 dated January 2020 which was
signed by Nalunaq A/S in January 23, 2020 and became effective on March 13, 2020 when it was signed by
the Government of Greenland.
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. For the exploration licence, Nalunaq A/S shall complete DKK nil of exploration activities
in 2021, reducing by the total credit from 2020 of DKK 2,517,299, for a total credit of DKK 2,517,299 (credit of
$487,432 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which
was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Vagar
Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of
expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to
rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling
over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted
its statements of expenses for the Vagar exploration licence for the 2021 year to the MLSA by April 1, 2022.
- 21 -
64
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
6. MINERAL PROPERTIES (CONT’D)
6.5 Nuna Nutaaq
6.5.1 Purchase of the Nuna Nutaaq Licence
The Corporation has acquired the right to conduct exploration activities on approximately 266km2 of land in an
area of Itillersuaq near Narsaq in South Greenland. The exploration rights have been granted to the Corporation
under a new separate Exploration Licence 2019/113 Nuna Nutaaq. The licence application has been approved
and all required documentation was signed by the Corporation on September 13, 2019 and the licence became
effective on September 26, 2019 when it was signed by the Government of Greenland. The licence originally
expired December 31, 2023 with an entitlement to a 5-year extension. In response to the COVID 19 pandemic,
the Government of Greenland gave an extension of the licence period for all exploration licences by two years,
therefore the licence expires December 31, 2025.
6.5.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. For the exploration licence, Nalunaq A/S shall complete DKK nil of exploration activities
in 2021, reducing by the total credit from 2020 of DKK 96,972, for a total credit of DKK 96,972 (credit of $18,777
using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was
confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Nuna Nutaaq
Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of
expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to
rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling
over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted
its statements of expenses for the Nuna Nutaaq exploration licence for the 2021 year to the MLSA by
April 1, 2022.
6.6 Saarloq
6.6.1 Purchase of the Saarloq Licence
The Corporation acquired the right to conduct exploration activities on approximately 818km2 of land in the areas
of Quassugaarsuk and Sermeq Kangilleq in South Greenland. The exploration rights have been granted to the
Corporation under a new separate Exploration Licence 2020/31, referred to as Saarloq. The licence application
has been approved and all required documentation was signed by the Corporation on May 15, 2020 and the
licence became effective on May 28, 2020 when it was signed by the Government of Greenland. The licence
originally expired December 31, 2024 with an entitlement to a 5-year extension. In response to the COVID 19
pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by
two years, therefore the licence expires December 31, 2026.
6.6.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. For the exploration licence, Nalunaq A/S shall complete DKK nil of exploration activities
in 2021, reducing by the total credit from 2020 of DKK 271,382, for a total credit of DKK 271,382 (credit of
$52,549 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which
was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Saarloq
Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of
expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to
rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling
over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted
its statements of expenses for the Saarloq exploration licence for the 2021 year to the MLSA by April 1, 2022.
- 22 -
65
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
6. MINERAL PROPERTIES (CONT’D)
6.7 Anoritooq
6.7.1 Purchase of the Anoritooq Licence
The Corporation acquired the right to conduct exploration activities on approximately 1,710km2 of land in the
areas of Anoritooq and Kangerluluk in South Greenland. The exploration rights have been granted to the
Corporation under a new separate Exploration Licence 2020/36, referred to as Anoritooq. The licence application
has been approved and all required documentation was signed by the Corporation on June 11, 2020 and the
licence became effective on June 24, 2020 when it was signed by the Government of Greenland. In October
2020, the Corporation was granted an addendum to the Anoritooq Licence, increasing the size of the licence to
1,889km2 and became effective November 6, 2020 when it was signed by the Government of Greenland. The
licence originally expired December 31, 2024 with a possible 5-year extension. In response to the COVID 19
pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by
two years, therefore the licence expires December 31, 2026.
6.7.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. For the exploration licence, Nalunaq A/S shall complete DKK nil of exploration activities
in 2021, reducing by the total credit from 2020 of DKK 516,903, for a total credit of DKK 516,903 (credit of
$100,089 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which
was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the
Anoritooq Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the
type of expenditures made. If these obligations are not met, certain measures may be taken by the licence
holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall
or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S
submitted its statements of expenses for the Anoritooq exploration licence for the 2021 year to the MLSA by
April 1, 2022.
