UNITED STATES
SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
FORM 20-F
( ) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2011
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
( ) SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of event requiring this shell company report …………………………
For the transition period from _____________________ to ____________________
Commission file number 001-32702
ALMADEN MINERALS LTD.
(Exact name of Registrant as specified in its charter)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
750 West Pender Street, #1103, Vancouver, British Columbia V6C 2T8
(Address of principal executive offices)
Korm Trieu, ktrieu@almadenminerals.com, 750 West Pender Street, #1103, Vancouver, BC V6C 2T8
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
Name of each exchange on which registered
Common Stock without Par Value NYSE Amex
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the
close of the period covered by the annual report.
59,122,321
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.
( ) Yes ( X ) No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
( ) Yes ( X ) No
Indicate by check mark weather the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
( X ) Yes ( ) No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web
site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit and post such files).
( ) Yes ( ) No
As a foreign private issuer that prepares its financial statements in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”), the Registrant is required to submit to the SEC and post on its corporate website Interactive
Data Files (as defined by Item 11 of Regulation S-T) pursuant to Rule 405 of Regulation S-T.
However, it is the view of the SEC’s Division of Corporation Finance and Office of the Chief Accountant
that the Registrant is not required to submit to the SEC and post on its corporate website Interactive
Data Files until the SEC specifies on its website an IFRS taxonomy for use by foreign private issuers in
preparing their Interactive Data Files.
As of the submission date of this Annual Report on Form 20-F, the SEC has not specified an IFRS
taxonomy for the Registrant to use in preparing its Interactive Data Files.
Indicate by check mark weather the registrant is a large accelerated filer, an accelerated filer or a non-
accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
Large accelerated filer ( )
Accelerated filer ( )
Non-accelerated filer ( X )
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements
included in this filing:
U.S. GAAP ( )
International Financial Reporting Standards as issued
by the International Accounting Standards Board (X)
Other ( )
2
If “Other” has been checked in response to the previous question, indicate by check mark which financial
statement item the registrant has elected to follow.
( ) Item 17 ( ) Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
( ) Yes ( X ) No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDS DURING THE PAST
FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section
12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
( ) Yes ( ) No
3
TABLE OF CONTENTS
Glossary of Geologic and Mining Terms
PART I
Item 1
Identity of Directors, Senior Management and Advisers
Item 2
Offer Statistics and Expected Timetable
Item 3
Key Information
Item 4
Information on the Company
Item 5
Operating and Financial Review and Prospects
Item 6
Directors, Senior Management and Employees
Item 7
Major Shareholders and Related Party Transactions
Item 8
Financial Information
Item 9
The Offer and Listing
Item 10
Additional Information
Item 11
Quantitative and Qualitative Disclosures About Market Risk
Item 12
Description of Securities Other than Equity Securities
PART II
Item 13
Defaults, Dividend Arrearages and Delinquencies
Item 14
Material Modifications to the Rights of Security Holders and
Use of Proceeds
Item 15
Controls and Procedures
Item 16A
Item 16B
Item 16C
Item 16D
Item 16E
Item 16F
Item 16G
Item 16H
Audit Committee Financial Expert
Code of Ethics
Principal Accountant Fees and Services
Exemptions from the Listing Standards for Audit Committees
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
Change in Registrant’s Certifying Accounts
Corporate Governance
Mine Safety Disclosure
PART III
Item 17
Item 18
Financial Statements
Financial Statements
Item 19
Exhibits
Signatures
Page
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18
18
24
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51
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4
Glossary of Geologic and Mining Terms
Adularia: A colourless, moderate to low-temperature variety of orthoclase feldspar typically with a relatively high
barium content. It is a prominent constituent of low sulphidation epithermal veins.
Alkalic Intrusive: An igneous rock emplaced below ground level in which the feldspar is dominantly sodic and or
potassic.
Alkalinity: The chemical nature of solutions characterized by a high concentration of hydroxyl ions.
Alteration: Usually referring to chemical reactions in a rock mass resulting from the passage of hydrothermal
fluids.
Andesite: A dark-coloured, fine-grained extrusive rock that, when porphyritic, contains phenocrysts composed
primarily of zoned sodic plagioclase (esp. andesine) and one or more of the mafic minerals (eg. Biotite, horn-blende,
pyroxene), with a ground-mass composed generally of the same minerals as the phenocrysts; the extrusive
equivalent of diorite. Andesite grades into latite with increasing alkali feldspar content, and into dacite with more
alkali feldspar and quartz. It was named by Buch in 1826 from the Andes Mountains, South America.
Anomalous: A geological feature, often subsurface, distinguished by geological, geochemical or geophysical
means, which is detectably different than the general surroundings and is often of potential economic value.
Anomaly: Any concentration of metal noticeably above or below the average background concentration.
Argillic: A form of alteration characterised by the alteration of original minerals to clays.
Arsenopyrite: A sulphide of arsenic and iron with the chemical composition FeAsS.
Assay: An analysis to determine the presence, absence or quantity of one or more components.
Axis: An imaginary hinge line about which the fold limbs are bent. The axis of a fold can be at the top or
bottom of the fold, can be tilted or horizontal.
Batholith: An intrusion, usually granitic, which has a large exposed surface area and no observable bottom.
Usually associated with orogenic belts.
Bathymetry survey: A geophysical survey that uses echo sounding to determine water depth.
Breccia: Rock consisting of more or less angular fragments in a matrix of finer-grained material or cementing
material.
Brecciated: Rock broken up by geological forces.
Bulk sample: A very large sample, the kind of sample to take from broken rock or of gravels and sands when
testing placer deposits.
Calc-silicate: Calcium-bearing silicate minerals. These minerals are commonly formed as a result of the
interaction of molten rock and its derived, hot hydrothermal fluids with very chemically reactive calcium
carbonate (limestone). Calc-silicate minerals include garnet, pyroxene, amphibole and epidote. These minerals
are commonly described as skarn and are genetically and spatially associated with a wide range of metals
Carbonate replacement deposit: A style of silver lead zinc mineralization in limestones.
Chert: A very fine grained siliceous rock. Many limestones contain nodules and thin lenses of chert.
Chip sample: A sample composed of discontinuous chips taken along a surface across a given line.
5
Claim: That portion of public mineral lands, which a party has staked or marked out in accordance with
provincial or state mining laws, to acquire the right to explore for the minerals under the surface.
Clastic: Consisting of rock material that has been mechanically derived, transported, and deposited. Such
material is also called detrital.
Cleavage: The tendency of a crystal to split, or break, along planes of structural weakness.
Columnar Jointing: A pattern of jointing that breaks rock into rough, six-sided columns. Such jointing is
characteristic of basaltic flows and sills and is believed to result from shrinkage during cooling.
Concordant Bodies: Intrusive igneous bodies whose contacts are parallel to the bedding of the intruded rock.
Conglomerate: Rock composed of mostly rounded fragments which are of gravel size or larger in a finer
grained matrix.
Craton: A central stable region common to nearly all continents and composed chiefly of highly metamorphosed
Precambrian rocks.
Cretaceous: Geological time period between 136 and 64 million years ago.
Crystalline: Means the specimen is made up of one or more groups of crystals.
Cut-off grade: The minimum grade of mineralization used to establish quantitative and qualitative estimates of
total mineralization.
Dacite: A fine grained acid volcanic rock, similar to rhyolite in which the feldspar is predominantly
plagioclase.
Degradation: The ongoing process of erosion in a stream.
Diabase: Igneous hypabyssal rocks. The name is applied differently in different parts of the world leading to
considerable confusion.
Diagenesis: The changes that occur in a sediment during and after lithification. These changes include compaction,
cementation, replacement, and recrystallization.
Diamond drill: A type of rotary drill in which the cutting is done by abrasion using diamonds embedded in a
matrix rather than by percussion. The drill cuts a core of rock which is recovered in long cylindrical sections.
Dilution: Results from the mixing in of unwanted gangue or waste rock with the ore during mining.
Dip: Geological measurement of the angle of maximum slope of planar elements in rocks. Can be applied to
beddings, jointing, fault planes, etc.
Discordant Bodies: Intrusive igneous bodies whose contacts cut across the bedding, or other pre-existing
structures, to the intruded rock.
Disseminated deposit: Deposit in which the mineralization is scattered through a large volume of host rock,
sometimes as separate mineral grains, or sometimes along joint or fault surfaces.
Dolomite: A magnesium bearing limestone usually containing at least 15% magnesium carbonate.
Dunite: An intrusive, monomineralic, ultramafic rock composed almost completely of magnesian olivine.
Dyke: A tabular, discordant, intrusive igneous body.
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Earn in: The right to acquire an interest in a property pursuant to an Option Agreement.
Ejecta: Pyroclastic material thrown out or ejected by a volcano. It includes ash, volcanic bombs, and lapilli.
Epithermal: Epithermal deposits are a class of ore deposits that form generally less than 1 km from surface.
These deposits, which can host economic quantities of gold, silver, copper, lead and zinc are formed as a result
of the precipitation of ore minerals from up-welling hydrothermal fluids. There are several classes of epithermal
deposits that are defined on the basis of fluid chemistry and resulting alteration and ore mineralogy. Fluid
chemistry is largely controlled by the proximity to igneous intrusive rocks and as a result igneous fluid content.
Extrusive Rock: Igneous rock that has solidified on the earth’s surface from volcanic action.
Fault: A fracture in a rock where there had been displacement of the two sides.
Faults: Breaks in rocks with noticeable movement or displacement of the rocks on either side of the break.
Feldspar: A group of aluminum silicate minerals closely related in chemical composition and physical properties.
There are two major chemical varieties of feldspar: the potassium aluminum, or potash, feldspars and the sodium-
calcium-aluminum, or plagioclase, feldspars. The feldspars possess a tetrahedral framework of silicon and oxygen,
with the partial substitution of aluminum for the silicon. They make up about 60 percent of the earth’s crust.
Felsic: Light coloured silicate minerals, mainly quartz and feldspar, or an igneous rock comprised largely of
felsic minerals (granite, rhyolite).
Fluid inclusion: A cavity, with or without negative crystal faces, containing one or two fluid phases, and possibly
one or more minute crystals, in a host crystal. If two fluid phases are present, the vapour phase (bubble) may show
Brownian motion.
Folds: Are flexures in bedded or layered rocks. They are formed when forces are applied gradually to rocks
over a long period of time.
Fracture: Breaks in a rock, usually due to intensive folding or faulting.
Gabbro: A group of dark-colored, basic intrusive igneous rocks composed principally of basic plagioclase
(commonly labradorite or bytownite) and clinopyroxene (augite), with or without olivine and orthopyroxene; also,
any member of that group. It is the approximate intrusive equivalent of basalt. Apatite and magnetite or ilmenite
are common accessory minerals.
Gambusino: Small miners working without machinery.
Gangue: Term used to describe worthless minerals or rock waste mixed in with the valuable minerals.
Geochemical Anomaly: An area of elevated values of a particular element in soil or rock samples collected during
the preliminary reconnaissance search for locating favourable metal concentrations that could indicate the presence
of surface or drill targets.
Geochemistry: The study of the chemistry of rocks, minerals, and mineral deposits.
Geophysics: The study of the physical properties of rocks, minerals, and mineral deposits.
Gneiss: A coarse grained metamorphic rock characterized by alternating bands of unlike minerals, commonly light
bands of quartz and feldspar and dark bands of mica and hornblende.
Gossan: The leached and oxidised near surface part of a sulphide mineral deposit, usually consisting largely of
hydrated iron oxides left after copper and other minerals have been removed by downward leaching.
Gouge: The finely ground rock that results from the abrasion along a fault surface.
7
Grade: The concentration of each ore metal in a rock sample, usually given as weight percent. Where
extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t) or ounces
per ton (oz/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an
average of the grades of a very large number of samples collected from throughout the deposit.
Granite: A coarse grained, plutonic igneous rock that is normally pale pink, pale pink-brown, or pale grey, and
composed of quartz, alkali feldspar, micas and accessory minerals.
Granodiorite: A course grained, plutonic igneous rock that is normally pale grey, and composed of quartz, calc-
alkali feldspar, micas and accessory minerals.
Gravity survey: A geophysical survey which measures the variations of the earth’s gravitational field in order to
differentiate between rocks of contrasting specific gravities.
Grid: A network composed of two sets of uniformly spaced parallel lines, usually intersecting at right angles and
forming squares, superimposed on a map, chart, or aerial photograph, to permit identification of ground locations by
means of a system or coordinates and to facilitate computation of direction and distance and size of geologic,
geochemical or geophysical features.
Hanging wall and Footwall: Terms used in reference to faults where when mining along a fault, your feet
would be in the footwall side of the fault and the other side would be “hanging” over your head.
Hectare: A square of 100 metres on each side.
Host rock: The rock within which the ore deposit occurs.
Hydrothermal: Of or pertaining to hot water, to the action of hot water, or to the products of this action, such
as a mineral deposit precipitated from a hot aqueous solution; also, said of the solution itself. “Hydrothermal”
is generally used for any hot water, but has been restricted by some to water of magmatic origin.
Igneous: Means a rock formed by the cooling of molten silicate material.
Ignimbrite: The rock formed by the widespread deposition and consolidation of ash flows and nues ardentes. The
term includes welded tuff and nonwelded but recrystallized ash flows.
Induced polarization (I.P.) method: The method used to measure various electrical responses to the passage
of alternating currents of different frequencies through near-surface rocks or to the passage of pulses of
electricity.
Intermediate: An igneous rock made up of both felsic and mafic minerals (diorite).
Intrusion: General term for a body of igneous rock formed below the surface.
Intrusive Rock: Any igneous rock solidified from magma beneath the earth’s surface.
Joint venture agreement: An agreement where the parties agree to the terms on which a property will be
jointly explored, developed, and mined. (See also “Option agreement” and “Earn in”).
Jurassic: Geological time period between 195 and 136 million years ago.
Kimberlite: A kimberlite is a pipe-like volcano sourced from deep within the earth under extreme temperatures
and pressures. It is the host rock for diamonds and diamond indicator minerals such as kimberlitic ilmenites and
garnets.
8
K-silicate: Potassium-bearing silicates. Potassium silicates are very common rock-forming minerals, however
they are also formed by the interaction of hyrothermal fluids derived from the cooling intrusive rocks that are
genetically and spatially associated with porphyry and epithermal deposits. Potassium feldspar (orthoclase) and
potassium mica (biotite) are both commonly closely associated with copper-molybdenum ore in porphyry
copper deposits.
K-spar: Potassium feldspar.
Lamprophyre: A group of dike rocks in which dark minerals occur both as phenocrysts and in the groundmass and
light minerals occur in the groundmass. Essential constituents are biotite, hornblende, pyroxene, and feldspar or
feldspathoids. Most lamprophyres are highly altered. They are commonly associated with carbonatites.
Lava: Means an igneous rock formed by the cooling of molten silicate material which escapes to the earth’s
surface or pours out onto the sea floor.
Limestone: Sedimentary rock that is composed mostly of carbonates, the two most common of which are
calcium and magnesium carbonates.
Lithosphere: The crust and upper mantle, located above the asthenosphere and composing the rigid plates.
Mafic: A general term used to describe ferromagnesian minerals. Rocks composed mainly of ferromagnesian
minerals are correctly termed melanocratic.
Magma: Naturally occurring molten rock material, generated within the earth and capable of intrusion and
extrusion, from which igneous rocks have been derived through solidification and related processes. It may or may
not contain suspended solids (such as crystals and rock fragments) and/or gas phases.
Massive: Implies large mass. Applied in the context of hand specimens of, for example, sulphide ores, it
usually means the specimen is composed essentially of sulphides with few, if any, other constituents.
Metamorphic: Means any rock which is altered within the earth’s crust by the effects of heat and/or pressure
and/or chemical reactions. Pertains to the process of metamorphism or to its results.
Metasediment: A sediment or sedimentary rock that shows evidence of having been subjected to metamorphism.
Metavolcanic: An informal term for volcanic rocks that show evidence of having been subject to metamorphism.
Mineral claim: A legal entitlement to minerals in a certain defined area of ground.
Mineral Deposit or Mineralized Material: A mineralized underground body which has been intersected by
sufficient closely spaced drill holes and or underground sampling to support sufficient tonnage and average grade of
metal(s) to warrant further exploration-development work. This deposit does not qualify as a commercially
mineable ore body (Reserves), as prescribed under Commission standards, until a final and comprehensive
economic, technical, and legal feasibility study based upon the test results is concluded
Mineral: A naturally occurring, inorganic, solid element or compound that possesses an orderly internal
arrangement of atoms and a unique set of physical and chemical properties.
Mineralization: Usually implies minerals of value occurring in rocks.
Monocline: A structure in which a bed exhibits local steepening of otherwise uniform dip.
National Instrument 43-101: A rule developed by the Canadian Securities Administrators and administered by
the provincial securities commissions that govern how issuers disclose scientific and technical information
about their mineral projects to the public. It covers oral statements as well as written documents and websites.
It requires that all disclosure be based on advice by a “qualified person” and in some circumstances that the
person be independent of the issuer and the property.
9
Net profits interest: A contractual granted right to some portion of the profits after deduction of expenses
sometimes expressed as a form of royalty.
Net smelter returns: Means the amount actually paid to the mine or mill owner from the sale of ore, minerals
and other materials or concentrates mined and removed from mineral properties. A royalty based on net smelter
returns usually provides cash flow that is free of any operating or capital costs and environmental liabilities.
Option agreement: An agreement where the optionee can exercise certain options to acquire or increase an
interest in a property by making periodic payments or share issuances or both to the optionor or by exploring,
developing or producing from the optionor’s property or both. Usually upon the acquisition of such interest, all
operations thereafter are on a joint venture basis.
Ore: A natural aggregate of one or more minerals which may be mined and sold at a profit, or from which
some part may be profitably separated.
Ore reserve: The measured quantity and grade of all or part of a mineralized body in a mine or undeveloped
mineral deposit for which the mineralization is sufficiently defined and measured on three sides to form the
basis of at least a preliminary mine production plan for economically viable mining.
Orogeny: The process of forming mountains by folding and thrusting.
Outcrop: An in situ exposure of bedrock.
Overburden: A general term for any material covering or obscuring rocks from view.
oz/t or opt: Ounces per ton.
Paleozoic: An era of geologic time, from the end of the Precambrian to the beginning of the Mesozoic, or from
about 570 to about 225 million years ago.
Panel Sample: A large volume/weight continuous rock chip sample collected over a definite area (e.g. 0.25m X
0.50m), and to a uniform depth (e.g. 2.5cm or 1 inch), on a mineral zone. Panel sampling is generally employed in a
trenching program to obtain more representative grades particularly of a narrow mineralized structure such as a vein.
Peridotite: A coarse grained ultramafic rock commonly consisting of olivine and pyroxenes.
Phenocrysts: An unusually large crystal in a relatively finer grained matrix.
Phonolite: Any extrusive rock composed of alkali feldspar, mafic minerals and any feldspathoid, such as nepheline,
leucite, or sodalite.
Pluton: Term for an igneous intrusion, usually formed from magma.
Porphyry: An igneous rock composed of larger crystals set within a finer ground mass.
Preliminary Economic Assessment: A comprehensive study of the viability of a mineral project that has
advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in
the case of an open pit, has been established and an effective method of mineral processing has been
determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal,
operating, economic, social and environmental factors and the evaluation of other relevant factors which are
sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be
classified as a mineral reserve.
Pyroclastic rock: A rock of volcanic origin consisting of highly variable mixture of rock fragments, cinders
and ashes and bits of crystals and glass.
10
Pyroxenites: Ultramafic plutonic rock chiefly composed of pyroxene, with accessory hornblende, biotite, or
olivine.
Quartz monzonite: A course grained, plutonic igneous rock that is normally pale pink, and composed of quartz,
alkali feldspar, micas and accessory minerals.
Rare Earth: A group of rare metallic chemical elements with consecutive atomic numbers of 57 to 71.
Reclamation bond: A bond usually required by governmental mining regulations when mechanized work on a
property is contemplated. Proceeds of the bond are used to reclaim any workings or put right any damage if
reclamation undertaken does not satisfy the requirements of the regulations.
Reserve: That part of a mineral deposit which could be economically extracted or produced at the time of the
reserve determination.
Reserves: A natural aggregate of one or more minerals which, at a specified time and place, may be mined and
sold at a profit, or from which some part may be profitably separated.
Reverse circulation drill: A rotary percussion drill in which the drilling mud and cuttings return to the
surface through the drill pipe.
Rhyolite: The fine grained equivalent of a granite.
Royalty interest: A royalty, the calculation and payment of which is tied to some production unit such as
tonne of concentrate or ounce of gold or silver produced. A common form of royalty interest is based on the net
smelter return.
Sample: Small amount of material that is supposed to be absolutely typical or representative of the object
being sampled.
Sandstone: Composed of sand-sized fragments cemented together. As a rule the fragments contain a high
percentage of quartz.
Schist: A strongly foliated crystalline rock, formed by dynamic metamorphism, that has well-developed parallelism
of more than 50% of the minerals present, particularly those of lamellar or elongate prismatic habit, e.g. mica and
hornblende.
Sedimentary: A rock formed from cemented or compacted sediments.
Sediments: Are composed of the debris resulting from the weathering and breakup of other rocks that have
been deposited by or carried to the oceans by rivers, or left over from glacial erosion or sometimes from wind
action.
Selvage: A marginal zone, as in a dyke or vein, having some distinctive feature of fabric or composition.
Sericite: A fine-grained variety of mica occurring in small scales, especially in schists.
Shale: An argillaceous rock consisting of silt or clay-sized particles cemented together. Most shales are quite
soft, because they contain large amounts of clay minerals.
Shear zone: Where a fault affects a width of rock rather than being a single clean break, the width of affected
rock is referred to as the shear zone. The term implies movement, i.e. shearing.
Silicate: Most rocks are made up of a small number of silicate minerals ranging from quartz (SiO2) to more
complex
hornblende
(Ca2Na(Mg,Fe)4(Al,Fe,Ti)Si8)22(OH)2).
(KAlSi3O8)
orthoclase
minerals
feldspar
such
or
as
11
Sill: Tabular intrusion which is sandwiched between layers in the host rock.
Skarn: A thermally altered impure limestone in which material has been added to the original rock. Skarns are
generally characterized by the presence of calcium and silica rich minerals. Many skarns contain sulphide minerals
which in some cases can be of economic value.
Sonic drill: A drill used to penetrate soft sediments where the drill advance by means of slow rotations and
sonic vibrations. Samples of very soft material can be collected with this system.
Stock: An igneous intrusive body of unknown depth with a surface exposure of less than 104 square kilometres.
The sides, or contacts, of a stock, like those of a batholith, are usually steep and broaden with depth.
Stockwork: A mineral deposit consisting of a three-dimensional network of closely spaced planar or irregular
veinlets.
Strike: The bearing, or magnetic compass direction, of an imaginary line formed by the intersection of a horizontal
plane with any planar surface, most commonly with bedding planes or foliation planes in rocks.
Sulphide minerals: A mineral compound characterized by the linkage of sulfur with a metal or semimetal; e.g.,
galena.
Syncline: A fold in which the bed has been forced down in the middle or up on the sides to form a trough.
Tailings: Material rejected from a mill after recoverable valuable minerals have been extracted.
Tailings pond: A pond where tailings are disposed of.
Till: An unsorted sediment made up of clay, sand and boulders left in the wake of a glaciation.
Tonne: Metric ton – 1,000 kilograms – equivalent to 1.1023 tons.
Tourmaline: A group of minerals of general formula (Na,Ca)(Mg,Fe+2,Fe+3,Al,Li)3Al6(BO3)3Si6O18(OH)4; it
sometimes contains fluorine in small amounts. Also, any mineral of the tourmaline group. Tourmaline occurs in 3-,
6-, or 9-sided prisms, usually vertically striated, or in compact or columnar masses; it is commonly found as an
accessory mineral in granitic pegmatites, and is widely distributed in acid igneous rocks and in metamorphic rocks.
It can indicative of alteration associated with porphyry style mineralization.
Tremolite: A white to dark-gray monoclinic mineral of the amphibole group: Ca2Mg5Si8O22(OH)2. It occurs in
long blade-shaped or short stout prismatic crystals, and also in columnar or fibrous masses, esp. in metamorphic
rocks such as crystalline dolomitic limestone and talc schist. It is a constituent of much commercial talc. alteration
— usually referring to chemical reactions in a rock mass resulting from the passage of hydrothermal fluids.
Triassic: Geological time period between 225 and 195 million years ago.
Tuff : A finer grained pyroclastic rock made up mostly of ash and other fine grained volcanic material.
Veins: The mineral deposits that are found filling openings in rocks created by faults or replacing rocks on
either side of faults.
Vuggy silica: In a high sulphidation epithermal environment, the highly acidic waters have dissolved
everything but silica resulting in a highly porous and pox marker rock which is a good host for gold deposition.
It is an indicator mineralization typical of epithermal rocks.
Waste: Rock which is not ore. Usually referred to that rock which has to be removed during the normal course
of mining in order to get at the ore.
12
Notes Concerning Terminology Related to Resources and Reserves
The terms "mineral resource", "measured mineral resource", "indicated mineral resource", "inferred mineral
resource", “mineral reserve”, “probable mineral reserve” and “proven mineral reserve” used in this Annual
Report are Canadian mining terms as defined in accordance with National Instrument 43-101, Standards of
Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and
Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council.
On November 14, 2004 and November 27, 2010, CIM Council adopted an update to the CIM Definition
Standards to reflect the more detailed guidance available and effect certain editorial changes required to
maintain consistency with current regulations. This version of the CIM Definition Standards includes further
editorial changes required to maintain compatibility with the new version of National Instrument 43-101 which
is became law in 2011. The CIM Definition Standards can be viewed on the CIM website at www.cim.org. In
accordance with Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant
Mining Operations, issued by the U. S. Securities and Exchange Commission, reserve is termed “mineral
deposit”.
DEFINITIONS
Qualified Person
Mineral Resource and Mineral Reserve estimates and resulting Technical Reports must be prepared by or under
the direction of, and dated and signed by, a Qualified Person. A “Qualified Person” means an individual who is
an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or
operation or mineral project assessment, or any combination of these; has experience relevant to the subject
matter of the mineral project and the technical report; and is a member or licensee in good standing of a
professional association. The Qualified Person(s) should be clearly satisfied that they could face their peers and
demonstrate competence and relevant experience in the commodity, type of deposit and situation under
consideration. If doubt exists, the person must either seek or obtain opinions from other colleagues or
demonstrate that he or she has obtained assistance from experts in areas where he or she lacked the necessary
expertise. Determination of what constitutes relevant experience can be a difficult area and common sense has
to be exercised. For example, in estimating Mineral Resources for vein gold mineralization, experience in a
high-nugget, vein-type mineralization such as tin, uranium etc. should be relevant whereas experience in
massive base metal deposits may not be. As a second example, for a person to qualify as a Qualified Person in
the estimation of Mineral Reserves for alluvial gold deposits, he or she would need to have relevant experience
in the evaluation and extraction of such deposits. Experience with placer deposits containing minerals other than
gold, may not necessarily provide appropriate relevant experience for gold. In addition to experience in the style
of mineralization, a Qualified Person preparing or taking responsibility for Mineral Resource estimates must
have sufficient experience in the sampling, assaying, or other property testing techniques that are relevant to the
deposit under consideration in order to be aware of problems that could affect the reliability of the data. Some
appreciation of extraction and processing techniques applicable to that deposit type might also be important.
Estimation of Mineral Resources is often a team effort, for example, involving one person or team collecting the
data and another person or team preparing the Mineral Resource estimate. Within this team, geologists usually
occupy the pivotal role. Estimation of Mineral Reserves is almost always a team effort involving a number of
technical disciplines, and within this team mining engineers have an important role. Documentation for a
Mineral Resource and Mineral Reserve estimate must be compiled by, or under the supervision of, a Qualified
Person(s), whether a geologist, mining engineer or member of another discipline. It is recommended that, where
there is a clear division of responsibilities within a team, each Qualified Person should accept responsibility for
his or her particular contribution. For example, one Qualified Person could accept responsibility for the
collection of Mineral Resource data, another for the Mineral Reserve estimation process, another for the mining
study, and the project leader could accept responsibility for the overall document. It is important that the
Qualified Person accepting overall responsibility for a Mineral Resource and/or Mineral Reserve estimate and
supporting documentation, which has been prepared in whole or in part by others, is satisfied that the other
contributors are Qualified Persons with respect to the work for which they are taking responsibility and that
such persons are provided adequate documentation.
Preliminary Feasibility Study (Pre-Feasibility Study)
The CIM Definition Standards requires the completion of a Preliminary Feasibility Study as the minimum
prerequisite for the conversion of Mineral Resources to Mineral Reserves.
13
A Preliminary Feasibility Study is a comprehensive study of a range of options for the technical and economic
viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of
underground mining, or the pit configuration, in the case of an open pit, is established and an effective method
of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on
mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental
considerations and the evaluation of any other relevant factors which are sufficient for a Qualified Person,
acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
Feasibility Study
A Feasibility Study is a comprehensive technical and economic study of the selected development option for a
mineral project that includes appropriately detailed assessments of realistically assumed mining, processing,
metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with
any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the
time of reporting that extraction is reasonably justified (economically mineable). The results of the study may
reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or
finance, the development of the project. The confidence level of the study will be higher than that of a Pre-
Feasibility Study.
Exploration Information
Exploration information means geological, geophysical, geochemical, sampling, drilling, trenching, analytical
testing, assaying, mineralogical, metallurgical and other similar information concerning a particular property
that is derived from activities undertaken to locate, investigate, define or delineate a mineral prospect or mineral
deposit. It is recognised that in the review and compilation of data on a project or property, previous or
historical estimates of tonnage and grade, not meeting the minimum requirement for classification as Mineral
Resource, may be encountered. If a Qualified Person reports Exploration Information in the form of tonnage
and grade, it must be clearly stated that these estimates are conceptual or order of magnitude and that they do
not meet the criteria of a Mineral Resource.
Mineral Resource
Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and
Measured categories. An Inferred Mineral Resource has a lower level of confidence than that applied to an
Indicated Mineral Resource. An Indicated Mineral Resource has a higher level of confidence than an Inferred
Mineral Resource but has a lower level of confidence than a Measured Mineral Resource. A Mineral Resource
is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic
material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form
and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The
location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated
or interpreted from specific geological evidence and knowledge. The term Mineral Resource covers
mineralization and natural material of intrinsic economic interest which has been identified and estimated
through exploration and sampling and within which Mineral Reserves may subsequently be defined by the
consideration and application of technical, economic, legal, environmental, socio-economic and governmental
factors. The phrase “reasonable prospects for economic extraction” implies a judgement by the Qualified Person
in respect of the technical and economic factors likely to influence the prospect of economic extraction. A
Mineral Resource is an inventory of mineralization that under realistically assumed and justifiable technical and
economic conditions might become economically extractable. These assumptions must be presented explicitly
in both public and technical reports.
Inferred Mineral Resource
An “Inferred Mineral Resource” is that part of a Mineral Resource for which quantity and grade or quality can
be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. Due to the
uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an
Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resource as a result of
continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of
technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure.
14
Inferred Mineral Resources must be excluded from estimates forming the basis of feasibility or other economic
studies.
Indicated Mineral Resource
An “Indicated Mineral Resource” is that part of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the
appropriate application of technical and economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
Mineralization may be classified as an Indicated Mineral Resource by the Qualified Person when the nature,
quality, quantity and distribution of data are such as to allow confident interpretation of the geological
framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the
importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An
Indicated Mineral Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which
can serve as the basis for major development decisions.
Measured Mineral Resource
A “Measured Mineral Resource” is that part of a Mineral Resource for which quantity, grade or quality,
densities, shape, and physical characteristics are so well established that they can be estimated with confidence
sufficient to allow the appropriate application of technical and economic parameters, to support production
planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable
exploration, sampling and testing information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and
grade continuity. Mineralization or other natural material of economic interest may be classified as a Measured
Mineral Resource by the Qualified Person when the nature, quality, quantity and distribution of data are such
that the tonnage and grade of the mineralization can be estimated to within close limits and that variation from
the estimate would not significantly affect potential economic viability. This category requires a high level of
confidence in, and understanding of, the geology and controls of the mineral deposit.
Mineral Reserve
Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven
Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of
reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and
allowances for losses that may occur when the material is mined. Mineral Reserves are those parts of Mineral
Resources which, after the application of all mining factors, result in an estimated tonnage and grade which, in
the opinion of the Qualified Person(s) making the estimates, is the basis of an economically viable project after
taking account of all relevant processing, metallurgical, economic, marketing, legal, environment, socio-
economic and government factors. Mineral Reserves are inclusive of diluting material that will be mined in
conjunction with the Mineral Reserves and delivered to the treatment plant or equivalent facility. The term
“Mineral Reserve” need not necessarily signify that extraction facilities are in place or operative or that all
governmental approvals have been received. It does signify that there are reasonable expectations of such
approvals.
Probable Mineral Reserve
A “Probable Mineral Reserve” is the economically mineable part of an Indicated and, in some circumstances, a
Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include
adequate information on mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve
A “Proven Mineral Reserve” is the economically mineable part of a Measured Mineral Resource demonstrated
by at least a Preliminary Feasibility Study. This Study must include adequate information on mining,
15
processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that
economic extraction is justified. Application of the Proven Mineral Reserve category implies that the Qualified
Person has the highest degree of confidence in the estimate with the consequent expectation in the minds of the
readers of the report. The term should be restricted to that part of the deposit where production planning is
taking place and for which any variation in the estimate would not significantly affect potential economic
viability.
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL RESOURCE AND
MINERAL RESERVE ESTIMATES
As used in this Annual Report on Form 20-F, the terms “Mineral Reserve,” “Proven Mineral Reserve” and
“Probable Mineral Reserve” are Canadian mining terms defined in accordance with NI 43-101 and the CIM
Standards. These definitions differ from the definitions in SEC Industry Guide 7 under the U.S. Securities Act.
Under SEC Industry Guide 7, a reserve is defined as that part of a mineral deposit which could be economically
and legally extracted or produced at the time the reserve determination is made. The terms “Mineral Resource,”
“Measured Mineral Resource,” “Indicated Mineral Resource” and “Inferred Mineral Resource” are defined in
and required to be used by NI 43-101. However, these terms are not defined terms under SEC Industry Guide 7
and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors
are cautioned not to assume that any all, or any part of a mineral deposit in these categories will ever be
converted into reserves. “Indicated, Mineral Resource” and “Inferred Mineral Resource” have a great amount
of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be
assumed that all, or any part, of an Indicated Mineral Resource or an Inferred Mineral Resource will ever be
upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the
basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume
that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable. Disclosure of
“contained ounces” in a resource is permitted disclosure under Canadian regulations. However, the SEC
normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in
place tonnage and grade without reference to unit measures. Accordingly, information contained in this Annual
Report on Form 20-F and the exhibits filed herewith or incorporated by reference herein contain descriptions of
our mineral deposits that may not be comparable to similar information made public by U.S. companies subject
to the reporting and disclosure requirements under United States federal securities laws and the rules and
regulations promulgated thereunder. Further, the term “mineralized material” as used in this Annual Report on
Form 20-F does not indicate “reserves” by SEC standards. We cannot be certain that mineralized material will
ever be confirmed or converted into SEC Industry Guide 7 compliant "reserves". Investors are cautioned not to
assume that mineralized material will ever be confirmed or converted into reserves or that mineralized material
can be economically or legally extracted.
Conversion Table
Metric Imperial
1.0 millimetre (mm) = 0.039 inches (in)
1.0 metre (m) = 3.28 feet (ft)
1.0 kilometre (km) = 0.621 miles (mi)
1.0 hectare (ha) = 2.471 acres (ac)
1.0 gram (g) = 0.032 troy ounces (oz)
1.0 metric tonne (t) = 1.102 short tons (ton)
1.0 g/t = 0.029 oz/ton
Unless otherwise indicated, all dollar ($) amounts referred to herein are in Canadian dollars.
Glossary of Abbreviations
Ag: Silver
Ag gm/t: Silver grade measured in grams per metric tonne
Converts to ounces per ton by dividing by 34.286
Au: Gold
Au gm/t: Gold grade measured in grams per metric tonne
Converts to ounces per ton by dividing by 34.286
Ba: Barium
Co: Cobalt
16
CRD: Carbonate replacement deposit
Cu: Copper
EIS: Environmental Impact Statement
Fe: Iron
gpm: gallons per minute
gpt: grams per tonne
g/t: grams per tonne
IP: Induced Polarization geophysical survey
Ni: Nickel
NSR: net smelter return royalty
opt: ounces per ton
Oz: Troy ounce
Pb: Lead
Pd: Palladium
PGM: Platinum group minerals
Pt: Platinum
S: Sulphur
tpd: Tonnes per day
ton: Short ton (2,000 pounds)
tonne: Metric ton (1000 kilograms - 2204.62 pounds)
VLF: Very low frequency electromagnetic geophysical survey
VMS: Volcanogenic massive sulphide
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 20-F and the exhibits attached hereto contain “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern
our anticipated results and developments in our operations in future periods, planned exploration and
development of our properties, plans related to our business and other matters that may occur in the future.
These statements relate to analyses and other information that are based on forecasts of future results, estimates
of amounts not yet determinable and assumptions of management. Statements concerning Mineral Reserve and
Mineral Resource estimates may also be deemed to constitute forward-looking statements to the extent that they
involve estimates of the mineralization that will be encountered if a property is developed, and in the case of
Mineral Reserve, such statements reflect the conclusion based on certain assumptions that the mineral deposit
can be economically exploited. Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not
always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not
anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”,
“would”, “might” or “will” (or the negative and grammatical variations of any of these terms and similar
expressions) be taken, occur or be achieved) are not statements of historical fact and may be forward-looking
statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and
other factors which could cause actual events or results to differ from those expressed or implied by the
forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking
statements are described further in the sections entitled “ITEM 3. KEY INFORMATION - Risk Factors”,
“ITEM 4.B. INFORMATION ON THE COMPANY - Business Overview”, “ITEM 4. INFORMATION ON
THE COMPANY - Property, Plants and Equipment” and “ITEM 5. OPERATING AND FINANCIAL
REVIEW AND PROSPECTS” and in the exhibits attached to this Annual Report on Form 20-F. Should one or
more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those described in the Company’s forward-looking statements. The
Company’s forward-looking statements are based on beliefs, expectations and opinions of the Company’s
management on the date the statements are made and the Company does not assume any obligation to update
forward-looking statements if circumstances or management’s beliefs, expectations or opinions change, except
as required by law. For the reasons set forth above, investors should not place undue reliance on forward-
looking statements.
Please consult the Company’s public filings at www.sedar.com and www.sec.gov for further, more detailed
information concerning these matters.
17
PART I
Item 1. Identity of Directors, Senior Management and Advisors
Not applicable
Item 2. Offer Statistics and Expected Timetable
Not applicable
Item 3. Key Information
The following selected financial data of the Company for Fiscal 2011, Fiscal 2010 and Fiscal 2009 ended
December 31st was derived from the consolidated financial statements of the Company included elsewhere in
this 20-F Annual Report. The selected financial data should be read in conjunction with the consolidated
financial statements and other information included immediately following the text of this Annual Report.
The consolidated financial statements of the Company have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
Until December 31, 2008, the Company prepared its consolidated financial statements in accordance with
Canadian generally accepted accounting principles (“Canadian GAAP”). Effective January 1, 2009 the
Company adopted IFRS.
Pursuant to SEC Release No. 33-8879 “Acceptance from Foreign Private Issuers of Financial Statements
Prepared in Accordance with International Reporting Standards Without Reconciliation to U.S. GAAP”, the
Company includes selected financial data prepared in compliance with IFRS as issued by IASB without
reconciliation to U.S. GAAP.
The basis of preparation is described in detail Note 2 to our consolidated financial statements.
Table No. 1
Selected Financial Data
(expressed in thousands of Canadian dollars, except share and per share data)
Revenues
Net income (loss)
Basic net income (loss) per common share
Diluted net income (loss) per common share
Weighted average shares (000)
Working capital
Mineral properties
Net assets
Total assets
Capital stock
Dividends declared per share
Canadian/U.S. Dollar Exchange Rates
Year
Ended
12/31/2011
Year
Ended
12/31/2010
Year
Ended
12/31/2009
$249
7,295
0.13
0.12
57,269
30,513
10,470
53,340
53,905
73,354
0
$234
(3,465)
(0.07)
(0.07)
51,188
29,187
4,439
35,694
36,343
62,854
0
$2,441
(2,286)
(0.05)
(0.05)
45,847
14,530
8,417
25,171
25,659
50,878
0
In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars (CDN$).
Table No. 2 sets forth the exchange rate for the Canadian dollars at the end of the five most recent fiscal periods
ended at December 31st, the average rates for the period, the range of high and low rates and the close for the
period. Table No. 3 sets forth the range of high and low rates for each month during the previous six months.
For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers
18
in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table
sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar. The average rate
means the average of the exchange rates on the last day of each month during the period.