6.8 Sava (previously called Kangerluarsuk)
6.8.1 Purchase of the Sava Licence
The Corporation acquired the right to conduct exploration activities on approximately 335km2 of land in the area
of Eqaluit Iluat in South Greenland. The exploration rights have been granted to the Corporation under a new
separate Exploration Licence 2021/02, referred to as Sava. The licence application has been approved and all
required documentation was signed by the Corporation on October 13, 2020 and the licence became effective
on November 6, 2020 when it was signed by the Government of Greenland. The licence originally expired
December 31, 2025 with a possible 5-year extension. In response to the COVID 19 pandemic, the Government
of Greenland gave in December 2020, an extension of the licence period for all exploration licences by one year,
therefore the licence expires December 31, 2026.
- 23 -
66
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
6. MINERAL PROPERTIES (CONT’D)
6.8.2 Exploration commitments
In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years
2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be
postponed by two years. The exploration commitments for this new exploration licence are DKK nil ($nil using
the exchange rate as at December 31, 2021) in 2021. For the purpose of crediting expenditures against the
amounts set forth in the Sava Licence, actual expenditures are multiplied by a factor of between 1.5 and 3,
depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken
by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the
spending shortfall or rolling over the exploration commitment to the next period subject to approval from the
MLSA. Nalunaq A/S submitted its statements of expenses for the Sava exploration licence for the 2020 and
2021 years to the MLSA by April 1, 2022.
6.9 Genex
On October 16, 2017, Nalunaq A/S was awarded a prospecting licence number 2017/45 covering West
Greenland, in this context defined as areas south of 78ºN and west of 44ºW. It is valid for a term of five years
until December 31, 2021. This licence has expired and Nalunaq A/S is in the process of applying for a
replacement licence with the Government of Greenland. Nalunaq A/S is not obligated to spend exploration
expenses regarding this licence area during this period.
On September 26, 2019, Nalunaq A/S was granted a prospecting licence number 2019/146 covering East
Greenland, in this context defined as areas south of 75ºN and east of 44ºW. It is valid for a term of five years
until December 31, 2023. Nalunaq A/S is not obligated to spend exploration expenses regarding this licence
area during this period.
7. CAPITAL ASSETS
2020
Opening net book value
Additions
Depreciation
Closing net book value
As at December 31, 2020
Cost
Accumulated depreciation
Closing net book value
Field
equipment and
infrastructure
$
271,977
-
(125,774)
146,203
Vehicles and
rolling stock
$
86,656
245,734
(75,525)
256,865
Equipment
(including
software)
$
Right-of-use
assets (note
8)
$
Total
$
8,470
175,364
(6,782)
177,052
-
841,080
(20,186)
820,894
367,103
1,262,178
(228,267)
1,401,014
387,323
(241,120)
146,203
533,800
(276,935)
256,865
185,878
(8,826)
177,052
841,080
(20,186)
820,894
1,948,081
(547,067)
1,401,014
- 24 -
67
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
7. CAPITAL ASSETS (CONT’D)
Field
equipment
and
infrastruc-
ture
$
Vehicles
and rolling
stock
Equipment
(including
software)
Construc-
tion In
Progress
Right-of-
use assets
(note 8)
Total
$
$
$
$
$
146,203
1,983,718
(140,807)
1,989,114
256,865
4,195,205
(147,361)
4,304,709
177,052
-
(21,041)
156,011
-
7,452,668
-
7,452,668
820,894
1,401,014
- 13,631,591
(80,744)
(389,953)
740,150 14,642,652
2,371,041
(381,927)
1,989,114
4,729,005
(424,296)
4,304,709
185,878
(29,867)
156,011
7,452,668
-
7,452,668
841,080 15,579,672
(100,930)
(937,020)
740,150 14,642,652
2021
Opening net book value
Additions
Depreciation
Closing net book value
As at December 31, 2021
Cost
Accumulated depreciation
Closing net book value
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 $299,771 ($206,153 – 2020) was expensed as exploration and evaluation expenses in 2021.