Table No. 2
Canadian Dollar/U.S. Dollar Exchange Rates for Five Most Recent Financial Years
Fiscal Year Ended 12/31/2011
Fiscal Year Ended 12/31/2010
Fiscal Year Ended 12/31/2009
Fiscal Year Ended 12/31/2008
Fiscal Year Ended 12/31/2007
Average
$0.99
1.03
1.14
1.06
1.07
High
$1.06
1.08
1.30
1.30
1.19
Low
$0.94
1.00
1.03
0.97
0.92
Close
$1.02
1.00
1.05
1.22
0.99
Table No. 3
U.S. Dollar/Canadian Dollar Exchange Rates for Previous Six Months
High
Low
September
2011
$1.04
0.98
October
2011
$1.06
0.99
November
2011
$1.05
1.01
December
2011
$1.04
1.01
January
2012
$1.03
1.00
February
2012
$1.00
0.99
The exchange rate was $1.00 on March 23, 2012.
Risk Factors
General Risk Factors Attendant to Resource Exploration and Development
Resource exploration and development is a speculative business, characterized by a number of significant risks
including, among other things, unprofitable efforts resulting not only from the failure to discover mineral
deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to
return a profit from production. The marketability of minerals acquired or discovered by the Company may be
affected by numerous factors which are beyond the control of the Company and which cannot be accurately
predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and
processing equipment, and such other factors as government regulations, including regulations relating to
royalties, allowable production, importing and exporting of minerals, and environment protection, the
combination of which factors may result in the Company not receiving an adequate return on investment
capital.
Presently, the Company is in the exploration stage and there is no assurance that a commercially viable ore
deposit (a reserve) exists in any of its properties or prospects until further exploration work is done and a
comprehensive economic evaluation based upon that work is concluded. The Company has financed its
operations principally through the sale of equity securities, entering into joint venture arrangements and the sale
of its inventory of gold. The recoverability of mineral properties is dependent on the establishment of
economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete
development and ultimately upon future profitable production or the realization of proceeds from the disposition
of the properties.
Uncertainty in Discovering Commercially Mineable Ore Deposits
There is no certainty that the expenditures to be made by the Company in the exploration of its properties and
prospects as described herein will result in discoveries of mineralized material in commercial quantities. Most
exploration projects do not result in the discovery of commercially mineable ore deposits and no assurance can
be given that any particular level of recovery of ore reserves will in fact be realized or that any identified
mineral deposit will ever qualify as a commercially mineable (or viable) ore body which can be legally and
economically exploited. Estimates of reserves, mineral deposits and production costs can also be affected by
such factors as environmental permitting regulations and requirements, weather, environmental factors,
unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In
addition, the grade of ore ultimately mined may differ from that indicated by drilling results. Short term factors
relating to ore reserves, such as the need for orderly development of ore bodies or the processing of new or
different grades, may also have an adverse effect on mining operations and on the results of operations. There
19
can be no assurance that minerals recovered in small-scale tests will be duplicated in large-scale tests under on-
site conditions or in production scale. Material changes in ore reserves, grades, stripping ratios or recovery
rates may affect the economic viability of any project.
History of Net Losses, Lack of Cash Flow and Assurance of Profitability
The Company had net losses in a number of years since its date of incorporation. Due to the nature of the
Company’s business, there can be no assurance that the Company will be profitable. The Company had net
income of $7,294,858 in Fiscal 2011 and net losses of $3,464,652 in Fiscal 2010 and $2,285,959 in Fiscal 2009.
The Company currently has no revenues from operations as all of its properties and prospects are in the
exploration stage. There is no assurance that the Company will receive revenues from operations at any time in
the near future. During Fiscal 2011 and 2010, revenue consisted of interest and other income from office rental
and contract exploration services provided to third parties. During Fiscal 2009, the Company also had revenue
from drilling services provided to third parties. Otherwise, the Company has had no prior year’s history of
earnings or cash flow other than the NSR royalty from the La Trinidad Mine and the bulk sampling on the Elk
gold property. The Company has not paid dividends on their shares since incorporation and the Company does
not anticipate doing so in the foreseeable future. Historically, the only source of funds available to the
Company was through the sale of its equity shares and entering into joint venture agreements. The only source
of funds available to the Company is through the sale of its inventory of gold, the sale of its equity shares and
entering into joint venture agreements. Any future additional equity financing would cause dilution to current
stockholders.
Uncertainty of Obtaining Additional Funding Requirements
If the Company’s exploration programs are successful, additional capital will be required for the development
of an economic ore body and to place it in commercial production. The only sources of future funds presently
available to the Company are the sale of its inventory of gold, sale of equity capital or the offering by the
Company of an interest in its properties and prospects to be earned by another party or parties carrying out
further development thereof. Failure to obtain additional financing on a timely basis could cause the Company
to forfeit its interest in such properties, dilute its interests in the properties and/or reduce or terminate its
operations.
Possible Dilution to Present and Prospective Shareholders
The Company’s plan of operation, in part, contemplates the financing of the conduct of its business by the
issuance for cash securities of the Company or incurring debt, or a combination of the two. Any transaction
involving the issuance of previously authorized but unissued shares of common stock, or securities convertible
into common stock, would result in dilution, possibly substantial, to present and prospective holders of common
stock. The Company usually seeks joint venture partners to fund in whole or in part exploration projects. This
dilutes the Company’s interest in properties it has acquired.
Mineral Prices May Not Support Corporate Profit
The mining industry in general is intensely competitive and there is no assurance that, even if commercial
quantities of mineral resources are developed, a profitable market will exist for the sale of same. Factors
beyond the control of the Company may affect the marketability of any substances discovered. The price of
minerals is volatile over short periods of time, and is affected by numerous factors beyond the control of the
Company, including international economic and political trends, expectations of inflation, currency exchange
fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased
production due to improved mining techniques. Material changes in mineral prices may affect the economic
viability of any project.
Environmental Regulations
The current and anticipated future operations of the Company, including development activities and
commencement of production on its properties, require permits from various federal, territorial and local
governmental authorities and such operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies
engaged in the development and operation of mines and related facilities generally experience increased costs,
and delays in production and other schedules as a result of the need to comply with applicable laws, regulations
and permits. Such operations and exploration activities are also subject to substantial regulation under these
laws by governmental agencies and may require that the Company obtain permits from various governmental
20
agencies. The Company believes it is in substantial compliance with all material laws and regulations which
currently apply to its activities. There can be no assurance, however, that all permits which the Company may
require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable
terms or that such laws and regulations, or that new legislation or modifications to existing legislation, would
not have an adverse effect on any exploration or mining project which the Company might undertake.
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 be
curtailed, and may include corrective measures requiring capital expenditures, installation of additional
equipment or remedial actions. Parties engaged in exploration and 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 violation of applicable laws or regulations.
The enactment of new laws or amendments to current laws, regulations and permits governing operations and
activities of mining companies, or more stringent implementation thereof, could have a material adverse impact
on the Company and cause increases in capital expenditures or production costs or reduction in levels of
production at producing properties or require abandonment or delays in development of new mining properties.
As a requirement for performing certain exploration activities, the Company has $124,764 on deposit as
reclamation bonds for exploration work and site disturbance on the Elk and other prospects in Canada and the
United States. These allocated funds have been deposited for the benefit of the Province of British Columbia
and the State of Nevada until released upon approval from the Province and State after all necessary
reclamation work on the properties has been performed. If the reclamation is more prolonged and requires
funds in addition to those already allocated, the Company could be forced to pay for the extra work and it could
have a significant negative impact upon the Company’s financial position and operations.
No Guarantee of Title to Mineral Properties
While the Company has investigated title to all of its mineral properties and prospects, and, to the best of its
knowledge, title to all of its properties and prospects in which it has the right to acquire or earn an interest are in
good standing as of the date of this Annual Report, this should not be construed as a guarantee of title. The
properties and prospects may be subject to prior unregistered agreements or transfers unknown to the Company
and title may be affected by undetected defects, e.g. defects in staking or acquisition process.
As there are unresolved native land claim issues in British Columbia and the Yukon Territory, the Company’s
properties and prospects in these jurisdictions may be affected in the future.
If title is disputed, the Company will have to defend its ownership through the courts, which would likely be an
expensive and protracted process and have a negative effect on the Company’s operations and financial
condition. In the event of an adverse judgment, the Company could lose its property rights.
Trading Volume
The relatively low trading volume of the Company’s shares reduces the liquidity of an investment in the
Company’s shares. Due to the reduced liquidity in the secondary markets, shareholders may find it more
difficult to sell their shares.
Volatility of Share Price
Market prices for shares of early stage companies are often volatile. Factors such as announcements of mineral
discoveries, exploration and financial results, and other factors could have a significant effect on the price of the
Company’s shares.
Material Risk of Dilution Presented by Large Number of Outstanding Share Purchase Options and Warrants
As of March 27, 2012 there were share purchase options outstanding allowing the holders of these options to
purchase 5,430,000 shares of common stock. Directors and officers of the Company hold 4,510,000 of these
share purchase options. An additional 920,000 share purchase options are held by employees and consultants of
the Company. Given the fact that as of March 27, 2012 there were 59,122,321 shares of common stock
outstanding, the exercise of all of the existing share purchase options would result in further dilution to the
existing shareholders and could depress the price of the Company’s shares. The exercise of all outstanding
share purchase options would cause the number of issued and outstanding common shares to rise 8.5%.
21
No Proven Reserves
The properties and prospects in which the Company has an interest or the properties in which the Company has
the right to earn an interest are in the exploratory stage only, are without a known body of ore and are not in
commercial production. If the Company does not ultimately find a body of economically recoverable ore, it
would either have to acquire additional exploration projects, or terminate is operations.
Uncertainty of Reserves and Mineralization Estimates
There are numerous uncertainties inherent in estimating proven and probable reserves and mineralization,
including many factors beyond the control of the Company. The estimation of reserves and mineralization is a
subjective process and the accuracy of any such estimates is a function of the quality of available data and of
engineering and geological interpretation and judgement. Results of drilling, metallurgical testing and
production and the evaluation of mine plans subsequent to the date of any estimate may justify revision of such
estimates. No assurances can be given that the volume and grade of reserves recovered and rates of production
will not be less than anticipated. Assumptions about prices are subject to greater uncertainty and metals prices
have fluctuated widely in the past. Declines in the market price of base or precious metals also may render
reserves or mineralization containing relatively lower grades of ore uneconomic to exploit. Changes in
operating and capital costs and other factors including, but not limiting to, short-term operating factors such as
the need for sequential development of ore bodies and the processing of new or different ore grades, may
materially and adversely affect reserves.
Foreign Incorporation and Civil Liabilities
The Company was created under amalgamation under the laws of the Province of British Columbia, Canada.
All of the Company’s directors and officers are residents of Canada and substantially all of the Company’s
assets and its subsidiaries are located outside the United States. Consequently, it may be difficult for United
States investors to effect service of process in the United States upon those directors and officers who are not
residents of the United States, or to realize in the United States upon judgements of United States courts
predicated upon civil liabilities under applicable United States laws.
Conflict of Interest
Some of the Company’s directors and officers are directors and officers of other natural resource or mining-
related companies. Duane Poliquin and Morgan Poliquin also serve as directors of Gold Mountain Mining
Corporation. James McInnes also serves as a director of Cosigo Resources Inc. Joseph Montgomery also
serves as a director of Infrastructure Materials Corp. and Cosigo Resources Inc. Gerald Carlson also serves as a
director and President of Windstorm Resources Inc., President of Iron South Mining Inc., a director of Blue Sky
Uranium Corp., and a director of Tarsis Resources Ltd. Barry Smee also serves as a director of Platinum Group
Metals Ltd. Mark Brown also serves as a director and CFO of Big Sky Petroleum Corporation and Pitchstone
Exploration Ltd. He also serves as a director of Avrupa Minerals Ltd. and Estrella Gold Corporation. He also
serves as a CFO for Tarsis Resources Ltd. These associations may give rise from time to time to conflicts of
interest, as a result of which, the Company may miss the opportunity to participate in certain transactions.
Foreign Operations
The Company currently has exploration projects located in Mexico and the United States. The Company’s
foreign activities are subject to the risk normally associated with conducting business in foreign countries,
including exchange controls and currency fluctuations, limitations on repatriation of earnings, foreign taxation,
laws or policies of particular countries, labor practices and disputes, and uncertain political and economic
environments, as well as risks of war and civil disturbances, or other risk that could cause exploration or
development difficulties or stoppages, restrict the movement of funds or result in the deprivation or loss of
contract rights or the taking of property by nationalization or expropriation without fair compensation. Foreign
operations could also be adversely impacted by laws and policies of the United States affecting foreign trade,
investment and taxation.
Foreign Currency Fluctuations
At the present time, some of the Company’s activities are carried on outside of Canada. Accordingly, it is
subject to risks associated with fluctuations of the rate of exchange between the Canadian dollar and foreign
currencies.
22
The Company is currently not engaged in currency hedging to offset any risk of exchange rate fluctuation and
currently has no plans to engage in currency hedging.
Operating Hazards and Risks Associated with the Mining Industry
Mining operations generally involve a high degree of risk, which even a combination of experience, knowledge
and careful evaluation may not be able to overcome. Hazards such as unusual or unexpected geological
formations and other conditions are involved. Operations in which the Company has a direct or indirect interest
will be subject to all the hazards and risks normally incidental to exploration, development and production of
minerals, any of which could result in work stoppages, damage to or destruction of mines and other producing
facilities, damage to or loss of life and property, environmental damage and possible legal liability for any or all
damage or loss. The Company may become subject to liability for cave-ins and other hazards for which it
cannot insure or against which it may elect not to insure where premium costs are disproportionate to the
Company’s perception of the relevant risks. The payment of such insurance premiums and the incurring of such
liabilities would reduce the funds available for exploration activities.
The Ability to Manage Growth
Should the Company be successful in its efforts to develop its mineral properties or to raise capital for such
development or for the development of other mining ventures it will experience significant growth in
operations. If this occurs management anticipates that additional expansion will be required in order to continue
development. Any expansion of the Company’s business would place further demands on its management,
operational capacity and financial resources. The Company anticipates that it will need to recruit qualified
personnel in all areas of its operations. There can be no assurance that the Company will be effective in
retaining its current personnel or attracting and retaining additional qualified personnel, expanding its
operational capacity or otherwise managing growth. The failure to manage growth effectively could have a
material adverse effect on the Company's business, financial condition and results of operations.
Lack of a Dividend Policy
The Company does not intend to pay cash dividends in the foreseeable future, as any earnings are expected to
be retained for use in developing and expanding its business. However, the actual amount of dividends which
the Company may pay will remain subject to the discretion of the Company’s Board of Directors and will
depend on results of operations, cash requirements and future prospects of the Company and other factors.
Competition
There is competition from other mining exploration companies with operations similar to those of the
Company's. Many of the mining companies with which the Company competes have operations and financial
strength many times greater than that of the Company. Such competitors could outbid the Company for such
projects, equipment or personnel, or produce minerals at a lower cost which would have a negative effect on the
Company’s operations and financial condition.
Dependence on Key Personnel
The Company depends highly on the business and technical expertise of its management and key personnel, in
particular, Duane Poliquin and Morgan Poliquin. There is little possibility that this dependence will decrease in
the near term. As the Company’s operations expand, additional general management resources will be required,
especially since the Company encounters risks that are inherent in doing business in several countries. In Fiscal
2007, the Company took out an accidental death insurance policy on Duane Poliquin with a $2,000,000 limit.
However, the loss or unavailability of any of its key personnel could have a negative effect on the Company’s
ability to operate effectively.
23
Item 4. Information on the Company
History and Development of the Company
The head office of the Company is located at 750 West Pender Street, Suite 1103, Vancouver, British
Columbia, Canada, V6C 2T8. The registered and records office of the Company is 1199 West Hastings Street,
Suite 950, Vancouver, British Columbia, Canada, V6E 3T5.
The contact persons are Duane Poliquin, Chairman and Morgan Poliquin, President. The telephone number is
(604) 689-7644. The fax number is (604) 689-7645. The email address is info@almadenminerals.com. The
web-site address is www.almadenminerals.com.
The Company was created by amalgamation under the laws of the Province of British Columbia of its
predecessor companies, Almaden Resources Corporation and Fairfield Minerals Ltd., effective December 31,
2001. The Company operates under the laws of the Business Corporations Act (British Columbia).
The Company’s common shares began trading on The Toronto Stock Exchange (“TSX”) under the symbol
“AMM” on February 11, 2002 and on the American Stock Exchange, now the NYSE Amex, under the symbol
“AAU” on December 19, 2005. Almaden Resources Corporation’s initial public offering on the Vancouver
Stock Exchange was pursuant to a prospectus dated October 10, 1986. The shares of Fairfield Minerals Ltd.
began trading on the Vancouver Stock Exchange on July 18, 1986 and on The Toronto Stock Exchange on May
21, 1990.
There have been no public takeover offers by third parties in respect of the Company’s shares and the Company
has made no public takeover offers in respect of any other company’s shares.
Organizational Structure
The Company currently has five wholly-owned subsidiaries that were formed to hold properties in their respective
jurisdictions. These subsidiaries are:
Jurisdiction
Nature of operations
Almaden America Inc.
Republic Resources Ltd.
Ixtaca Precious Metals Inc.
Almaden de Mexico, S.A. de C.V.
Minera Gavilan, S.A. de C.V.
Compania Minera Zapata, S.A. de C.V.
Minera Gorrion, S.A. de C.V.
USA
Canada
Canada
Mexico
Mexico
Mexico
Mexico
exploration company
service company
holding company
exploration company
exploration company
exploration company
exploration company
At December 31, 2011, the Company owned a 50% share interest in ATW Resources Ltd. ("ATW"), a company
incorporated in the Northwest Territories, Canada on January 6, 1993, a 14.8% share interest in Tarsis
Resources Ltd. (formerly Tarsis Capital Corp.), a company incorporated in Alberta, Canada on October 21,
2005 and continued into British Columbia on June 2, 2008 and a 38.8% share interest in Gold Mountain Mining
Corporation, a company incorporated in British Columbia, Canada on June 12, 2008 (formerly Beanstalk
Capital Inc. and Set For Growth Developments Ltd.).
Business of the Company
The Company is engaged in the business of the acquisition, exploration and when warranted, development of
mineral properties. The Company has property interests in Canada, United States and Mexico. None of the
Company's property interests are beyond exploration stage. Presently there is no assurance that any of the
Company's mining properties or prospects contain a commercially viable ore body (reserve) until further
exploration work is done and final feasibility study based upon such work is concluded. The Company is in the
exploration stage and has not generated any revenues from operations.
24
Business Overview
Maintaining properties
The following is a general statement about government requirements for holding mineral properties in the
jurisdictions where the Company works.
In Canada, mining law is a provincial or territorial matter. Maintaining a mineral property requires annual
assessment work or cash in lieu of work. Prior to starting a work program, an application describing the
program is submitted to the government authorities and this is then distributed for comment to various
departments for review, such as fisheries or forestry, that may discern impact from the proposed work. The
government has an obligation to consult with First Nation groups in the area that may have a land claim over the
mineral claims, but this consultation is often delegated to the Company to handle. A memorandum of
understanding may have to be negotiated with the First Nation before the government will issue a permit to
work. If there is to be any environmental impact, an appropriate reclamation amount is determined and a bond is
posted by the Company for this amount before the permit is issued.
In the United States, federal mining laws govern mining claims on federal land, including land administered by
the Bureau of Land Management (“BLM”). A payment of US$140 per claim is payable to the BLM by
September 1 of each year per twenty acre mining claim. This is filed in advance for the upcoming assessment
year. Prior to any exploration activity, an Exploration Plan is submitted to the BLM that outlines the work
program and describes any proposed land disturbance. Reclamation plans are also submitted and an appropriate
bond to ensure such reclamation is done may have to be provided before the permit is issued.
In Mexico, mining law is a federal matter. The government requires annual assessment work and expenditures
per hectare which increase with the size and age of the claim. Land taxes per hectare also have to be paid by
January 31 and July 31 each year. Both amounts are subject to inflation accounting and the inflation adjustment
number for each fiscal period is published in the official gazette. Under the Mexican Constitution and the
mining and environmental laws of Mexico, all mining projects are subject to Federal legal control; State and
Municipal governments have small participation in the permitting process. This control is exercised from the
exploration phase through the closure phase of a mining project. Prior to the initiation of exploration activities,
concession owners are required to file a notice of commencement of exploration activities in conformity with
Mexican Official Norm 120 (NOM-120); prior to initiation of construction activities (and also in some more
intrusive exploration activities), mining projects are required to apply for and obtain an environmental impact
authorization and a land use permit from the Mexican Federal environmental agency SEMARNAT (Secretaria
de Medio Ambiente y Recursos Naturales). This requires the presentation of an environmental impact manifest
and a technical study which deals with the impacts, the environmental mitigation, and habitat compensation to
the satisfaction of the authorities having environmental jurisdiction.
Competition
The mineral property exploration and development business, in general, is intensively competitive and there is
not any assurance that even if commercial quantities of ore are discovered, a ready market will exist for sale of
same. Numerous factors beyond our control may affect the marketability of any substances discovered. These
factors include market fluctuations; the proximity and capacity of natural resource markets and processing
equipment; and government regulations, including regulations relating to prices, taxes, royalties, land tenure,
land use, importing and exporting of mineral and environmental protection. The exact effect of these factors
cannot be accurately predicted, but the combination of these factors may make it difficult for us to receive an
adequate return on investment.
We compete with many companies possessing greater financial resources and technical facilities for the
acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and
retention of qualified employees.
Seasonality
The climate in the Project Areas is marked by dry, cold winters and a distinct rainy season. The rainy season
typically begins in May or June and continues until late September to October. In most years roads remain
passable and exploration can be done throughout the rainy season. Seasonal changes do not have a material
impact on our exploration expenditures.
25
Exploration Program Protocols
General Sample Handing and Quality Control Program for Exploration Programs
The Company employs a strict quality control program for samples taken during its exploration programs. For
drilling programs a quality control program is in place which includes the insertion of blanks, field duplicates
and certified standards into the sample stream.
Chain of Custody
Samples of rock and drill core and cuttings are sealed by the sampler and kept under control of a qualified
person until they are shipped to a laboratory.
Sample Handling
Sample handling for drilling programs is described more fully below. Soil and stream sediment samplers have
been trained to industry standard levels of sampling methodology. In general, the Company sieves stream
sediment samples to -20 mesh in the field during preparation. Samplers are required to not wear any jewellery
or clothing or use equipment which may contaminate the sample. All sample locations are geographically
located at the time of sampling using the Global Positioning System. The Company has prepared standardized
sample information cards for samplers to record information concerning the sample location, type and medium.
Outcrop, float and dump rock samples are collected by geologists who record similarly ordered geologic
information relating to the sample taken.
Blanks
Blank material, a sample of crushed and pulverized rock, known to contain very low or non detectable
concentration of gold, is inserted as a pulp into the sample stream on an interval of every 20 samples. Blanks are
intended to detect possible contamination.
Duplicates
During drill programs the company routinely includes a field duplicate into the sample stream, spaced at 20
sample intervals. Field duplicate samples are splits of drill core or reverse circulation cuttings from the sample
interval. The resulting two field duplicate samples are submitted with separate sample numbers “blind” to the
assay lab and separately treated as normal samples. The samples are taken randomly with no regard to rock
type, geographic position or degree of alteration or mineralization. These field duplicated are then used to detect
the cumulative uncertainties associated with the entire sampling and analytical process.
Standards
During drill programs the company routinely includes a field duplicate into the sample stream, spaced at 20
sample intervals. Certified standards are purchased from CDN Resource Labs of Vancouver and are prepared by
this professional third party lab according to industry standard and accepted methodologies. Standards are
utilized to monitor the accuracy of the laboratory work.
Sample Handling for Drill Programs
Core Box Preparation
Plastic core boxes are used for the storage of core. Each box is labelled by the drillers at the rig with the drill-
hole number, a box number and an arrow to mark the start of the tray and the down-hole direction. Wooden
core blocks, with the metreage in black marker pen, are inserted by the drillers at the end of each core run
(usually 3 m or less). These core run intervals are checked and recorded by the geologist during mark up (see
below). When filled with core the boxes are sealed with a plastic lid by the drillers and transported to the core
logging facility.
Sample and Corebox Markup
Once at the core logging facility, the core boxes are marked up with the starting and ending metreage, written at
the ends of the trays with a marker. An aluminum tag with the hole number, box number and metreage is then
stapled to the front of each tray. The core blocks are then covered with an aluminum permi-tag with the depth
inscribed and written over in black marker pen for clarity in core tray photographs. The start and end of each
selected sample interval is marked with a red wax pencil mark across the core and sample numbers are written
26
on the edge of the core box channels at the start and end of each sample interval. Intervals denoting the position
in the sample tag sequence of field duplicate, blank and analytical standards are also marked on the core box.
Different coloured tape was stapled to the boxes to indicate the position and type of duplicate sample. A
permanent aluminum tag with the sample number inscribed on them was stapled to the inside of the core box
channel at the start of each sample interval. A cut line was marked on the core as a guide for sawing of half-
core samples for assay. The cut line position is marked by fitting the ends of the core together, to align them as
they came out of the hole, and using a ruler to draw a line down the core axis with a red wax pencil. This mark-
up is done after the trays are photographed. Cut line positions are selected by the logging geologist to produce
two halves with equal proportions of mineralization. Typically this is done by marking the cut line down the
long axis of the ellipses described by the intersection of the veins with the core circumference. Each tray is
digitally photographed before core cutting and sampling.
Core Logging
Before cutting and sampling the core, the following tables of data are recorded on paper and then entered into
the Almaden drillhole database system:
Geotechnical Logging
1. Core box record sheet: Beginning and end from/to intervals for each core box.
2. For each core run (from and to) a record of the core size, metres of core recovered for the interval, RQD (the
total length of pieces of core in the interval that are twice the width of the core divided by the length of the
interval, times 100) and hardness (on a scale from 1 to 5, from softest to hardest).
3. A drilling daily control sheet showing the progress of the rig for each shift.
Geological Logging
1. Geology Log: Intervals selected by the geologist recording a detailed description of the lithology, texture,
alteration, mineral assemblage and intensity and level of oxidation/weathering. Structural measurements (i.e.
the angle of structures to the core axis) are also recorded. The cover sheet includes details such as surveyed
collar co-ordinates, downhole survey data, core size depths, drilling dates and sample number series. A graphic
log column with a sketch of the geology is also included.
2. Veining and Mineralization: (Intervals on this form are the same as the sample intervals). Estimates of the
percent veining and the percentage of different minerals represented in either vein, breccia or disseminated
form, i.e. quartz, carbonates, pyrite etc. (Sometimes completed after sampling).
3. Sample Sheet: A record of the sample intervals, sample numbers and duplicate, blank and analytical standard
numbers as well as magnetic susceptibility measurements taken on each sample (using a handheld magnetic
susceptibility metre pushed against the core).
4. Hole Summary: An abbreviated hole log that summarizes the important features of a drill hole. A summary
drill hole trace giving the geologist the opportunity to summarize the hole and sketch in structural orientations
in a form easily transferred to sections. All logs are saved on the server along with the core photos and other
data from each hole.
SAMPLE INTERVAL SELECTION
All strongly altered or mineralized intervals of core were sampled. Sampling always began at least 5 samples
above the start of mineralization. Sample intervals were selected using the following criteria.
-Maximum sample length of 2 m in unmineralized lithologies
-Maximum sample length of 1 m in mineralized lithologies
-Minimum sample length of 50 cm. Geological changes in the core such as major mineralization/alteration
intensity and lithology changes were used as sample breaks.
-Core size changes and any zones of core loss were used as sample breaks.
-Large discrete veins that might possibly be modeled or mined as separate structures were sampled separately.
The begin/end marks were placed so that the entire vein ended up in the sample(s) and the vein is not smeared
into samples on either side.
27
Sampling Procedure
All samples were originally cut in half using custom-made, gasoline engine-powered diamond core saws. All
were recently changed to electric powered saws. Each saw has sliding trays and customized “core cradles”
sized for each core diameter in order to ensure a straight cut down the cut line and to minimize the loss of
friable core during cutting. Areas of very soft rock (e.g. fault gouge), are cut with a machete, using the side of
the core channel to ensure a straight cut. Areas of very broken core (pieces <1 cm) were sampled using spoons.
The following standard sampling procedures were employed:
The right hand side of the core (looking down the hole) was always sampled. After cutting, half the core was
placed in a new plastic sample bag and half was placed back in the core box. Between each sample, the core
saw and sampling table areas were washed to ensure no contamination between samples. Field duplicate, blank
and analytical standards were added into the sample sequence as they were being cut. After cutting of samples
containing visible gold, a piece of abrasive quartz sandstone was cut to clean the diamond blade. This was done
to prevent contamination of the following sample with gold that may have become smeared onto the blade.
Sample numbers were written on the outside of the sample bags twice and the tag from the sample book was
placed inside the bag with the half core. The bags were sealed using single-use plastic cable ties.
Sample numbers on the bags were checked against the numbers on the core box and the sample book.
The core cutting area is within the core logging shed and the logging geologists regularly checked the precision
of the core cutting and sampling. The sealed plastic sample bags were placed in large plastic twine (rice) sacks
(usually between 8 and 10 samples per sack) and sealed using single-use plastic cable ties. The sacks were
weighed and the sack number, sample numbers, sack weight and date written on the outside of the sacks.
Company’s Principal Properties
The Company has two principal property interests: (1) the Tuligtic prospect (100% interest) which includes the
Ixtaca zone in Mexico, and (2) the El Cobre copper-gold prospect (100% interest).
The Company does not deem its other exploration projects to be material properties. The Company plans to
conduct preliminary exploration on the projects however there are no current plans to conduct advanced
exploration on these projects.
PRINCIPAL PROPERTIES INTERESTS
The Tuligtic Prospect – Mexico
Location and Access
The property is located roughly 82 kilometers north-northeast of the City of Puebla, the capital of the state of
Puebla, and one of the five most important colonial cities in Mexico. Puebla City is located to the east of
Mexico City and west of Mexico's main port, Veracruz, on the main route between the two. The project is
located east of Apizaco, an industrial centre located 51 kilometers north of Puebla City along Highway 119. The
project area is most easily accessed via Highway 119 from Apizaco, Tlaxcala to the Ciudad Industrial
Zicotencatl and 42 kilometers east along the paved road toward Ixtacamaxtitlan passing through the
communities of Lázaro Cárdenas and Emiliano Zapata. A gravel road connects the paved highway with the
town of Santa Maria 3.2 kilometers north of the bridge crossing the Rio Apulco. The Ixtaca Zone of the Tuligtic
project, and drill sites, are located between the communities of Santa Maria and Zacatepec, a further 2.5
kilometers north along the recently graded gravel road. The 61 kilometers total distance from Apizaco can be
driven in approximately 1.5 hours. The property can also be accessed by gravel roads from the NW via
Chignahuapan, from the NE via Tezhuitán and Cuyoaco and from the south via Libres.
The towns of Santa Maria and Zacatepec are serviced by the national electricity grid and rare wired telephone
lines and recently have cellular telephone coverage.
The climate of the region is temperate with temperatures averaging 10°C in December to 19°C in May-June.
Annual precipitation averages over 600mm, three-quarters falling in the rainy season May through September.
The project area is located in the Sierras Altas subprovince of the Sierra Madre Oriental at the northern edge of
the Trans-Mexican Volcanic Belt (TMVB). The area is dominated by moderate- to steep-sided hills of altered
volcanic rock and volcaniclastic sediments locally deeply incised to bedrock by intermittent streams. Elevation
28
varies from 2300 meters above sea level in the south to 2800 masl in the north. The area is partially cultivated
with corn, beans, vegetables and pasture land. Vegetation on non-cultivated land is dominated by either cactus
or pines.
29
Claims and Title
The Tuligtic property consists of two claims held 100% by Compañía Minera Gorrion S.A. de C.V., a wholly-
owned subsidiary of Almaden Minerals Limited. The claims, tabularized below, cover an area of over 14, 000
hectares and were staked subsequent to recognition of alteration during a helicopter-borne reconnaissance
exploration program in 2001. Official title documents have been issued for both claims, the details of which are
summarized below.
Claim Name
Cerro Grande
Claim Number
219469
Valid Until Date
March 5, 2059
Area (hectares)
11, 201.55
Cerro Grande 2
Total
233434
February 23, 2059
3,028
14, 229.55
Location
Tetela de Ocampo
Ixtacamaxtitlan
Aquixtla, Pue.
Zautla, Pue.
Geological Setting of the Tuligtic Project and Ixtaca Zone
The Tuligtic property is underlain by chevron-folded limestones, shales and sandstones of the Tamaulipas
Formation intruded by Tertiary granodioritic plutons and smaller porphyritic bodies and dikes, all
unconformably overlain by lithic rhyolite tuff of the Coyoltepec Pyroclastic Deposit.
Outcrops of the Tamaulipas Formation are rare in the centre of the property in the area of concentrated drilling.
Chevron-folded medium-bedded limestones and shales form steep-sided canyons and cliffs in the southwest and
north parts of the property. The limestones are locally altered to red-green garnet-diopside skarn near the
contact with intrusions. The sedimentary rocks are intruded by a several plutonic phases comprising a regional
and pre-mineral granodiorite body to the north which in turn was intruded by a complex multi-phase diorite to
quartz diorite intrusive body. This latter intrusive complex has undergone classic porphyry-style potassic and
phyllic alteration and veining associated with copper-molybdenum-gold mineralization. The sedimentary and
plutonic rocks are overlain by two episodes of pyroclastic rocks: (1) intensely to texturally destructive argillic
and silicic altered lithic-crystal tuffs and (2) unconsolidated post-mineral fine-grained brown ash.
Two styles of alteration and mineralization have been identified in the area: (1) copper-molybdenum porphyry-
style alteration and mineralization hosted by diorite and quartz-diorite intrusions; (2) silver-gold low-
sulphidation epithermal quartz-bladed calcite veins hosted by carbonate rocks and spatially associated with
overlying volcanic hosted texturally destructive clay alteration and replacement silicification.
Outcropping porphyry-style alteration and mineralization is observed in the bottoms of several drainages where
the altered intrusive complex is exposed in erosional windows beneath post mineral unconsolidated ash
deposits. Multiple late and post mineral intrusive phases have been identified crossing an early intensely altered
and quartz-veined medium-grained feldspar phyric diorite named the Principal Porphyry. Other intrusive types
include late and post mineral mafic dykes and an inter-mineral feldspar-quartz phyric diorite. Late mineral
mafic dykes are fine grained and altered to chlorite with accessory pyrite. Calc-silicate (garnet-clinopyroxene)
altered limestone occurs in proximity to the intrusive contacts and is crosscut by late quartz-pyrite veins. Early
biotite alteration of the principal porphyry consists of biotite-orthoclase flooding of the groundmass. Quartz
veins associated with early alteration have irregular boundaries and are interpreted to be representative of A-
style porphyry veins. These are followed by molybdenite veins which are associated with the same wallrock
alteration. Chalcopyrite appears late in the early alteration sequence. Late alteration is characterized by intense
zones of muscovite-illite-pyrite overprinting earlier quartz-K-feldspar-pyrite ± chalcopyrite veining and
replacing earlier hydrothermal orthoclase and biotite. Stockwork quartz-pyrite crosscuts the A-style veins and is
associated with muscovite-illite alteration of biotite. The quartz-sericite alteration can be texturally destructive
resulting in a white friable quartz veined and pyrite rich rock. Pyrite is observed replacing chalcopyrite and in
some instances chalcopyrite remains only as inclusions within late stage pyrite grains.
The Ixtaca epithermal gold-silver vein zone is exposed roughly one kilometer to the south of the outcropping
intrusive. At surface, it is characterized by friable, texturally destructive clay alteration developed in what is
interpreted to have been a fine-grained volcaniclastic. Strataform zones of opaline silicification are associated
with this alteration zone. Analysis of the argillic alteration indicated presence of kaolinite, alunite and
cristobalite typical of alteration that forms above mineralization in active geothermal systems. Quartz-bladed
30
calcite veins were been identified cropping out in limestone roughly 100 meters beneath the exposed tabular
silica zones. Initial sampling as part of this study of these veins and from float boulders of breccia containing
quartz vein fragments have returned anomalous values in gold and silver. Samples of strataform silicification
and altered volcanic rocks returned anomalous values of Hg, As and Sb. These findings are consistent with a
highly preserved low-sulfidation epithermal vein system. Drilling has shown that the limestone stratigraphy is
comprised of lime mudstone units higher in the succession to shaley units deeper in the succession. Veins
encountered in drilling appear to be sub parallel to dykes which cross cut the limestone succession. The dykes
and their margins are commonly the locus of veining. The present drilling program has been designed to better
understand the more densely veined portions of the vein zone, where higher grades have been recognized to be
located, as well has defining the confines of veining.
Preliminary mineralogy shows that the veins are largely comprised of carbonate and lesser quartz. The veins
variously mineralized with sulfides (pyrite-sphalerite-galena-minor chalcopyrite, rare arsenopyrite, pyrrhotite,
possible relict marcasite?), local Ag sulfosalts or sulfides (possibly including but not restricted to, tetrahedrite,
ruby silver, i.e. the proustite-pyrargyrite and/or pearcite-polybasite series, and acanthite), and native gold or
electrum.
The Main Ixtaca zone of veining is thought to have a north-easterly trend which is the apparent trend of the
dykes (060 azimuth). At present the Main Ixtaca Zone is interpreted to be sub-vertical with local variations. The
drilling completed to date has traced mineralisation over 1,000 meters along this northeast trend. Based upon
observations at surface and of core as drilling progresses, there seems to be a variety of veinlet orientations
within the other parts of the Ixtaca zone.
History of Past Work
To the Company’s knowledge no modern exploration was carried out on the project prior to Almaden’s
acquisition of the property area by staking in 2001. Evidence of historic mining of clay (kaolinite) deposits from
surface is evident throughout the property area.
The Company conducted multiple surface geologically focused exploration programs which included surface
geological and alteration mapping, prospecting and rock and stream sediment sampling. These programs
identified two distinct styles of alteration and mineralization; copper porphyry style mineralization located in
the north central part of the claim block and roughly one kilometer south, gold-silver epithermal vein style
mineralization located in the south central part of the claim block. Subsequent programs of increasingly detailed
grid based soil sampling and surface geophysics (induced polarization and magnetics) were carried out which
defined targets within both areas of identified mineralization.
In 2006, the Tuligtic project was optioned to Pinnacle Mines Ltd. In 2007 this option agreement was
terminated. In 2009 the property was optioned to Antofagasta Minerals S.A. under terms whereby it could earn
a 75% interest in the property. In 2009 and 2010 Antofagasta Minerals S.A., under Almaden operation,
conducted a geophysical and exploration drilling program on the copper porphyry area of the project. The
program consisted of three lines of IP geophysics and 2,522 meters of diamond drilling in six holes. The IP
chargeability results, along with that of previous programs carried out by Almaden, defined a 2 by 2.5 kilometer
chargeability high the limits of which are currently only defined to the west and south. The drilling intersected
skarn and porphyry copper-molybdenum mineralization in an intrusive complex. Four of the six drillholes were
oriented within thirty degrees of north south and located within a 200 by 300 meter area roughly in the central
portion of the IP chargeability anomaly. These holes were selected based on intensely altered and quartz-veined
porphyry exposed in the drainages in the central portion of the chargeability anomaly. The drilling program
encountered sub economic porphyry mineralisation. The mineralized intersections, despite being largely in
skarn and uneconomic, are considered by the Company to be encouraging for the greater porphyry potential of
the system. Antofagasta Minerals S.A. terminated its option on the project in March 2010.
In July 2010 Almaden initiated a diamond drilling program on the gold-silver epithermal vein target area of the
project located roughly 1 kilometers to the south of the porphyry prospect on the project. The first hole in this
program (results announced in August, 2010) intersected a zone of banded carbonate-quartz epithermal veining
with gold and silver values. This hole constitutes the discovery of the Ixtaca Zone of veining. The entire hole
cut through a vein zone of varying intensity of veining and intersected 302.41m of 1.01 g/t Au & 48 g/t Ag.
Within this broad zone of veining several higher grade veins were intersected including a 1.67 meter interval
31
that returned 60.66 g/t Au and 2112g/t Ag. Immediately after this discovery the Company initiated a follow-up
drill program which had expanded to two drills by the end of 2010. In 2010 6,465.12 meters were drilled in 14
holes. In 2011 the program was expanded to four drills and a further 30,759.54 meters were drilled in 81 holes.
Present Condition of Project and 2012 Exploration Program
The property is without known reserves and the 2012 exploration program is exploratory in nature. The
Company intends to produce the first resource estimate on the Ixtaca Zone in 2012 based on results of the
current exploration program. At present over 30,000 meters of drilling has been planned for the 2012
exploration program which is underway with four drills operating.
Mr. Norm Dircks, P.Geo., a qualified person (“QP”) under the meaning of NI 43-101, is the QP and project
manager of Almaden’s 2012 Ixtaca Zone exploration program. The analyses are presently carried out at ALS
Laboratories of North Vancouver using industry standard analytical techniques. For gold, samples are first
analysed by fire assay and atomic absorption spectroscopy (“AAS”). Samples that return values greater than 10
g/t gold using this technique are then re-analysed by fire assay but with a gravimetric finish. Silver is first
analysed by Inductively Coupled Plasma - Atomic Emission Spectroscopy (“ICP-AES”). Samples that return
values greater than 100 g/t silver by ICP-AES are then re analysed by HF-HNO3-HCLO4 digestion with HCL
leach and ICP-AES finish. Of these samples those that return silver values greater than 1,500 g/t are further
analysed by fire assay with a gravimetric finish. Blanks, field duplicates and certified standards were inserted
into the sample stream as part of Almaden’s quality assurance and control program which complies with
National Instrument 43-101 requirements.