As at December 31, 2021, the Corporation had capital asset purchase commitments, net of deposit on order, of
$nil ($8,796,288 as at December 31, 2020). These commitments related to purchases of equipment,
infrastructure and vehicles.
As of December 31, 2021, the amount of $7,452,668 of construction in progress is related to equipment and
infrastructure received or in storage and which will be installed at the appropriate time.
8. LEASE LIABILITIES
Balance beginning
Additions
Principal repayment
Balance ending
Non-current portion – lease liabilities
Current portion – lease liabilities
As at
December 31,
2021
$
829,813
-
(65,900)
763,913
(713,078)
50,835
As at
December 31,
2020
$
-
841,080
(11,267)
829,813
(763,913)
65,900
The Corporation has presently only one lease for its office. In October 2020, the Corporation started the lease
for five years and five months including five free rent months during this period. The monthly rent is $8,825 until
March 2024 and $9,070 for the balance of the lease. The Corporation has the option to renew the lease for an
additional five-year period at $9,070 monthly rent indexed annually to the increase of the consumer price index
of the previous year for the Montreal area.
A right-of-use asset of $841,080 and an equivalent long term lease liability was recorded as of October 1, 2020,
with a 5% incremental borrowing rate and considering that the renewal option would be exercised. Depreciation
of right-of-use assets is being recorded in general and administrative expenses in the consolidated statement
of comprehensive loss, under depreciation. Depreciation of $80,744 ($20,186 in 2020) was expensed as general
and administration expenses in 2021.
- 25 -
68
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
9. ENVIRONMENTAL MONITORING PROVISION
Balance beginning
Effect of foreign exchange translation
Payment from cash held in escrow account for environmental monitoring
Accretion expense
Change in estimates
Balance ending
Non-current portion – environmental monitoring provision
Current portion – environmental monitoring provision
2021
$
-
-
-
-
-
-
-
-
2020
$
174,864
13,125
(95,102)
5,959
(98,846)
-
-
-
In September 2020, a final payment to settle the environmental monitoring obligations attached to the Nalunaq
Licence has been completed and no further payments are expected to be made regarding this obligation.
10. SHARE CAPITAL
10.1 Share Capital
The Corporation is authorized to issue an unlimited number of common voting shares and an unlimited number
of preferred shares issuable in series, all without par value.
10.2 AIM Admission
During the quarter ended September 30, 2020, the Corporation completed the admission of its entire issued
share capital to trading on the AIM market of the London Stock Exchange and trading commenced on AIM on
July 31, 2020 (“Admission”) under the ticker AEXG.
10. SHARE CAPITAL (CONT’D)
10.3 Completion of the fundraising
On July 31, 2020, the Corporation completed the fundraising by issuing 94,444,445 common shares at a price
of $0.77 per share for subscription made in Canadian dollars and GBP 0.45 per share for subscriptions made in
British pounds sterling, for gross proceeds to the Corporation of $74,550,202 (the “Fundraising”).
The Corporation incurred total issuance costs of $6,312,546 in relation to this process.
Certain officers and directors of the Corporation purchased an aggregate of 1,177,581 common shares for
$906,737 (note 20). The officers and directors of the Corporation subscribed to the Fundraising under the same
terms and conditions as set forth for all subscribers.
- 26 -
69
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
11. WARRANTS
11.1 Warrants
Changes in the Corporation’s warrants are as follow:
Number of
warrants
2021
Carrying
Value
$
Weighted
average
exercise
price
$
Number of
warrants
Balance, beginning
Exercised
Expired
Balance, end
-
-
-
-
-
-
-
-
-
-
-
-
13,157,895
(11,272,271)
(1,885,624)
-
2020
Carrying
Value
$
1,137,816
(974,758)
(163,058)
-
Weighted
average
exercise
price
$
0.45
0.45
0.45
-
The Corporation has accelerated the expiry of certain common share purchase warrants ("Warrants"), bearing
an expiration date of June 28, 2022. The certificate evidencing the Warrants ("Warrant Certificate") provided for
acceleration in certain circumstances, which were met during the period. From the period February 6, 2020 to
March 5, 2020, the daily volume weighted average price of the Corporation's common shares on the TSX-V was
equal to or greater than $0.50, thus satisfying the acceleration requirements under the Warrants. Accordingly,
Warrant holders were provided with notification that any Warrants that were not exercised before April 20, 2020,
being the 30th trading day following the occurrence of the acceleration event, would expire and be cancelled.
Certain Warrant holders exercised 11,272,271 Warrants, each entitling the holder to receive one common share
of the Corporation, at an exercise price per warrant of $0.45, representing gross proceeds of $5,072,522. The
remaining Warrants amounting to 1,885,624 expired.
11.2 Agent warrants
Changes in the Corporation’s agent and finders warrants are as follow:
2021
2020
Number of
warrants
Carrying
Value
$
Balance, beginning
Exercised
Expired
Balance, end
-
-
-
-
-
-
-
-
Weighted
average
exercise
price
$
-
-
-
-
Number of
warrants
1,067,739
(335,627)
(732,112)
-
Carrying
Value
$
321,788
(103,944)
(217,844)
-
Weighted
average
exercise
price
$
0.49
0.50
0.49
-
12. STOCK OPTIONS
An incentive stock option plan (the “Plan”) was approved initially in 2017 and renewed by shareholders on
June 9, 2021. 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 and directors, employees and consultants. The
Board of directors attributes the stock options and the exercise price of the options shall not be less than the
closing price on the last trading day preceding the grant date. The options have a maximum term of ten years.
Options granted pursuant to the Plan shall vest and become exercisable at such time or times as may be
determined by the Board, except options granted to consultants providing investor relations activities shall vest
in stages over a 12 month period with a maximum of one-quarter of the options vesting in any three-month
period. The Corporation has no legal or constructive obligation to repurchase or settle the options in cash.
- 27 -
70
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
12. STOCK OPTIONS (CONT’D)
On June 17, 2020, the Corporation granted to its directors, officers and consultants 2,195,000 stock options
exercisable at an exercise price of $0.70, with an expiry date of December 31, 2026. The stock options vested
100% at the grant date. Those options were granted at an exercise price equal to the closing market value of
the shares the previous day of the grant. Total stock-based compensation costs amount to $1,031,650 for an
estimated fair value of $0.47 per option. The fair value of the options granted was estimated using the Black-
Scholes model with no expected dividend yield, 76.41% expected volatility, 0.41% risk-free interest rate and 6.5
years options expected life. The expected life and expected volatility were estimated by benchmarking
comparable companies to the Corporation.
On June 9, 2021, the Corporation granted the CFO with 900,000 stock options exercisable at an exercise price
of $0.59, with an expiry date of December 31, 2027. The stock options vested 100% at the grant date. Those
options were granted at an exercise price equal the closing market value of the shares the previous day of the
grant. Total stock-based compensation costs amount to $360,000 for an estimated fair value of $0.40 per option.
The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend
yield, 75.85% expected volatility, 1.07% risk-free interest rate and 6.6 years options expected life. The expected
life and expected volatility were estimated by benchmarking comparable companies to the Corporation.
On July 5, 2021, the Corporation granted to an employee 100,000 stock options exercisable at an exercise price
of $0.50, with an expiry date of July 5, 2026. The stock options vest in three equal annual tranches from the
grant date. Those options were granted at an exercise price equal to the closing market value of the shares the
previous day of the grant. Total stock-based compensation costs amount to $29,000 for an estimated fair value
of $0.29 per option. The fair value of the options granted was estimated using the Black-Scholes model with no
expected dividend yield, 71.40% expected volatility, 1.01% risk-free interest rate and 5 years options expected
life. The expected life and expected volatility were estimated by benchmarking comparable companies to the
Corporation.
On September 13, 2021, the Corporation granted to an employee 100,000 stock options exercisable at an
exercise price of $0.50, with an expiry date of September 13, 2026. The stock options vest in three equal annual
tranches from the grant date. Those options were granted at an exercise price equal to the closing market value
of the shares the previous day of the grant. Total stock-based compensation costs amount to $29,000 for an
estimated fair value of $0.29 per option. The fair value of the options granted was estimated using the Black-
Scholes model with no expected dividend yield, 69.49% expected volatility, 0.86% risk-free interest rate and 5
years options expected life. The expected life and expected volatility were estimated by benchmarking
comparable companies to the Corporation.