The El Cobre Prospect - Mexico
Location and Access
The property is located in the state of Veracruz roughly 75 kilometers northwest of the City of Veracruz. The
property is accessible by road along the Pan American Highway (Federal Highway 180) north from Veracruz.
Various roads provide access to the centre of the claim block. Logistically, it is extremely well situated with the
Pan-American Highway located 3 kilometers to the east of the property and ready access to power (Laguna
Verde Nuclear Power Plant located 15 kilometers north).
The topography on the property is rugged with elevations ranging from 10 m to 400 m. Trees and scrub growth
cover much of the hillsides, however, various trails and dirt roads provide good access to many parts of the
property.
A warehouse and core facility has been established in the town of Tinajitas providing a base with good access to
all parts of the property.
32
33
Claims and Title
Almaden Minerals Ltd., through its wholly owned Mexican subsidiary Minera Gavilan S.A. de C.V., owns a
100% interest in the El Cobre project subject to a 0.5% NSR payable to a third party, 50% of which may be
purchased for $US1.5 MM. The below table shows the title numbers and expiry dates for the list of current
titled claims.
Claim Name
CABALLO BLANCO III
CABALLO BLANCO V
CABALLO BLANCO VIII
(GPO) REYNA NEGRA FRACCIÓN 2
RED. REYNA NEGRA FRACCIÓN 4
C. B. X‐b
C. B. X‐a
Title Number
218457
218955
223360
221152
224416
237405
237440
File Number
5/1/0667
5/1/0674
108/72
5/1/716
05/02/2023
108/120
108/119
Area in Hectares
1145.00
450.00
965.81
65.97
25.15
2653.56
1721.00
Expiry Date
04/11/2052
27/01/2053
02/12/2054
02/12/2053
02/12/2053
08/12/2060
15/12/2060
Geological Setting of the El Cobre Project
Central Mexico is dominated by an east-west belt of Miocene to sub-recent calc-alkaline andesitic to dacitic
volcanic rocks and active volcanoes known as the Trans Mexican Volcanic Belt (TMVB). At the eastern end of
the TMVB, where the El Cobre Property is located, Quaternary basalts that are associated with the Eastern
Alkalic Province cover Oligocene andesitic to basaltic volcanic rocks of the TMVB. The property itself is
largely underlain by a sequence of andesitic to dacitic lithic tuffs, crystal tuffs and volcanic breccias. These
volcanic centers are bound by and possibly in fault contact with basalt flows and related clastic rocks. Large
arcuate faults are present and are interpreted to represent normal faults associated with caldera development.
Fine-grained, magnetic monzonite and diorite intrusions and dykes have been identified in several locations on
the property and these are interpreted to be the causative intrusions for the porphyry style mineralization
identified on the project.
History of Past Work
To the Company’s knowledge no modern exploration was carried out on the project prior to Almaden’s
acquisition of the property in 1994.
In 1994 Almaden Minerals Ltd., through its wholly owned subsidiary Minera Gavilan S.A. de C.V., signed an
option agreement whereby Almaden had the option to acquire a 100% interest in the claims. This option has
been exercised.
From 1995 to 1998, Almaden Minerals Ltd completed extensive exploration work mainly concentrated on
porphyry Cu-Au and Au-Ag vein targets in the El Cobre area. Surface work included extensive grid based soil
sampling and ground induced polarization (IP) and magnetics geophysics. This work also included 17 RC drill
holes designed to test soil geochemical and IP geophysical anomalies spatially associated with mineralized float
and outcrop. The 17-hole reverse circulation drill program totalled 2,390 meters and was completed in the
spring of 1998. Several zones of gold and silver mineralized quartz-barite veins were intersected including the
zone in hole CB-4 which cut 40 meters of 1.4g/t gold and 9.0 g/t silver. Shallow drillholes into an intrusive
returned 107 meters of 0.25g/t gold and 0.18% copper in one hole and 40 meters averaging 0.39g/t gold and
0.15% copper in another. Drill testing of a third zone with two holes returned 20 meters of 0.45g/t gold and
0.11% copper and 15 meters of 0.23g/t gold and 0.16% copper. Based on this work, it was interpreted that these
holes tested the top of a porphyry system.
In 2001, Noranda optioned the Caballo Blanco property from Almaden and drilled 7 very widely spaced
diamond drill holes totaling 1,641 meters. No significant copper mineralization was intersected and despite
significant alteration and anomalous gold mineralization in several holes, Noranda terminated its option in the
fall of 2002.
In 2002 the project was optioned to Comaplex Minerals Corp. under terms whereby Comaplex could earn a
60% interest in the project which Comaplex exercised in 2006. In 2004 Comaplex drilled two diamond drill
34
holes on the El Cobre project for a total of 515.8 meters. This drilling confirmed the presence of significant
porphyry style copper–gold mineralization. DDH 04CB1 drilled in an area that had shown significant results in
the past returned 290 meters that averaged 0.39 g/t gold and 0.16% copper. The drill hole is associated with a
prominent magnetic feature and a large gold soil anomaly. In 2007 Almaden purchased Comaplex Mineral’s
60% interest in the project in its entirety for a cash payment of US$1.25 Million.
In 2007 prospecting conducted by Almaden resulted in the discovery of a new zone of porphyry mineralization
named Pedrero in the north part of the project.
Also in 2007 Almaden optioned the project to Canadian Gold Hunter Corp. under terms whereby Canadian
Gold Hunter could earn a 70% interest in the project from Almaden. In 2008 Canadian Gold Hunter drilled 10
diamond drill holes on the project for a total of 2,837.14 meters. At Pedrero drilling confirmed the presence of
porphyry mineralization. The final 41.15 meters of 08CBCN-019 graded 0.272% copper and 0.415 g/t gold
before the hole was lost in a fault. Significant sections with strong quartz stockwork were encountered in hole
09CBCN-042 and the final 137 meters returned 0.105% copper and 0.100 g/t gold.
In 2010 NGEX Resources Inc. (successor to Canadian Gold Hunter Corp.) sold its option to acquire a 70%
interest in the project to Goldgroup Mining at which point a 60 (Almaden) / 40 (Goldgroup Mining) joint
venture was initiated. In 2011 Almaden acquired a 100% interest in the project as part of the consideration of
the sale of Almaden’s interest in the adjacent Caballo Blanco project to Goldgroup Mining. Also in 2011
Almaden contracted a TITAN 24 deep earth imaging induced polarization survey on the project which was
completed in January of 2012.
Present Condition of Project and 2012 Exploration Program
The property is without known reserves and the 2012 exploration program is exploratory in nature. From late
November 2011 to January 2012 a TITAN 24 deep induced polarization surface geophysical program was
conducted. For 2012 Almaden has planned an initial 3,500 diamond drilling program on the project designed to
test the porphyry copper-gold targets defined by past work on the property.
The planned 2012 exploration program will be under the direction of Mr. Norm Dircks, P.Geo., a qualified
person (“QP”) under the meaning of NI 43-101. It is anticipated that the analyses will be carried out using
industry standard analytical techniques as follows: For gold, samples are first analysed by fire assay and atomic
absorption spectroscopy (“AAS”). Samples that return values greater than generally 10 g/t gold using this
technique are then re-analysed by fire assay but with a gravimetric finish. Silver is first analysed by Inductively
Coupled Plasma - Atomic Emission Spectroscopy (“ICP-AES”). Samples that return values greater than
generally 100 g/t silver by ICP-AES are then re analysed by HF-HNO3-HCLO4 digestion with HCL leach and
ICP-AES finish. Of these samples those that return silver values greater than generally 1,500 g/t are further
analysed by fire assay with a gravimetric finish. Blanks, field duplicates and certified standards were inserted
into the sample stream as part of Almaden’s quality assurance and control program which complies with
National Instrument 43-101 requirements.
NON-PRINCIPAL PROPERTIES INTERESTS
The Company has assembled a portfolio of mineral exploration projects, including the Principal properties
Tuligtic and El Cobre, through its ongoing grass roots exploration efforts. While the properties are largely at
early stages of exploration they represent opportunities for the discovery of gold, silver and copper deposits.
Almaden’s business model is to find and acquire mineral properties and develop them by seeking partnerships
with third party exploration and development companies and retaining a carried interest.
The Tuligtic and El Cobre projects are considered principal properties because past drilling has confirmed the
presence of significant mineralization that has a reasonable chance of being economic although as yet no
resources have been defined on these projects. Non principal projects have not yet had drilling results that
indicate the presence of significant mineralization. Nevertheless the non-material projects are deemed worthy of
preliminary exploration and drilling. Below is a list of Non-Principal properties and their current status with
respect to agreements with others. In 2011 Almaden carried out preliminary work programs on some of these
Non-Principal projects including a geophysical survey at the Willow project in Nevada, USA and a geochemical
survey on the ATW diamond prospect in Canada. Almaden hopes to advance all these Non-Principal projects
35
with preliminary exploration programs in 2012, whether carried out by the Company or by partners. The
Company may form new agreements to explore these projects and, if negative exploration results are received,
drop projects on this list.
Name
ATW
Elk
Dill
Logan
Merit
Munro Lake
Nicoamen River
Ponderosa
Skoonka Creek
Yukon/BC Projects (8) Sold to Tarsis Resources
Black Jack Springs
BP
Monte Cristo
Newark Valley
Paradise Valley
Veta
Willow
Bufa
Caballo Blanco
Caldera
Campanario
Cerro Colorado
El Chato
El Cobre
El Encuentro
El Realito
Erika
Fuego
Joya
Lajas
Matehuapil
Mezquites
Ocotzingo
Picacho
San Carlos
San Pedro
Tanquecillos
Terrerillos
Tropico
Tuligtic
Viky
Yago
Location
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
Canada
USA
USA
USA
USA
USA
USA
USA
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Mexico
Interest
Joint Venture, 58.8% Interest
2% NSR Royalty
2% NSR Royalty
Joint Venture, 40% Interest
Optioned to Suburst Exploration
100% owned
100% owned
100% owned
Joint Venture, 34.14% Interest
2% NSR Royalty
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
2% NSR Royalty
1.5% NSR Royalty
Optioned to Windstorm Resources
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
2% NSR Royalty
100% owned
100% owned
100% owned
Optioned to Golden Minerals Company
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
100% owned
0.8% NSR Royalty
100% owned
100% owned
100% owned
36
Item 5. Operating and Financial Review and Prospects
Operating Results
The following discussion and analysis of the results of operations and the Company’s financial position should
be read in conjunction with the consolidated financial statements and related notes for the years ended
December 31, 2011, 2010 and 2009 appearing under Item 17 – Financial Statements and listed under Item 19 –
Exhibits.
The Company’s consolidated financial statements are stated in Canadian Dollars and have been prepared in
accordance and compliance with International Financial Reporting Standards as issued by the International
Accounting Standards Board (“IASB”) and the IFRS Interpretations Committee (“IFRIC”).
The Company is in the business of acquiring and exploring mineral properties and prospects in Canada, the
United States and Mexico with the aim of developing them to a stage where they can be exploited at a profit or
to arrange joint ventures whereby other companies provide, in whole or in part, funding for development and
exploitation. At that stage, the Company’s operations would, to some extent, be dependent on the world market
prices of any minerals mined. The Company does not have producing properties and operations on its properties
and prospects are exploratory searches for mineable deposits.
Fiscal 2011 compared to Fiscal 2010
The Company’s operations during the year ended December 31, 2011 (“Fiscal 2011”) produced net income of
$7,294,858 or $0.13 per share compared to a net loss of $3,464,652 or $0.07 per share for the fiscal year ended
December 31, 2010 (“Fiscal 2010”). The income is primarily due to the sale of the Elk and Caballo Blanco
properties. In July 2011, the Company completed the sale of the Elk Gold Project to Gold Mountain Mining
Corporation (“Gold Mountain”) for 35 million common shares of Gold Mountain and a 2% NSR. The Company
then sold 8.25 million of the 35 million shares of Gold Mountain to third parties at $0.355 per share for
proceeds of $2,928,750. An additional 2,000,000 common shares will be held in escrow subject to the
following conditions: 1,000,000 common shares upon the establishment of 1,000,000 ounces of measured or
indicated reserves of gold on the property; and 1,000,000 common shares upon the establishment of an
additional 1,000,000 ounces of measured or indicated reserves of gold on the property. Any bonus shares not
released from escrow within five years will be cancelled. The Company has recorded the contingent share
receivable at its fair value of $144,000. In October 2011, the Company completed the sale of its 30% interest in
the Caballo Blanco project to Goldgroup Mining Inc. (“Goldgroup”) for US$2.5 million cash, 7 million
common shares of Goldgroup and a 1.5% NSR. An additional 7 million shares will be issued to the Company
under the following conditions: 1 million upon commencement of commercial production, 2 million upon
measured and indicated resources including cumulative production reaching 2 million ounces of gold, 2 million
shares upon measured, indicated and inferred resources including cumulative production reaching 5 million
ounces of gold and 2 million shares upon measured, indicated and inferred resources including cumulative
production reaching 10 million ounces of gold. The Company recorded the contingent share receivable at its
fair value of $518,700.Goldgroup also transferred to Almaden its 40% interest in the El Cobre property. The
Company now owns a 100% interest in the El Cobre subject to a sliding scale royalty payable to a third party.
During Fiscal 2011, the income on mineral property options totalled $15,072,485 from the sales discussed
above. During Fiscal 2010, the income on mineral property options consisted of the receipt of 6,000,000 shares
of Lincoln Mining Corporation with a fair market value on receipt of $1,770,000 pursuant to the sale of the
Company’s Bufa prospect and the receipt of 2,560,000 shares of Skeena Resources Ltd. with a fair market value
on receipt of $153,600 pursuant to the sale of the Company’s 40% interest in the Tropico prospect. Income on
mineral property options consists of equity securities and/or cash payments received pursuant to mineral
property option agreements and reflect the excess of market value, in the case of the marketable securities, at
the time of receipt over the carrying value of the property.
During Fiscal 2011, the Company determined it no longer had significant influence over Tarsis. As a result, the
Company classified its interest in Tarsis to marketable securities from investment in associate and recognized a
gain on reclassification in the amount of $1,077,223 which is included in gain (loss) on investment in associate.
Prior to this determination and reclassification the Company recognized a loss on dilution of $122,843 as a
result of a private placement in Tarsis and recorded its equity share of Tarsis’ loss during Fiscal 2011of $25,193
which is also included in gain (loss) on investment in associate. During Fiscal 2010, the Company recognized a
loss of $151,926 in its equity investment in Tarsis. During Fiscal 2010, the Company recognized a loss of
37
$168,449 on the deemed partial dilution of the Company’s investment in Tarsis from 27.6% to 16.7%.
Because the Company is an exploration company, it has no revenue from mining operations. During Fiscal
2011 and 2010, revenue consisted primarily of interest income and other income from office rental and contract
exploration services provided to third parties.
General and administrative expenses were $2,096,097 in Fiscal 2011, an increase from $1,493,611 in Fiscal
2010. The most significant increase is in salaries and benefits with the hiring of a full-time CFO. The
Company participated in a number of investor conferences such as the New Orleans Investment Conference, the
Agora Financial Symposium in Vancouver, the Precious Metals Summit 2011 in Colorado, the Prospectors and
Developers Association Conference in Toronto and the World Resource Investment Conference in Vancouver.
The Chairman and CEO made presentations to potential investors in New York, Los Angeles and Minneapolis.
The Chairman also made presentations to potential investors in London and Paris. The Company also retained
Casey Research for a sponsored profile on the Kitco Casey website and Michael S. Fulp for website sponsorship
for part of the year. Director’s fees totalling $33,000 were paid during both years ended December 31, 2011
and 2010.
General exploration expenses were $961,992 in the year ended December 31, 2011, compared to $646,358 in
Fiscal 2010. These expenditures vary according to management decisions on work to be done on any property.
Significant non-cash items in Fiscal 2011 include income on mineral property options and share-based
payments. Share-based payments are recognized for stock options granted. This expense is directly related to,
and fluctuates based on, the number of options granted during any period. Significant non-cash items in Fiscal
2010 include income on mineral property options, share-based payments and impairment of interests in mineral
properties Impairments of interests in mineral properties fluctuate period to period based on management’s
evaluation of the carrying value of each mineral property interest held at that time.
Fiscal 2010 compared to Fiscal 2009
The Company’s operations during the year ended December 31, 2010 (“Fiscal 2010”) produced a net loss of
$3,464,652 or $0.07 per share compared to a net loss of $2,285,959 or $0.05 per share for the fiscal year ended
December 31, 2009 (“Fiscal 2009”). The increase in net loss was primarily due to the Company not earning
other income from drill programs undertaken on behalf of third parties while utilizing the drill to advance its
own properties and the non-cash expense of share-based compensation recorded on the grant of stock options.
Share-based compensation is directly related to, and fluctuates based on, the number of stock options granted
and vested during any period.
During Fiscal 2010, the income on mineral property options consisted of the receipt of 6,000,000 shares of
Lincoln Mining Corporation with a fair market value on receipt of $1,770,000 pursuant to the sale of the
Company’s Bufa prospect and the receipt of 2,560,000 shares of Skeena Resources Ltd. with a fair market value
on receipt of $153,600 pursuant to the sale of the Company’s 40% interest in the Tropico prospect. During
Fiscal 2009, the income on mineral property options consisted of the receipt of 100,000 shares of Skeena
Resources Ltd. pursuant to a 2008 option agreement with a fair market value of $4,000 and the receipt of
200,000 shares of Lincoln Gold Corporation pursuant to a 2007 option agreement with a fair market value of
$6,900 and the receipt of British Columbia mining exploration tax credit of $97,348 including interest. Income
on mineral property options consists of equity securities and/or cash payments received pursuant to mineral
property option agreements and reflect the excess of market value, in the case of the marketable securities, at
the time of receipt over the carrying value of the property. During Fiscal 2010, the Company recognized a loss
of $151,926 in its equity investment in Tarsis compared to a loss of $90,908 in Fiscal 2009. During Fiscal
2010, the Company recognized a loss of $168,449 on the deemed partial dilution of the Company’s investment
in Tarsis from 27.6% to 16.7%. In Fiscal 2009, the Company recognized a loss of $196,476 on the deemed
partial dilution of the Company’s investment from 33.2% to 27.6%. During Fiscal 2009 the Company
recognized a permanent impairment in the amount of $80,600. In Fiscal 2010, the loss on the sale of the sale of
securities was higher when compared to Fiscal 2009. The Company disposes of its equity securities when, in the
view of management, favorable market conditions exist for any of its holdings. During Fiscal 2010, the
Company also recognized an income tax recovery of $305,766 from premiums on flow-through share issuances.
Also, the fluctuation in the exchange rate for the U.S. and Canadian dollars resulted in a smaller loss on foreign
exchange in Fiscal 2010 when compared to Fiscal 2009.
38
Because the Company is an exploration company, it has no revenue from mining operations. During Fiscal
2010 and 2009, revenue consisted primarily of other income from contract exploration services provided to
third parties although revenue was significantly lower during the current year due to the Company not earning
other income from drill programs undertaken on behalf of third parties while utilizing the drill to advance its
own properties.
General and administrative expenses were $1,493,611 in Fiscal 2010, an increase from $1,291,253 in Fiscal
2009. This increase is primarily due to increases in stock exchange fees and travel and promotion. Stock
exchange fees increased due to the increase in the Company’s share price. The Company participated in the
Vancouver Resource Investment Conference, the Prospectors and Developers Association Conference in
Toronto, the Atlanta Investment Conference, the Khandaker Mining World Institutional Conference in New
York, the Casey Research Crisis & Opportunity Summit in Las Vegas, the Agora Financial Symposium and the
New Orleans Investment Conference. The Company continued to retain Casey Research for a sponsored profile
on the Kitco Casey website and also retained Michael S. Fulp for website sponsorship.
General exploration expenses were $646,358 in Fiscal 2010, comparable to $665,055 in Fiscal 2009.
Significant non-cash items in Fiscal 2010 include income on mineral property options, share-based
compensation and write-down of interests in mineral properties. Significant non-cash items in Fiscal 2009
include write-down of interests in mineral properties. Write-downs of interests in mineral properties fluctuate
period to period based on management’s evaluation of the carrying value of each mineral property interest held
at that time.
Liquidity and Capital Resources
Fiscal 2011
At the end of Fiscal 2011, the Company had working capital of $30,513,403 including cash and cash
equivalents of $21,184,159 compared to working capital of $29,187,035 including cash and cash equivalents of
$16,087,832 and a short term investment of $2,000,000 at the end of Fiscal 2010. In addition, the market value
of the Company’s inventory of gold bullion (1,597 ounces) at December 31, 2011 was $2,547,173 or
$2,272,405 above book value as presented in the financial statements.
Management believes that the Company’s cash resources are sufficient to meet its working capital and mineral
exploration requirements for the foreseeable future. The Company has no long-term debt.
Cash used in operations in Fiscal 2011 was $3,568,646 (2010 - $1,539,439) after adjusting for non-cash
activities. Significant changes in non-cash items in the current period include income on mineral property
options and share-based payments. Significant changes in non-cash items in the comparable period include
income on mineral property options, share-based payments and write-down of mineral properties which
fluctuate period to period based on management’s evaluation of the carrying value of each mineral property
interest held at that time.
Cash from investing activities in Fiscal 2011 was $1,402,531 (2010 – cash used of $6,993,557). Significant
items in the current period include expenditures on mineral property interests of $6,197,667 (2010 -
$5,478,095), proceeds from mineral properties of $5,871,380 (2010 - $15,000) and the maturing of a short-term
investment of $2,000,000 (2010 – purchase of short-term investment of $2,000,000). Significant investments
made in mineral property interests include drilling on the Tuligtic property in Mexico ($4,630,341), geophysical
surveys undertaken on the El Cobre property in Mexico ($609,059), exploration on the ATW project in the
Northwest Territories ($326,446) and the Willow project in Nevada (260,575). Significant investments made in
mineral property interests in the comparable period include camp construction and a drill program on the Elk
gold property in BC ($2,514,617) and the staking of additional claims and drilling on the Tuligtic property in
Mexico ($1,579,083).
During Fiscal 2011, the Company received a total of $7,262,442 net of share issue costs on closing a private
placement financing of 100,000 common flow-through shares at a price of $4.00 per share, on the exercise of
2,030,000 stock options and on the exercise of 1,481,499 warrants. During Fiscal 2010, the Company received
$11,172,391 net of share issue costs on closing several private placement financings and the exercise of options
39
and warrants and the income tax recovery discussed above. One private placement consisted of 3,000,000
common shares at a price of $2.50 per share and its over-allotment of 450,000 common shares also at a price of
$2.50 per share, one consisted of 1,003,821 common flow-through shares at a price of $1.20 per share with
49,997 broker's warrants entitling the brokers to purchase 49,997 common non-flow-through shares until June
29, 2011 issued to brokers in consideration of their services, and one consisted of 350,000 units at a price of
$1.00 per unit. Each unit consists of one common flow-through share and one-half of a non-flow-through
warrant with each whole warrant entitling the holder to purchase one additional common share at a price of
$1.00 per share until March 16, 2011. 4,375 non-flow-through common shares and 2,625 flow-through
common shares were issued to finders in respect of this placement. And one consisted of 81,200 common flow-
through shares at a price of $3.50 per share. 895,000 stock options and 740,658 warrants were also exercised
during the year.
Fiscal 2010
At the end of Fiscal 2010, the Company had working capital of $29,187,035 including cash and cash
equivalents of $16,087,832 and a short term investment of $2,000,000 compared to working capital of
$14,529,582 including cash and cash equivalents of $13,142,671 at December 31, 2009. The increase in
working capital and cash and cash equivalents is primarily due to several private placement financings and the
exercise of options and warrants. In addition, the market value of the Company’s inventory of gold bullion
(1,597 ounces) at December 31, 2010 was $2,268,986 or $1,994,218 above book value as presented in the
financial statements. Should the Company dispose of all its marketable securities at one particular time, it
may not realize the value stated on its balance sheet. Instead, the Company disposes of equities when favorable
market conditions exist for any of its holdings.
The Company’s cash resources are sufficient to meet its anticipated working capital and mineral exploration
requirements for 2011 and 2012. The Company has no long-term debt.
Cash used in operating activities during Fiscal 2010 was $1,233,673 compared to $946,188 during Fiscal 2009.
Significant non-cash expenses are discussed above.
Cash flows from financing activities during Fiscal 2010 were $11,172,391 compared to $2,700,202 during
Fiscal 2009. The source of cash during Fiscal 2010 is from closing several private placement financings and the
exercise of options and warrants. The Company also recognized an income tax recovery on premiums on flow-
through shares issuances. One private placement consisted of 3,000,000 common shares at a price of $2.50 per
share and its over-allotment of 450,000 common shares also at a price of $2.50 per share, one consisted of
1,003,821 common flow-through shares at a price of $1.20 per share with 49,997 broker's warrants entitling the
brokers to purchase 49,997 common non-flow-through shares until June 29, 2011 issued to brokers in
consideration of their services, and one consisted of 350,000 units at a price of $1.00 per unit. Each unit
consists of one common flow-through share and one-half of a non-flow-through warrant with each whole
warrant entitling the holder to purchase one additional common share at a price of $1.00 per share until March
16, 2011. 4,375 non-flow-through common shares and 2,625 flow-through common shares were issued to
finders in respect of this placement. And one consisted of 81,200 common flow-through shares at a price of
$3.50 per share. 895,000 stock options and 740,658 warrants were also exercised during the year. Cash flows
from financing activities during Fiscal 2009 were $2,700,202. The source of cash during Fiscal 2009 is from
the issuance of shares pursuant to two private placement financings. One consisted of 226,316 units at a price
of $0.95 per unit. Each unit consists of one common flow-through share and one-half of a non-flow-through
warrant with each whole warrant entitling the holder to purchase one additional common share at a price of
$1.15 per share until March 31, 2010. 7,000 non-flow-through common shares were issued to a finder in
respect of this placement. The second consisted of 3,060,000 units at a price of $0.85 per share. Each unit
consists of one common share and one-half of a warrant with each whole warrant entitling the holder to
purchase one additional common share at a price of $1.40 per share until December 17, 2011. 236,000 finder’s
warrant entitling the finder to purchase 236,000 units at $0.85 per unit until December 17, 2011 was issued to a
finder in respect of this placement. 154,000 stock options were also exercised during Fiscal 2009. Please see the
consolidated statements of changes in equity and Note 9 to the consolidated financial statements for the year
ended December 31, 2010 for further details.
Cash used for investing activities during Fiscal 2010 was $6,993,557 compared to $930,293 during Fiscal 2009.
During 2010, the Company made investments in mineral properties of $5,478,095 and received $15,000
pursuant to a property option agreement compared to investments in mineral properties of $1,119,474 and
40
recovered $119,958 during Fiscal 2009. During Fiscal 2010, the Company purchased a short-term investment
of $2,000,000. Significant investments during Fiscal 2010 include camp construction and a drill program on
the Elk gold property in BC ($2,514,617), the staking of additional claims and drilling on the Tuligtic property
in Mexico ($1,546,027), a drill program on the ATW diamond property in the Northwest Territories ($215,802)
and drill programs undertaken on the San Carlos property ($254,181) and Viky property ($288,496) in Mexico.
Investments made in mineral property interests in the comparable period include further evaluation on the ATW
diamond property ($399,103), a drill program on the Tuligtic property ($855,200), a geological mapping and
sampling program on the Caldera property ($154,765) and further evaluation of the Elk gold property
($322,384). Significant investments during Fiscal 2009 include a drill program on the Tuligtic property in
Mexico ($855,200), further evaluation on the ATW diamond property in the Northwest Territories ($399,103),
further evaluation of the Elk gold property in B.C. ($322,384) and a geological mapping and sampling program
on the Caldera property in Mexico ($154,765). Investments in mineral property interests are net of any proceeds
received from option agreements and costs recovered or written-off to operations.
Fiscal 2009
At the end of Fiscal 2009, the Company had working capital of $14,529,582 including cash and cash
equivalents of $13,142,671. The increase in working capital and cash and cash equivalents is primarily due to
two private placement financings and lower expenditures on mineral properties. In addition, the market value
of the Company’s inventory of gold bullion (1,597 ounces) at December 31, 2009 was $1,839,421 or
$1,564,653 above book value as presented in the financial statements. The Company was assessed additional
mineral tax of $197,233 plus interest of $84,638 by the British Columbia Ministry of Energy and Mines (the
“Ministry”). The assessment related to the deductibility of certain expenditures between February 1, 1995 and
January 31, 1997. The Company appealed the Ministry’s decision and on July 3, 2009, the Supreme Court of
British Columbia made judgement in favour of the Company. The $281,871 the Company paid and expensed in
order to reduce the exposure to interest charges was refunded with interest. Costs were also awarded to the
Company.
Cash used for operating activities during Fiscal 2009 was $946,188. Significant non-cash expenses are
discussed above.
Cash flows from financing activities during Fiscal 2009 were $2,700,202. The source of cash during Fiscal
2009 is from the issuance of shares pursuant to two private placement financings. One consisted of 226,316
units at a price of $0.95 per unit. Each unit consists of one common flow-through share and one-half of a non-
flow-through warrant with each whole warrant entitling the holder to purchase one additional common share at
a price of $1.15 per share until March 31, 2010. 7,000 non-flow-through common shares were issued to a
finder in respect of this placement. The second consisted of 3,060,000 units at a price of $0.85 per share. Each
unit consists of one common share and one-half of a warrant with each whole warrant entitling the holder to
purchase one additional common share at a price of $1.40 per share until December 17, 2011. 236,000 finder’s
warrant entitling the finder to purchase 236,000 units at $0.85 per unit until December 17, 2011 was issued to a
finder in respect of this placement. 154,000 stock options were also exercised during Fiscal 2009.
Cash used for investing activities during Fiscal 2009 was $930,293. During Fiscal 2009, the Company made
investments in mineral properties of $1,119,474 and recovered $119,958. Significant investments during Fiscal
2009 include a drill program on the Tuligtic property in Mexico ($855,200), further evaluation on the ATW
diamond property in the Northwest Territories ($399,103), further evaluation of the Elk gold property in B.C.
($322,384) and a geological mapping and sampling program on the Caldera property in Mexico ($154,765).
Research and Development, Patents and Licenses
The Company conducts no Research and Development activities, nor is it dependent upon any patents or
licenses.
Trend information
Many trend features discussed in Fiscal 2010 continue. After a long period of low prices, metals rose to record
levels and after several corrections, are again near their highs. This appears to be related to demand from large
developing nations that are stockpiling metals, securing long term contracts for concentrates and buying up
properties and companies with undeveloped deposits. There is uncertainty as to how long this trend will
continue, whether competition for resources will decrease or intensify and how any change might affect metal
prices. There is uncertainty in currency exchange rates due to economic conditions around the world and how
41
these might affect both costs and profits. These factors require frequent review of plans and budgets against a
backdrop of fewer good exploration and development new projects along with the long term shortage of skilled
exploration personnel.
Previous merger and acquisition activity in large organizations has slowed, at least in part because there are
fewer large companies left and fewer that are vulnerable to takeover. This activity is expected to move down to
intermediate and smaller companies with attractive assets. This creates difficulties in valuations for assets in
relation to often depressed stock market prices.
Many junior exploration companies are having difficulty raising capital and those that do often do so at low
prices resulting in significant dilution to shareholders. Companies at the feasibility study stage or raising capital
for production startup are finding that costs are increasing.
The price of both exploration and production companies focused on precious metals have underperformed when
compared to the price of gold. This has been attributed to various reasons such as the rise of funds that invest in
precious metals which are capturing much of the investment interest in gold and silver. This is no certainty that
this will ever change. Many in the investment and economic communities dispute the likelihood of inflationary
or deflationary conditions and the effect of either on precious metal prices. Any rise in interest rates might
lower investment demand for gold and silver
The uncertain times have led to a need by some cash strapped governments to seek or threaten higher tax and
royalty policies while others consider lowering them to attract investment. Globalization, of trade and markets
has been more important to the mining than many other industries and because of current conditions these
concepts are under question by many vested interest groups. At the same time, environmental groups have
successfully lobbied for more wilderness areas and parks where exploration and mining activities are not
allowed. Native groups are actively pursuing land claims and there is a rise of militant national and religious
groups in many parts of the world. Pressure from such groups can lead to increased regulation and this must be
monitored closely to recognize a point where it becomes excessive. Even though metal mining does not have
the large output of so called greenhouse gasses as some other industries and despite the unresolved science of
and increasing doubt in the claims for global warming, many governments are pursuing regulations and taxes
that could raise costs. As more and more stakeholders become interested in mining ventures there is an
increasing need to maintain cooperation with valid concerned groups, the most important of which is the local
community where the project is.
Some of these issues tend to restrict the areas where mineral exploration and development of new mines can
occur. This should make areas permissive to exploration more attractive and a previously discerned need for
new, good exploration projects based on sound geological work continues.
The world may be slow to recover from current economic conditions and a further deterioration of these
conditions remains a serious threat. If such deterioration occurs, lower economic activity would probably also
lower the demand for base metals but it is believed that precious metals will continue to be in demand as a store
of value.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements other than the lease related to its office premises as
disclosed below.
Contractual Obligations
The Company is obligated under an operating lease for its office premises with the following aggregate
minimum lease payments to the expiration of the lease on January 31, 2016. The Company does have
government requirements in work and/or taxes to maintain other claims held. The decision to keep or abandon
such claims is not contractual but at the discretion of the Company. All other property option payments on the
Company’s projects have been assumed by third parties who are earning their interests in the projects. During
Fiscal 2007, the Company entered into contracts with the Chief Executive Officer and Chief Operating Officer
(now the Chairman and Chief Executive Officer, respectively) for remuneration of $140,000 annually for two
years, renewable for two additional successive terms of 24 months. Effective January 1, 2009, remuneration
increased to $165,000 annually and the contracts will be renewed for additional successive terms of 24 months.
Effective January 1, 2011, remuneration increased to $206,250 annually. During Fiscal 2007, the Company
42
also entered into a Financial, Administrative and Executive Services Agreement with its Chief Financial Officer
and a company controlled by him for a term of one year, renewable for additional successive terms of 12
months, for remuneration of $6,000 per month for the first three months and $5,000 per month thereafter.
Effective May 30, 2011, the Financial, Administrative and Executive Service Agreement was terminated once
Mark T. Brown became a Director of the Company. Table No. 4 lists the total contractual obligations as at
December 31, 2011 for each period.
Table No. 4
Contractual Obligations of the Company
Payments due by period
Operating lease obligations
Executive contracts
Total
$296,700
$450,000
less
than 1
year
1 – 3
years
$67,000
$225,000
$223,000
$225,000
3 – 5
Years
$6,700
-
more
than 5
years
-
-
Contractual obligations of the Company in the above table exclude future option payments required to maintain
the Company’s interest in certain mineral properties.
Forward-Looking Statements Safe Harbor
Certain statements contained in this annual report on Form 20-F regarding contractual obligations, future
operating results or performance or business plans or prospects and any other statements not constituting
historical fact are “forward-looking statements” subject to the safe harbor created by Section 27A of the
Securities Act 1933 and Section 21E of the Securities Exchange Act 1934 and Canadian Securities Law. Where
possible, the words “believe,” “expect,” “anticipate,” “intend,” “should,” “will,” “planned,” “estimated,”
“potential,” “goal,” “outlook,” and similar expressions, as they relate to the Company, its management, or the
Company’s property interests , have been used to identify such forward-looking statements. All forward-
looking statements reflect only current beliefs and assumptions with respect to future business plans, prospects,
decisions and results, and are based on information currently available to the Company. Accordingly, the
statements are subject to significant risks, uncertainties and contingencies which could cause the Company’s
actual business plans or prospects to differ materially from those expressed in, or implied by, these statements.
Such risks, uncertainties and contingencies include, but are not limited to, general economic conditions.
Additional factors that could cause the companies’ results to differ materially from those described in the
forward-looking statements are described in detail in this annual report on Form 20-F under the heading Item 3:
Key Information - Risk Factors. Unless required by law the Company does not undertake any obligation to
update publicly any forward-looking statements, whether as a result of new information, future events or
otherwise.
43
Significant Accounting Policies
(a) Basis of consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries as follows:
Jurisdiction
Nature of operations
Almaden America Inc.
Republic Resources Ltd.
Ixtaca Precious Metals Inc.
Almaden de Mexico, S.A. de C.V.
Minera Gavilan, S.A. de C.V.
Compania Minera Zapata, S.A. de C.V.
Minera Gorrion, S.A. de C.V.
USA
Canada
Canada
Mexico
Mexico
Mexico
Mexico
exploration company
service company
holding company
exploration company
exploration company
exploration company
exploration company
Investments where the Company has the ability to exercise significant influence are accounted for using
the equity method. Under this method, the Company’s share of the investee’s earnings or losses is
included in operations and its investments therein are adjusted by a like amount. Dividends received from
these investments are credited to the investment. The Company’s 38.8% interest in Gold Mountain Mining
Corporation is accounted for using the equity method. The Company accounts for its interest in jointly
controlled assets by recognizing its share of the jointly controlled assets classified according to the nature
of the assets.
Inter-company balances and transactions, including unrealised income and expenses arising from inter-
company transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains
arising from transactions with equity accounted investees are eliminated against the investment to the
extent of the Company’s interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence of impairment.
(b) Foreign currencies
Transactions in currencies other than the functional currency are recorded at the rates of exchange
prevailing on dates of transactions. At each financial position reporting date, monetary assets and
liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the
statement of financial position. Non-monetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
(c) Financial instruments
Financial assets
The Company classifies its financial assets into one of the following categories, depending on the purpose
for which the asset was acquired. The Company's accounting policy for each category is as follows:
Fair value through profit or loss - This category comprises derivatives, including contingent shares
receivable or assets acquired or incurred principally for the purpose of selling or repurchasing it in the near
term. They are carried in the statement of financial position at fair value with changes in fair value
recognized in net income (loss).
Loans and receivables - These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are carried at cost less any provision for
impairment. Individually significant receivables are considered for impairment when they are past due or
when other objective evidence is received that a specific counterparty will default. The Company
classifies its cash and cash equivalents and accounts receivable as “loans and receivables”.
Held-to-maturity investments - These assets are non-derivative financial assets with fixed or determinable
44
payments and fixed maturities that the Company's management has the positive intention and ability to
hold to maturity. These assets are measured at amortized cost using the effective interest method. If there
is objective evidence that the investment is impaired, determined by reference to external credit ratings
and other relevant indicators, the financial asset is measured at the present value of estimated future cash
flows. Any changes to the carrying amount of the investment, including impairment losses, are recognized
in net income (loss).
Available-for-sale - Non-derivative financial assets not included in the above categories and which include
marketable securities are classified as available-for- sale. They are carried at fair value with changes in fair
value recognized directly in other comprehensive income and equity. Where a decline in the fair value of
an available-for-sale financial asset constitutes objective evidence of significant or prolonged decline in
value, the amount of the loss is removed from equity and recognized in net income (loss).
All financial assets except for those at fair value through profit or loss are subject to review for impairment
at least at each reporting date. Financial assets are impaired when there is any objective evidence that a
financial asset or a group of financial assets is impaired. Different criteria to determine impairment are
applied for each category of financial assets, which are described above.
Financial liabilities
The Company classifies its financial liabilities into one of two categories, depending on the purpose for
which the asset was acquired. The Company's accounting policy for each category is as follows:
Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or incurred
principally for the purpose of selling or repurchasing it in the near term. They are carried in the statement
of financial position at fair value with changes in fair value recognized in net income (loss).
Other financial liabilities: This category includes promissory notes, amounts due to related parties and
trade and other payables, all of which are recognized at amortized cost.
(d) Cash, cash equivalents and short-term investments
Cash equivalents include money market instruments which are readily convertible into cash or have
maturities at the date of purchase of less than ninety days. Short-term investments include money market
instruments with terms to maturity exceeding ninety days.
(e)
Inventory
Inventory is valued at the lower of the average cost of mining and estimated net realizable value.
(f) Property, plant and equipment
Property, plant and equipment are stated at cost and are depreciated annually on a declining-balance basis
at the following rates:
Automotive equipment
Computer hardware and software
Field equipment
Furniture and fixtures
Geological data library
Mill equipment
Drill equipment
Leasehold improvements
30%
30%
20%
20%
20%
30%
20%
20% straight-line
(g) Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company
45
and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received, excluding discounts, rebates and other sales tax or duty. The following specific recognition
criteria must also be met before revenue is recognized:
Interest income
Revenue is recognized as interest accrues (using the effective interest rate, that is, the rate that exactly
discounts estimated future cash receipts through the expected life of the financial instrument to the net
carrying amount of the financial asset).
Other income
Revenue from other income is recognized upon completion of the services for which the measurement of
the consideration can be reasonably assured and the ultimate collection is reasonably assured.
(h) Exploration and evaluation
The Company is in the exploration stage with respect to its investment in mineral properties and
accordingly follows the practice of capitalizing all costs relating to the acquisition of, exploration for and
development of mineral claims to which the Company has rights and crediting all proceeds received for
farm-out arrangements or recovery of costs against the cost of the related claims. Such costs include, but
are not exclusive to, geological, geophysical studies, exploratory drilling and sampling. At such time as
commercial production commences, these costs will be charged to operations on a unit-of-production
method based on proven and probable reserves. The aggregate costs related to abandoned mineral claims
are charged to operations at the time of any abandonment or when it has been determined that there is
evidence of an impairment.
The Company considers the following facts and circumstances in determining if it should test exploration
and evaluation assets for impairment:
the period for which the Company has the right to explore in the specific area has expired during the
a)
period or will expire in the near future, and is not expected to be renewed.
substantive expenditure on further exploration for and evaluation of mineral resources in the specific
b)
area is neither budgeted or planned.
c)
exploration for and evaluation of mineral resources in the 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; and
d)
sufficient data exists to indicate that, although a development in the specific area is likely to proceed,
the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from
successful development or by sale.
An impairment charge relating to a mineral property is subsequently reversed when new exploration
results or actual or potential proceeds on sale or farm-out of the property result in a revised estimate of the
recoverable amount but only to the extent that this does not exceed the original carrying value of the
property that would have resulted if no impairment had been recognized. General exploration costs in
areas of interest in which the Company has not secured rights are expensed as incurred.
The recoverability of amounts shown for exploration and evaluation assets is dependent upon the
discovery of economically recoverable reserves, the ability of the Company to obtain financing to
complete development of the properties, and on future production or proceeds of disposition.
The Company recognizes in income costs recovered on mineral properties when amounts received or
receivable are in excess of the carrying amount.
Upon transfer of “Exploration and evaluation costs” into “Mine Development”, all subsequent expenditure
on the construction, installation or completion of infrastructure facilities is capitalised within “Mine
46
development”. After production starts, all assets included in “Mine development” are transferred to
“Producing Mines”.
All capitalized exploration and evaluation expenditure is monitored for indications of impairment.
Where a potential impairment is indicated, assessments are performed for each area of interest. To the
extent that exploration expenditure is not expected to be recovered, it is charged to the results of
operations. Exploration areas where reserves have been discovered, but require major capital expenditure
before production can begin, are continually evaluated to ensure that commercial quantities of reserves
exist or to ensure that additional exploration work is underway as planned.
(i)
Impairment of property, plant and equipment and intangible assets
Property, plant and equipment and finite life intangible assets are reviewed for impairment if there is any
indication that the carrying amount may not be recoverable. 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 Company estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Any intangible asset with an
indefinite useful life is tested for impairment annually and whenever there is an indication that the asset
may be impaired.
An asset’s recoverable amount is the higher of fair value less costs to sell 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 cash generating unit is estimated to be less than its carrying
amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized immediately
as additional depreciation. 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 depreciation charge for the period.
(j)
Income taxes
Deferred tax is recorded using the liability method, recognized on temporary differences between the
carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding
tax bases used in the computation of taxable profit. Deferred tax assets are recognized for all deductible
temporary differences, unused tax losses and other income tax deductions to the extent that it is probable
that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
the asset to be recovered. Deferred tax assets and liabilities are not recognized if temporary differences
arise from goodwill or from the initial recognition (other than a business combination) of other assets and
liabilities in a transaction that affects neither taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interest in joint ventures, except where the "Group" is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset is realized, based on tax rates that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and
assets reflect the tax consequences that would follow from the manner in which the Company expects to
recover or settle the carrying amount of its assets and liabilities at the end of the reporting period.
47
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Company intends to settle its current tax liabilities and assets on a net basis.
Current and deferred income tax expense or recovery are recognized in net earnings except when they
arise as a result of items recognized in other comprehensive income or directly in equity in the current or
prior periods, in which case the related current and deferred income taxes are also recognized in other
comprehensive income or directly in equity, respectively.
Any premium paid for flow-through shares in excess of market value of those shares without the flow-
through feature is recorded as other liabilities at the time of issue and recognized as a component of tax
recovery at the time the qualifying expenditures are made.
(k) Share-based payments
The Company grants stock options to buy common shares of the Company to directors, officers,
employees and consultants. The board of directors grants such option for periods of up to five years, with
vesting periods determined at the sole discretion of the board and at prices equal to the volume weighted
average price for the five days immediately preceding the date the options were granted.
The fair value of the options is measured at the date the options are granted, using the Black-Scholes
option pricing model, and is recognized over the period that the employees earn the options. The fair
value is recognized as an expense with a corresponding increase in equity settled employee compensation
reserve. The amount recognized as expense is adjusted to reflect the number of share options expected to
vest.
(l) Reclamation and closure cost obligations
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental
disturbance is caused by the exploration, development or ongoing production of a mineral property
interest. Such costs arising for the decommissioning of plant and other site preparation work, discounted
to their net present value, are provided for and capitalized at the start of each project to the carrying value
of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that
reflect the time value of money are used to calculate the net present value. These costs are charged against
profit or loss over the economic life of the related asset, through amortization using either the unit-of-
production or the straight line method. The related liability is adjusted for each period for the unwinding
of the discount rate and for changes to the current market-based discount rate, amount or timing of the
underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage
which is created on an ongoing basis during production are provided for at their net present values and
charged against profits as extraction progresses.
The Company has $104,000 of reclamation deposits held with the Ministry of Mines should any other
reclamation and closure cost obligations arise from its obligations to undertake site reclamation and
remediation in connection with its operating activities in British Columbia and $25,764 of reclamation
deposits held with the State of Nevada should any asset retirement obligation arise from its obligations to
undertake site reclamation and remediation in connection with its operating activities in Nevada.
When the Company enters into an option agreement on its mineral properties, as part of the option
agreement, responsibility for any reclamation and remediation becomes the responsibility of the optionee.
(m) Income (loss) per share
The Company presents the basic and diluted income (loss) per share data for its common shares, calculated
by dividing the loss attributable to common shareholders of the Company by the weighted average number
of common shares outstanding during the period. Diluted income (loss) per share is determined by
adjusting the income (loss) attributable to common shareholders and the weighted average number of
common shares outstanding for the effects of all dilutive potential common shares.
48
(n) Non-current assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered
primarily through sale rather than through continuing use, are classified as held for sale. Immediately
before classification as held for sale, the assets, or components of a disposal group, are re-measured in
accordance with the Company’s accounting policies. Thereafter generally the assets, or disposal group, are
measured at the lower of their carrying amount and fair value less cost to sell.
Impairment losses on initial classification as held for sale and subsequent gains or losses on re-
measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative
impairment loss.
(o) Adoption of new and revised standards and interpretations
The IASB issued a number of new and revised International Accounting Standards, IFRS amendments and
related interpretations which are effective for the Company’s financial year beginning on or after January
1, 2012. For the purpose of preparing and presenting the financial statements for the relevant periods, the
Company has consistently adopted all these new standards for the relevant reporting periods. At the date
of authorization of these financial statements, the IASB and IFRIC has issued the following new and
revised Standards and Interpretations which are not yet effective for the relevant reporting periods:
(i) In December 2010, the IASB issued an amendment to IAS 12 – Income taxes that provide a practical
solution to determining the recovery of investment properties as it relates to the accounting for deferred
income taxes. This amendment is effective for annual periods beginning on or after July 1, 2011, with
earlier adoption permitted. In addition, amendments to IFRS 7 Financial Instruments: Disclosures are
effective for annual periods beginning on or after July 1, 2011 and introduce enhanced disclosure around
transfers of financial assets and associated risks. The Company does not anticipate that these amendments
will have a significant impact on its condensed consolidated financial statements.
(ii) The following Standards are effective for annual periods beginning on or after January 1, 2013. The
Company is assessing the impact of these standards.
IFRS 10 Consolidated Financial Statements will replace existing guidance on consolidation in IAS 27
Consolidated and Separate Financial Statements, and SIC 12 Consolidation – Special Purpose Entities.
IFRS 11 Joint Arrangements will replace IAS 31 Interests in Joint Ventures, and SIC 13 Jointly Controlled
Entities – Non-monetary Contributions by Venturers.
IFRS 12 Disclosure of Interests in Other Entities is the new Standard for disclosure requirements for all
forms of interests in other entities, including subsidiaries, joint arrangements, associates and
unconsolidated structured entities.
IFRS 13 Fair Value Measurement was issued to remedy the inconsistencies in the requirements for
measuring fair value and for disclosing information about fair value measurement in various current
IFRSs.
IAS 27 Separate Financial Statements has been updated to require an entity presenting separate financial
statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments.
IAS 28 Investments in Associates and Joint Ventures has been revised and it is to be applied by all entities
that are investors with joint control of, or significant influence over, an investee.
(iii) The following Standard is effective for annual periods beginning on or after January 1, 2015. The
Company is assessing the impact of this standard.
IFRS 9 Financial Instruments (‘‘IFRS 9’’) was issued to replace IAS 39, Financial Instruments:
49
Recognition and Measurement. IFRS 9 addresses the classification and measurement of financial assets.
IFRS 9 was subsequently reissued in October 2010, incorporating new requirements on accounting for
financial liabilities.
Significant accounting judgments and estimates
The preparation of the consolidated financial statements requires management to make judgements and
estimates 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. Actual outcomes could differ from these judgements
and estimates. The consolidated financial statements include judgements and estimates which, by their nature,
are uncertain. The impacts of such judgements and estimates are pervasive throughout the consolidated
financial statements, and may require accounting adjustments based on future occurrences. Revisions to
accounting estimates are recognized in the period in which the estimate is revised and the revision affects both
current and future periods.
Significant assumptions about the future and other sources of judgements and estimates that management has
made at the statement of financial position date, that could result in a material adjustment to the carrying
amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are
not limited to, the following:
Critical Judgments
o
o
o
The assessment that the Company has significant influence over the investment in Gold Mountain
Mining Corporation (“Gold Mountain”) (See Note 7(ii) to the consolidated financial statements) which
results in the use of the equity accounting method for accounting for this investment. In making their
judgement, management considered the composition of the Board of Directors of its equity investment
in Gold Mountain, the common directors and management between Gold Mountain and the Company
and the intercompany transactions and relationship with Gold Mountain and concluded that significant
influence exists.
In addition the Company determined in 2011 that it no longer has significant influence over its
investment in Tarsis Resources Ltd. (See Note 7(i) to the consolidated financial statements).
The analysis of the functional currency for each entity of the Company. In concluding that the
Canadian dollar is the functional currency of the parent and its subsidiary companies, management
considered the currency that mainly influences the cost of providing goods and services in each
jurisdiction in which the Company operates. As no single currency was clearly dominant, the
Company also considered secondary indicators including the currency in which funds from financing
activities are denominated and the currency in which funds are retained.
Estimates
o
o
o
o
o
o
o
the recoverability of amounts receivable and prepayments which are included in the consolidated
statement of financial position;
the carrying value of the marketable securities and the recoverability of the carrying value which are
included in the consolidated statement of financial position;
the carrying value of investments, and the estimated annual gains or losses recorded on investments
from income and dilution, and the recoverability of the carrying value which are included in the
consolidated statement of financial position;
the estimated useful lives of property, plant and equipment which are included in the consolidated
statement of financial position and the related depreciation included in the consolidated statement of
comprehensive loss;
the estimated value of the exploration and development costs which is recorded in the statement of
financial position;
the inputs used in accounting for share purchase option expense in the consolidated statement of
comprehensive loss;
the provision for income taxes which is included in the consolidation statements of comprehensive loss
and composition of deferred income tax assets and liabilities included in the consolidated statement of
financial position at December 31, 2011;
50
o
o
o
o
o
the inputs used in determining the net present value of the liability for asset retirement obligation
included in the consolidated statement of financial position;
the inputs used in determining the various commitments and contingencies accrued in the consolidated
statement of financial position;
the assessment of indications of impairment of each mineral property and related determination of the
net realizable value and write-down of those properties where applicable;
the estimated fair value of contingent share payments receivable in the event that Gold Mountain
achieves some or all of the specified resource and production levels described in Note 9(a) of the
consolidated financial statements; and
the estimated fair value of contingent share payments receivable in the event that Goldgroup Mining
Inc. achieves some or all of the specified resource and production levels described in Note 9(d) of the
consolidated financial statements.
Item 6. Directors, Senior Management and Employees
Table No. 5 lists the directors and senior management of the Company. The directors have served in their
respective capacities since their election and/or appointment and will serve until the next annual general
meeting or until a successor and senior management of the Company are duly elected, unless the office is
vacated in accordance with the Articles of the Company. All directors are residents and citizens of Canada.
Table No. 5
Directors of the Company
Name
James Duane Poliquin
James E. McInnes(1)
John D. McCleary(2)(3)
Joseph Montgomery(1)(2)(3)
Morgan Poliquin
Gerald G. Carlson(1)(2)(3)
Barry W. Smee
Mark T. Brown
(1) Member of Audit Committee
(2) Member of Nominating and Corporate Governance Committee
(3) Member of Compensation Committee
(4) Date of issue of the Certificate of Amalgamation
Age
71
74
71
84
40
66
66
43
Date First Elected or Appointed
February 1, 2002(4)
February 1, 2002(4)
February 1, 2002(4)
February 1, 2002(4)
February 1, 2002(4)
February 1, 2002(4)
July 6, 2006
May 30, 2011
Duane Poliquin has been a director of Almaden Resources Corporation since September 1980, James E.
McInnes since December 1985, Jack McCleary since June 1991 and Morgan Poliquin since June 1999.
Duane Poliquin and James E. McInnes were directors of Fairfield Minerals Ltd. since June 1996, Joseph
Montgomery since July 2000 and Gerald G. Carlson since July 1998.
Table No.6 lists the Executive Officers of the Company. The Executive Officers serve at the pleasure of the
Board of Directors, subject to the terms of executive compensation agreements hereinafter described. All
Executive Officers are residents and citizens of Canada.
Name
James Duane Poliquin
Morgan Poliquin
Korm Trieu
Dione Bitzer
Table No. 6
Executive Officers of the Company
Position
Chairman of the Board
President and Chief Executive Officer
Chief Financial Officer
Controller
and Secretary
Age
71
40
46
51
(4) Date of issue of the Certificate of Amalgamation
Date First Appointed
February 1, 2002 (4)
March 1, 2007
May 30, 2011
February 1, 2002 (4)
June 9, 2008
Duane Poliquin was appointed an Officer of Almaden Resources Corporation in September 1980 and of
Fairfield Minerals Ltd. in June 1996. Dione Bitzer was appointed an Officer of Fairfield Minerals Ltd. in
51
March 2001.
Duane Poliquin is a registered professional geological engineer with over 50 years experience in mineral
exploration and he is the founding shareholder of Almaden Resources Corporation. He gained international
experience working with major mining companies where he participated in the discovery of several important
mineral deposits. Mr. Poliquin has held executive positions and directorships with several junior resource
companies over his career. He was founder and President of Westley Mines Ltd. when that company
discovered the Santa Fe gold deposit in Nevada. Mr. Poliquin spends virtually all of his time on the affairs of
the Company. He also serves as a director of Gold Mountain Mining Corporation.
James E. McInnes is a retired lawyer and a former geologist with over 40 years experience in mineral
exploration and mining law. He has held executive positions with several junior resource companies over his
career. Mr. McInnes spend 25% of his time on the affairs of the Company. He also serves as a director of
Cosigo Resources Inc., a diamond and gold exploration company listed on the TSX-V.
John D. (Jack) McCleary is a registered professional geologist with 40 years experience in petroleum and
mineral exploration. He has held executive positions with several junior resource companies over his career and
for several years was a Vice President of Dominion Securities Ltd. He served as a director and President of
Canadian Hydro Developers Inc. until December 1995 at which time he retired and as a director and President
of Troymin Resources Ltd. until April 2003 at which time Troymin amalgamated with Santoy Resources Ltd.
where he served as a director for 5 years. Mr. McCleary spends less than 5% of his time on the affairs of the
Company.
Joseph Montgomery, Ph.D., P.Eng. is a professional engineer registered with the Association of Professional
Engineers and Geoscientists of B.C. He has over 40 years experience in the mineral industry primarily as a
consultant in base and precious metals, industrial metals and gemstones. He is President of Montgomery
Consultants Ltd. and is on the Advisory Board of the Canadian Institute of Gemology. He spends less than 10%
of his time on the affairs of the Company. Mr. Montgomery also serves as a director of Infrastructure Materials
Corp, an industrial materials company listed on the US OTCBB and of Cosigo Resources Inc., a diamond and
gold exploration company listed on the TSX-V.
Morgan Poliquin, Ph.D., P.Eng., is a registered professional geological engineer with 16 years experience in
mineral exploration since graduating with a B.A.Sc. degree in geological engineering from the University of
British Columbia (1994). In 1996 he earned a M.Sc. in geology from the University of Auckland, New Zealand
studying geothermal and epithermal deposits in the South Pacific including the Emperor Gold Deposit, Fiji. In
2010, Dr. Poliquin earned his Ph.D. in Geology from the Camborne School of Mines, University of Exeter. He
is President and CEO of the Company and oversees corporate matters as well as directing the Company’s
exploration program. Dr. Poliquin spends virtually all of his time of the affairs of the Company directing its
exploration programs. He also serves as a director of Gold Mountain Mining Corporation.
Gerald G. Carlson, Ph.D., P.Eng, has been involved in mineral exploration and junior exploration company
management for over 40 years. Mr. Carlson has a B.A.Sc. from the University of Toronto, a M.Sc. from
Michigan Technological University and Ph.D. from Dartmouth College. He is a past President of AME BC
(formerly the B.C. and Yukon Chamber of Mines), President of the Society of Economic Geologists Canada
Foundation and a member of the Professional Engineers and Geoscientists of British Columbia, the Professional
Engineers of the Yukon Territory and the Canadian Institute of Mining, Metallurgy & Petroleum. Mr. Carlson
spends less than 5% of his time on the affairs of the Company. He also serves as a director and President of
Windstorm Resources Inc., a gold and copper exploration company listed on the TSX-V, President of Iron
South Mining Inc. and a director of the following companies:
a. Blue Sky Uranium Corp., a uranium exploration company listed on the TSX-V.
b. Tarsis Resources Ltd., a mineral exploration company listed on the TSX-V.
Barry W. Smee is a consulting geochemist based in British Colombia. He obtained a B.Sc. in chemistry and
geology from the University of Alberta, and a Ph.D. in geochemistry from the University of New Brunswick.
He has designed and managed commercial analytical laboratories and worked in academia, government and
industry for over 40 years. He has authored or co-authored over 50 scientific papers on geochemical and quality
control topics. Barry formed Smee and Associates Consulting Ltd., a privately owned geochemical consulting
company in 1990 through which he has actively promoted the use of Quality Control protocols in mineral
52
exploration, comprehensive due diligence procedures, and the intelligent use of modern geochemical methods.
Dr. Smee spends less than 5% of his time on the affairs of the Company. He also serves as a director of
Platinum Group Metals Ltd., a platinum exploration company listed on the TSX and NYSE Amex.
Mark T. Brown is a Chartered Accountant and earned a Bachelor’s Degree in Commerce from the University
of British Columbia in 1990. Mr. Brown received his Chartered Accountant’s designation in 1993 while
working at Price Waterhouse, Chartered Accountants. From 1994 to 1997, he was the controller of two TSE
300 mining companies, one after the other, each of which produced in excess of 100,000 ounces of gold
annually. At the end of 1997, Mr. Brown joined Pacific Opportunity Capital Ltd. which was set up to provide
business financial support, both administratively and for transactions and negotiations, to public and private
emerging companies. Mr. Brown spends approximately 5% of his time on the affairs of the Company. He also
serves as a director and CFO of the following companies:
a. Big Sky Petroleum Corporation, an oil and gas exploration company listed on the TSX-V.
b. Pitchstone Exploration Ltd., a uranium exploration company listed on the TSX-V.
Mr. Brown also serves as a director of the following companies:
a. Avrupa Minerals Ltd., a base metals exploration company listed on the TSX-V.
b. Estrella Gold Corporation, a gold exploration company listed on the TSX-V.
Mr. Brown also serves as CFO of the following companies:
a. Tarsis Resources Ltd., a mineral exploration company listed on the TSX-V.
Korm Trieu is a Chartered Accountant and holds a Bachelor of Science degree from the University of British
Columbia and has spent over 15 years in corporate finance, administration and tax services, primarily in the
natural resource, financial service and real estate sectors. From 2008-2011, he served as Vice President Finance
for Sprott Resource Lending Corp. where he oversaw the Finance and Administration departments of a natural
resource lending company. Mr. Trieu spends all of his business time on the affairs of the Company.
Dione Bitzer is a Certified Management Accountant with over 20 years accounting experience with junior
exploration companies. She has held executive positions with several junior resource companies. Miss Bitzer
spends all of her business time on the affairs of the Company.
There are no arrangements or understandings with any two or more directors or executive officers pursuant to
which any such person was selected as a director or executive officer. Duane Poliquin, Chairman of the Board
and Director, is the father of Morgan Poliquin, President, Chief Executive Officer and Director.
During Fiscal 2008, the Compensation Committee conducted an Executive and Directors Compensation Review
which resulted in the recommendations that remuneration of both the Chief Executive Officer (now Chairman)
and Chief Operating Officer (now Chief Executive Officer) be increased to $165,000 each annually and all
Directors be compensated $5,000 yearly and the Chair of the Audit Committee to be compensated $3,000
yearly, effective January 1, 2009. During 2010, the Compensation Committee conducted a further Executive
and Directors Compensation Review which resulted in the recommendations that remuneration of both the
Chairman and Chief Executive Officer be increased to $206,250 each annually effective January 1, 2011. There
was no increase to Directors or Chair of the Audit Committee compensation. Previously the Company had no
formal plan for compensating its directors for their service in their capacity as directors. The Compensation
Committee also recommended that, with respect to Director stock options, up to 250,000 options be granted to
each non-management Director. Directors are entitled to reimbursement for reasonable travel and other out-of-
pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of
Directors may award special remuneration to any director undertaking any special services on behalf of the
Company other than services ordinarily required of a director. Other than indicated below no director received
any compensation for his services as a director, including committee participation and/or special assignments.
Total compensation paid by the Company directly and/or indirectly to all directors and executive officers during
Fiscal 2011 was $872,372.
53
Table No. 7
Summary Compensation Table
Long-Term Compensation
Annual Compensation
Name and
Principle Position
Fiscal
Year
Salary
Bonus
Other Annual
Compensation
Awards
Restricted
Stock
Awards
Duane Poliquin
Chairman of the Board &
Director
James E. McInnes
Director
Jack McCleary
Director
Joseph Montgomery
Director
Morgan Poliquin
President, Director &
Chief Executive Officer
Gerald G. Carlson
Director
Barry W. Smee
Director
Mark T. Brown
Director, former Chief Financial
Officer
Donald M. Lorimer
Former Director
Marc Blythe
Former Vice-President-Mining
Korm Trieu
Chief Financial Officer
Dione Bitzer
Controller & Secretary
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
2011
2010
2009
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$206,250
$165,000
$165,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$88,084
N/A
N/A
$73,950
$72,555
$70,920
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$94,800
Nil
$8,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$15,000
N/A
N/A
$6,500
$6,000
$4,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
N/A
N/A
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
N/A
N/A
Nil
Nil
Nil
Options/
SARS
Granted
(#)
560,000
Nil
100,000
100,000
Nil
150,000
Nil
225,000
100,000
Nil
650,000
550,000
150,000
50,000
75,000
Nil
125,000
100,000
Nil
25,000
75,000
Nil
Nil
100,000
50,000
Nil
75,000
Nil
150,000
N/A
N/A
125,000
35,000
Nil
LTIP
Payouts
All Other
Compensation
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
N/A
N/A
Nil
Nil
Nil
$298,525(1)
$208,100(1)
$189,200(1)
$5,000(2)
$5,000(2)
$5,000(2)
$5,000(2)
$5,000(2)
$5,000(2)
$5,000(2)
$5,000(2)
$5,000(2)
Nil
Nil
Nil
$5,000(2)
$5,000(2)
$5,000(2)
$10,000(2)(3)
$5,000(2)
$8,780(2)(3)
$26,325 (6)
$60,000(6)
$60,000(6)
$8,000(2)(5)
$8,000(2)(5)
$8,000(2)(5)
$24,938(5)
$55,875(5)
$52,875(5)
Nil
N/A
N/A
Nil
Nil
Nil
(1) For geological services provided to the Company and general and administrative services provided by Hawk Mountain Resources Ltd., a
company owned by Duane Poliquin and his wife.
(2) Director’s fees.
(3) For consulting services provided by Smee & Associates Consulting Ltd., a company owned by Barry Smee and his wife.
(4) Audit Chairman fee.
(5) For technical services provided to the Company.
(6) For financial and administrative services provided by Pacific Opportunity Capital Ltd., a company controlled by Mark T. Brown and his
family.
Remuneration for Termination
The Company has the following termination clauses within its executive compensation contracts.
The Executive Compensation Contract dated April 12, 2007 between the Company and Duane Poliquin
(“Executive”) and Hawk Mountain Resources Ltd. (“Management Company”) will terminate or may be
terminated for any one of the following reasons:
a) voluntary, upon at least three months prior written notice of termination by the Management Company to
the Company; or
b)
by the Company for Cause; or
54
c)
Agreement; or
d)
c) without Cause, as hereinafter defined in Section 9, upon at least three months prior written notice of
termination by the Company to the Management Company; or
d)
e)
upon the death or disability of the Executive, as hereinafter defined in Section 10; or
upon retirement by the Executive.
Termination by the Management Company Voluntarily or by the Company for Cause
If the Management Company shall voluntarily terminate the providing the services of the Executive under this
Agreement or if the employment of the Management Company is terminated by the Company for Cause, then
all compensation and benefits as heretofore provided shall terminate immediately upon the effective date of
termination and no special severance compensation will be paid.
Cause to terminate the Management Company’s employment shall mean:
a) the repeated and demonstrated failure by the Executive or the Management Company to perform the
Executive or the Management Company’s material duties under this Agreement, after demand for
substantial performance is delivered by the Company that specifically identifies the manner in which the
Company believes the Executive or the Management Company has not substantially performed the
Executive or the Management Company’s duties under this Agreement; or
b)
the willful engagement by the Executive or the Management Company in misconduct which is materially
injurious to the Company, monetarily or otherwise;
any other willful violation by the Executive or the Management Company of the provisions of this
the Executive or the Management Company is convicted of a criminal offence involving fraud or
dishonesty.
Termination by the Company Without Cause
If the Company shall terminate the Management Company’s employment under this Agreement for any reason
except for Cause (as defined in paragraph 8) then, upon the effective date of termination, the Company shall pay
the Management Company in one lump sum an amount equal to two (2) times the Management Company’s
then current Base Fee. All the benefits provided to the Executive shall be continued as if the Executive was still
an Executive of the Company for a period of twelve (12) months from the date of termination or until equal or
better benefits are provided by a new employer, whichever shall first occur.
Termination by Death or Disability
If the Executive dies or becomes disabled before the Management Company’s employment are otherwise
terminated, the Company shall pay the Management Company, an amount of compensation equal to six (6)
months of the Management Company’s then current Base Fee and all the Executive benefits theretofore
provided to the Executive shall be continued, for a period of six (6) months from the date of Death or Disability
as if the Executive were still the Executive of the Company. If such termination is due to the Executive’s
Death, payment shall be made in one lump sum to the Management Company. If such termination is due to the
Executive’s Disability, payment shall be made in one lump sum to the Management Company within sixty (60)
days of the Executive’s Disability. The compensation provided under this paragraph shall be in addition to that
payable from any insurance coverage providing compensation upon Death or Disability.
Termination Following Change in Control
(a) For purposes of this Agreement, a Change in Control shall be deemed to have occurred if:
(i)
any person or any person and such person’s associates or affiliates, as such terms are defined in
the Securities Act (British Columbia) (the “Act”), makes a tender, take-over or exchange offer,
circulates a proxy to shareholders or takes other steps to effect a takeover of the control of the
Company, whether by way of a reverse take-over, formal bid, causing the election or appointment
of a majority of directors of the Company or otherwise in any manner whatsoever; or
55
(ii)
(iii)
during any period of eighteen (18) consecutive months (not including any period prior to the
Date), individuals who at the beginning of such period constituted on the Board of Effective
Directors and any new directors, whose appointment by the Board of Directors or nomination for
election by the Company’s shareholders was approved by a vote of at least three quarters (3/4) of
the Board of Directors then still in office who either were directors at the beginning of the period
or whose appointment or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board of Directors; or
the acquisition by any person or by any person and such person’s affiliates or associates, as such
terms are defined in the Act, and whether directly or indirectly, of common shares of the
Company at the time held by such person and such person’s affiliates and associates, totals for the
first time, twenty percent (20%) or more of the outstanding common shares of the Company.
(b) Notwithstanding any other provisions in this Agreement regarding termination, if any of the events
described above constituting a Change in Control shall have occurred during the Term or an Extended
Term, upon the termination of the Management Company’s services (unless such termination is because
of the Executive’s Death or Disability, by the Company for Cause or by the Executive other than for
“Good Reason”, as defined below) the Management Company shall be entitled to and will receive no
later than the fifteenth (15th) day following the date of termination a lump sum severance payment equal
to three (3) times the Management Company’s then current Base Fee. In addition, all benefits then
applicable to the Executive shall be continued for a period of eighteen (18) months after the date of
termination.
(c) For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s express written
consent, any of the following:
(i)
(ii)
(iii)
(iv)
(v)
the assignment of the Executive of any duties inconsistent with the status or authority of the
Executive’s office, or the Executive’s removal from such position, or a substantial alteration in
the nature or status of the Executive’s authorities or responsibilities from those in effect
immediately prior to the Change in Control;
a reduction by the Company of the Management Company’s Base Fee as in effect on the date
hereof or as the same may have been increased from time to time, or a failure by the Company to
increase the Management Company’s Base Fee as provided for herein or at a rate commensurate
with that of other key executives of the Company;
the relocation of the office of the Company where the Executive is employed at the time of
the Change in Control (the “CIC Location”) to a location more than fifty (50) miles away from
the CIC Location, or the Company’s requiring the Executive to be based more than fifty (50)
miles away from the CIC Location (except for requiring travel on the Company’s business to an
extent substantially consistent with the Executive’s business travel obligations prior to the Change
in Control);
the failure by the Company to continue to provide the Executive with benefits at least as
favourable as those enjoyed by the Executive prior to the Change in Control, the taking of any
action by the Company which would directly or indirectly materially reduce any of such benefits
or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the
Change in Control, or the failure by the Company to provide the Executive with the number of
entitled vacation days to which the Executive has earned on the basis of years of service with the
Company; or
the failure of the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement or, if the business of the Company for which the Executive’s
services are principally performed is sold within two (2) years after a Change in Control, the
purchaser of such business shall fail to agree to provide the Executive with the same or a
comparable position, duties, salary and benefits as provided to the Executive by the Company
immediately prior to the Change in Control.
Following a Change in Control during the Term, or an Extended Term, the Executive shall be entitled to
terminate the Executive’s employment for Good Reason.
(d)
In the event the Executive is entitled to a severance payment under this Agreement, then in addition to
56
such severance payment, the Management Company shall be entitled to employment search assistance to
secure other comparable employment for the Executive for a period not to exceed one (1) year or until
such comparable employment is found, whichever is the sooner, with fees for such assistance to be paid
by the Company.
The Management Company’s right to receive the aforementioned payment and benefits is expressly contingent
upon the signing of a waiver and release satisfactory to the Company which release the Company and its
Affiliates from all claims and liabilities arising out of the Executive’s employment and termination and
including confidentiality provisions, which waiver and release is satisfactory to the Company with the respect to
form, substance and timeliness.
The Executive Employment Contract dated April 12, 2007 between the Company and Morgan Poliquin will
terminate or may be terminated for any one of the following reasons:
a) voluntary, upon at least three (3) months prior written notice of termination by the Executive to the
Company; or
by the Company for Cause; or
b)
c) without Cause, as hereinafter defined in Section 9, upon at least three (3) months prior written notice of
termination by the Company to the Executive; or
d)
e)
upon the death or disability of the Executive, as hereinafter defined in Section 10; or
upon a change of control.
Termination by the Executive Voluntarily or by the Company for Cause
If the Executive shall voluntarily terminate employment under this Agreement or if the employment of the
Executive is terminated by the Company for Cause, then all compensation and benefits as heretofore provided
shall terminate immediately upon the effective date of termination and no special severance compensation will
be paid.
Cause to terminate the Executive’s employment shall mean:
(a) the repeated and demonstrated failure by the Executive to perform the Executive’s material duties under
this Agreement, after demand for substantial performance is delivered by the Company that specifically
identifies the manner in which the Company believes the Executive has not substantially performed the
Executive’s duties under this Agreement; or
(b) the willful engagement by the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise;
(c) any other willful violation by the Executive of the provisions of this Agreement ;or
(d)
the Executive is convicted of a criminal offence involving fraud or dishonesty.
Termination by the Company Without Cause
If the Company shall terminate the Executive’s employment under this Agreement for any reason except for
Cause (as defined in paragraph 8) then, upon the effective date of termination, the Company shall pay the
Executive in one lump sum an amount equal to two (2) times the Executive’s then current Base Salary. All the
benefits provided to the Executive shall be continued as if the Executive was still an Executive of the Company
for a period of twelve (12) months from the date of termination or until equal or better benefits are provided by
a new employer, whichever shall first occur.
Termination by Death or Disability
If the Executive dies or becomes disabled before the Executive’s employment is otherwise terminated, the
Company shall pay the Executive or the Executive’s estate, an amount of compensation equal to six (6) months
of the Executive’s then current Base Salary and all the Executive benefits theretofore provided to the Executive
shall be continued, for a period of six (6) months from the date of Death or Disability as if the Executive were
still the Executive of the Company. If such termination is due to the Executive’s Death, payment shall be made
in one lump sum to the Executive’s Designate. If no Executive’s Designate survives the Executive, the entire
57
amount shall be paid to the Executive’s estate within sixty (60) days of the Executive’s death. If such
termination is due to the Executive’s Disability, payment shall be made in one lump sum to the Executive
within sixty (60) days of the Executive’s Disability. The compensation provided under this paragraph shall be
in addition to that payable from any insurance coverage providing compensation upon Death or Disability.
Termination Following Change in Control
(a) For purposes of this Agreement, a Change in Control shall be deemed to have occurred if:
(i)
any person or any person and such person’s associates or affiliates, as such terms are defined in
the Securities Act (British Columbia) (the “Act”), makes a tender, take-over or exchange offer,
circulates a proxy to shareholders or takes other steps to effect a takeover of the control of the
Company, whether by way of a reverse take-over, formal bid, causing the election or appointment
of a majority of directors of the Company or otherwise in any manner whatsoever; or
(ii) during any period of eighteen (18) consecutive months (not including any period prior to the
Effective Date), individuals who at the beginning of such period constituted on the Board of
Directors and any new directors, whose appointment by the Board of Directors or nomination for
election by the Company’s shareholders was approved by a vote of at least three quarters (3/4) of
the Board of Directors then still in office who either were directors at the beginning of the period
or whose appointment or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board of Directors; or
(iii) the acquisition by any person or by any person and such person’s affiliates or associates, as such
terms are defined in the Act, and whether directly or indirectly, of common shares of the
Company at the time held by such person and such person’s affiliates and associates, totals for the
first time, twenty percent (20%) of more of the outstanding common shares of the Company.
(b) Notwithstanding any other provisions in this Agreement regarding termination, if any of the events
described above constituting a Change in Control shall have occurred during the Term or an Extended
Term, upon the termination of the Executive’s employment (unless such termination is because of the
Executive’s Death or Disability, by the Company for Cause or by the Executive other than for “Good
Reason”, as defined below) the Executive shall be entitled to and will receive no later than the fifteenth
(15th) day following the date of termination a lump sum severance payment equal to three (3) times the
Executive’s then current Base Salary. In addition, all benefits then applicable to the Executive shall be
continued for a period of eighteen (18) months after the date of termination.
(c) For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s express written
consent, any of the following:
(i)
assignment of the Executive of any duties inconsistent with the status or authority of the
Executive’s office, or the Executive’s removal from such position, or a substantial alteration in
the nature or status of the Executive’s authorities or responsibilities from those in effect
immediately
prior to the Change in Control;
(ii) a reduction by the Company in the Executive’s Base Salary as in effect on the date hereof or as
the same may have been increased from time to time, or a failure by the Company to increase the
Executive’s Base Salary as provided for herein or at a rate commensurate with that of other key
executives of the Company;
(iii) the relocation of the office of the Company where the Executive is employed at the time of the
Change in Control (the “CIC Location”) to a location more than fifty (50) miles away from the
CIC Location, or the Company’s requiring the Executive to be based more than fifty (50) miles
away from the CIC Location (except for requiring travel on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations prior to the Change in
Control);
(iv) the failure by the Company to continue to provide the Executive with benefits at least as
favourable as those enjoyed by the Executive prior to the Change in Control, the taking of any
action by the Company which would directly or indirectly materially reduce any of such benefits
or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the
58
(v)
Change in Control, or the failure by the Company to provide the Executive with the number of
entitled vacation days to which the Executive has earned on the basis of years of service with the
Company; or
the failure of the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform this Agreement or, if the business of the Company for which the Executive’s
services are principally performed is sold within two (2) years after a Change in Control, the
purchaser of such business shall fail to agree to provide the Executive with the same or a
comparable position, duties, salary and benefits as provided to the Executive by the Company
immediately prior to the Change in Control.
Following a Change in Control during the Term, or an Extended Term, the Executive shall be entitled to
terminate the Executive’s employment for Good Reason.
(d)
In the event the Executive is entitled to a severance payment under this Agreement, then in addition to
such severance payment, the Executive shall be entitled to employment search assistance to secure other
comparable employment for a period not to exceed one (1) year or until such comparable employment is
found, whichever is the sooner, with fees for such assistance to be paid by the Company.
The Executive’s right to receive the aforementioned payment and benefits is expressly contingent upon the
signing of a waiver and release satisfactory to the Company which release the Company and its Affiliates from
all claims and liabilities arising out of the Executive’s employment and termination and including
confidentiality provisions, which waiver and release is satisfactory to the Company with the respect to form,
substance and timeliness.
Stock options
Incentive stock options to purchase securities from the Company are granted to directors, executive officers,
employees and consultants of the Company on terms and conditions acceptable to the regulatory authorities in
Canada, notably the Toronto Stock Exchange, and in accordance with the requirements of the applicable Canadian
securities commissions’ requirements and regulation.
Incentive stock options previously granted by the Company and its predecessor, which, by the terms of the
amalgamation, become options granted by the Company, are not options granted under the Company’s formal stock
option plan.
The Company has a formal written stock option plan (“Plan”) which permits the issuance of up to 10% of the
Company’s issued share capital from time to time during the term of the Plan and may be granted from time to
time provided that incentive stock options in favour of any consultant or person providing investor relations
services cannot exceed 2% in any 12 month period. No incentive stock option granted under the Plan is
transferable by the optionee other than by will or the laws of descent and distribution, and each incentive stock
option is exercisable during the lifetime of the optionee only by such optionee.
The exercise price of all incentive stock options granted under the Plan are determined in accordance with Toronto
Stock Exchange guidelines and cannot be less than the Market Price on the date of the grant. Market Price is the
volume weighted average trading price of the shares for the five trading days immediately preceding the date of the
grant. The maximum term of each incentive stock option is five years. Options granted to consultants or persons
providing Investor Relations Activities (as defined in the Plan) shall vest in stages with no more than ¼ of such
options being exercisable in any three month period. All options granted during Fiscal 2011 vested on the date
granted. Under the requirements of the Toronto Stock Exchange, all unallocated options under the Plan must be
approved by the Board of Directors, including a majority of the unrelated directors and by the shareholders every
three years after the institution of the Plan. Insiders and affiliates of insiders entitled to receive a benefit under the
Plan are not entitled to vote for such approval.
The names and titles of the directors and executive officers of the Company to whom outstanding stock options
have been granted and the number of common shares subject to such options as of March 27, 2012 are set forth in
Table No. 8, as well as the number of options granted to directors, executive officers, employees and contractors as
a group.
59
Name
Duane Poliquin,
Chairman of the Board & Director
Table No. 8
Stock Options Outstanding
Number of Options
Outstanding
220,000
240,000
100,000
500,000
50,000
Exercise Price
CDN$
$1.14
1.00
2.22
3.29
2.93
Expiry Date
01/04/2015
06/21/2015
08/27/2015
06/08/2016
08/15/2016
James E. McInnes,
Director
Jack McCleary
Director
Morgan Poliquin
President, Director &
Chief Executive Officer
Gerald G. Carlson
Director
Joseph Montgomery
Director
Barry Smee
Director
Mark T. Brown
Director
Korm Trieu
Chief Financial Officer
Dione Bitzer
Controller & Secretary
50,000
50,000
50,000
50,000
50,000
100,000
50,000
50,000
50,000
500,000
150,000
350,000
100,000
100,000
650,000
50,000
50,000
25,000
50,000
50,000
225,000
100,000
125,000
100,000
25,000
75,000
25,000
150,000
0.68
1.14
2.73
3.29
2.93
0.92
2.73
3.29
2.93
2.32
0.81
1.14
0.92
2.67
3.29
0.68
1.14
2.73
3.29
2.93
3.29
2.22
3.29
2.68
0.68
1.14
3.29
3.29
12/29/2013
01/04/2015
11/22/2015
06/08/2016
08/15/2016
07/16/2015
11/22/2015
06/08/2016
08/15/2016
09/10/2012
11/25/2014
01/04/2015
07/16/2015
09/20/2015
06/08/2016
12/29/2013
01/04/2015
11/22/2015
06/08/2016
08/15/2016
06/08/2016
08/27/2015
06/08/2016
11/15/2012
12/29/2013
01/04/2015
06/08/2016
06/08/2016
100,000
3.29
06/08/2016
Total Directors/Officers (10 persons)
Total Employees/Consultants (8 persons)
Total Directors/Officers/Employees/Consultants
4,635,000
795,000
5,430,000
60
No funds were set aside or accrued by the Company during Fiscal 2011 to provide pension, retirement or
similar benefits for directors or executive officers.