Changes in stock options are as follow:
2021
2020
Number of
options
7,745,000
1,100,000
(1,910,000)
-
6,935,000
6,801,666
Weighted
average
exercise
price
$
0.51
0.57
0.52
-
0.51
0.51
Number of
options
5,650,000
2,195,000
-
(100,000)
7,745,000
7,745,000
Weighted
average
exercise price
$
0.43
0.70
-
0.38
0.51
0.51
Balance, beginning
Granted
Expired
Exercised
Balance, end
Balance, end exercisable
- 28 -
71
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
12. STOCK OPTIONS (CONT’D)
Stock options outstanding and exercisable as at December 31, 2021 are as follows:
Number of options
outstanding
Number of options
exercisable
1,160,000
1,360,000
1,820,000
100,000
100,000
1,495,000
900,000
6,935,000
1,160,000
1,360,000
1,820,000
33,333
33,333
1,495,000
900,000
6,801,666
Exercise
price
$
0.50
0.45
0.38
0.50
0.50
0.70
0.59
Expiry date
July 13, 2022
August 22, 2023
December 31, 2025
July 5, 2026
September 13, 2026
December 31, 2026
December 31, 2027
13. CAPITAL MANAGEMENT
The capital of the Corporation consists of the items included in equity and balances thereof and changes therein
are depicted in the consolidated statement of changes in equity.
The Corporation’ objectives are to safeguard the Corporation’ ability to continue as a going concern in order to
pursue its acquisition, exploration and evaluation activities and to maintain a flexible capital structure which
optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes
adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.
As the Corporation does not have cash flow from operations, to maintain or adjust the capital structure, the
Corporation may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of
cash. In order to maximize ongoing development efforts and to continue operations, the Corporation does not
pay out dividends.
The Corporation is not subject to externally imposed restrictions on capital.
14. EMPLOYEE REMUNERATION
Salaries
Salaries
Director’s fees
Benefits
Less : salaries and benefits presented in E&E expenses
Salaries disclosed in general and administrative expenses
2021
$
5,343,482
628,652
878,580
6,850,714
(3,569,124)
3,281,590
2020
$
1,154,302
252,083
218,740
1,625,125
(1,024,094)
601,031
- 29 -
72
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
15. EXPLORATION AND EVALUATION EXPENSES
2021
Geochemistry
Geology
Lodging and on-site support
Underground works
Drilling
Analysis
Transport
Supplies and equipment
Helicopter Charter
Logistic support
Insurance
Project Engineering costs
Government fees
Depreciation
Exploration and
Nalunaq
$
Vagar Tartoq
$
$
Naalagaaffiup
Portornga
$
Nuna
Nutaaq Saarloq Anoritooq
$
$
$
479,921
118,017
3,647,452
120,548
35,324
1,998
- 227,764 80,631
2,332,281 427,903 19,413
248
-
130
-
957
-
-
-
-
-
8,419
-
-
-
-
1,250
-
-
181,069 124,843
-
-
3,753,320 20,461
8,419
-
1,009,553
41,197
137,453
299,771
-
1,105
-
-
-
-
-
-
-
-
-
-
-
-
-
113,309
-
-
-
469
-
-
128,328
-
-
21,039
-
-
-
6,620
-
-
-
-
-
-
-
-
-
-
-
-
-
57,905
-
-
-
-
-
-
11,772
-
-
1,927
-
-
Sava
(previously
called
Kangerluarsuk) Genex
$
292,883
219,458
-
-
-
-
-
-
295,147
-
-
-
-
-
$
-
11,039
-
-
-
-
-
-
33,302
-
-
5,461
1,949
-
Total
$
601,278
3,189,033
480,169
118,017
3,647,582
122,267
36,281
1,998
774,461
1,009,553
41,197
3,802,208
156,240
299,771
evaluation expenses
12,157,904 810,640 109,798
1,105
263,145
6,620
71,604
807,488
51,751 14,280,055
2020
Nalunaq
$
Vagar
$
Geology
278,440
Lodging and on-site support
75,396
Underground works
186,955
Drilling
21,402
Safety and environment
259,188
Analysis
638,533
Transport
4,922
Helicopter Charter
339,200
Logistic support
Insurance
37,990
Maintenance infrastructure 2,434,862
87,224
Government fees
Depreciation
206,153
Exploration and
1,968,010 158,392
7,088
-
-
-
263
519
40,451
19,652