Board Practices
This Statement of Board Practices has been approved by the Board.
General
The Toronto Stock Exchange (“TSX”) and the applicable Canadian securities law and regulation require that the
Company comply with National Instrument 58-101 (Disclosure of Corporate Governance Practices) or any
replacement of that instrument. The Company is also, under applicable Canadian securities law and regulation,
required to comply with National Policy 58-201 (Corporate Governance Guidelines). National Instrument 58-101
and National Policy 58-201 (for convenience referred to in the aggregate as the “guidelines”) deal with matters such
as the constitution and independence of corporate boards, their functions, the effectiveness and education of the
board members and other matters. The Company’s statement as to compliance with the guidelines and its approach
to corporate governance is set forth below.
Corporate Governance
The Company’s Board and management are committed to the highest standards of corporate governance. The
Company’s corporate governance practices are in accordance with the guidelines. The Company is also
cognizant of and compliant with various corporate governance requirements in Canada and is in compliance
with applicable U.S. requirements.
The Company’s prime objective in directing and managing its business and affairs is to enhance shareholder
value. The Company views effective corporate governance as a means of improving corporate performance and
accordingly of benefit to the Company and all shareholders.
The Company also believes that director and management honesty and integrity are essential factors in ensuring
good and effective corporate governance. To that end the Company’s directors have adopted various codes and
policies for the Company, its directors, officers, employees and consultants. The codes and policies adopted to
date are as follows: Audit Committee Charter, Nominating and Corporate Governance Committee-
Responsibilities and Duties, Compensation Committee-Responsibilities and Duties, Code of Business Ethics,
Code of Business Conduct and Ethics for Directors, Communications Policy, Securities Trading Policy,
Whistleblowers Policy a Privacy Policy (the “Codes”). The Codes may be viewed on the Company’s website
at www.almadenminerals.com. The Codes may also be viewed as filed on EDGAR and SEDAR as an exhibit
to the 2005 20-F Annual Report filed with the Commission on March 30, 2006. Any amendments to the Codes
or waivers of the provision of any Codes will be posted on the Company’s website within 5 business days of
such amendment or waiver.
Executive Officer Position Descriptions
Chairman of the Board (‘Chairman’)
Responsibilities:
‐ Leads the Board and also takes a hands-on role in the Company’s day-to-day management
‐ Helps the CEO to oversee all the operational aspects involved in running the Company, including
project selection and planning.
‐ Takes overall responsibility for the Company’s direction and growth, seeking to generate significant
financial gains for the shareholders.
‐ Oversees relationships with the communities and stakeholders in the areas where the Company
operates, with the intent of ensuring the Company’s activities are of benefit to all.
61
Chief Executive Officer (‘CEO’)
Reports to:
The Board of Directors of the Company.
Function:
Provides overall leadership and vision in developing, in concert with the Board, the strategic direction of the
Company and in developing the tactics and business plans necessary to increase shareholder value.
Manages the overall business to ensure strategic and business plans are effectively implemented, the results are
monitored and reported to the Board and financial and operational objectives are attained.
Authorities, Duties and Responsibilities:
(a) General Functions:
1. Provides effective leadership to the management and the employees of the Company and
establishes an effective means of control and co-ordination for all operations and activities.
2. Fosters a corporate culture that promotes ethical practices, integrity and a positive work climate
enabling the Company to attract, retain and motivate a diverse group of quality employees.
3. Keeps the Board fully informed on the Company`s operational and financial affairs.
4. Develops and maintains a sound, effective organization structure and plans for capable
management succession, progressive employee training and development programs and reports to
the Board on these matters.
5. Ensures that effective communications and appropriate relationships are maintained with the
shareholders of the Company and other stakeholders.
6. Develops capital expenditure plans for approval by the Board.
7. Turns any strategic plan as may be developed by the Board into a detailed operating plan.
(b) Strategy and Risks
1. Develops and recommends to the Board strategic plans to ensure the Company`s profitable
growth and overall success. This includes updating and making changes as required and
involving the Board in the early stages of developing strategy.
Identifies in conjunction with the other senior officers and appropriate directors the key risks with
respect to the Company and its businesses and reviews such risks and strategies for managing
them with the Board.
2.
3. Ensures that the assets of the Company are adequately safeguarded and maintained.
(c) Exploration and Development
Responsible for managing the day to day activities and operating management of the Company and as
such shall be responsible for the design, operation and improvement of the systems that create the
Company`s exploration and development opportunities. The CEO accordingly shall have the primary
responsibility:
- To direct and oversee all operational activities of the Company including exploration,
development, mining and other such functions.
- To initiate solutions to the key business challenges of the Company.
- To participate in sourcing and negotiating financial arrangements for the further expansion
and development of the Company including joint ventures, mergers, acquisitions, debt and
equity financing.
- Represent and speak for the Company with shareholders, potential investors and other
members of the industry.
62
(d) Financial Reporting
Oversees the quality and timeliness of financial reporting. Reports to the Board in conjunction with the
CFO on the fairness and adequacy of the financial reporting of the Company to its shareholders.
Chief Financial Officer (‘CFO’)
Reports to:
The CEO of the Company.
Responsibilities:
-
Developing, analyzing and reviewing financial data.
-
Reporting on financial performance.
- Monitoring expenditures and costs.
- Assisting the CEO and COO in preparing budgets and in the communicating to the analyst and
shareholder, community and securities regulators, the financial performance of the Company.
Fulfilling the reporting requirements of the securities regulators, stock exchanges and shareholders.
-
- Monitoring filing of tax returns and payment of taxes.
The CFO shall assist the CEO is establishing effective means of control and co-ordination of the operations and
activities of the Company and identifying, in conjunction with the CEO and COO, the key risks with respect to
the Company and its business and reviewing with the CEO and COO the strategies for managing such risks and
ensuring that the assets of the Company are adequately safeguarded and maintained.
The CFO, in conjunction with the CEO shall design or supervise the design of and implement, maintain and
periodically evaluate the effectiveness of internal controls to provide reasonable assurances that the financial
statements of the Company are fairly presented in accordance with generally accepted financial standards and
principles and that disclosure controls are in place to provide reasonable assurance that material information
relating to the financial performance of the Audit Committee.
Controller
Reports to:
The Chairman, the Chief Operating Officer and the Chief Financial Officer
Responsibilities:
The Controller is responsible for:
assisting in developing, analyzing and reviewing financial data;
assisting in the reporting on financial performance;
assisting in the monitoring expenditures and costs;
assisting the CEO, COO and CFO in preparing budgets
-
-
-
-
- assisting in fulfilling the reporting requirements of the securities regulators, stock exchanges and
shareholders.
The Controller shall assist the CEO and CFO in establishing effective means of control and co-ordination of the
operations and activities of the Company and identifying, in conjunction with the CEO, COO and CFO the key
risks with respect to the Company and its business and reviewing with the CEO, COO and CFO the strategies
for managing such risks and ensuring that the assets of the Company are adequately safeguarded and maintained
The Controller in conjunction with the CEO and CFO shall assist in design or supervise the design of and
implement, maintain and periodically evaluate the effectiveness of internal controls to provide reasonable
assurances that the financial statements of the Company are fairly presented in accordance with generally
accepted accounting standards and principles and that disclosure controls are in place to provide reasonable
assurance that material information relating to the financial performance of the Company is made known to the
CEO, COO and CFO and that any deficiencies are made known to the Audit Committee.
63
Mandate of the Board
The mandate of the Board is to supervise the management of the business and affairs of the Company and to act
with a view to the best interests of the Company. In fulfilling its mandate, the Board, among other matters, is
responsible for:
(a) adopting a strategic planning process and approving, on at least an annual basis, a strategic plan, taking into
(b)
account the risk and opportunities of the Company’s business;
identifying the principal risks of the Company’s business and implementing appropriate systems to manage
such risks;
(c) satisfying itself, to the extent reasonably feasible, of the integrity of the CEO and other executive officers (if
any) and ensuring that all such officers create a culture of integrity throughout the Company and developing
programs of succession planning (including appointing, training and monitoring senior management);
(d) creating the Company’s internal control and management information systems and creating appropriate
policies for matters including communications, securities trading, privacy, audit, whistleblowing and codes of
ethical conduct;
(e) managing its affairs including selecting its Chair, nomination of candidates for election to the Board,
constituting committees of the Board and determining director compensation; and
(f) engaging any necessary internal and/or external advisors.
In the Fiscal year ended December 31, 2011 there were ten meetings of the Board. The frequency of meetings as
well as the nature of agenda items change, depending upon the state of the Company’s affairs and in light of
opportunities or risks which the Company is subject to. Table No. 9 indicates the number of meetings attended by
each director.
Table No. 9
Meetings Attended
Director
Duane Poliquin
James E. McInnes
Jack McCleary
Joseph Montgomery
Morgan Poliquin
Gerald G. Carlson
Barry W. Smee
Mark T. Brown
Number
9
9
9
9
9
5
8
6
The CEO is the chair of meetings of the Board of directors and is not an independent director. Meetings of the
independent members of the Board may be held periodically as convened by the independent Board members. In
Fiscal 2011, six meetings of the independent Board members were convened.
In carrying out its mandate, the Board and each committee of the Board, relies primarily on management and its
employees to provide it with regular detailed reports on the operations of the Company and its financial position.
Certain members of management are also on the Board and provide the Board with direct access to information
concerning their areas of responsibility. Management personnel are also regularly asked to attend Board meetings
to provide information, answer questions and receive the direction of the Board. The reports and information
provided to the Board enable them to monitor and manage the risks associated with the Company’s operations and
its compliance with legal and safety requirements, environmental issues and the financial position and liquidity of
the Company.
The Board discharges its responsibilities directly and through committees. At regularly scheduled meetings,
members of the Board and management discuss the broad range of matters and issues relevant to the
Company’s business interests and the Board is responsible for the approval of the Company’s Strategic Plan. In
addition, the Board receives reports from management on the Company’s operational and financial
performance. Between scheduled meetings, matters requiring Board authorization is effected by means of
signed Consent Resolutions.
64
Board Assessment
The Nomination and Corporate Governance Committee reports to the Board periodically on the evaluation of
the Board’s performance and that of the individual directors. The Performance of the Chief Executive Officer is
evaluated by the Compensation Committee.
Composition of the Board
The guidelines recommend that a board of directors be constituted with a majority of individuals who qualify as
independent directors.
In deciding whether a particular director is independent, the Board examined the factual circumstances of each
director and considered them in the context of many factors, including the definitions in the guidelines and the
requirements and policies of NYSE Amex Company Guide Rules. The proposed Board is composed of eight
members. The Board believes that 6 directors would be considered independent-John McCleary, Joseph
Montgomery, Gerald Carlson, Barry Smee, James E. McInnes and Mark T. Brown. The basis for determination of
independence is under Canadian securities instrument NI 52-110 and American Stock Exchange Company Guide
Rules. Accordingly, the Board is constituted with a majority of individuals who qualify as independent directors.
The Company does not have a controlling or significant shareholder. The Board believes that the membership of
the Board fairly reflects the investment in the Company by minority shareholders.
The Board, on the advice of the Nomination and Corporate Governance Committee, considers its size and
composition to be appropriate and effective for carrying out its responsibilities. However, the Board may consider
adding an additional director if a suitable candidate can be found who may bring additional experience or
knowledge to the Board.
Board Committees
The Board currently has three committees: the Audit Committee, the Nomination and Corporate Governance
Committee and the Compensation Committee. Each member of each committee is an independent director. Each
committee is responsible for determining its own rules of procedure and may, from time to time, develop written
descriptions for the responsibilities of the chair of such committee. No written descriptions have yet been
developed.
Mandates of each of the committees and the Codes undergo review periodically (in some cases mandated as
annually) to bring them into line with changing Canadian and U.S. securities and corporate governance
requirements and to reflect amendments that may be considered appropriate to make them more effective. Any
revisions to the mandates and Codes will available on the Company’s website at www.almadenminerals.com.
Audit Committee
The members of the Audit Committee are Messrs. James E. McInnes, Joseph Montgomery and Gerald Carlson. The
Audit Committee has met four (4) times during Fiscal 2011. The full text of the initial Audit Committee Charter
was filed as an exhibit to the 2003 20-F Annual Report with the Commission on May 11, 2004. After review, the
charter was altered to more properly define the functions of the Audit Committee. The revised charter was filed as
an exhibit to the 2005 20-F Annual Report with the Commission on March 30, 2006.
Nominating and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee are John McCleary, Joseph Montgomery
and Gerald Carlson. The Nominating and Corporate Governance Committee has met nil (0) times during Fiscal
2011. The full text of the initial Corporate Governance Charter was filed as an exhibit to the 2003 20-F Annual
Report with the Commission on May 11, 2004. After review, the Responsibilities and Duties of the Nominating and
Corporate Governance Committee were altered to more properly define the functions of the Nominating and
Corporate Committee. The revised Responsibilities and Duties are filed as an exhibit to the 2005 20-F Annual
Report with the Commission on March 30, 2006.
Compensation Committee
The members of the Compensation Committee are John McCleary, Joseph Montgomery and Gerald Carlson. The
Compensation Committee has met seven (7) times during Fiscal 2011 with John McCleary, Joseph Montgomery
65
and Gerald Carlson attending. The Responsibilities and Duties of the Compensation Committee were filed as an
exhibit to the 2005 20-F Annual Report with the Commission on March 30, 2006.
Decisions Requiring Board Approval
In addition to those matters which must by law be approved by the Board, management is also required to seek
Board approval for any major acquisition, disposition or expenditure. Management is also required to consult with
the Board before entering into any venture which is outside of the Company’s existing line of business.
Changes in officers are to be approved by the Board including changes in officers of the Company’s principal
operating subsidiaries.
In certain circumstances it may be appropriate for an individual director to engage an outside advisor at the
expense of the Company. The engagement of the outside advisor would be subject to the approval of the
Nomination and Corporate Governance Committee.
Communications and Investor Relations
The Company has adopted a Communications Policy, the purpose and aim of which is as follows:
(a) Controls the communications between the Company and its external stakeholders;
(b) Complies with its continuous and timely disclosure obligations;
(c) Avoids selective disclosure of Company information;
(d) Protects and prevents the improper use or disclosure of material information and confidential information;
(e) Educates the Company’s personnel on the appropriate use and disclosure of material information and
confidential information;
(f) Fosters and facilitates compliance with applicable laws; and
(g) Creates formal Disclosure Officers to help achieve the above objectives.
In accordance with the Communications Policy of the Company, designated Disclosure Officers receive and
respond to shareholder enquiries. Shareholder enquiries and concerns are dealt with promptly by Disclosure
Officers of the Company.
Ethical Business Conduct
The Company has adopted a Code of Business Conduct and Ethics for Directors (“Code”), a Code of Business
Ethics (“COBE”), a Securities Trading Policy and a Privacy Policy. Employees and consultants are required as a
term of employment to undertake to abide by the COBE. Directors are by law bound to observe the Code adopted
by the Board.
All Directors, Officers and Employees (“Individuals”) sign an Annual Certification (“Certification”) stating they
have read the Code of Business Ethics policy (“Policy”) of the Company and have complied with such Policy in all
respects. The Certification further acknowledges that all members of the Individual’s family, all other persons who
live with the Individual and all holding companies and other related entities of the Individual and all such persons or
companies acting on behalf of or at the request of any of the foregoing also complied with such Policy. The
Certification also states that any violation of such Policy may constitute grounds for immediate suspension or
dismissal.
Each director is expected and required by statute to act honestly and in good faith with a view to the best
interests of the Company and to exercise the care, diligence and skill that a reasonably prudent individual would
exercise in comparable circumstances and in accordance with the Business Corporations Act (British Columbia)
and the Company’s Articles.
Employees
As of December 31, 2011, the Company operated with seven persons in Canada, of which four are
administrative personnel and three are exploration personnel, some of which are retained on a contractual basis.
There are no full time employees in the United States or Mexico. None of the Company’s employees are
covered by a collective bargaining agreement.
66
Share Ownership
Table No. 10 lists, as of March 27, 2012, directors and executive officers who beneficially own the Company's
voting securities and the amount of the Company’s voting securities owned by the directors and executive
officers as a group.
Table No. 10
Shareholdings of Directors and Executive Officers
Title of
Class
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
Common
(1)
Name of Beneficial Owner
Duane Poliquin
James E. McInnes
Jack McCleary
Morgan Poliquin
Gerald G. Carlson
Joseph Montgomery
Barry Smee
Mark T. Brown
Korm Trieu
Dione Bitzer
Total Directors/Officers
Amounts and Nature of
Beneficial Ownership
3,184,937(1)
864,580(2)
656,550(3)
2,758,197(4)
258,000(5)
225,000(6)
275,000(7)
235,300 (8)
153,000(9)
152,300(10)
8,762,864
Percent of
Class*
5.29%
1.46%
1.11%
4.52%
0.43%
0.30%
0.46%
0.40%
0.26%
0.26%
14.49%
Of these shares 1,110,000 represent currently exercisable stock options and 69,300 of these shares are held indirectly by
Hawk Mountain Resources Ltd., a company owned by Mr. Poliquin and his wife.
Of these shares 250,000 represent currently exercisable stock options. 239,470 of these shares are held indirectly through
Laredo Investments Ltd., private company controlled by Mr. McInnes.
Of these shares 250,000 represent currently exercisable stock options. 38,500 of these shares are held indirectly by
Connemara Resource Ventures Ltd., a company owned by Mr. McCleary.
Of these shares 1,850,000 represent currently exercisable stock options.
(2)
(3)
(4)
(7)
(5) Of these shares 225,000 represent currently exercisable stock options.
Of these shares 225,000 represent currently exercisable stock options.
(6)
Of these shares 225,000 represent currently exercisable stock options.
Of these shares 225,000 represent currently exercisable stock options.
Of these shares 150,000 represent currently exercisable stock options.
Of these shares 125,000 represent currently exercisable stock options.
(10)
(9)
(8)
*Based on 59,122,321 shares outstanding as of March 27, 2012 and stock options held by each beneficial owner.
Item 7. Major Shareholders and Related Party Transactions
The Company is a publicly owned Canadian corporation, the shares of which are owned by residents of the
United States, residents of Canada and other foreign residents. To the extent known by the directors and
executive officers of the Company, the Company is not directly or indirectly owned or controlled by another
corporation. Table No. 11 lists, as of March 27, 2012, the only persons or companies beneficially owning more
than 5% of the Company’s voting securities.
Table No. 11
Shareholdings of Beneficial Owners
Title of
Class
Name of Beneficial Owner
Common Duane Poliquin
Amounts and Nature of
Beneficial Ownership
3,184,937(1)
Percent of
Class*
5.29%
Common RBC Global Asset Management Inc.
2,955,500
5.00%
(1) Of these shares 1,110,000 represent currently exercisable stock options. 69,300 of these shares are held indirectly by
Hawk Mountain Resources Ltd., a company owned by Mr. Poliquin and his wife.
*Based on 59,122,321 shares outstanding as of March 27, 2012 and stock options held by each beneficial owner.
67
Related party transactions
Certain geological, technical, professional and general and administrative services were provided to the
Company by directors and officers and/or companies controlled by them. These directors and officers and the
companies controlled by them are as follows:
(a) Duane Poliquin operates through the private company Hawk Mountain Resources Ltd.
(b) Barry Smee operates through his private company Smee & Associates Consulting Ltd.
(c) Mark T. Brown operates through his private company Pacific Opportunity Capital Ltd.
(d) Gerald Carlson operates through his private company KGE Management.
The costs of such services for Fiscal 2011 ended December 31, 2011 were $329,850, Fiscal 2010 ended
December 31, 2010 were $268,100 and Fiscal 2009 ended December 31, 2009 were $252,980.
Certain officers and directors of the Company are also officers or directors of companies with which the
Company has agreements and may not be considered at arm's-length to such agreements. However, any
agreement or any to be negotiated between the Company and such other companies has been or will be
approved by directors of the Company, in accordance with the common law and the provisions of the B.C.
Business Corporations Act (British Columbia).
(a) Compensation of key management personnel
Key management includes members of the Board, the President and Chief Executive Officer, the Chief Financial
Officer and the Vice-President-Mining. The aggregate compensation paid or payable to key management for
services is as follows:
Salaries and short-term employee
benefits
Share based compensation
Directors’ fees
February 29,
2012
$ 102,500(i)
December 31,
2011
$ 722,157(ii)
December 31,
2010
$ 470,875(iv)
December 31,
2009
$ 450,875(vi)
-
39,000
$ 141,500
3,883,250(iii)
33,000
$ 4,638,407
1,862,500(v)
33,000
$ 2,366,375
67,500(vii)
33,000
$ 551,375
(i) Hawk Mountain Resources Ltd. (“Hawk Mountain”), a private company controlled by the Chairman of the
Company was paid $37,500 for geological services provided to the Company. An additional $3,000 was
paid to Hawk Mountain for marketing and administrative services including website management and
updates, market materials coordination, and general administration.
(ii) Hawk Mountain was paid $268,050 for geological services provided to the Company. An additional
$30,475 was paid to Hawk Mountain for marketing and administrative services.
(iii) Comprised of options granted pursuant to the Company’s stock option plan. The value of 1,825,000
option-based awards is based on the fair value of the awards ($1.89) calculated using the Black-Scholes
model at the June 8, 2011 grant date. The value of 200,000 option-based awards is based on the fair value
of the awards ($2.17) calculated using the Black-Scholes model at the August 15, 2011 grant date. All
options vested upon grant.
(iv) Hawk Mountain was paid $148,750 for geological services and an additional $59,350 for marketing and
administrative services. The spouse and daughter of the Chairman were also directly paid $10,000 each
for marketing and administrative services.
(v) Comprised of options granted pursuant to the Company’s stock option plan. The value of 75,000 option-
based awards is based on the fair value of the awards ($0.94) calculated using the Black-Scholes model at
the April 7, 2010 grant date. The value of 240,000 option-based awards is based on the fair value of the
awards ($1.00) calculated using the Black-Scholes model at the June 21, 2010 grant date. The value of
200,000 option-based awards is based on the fair value of the awards ($0.92) calculated using the Black-
68
Scholes model at the July 16, 2010 grant date. The value of 50,000 option-based awards is based on the
fair value of the awards ($2.22) calculated using the Black-Scholes model at the August 22, 2010 grant
date. The value of 200,000 option-based awards is based on the fair value of the awards ($2.22) calculated
using the Black-Scholes model at the August 27, 2010 grant date. The value of 100,000 option-based
awards is based on the fair value of the awards ($2.67) calculated using the Black-Scholes model at the
September 20, 2010 grant date. The value of 200,000 option-based awards is based on the fair value of the
awards ($2.73) calculated using the Black-Scholes model at the November 22, 2010 grant date. All
options vested upon grant.
(vi) Hawk Mountain was paid $165,000 for geological services and an additional $16,200 for marketing and
administrative services. The spouse and daughter of the Chairman were also directly paid $4,000 each for
marketing and administrative services.
(vii) Comprised of options granted pursuant to the Company’s stock option plan. The value of 150,000 option-
based awards is based on the fair value of the awards ($0.45) calculated using the Black-Scholes model at
the November 25, 2009 grant date. All options vested upon grant.
(b) Other related party transactions
i) Gold Mountain Mining Corporation (“Gold Mountain”)
Gold Mountain has two Directors, Duane Poliquin and Morgan Poliquin, in common with Almaden, and
Almaden owns 38.8% of Gold Mountain’s common shares. During Fiscal 2011, the Company charged Gold
Mountain $271,602 (2010 - $Nil; 2009 - $Nil) for exploration expenditures relating to the Elk project and
surveys undertaken on behalf of Gold Mountain. These amounts were valued at the exchange amount agreed to
by the parties. At December 31, 2011, Gold Mountain owed the Company $271,602 (2010 - $Nil; 2009 - $Nil).
ii) Windstorm Resources Ltd. (“Windstorm”)
Windstorm’s President and Director, Gerald Carlson, is also a Director of Almaden. Almaden also owns
common shares in Windstorm. In Fiscal 2010, the Company optioned the Caldera property to Windstorm such
that Windstorm may earn a 60% interest in the property by issuing one million common shares to Almaden and
completing $5 million in exploration work, both over a six year period, with $150,000 to be spent during the
first year of the agreement.
iii) ATW Resources Ltd. (“ATW”)
Almaden owns a 50% interest in this company which holds title in trust for a mineral property. The Company
has two directors, Duane Poliquin and James McInnes, in common with ATW.
iv) Other
(a) During Fiscal 2011, the Company paid a company controlled by a Director of the Company $5,000
(2010 - $Ni; 2009 - $3,780l) for consulting services provided to the Company.
(b) During Fiscal 2011, the Company paid a company controlled by the former CFO and current Director of
the Company, $1,325 (2010 - $Nil; 2009 - $Nil) for accounting services provided to the Company.
Other than as disclosed above, there have been no transactions or proposed transactions, which have materially
affected or will materially affect the Registrant in which any director, executive officer, or beneficial holder of
more that 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or
affiliates has had or will have any direct or material indirect interest. As stated above, management believes the
transactions referenced above were on terms at least as favorable to the Company as the Company could have
obtained from unaffiliated parties.
69
Item 8. Financial Information
The financial statements as required under Item 8 are attached hereto and found immediately following the text
of this Annual Report.
Legal Proceedings
The original owner of the El Encuentro, Mexico prospect has sued the Company’s wholly owned subsidiary,
Almaden de Mexico, S.A. de C.V., to have the property returned on grounds that he is not receiving a royalty.
He was paid US$100,000 by Eldorado Gold Corporation which was payment in full for the property and retains
a net smelter return royalty. The agreement with the original owner does not provide for a royalty if there is no
mine in operation. The Company considers the lawsuit trivial and is defending this action.
In Fiscal 2001. the Company was assessed additional mineral tax of $197,233 plus interest of $84,638 by the
British Columbia Ministry of Energy and Mines (the “Ministry”). The assessment related to the deductibility of
certain expenditures between February 1, 1995 and January 31, 1997. In order to reduce the exposure to
interest charges, the Company paid and expensed $281,871 which was refunded with interest early in Fiscal
2010 upon management successfully defending its position.
Other than the above, the Company knows of no other material, active or pending legal proceedings against
them; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.
Dividends
The Company has not declared any dividends since inception and does not anticipate that it will do so in the
foreseeable future. The present policy of the Company is to retain future earnings for use in its operations and the
expansion of its business.
Significant Changes
There have been no significant changes of financial condition since the most recent audited financial statements
included within this Annual Report on Form 20-F.
Item 9. Offer and Listing of Securities
The Company's common shares trade on The Toronto Stock Exchange ("TSX") in Toronto, Ontario, Canada having
the symbol "AMM” and on the NYSE Amex (formerly the American Stock Exchange) in New York, New York,
U.S.A. having the symbol “AAU” and CUSIP #020283107.
The Company’s common shares commenced trading on February 11, 2002 on TSX and December 19, 2005 on the
American Stock Exchange, now the NYSE Amex.
Table No. 12 lists the high and low prices for the shares of Almaden Minerals Ltd. common stock for the years
since listing on the American Stock Exchange, now the NYSE Amex. Table No. 13 lists the high and low
prices for shares of Almaden Minerals Ltd. common stock on TSX.
Table No. 12
Almaden Minerals Ltd.
Stock Trading Activity
NYSE Amex
(expressed in US$)
Year Ended
12/31/2011
12/31/2010
12/31/2009
12/31/2008
12/31/2007
High
$5.35
5.03
1.34
2.91
3.28
Low
$2.00
0.86
0.55
0.39
2.00
70
Table No. 13
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Year Ended
12/31/2011
12/31/2010
12/31/2009
12/31/2008
12/31/2007
High
$5.17
5.15
1.37
2.90
3.10
Low
$2.08
0.88
0.64
0.44
2.17
Table No. 14 lists the quarterly high and low prices for shares of Almaden Minerals Ltd. common stock on
NYSE Amex for the two most recent full financial years. Table No. 15 lists the quarterly high and low prices
for shares of Almaden Minerals Ltd. common stock on TSX for the two most recent full financial years.
Table No. 14
Almaden Minerals Ltd.
Stock Trading Activity
NYSE Amex
(expressed in US$)
Table No. 15
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
High
$3.04
4.27
5.35
5.24
5.03
2.87
1.29
1.29
High
$3.08
3.73
5.07
5.17
5.15
2.92
1.32
1.34
Quarter Ended
12/31/2011
09/30/2011
06/30/2011
03/30/2011
12/31/2010
09/30/2010
06/30/2010
03/30/2010
Quarter Ended
12/31/2011
09/30/2011
06/30/2011
03/31/2011
12/31/2010
09/30/2010
06/30/2010
03/31/2010
Low
2.00
2.56
3.31
3.33
2.55
0.86
0.90
0.87
Low
2.08
2.23
2.82
3.25
2.60
0.88
0.93
0.91
Table No.16 lists the high and low prices for shares of Almaden Minerals Ltd. common stock on NYSE Amex
for the most recent six months. Table No. 17 lists the high and low prices for shares of Almaden Minerals Ltd.
common stock on TSX for the most recent six months.
71
Table No. 16
Almaden Minerals Ltd.
Stock Trading Activity
NYSE Amex
(expressed in US$)
Table No. 17
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
High
$2.70
2.90
2.76
3.04
2.95
3.67
High
$2.66
2.97
2.80
3.08
2.95
3.73
Month Ended
02/28/2012
01/31/2012
12/31/2011
11/30/2011
10/31/2011
09/30/2011
Month Ended
02/28/2012
01/31/2012
12/31/2011
11/30/2011
10/31/2011
09/30/2011
Low
$2.41
2.33
2.00
2.40
2.11
2.55
Low
$2.42
2.37
2.08
2.52
2.23
2.67
The closing price of the Company’s common stock was $3.25 (US$) on the NYSE Amex and $3.22 (C$) on TSX
on February 28, 2012.
In recent years, securities markets in Canada and the United States have experienced a high level of price and
volume volatility, and the market price of many resource companies, particularly those considered speculative
exploration companies, have experienced wide fluctuations in price which have not necessarily been related to
operating performance or underlying asset values on prospects of such companies. Exploration for gold and other
minerals is considered high risk and highly speculative in the resource industry and the trading market for precious
and base metal exploration companies is characteristically volatile, with wide fluctuations of price and volume only
in part related to progress of exploration. There can be no assurance that continual fluctuations in the Company’s
share price and volume will not occur.
The Company's common stock is issued in registered form and the following information is from the Company’s
registrar and transfer agent, Computershare Investor Services Inc. located in Vancouver, British Columbia and
Toronto, Ontario, Canada.
On February 29, 2012, the shareholders' list for the Company’s common shares showed 100 registered shareholders
and 59,122,331 shares outstanding. 81 of these registered shareholders are U.S. residents, owning 15,209,425 shares
representing 26% of the issued and outstanding shares of common stock. 16 of these registered shareholders are
Canadian residents, owning 43,906,006 shares representing 74% of the issued and outstanding shares of common
stock. 3 of these registered shareholders are of other countries, owning 6,900 shares representing 0% of the issued
and outstanding shares of common stock.
Table No. 18 lists changes, if any, in issued shares to March 27, 2012:
72
Table No. 18
Shares Issued to March 21, 2012
Balance, December 31, 2011
Shares issued
Balance, March 27, 2012
Item 10. Additional Information
Number
59,122,321
-
59,122,321
Flow-Through Shares
The Company’s common shares are not normally flow-through shares but the Company has issued flow-
through shares pursuant to private placements of the Company’s common shares. Flow-through shares differ
from other common shares in one aspect only, all other rights of the shareholder remain unchanged. Companies
must specifically identify the expenditures associated with the funds raised through the sale of flow-through
shares. Companies raising capital through flow-through shares must expend the funds on qualifying natural
resources/exploration development in Canada. The tax benefits (depreciation, amortization, etc.) connected with
the expenditures flow through to the shareholder rather than corporation. These tax benefits are available only
to shareholders residing in Canada. Shareholders residing in the United States and other non-Canadian
shareholders, receive no tax benefits through the purchase of flow-through shares.
Memorandum and Articles
At the Annual and Special General meeting of the Company held on May 18, 2005, shareholders passed
appropriate resolutions to complete the transition procedures in accordance with the Business Corporations Act
(British Columbia), (the “BCBCA”), to increase the number of common shares which the Company is
authorized to issue to an unlimited number of common shares and to cancel the Company’s Articles and adopt
new Articles to take advantage of provisions of the BCBCA. The BCBCA was adopted in British Columbia on
March 29, 2004 replacing the Company Act (the “Former Act”). The BCBCA requires the provisions formerly
required in the Memorandum to be in the Articles. The BCBCA eliminates the requirement for a Memorandum.
The revised Articles were filed as an exhibit to the 2005 20-F Annual Report with the Commission on March 30,
2006.
The Articles replace the Memorandum and Articles as filed with the Commission on May 17, 2002.
Articles
The Company was formed through the amalgamation of Fairfield Minerals Ltd. and Almaden Resources
Corporation effective December 31, 2001 under the Company Act of British Columbia (the “Company Act”).
On March 29, 2004, British Columbia adopted the Business Corporations Act (British Columbia) (the
“BCBCA”) to replace the Company Act. Companies registered under the Company Act are required to
transition to the BCBCA. At the Annual and Special General meeting of the Company held on May 18, 2005,
shareholders passed appropriate resolutions to complete the transition procedures to cancel the Company’s
Articles and adopt new Articles, which includes an increase of the number of common shares which the
Company is authorized to issue to an unlimited number of common shares. The Company’s new Articles
became effective in June 2005 (the “Articles”).
The Articles contain no restrictions on the business the Company may carry on.
Under the Articles, if a director has a disclosable interest in a contract or transaction, such director is liable to
account to the Company for any profits that accrue to the director as a result of the contract or transaction unless
disclosure is made thereof and the contract or transaction is approved in accordance with the provisions of the
BCBCA and a director is not entitled to vote on any director’s resolution to approve that contract or transaction
unless all of the directors have a disclosable interest in that contract or transaction, in which case all of those
directors may vote on such resolution.
A director may hold any office or place of profit with the Company in conjunction with the office of director,
and no director shall be disqualified by his office from contracting with the Company. A director or his firm
73
may act in a professional capacity for the Company and he or his firm shall be entitled to remuneration for
professional services. A director may become a director or other officer or employee of, or otherwise interested
in, any corporation or firm in which the Company may be interested as a shareholder or otherwise. The director
shall not be accountable to the Company for any remuneration or other benefits received by him from such
other corporation or firm unless the Company in general meeting directs otherwise.
Under the Articles the directors must manage or supervise the management of the business and affairs of the
Company and have the authority to exercise all such powers which are not required to be exercised by the
shareholders, or as governed by the BCBCA. Under the Articles the directors may, by resolution, create and
appoint one or more committees consisting of such member or members of their body as they think fit and may
delegate to any such committee such powers of the Board as the Board may designate or prescribe.
The Articles provide that the quorum necessary for the transaction of the business of the directors may be fixed
by the directors and if not so fixed shall be a majority of the directors. The continuing directors may,
notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number
fixed pursuant to the Articles as the necessary quorum of directors, act only for the purpose of increasing the
number of directors to that number, or of summoning a general meeting of the Company, but for no other
purpose.
The Articles provide that the directors may, on behalf of the Company:
Borrow money in a manner and amount, on any security, from any source and upon any terms
and conditions;
Issue bonds, debentures, and other debt obligations either outright or as security for any
liability or obligation of the Company or any other person;
Guarantee the repayment of money by any other person or the performance of any obligation
of any other person; and
Mortgage, charge, or give other security, on the whole or any part of the property or assets of
the Company, both present and future.
There are no age limit requirements pertaining to the retirement or non-retirement of directors.
A director need not be a shareholder of the Company.
The Articles provide for the mandatory indemnification of Directors, Officers, former officers and directors,
alternate directors, as well as their respective heirs and personal or other legal representatives, or any other
person, to the greatest extent permitted by the BCBCA. The indemnification includes the mandatory payment of
expenses. The directors may cause the Company to purchase and maintain insurance for the benefit of eligible
parties.
The rights, preferences and restrictions attaching to each class of the Company’s shares are as follows:
Common Shares
The authorized share structure consists of an unlimited number of common shares without par value. All the
shares of common stock of the Company are of the same class and, once issued, rank equally as to dividends,
voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held
of record on all matters to be acted upon by the shareholders. Holders of common stock are entitled to receive
such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds
legally available therefore.
Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro
rata the assets of Company, if any, remaining after payments of all debts and liabilities. No shares have been issued
subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or
purchase for cancellation, surrender, or sinking or purchase funds.
The Directors may by resolution make any changes in the authorized share structure as may be permitted under
74
Section 54 of the BCBCA, and may by resolution of the Directors make or authorize the making of any alterations
to the Articles and the notice of articles as may be required by such changes.
The Company may by ordinary resolution, create or vary special rights and restrictions as provided in Section 58 of
the BCBCA. No alteration will be valid as to any part of the issued shares of any class unless the holders of all the
issued shares of that class consent to the alteration in writing or consent by special separate resolution.
An annual general meeting shall be held once every calendar year at such time (not being more than 15 months after
holding the last preceding annual meeting) and place as may be determined by the Directors. The Directors may, as
they see fit, to convene an extraordinary general meeting. An extraordinary general meeting, if requisitioned in
accordance with the BCBCA, shall be convened by the Directors or, if not convened by the Directors, may be
convened by the requisitionists as provided in the BCBCA.
There are no limitations upon the rights to own securities.
There are no provisions that would have the effect of delaying, deferring, or preventing a change in control of the
Company.
There is no special ownership threshold above which an ownership position must be disclosed. However, any
ownership level above 10% must be disclosed by news release and notices filed in accordance with Canadian
Securities Laws and by notices to the Toronto Stock Exchange.
A copy of the Company’s new articles is filed was filed as an exhibit to the 2005 Form 20-F Annual Report with the
Commission on March 30, 2006.
Material Contracts
The following is a summary of each material contract, other than contracts entered into in the ordinary course of
business, to which we or any member of the group is a party, for the two years preceding the date of this
document.
1. Purchase Offer dated April 22, 2010 between the Company, Skeena Resources Limited (“Skeena”), Virginia
Energy Resources Inc. (“Virginia Energy”) and Minera Cascable SA de CV (“Cascable”) whereby Skeena
purchased the Company’s, Virginia Energy’s and Cascable’s 100% interest in the Tropico prospect for a total of
8,000,000 shares of Skeena and 4,000 share purchase warrants. The full text of the Purchase Offer is filed with
the Commission as Exhibit 4.1 to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended
December 31, 2010 on October 31, 2011.
2. Option Agreement dated May 21, 2010 between the Company and Sunburst Explorations Inc. (“Sunburst”)
whereby Sunburst has the right to earn a 60% interest in the Merit prospect by spending $3,000,000 and issuing
700,000 shares of Sunburst to the Company on or before fifteen (15) days from the date upon which the
common shares of Sunburst are listed for trading on the TSX Venture Exchange. The full text of the Option
Agreement was furnished to the Commission under cover of Form 6-K on June 10, 2010.
3. Option Agreement dated September 3, 2010 between the Company and Windstorm Resources Ltd.
(“Windstorm”) whereby Windstorm has the right to earn a 60% interest in the Caldera prospect by spending
US$5,000,000 and issuing 1,000,000 shares of Windstorm to the Company by September 16, 2016. The full
text of the Option Agreement was furnished to the Commission under cover of Form 6-K on September 8, 2010.
4. Assets Purchase Agreement dated February 11, 2011 between the Company and Beanstalk Capital Inc.
(“Beanstalk”) whereby Beanstalk has agreed to purchase 100% of all assets belonging to or usually and
ordinarily used in connection with the Elk Gold Project for thirty-seven (37) million shares of Beanstalk. The
full text of the Assets Purchase Agreement was furnished to the Commission under cover of Form 6-K on
March 11, 2011.
5. Shareholder Rights Plan Agreement (the “Plan”) dated April 13, 2011 between the Company and
Computershare Investor Services Inc. as Rights Agent whereby the Plan will provide the Board of Directors
(the “Board”) of the Company and the shareholders more time to fully consider any unsolicited takeover bids
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for the Company without any undue pressure, it will allow the Board to pursue other alternatives to maximize
shareholder value, and it will allow additional time for competing bids to emerge. The full text of the Plan was
furnished to the Commission under cover of Form 6-K on April 15, 2011.
6. Amendment to Option Agreement dated May 20, 2011 between the Company and Sunburst Explorations
Inc. (“Sunburst”) extending the date whereby the common shares of Sunburst are to be listed for trading on the
TSX Venture Exchange to July 31, 2011. The full text of the Option Agreement was furnished to the
Commission under cover of Form 6-K on May 31, 2011.
7. Option Agreement dated June 17, 2011 between the Company and G4G Resources Ltd. (“G4G”) whereby
G4G has the right to earn a 60% interest in the Yago prospect by paying $50,000 to the Company, spending
US$6,000,000 and issuing 3,000,000 shares of G4G to the Company within five years. The full text of the
Option Agreement is filed with the Commission as Exhibit 4.2 to the Company’s Form 20-F/A-2, Amendment
No.2, for the year ended December 31, 2010 on October 31, 2011.
8. Amendment No. 2 to Option Agreement dated July 12, 2011 between the Company and Sunburst
Explorations Inc. (“Sunburst”) extending the date whereby the common shares of Sunburst are to be listed for
trading on the TSX Venture Exchange to September 30, 2011. The full text of the Option Agreement was
furnished to the Commission under cover of Form 6-K on September 22, 2011.
9. Amendment No. 3 to Option Agreement dated September 19, 2011 between the Company and Sunburst
Explorations Inc. (“Sunburst”) extending the date whereby the common shares of Sunburst are to be listed for
trading on the TSX Venture Exchange to December 31, 2011. The full text of the Option Agreement was
furnished to the Commission under cover of Form 6-K on September 22, 2011.
10. Transfer Agreement dated September 23, 2011 between the Company, Candymin S.A. de C.V.
(“Candymin”) and Goldgroup Mining Inc. (“Goldgroup”) whereby the Company has agreed to transfer all its
interest in the Caballo Blanco Property to Goldgroup and Candymin has agreed to transfer, release and quit
claim the El Cobre Interest. The full text of the Transfer Agreement is filed with the Commission as Exhibit 4.3
to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended December 31, 2010 on October 31,
2011.
11. Retained Interest Agreement dated September 23, 2011 between the Company, 0919921 B.C. Ltd.
(“0919921”) and Goldgroup Mining Inc. (“Goldgroup”) whereby Almaden is causing its subsidiary to enter into
a transfer agreement where under all property rights are transferred to Goldgroup’s subsidiary. The full text of
the Retained Interest Agreement is filed with the Commission as Exhibit 4.4 to the Company’s Form 20-F/A-2,
Amendment No.2, for the year ended December 31, 2010 on October 31, 2011.
12. Amending Agreement dated September 26, 2011 between the Company, 0919921 B.C. Ltd. and Goldgroup
Mining Inc. whereby the definition of Closing Date in the Retained Interest Agreement is replaced. The full
text of the Amending Agreement is filed with the Commission as Exhibit 4.5 to the Company’s Form 20-F/A-2,
Amendment No.2, for the year ended December 31, 2010 on October 31, 2011.
13. Option Agreement dated January 23, 2012 between the Company and Fjordland Exploration Inc.
(“Fjordland”) whereby Fjordland has the right to earn a 100% interest in the Dill prospect by paying $50,000 to
the Company and issuing 2,000,000 shares of Fdjordland upon completion of a NI 43-101 Resource Estimate by
Fjordland. The full text of the Option Agreement was furnished to the Commission under cover of Form 6-K
on February 14, 2012.
Exchange controls
Except as discussed above, the Company is not aware of any Canadian federal or provincial laws, decrees or
regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the
remittance of interest, dividends or other payments to non-Canadian holders of the common shares. There are
no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian
federal or provincial law or by the charter or other constituent documents of the Company.
The Investment Canada Act (the "IC Act") governs acquisitions of Canadian business by a non-Canadian person
or entity. The IC Act requires a non-Canadian (as defined in the IC Act) making an investment to acquire control
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of a Canadian business, the gross assets of which exceed certain defined threshold levels, to file an application
for review with the Investment Review Division of Industry Canada. The IC Act provides, among other things,
for a review of an investment in the event of acquisition of "control" in certain Canadian businesses in the
following circumstances:
1. If the investor is a non-Canadian and is a national of a country belonging to the North American Free Trade
Agreement ("NAFTA") and/or the World Trade Organization ("WTO") ("NAFTA or WTO National"), any
direct acquisition having an asset value exceeding $179,000,000 is reviewable. This amount is subject to an
annual adjustment on the basis of a prescribed formula in the IC Act to reflect inflation and real growth within
Canada. This threshold level does not apply in certain sections of Canadian industry, such as uranium, financial
services (except insurance), transportation services and cultural services (i.e. the publication, distribution or sale
of books, magazines, periodicals (other than printing or typesetting businesses), music in print or machine
readable form, radio, television, cable and satellite services; the publication, distribution, sale or exhibition of
film or video recordings on audio or video music recordings), to which lower thresholds as prescribed in the IC
Act are applicable.
2. If the investor is a non-Canadian and is not a NAFTA or WTO National, any direct acquisition having an
asset value exceeding $5,000,000 and any indirect acquisition having an asset value exceeding $50,000,000 is
reviewable.
3. If the investor is a non-Canadian and is NAFTA or WTO National, an indirect acquisition of control is
reviewable if the value of the assets of the business located in Canada represents more than 50% of the asset
value of the transaction or the business is involved in uranium, financial services, transportation services or
cultural services (as set forth above).
Finally, certain transactions prescribed in the IC Act are exempted from review altogether.
In the context of the Company, in essence, three methods of acquiring control of a Canadian business are
regulated by the IC Act: (i) the acquisition of all or substantially all of the assets used in carrying on business in
Canada; (ii) the acquisition, directly or indirectly, of voting shares of a Canadian corporation carrying on
business in Canada; or (iii) the acquisition of voting shares of an entity which controls, directly or indirectly,
another entity carrying on business in Canada.
An acquisition of a majority of the voting shares of a Canadian entity, including a corporation, is deemed to be
an acquisition of control under the IC Act. However, under the IC Act, there is a rebuttable presumption that
control is acquired if one-third of the voting shares of a Canadian corporation or an equivalent undivided
interest in the voting shares of such corporation are held by a non-Canadian person or entity. An acquisition of
less than one-third of the voting shares of a Canadian corporation is deemed not to be an acquisition of control.
An acquisition of less than a majority, but one-third or more, of the voting shares of a Canadian corporation is
presumed to be an acquisition of control unless it can be established that, on the acquisition, the Canadian
corporation is not, in fact, controlled by the acquirer through the ownership of voting shares. For partnerships,
trusts, joint ventures or other unincorporated Canadian entities, an acquisition of less than a majority of the
voting interests is deemed not to be an acquisition of control.
In addition, if a Canadian corporation is controlled by a non-Canadian, the acquisition of control of any other
Canadian corporation by such corporation may be subject to the prior approval of the Investment Review
Division, unless it can be established that the Canadian corporation is not in fact controlled by the acquirer
through the ownership of voting shares.
Where an investment is reviewable under the IC Act, the investment may not be implemented unless it is likely
to be of net benefit to Canada. If an applicant is unable to satisfy the Minister responsible for Industry Canada
that the investment is likely to be of net benefit to Canada, the applicant may not proceed with the investment.
Alternatively, an acquirer may be required to divest control of the Canadian business that is the subject of the
investment.
In addition to the foregoing, the IC Act provides for formal notification under the IC Act of all other acquisitions
of control by Canadian businesses by non-Canadian investors. The notification process consists of filing a
notification within 30 days following the implementation of an investment, which notification is for
information, as opposed to review, purposes.
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Taxation
The following summary of the material Canadian federal income tax consequences generally applicable in
respect of the common stock reflects the Company’s opinion. The tax consequences to any particular holder of
common stock will vary according to the status of that holder as an individual, trust, corporation or member of a
partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident
and, generally, according to that holder’s particular circumstances. This summary is applicable only to holders
who are resident in the United States, have never been resident in Canada, deal at arm’s length with the
Company, hold their common stock as capital property and who will not use or hold the common stock in
carrying on business in Canada. Special rules, which are not discussed in this summary, may apply to a United
States holder that is an issuer that carries on business in Canada and elsewhere.
This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder
(collectively, the "Tax Act" or “ITA”)and the Canada-United States Tax Convention (the “Tax Convention”) as
at the date of the Registration Statement and the current administrative practices of Canada Customs and
Revenue Agency. This summary does not take into account Provincial income tax consequences.
Each holder should consult his own tax advisor with respect to the income tax consequences applicable to him
in his own particular circumstances.
Certain Canadian Federal Income Tax Consequences
The discussion under this heading summarizes the principal Canadian federal income tax consequences of
acquiring, holding and disposing of shares of common stock of the Corporation for a shareholder of the
Corporation who is not a resident of Canada but is a resident of the United States and who will acquire and hold
shares of common stock of the Corporation as capital property for the purposes of the Income Tax Act (Canada)
(the “Canadian Tax Act”). This summary does not apply to a shareholder who carries on business in Canada
through a “permanent establishment” situated in Canada or performs independent personal services in Canada
through a fixed base in Canada if the shareholder’s holding in the Corporation is effectively connected with
such permanent establishment or fixed base. This summary is based on the provisions of the Canadian Tax Act
and the regulations thereunder and on an understanding of the administrative practices of Canada Customs &
Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or regulations
made by the Minister of Finance of Canada as of the date hereof. It has been assumed that there will be no
other relevant amendment of any governing law although no assurance can be given in this respect. This
discussion is general only and is not a substitute for independent advice from a shareholder’s own Canadian and
U.S. tax advisors.
The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including
the Canada-United States Income Tax Convention (1980), as amended (the “Convention”).
Dividends on Common Shares and Other Income
Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the
rate of 25 percent on dividends paid or deemed to have been paid to him or her by a corporation resident in
Canada. The Corporation is responsible for withholding of tax at the source. The Convention limits the rate to
15 percent if the shareholder is a resident of the United States and the dividends are beneficially owned by and
paid to such shareholder, and to 5 percent if the shareholder is also a corporation that beneficially owns at least
10 percent of the voting stock of the payor corporation.
The amount of a stock dividend (for tax purposes) would generally be equal to the amount by which the paid up
or stated capital of the Corporation had increased by reason of the payment of such dividend. The Corporation
will furnish additional tax information to shareholders in the event of such a dividend. Interest paid or deemed
to be paid on the Corporation’s debt securities held by non-Canadian residents may also be subject to Canadian
withholding tax, depending upon the terms and provisions of such securities and any applicable tax treaty.
The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary,
educational or charitable organization or to an organization constituted and operated exclusively to administer a
pension, retirement or employee benefit fund or plan, if the organization is a resident of the United States and is
exempt from income tax under the laws of the United States.
Dispositions of Common Shares
Under the Canadian Tax Act, a taxpayer’s capital gain or capital loss from a disposition of a share of common
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stock of the Corporation is the amount, if any, by which his or her proceeds of disposition exceed (or are
exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of
disposition. The capital gain or loss must be computed in Canadian currency using a weighted average adjusted
cost base for identical properties. There are special transitional rules to apply capital losses against capital gains
that arose in different periods. The amount by which a shareholder’s capital loss exceeds the capital gain in a
year may be deducted from a capital gain realized by the shareholder in the three previous years or any
subsequent year, subject to certain restrictions in the case of a corporate shareholder.
Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and
may deduct allowable capital losses, realized on a disposition of "taxable Canadian property." Shares of
common stock of the Corporation will constitute taxable Canadian property of a shareholder at a particular time
if the shareholder used the shares in carrying on business in Canada, or if at any time in the five years
immediately preceding the disposition 25% or more of the issued shares of any class or series in the capital
stock of the Corporation belonged to one or more persons in a group comprising the shareholder and persons
with whom the shareholder and persons with whom the shareholder did not deal at arm’s length and in certain
other circumstances.
The Convention relieves United States residents from liability for Canadian tax on capital gains derived on a
disposition of shares unless
(a) the value of the shares is derived principally from “real property” in Canada, including the right to explore
for or exploit natural resources and rights to amounts computed by reference to production,
(b) the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding,
and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him
when he or she ceased to be resident in Canada, or
(c) the shares formed part of the business property of a “permanent establishment” that the holder has or had in
Canada within the 12 months preceding the disposition.
Certain United States Federal Income Tax Consequences
The Convention relieves United States residents from liability for Canadian tax on capital gains derived on a
disposition of shares unless
(a) the value of the shares is derived principally from “real property” in Canada, including the right to explore
for or exploit natural resources and rights to amounts computed by reference to production,
(b) the shareholder was resident in Canada for 120 months during any period of 20 consecutive years preceding,
and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him
when he or she ceased to be resident in Canada, or
(c) the shares formed part of the business property of a “permanent establishment” that the holder has or had in
Canada within the 12 months preceding the disposition.
Certain United States Federal Income Tax Consequences
The following is a discussion of material United States federal income tax consequences generally applicable to
a U.S. Holder (as defined below) of common shares of the Company. This discussion does not cover any state,
local or foreign tax consequences.
The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (“the
Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative
positions of the IRS and court decisions that are currently applicable, any or all of which could be materially
and adversely changed, possible on a retroactive basis, at any time. In addition, the discussion does not
consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted,
could be applied, possibly on a retroactive basis, at any time. The following discussion is for general
information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any Holder
or prospective holder and not opinion or representation with respect to the U.S. Federal income tax
consequences to any such Holder or prospective holder is made. The following summary was not written and is
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not intended to be used, and cannot be used, by any person for the avoidance of any penalties with respect to
taxes that may be imposed on such person. Holders and prospective holders of common shares of the Company
are urged to consult their own tax advisors about the federal, state, local, and foreign tax consequences of
purchasing, owning and disposing of common shares of the Company.
U.S. Holders
As used herein, a U.S. Holder includes a holder of common shares of the Company who is a citizen or resident
of the United States, a corporation (or an entity which has elected to be treated as a corporation under Treasury
Regulation Sections 301.7701-3) created or organized in or under the laws of the United States or of any
political subdivision thereof, any estate other than a foreign estate (as defined in Section 7701(a)(31)(A) of the
Code or, a trust subject to the primary supervision of a court within the United States and control of a United
States fiduciary as described in Section 7701(a)(30)(E) of the Code. This summary does not address the tax
consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax
law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies,
real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals,
persons or entities that have a “functional currency” other than the U.S. dollar, shareholders who hold common
shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common
shares through the exercise of employee stock options or otherwise as compensation for services. This summary
is limited to U.S. Holders who own common shares as capital assets. This summary does not address the
consequences to a person or entity holding an interest in a shareholder of the Company or the consequences to a
person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common
shares of the Company.
Distribution on Common Shares of the Company
U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares
of the Company are required to include in gross income for United States federal income tax purposes the gross
amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on
the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits,
without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld
may be credited, subject to certain limitations, against the U.S. Holder’s United States federal income tax
liability or, alternatively, may be deducted in computing the U.S. Holder’s United States federal taxable income.
(See more detailed discussion at “Foreign Tax Credit” below). To the extent that distributions exceed current or
accumulated earnings and profits of the Company, they will be treated first as a return of capital up to the U.S.
Holder’s adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common
shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax
rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.
In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on
the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on
the date of receipt. Gain or loss may be recognized upon a subsequent sale of other disposition of the foreign
currency, including the exchange for U.S. dollars.
Dividends paid on the common shares of the Company will not generally be eligible for the dividends received
deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder
which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States
source portion of dividends received from the Company (unless the Company qualifies as a “foreign personal
holding company” or a “passive foreign investment company”, as defined below) if such U.S. Holder owns
shares representing at least 10% of the voting power and value of the Company. The availability of this
deduction is subject to several complex limitations which are beyond the scope of this discussion.
Foreign Tax Credit
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the
ownership of common shares of the Company may be entitled, at the option of the U.S. Holder, to either a
deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim
a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a
deduction merely reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis
and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S.
Holder during the year. There are significant and complex limitations which apply to the credit, among which
is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s United States
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income tax liability that the U.S. Holder’s foreign source income bears to his/her or its worldwide taxable
income. The various items of income and deduction must be classified into foreign and domestic sources.
Complex rules govern this classification process. In addition, this limitation is calculated separately with
respect to specific classes of income such as “passive income”, “high withholding tax interest”, “financial
services income”, “shipping income”, and certain other classifications of income. Dividends distributed by the
Company will generally constitute “passive income” or, in the case of certain U.S. Holders, “financial services
income” for these purposes. The availability of the foreign tax credit and the application of the limitations on
the credit are fact specific and holders and prospective holders of common shares of the Company should
consult their own tax advisors regarding their individual circumstances.
For individuals whose entire income from sources outside the United States consists of qualified passive income
whose the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300
($600 in the case of a joint return) and for whom an election is made under section 904(j), the limitation on
credit does not apply.
Disposition of Common Shares of the Company
A U.S. Holder will recognize gain or loss upon the sale of common shares of the Company equal to the
difference, if any, between (I) the amount of cash plus the fair market value of any property received, and (ii)
the shareholder’s tax basis in the common shares of the Company. Preferential tax rates apply to long-term
capital gains of U.S. Holders which are individuals, estates or trusts. This gain or loss will be capital gain or loss
if the common shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term
capital gain or loss depending upon the holding period of the U.S. Holder. Gains and losses are netted and
combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.
Deductions for net capital losses are subject to significant limitations. For U.S. Holders which are not
corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until
such net capital loss is thereby exhausted, but individuals may not carry back capital losses. For U.S. Holders
which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss
may be carried back three years from the loss year and carried forward five years from the loss year to be offset
against capital gains until such net capital loss is thereby exhausted.
Other Considerations
In the following circumstances, the above sections of the discussion may not describe the United States federal
income tax consequences resulting from the holding and disposition of common shares of the Company.
Passive Foreign Investment Company
As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign
investment company (“PFIC”), as defined in Section 1297 of the Code. Section 1297 of the Code defines a
PFIC as a corporation that is not formed in the United States and, for any taxable year, either (i) 75% or more of
its gross income is “passive income”, which includes interest, dividends and certain rents and royalties or (ii)
the average percentage, by fair market value (or, if the company is a controlled foreign corporation or makes an
election, by adjusted tax basis), of its assets that produce or are held for the production of “passive income” is
50% or more.
The rule governing PFICs can have significant tax effects on U.S. shareholders of foreign corporations who are
subject to U.S. Federal income taxation under one of three alternative methods at the election of each such U.S.
shareholder. As a PFIC, each U.S. shareholder’s income or gain, with respect to a disposition or deemed
disposition of the PFIC’s shares or a distribution payable on such shares will generally be subject to tax at the
highest marginal rates applicable to ordinary income and certain interest charges as discussed below, unless the
U.S. shareholder has timely made a “qualified electing fund” election or a “mark-to-market” election for those
shares.
Under one method, a U.S. shareholder who elects in a timely manner to treat the PFIC as a Qualified Electing
Fund ("QEF"), as defined in the Code, (an "Electing U.S. Holder") will be required to currently include in his
income for any taxable year in which the corporation qualifies as a PFIC his pro-rata share of the corporation's
(i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be
taxed as long-term capital gain to the Electing U.S. Holder, and (ii) "ordinary earnings" (the excess of earnings
and profits over net capital gain), which will be taxed as ordinary income to the Electing U.S. Holder, in each
case, for the U.S. Holder's taxable year in which (or with which) the Corporation’s taxable year ends, regardless
of whether such amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to (i)
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generally treat any gain realized on the disposition of his common shares (or deemed to be realized on the
pledge of his common shares) as capital gain; (ii) treat his share of the corporation's net capital gain, if any, as
long-term capital gain instead of ordinary income, and (iii) either avoid interest charges resulting from PFIC
status altogether (see discussion of interest charge below), or make an annual election, subject to certain
limitations, to defer payment of current taxes on his share of the corporation's annual realized net capital gain
and ordinary earnings which will then be subject, however, to an interest charge.
The procedure a U.S. Holder must comply with in making a timely QEF election will depend on whether the
year of the election is the first year in the U.S. Holder's holding period in which the Corporation is a PFIC. If
the U.S. shareholder makes a QEF election in such first year, (sometimes referred to as a "Pedigreed QEF
Election"), then the U.S. shareholder may make the QEF election by simply filing the appropriate documents at
the time the U.S. Holder files its tax return for such first year. If, however, the corporation qualified as a PFIC
in a prior year during the U.S. shareholder’s holding period, then the U.S. shareholder may make a retroactive
QEF election, provided he has preserved his right to do so under the protective statement regime or he obtains
IRS permission.
If a U.S. shareholder has not made a QEF Election at any time (a "Non-electing U.S. Holder"), then special
taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be
realized by reason of a pledge) of his common shares and (ii) certain "excess distributions" by the corporation.
An excess distribution is a current year distribution received by the U.S. shareholder on PFIC stock to the extent
that the distribution exceeds its ratable portion of 125% of the average amount received by the U.S. shareholder
during the preceding three years.
A Non-electing U.S. shareholder generally would be required to pro-rate all gains realized on the disposition of
his common shares and all excess distributions over the entire holding period for the common shares. All gains
or excess distributions allocated to prior years of the U.S. shareholder (other than years prior to the first taxable
year of the Corporation during such U.S. Holder's holding period and beginning after January 1, 1987 for which
it was a PFIC) would be taxed at the highest marginal tax rate for each such prior year applicable to ordinary
income. The Non-electing U.S. shareholder also would be liable for interest on the foregoing tax liability for
each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-
electing non-corporate U.S. shareholder must treat this interest charge as "personal interest" which is wholly
non-deductible. The balance of the gain or the excess distribution will be treated as ordinary income in the year
of the disposition or distribution, and no interest charge will be incurred with respect to such balance.
If a corporation is a PFIC for any taxable year during which a Non-electing U.S. shareholder holds common
shares, then the corporation will continue to be treated as a PFIC with respect to such common shares, even if it
is no longer by definition a PFIC. A Non-electing U.S. shareholder may terminate this deemed PFIC status by
electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders)
as if such common shares had been sold on the last day of the last taxable year for which it was a PFIC. If the
corporation no longer qualifies as a PFIC in a subsequent year, then normal Code rules and not the PFIC rules
will apply with respect to a U.S. shareholder who has made a Pedigreed QEF election.
If a U.S. shareholder makes a QEF Election that is not a Pedigreed Election (i.e., it is made after the first year
during which the corporation is a PFIC and the U.S. shareholder holds shares of the corporation) (a "Non-
Pedigreed Election"), the QEF rules apply prospectively but do not apply to years prior to the year in which the
QEF first becomes effective. U.S. Holders are encouraged to consult their tax advisors regarding the specific
consequences of making or not making a QEF Election.
Controlled Foreign Corporation
If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively,
by U.S. Holders, each of whom own actually or constructively 10% or more of the total combined voting power
of all classes of stock of the Company, the Company would be treated as a “controlled foreign corporation” or
“CFC” under Subpart F of the Code. This classification would effect many complex results, one of which
requires such 10% U.S. Holders to include in their income their pro rata shares of the Subpart F income of the
CFC and the CFC’s earnings invested in U.S. property. The foreign tax credit described above may reduce the
U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of
shares by a U.S. Holder of common shares of the Corporation which is or was a United States Shareholder at
any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent
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of earnings and profits of the Company (accumulated only while the shares were held by the United States
Shareholder and while the Company was a CFC attributable to the shares sold or exchanged. If a foreign
corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with
respect to certain 10% U.S. Shareholders of the CFC. This rule generally will be effective for taxable years of
United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or
within such taxable years of United States Shareholders. The PFIC provisions continue to apply in the case of a
PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders. Because of the
complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion.
Filing of Information Returns
Under a number of circumstances, United States persons acquiring shares of the Company may be required to
file an information return with the Internal Revenue Service Center where they are required to file their tax
returns with a duplicate copy to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular,
under Section 6046 of the Code, any United States person who becomes the owner, directly or indirectly, of
10% or more of the shares of the Company will be required to file such a return. Other filing requirements may
apply, such United States persons should consult their own tax advisors concerning these requirements.
Documents on Display
Any of the documents referred to above can be viewed at the registered office of the Company located at 1185
West Georgia Street, Suite 1150, Vancouver, British Columbia, Canada, V6E 4E6.
This Annual Report and the Company’s recent 6-K filings can be viewed on the U.S. Securities and Exchange
EDGAR web-site at www.sec.gov. All regulatory filings in Canada can be viewed on the System for Electronic
Document Analysis and Retrieval (SEDAR) web-site at www.sedar.com.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Some of the Company’s mineral exploration properties are located outside of Canada. As a Canadian company,
Almaden’s cash balances are kept primarily in Canadian funds, while many exploration and property expenses
are denominated in United States dollars or the Mexican peso. Therefore, the Company is exposed to some
exchange rate risk. The Company considers the amount of risk to be manageable and does not currently, nor is
likely in the foreseeable future, conduct hedging to reduce its exchange rate risk. A 10% change in the United
States dollar exchange rate relative to the Canadian dollar would change the Company’s net income by
$220,000. A 10% change in the Mexican peso exchange rate relative to the Canadian dollar would change the
Company’s net income by $1,000.
Item 12. Description of Securities Other than Equity Securities
Not Applicable
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not Applicable
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
Not Applicable
Item 15. Controls and Procedures
i.
Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended, or
“Exchange Act”) as of December 31, 2011. This evaluation was conducted under the supervision and with
the participation of management, including our Chief Executive Officer and Chief Financial Officer.
Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that,
as of December 31, 2011, our disclosure controls and procedures were effective to provide reasonable
83
assurance that information required to be disclosed by us in reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified by the rules and
forms. We also concluded that our disclosure controls and procedures are effective to provide reasonable
assurance that information required to be disclosed in the reports filed or submitted under the Exchange
Act is accumulated and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, to allow timely decisions regarding required disclosure.
ii.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. Internal control over financial reporting is a process designed by, or under the
supervision of, the Company’s principal executive and principal financial officers and effected by the
Company’s board of directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS as issued by IASB.
Because of the inherent limitations of internal control over financial reporting, including the possibility of
collusion or improper management override of controls, material misstatements due to error or fraud may
not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of
the internal control over financial reporting to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
The Company’s management’s assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2011. In making this assessment, the Company’s management used criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-
Integrated Framework. Based on its assessment, management concluded that, as of December 31, 2011,
the Company’s internal control over financial reporting was effective.
The Company’s internal control over financial reporting as of December 31, 2011 has been audited by
Deloitte & Touche LLP, Independent Registered Chartered Accountants, who also audited the Company’s
Consolidated Financial Statements for the year ended December 31, 2011 and as stated in the Report of
Independent Registered Chartered Accountants, as included herein, expressed an unqualified opinion on
the effectiveness of the Company’s internal control over financial reporting.
iii.
Attestation Report of Independent Registered Public Accounting Firm
The Independent Registered Chartered Accountants, Deloitte & Touche LLP, who audited the Company’s
annual financial statements for the year ended December 31, 2011, have issued an attestation report on the
Company’s Internal Control Over Financial Reporting as included in the financial statements included
with this Annual Report on Form 20-F.
iv.
Changes in Internal Control Over Financial Reporting
There was no change in the Company’s internal control over financial reporting that occurred during
Fiscal 2011 that has materially affected, or that is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
Item 16A. Audit Committee Financial Expert
The Company’s Board of Directors has determined that Mr. James E. McInnes is the Company's audit
committee financial expert. Mr. McInnes served as President of Horseshoe Gold Mining Inc. (now Cosigo
Resources Ltd.) from 1991 to 2011, and has served as a director with other publicly traded companies. Mr.
McInnes is independent as defined by Section 803(B) of the NYSE Amex Listing Standards.
Item 16B. Code of Ethics
The Company adopted several codes of conduct, including a Code of Business Ethics, a Code of Business
Conduct Ethics for Directors, a Communications Policy and an Audit Committee Charter. These initial codes
were filed with the 20-F Annual Report for the fiscal year ended December 31, 2003 as filed with the United
84
States Securities and Exchange Commission on May 11, 2004. After review, the Company has adopted revised
and new codes as follow: Audit Committee Charter, Nominating and Corporate Governance Committee-
Responsibilities and Duties, Compensation Committee-Responsibilities and Duties, Code of Business Ethics,
Code of Business Conduct and Ethics for Directors, Communications Policy, Securities Trading Policy,
Whistleblowers Policy and a Privacy Policy (the “Codes”). The Codes may be viewed on the Company’s
website at www.almadenminerals.com. The Codes may also be viewed as filed on EDGAR and SEDAR as an
exhibit to the 2005 20-F Annual Report filed with the Commission on March 30, 2006. Any amendments to the
Codes or waivers of the provision of any Codes will be posted on the Company’s website within 5 business
days of such amendment or waiver.
The Company has adopted a Code of Business Conduct and Ethics for Directors (“Code”), a Code of Business
Ethics (“COBE”), a Securities Trading Policy and a Privacy Policy. Employees and consultants are required as a
term of employment to undertake to abide by the COBE. Directors are by law bound to observe the Code adopted
by the Board.
All Directors, Officers and Employees (“Individuals”) sign an Annual Certification (“Certification”) stating they
have read the Code of Business Ethics policy (“Policy”) of the Company and have complied with such Policy in all
respects. The Certification further acknowledges that all members of the Individual’s family, all other persons who
live with the Individual and all holding companies and other related entities of the Individual and all such persons or
companies acting on behalf of or at the request of any of the foregoing also complied with such Policy. The
Certification also states that any violation of such Policy may constitute grounds for immediate suspension or
dismissal.
Each director is expected and required by statute to act honestly and in good faith with a view to the best
interests of the Company and to exercise the care, diligence and skill that a reasonably prudent individual would
exercise in comparable circumstances and in accordance with the Business Corporations Act (British Columbia)
and the Company’s Articles.
Item 16C. Principal Accountant Fees and Services
Table No. 19 lists the aggregate fees billed or estimated for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the Company’s annual financial statements or
services that are normally provided by the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years.
Table No. 19
Principal Accountant Fees
Years ended December 31
2011
$104,690
58,500
117,104
-
2010
$99,910
47,330
15,500
-
Audit fees
Audit-related fees
Tax fees
Other fees
Fiscal 2011 audit fees relate to the annual audit of the Company’s consolidated financial statements,
effectiveness of the Company’s internal control over financial reporting and review of the Form 20-F. Fiscal
2010 audit fees relate to the annual audit of the Company’s financial statements and review of the Form 20-F.
Audit-related fees consist of IFRS conversion and advisory services. Tax fees relate to the completion of
income tax returns and tax consulting services. Other fees relate to services other than audit fees, audit-related
fees, and tax fees described above.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
85
Item 16G. Corporate Governance
The Company’s class of common shares are listed on the NYSE Amex. In the opinion of management, the
Company’s corporate governance practices do not differ in any significant way from those followed by U.S.
domestic companies listed on the NYSE Amex.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 17. Financial Statements
PART III
The Company’s consolidated financial statements and notes thereto are stated in Canadian Dollars (CDN$) and
are prepared in accordance with International Financial Reporting Standards as issued by the IASB.
Item 18. Financial Statements
The Company has provided financial statements pursuant to Item 17.
Item 19. Exhibits
A. The financial statements and notes thereto as required under Item 17 are attached hereto and found
immediately following the text of this Annual Report.
Audited Financial Statements
Independent auditor’s report on the consolidated financial statements, dated March 27, 2012
Report on internal control over financial reporting dated March 27, 2012
Consolidated statements of financial position at December 31, 2011 and 2010
Consolidated statements of comprehensive loss for the years ended December 31, 2011, 2010 and 2009
Consolidated statements of changes in equity for the years ended December 31, 2010 and 2009
Consolidated statements of cash flows for the years ended December 31, 2011, 2010 and 2009
Summary of significant accounting policies and other explanatory information
B. Index to Exhibits
1.
1.1
2.
3.
4.
Certificate of Amalgamation
Amalgamation Agreement
--Incorporated by reference to the Company’s Form 20-F Annual Report for the year ended December 31,
2001,
as filed with the Commission on May 17, 2002--
Articles
--Incorporated by reference to the Company’s Form 20-F Annual Report for the year ended December 31,
2005,
as filed with the Commission on March 30, 2006--
Instruments defining the rights of holders of equity of debt securities being registered
--Refer to Exhibit No. 1--
Voting trust agreements – N/A
Purchase Offer dated April 22, 2010 with Skeena Resources Limited, Virginia Energy Resources Inc. and
Minera Cascabel SA de CV
--Incorporated by reference to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended December
31, 2010 furnished with the Commission on October 31, 2011--
Option Agreement dated May 21, 2010 with Sunburst Explorations Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on June 10, 2010--
Option Agreement dated September 2, 2010 with Windstorm Resources Ltd.
--Incorporated by reference to the Form 6-K furnished with the Commission on September 8, 2010 --
Assets Purchase Agreement dated February 15, 2011 with Beanstalk Capital Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on March 11, 2011--
86
Shareholder Rights Plan Agreement dated April 13, 2011 with Computershare Investor Services Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on April 15, 2011--
Amendment to Option Agreement dated May 20, 2011 with Sunburst Explorations Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on May 31, 2011--
Option Agreement dated June 17, 2011 with G4G Resources Ltd.
--Incorporated by reference to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended December
31, 2010 furnished with the Commission on October 31, 2011--
Amendment No. 2 to Option Agreement dated July 12, 2011 with Sunburst Explorations Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on September 22, 2011--
Amendment No. 3 to Option Agreement dated September 29, 2011 with Sunburst Explorations Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on September 22, 2011--
Transfer Agreement dated September 23, 2011 with Candymin S.A. de C.V. and Goldgroup Mining Inc.
--Incorporated by reference to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended December
31, 2010 furnished with the Commission on October 31, 2011--
Retained Interest Agreement dated September 23, 2011 with 0919921 B.C. Ltd. and Goldgroup Mining Inc.
--Incorporated by reference to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended December
31, 2010 furnished with the Commission on October 31, 2011--
Amending Agreement dated September 26, 2011 with 0919921 B.C. Ltd. and Goldgroup Mining Inc.
--Incorporated by reference to the Company’s Form 20-F/A-2, Amendment No.2, for the year ended December
31, 2010 furnished with the Commission on October 31, 2011--
Option Agreement dated January 23, 2012 with Fjordland Exploration Inc.
--Incorporated by reference to the Form 6-K furnished with the Commission on February 14, 2012
5.
6.
7.
8.
9.
List of foreign patents – N/A
Calculation of earnings per share – N/A
Explanation of calculation of ratios – N/A
List of subsidiaries
Statement pursuant to the instruction to Item 8.A.4, regarding the financial statement filed in registration
Statements for initial public offerings of securities – N/A
10.
Any notice required by Rule 104 of Regulation BTR – N/A
11
Audit Committee Charter
Nominating and Corporate Governance Committee-Duties and Responsibility
Compensation Committee-Responsibilities and Duties
Code of Business Ethics
Code of Business Conduct and Ethics for Directors
Communications Policy
Securities Trading Policy
Whistleblower Policy
Privacy Policy
--Incorporated by reference to the Company’s Form 20-F Annual Report for the year ended December 31,
2005,
as filed with the Commission on March 30, 2006
12.1 Certification of CEO Pursuant to Securities Exchange Act, Rules 13a-14 and 15d-14 as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12.2 Certification of CFO Pursuant to Securities Exchange Act, Rules 13a-14 and 15d-14 as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
13.1 Certification of CEO Pursuant to the Sarbanes-Oxley Act, 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
13.2 Certification of CFO Pursuant to the Sarbanes-Oxley Act, 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
87
Consolidated financial statements of
Almaden Minerals Ltd.
For the year ended December 31, 2011
Almaden Minerals Ltd.
December 31, 2011
Table of contents
Report of Independent Registered Chartered Accountants.........................................................1-4
Consolidated statements of financial position.................................................................................5
Consolidated statements of comprehensive income (loss).............................................................6
Consolidated statements of cash flows...........................................................................................7
Consolidated statements of changes in equity................................................................................8
Notes to the consolidated financial statements..........................................................................9-44
Schedule:
1.
Consolidated schedules of general and administrative expenses..........................................45
Deloitte & Touche LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 604-685-0395
www.deloitte.ca
Report of Independent Registered Chartered Accountants
To the Board of Directors and Shareholders of Almaden Minerals Ltd.
We have audited the accompanying consolidated financial statements of Almaden Minerals Ltd. and
subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at
December 31, 2011 and 2010 and the consolidated statements of comprehensive income (loss), changes in
equity and cash flows for each of the years ended December 31, 2011, 2010 and 2009 and a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Almaden Minerals Ltd. and subsidiaries as at December 31, 2011 and 2010 and their financial
performance and cash flows for each of the years ended December 31, 2011, 2010 and 2009 in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board.
Other Matter
We have also audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company's internal control over financial reporting as of December 31, 2011,
based on the criteria established in Internal Control - Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated March 27, 2012 expressed
an unqualified opinion on the Company’s internal control over financial reporting.
(Signed) Deloitte & Touche LLP
Independent Registered Chartered Accountants
Vancouver, Canada
March 27, 2012
Deloitte & Touche LLP
2800 - 1055 Dunsmuir Street
4 Bentall Centre
P.O. Box 49279
Vancouver BC V7X 1P4
Canada
Tel: 604-669-4466
Fax: 604-685-0395
www.deloitte.ca
Report of Independent Registered Chartered Accountants
To the Board of Directors and Shareholders of Almaden Minerals Ltd.
We have audited the internal control over financial reporting of Almaden Minerals Ltd. and subsidiaries
(the “Company”) as of December 31, 2011, based on the criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company's internal control over financial reporting based on
our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion.
A company's internal control over financial reporting is a process designed by, or under the supervision
of, the company's principal executive and principal financial officers, or persons performing similar
functions, and effected by the company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company's internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company's assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of
collusion or improper management override of controls, material misstatements due to error or fraud may
not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of
the internal control over financial reporting to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2011, based on the criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with Canadian generally accepted auditing standards and the
standards of the Public Company Accounting Oversight Board (United States), the consolidated financial
statements as of and for the year ended December 31, 2011 of the Company and our report dated March
27, 2012 expressed an unqualified opinion on those financial statements.
(Signed) Deloitte & Touche LLP
Independent Registered Chartered Accountants
Vancouver, Canada
March 27, 2012
Almaden Minerals Ltd.
Consolidated statements of financial position
(Expressed in Canadian dollars)
ASSETS
Current assets
Cash and cash equivalents (Note 15)
Accounts receivable and prepaid expenses (Note 4)
Marketable securities (Note 5)
Short term investment
Inventory (Note 6)
Assets classified as held for sale (Note 20)
Non-current assets
Investments in associates (Note 7)
Exploration and evaluation assets deposit (Note 9(h)(vi))
Reclamation deposit
Contingent shares receivable (Note 9(a) and (d))
Property, plant and equipment (Note 8)
Exploration and evaluation assets (Note 9)
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Deferred exploration advances payable
Liabilities directly associated with assets
classified as held for sale (Note 20)
EQUITY
Share capital (Note 10)
Reserves (Note 10)
Deficit
TOTAL EQUITY AND LIABILITIES
Commitments (Note 17)
December 31,
2011
December 31,
2010
$
$
21,184,159
1,148,406
8,471,167
-
274,768
-
31,078,500
10,179,423
138,929
129,764
662,700
1,245,543
10,470,410
22,826,769
53,905,269
16,087,832
538,400
1,851,883
2,000,000
274,768
9,083,633
29,836,516
941,276
138,929
124,764
-
862,725
4,439,145
6,506,839
36,343,355
565,097
-
-
565,097
372,889
156,956
119,636
649,481
73,353,977
6,861,644
(26,875,449)
53,340,172
53,905,269
62,853,930
7,010,251
(34,170,307)
35,693,874
36,343,355
These consolidated financial statements are authorized for issue by the Board of Directors on March 27, 2012.
They are signed on the Company's behalf by:
/s/Duane Poliquin
Director
/s/James E. McInnes
Director
Almaden Minerals Ltd.
Consolidated statements of comprehensive income (loss)
(Expressed in Canadian dollars)
Revenue
Interest income
Drilling services
Other income
Expenses (income)
Drilling services expenses
Impairment of exploration and evaluation assets
Recovery in value of mineral properties
General and administrative expenses (Schedule 1)
Income on sale of mineral property interests (Note 13)
General exploration expenses
Share-based payments
Operating income (loss)
Other income (loss)
Gain (loss) on investment in associate (Note 7)
Loss on dilution of equity investments (Note 7)
Impairment of marketable securities (Note 5)
Gain (loss) on sale of marketable securities
Gain (loss) on sale of property, plant and equipment
Foreign exchange loss
Income (loss) before income taxes
Income tax recovery (Note 16)
2011
$
161,664
-
87,048
248,712
-
318,847
-
2,096,097
(15,072,485)
961,992
4,930,700
(6,764,849)
7,013,561
1,286,740
(122,843)
(987,600)
149,069
(9,374)
(54,695)
7,274,858
20,000
Years ended December 31,
2009
2010
$
$
38,589
-
195,286
233,875
-
725,951
(84,323)
1,493,611
(1,923,430)
646,358
2,108,800
2,966,967
(2,733,092)
(151,926)
(168,449)
-
(556,753)
2,836
(163,034)
(3,770,418)
305,766
169,458
2,112,832
158,329
2,440,619
1,218,518
890,811
-
1,291,253
(77,360)
665,055
67,500
4,055,777
(1,615,158)
(90,908)
(196,476)
(80,600)
(26,790)
-
(415,755)
(2,425,687)
139,728
Net income (loss) for the year
7,294,858
(3,464,652)
(2,285,959)
Other comprehensive (loss) income
Net change in fair value of available-for-sale financial
assets, net of tax of nil
Reclassification adjustment relating to available-for-sale
financial assets disposed of in the year, net of tax of nil
Other comprehensive (loss) income for the year
(1,673,674)
149,738
596,051
(148,028)
(1,821,702)
556,753
706,491
26,240
622,291
Total comprehensive income (loss) for the year
5,473,156
(2,758,161)
(1,663,668)
Basic net income (loss) per share (Note 14)
Diluted net income (loss) per share (Note 14)
0.13
0.12
(0.07)
(0.07)
(0.05)
(0.05)
Almaden Minerals Ltd.