-
14,116
8,468
-
Tartoq
$
11,426
-
-
-
-
-
-
-
19,652
-
-
14,615
-
Naalagaaffiup
Portornga
$
14,110
-
-
-
-
-
-
-
19,652
-
-
-
-
Nuna
Nutaaq Saarloq Anoritooq
$
32,549
-
-
-
-
-
156
-
-
-
4,235
-
-
$
18,630
-
-
-
-
-
104
30,115
19,652
-
2,823
-
-
$
55,760
-
-
-
-
-
259
6,789
-
-
7,058
-
-
Sava
(previously
called
Kangerluarsuk) Genex
$
9,937
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
961
-
Total
$
2,268,814
285,528
75,396
186,955
21,402
259,451
639,571
82,277
417,808
37,990
2,463,094
111,268
206,153
evaluation expenses
6,538,275 248,949
45,693
33,762
71,324
36,940
69,866
9,937
961
7,055,707
16. GENERAL AND ADMINISTRATIVE
Salaries and benefits
Management and consulting fees
Director’s fees
Professional fees
Marketing and investor relations
Insurance
Travel and other expenses
Regulatory fees
Depreciation
General and administrative
2021
$
2,652,938
-
628,652
2,382,916
791,722
571,364
1,884,189
326,464
90,182
9,328,427
2020
$
348,948
633,220
252,083
1,077,541
466,465
218,355
140,135
132,315
22,114
3,291,176
- 30 -
73
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
17. FINANCE COSTS
Accretion expense - environmental monitoring provision
Financing fees lease
Finance costs
18. INCOME TAXES
2021
$
-
39,994
39,994
2020
$
5,959
6,872
12,831
Tax expense differs from the amount computed by applying the combined Canadian Statutory and Greenlandic
income tax rates, applicable to the Corporation, to the loss before income taxes due to the following:
Net loss before income taxes
Income tax rates
Income tax recovery
Increase (decrease) attributable to:
Non deductible expenses
Difference in statutory tax rate
Changes in unrecognized deferred tax assets
Tax recovery
2021
$
(24,689,239)
26.5%
(6,542,648)
2020
$
(12,339,112)
26.5%
(3,269,865)
104,109
265,772
6,172,767
-
274,878
111,110
2,883,877
-
The analysis of the Corporation’s deferred tax assets and liabilities as at December 31, 2021 and 2020 is as
follows:
Deferred tax assets (liabilities):
Capital assets
Non-capital losses
2021
$
(437,033)
437,033
-
2020
$
(25,949)
25,949
-
The Corporation records deferred income tax assets to the extent that it is probable that sufficient taxable income
will be realized during the carry-forward period to utilize these net future tax assets.
The significant components of deductible temporary differences and unused tax losses for which the
benefits have not been recorded on the consolidated statement of financial position as at December 31,
2021 are as follows:
Greenland
Non-capital losses carry forwards
As at
December 31,
2021
$
36,398,528
As the Corporation is a mineral licence holder, the non-capital losses in Greenland have no expiration date.
- 31 -
74
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
18. INCOME TAXES (CONT’D)
Canada
Non-capital losses carry forwards expiring in 2038
Non-capital losses carry forwards expiring in 2039
Non-capital losses carry forwards expiring in 2040
Non-capital losses carry forwards expiring in 2041
Non-capital losses carry forwards expiring in 2042
19. NET LOSS PER SHARE
As at
December 31,
2021
$
965,032
1,272,338
1,210,346
5,622,490
8,302,287
The calculation of basic and diluted net loss per share for the year ended December 31, 2021, was based on
the net loss attributable to shareholders of $24,689,239 ($12,339,112 for the year ended December 31, 2020)
and the weighted average number of common shares outstanding for the year ended December 31, 2021 of
177,098,737 (119,729,081 for the year ended December 31, 2020). As a result of the net loss for the years
ended December 31, 2021 and 2020, all potentially dilutive common shares are deemed to be antidilutive and
thus diluted net loss per share is equal to the basic net loss per share for these periods.
20. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION
The Corporation’s key management are the members of the board of directors, the President and Chief
Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Vice President Exploration and
the Corporate Secretary. Key management compensation is as follows:
Short-term benefits
Management and consulting fees
Professional fees
Salaries and benefits
Salaries and benefits included in the E&E expenses
Professional fees included in the E&E expenses
Director’s fees
Long-term benefits
Stock-based compensation (note 12)
Total compensation
2021
$
-
64,162
1,639,334
71,349
-
628,652
365,909
2,769,406
2020
$
633,220
-
292,562
72,170
261,292
252,083
916,500
2,427,827
The compensation for Joan Plant (Corporate Secretary) is charged through FBC BA for $nil for 2021 ($161,925
for 2020).
In addition to the amounts listed above in the compensation to key management, following are the related party
transactions, in the normal course of operations:
● A firm in which Georgia Quenby (director until June 9, 2021) is a partner charged legal professional fees
for $9,934 ($168,309 in 2020);
● A company controlled by Martin Ménard (Chief Operating Officer from July 9, 2019 to June 30, 2021)
charged engineering professional fees of $12,240 for his staff ($765,235 in 2020). The Chief Operating
Officer is the son of Robert Ménard, director until April 27, 2021;
● Nicolas and Catherine Ménard and Samuel Martel, engineering consultants, (the son, the daughter and
the son-in-law of Robert Ménard, director until April 27, 2021 and the brother, the sister and brother-in-
law of Martin Ménard, Chief Operating Officer until June 30, 2021) were paid $324,799 ($464,896 in
2020);
- 32 -
75
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
20. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION (CONT’D)
● As at December 31, 2021, the balance due to those related parties listed above and in the compensation
to key management amounted to $173,254 ($150,829 as at December 31, 2020).
Following are the related party transactions, outside of the normal course of operations:
● Directors and officers of the Corporation participated in the July 31, 2020 fundraising for $906,737 ($nil
in 2021). The directors and officers subscribed to the fundraising in 2020 under the same terms and
conditions set forth to all subscribers.
● Key management are subject to employment agreements which provide for payments on termination,
without cause or following a change of control, providing for payments up to one base salary.
The compensation of directors is as follows:
Short-term
benefits (a)
$
471,815
79,919
334,757
195,228
43,788
94,478
30,417
29,913
47,962
47,962
2021
Stock-based
compensation
$
Total
compensation
$
-
-
360,000
-
-
-
-
-
-
-
471,815
79,919
694,757
195,228
43,788
94,478
30,417
29,913
47,962
47,962
Short-term
benefits (a)
$
406,265
270,888
-
110,000
55,833
41,250
45,000
-
-
-
2020
Stock-based
compensation
$
211,500
117,500
-
188,000
47,000
-
47,000
-
-
-
Total
compensation
$
617,765
388,388
-
298,000
102,833
41,250
92,000
-
-
-
Eldur Olafsson
George Fowlie (1)
Jaco Crouse
Graham Stewart
Georgia Quenby (2)
Sigurbjorn Thorkelsson
Robert Ménard (3)
Liane Kelly
Line Frederiksen
David Neuhauser
Warwick Morley-
Jepson
138,904
Total compensation 1,515,143
-
360,000
138,904
1,875,143
-
929,236
-
611,000
-
1,540,236
(a) Short-term benefits comprise salary, director fees as applicable, annual bonus and pension.
(1) George Fowlie ceased to be Director 26th August 2021
(2) Georgia Quenby ceased to be Non-Executive Director 9th June 2021
(3) Robert Ménard ceased to be Non-Executive Director 27 April 2021
The directors participated in the July 31, 2020 fundraising for $836,596 ($nil in 2021). The director participation
is as follows:
Eldur Olafsson
George Fowlie
Graham Stewart
Georgia Quenby
Sigurbjorn Thorkelsson
Robert Ménard
Total
- 33 -
2021
Number of
new shares
-
-
-
-
-
-
-
2020
Number of
new shares
222,222
100,000
222,222
-
444,444
97,600
1,086,488
76
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
21. FINANCIAL INSTRUMENTS
The Corporation is exposed to various financial risks resulting from both its operations and its investment
activities. The Management manages financial risks. The Corporation does not enter into financial instruments
agreements, including derivative financial instruments, for speculative purposes. The Corporation’s main
financial risks exposure and its financial policies are described below.