Consolidated statements of cash flows
(Expressed in Canadian dollars)
Operating activities
Net income (loss) for the year
Items not affecting cash
Deferred income tax recovery
(Gain) loss on investment in associate
Loss on dilution
Depreciation
(Gain) loss on sale of marketable securities
Impairment of marketable securities
Non-cash portion of income on sale
of mineral property interests
Impairment of interest in mineral properties
Recovery in value of mineral properties
Share-based payments
Gain (loss) on sale of property, plant and equipment
Changes in non-cash working capital components
Accounts receivable and prepaid expenses
Trade and other payables
Deferred exploration advances payable
Net cashed used in operating activities
Investing activities
Reclamation deposit
Short term investment
Marketable securities
Purchases
Net proceeds
Property, plant and equipment
Purchases
Net proceeds
Assets classified as held for sale
Mineral properties
Costs
Net proceeds on disposal
Net cash from (used in) investing activities
Financing activity
2011
$
Years ended December 31,
2009
2010
$
$
7,294,858
(3,464,652)
(2,285,959)
(20,000)
(1,286,740)
122,843
271,061
(149,069)
987,600
(15,067,486)
318,847
-
4,930,700
9,374
(610,006)
(213,672)
(156,956)
(3,568,646)
(305,766)
151,926
168,449
189,580
556,753
-
(1,923,430)
725,951
(84,323)
2,108,800
(2,836)
163,827
19,326
156,956
(1,539,439)
(139,728)
90,908
196,476
169,973
26,790
80,600
(77,360)
890,811
-
67,500
-
(299,515)
147,625
-
(1,131,879)
(5,000)
2,000,000
(40,764)
(2,000,000)
(2,500)
-
-
579,783
(1,550)
1,009,484
-
103,217
(678,274)
15,022
(182,713)
(502,822)
5,190
-
(6,197,667)
5,871,380
1,402,531
(5,478,095)
15,000
(6,993,557)
(31,494)
-
-
(933,783)
119,958
(744,602)
Issuance of shares, net of share issue costs of $19,257
Net cash from financing activity
7,262,442
7,262,442
11,478,157
11,478,157
2,700,202
2,700,202
Net cash inflows
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental cash and cash equivalents information - Note 15
5,096,327
16,087,832
21,184,159
2,945,161
13,142,671
16,087,832
823,721
12,318,950
13,142,671
Interest paid
Interest received
Taxes paid
Taxes received
-
161,664
-
-
-
38,589
-
-
-
169,458
-
-
Almaden Minerals Ltd.
Consolidated statements of changes in equity
(Expressed in Canadian dollars)
Balance, January 1, 2009
Shares issued for cash on exercise of stock options
Fair value of share options transferred to share capital
on exercise of options
Share-based payments
Private placements
Total comprehensive loss for the year
Balance, December 31, 2009
Shares issued for cash on exercise of stock options
Fair value of share options transferred to share capital
on exercise of options
Share-based payments
Private placements
Shares issued for cash on exercise of warrants
Fair value of warrants transferred to share capital
on exercise of warrants
Total comprehensive loss for the year
Balance, December 31, 2010
Shares issued for cash on exercise of stock options
Fair value of share options transferred to share capital
on exercise of options
Share-based payments
Private placements and other
Shares issued for cash on exercise of warrants
Fair value of warrants transferred to share capital
on exercise of warrants
Total comprehensive loss for the year
Balance, December 31, 2011
Share capital
Reserves
Number of
shares
45,525,829
154,000
Equity settled
employee
Amount
$
49,159,392
59,752
compensation Warrants
$
4,509,023
-
176,741
-
-
-
3,293,316
-
48,973,145
895,000
-
-
1,658,465
-
50,877,609
919,500
-
67,500
-
-
-
-
981,985
-
4,576,523 1,158,726
-
-
Available-for-
sale financial
assets
$
(1,358,650)
-
-
-
-
622,291
(736,359)
-
Total
reserves
3,327,114
-
-
67,500
981,985
622,291
4,998,890
-
Deficit
Total
$
(28,419,696)
-
$
24,066,810
59,752
-
-
-
(2,285,959)
(30,705,655)
-
-
67,500
2,640,450
(1,663,668)
25,170,844
919,500
-
2,108,800
9,269,511
983,380
-
-
4,892,021
740,656
533,250
-
9,234,011
983,380
(533,250)
2,108,800
-
-
-
-
35,500
-
-
(533,250)
- 2,108,800
35,500
-
-
-
-
-
-
-
-
-
55,500,822
2,030,000
306,180
-
62,853,930
4,922,900
-
-
6,152,073
-
(306,180)
-
888,046
-
-
706,491
(29,868)
-
(306,180)
706,491
7,010,251
-
-
(3,464,652)
(34,170,307)
-
-
(2,758,161)
35,693,874
4,922,900
-
-
110,000
1,481,499
2,546,300
-
386,243
1,933,299
(2,546,300)
4,930,700
-
-
-
-
-
-
(2,546,300)
-
- 4,930,700
-
-
-
-
-
-
-
-
-
4,930,700
386,243
1,933,299
-
-
59,122,321
711,305
-
73,353,977
-
-
8,536,473
(711,305)
-
176,741
-
(1,821,702)
(1,851,570)
(711,305)
(1,821,702)
6,861,644
-
7,294,858
(26,875,449)
-
5,473,156
53,340,172
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
1.
Nature of operations
Almaden Minerals Ltd. (the “Company” or “Almaden”) is form by amalgamation under the laws of the
Province of British Columbia, Canada, and its principal business activity is the exploration of mineral
properties. The address of the Company’s registered office is Suite 950 –1199 West Hastings Street,
Vancouver, BC, Canada V6E 3T5. The Company is in the process of exploring its mineral properties
and has not yet determined whether these properties contain mineral reserves that are economically
the
recoverable. The recoverability of amounts shown for mineral properties is dependent upon
establishment of a sufficient quantity of economically recoverable reserves, the ability of the Company
to obtain the necessary financing or participation of joint venture partners to complete development of
the properties and upon future profitable production or proceeds from the disposition of mineral
properties.
2.
Basis of preparation
(a)
Statement of Compliance with International Financial Reporting Standards
These consolidated financial statements have been prepared in accordance and compliance with
International Financial Reporting Standards as i ssued by the International Accounting Standards
Board (“IASB”) and the IFRS Interpretations Committee (“IFRIC”).
(b)
Basis of preparation
These consolidated financial statements have been pr epared on a historical cost basis except for
financial instruments classified as available-for-sale that have been measured at fair value.
These consolidated financial statements, including comparatives, have been prepared on the basis of
IFRS standards that are effective as at December 31, 2011.
(c)
Functional currency
The presentation currency of the Company and the functional currency of the Company and each of
its subsidiaries is the Canadian dollar.
(d)
Significant accounting judgments and estimates
The preparation of these consolidated financial statements requires management to make
judgements and estimates 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. Actual outcomes
could differ from these judgements and estimates. The consolidated financial statements include
judgements and estimates which, by their nature, are uncertain. The impacts of such judgements and
estimates are pervasive throughout the consolidated financial statements, and may require
future occurrences. Revisions to accounting estimates are
accounting adjustments based on
recognized in the period in which the estimate is revised and the revision affects both current and
future periods.
Significant assumptions about the future and ot her sources of judgements and estimates that
management has made at the statement of financial pos ition date, that could result in a material
adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from
assumptions made, relate to, but are not limited to, the following:
9
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
2.
Basis of preparation (Continued)
(d)
Significant accounting judgments and estimates (continued)
Critical Judgments
o The assessment that the Company has significant influence over the investment in Gold
Mountain Mining Corporation (“Gold Mountain”) (Note 7(ii)) which results in the use of
the equity accounting method for accounting for
this investment. In making their
judgement, management considered the composition of the Board of Directors of its
equity investment in Gold Mountain, the common directors and management between
Gold Mountain and the Company and the intercompany transactions and relationship
with Gold Mountain and concluded that significant influence exists.
o
In addition the Company determined in 2011 t hat it no longer has significant influence
over its investment in Tarsis Resources Ltd. (Note 7(i)).
o The analysis of the functional currency for each entity of the Company. In concluding
that the Canadian dollar is the functional currency of the parent and its subsidiary
companies, management considered the currency that mainly influences the cost of
providing goods and services in each jurisdiction in which the Company operates. As no
single currency was clearly dominant, the Company also considered secondary
indicators including the currency in which f unds from financing activities are denominated
and the currency in which funds are retained.
Estimates
o
o
o
o
o
o
o
o
o
the recoverability of amounts receivable and prepay ments which are included in the
consolidated statement of financial position;
the carrying value of the marketable securities and the recoverability of the carrying value
which are included in the consolidated statement of financial position;
the carrying value of investments, and the estimated annual gains or losses recorded on
investments from income and dilution, and the recoverability of the carrying value which
are included in the consolidated statement of financial position;
the estimated useful lives of property, plant and equipment which are included in the
consolidated statement of financial position and the related depreciation included in the
consolidated statement of comprehensive loss;
the estimated value of the exploration and development costs which is recorded in the
statement of financial position;
the inputs used in accounting for share purchase option expense in the consolidated
statement of comprehensive loss;
the provision for income taxes which is included in the consolidation statements of
comprehensive loss and composition of deferred income tax assets and liabilities
included in the consolidated statement of financial position at December 31, 2011;
the inputs used in determining the net present value of the liability for asset retirement
obligation included in the consolidated statement of financial position;
the inputs used in determining the various commitments and contingencies accrued in
the consolidated statement of financial position;
10
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
2.
Basis of preparation (Continued)
(d)
Significant accounting judgments and estimates (continued)
o
o
o
the assessment of indications of impairment of each mineral property and related
determination of the net realizable value and write-down of those properties where
applicable;
the estimated fair value of contingent share payments receivable in the event that Gold
Mountain achieves some or all of the specified resource and production levels described
in Note 9(a); and
the estimated fair value of contingent s hare payments receivable in the event that
Goldgroup Mining Inc. achieves some or a ll of the specified resource and production
levels described in Note 9(d).
3.
Significant accounting policies
(a)
Basis of consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries as follows:
Jurisdiction
Nature of operations
Almaden America Inc.
Republic Resources Ltd.
Ixtaca Precious Metals Inc.
Almaden de Mexico, S.A. de C.V.
Minera Gavilan, S.A. de C.V.
Compania Minera Zapata, S.A. de C.V.
Minera Gorrion, S.A. de C.V.
USA
Canada
Canada
Mexico
Mexico
Mexico
Mexico
exploration company
service company
holding company
exploration company
exploration company
exploration company
exploration company
Investments where the Company has the ability to exercise significant influence are accounted for
using the equity method. Under this method, t he Company’s share of the investee’s earnings or
losses is included in operations and its investments therein are adjusted by a like amount. Dividends
received from these investments are credited to the investment. The Company’s 38.8% interest in
Gold Mountain Mining Corporation is accounted for using the equity method. The Company accounts
for its interest in jointly controlled assets by re cognizing its share of the jointly controlled assets
classified according to the nature of the assets.
Inter-company balances and transactions, including unrealised income and expenses arising from
inter-company transactions, are eliminated in pr eparing the consolidated financial statements.
Unrealised gains arising from transactions with equity accounted investees are eliminated against the
investment to the extent of the Company’s interest in the investee. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
11
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies
(b)
Foreign currencies
Transactions in currencies other than the functional currency are recorded at the rates of exchange
prevailing on dates of transactions. At each financial position reporting date, monetary assets and
liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of
the statement of financial position. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated.
(c)
Financial instruments
Financial assets
The Company classifies its financial assets into one of the following categories, depending on the
purpose for which the asset was acquired. The Company's accounting policy for each category is as
follows:
Fair value through profit or loss - This category comprises derivatives including contingent shares
receivable, or assets acquired or incurred principally for the purpose of selling or repurchasing it in the
near term. They are carried in the statement of financial position at fair value with changes
value recognized in net income (loss).
in fair
Loans and receivables - These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They are carried at cost less any provision for
impairment. Individually significant receivables are considered for impairment when they are past due
or when other objective evidence is received that a specific counterparty will default. The Company
classifies its cash and cash equivalents and accounts receivables as “loans and receivables”.
Held-to-maturity investments - These assets are non-derivative financial
determinable payments and fixed maturities that the Company's management has the positive
intention and ability to hold to maturity . These assets are measured at amortized cost using the
effective interest method. If there is objective evidence that the investment is impaired, determined by
reference to external credit ratings and other relevant indicators, the financial asset is measured at the
present value of estimated future cash flows. Any changes to the carrying amount of the investment,
including impairment losses, are recognized in net income (loss).
assets with fixed or
Available-for-sale - Non-derivative financial assets not included in the above categories and which
include marketable securities are classified as available-for- sale. They are carried at fair value with
changes in fair value recognized directly in other comprehensive income and equity. Where a decline
in the fair value of an available-for-sale financial asset constitutes objective evidence of significant or
prolonged decline in value, the amount of the loss
is removed from equity and recognized in net
income (loss).
All financial assets except for those at fair value through profit or loss are subject to review for
impairment at least at each reporting date. Financial assets are impaired when there is any objective
evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine
impairment are applied for each category of financial assets, which are described above.
12
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(c)
Financial instruments (continued)
Financial liabilities
The Company classifies its financial liabilities into one of two categories, depending on the purpose
for which the asset was acquired. The Company's accounting policy for each category is as follows:
Fair value through profit or loss - This category comprises derivatives, or liabilities acquired or
incurred principally for the purpose of selling or repurchasing it in the near term. They are carried in
the statement of financial position at fair value with changes in fair value recognized in net income
(loss).
Other financial liabilities: This category includes promissory notes, amounts due to related parties and
trade and other payables, all of which are recognized at amortized cost.
(d)
Cash, cash equivalents and short-term investments
Cash equivalents include money market instruments which are readily convertible into cash or have
maturities at the date of purchase of less than ninety days. Short-term investments include money
market instruments with terms to maturity exceeding ninety days.
(e)
Inventory
Inventory is valued at the lower of the average cost of mining and estimated net realizable value.
(f)
Property, plant and equipment
Property, plant and equipment are stated at cost and are depreciated annually on a declining-balance
basis at the following rates:
Automotive equipment
Computer hardware and software
Field equipment
Furniture and fixtures
Geological data library
Mill equipment
Drill equipment
Leasehold improvements
30%
30%
20%
20%
20%
30%
20%
20%
straight-line
13
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(g)
Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Company and the revenue can be reliably measured. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebat es and other sales tax or duty. The following
specific recognition criteria must also be met before revenue is recognized:
Interest income
Revenue is recognized as interest accrues (using the effective interest rate, that is, the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument
to the net carrying amount of the financial asset).
Other income
Revenue from other income is recognized upon completion of the services for which the
measurement of the consideration can be reas
reasonably assured.
onably assured and the ultimate collection is
(h)
Exploration and evaluation
The Company is in the exploration stage with respect to its investment in mineral properties and
accordingly follows the practice of capitalizing all costs relating to the acquisition of, exploration for
and development of mineral claims to which t he Company has rights and crediting all proceeds
received for farm-out arrangements or recovery of costs against the cost of the related claims. Such
costs include, but are not exclusive to, geological, geophy sical studies, exploratory drilling and
sampling. At such time as commercial production commences, these costs will be charged to
operations on a unit-of-production method based on proven and probable reserves. The aggregate
costs related to abandoned mineral claims are charged to operations at the time of any abandonment
or when it has been determined that there is evidence of an impairment.
The Company considers the following facts and circumstances in determining if it should test
exploration and evaluation assets for impairment:
a)
during the period or will expire in the near future, and is not expected to be renewed.
the period for which the Company has the right to explore in the specific area has expired
b)
specific area is neither budgeted or planned.
substantive expenditure on further exploration for and evaluation of mineral resources in the
exploration for and evaluation of mineral resources in the specific area have not led to the
c)
discovery of commercially viable quantities of mineral resources and the entity has decided to
discontinue such activities in the specific area; and
d)
sufficient data exists to indicate that, although a development in the specific area is likely to
proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in
full from successful development or by sale.
14
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(h)
Exploration and evaluation (continued)
An impairment charge relating to a mineral property is subsequently reversed when new exploration
results or actual or potential proceeds on sale or farm-out of the property result in a revised estimate
of the recoverable amount but only to the extent that this does not exceed the original carrying value
of the property that would have resulted if no im pairment had been recognized. General exploration
costs in areas of interest in which the Company has not secured rights are expensed as incurred.
The recoverability of amounts shown for expl oration and evaluation assets is dependent upon the
discovery of economically recoverable reserves, the ability of the Company to obtain financing to
complete development of the properties, and on future production or proceeds of disposition.
The Company recognizes in income costs recovered on mineral properties when amounts received or
receivable are in excess of the carrying amount.
Upon transfer of “Exploration and evaluation
expenditure on the construction, installation or completion of infrastructure facilities is capitalised
within “Mine development”. After production starts, all assets included in “Mine development” are
transferred to “Producing Mines”.
costs” into “Mine Development”, all subsequent
All capitalized exploration and evaluation expenditure is monitored for indications of impairment.
Where a potential impairment is indicated, assessments are performed for each area of interest. To
the extent that exploration expenditure is not expected to be recovered, it is charged to the results of
operations. Exploration areas where reserves have been discovered, but require major capital
expenditure before production can begin, are cont
inually evaluated to ensure that commercial
quantities of reserves exist or to ensure that additional exploration work is underway as planned.
(i)
Impairment of property, plant and equipment and intangible assets
Property, plant and equipment and finite life intangible assets are reviewed for impairment if there is
any indication that the carrying amount may not be recoverable. If any such indication is present, the
recoverable amount of the asset is e stimated in order to determine whether impairment exists. Where
the asset does not generate cash flows that are independent from other assets, the Company
estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any
intangible asset with an indefinite useful life is tested for impairment annually and whenever there is
an indication that the asset may be impaired.
An asset’s recoverable amount is the higher of fair value less costs to sell 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.
15
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(i)
Impairment of property, plant and equipment and intangible assets (continued)
If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying
amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized
immediately as additional depreciation. Where an impairment subsequently reverses, the carrying
amount is increased to the revised estimate of reco verable amount but only to the extent that this
does not exceed the carryi ng value that would have been determined if no impairment had previously
been recognized. A reversal is recognized as a reduction in the depreciation charge for the period.
(j)
Income taxes
Deferred tax is recorded using the liability method, recognized on temporary differences between the
carrying amounts of assets and liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred tax assets are
tax
recognized for all deductible temporary differences, unused tax losses and other income
deductions to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilized. The carry ing amount of deferred tax assets is
reviewed at the end of each reporting period and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred
tax assets and liabilities are not recognized if temporary differences arise from goodwill or from the
initial recognition (other than a business combination) of other assets and liabilities in a transaction
that affects neither taxable profit nor the accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, and interest in joint ventures, except where the Company is able to
control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the
period in which the liability is settled or the asset is realized, based on tax rates that have
been
enacted or substantively enacted by the end of the reporting period. The measurement of deferred
tax liabilities and assets reflect the tax consequences that would follow from the manner in which the
Company expects to recover or settle the carriyng amount of its assets and liabilities at the end of the
reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority and the Company intends to settle its current tax liabilities and assets on a net
basis.
Current and deferred income tax expense or recovery are recognized in net earnings except when
they arise as a result of items recognized in other comprehensive income or directly in equity in the
current or prior periods, in which case the related current and deferred income taxes
are also
recognized in other comprehensive income or directly in equity, respectively.
Any premium paid for flow-through shares in excess of market value of those shares without the flow-
through feature is recorded as other liabilities at the time of issue and recognized as a component of
tax recovery at the time the qualifying expenditures are made.
16
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(k)
Share-based payments
The Company grants stock options to buy common s hares of the Company to directors, officers,
employees and consultants. The board of directors gr ants such option for periods of up to five years,
with vesting periods determined at the sole discreti on of the board and at prices equal to the volume
weighted average price for the five days immediately preceding the date the options were granted.
The fair value of the options is measured at the date the options are granted, using the Black-Scholes
option pricing model, and is recognized over the period that the employees earn the options. The fair
rresponding increase in equity settled employee
value is recognized as an expense with a co
compensation reserve. The amount recognized as expense is adjusted to reflect the number of share
options expected to vest.
(l)
Reclamation and closure cost obligations
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental
disturbance is caused by the exploration, development or ongoing production of a mineral property
interest. Such costs arising for the decommissioning of plant and other site preparation work,
discounted to their net present value, are provided for and capitalized at the start of each project to
the carrying value of the asset, as soon as the obligation to incur such costs arises. Discount rates
using a pre-tax rate that reflect the time value of money are used to calculate the net present value.
These costs are charged against profit or loss over the economic life of the related asset, through
amortization using either the unit-of-production or t he straight line method. The related liability is
adjusted for each period for the unwinding of the di scount rate and for changes to the curre nt market-
based discount rate, amount or timing of the underly ing cash flows needed to settle the obligation.
Costs for restoration of subsequent site damage which is created on an ongoing basis during
production are provided for at their net present values and charged against profits as extraction
progresses.
The Company has $104,000 of reclamation deposits held with the Ministry of Mines should any o ther
reclamation and closure cost obligations arise from its obligations to undertake site reclamation and
remediation in connection with its operating activities in British Columbia and $25,764 of reclamation
deposits held with the State of Nevada should any asset retirement obligation arise from
its
obligations to undertake site reclamation and remediat ion in connection with its op erating activities in
Nevada.
When the Company enters into an option agreement on its mineral properties, as part of the option
agreement, responsibility for any reclamation and remediation becomes the responsibility of the
optionee.
(m)
Income (loss) per share
The Company presents the basic and diluted income (loss) per share data for its common shares,
calculated by dividing the loss attributable to co mmon shareholders of the Company by the weighted
average number of common shares outstanding during the period. Diluted income (loss) per share is
determined by adjusting the income (loss) attr ibutable to common shareholders and the weighted
average number of common shares outstanding for the effects of all dilutive potential common n shares.
17
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(n)
Non-current assets held for sale
Non-current assets, or disposal groups comprisi ng assets and liabilities, that are expected to be
recovered primarily through sale rather than through continuing use, are classified as held for sale.
Immediately before classification as held for sale, the assets, or components of a disposal group, are
re-measured in accordance with the Company’s accounting policies. Thereafter generally the assets,
or disposal group, are measured at the lower of their carrying amount and fair value less cost to sell.
Impairment losses on initial classification as held for sale and subsequent gains or losses on
measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative
impairment loss.
re-
(o)
Adoption of new and revised standards and interpretations
The IASB issued a number of new and revised
amendments and related interpretations which are effective for the Company’s financial year
beginning on or after January 1, 2012. For the pur pose of preparing and presenting the financial
statements for the relevant periods, the Company has consistently adopted all these new standards
for the relevant reporting periods. At the date of authorization of these financial statements, the IASB
and IFRIC has issued the following new and revised Standards and Interpretations which are not yet
effective for the relevant reporting periods:
International Accounting Standards, IFRS
that provide a
(i) In December 2010, the IASB issued an amendment to IAS 12 – Income taxes
practical solution to determining the recovery of investment properties as it relates to the accounting
for deferred income taxes. This amendment is effective for annual periods beginning on or after July 1,
2011, with earlier adoption permitted. In addition, amendments to IFRS 7 Financial
Instruments:
Disclosures are effective for annual periods beginning on or after July 1, 2011 and introduce
enhanced disclosure around transfers of financial assets and associated risks. The Company does
not anticipate that these amendments will have a significant impact on its condensed consolidated
financial statements.
(ii) The following Standards are effective for annual periods beginning on or after January 1, 2013.
The Company is assessing the impact of these standards.
IFRS 10 Consolidated Financial Statements will repl ace existing guidance on consolidation in IAS 27
Consolidated and Separate Financial Statements, and SIC 12 Consolidation – Special Purpose
Entities.
IFRS 11 Joint Arrangements will replace IAS 31 Interests in Joint Ventures, and
Controlled Entities – Non-monetary Contributions by Venturers.
SIC 13 Jointly
IFRS 12 Disclosure of Interests in Other Entities is the new Standard for disclosure requirements for
all forms of interests in other entities, including subsidiaries, joint arrangements, associates and
unconsolidated structured entities.
IFRS 13 Fair Value Measurement was issued to remedy the inconsistencies in the requirements for
measuring fair value and for disclosing information about fair value measurement in various current
IFRSs.
18
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
3.
Significant accounting policies (Continued)
(o)
Adoption of new and revised standards and interpretations (continued)
IAS 27 Separate Financial Statements has been updat ed to require an entity presenting separate
financial statements to account for those investments at cost or in accordance with IFRS 9 Financial
Instruments.
IAS 28 Investments in Associates and Joint Ventures has been revised and it is to be applied by all
entities that are investors with joint control of, or significant influence over, an investee.
(iii) The following Standard is effective for annual periods beginning on or after January 1, 2015. The
Company is assessing the impact of this standard.
IFRS 9 Financial Instruments (‘‘IFRS 9’’) was issued
to replace IAS 39, Financial Instruments:
Recognition and Measurement. IFRS 9 addresses t he classification and measurement of financial
assets. IFRS 9 was subsequently reissued in October 2010, incorporating new requirements on
accounting for financial liabilities.
4.
Accounts receivable and prepaid expenses
Accounts receivable and prepaid expenses consist of the following:
Accounts receivable
HST receivable
Allowance for doubtful accounts
Prepaid expenses
5.
Marketable securities
December 31, December 31,
2010
$ 327,321
187,300
(75,030)
98,809
$ 538,400
2011
$ 616,774
69,424
(75,030)
537,238
$ 1,148,406
Marketable securities consist of equity securities over which the Company does not have control or
significant influence. Marketable securities are designated as available for sale and valued at fair
value. Unrealized gains and losses due to period end revaluation to fair value, other than those
determined to be other than significant or prolonged losses are recorded as other comprehensive
income or loss. During the year ended December 31, 2011, the Company determined that $987,600
(2010 - $Nil; 2009 - $80,600) of unrealized loss recorded in available-for-sale financial assets was a
result of significant or prolonged losses and as a result recognized an impairment of marketable
securities of a corresponding amount in net income for the year.
19
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
6.
Inventory
Inventory consists of 1,597 ounces of gold which is valued at the lower of average cost of mining and
estimated net realizable value. The market value of the gold at December 31, 2011 is $2,547,173
(2010 - $2,268,986).
7.
Investments in associates
The investment in associates is comprised of the following:
Investment in Tarsis Resources Ltd. (i)
Investment in Gold Mountain Mining Corporation (ii)
December 31
2011
$ -
10,179,423
December 31,
2010
$ 941,276
-
$ 10,179,423
$ 941,276
(i)
Tarsis Resources Ltd.
On July 23, 2007, the Company sold interests in certain mineral exploration properties located in the
Yukon Territory and Mexico for a total of 3,500,000 common shares of Tarsis Resources Ltd.
(“Tarsis”) resulting in a gain on sale of $969,314 and the recording of an initial investment in Tarsis in
the amount of $1,120,000. In addition, Almaden reta ined a net smelter royalty equal to 2% of all
metals discovered on the properties.
In May 2008, the Company sold its interest in the Prospector Mountain property located in the Yukon
Territory for 100,000 common shares of Tarsis and a cash payment of $30,000. Almaden retained a
2% net smelter royalty (“NSR”) over any minerals produced from the property, however, half of the net
smelter royalty may be purchased at any time after production commences for fair value as
determined by an independent valuator. Tarsis al so agreed to issue 500,000 common shares of
Tarsis upon receipt of a bankable feasibility study for the property.
In the year ended December 31, 2010, Almaden’s intere st in Tarsis decreased from 27.6% to 16.6%
resulting in the recognition of a loss on dilution of $168,449.
During the year ended December 31, 2011, the Co mpany determined it no longer had significant
influence over Tarsis as a result of changes
in common management between Tarsis and the
Company. The Company therefore reclassified its inte rest in Tarsis to marketable securities from
investment in associate and recognized a gain on reclassification in the amount of $1,077,223 which
is included in gain (loss) on investment in associate. Prior to this determination and reclassification
the Company recognized a loss on dilution of $122,843 as a result of a private placement in Tarsis.
20
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
7.
Investments in associates (Continued)
(i)
Tarsis Resources Ltd. (continued)
Prior to the reclassification to marketable securi ties, Almaden had recorded its equity share of Tarsis’
loss during the year ended December 31, 2011 in the amount of a loss $25,193 (2010 – loss of
$151,926; 2009 - $90,908) which is also included in gain (loss) on investment in associate.
During the year ended December 31, 2011, the Company charged Tarsis $97,055 (2010 - $54,515)
for office rent and various expenses and surveys undertaken on behalf of Tarsis. These amounts
were valued at the exchange amount agreed to by the parties.
(ii)
Gold Mountain Mining Corporation
On July 26, 2011, the Company closed an Asset Sale Agreement under
acquired 100% of the Elk gold deposit. Almaden retains a 2% NSR in the project. Under the terms of
the agreement, Almaden received 35 million common shares of Gold Mountain and recorded a gain
on sale in the amount of $4,122,166 as described in Note 9(a).
Concurrent with the transaction,
Almaden sold 8.25 million common shares of Gold Mountain to third parties at $0.355 per share for
gross proceeds of $2,928,750 resulting in no gain or loss on sale and now holds 26.75 million
common shares of Gold Mountain representing a 38.8% interest. Upon completion of the transaction,
Duane Poliquin (Chairman and Director of Almaden) and Morgan Poliquin (CEO and director of
Almaden) became directors of Gold Mountain.
which Gold Mountain
Almaden is accounting for this investment using the equity accounting method as the Company has
determined that significant influence exists. Almaden has recorded its equity share of Gold Mountain’s
loss during the year ended December 31, 2011 in the amount of $26,827 (2010 - $Nil; 2009 - $Nil).
The fair value of the investment at December 31, 2011 is $14,177,500 (December 31, 2010 - $Nil).
During the year ended December 31, 2011, the Company charged Gold Mountain $271,602 (2010 -
Nil) for expenditures relating to the Elk project and IP
services undertaken on behalf of Gold
Mountain. These amounts were valued at the exchange amount agreed to by the parties. The
following table summarizes the financial information of Gold Mountain for its year ended December
31, 2011:
Total assets
Total liabilities
Revenue
Loss
December 31,
2011
$31,262,296
140,914
400
166,305
21
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
8.
Property, plant and equipment
Auto
equip.
Furniture
& fixtures
Computer
hardware
Computer
software
Geological
library
Field
equip.
Leasehold
Drill
equip.
$
$
$
$
$
$
$
$
Total
$
Cost
December 31,
2010
469,818
138,625
270,861
133,918
65,106
367,740
27,181
760,180
2,233,429
Additions
138,643
Disposals
December 31,
2011
(55,143)
570
-
45,634
26,135
-
-
-
-
12,792
-
-
-
454,500
678,274
-
(55,143)
553,318
139,195
316,495
160,053
65,106
380,532
27,181 1,214,680
2,856,560
Accumulated depreciation
December 31,
2010
309,008
117,041
229,451
70,251
53,135
220,737
26,059
345,022
1,370,704
Disposals
(30,747)
-
-
-
-
-
-
( 30,747)
-
Depreciation
December 31,
2011
Carrying
amounts
December 31,
2010
December 31,
2011
61,720
4,374
19,268
23,020
2,394
30,680
1,122
128,482
271,060
339,981
121,415
248,719
93,271
55,529
251,417
27,181
473,504
1,611,017
160,810
21,584
41,410
63,667
11,971
147,003
1,122
415,158
862,725
213,337
17,780
67,776
66,782
9,577
129,115
-
741,176
1,245,543
22
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
8.
Property, plant and equipment (continued)
Auto.
equip.
Furniture
& fixtures
Computer
hardware
Computer
software
Geological
library
Field
equip
Mill
equip.
Leasehold
Drill
equip.
$
$
$
$
$
$
$
$
$
Total
$
Cost
December 31,
2009
371,015
133,435
265,104
80,455
65,106
353,733
323,264
27,181
476,270
2,095,563
Additions
98,803
-
5,190
-
5,757
53,463
-
55,710
-
-
-
(41,703)
-
-
-
-
283,910
502,833
-
(41,703)
Disposals
December 31,
2010
469,818
138,625
270,861
133,918
65,106
367,740
323,264
27,181
760,180
2,556,693
Accumulated depreciation
December 31,
2009
261,261
112,294
212,938
54,422
50,143
230,288
-
22,395
276,721
1,220,462
Disposals
-
-
-
-
(39,338)
-
47,747
4,747
16,513
15,829
2,992
29,787
-
-
-
-
( 39,338)
3,664
68,301
189,580
Depreciation
December 31,
2010
Carrying
amounts
December 31,
2009
Reclassified to
Asset Held for
Sale (Note 20)
December 31,
2010
309,008
117,041
229,451
70,251
53,135
220,737
-
26,059
345,022
1,370,704
109,754
21,141
52,166
26,033
14,963
123,445
323,264
4,786
199,549
875,101
160,810
21,584
41,410
63,667
11,971
147,003
323,264
1,122
415,158
1,185,989
-
-
-
-
-
(323,264)
-
-
( 323,264)
-
160,810
21,584
41,410
63,667
11,971
147,003
-
1,122
415,158
862,725
23
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
9.
Exploration and evaluation assets
Mineral properties
$
$
$
ATW
Willow
Caballo
Blanco
El
Cobre
$
Tuligtic
San
Carlos
Caldera
Other
Properties
Total
$
$
$
$
$
Acquisition costs
Opening balance
(December 31, 2010)
Additions
Impairment of deferred
acquisition costs
Recoveries
Closing balance
(December 31, 2011)
Deferred exploration costs
Opening balance
(December 31, 2010)
Costs incurred during the period
Drilling and related costs
Professional/technical fees
Claim maintenance/lease cost
Geochemical
Travel and accommodation
Geology, engineering
Salaries and wages
Supplies and misc.
Geophysical, geosciences
Reclamation, environmental
Recoveries
Impairment of deferred
exploration costs
Proceeds from options
Income from mineral property
Options
Closing balance
(December 31, 2011)
Total exploration and
evaluation assets
46,451
-
148,254
-
4,321
-
41,988
3,611
231,059
-
1
-
50,205
-
401,092
113,912
923,371
117,523
-
-
-
-
-
(4,321)
-
-
-
-
-
-
-
-
(19,848)
(19,848)
-
(4,321)
46,451
148,254
-
45,599
231,059
1
50,205
495,156
1,016,725
1,063,665
369,339
72,840
136,844
1,382,454
-
443,237
47,395
3,515,774
208,945
-
-
-
1,732,164
25,571
23,777
40,499
18,340
566,859
-
331
-
-
1,941,109
2,449
90,183
768,009
15,580
18,246
1,216
24,020
117,955
52,616
13,453
229,974
473,060
-
-
76,315
-
35
-
-
-
-
-
-
-
-
-
-
-
-
924,242
12,177
25,741
321,981
179,266
382,971
-
-
3,643
180,881
3,248
552
2,823
14,894
186,127
218,000
-
-
-
-
-
-
-
489,500
203,143
7,000
14,018
(129,555)
(156,956)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,964
-
135
880
-
-
(20,023)
41,194
34,323
16,650
965,436
398,186
655,202
5,953
193,860
11,837
16,273
-
-
217,148
926,916
21,018
(306,534)
(56,195)
-
(242,804)
(298,999)
-
-
-
(11,500)
-
(11,500)
-
(5,000)
(5,000)
(10,642)
198,583
5,937,911
326,446
260,575
(72,840)
605,448
4,630,341
1,390,111
629,914
1,436,562
778,168
-
-
742,292
6,012,795
-
432,595
245,978
9,453,685
787,891
6,243,854
1
482,800
741,134
10,470,410
24
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
9.
Exploration and evaluation assets (Continued)
Mineral properties
Acquisition costs
Opening balance
(December 31, 2009)
Additions
Proceeds from options
Recoveries
Impairment of deferred
acquisition costs
Proceeds received from options on
mineral properties in excess of cost -
reclassified to income
Closing balance
(December 31, 2010)
Deferred exploration costs
Opening balance
(December 31, 2009)
Costs incurred during the period
Drilling and related costs
Professional/technical fees
Claim maintenance/lease cost
Geochemical
Travel and accommodation
Camp costs
Truck rental and fuel
Geology, engineering
Salaries and wages
Supplies and misc.
Geophysical, geosciences
Reclamation, environmental
Proceeds from options
Recoveries
Impairment of deferred
exploration costs
Proceeds received from options on
mineral properties in excess of cost
-
reclassified to income
Recovery in value of mineral
interests
Closing balance
(December 31, 2010)
Reclassified to asset held for sale
(Note 20)
Total exploration and
evaluation assets
Elk
$
ATW
Willow
Caballo
Blanco
El
Cobre
Tuligtic
San
Carlos
Caldera
Other
Properties
Total
$
$
$
$
$
$
$
$
$
1,075,694
-
46,451
-
148,254
-
4,321
-
-
41,988
11,070
219,989
1
-
50,205
-
267,555
138,944
1,603,551
400,921
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(168,600)
(168,600)
-
-
(5,289)
(5,289)
168,482
168,482
1,075,694
46,451
148,254
4,321
41,988
231,059
1
50,205
401,092
1,999,065
5,170,058
847,863
332,610
66,694
-
23,360
-
372,461
-
6,813,046
1,182,922
202,601
425,444
9,079
7,406
5,815
-
9,582
703,535
139,450
-
158,482
2,403,978
4,276
61,418
93,581
10,963
9,402
58,155
678,133
1,500
6,885
23,077
748
6,365
61,664
51,942
29,920
139,159
321,260
-
-
30,449
182,933
17,642
-
314
4,649
23,189
93,132
10,902
1,275
-
-
-
-
403
-
34
-
-
-
(3,200)
-
-
174,893
54,979
188,810
64,407
255,715
-
38,169
54,310
73,468
-
-
-
-
-
-
-
-
-
117
-
-
-
-
-
-
-
-
-
900
-
-
-
-
-
16,858
19,921
7,412
10,694
-
(4,427)
(49,044)
-
-
-
-
-
-
-
-
-
-
-
18,625
-
-
-
98,318
21,323
1,959
-
-
-
-
(254,181)
29,491
41,523
3,236
-
-
-
-
33,056
49,623
35,200
-
-
-
49,426
27,101
11,908
1,800
455,540
223,640
188,810
64,407
275,643
188,008
118,218
115,153
92,918
-
-
-
2,083
1,426
-
3,720
(23,000)
(1,770,000)
(1,793,000)
-
-
(7,243)
(63,914)
(466,481)
(720,662)
-
-
-
1,754,948
1,754,948
45,950
5,317
84,323
2,514,617
215,802
36,729
6,146
136,844
1,359,094
-
70,776
47,395
4,387,403
7,684,675
8,760,369
1,063,665
1,110,116
369,339
517,593
72,840
77,161
136,844
178,832
1,382,454
1,613,513
-
1
443,237
493,442
47,395
448,487
11,200,449
13,199,514
(8,760,369)
-
-
-
-
-
-
-
-
(8,760,369)
-
1,110,116
517,593
77,161
178,832
1,613,513
1
493,442
448,487
4,439,145
25
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
9.
Exploration and evaluation assets (Continued)
The following is a description of the Company’s most significant property interest and related spending
commitments:
(a)
Elk
Gold
On February 15, 2011, the Company entered into an Asset Sale Agreement under which
Mountain would acquire 100% of the Elk gold depos it and Almaden would retain a 2% NSR in the
project. Under the terms of the Agreement, Almaden received 35 million common shares of Gold
Mountain resulting in a gain on sale of $4,122,166. An additional 2,000,000 common shares will be
held in escrow subject to the following conditions: 1,000,000 common shares upon the establishment
of 1,000,000 ounces of measured or indicated
common shares upon the establishment of an additional 1,000,000 ounces of measured or indicated
reserves of gold on the property. Any bonus shares not released from escrow within five years will be
cancelled. The aforementioned Goldgroup shares are subject to certain statutory holding periods.
Closing of the transaction was completed on July 26, 2011 as described in Note 7(ii). The Company
has included in proceeds of disposition management’s best estimate of the fair value of the
contingently issuable shares described above in the amount of $144,000.
reserves of gold on the property; and 1,000,000
(b)
ATW
The Company has a net 66.2% interest in this diamond property in the Northwest Territories through
its ownership of shares in ATW Resources Ltd. which holds the mineral claim.
(c)
Willow
The Company acquired a 100% interest in the Willow property in Nevada by staking in 2007.