21.1 Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by
failing to discharge an obligation. The Corporation’s cash and escrow account for environmental monitoring are
exposed to credit risk. Management believes the credit risk on cash and escrow account for environmental
monitoring is small because the counterparties are chartered Canadian and Greenlandic banks.
21.2 Liquidity risk
Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with
financial liabilities. The Corporation seeks to ensure that it has sufficient capital to meet short-term financial
obligations after taking into account its exploration and operating obligations and cash on hand. The Corporation
anticipates seeking additional financing in order to fund general and administrative costs and exploration and
evaluation costs. The Corporation’ options to enhance liquidity include the issuance of new equity instruments
or debt.
The following table summarizes the carrying amounts and contractual maturities of financial liabilities:
Within 1 year
1 to 5 years
5 to 10 years
Total
21.3 Currency risk
As at December 31, 2021 As at December 31, 2020
Trade and
other
payables
$
2,049,249
-
-
2,049,249
Lease
liabilities
$
88,245
431,910
435,343
955,498
Trade and
other
payables
$
105,894
411,320
544,178
1,061,392
831,899
-
-
831,899
Lease
liabilities
$
As at December 31, 2021 and 2020, a portion of the Corporation’s transactions are denominated in DKK, Euros,
US$ and British Pounds (GBP) to the extent such currencies are different from the relevant group entities’
functional currency.
The Corporation had the following balances in currencies:
As at December 31, 2021
In DKK
In Euros
In US$
In GBP
Cash
Escrow account for environmental monitoring
Trade and other payables
Exchange rate
Equivalent to CAD
2,145,132
2,193,001
(3,740,924)
597,209
0.1936
115,620
526,043
-
(20,987)
505,056
1.4401
727,331
5,314,298
-
(44,301)
5,269,997
1.2697
6,691,315
882
-
(36,563)
(35,681)
1.7155
(61,211)
Based on the above net exposures as at December 31, 2021, and assuming that all other variables remain
constant, a 10% appreciation or depreciation of the Canadian dollar against the DKK, Euro, US$ and GBP by
10% would decrease/increase profit or loss by $747,306.
- 34 -
77
AEX Gold Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(In Canadian Dollars, except as otherwise noted)
21.
FINANCIAL INSTRUMENTS (CONT’D)
As at December 31, 2020
In DKK
In Euros
In US$
In GBP
Cash
Escrow account for environmental monitoring
Trade and other payables
Exchange rate
Equivalent to CAD
324,536
2,193,001
(977,053)
1,540,484
0.2100
323,502
3,178,405
-
-
3,178,405
1.5625
4,966,258
6,658,837
-
(2,214)
6,656,623
1.2741
8,481,203
2,142
-
(40,603)
(38,461)
1.7390
(66,884)
Based on the above net exposures as at December 31, 2020, and assuming that all other variables remain
constant, a 10% appreciation or depreciation of the Canadian dollar against the DKK, Euro, US$ and GBP by
10% would decrease/increase profit or loss by $1,370,409.
21.4 Fair value risk
Fair value estimates are made at the consolidated statement of financial position date, based on relevant market
information and other information about financial instruments. As at December 31 2021, the Corporation’
financial instruments are cash, escrow account for environmental monitoring, trade and other payables and
lease liabilities. For all the financial instruments, the amounts reflected in the consolidated statement of financial
position are carrying amounts and approximate their fair values due to their short-term nature.
22. SUBSEQUENT EVENTS
On January 17, 2022, the Corporation granted to its directors, officers, employees and consultant 4,100,000
stock options exercisable at an exercise price of $0.60, with an expiry date of January 17, 2027. The stock
options vested 100% at the grant date. Those options were granted at an exercise price equal to the closing
market value of the shares the previous day of the grant. Total stock-based compensation costs amount to
$1,435,000 for an estimated fair value of $0.35 per option. The fair value of the options granted was estimated
using the Black-Scholes model with no expected dividend yield, 69.38% expected volatility, 1.51% risk-free
interest rate and 5 years options expected life. The expected life and expected volatility were estimated by
benchmarking comparable companies to the Corporation.
- 35 -
78