(d)
Caballo Blanco / El Cobre
On October 14, 2011 the Company completed the sale of its 30% interest in the Caballo Blanco
property to Goldgroup Mining Inc. (“Goldgroup”). The Company retains in its Mexican subsidiary an
undivided 1.5% NSR in Caballo Blanco. In consi deration for Almaden’s 30% interest in Caballo
Blanco, Goldgroup paid to Almaden cash consideration of US$2,500,000 and issued to Almaden
7,000,000 of its common shares at a fair value of $7,727,300, representing a 5.4% interest
in
Goldgroup. An additional 7,000,000 of its common shares will be issued to Almaden under the
following conditions: 1,000,000 common shares upon commencement of commercial production on
the Caballo Blanco project, 2,000,000 common s hares upon measured and indicated resources
including cumulative production reaching 2,000,000 ounces of gold, 2,000,000 common shares upon
measured, indicated and inferred resources in cluding cumulative production reaching 5,000,000
ounces of gold and 2,000,000 common shares upon measured, indicated and inferred resources
including cumulative production reaching 10,000,000 ounces of gold. The Company has recorded
the contingent share receivable at its estimat ed fair value of $518,700 as a component of the
proceeds and recognized a gain of $10,282,620 on the sale. The aforementioned Goldgroup shar es
are subject to certain statutory holding periods.
Goldgroup also transferred to Almaden its 40% interest in the El Cobre property. The Company
owns 100% interest in the El Cobre property subj ect to a sliding scale royalty payable to a third
party..
26
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
9.
Exploration and evaluation assets (Continued)
(e)
Tuligtic
The Company acquired a 100% interest in the Tuligtic property. During 2009, the Company entered
into an agreement with Antofagasta Minerals S.A. (“Antofagasta”) for Antofagasta to earn a 60%
interest in the property. Antofagasta would have to incur exploration expenditures of US$7,000,000
and make payments to Almaden of US$1,000,000 over five years. In February 2010, Antofagasta
terminated its option on the property. The Company has incurred significant exploration expenditures
on this property in 2010 and 2011.
(f)
San Carlos / San Jose
The Company acquired a 100% interest in the San Carlos claims by staking and purchasing a 100%
interest in the San Jose claim subject to a 2% NSR. During 2007, the Company purchased the NSR
for US$20,000 and issued 25,000 share purchase warrants for a term of three years exercisable at a
price of $3.00 per share. During the year ended December 31, 2010 these warrants expired
unexercised. The impairment recognized in 2011 is $56,195 (2010 - $254,181; 2009 - $329,747).
(g)
Caldera
The Company acquired a 100% interest in the Caldera property by staking. During the year ended
December 31, 2010, the Company entered into an agreement with Windstorm Resources Inc.
("Windstorm") to earn a 60% interest in the proper ty. Windstorm would have to incur exploration
expenditures of US$5,000,000 and issue 1,000,000 shares to the Company within six years.
(h)
Other
(i) Nicoamen River
The Company staked and acquired a 100% interest in the Nicoamen River property. During
2009, the Company entered into an agreement with Fairmont Resources Inc. (“Fairmont”) to earn
a 60% interest. Fairmont has to incur ex ploration expenditures of $2,000,000, pay Almaden
$25,000 and issue 300,000 shares to the Company within five years from the listing of the stock
on the TSX Venture or other Canadian Stock Exchange. In June 2011, Fairmont terminated its
option on the property.
(ii) Skoonka Creek
The Company has a 34.14% interest in the Skoonka Creek gold property.
(iii) Merit
The Company acquired a 100% interest in the Merit property by staking. During 2010, the
Company entered into an agreement with Sunburst Explorations Inc. (“Sunburst”) to earn a 60%
interest. Sunburst has to incur exploration expenditures of $3,000,000 and issue 700,000 shares
to the Company within five years from the listing of the stock on the TSX Venture Exchange.
2(cid:26)
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
9.
Exploration and evaluation assets (Continued)
(h)
Other (Continued)
(iv) Yago
The Company acquired a 100% interest in the Tepic claim by staking and purchasing a 100%
interest in the La Sarda, Guadalupe and Sagitario claims. During 2006, the Company entered into
an agreement to acquire a 100% interest in the Gallo de Oro claim. During 2007, the Company
acquired a 100% interest in the As de Oro claim. During the year ended December 31, 2011, the
Company entered into an agreement with G4G Resources Ltd. ("G4G") to earn a 60% interest in
the property. G4G would have to pay the Company $50,000, incur exploration expenditures of
US$6,000,000 and issue 3,000,000 shares to the Com pany within five years. This transaction
was not completed. The impairment recognized in 2011 is $77,479 (2010 - $58,327; 2009 -
$61,409).
(v) Bufa
The Company staked and acquired a 100% interest in the Guadalupe claim. During 2005, the
Company entered into an agreement with Lincoln Gold Corp. (“Lincoln”) to earn a 60% interest.
Lincoln has to incur exploration expenditures of US$3,500,000 and issue 1,550,000 shares to the
Company over five years. In February 2010, the Company sold its 100% interest in the property
to Lincoln for 6,000,000 common shares of Lincoln to the Company (fair market value on receipt –
$1,770,000) resulting in a gain on disposal of $1,754,948. The Company retains a 2% NSR.
(vi) Matehuapil
During 2007, the Company was successful in its bid to acquire a 100% interest in the Matehuapil
claim. An initial payment of $117,572 was paid, representing 20% of the purchase price. The
Company was required to put up two bonds (“Mineral property deposit”), one in the amount of
$446,964 representing four pending instalment payments of 20% each to be paid in six month
instalments from the issuance of title and one in the amount of $138,929 to pay for the purchase
of an NSR royalty. During 2008, the Company paid the remainder of the purchase price outright.
The bond in the amount of $446,964 was returned to the Company and the bond for the purchase
of the NSR royalty will remain in place until the NSR is purchased. The Company subsequently
entered into an agreement with Golden Minerals Company (“Golden Minerals”) formerly Apex
Silver Mines Limited to earn a 60% interest. Golden Minerals must incur exploration expenditure s
of US$2,600,000 by December 1, 2013 and make cash payments of Mexican pesos $3,312,000
by July 10, 2009 (received).
(vii) Tropico
During 2008, the Company and its 60% joint venture partner Santoy Resources Ltd. entered into
an agreement with Skeena Resources Ltd. (“Skeena”) to earn a 60% interest. Skeena must incur
expenditures totalling US$3,000,000 and issue a total of 1,250,000 shares to the joint venture
over 5 years. During the year ended December 31, 2010, the joint venture sold its 100% interest
in the property to Skeena. The Company received 2,560,000 common shares of Skeena (fair
market value on receipt - $153,600). The joint venture retains a 2% NSR interest in the property.
Other impairments of interest in mineral properties
(viii)
The Company recorded impairments in its interest in other mineral properties in aggregate of
$185,175 during the year ended December 31, 2011 (2010 - $408,200; 2009 - $377,726).
28
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
10.
Share capital and reserves
(a)
Authorized share capital
At December 31, 2011, the authorized share capital comprised an unlimited number of common
shares. The common shares do not have a par value. All issued shares are fully paid.
(b)
Details of private placement and other issues of common shares in 2011, 2010 and
2009 are as follows:
The Company issued 100,000 common flow-through shares on February 24, 2011 on a private
placement basis at a price of $4.00 per share, after incurring issue costs of $19,257. Cash
commissions totalling $4,800 were paid. The premi um above market value on the shares issued was
$20,000 and it was recorded as a tax recovery when the related qualifying expenditures were made.
On October 14, 2011, the Company issued 10,000 common shares at a deemed value of $2.55 per
share as a payment to modify the Caballo Blanco royalty agreement.
The Company issued 81,200 common flow-through shares on October 13, 2010 on a private
placement basis at a price of $3.50 per share, after incurring issue costs of $14,175. Cash
commissions totalling $8,400 were paid.
The Company issued 3,000,000 common shares on September 22, 2010 on a private placement
basis at a price of $2.50 per share. Cash commissions, a corporate finance fee and related expenses
totalled $650,500. On September 28, 2010, the Company issued a further 450,000 common shares
at a price of $2.50 per share on the closing of the over-allotment option portion of the September 22,
2010 private placement. Cash commissions and expenses totalling $82,045 were paid.
The Company issued 1,003,821 common flow-through shares on June
placement basis at a price of $1.20 per share, after incurring issue costs of $116,712. 49,997
broker’s warrants entitling the brokers to purchase 49,997 shares at $1.20 per shares until June 29,
2011 were issued to brokers in respect of this placement. The fair value of the broker’s warrants of
$7,500 was allocated to share capital and reserves for warrants.
29, 2010 on a private
The Company issued 350,000 units on March 16, 2010 on a private placement basis at a price of
$1.00 per unit, after incurring issue costs of $32,078. Each unit consists of one common flow-through
share and one-half of a non-flow-through warrant wit h each whole warrant entitling the holder to
purchase one additional common share at a price of $1.00 per share until March 16, 2011. 4,375
non-flow-through common shares and 2,625 flow-through s hares were issued to finders in r espect of
this placement. The fair value of the warrants issued as part of the private placement of $28,000 was
allocated to share capital and reserves for warrants.
29
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
10.
Share capital and reserves (Continued)
(b)
Details of private placement and other issues of common shares in 2011, 2010 and
2009 are as follows: (continued)
The Company issued 3,060,000 units on December 17, 2009 on a private placement basis at a price
of $0.85 per unit, after incurring issue costs of $169,637. Each unit consists of one common share
and one-half of a warrant with each whole warrant entitling the holder to purchase one additional
common share at a price of $1.40 per share until December 17, 2011. The fair value of the warrants
issued as part of the private placement of $774,560 was allocated to share capital and reserves for
warrants. 236,000 finders warrant entitling the finder to purchase 236,00 0 units at $0.85 per unit until
December 17, 2011 were issued to finder in respect of this placement. The fair value of the finder’s
warrant of $146,320 was allocated to share capital and reserves for warrants.
The Company issued 226,316 units on March 31, 2009 on a private placement basis at a price of
$0.95 per unit, after incurring issue costs of $12,563. Each unit consists of one common flow-through
share and one-half of a non-flow-through warrant wit h each whole warrant entitling the holder to
purchase one additional common share at a price of $1.15 per share until March 31, 2010. The fair
value of the warrants issued as part of the private placement of $61,105 was allocated to share capital
and reserves for warrants. 7,000 non-flow-through common shares were issued to a finder in respect
of this placement.
(c)
Warrants
The continuity of warrants for the years ended December 31, 2011 and 2010 are as follows:
Expiry date
December 17, 2011
December 17, 2011
March 16, 2011
June 29, 2011
Exercise
price
$ 0.85
$ 1.40
$ 1.25
$ 1.20
Weighted average
exercise price
Exercise
Price
Expiry date
March 20, 2010
$ 3.00
September 30, 2010 $ 1.15
$ 0.85
December 17, 2011
$ 1.40
December 17, 2011
$ 1.25
March 16, 2011
$ 1.20
June 29, 2011
Weighted average
exercise price
December 31,
2010 Granted Exercised
236,000
1,180,500
40,000
24,999
(1,481,499)
236,000
1,180,500
40,000
24,999
1,481,499
-
-
-
-
-
Expired
-
-
-
-
-
December 31,
2011
-
-
-
-
-
$ 1.30
-
$ 1.30
-
-
December 31,
December 31,
2009 Granted Exercised
-
113,158
-
467,500
135,000
24,998
(740,656)
-
-
-
-
175,000
49,997
224,997
25,000
113,158
236,000
1,648,000
-
-
2,022,158
Expired
(25,000)
-
-
-
-
-
(25,000)
2010
-
-
236,000
1,180,500
40,000
24,999
1,481,499
$ 1.34
$ 1.24
$1.33
$ 3.00
$ 1.30
30
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
10.
Share capital and reserves (Continued)
(c)
Warrants (continued)
Exercise
Expiry date
Price
November 14, 2009 $ 1.00
$ 3.00
March 20, 2010
$ 1.15
March 31, 2010
$ 0.85
December 17, 2011
$ 1.40
December 17, 2011
December 31,
2008
86,000
25,000
-
-
-
111,000
Granted
-
-
113,158
236,000
1,648,000
1,997,158
Exercised
-
-
-
-
-
-
Expired
(86,000)
-
-
-
-
(86,000)
December 31,
2009
-
25,000
113,158
236,000
1,648,000
2,022,158
Weighted average
exercise price
$ 1.45
$ 1.32
-
$ 1.00
$ 1.34
On March 31, 2010, the Company extended the expiry date of 113,158 warrants for six months. The
fair value for the modification of these warrants was recalculated on the extension date and an
adjustment of $Nil was recorded.
The fair value of the 49,997 warrants issued June 29, 2010 was estimated at $7,500 using the Black-
Scholes option pricing model based on the following weighted average assumptions: risk free interest
rate of 1.54%; expected life of 1 year; dividend rate of 0%; and volatility of 58.29%.
The fair value of the 175,000 warrants issued March 16, 2010 was estimated at $28,000 using the
Black-Scholes option pricing model based on the following weighted average assumptions: risk free
interest rate of 1.63%; expected life of 1 year; dividend rate of 0%; and volatility of 67.14%.
The fair value of the 1,884,000 warrants issued December 17, 2009 was estimated at $920,880 using
the Black-Scholes option pricing model based on the following weighted average assumptions: risk
free interest rate of 1.36%; expected life of 2 years; dividend rate of 0%; and volatility of 90.75%.
The fair value of the 113,158 warrants issued March 31, 2009 was estimated at $61,105 using the
Black-Scholes option pricing model based on the following weighted average assumptions: risk free
interest rate of 0.96%; expected life of 1 year; dividend rate of 0%; and volatility of 109.37%.
31
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
10.
Share capital and reserves (Continued)
(d)
Share purchase option compensation plan
The Company’s stock option plan permits the issuanc e of options up to a maximum of 10% of the
Company’s issued share capital. Stock options iss ued to any consultant or person providing investor
relations services cannot exceed 2% of the issued and outstanding common shares in any twelve
month period. At December 31, 2011, the Company had reserved 437,232 stock options that maybe
granted. The exercise price of any option cannot be less than the volume weighted average trading
price of the shares for the five trading days i mmediately preceding the date of the grant. The
maximum term of all options is five years. The Board of Directors determines the term of the option
(to a maximum of five years) and the time duri ng which any option may vest. Options granted to
consultants or persons providing investor relations services shall vest in stages with no more than
25% of such option being exercisable in any three month period. All options granted during the year
ended December 31, 2011 vested on the date granted. The continuity of stock options for the years
ended December 31, 2011, 2010 and 2009 are as follows:
Expiry date
July 6, 2011
November 22, 2011
March 25, 2012
September 10, 2012
November 1, 2012
November 15, 2012
December 13, 2012
December 13, 2012
March 17, 2013
December 29, 2013
November 25, 2014
January 4, 2015
April 7, 2015
June 21, 2015
July 16, 2015
August 27, 2015
September 20, 2015
November 22, 2015
June 8, 2016
August 15, 2016
Options outstanding
and exercisable
Weighted average
exercise price
Exercise
price
$ 2.50
$ 2.73
$ 3.90
$ 2.32
$ 2.72
$ 2.68
$ 2.52
$ 4.30
$ 2.35
$ 0.68
$ 0.81
$ 1.14
$ 0.94
$ 1.00
$ 0.92
$ 2.22
$ 2.67
$ 2.73
$ 3.29
$ 2.93
December 31,
2010
1,695,000
100,000
-
500,000
-
100,000
50,000
25,000
40,000
125,000
150,000
1,090,000
35,000
240,000
200,000
355,000
100,000
175,000
-
-
Granted Exercised
1,695,000
-
-
-
-
-
50,000
-
-
-
-
50,000
35,000
-
-
150,000
-
50,000
-
-
-
-
45,000
-
60,000
-
-
-
-
-
-
-
-
-
-
-
-
-
2,320,000
200,000
Expired/
cancelled
-
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31,
2011
-
-
45,000
500,000
60,000
100,000
-
25,000
40,000
125,000
150,000
1,040,000
-
240,000
200,000
205,000
100,000
125,000
2,320,000
200,000
4,980,000
2,625,000
2,030,000
100,000
5,475,000
$ 1.95
$ 3.26
$ 2.43
$ 2.73
$ 2.39
32
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
10. Share capital and reserves (Continued)
(d)
Share purchase option compensation plan (Continued)
Expiry date
June 17, 2010
September 15, 2010
July 6, 2011
November 22, 2011
September 10, 2012
November 15, 2012
December 13, 2012
December 13, 2012
March 17, 2013
December 29, 2013
November 25, 2014
January 4, 2015
April 7, 2015
June 21, 2015
July 16, 2015
August 27, 2015
September 20, 2015
November 22, 2015
Options outstanding
and exercisable
Weighted average
exercise price
Exercise
Price
$ 1.79
$ 1.07
$ 2.50
$ 2.73
$ 2.32
$ 2.68
$ 2.52
$ 4.30
$ 2.35
$ 0.68
$ 0.81
$ 1.14
$ 0.94
$ 1.00
$ 0.92
$ 2.22
$ 2.67
$ 2.73
December 31
2009
240,000
140,000
1,795,000
-
500,000
100,000
50,000
-
40,000
655,000
150,000
-
-
-
-
-
-
-
Granted Exercised
-
(140,000)
(100,000)
-
-
-
-
-
-
(530,000)
-
(50,000)
(40,000)
-
(10,000)
(25,000)
-
-
-
-
-
100,000
-
-
-
25,000
-
-
-
1,140,000
75,000
240,000
210,000
380,000
100,000
175,000
Expired/
cancelled
(240,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31
2010
-
-
1,695,000
100,000
500,000
100,000
50,000
25,000
40,000
125,000
150,000
1,090,000
35,000
240,000
200,000
355,000
100,000
175,000
3,670,000
2,445,000
(895,000)
(240,000)
4,980,000
$ 1.98
$ 1.55
$ 1.03
$ 1.79
$ 1.95
33
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
10.
Share capital and reserves (Continued)
(d)
Share purchase option compensation plan (Continued)
Expiry date
December 1, 2009
December 14, 2009
June 17, 2010
September 15, 2010
July 6, 2011
September 7, 2009
September 10, 2012
November 15, 2012
December 14, 2012
March 17, 2013
December 29, 2013
November 25, 2014
Options outstanding
and exercisable
Weighted average
exercise price
Exercise
Price
$ 0.39
$ 1.67
$ 1.79
$ 1.07
$ 2.50
$ 2.23
$ 2.32
$ 2.68
$ 2.52
$ 2.35
$ 0.68
$ 0.81
December 31
2008
154,000
806,000
240,000
140,000
1,795,000
25,000
500,000
100,000
50,000
40,000
655,000
-
Granted Exercised
(154,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150,000
Expired/
cancelled
-
(806,000)
-
-
-
(25,000)
-
-
-
-
-
-
December 31
2009
-
-
240,000
140,000
1,795,000
-
500,000
100,000
50,000
40,000
655,000
150,000
4,505,000
150,000
(154,000)
(831,000)
3,670,000
$ 1.93
$ 0.81
$ 0.39
$ 1.70
$ 1.98
The weighted average fair value of options granted during the years ended December 31, 2011, 2010
and 2009, calculated using the Black-Scholes model at grant date, are as follows:
Date of grant
Weighted average assumptions used
Number
of
options
200,000 November 1, 2011
200,000 August 15, 2011
Fair value
per share
Expected
volatility
Expected
dividends
2,320,000 June 8, 2011
45,000 March 25, 2011
25,000 December 13, 2010
175,000 November 22, 2010
100,000 November 22, 2010
100,000 September 20, 2010
380,000 August 27, 2010
210,000 July 16, 2010
240,000 June 21, 2010
75,000 April 7, 2010
1,140,000 January 4, 2010
150,000 November 25, 2009
Risk free
interest
rate
0.99%
1.30%
2.10%
1.72%
1.70%
2.24%
1.70%
2.00%
2.00%
2.00%
2.59%
2.59%
2.59%
2.12%
Expected
life
(in years)
1
5
5
1
2
5
1
5
5
5
5
4
5
5
78.13%
77.10%
76.58%
90.17%
70.94%
70.18%
70.47%
69.44%
68.86%
65.67%
66.46%
69.02%
65.27%
63.74%
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$0.86
$2.17
$1.89
$1.34
$1.67
$1.85
$0.86
$1.56
$1.19
$0.52
$0.54
$0.62
$0.67
$0.45
34
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
11.
Reclamation and closure cost obligations
The Company’s reclamation and closure cost obligat ions consist of reclamation costs for the Elk
property in British Columbia. See also Note 20 Assets Classified as Held for Sale.
Opening balance
- Accretion during the period
- Adjustment to estimate
- Transferred to liabilities held for sale
December 31,
2011
December 31,
2010
-
-
-
-
-
135,016
8,108
(23,488)
(119,636)
-
12. Related party transactions and balances
(a)
Compensation of key management personnel
Key management includes members of the Board, the President and Chief Executive Officer, the
Chief Financial Officer and the former Vice-President-Mining. The aggregate compensation paid or
payable to key management for services is as follows:
Salaries and short-term employee
benefits
Share based compensation
Directors’ fees
December 31,
2011
December 31,
2010
December 31,
2009
$ 722,157(i)
$ 470,875(iii)
$ 450,875(v)
3,883,250(ii)
33,000
$ 4,638,407
1,862,500(iv)
33,000
$ 2,366,375
67,500(vi)
33,000
$ 2,366,375
(i) Hawk Mountain Resources Ltd. (“Hawk Mountain”), a private company controlled by the
Chairman of the Company was paid $268,050 for geological services provided to the Company.
An additional $30,475 was paid to Hawk Mountain for marketing and administrative services
including website management and updates, mark
et materials coordination, and general
administration.
(ii) Comprised of options granted pursuant to t he Company’s stock option plan. The value of
1,825,000 option-based awards is based on the fair value of the awards ($1.89) calculated using
the Black-Scholes model at the June 8, 2011 grant date. The value of 200,000 option-based
awards is based on the fair value of the awards ($2.17) calculated using the Black-Scholes model
at the August 15, 2011 grant date. All options vested upon grant.
(iii) Hawk Mountain was paid $148,750 for geological services and an additional $59,350 for
marketing and administrative services. The spouse and daughter of the Chairman were also
directly
each for marketing and administrative services.
$10,000
paid
35
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
12. Related party transactions and balances
(a)
Compensation of key management personnel (continued)
(iv) Comprised of options granted pursuant to the Co mpany’s stock option plan. The value of 75,000
option-based awards is based on the fair value of the awards ($0.94) calculated using the Black-
Scholes model at the April 7, 2010 grant date. The value of 240,000 option-based awards is
based on the fair value of the awards ($1.00) calculated using the Black-Scholes model at the
June 21, 2010 grant date. The value of 200,000 opt ion-based awards is based on the fair value
of the awards ($0.92) calculated using the Black-Scholes model at the July 16, 2010 grant date.
The value of 50,000 option-based awards is based on the fair value of
the awards ($2.22)
calculated using the Black-Scholes model at
200,000 option-based awards is based on the fair value of the awards ($2.22) calculated using
the Black-Scholes model at the August 27, 2010 grant date. The value of 100,000 option-based
awards is based on the fair value of the awards ($2.67) calculated using the Black-Scholes model
at the September 20, 2010 grant date. The value of 200,000 option-based awards is based on
the fair value of the awards ($2.73) calculated using the Black-Scholes model at the November
22, 2010 grant date. All options vested upon grant.
the August 22, 2010 grant date. The value of
(v) Hawk Mountain was paid $165,000 for geological services and an additional $16,200 for
marketing and administrative services. The spouse and daughter of the Chairman were also
directly paid $4,000 each for marketing and administrative services.
(vi) Comprised of options granted pursuant to the Company’s stock option plan. The value of 150,000
option-based awards is based on the fair value of the awards ($0.45) calculated using the Black-
Scholes model at the November 25, 2009 grant date. All options vested upon grant.
(b)
Other related party transactions
i) Gold Mountain Mining Corporation (“Gold Mountain”)
Gold Mountain has two Directors, Duane Poliquin and Morgan Poliquin, in common with Almaden,
and Almaden owns 38.8% of Gold Mountain’s common shares (See Note 7).
During the year ended December 31, 2011, the Company charged Gold Mountain $271,602 (2010 -
$Nil; 2009 - $Nil) for exploration expenditures relating to the Elk project and surveys undertaken on
behalf of Gold Mountain. These amounts were valued at the exchange amount agreed to by the
parties. At December 31, 2011, Gold Mountain owed the Company $271,602 (2010 - $Nil; 2009 -
$Nil).
ii) Windstorm Resources Ltd. (“Windstorm”)
Windstorm’s President and Director, Gerald Carlson, is also a Director of Almaden. Almaden also
owns common shares in Windstorm.
In September 2010, the Company optioned the Caldera property to Windstorm such that Windstorm
may earn a 60% interest in the property by issuing one million common shares to Almaden and
completing $5 million in exploration work, both over a six y ear period, with $150,000 to be spent
during the first year of the agreement.
36
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
12. Related party transactions and balances
(b)
Other related party transactions (continued)
iii) ATW Resources Ltd. (“ATW”)
Almaden owns a 50% interest in this company which holds title in trust for a mineral property. The
Company has two directors, Duane Poliquin and James McInnes, in common with ATW.
iv) Other
(a)
(b)
During the year ended December 31, 2011, the Company paid a company controlled by a
Director of the Company $5,000 (2010 - $Nil; 2009 - $3,780) for consulting services provided
to the Company.
During the year ended December 31, 2011, the Company paid a company controlled by the
former CFO and current Director of the Company , $1,325 (2010 - $Nil; 2009 - $Nil) for
accounting services provided to the Company.
13.
Income on mineral property options
Income on mineral property options is comprised of the following:
Sale of Elk (Note 9(a))
Sale of Caballo Blanco (Note 9(d))
Sale of Bufa (Note 9(h)(v))
Sale of Tropico (Note 9(h)(vii))
Other
14.
Net income (loss) per share
Basic and diluted net income (loss) per share
December 31,
2011
December 31, December 31,
2009
2010
$ 4,266,166
10,801,320
-
-
4,999
$ - $ -
-
-
-
77,360
-
1,754,948
153,482
15,000
$ 15,072,485
$ 1,923,430
$ 77,360
The calculation of basic net income (loss) per share for the year ended December 31, 2011 was
based on the income attributable to common shareholders of $7,294,858 (2010 – ($3,464,652; 2009 -
$2,285,959) and a weighted average number of common shares outstanding of 57,268,649 (2010 –
51,187,561; 2009 – 45,846,627).
The calculation of diluted net income (loss) per share for the year ended December 31, 2011 includes
the weighted average number of common shares outstanding adjusted for the effects of all dilutive
potential common shares, which comprise of 1,791,544 stock options and 692,502 warrants. For the
years-ended December 31, 2010 and 2009, diluted net loss per share did not include the effect of
stock options and warrant as they are anti-dilutive.
37
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
15.
Supplemental cash flow information
Supplemental information regarding non-cash transactions is as follows:
December 31,
2011
December 31,
2010
December 31,
2009
Investing activities
Reversal of equity settled employee
benefits reserve on exercise of options
Reversal of warrants reserve on exercise
of warrants
Fair value of warrants upon completion
of private placement
Shares received on sale of Caballo
Blanco property
Shares received on sale of Elk property
Shares received on sale of Tropico
property
Shares received on sale of Bufa property
$ 2,546,300
$ 533,250
$ -
711,305
306,180
-
-
35,550
981,985
7,727,300
10,206,250
-
-
-
-
153,600
1,770,000
-
-
-
-
Supplemental information regarding the split between cash and cash equivalents is as follows:
Cash
Government of Canada (T-Bills)
Bankers Acceptance
December 31,
2011
December 31,
2010
$ 7,390,793
9,998,700
3,794,666
$ 21,184,159
$ 3,596,119
4,997,500
7,494,213
$ 16,087,832
38
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
16.
Income taxes
(a)
The provision for income taxes differs from the amounts computed by applying the Canadian
statutory rates to the net income (loss) before income taxes due to the following:
Income (loss) before income taxes
Statutory rate
Expected income tax
Effect of different tax rates in foreign jurisdictions
Non-deductible stock based compensation
Other permanent items
Change in expected reversal rate on temporary difference
Impact of future tax rates applied vs. current statutory rates
Change in deferred tax assets not recognized
Impact of capital gains rate on tax deferred sale of
mineral property in exchange for shares (i)
Unrecognized deferred tax liability on acquisition of
investment in associate (i)
Tax recovery on flow-through shares
Mineral tax recovery
Mexican flat tax
December 31,
2011
$
7,274,858
26.5%
December 31,
2010
(3,770,418)
28.5%
$
December 31,
2009
(2,425,687)
30.0%
$
1,927,837
(27,226)
1,306,636
311,122
(916,280)
(206,996)
(111,343)
(1,141,875)
(1,141,875)
(20,000)
-
-
(20,000)
$
(1,074,569)
1,000
601,008
141,273
-
6,672
324,616
-
-
(305,766)
-
-
$
(305,766)
(727,706)
(14,317)
20,250
47,662
-
145,757
528,354
-
-
-
(185,690)
45,962
(139,728)
$
(i)
During the year the Company sold its El k mineral property, on a tax deferred basis, in
exchange for shares of Gold Mountain. The deferral of the gain causes the carrying value of
the shares received on the sale to exceed the tax value by the amount of the deferred gain.
The shares of Gold Mountain will be taxable at the capital gains rate (50% of general rates)
when sold in the future and the transaction theref ore gives rise to an immediate tax benefit of
half of the deferred gain. The amount of the carrying value of the Gold Mountain shares in
excess of the tax value results in a deferred tax liability that would be taxable at the capital
gains rate on the sale of the shares. The Company is not recognizing this deferred tax
liability as the Company can control the timing of the recognition of the tax liability and does
not intend to cause the recognition of the liability in the foreseeable future.
Effective January 1, 2011 the Canadian Federal corporate tax rate decreased from 18% to 16.5%
and the British Columbia provincial tax rate decreased from 10.5% to 10%. The reduction in tax
rates resulted in an overall decrease in the Company's statutory tax rate from 28.5% to 26.5%.
39
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
16.
Income taxes (Continued)
(b)
The significant components of deferred income tax assets(liabilities) are as follows:
Exploration and evaluation assets
Contingent shares receivable
December 31,
2011
December 31,
2010
$
129,675
(129,675)
$
-
-
-
$
-
(c)
Deductible temporary differences, unused tax losses and unused tax credits for which no
deferred tax assets have been recognized are attributable to the following:
December 31,
2011
December 31,
2010
Non-capital loss carryforwards
Capital loss carryforwards
Exploration and evaluation assets
Share issue costs
Property, plant and equipment
Cumulative eligible capital deduction
Marketable securities
Asset retirement obligations
$
4,142,123
1,729,781
3,673,272
630,475
2,234,113
65,408
2,277,917
-
$
14,753,089
$
5,374,000
1,868,135
4,993,350
835,490
1,317,371
70,331
245,751
119,626
14,824,054
$
At December 31, 2011, the Company had operating loss carry forwards available for tax purposes in
Canada of $16,300 (2010 - $3,437,000) which expire between 2028 and 2031 and in Mexico of
$4,125,823 (2010 - $1,937,000) which expire between 2012 and 2021.
Taxable temporary differences in relation to investments in associates for which a deferred tax liability
has not been recognized is $7.1 million (2010 - nil).
40
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
17.
Commitments
(a)
The Company has, in the normal course of business, entered into various long-term contracts
which include commitments for future operating payments for the rental of premises as
follows:
2012
2013
2014
2015
2016
Thereafter
$ 67,000
67,000
75,000
81,000
6,700
-
$296,700
(b)
(c)
The Company entered into a contract with its Chairman for remuneration of 225,000
annually (amended), for two years, renewable for two additional successive terms of 24
months.
The Company entered into a contract with its President for remuneration of $225,000
annually (amended), for two years, renewable for two additional successive terms of 24
months.
18.
Financial instruments
The fair values of the Company’s cash and cash equivalent, accounts receivable and trade and other
payables approximate their carrying values because of the short-term nature of these instruments.
The Company’s financial instruments are exposed to certain financial risks, including currency risk,
credit risk, liquidity risk, interest risk and commodity price risk.
(a)
Currency risk
The Company’s property interests in Mexico make it subject to foreign currency fluctuations
and inflationary pressures which may adversely affect the Company’s financial position,
results of operations and cash flows. The Co mpany is affected by changes in exchange rates
between the Canadian Dollar and foreign functional currencies. The Company does not
invest in foreign currency contracts to mitigate the risks.
As at December 31, 2011, the Company is exposed to foreign exchange risk through
following assets and liabilities denominated in currencies other than the functional currency of
the applicable subsidiary:
the
41
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
18.
Financial instruments (Continued)
(a)
Currency risk (Continued)
All amounts in Canadian dollars
Cash and cash equivalents
Accounts receivable and prepaid expenses
Total assets
Trade and other payables
Total liabilities
Net assets (liabilities)
US dollar
$ 2,221,085
-
$ 2,221,085
Mexican peso
$ 7,904
89,649
$ 97,553
$ 66,248
$ 66,248
$ 99,208
$ 99,208
$ 2,154,837
$ (1,655)
A 10% change in the US dollar exchange rate relative to the Canadian dollar would change
the Company’s net income by $220,000.
A 10% change in the Mexican peso relative to the Canadian dollar would change the
Company’s net income by $1,000.
(b)
Credit risk
The Company’s cash and cash equivalents are held in large Canadian financial institutions.
These investments mature at various dates over the twelve months following the statement of
financial position date. The Company’s HST and VAT receivables consist primarily of
harmonized sales tax due from the federal government of Canada and value-added tax due
from the government of Mexico. The Company is exposed to credit risks through its accounts
receivable.
To mitigate exposure to credit risk on cash and cash
equivalents, the Company has
established policies to limit the concentration of credit risk with any given banking institution
where the funds are held, to ensure counterparties demonstrate minimum acceptable credit
risk worthiness and ensure liquidity of available funds.
As at December 31, 2011, the Company’s maximum exposure to credit risk is the carrying
value of its cash and cash equivalents and accounts receivable.
(c)
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as
they fall due. The Company manages liquidity risk through the management of its capital
structure.
Trade and other payables are due within twelve months of the statement of financial position
date.
(d)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
A 1% change in the interest rate would change the Company’s net income by $140,000.
42
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
18.
Financial instruments (Continued)
(e)
Commodity price risk
The ability of the Company to explore its mineral properties and the future profitability of the
Company are directly related to the market price of gold and other precious metals. The
Company has not hedged any of its potential future gold sales. The Company monitors gold
prices to determine the appropriate course of action to be taken by the Company.
A 1% change in the price of gold would affect the fair value of the Company’s gold inventory
by $25,000.
(f)
Classification of Financial instruments
IFRS 7 establishes a fair value hierarchy that prioritizes the input to valuation technique s used
to measure fair value as follows:
Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included in Level 1 that are o bservable for the asset
or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
Level 3 – inputs for the asset or liability
(unobservable inputs).
that are not based on observable market data
The following table sets forth the Company’s financial assets measured at fair value by level
within the fair value hierarchy.
Assets:
Cash and cash equivalents $
Marketable securities
$
Level 1
Level 2
Level 3
Total
21,184,159 $
8,471,167
29,655,326 $
- $
-
- $
- $
-
- $
21,184,159
8,471,167
29,655,326
19. Management of capital
The Company considers its capital to consist of common shares, stock options and warrants. The
Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a
going concern in order to pursue the exploration of its mineral properties and to maintain a flexible
capital structure which optimizes the costs of capital at an acceptable risk.
The Company manages the capital structure and makes adjustments to it in light of changes in
economic conditions and the risk characteristics of t he underlying assets. To maintain or adjust the
capital structure, the Company may attempt to issue new shares and, acquire or dispose of assets.
In order to maximize ongoing exploration efforts, the Company does not pay out dividends. The
Company’s investment policy is to invest its short- term excess cash in highly liquid short-term interest-
bearing investments with short term maturities, selected with regards to the expected timing of
expenditures from continuing operations.
The Company expects its current capital resources will be sufficient to carry its exploration plans and
operations for the foreseeable future.
43
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2010 and 2011
Presented in Canadian dollars
20.
Assets classified as held for sale
In December, 2010, the Board of Directors determined that the Elk Property in British Columbia would
be offered for sale. The Company completed a Preliminary Economic Assessment on the project
outlining the project’s economic parameters and with recent record gold prices, it was determined that
this project should be sold to a group that would likely put the mine into production. Closing of the
transaction was completed on July 26, 2011 as described in Note 9(a).
In September 2011, the Board of Directors determined that the Caballo Blanco Property in Mexico
would be offered for sale. Closing of the transaction was completed on October 14, 2011 as
described in Note 9(d).
Details of assets and liabilities held for sale at December 2011 and 2010 are as follows:
Exploration and evaluation assets held for sale
Property, plant and equipment held for sale
Assets classified as held for sale
Liabilities directly associated with assets classified as held
for sale
21.
Segmented information
2011
2010
-
-
-
-
$8,760,369
323,264
9,083,633
($ 119,636)
The Company operates in one reportable operating segment, being the acquisition and exploration of
mineral resource properties.
The Company has non-current tangible assets in the following geographic locations:
December 31,
2011
December 31,
2010
December 31,
2009
Canada
United States
Mexico
$
6,135,926
1,072,760
4,507,267
11,715,953
$
$
2,636,633
$
7,934,990
-
-
2,665,237
5,301,870
$
1,356,708
9,291,698
$
The Company’s revenues were all earned in Canada primarily from interest income on corporate cash
reserves and investment income.
44
Almaden Minerals Ltd.
Consolidated schedules of general and administrative expenses
(Expressed in Canadian dollars)
Schedule 1
Professional fees
Salaries and benefits
Travel and promotion
Depreciation
Office and license
Rent
Stock exchange fees
Insurance
Transfer agent fees
Directors fees
2011
Year ended December 31,
2009
2010
$
$
$
495,665
296,544
289,425
271,061
260,187
164,919
131,539
107,645
45,617
33,495
2,096,097
349,648
129,370
221,665
189,580
146,390
165,126
124,909
110,884
22,544
33,495
1,493,611
312,131
136,145
153,121
169,973
121,677
166,426
68,816
110,968
18,501
33,495
1,291,253
45
SIGNATURE
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly
caused and authorized the undersigned to sign this Annual Report on its behalf.
Almaden Minerals Ltd.
Registrant
Dated: March 30, 2012
By /s/Morgan Poliquin
Morgan Poliquin, CEO
ALMADEN MINERALS LTD.
Corporate Organizational Chart
December 31, 2011
Almaden Minerals Ltd.
(“Almaden”)
Canada
TSX: AMM
NYSE Amex: AAU
ATW Resources Ltd.
(“ATW”)
Canada
50%
Williams Creek 50%
Gold Mountain Mining Corp.
(“Gold Mountain”)
Canada
TSX-V: GUM
~44.70%
28,750,000 shares
ATW Joint Venture
66%
Williams Creek 30%
Harry Winston 4%
Ixtaca Precious Metals
Inc.
(“Ixtaca”)
Canada
100%
Republic Resources
Inc.
(“Republic”)
Canada
100%
Almaden America
Inc.
(“Almaden America”)
USA
100%
Minera Gorrión SA de
CV
(“Gorrión”)
Mexico
49,999 shares
99.9%
Minera Gavilán SA de
CV
(“Gavilán”)
Mexico
49,999 shares
99.9%
Compañía Minera
Zapata SA de CV
(“Zapata”)
Mexico
49,999 shares
99.9%
Almaden de Mexico
SA de CV
(“Almaden de Mexico”)
Mexico
49,999 shares
99.9%
EXHIBIT 12.1
SECTION 302 OF THE SARBANES-OXLEY ACT
CEO CERTIFICATION
I, Morgan Poliquin, certify that:
1.
I have reviewed this annual report on Form 20-F of Almaden Minerals Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over
financial reporting that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee
of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information; and
employees who have a significant role in the Company’s internal control over financial reporting.
(b) Any fraud, whether or not material, that involves management or other
Date: March 30, 2012
/s/Morgan Poliquin
Morgan Poliquin
Chief Executive Officer
EXHIBIT 12.2
SECTION 302 OF THE SARBANES-OXLEY ACT
CFO CERTIFICATION
I, Korm Trieu, certify that:
1.
I have reviewed this annual report on Form 20-F of Almaden Minerals Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-
15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over
financial reporting that occurred during the period covered by the annual report that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee
of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information; and
employees who have a significant role in the Company’s internal control over financial reporting.
(b) Any fraud, whether or not material, that involves management or other
Dated: March 30, 2012
/s/Korm Trieu
Korm Trieu
Chief Financial Officer
EXHIBIT 13.1
SECTION 906 OF THE SARBANES-OXLEY ACT
CEO CERTIFICATION
In connection with the annual report of Almaden Minerals Ltd. (the “Company”) on Form 20-F for the fiscal year
ending December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Morgan Poliquin, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
Exchange Act of 1934, as amended; and
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
2.
condition and results of operations of the Company.
The information contained in the Report fairly presents, in all material respects, the financial
/s/”Morgan Poliquin”
Name: Morgan Poliquin
Title: Chief Executive Officer
March 30, 2012
EXHIBIT 13.2
SECTION 906 OF THE SARBANES-OXLEY ACT
CFO CERTIFICATION
In connection with the annual report of Almaden Minerals Ltd. (the “Company”) on Form 20-F for the fiscal year
ending December 31, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
I, Korm Trieu, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1.
Exchange Act of 1934, as amended; and
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
2.
condition and results of operations of the Company.
The information contained in the Report fairly presents, in all material respects, the financial
/s/”Korm Trieu”
Name: Korm Trieu
Title: Chief Financial Officer
March 30, 2012