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, 2018
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)
1333 Johnston Street, #210, Vancouver, British Columbia V6H 3R9
(Address of principal executive offices)
Korm Trieu, ktrieu@almadenminerals.com, 1333 Johnston Street, #210, Vancouver, BC V6H 3R9
(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 American
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.
111,726,719
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 whether 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 every Interactive Data File required
to be submitted 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 such files).
( X) Yes ( ) No
Indicate by check mark whether 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 (X) Non-accelerated filer ( ) Emerging Growth Company (X)
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ( )
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.
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).
( ) Item 17 ( ) Item 18
(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
( ) Yes ( X ) No
3
TABLE OF CONTENTS
Page
Glossary of Geologic and Mining Terms
Notes Concerning Terminology Related to Resources and Reserves
Cautionary Note to U.S. Investors Regarding Mineral Resource and Mineral Reserve Estimates
Cautionary Note Regarding Forward-Looking Statements
Item 1
Item 2
Item 3
Item 4
Item 5
Item 6
Item 7
Item 8
Item 9
Item 10
Item 11
Item 12
Item 13
Item 14
PART I
Identity of Directors, Senior Management and Advisers
Offer Statistics and Expected Timetable
Key Information
Information on the Company
Operating and Financial Review and Prospects
Directors, Senior Management and Employees
Major Shareholders and Related Party Transactions
Financial Information
The Offer and Listing
Additional Information
Quantitative and Qualitative Disclosures About Market Risk
Description of Securities Other than Equity Securities
PART II
Defaults, Dividend Arrearages and Delinquencies
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
Item 17
Item 18
Item 19
Signatures
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
Financial Statements
Financial Statements
Exhibits
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12
15
16
17
17
17
24
44
49
74
75
75
78
88
89
89
89
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90
90
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91
91
91
91
91
91
91
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94
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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 characterized 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.
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
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.
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.
5
Cleavage: The tendency of a crystal to split, or break, along planes of structural weakness.
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.
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.
Dyke: A tabular, discordant, intrusive igneous body.
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.
6
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 colored silicate minerals, mainly quartz and feldspar, or an igneous rock comprised largely of felsic
minerals (granite, rhyolite).
Fluid inclusion: Fluid inclusions are "bubbles" of fluid trapped within the host mineral during its deposition from
its parent hydrothermal fluid. They are tiny remnants of the exact fluid from which the host mineral and its
associated ore minerals deposited and they provide direct information about the fluid composition, temperature
and pressure at which the hydrothermal deposit formed.
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.
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.
Gouge: The finely ground rock that results from the abrasion along a fault surface.
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.
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.
Hectare: A square of 100 meters 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.
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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.
Kriging: (a) A statistical technique employed in calculating grade and tonnage of ore reserves from sampling data.
The data are handled by computer. (b) A technique for interpolating which honors data points exactly. An output
point is calculated as a linear combination of known data points. Kriging attempts to produce the best linear unbiased
estimate. Used to interpolate between drill holes.
K-silicate: Potassium-bearing silicates. Potassium silicates are very common rock-forming minerals, however
they are also formed by the interaction of hydrothermal 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.
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
8
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.
National Instrument 43-101 or NI 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.
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,
unless it is a 100% interest, all operations thereafter are on a joint venture basis.
Ordinary kriging: The basic technique of kriging and uses a weighted average of neighboring samples to
estimate the 'unknown' value at a given location. Weights are optimized using the semi-variogram model, the
location of the samples and all the relevant inter-relationships between known and unknown values. The technique
also provides a "standard error" which may be used to quantify confidence levels.
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.
Phenocrysts: An unusually large crystal in a relatively finer grained matrix.
Pluton: Term for an igneous intrusion, usually formed from magma.
Porphyry: An igneous rock composed of larger crystals set within a finer ground mass.
9
Pyroclastic rock: A rock of volcanic origin consisting of highly variable mixture of rock fragments, cinders
and ashes and bits of crystals and glass.
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 granite.
Royalty interest: A royalty, the calculation and payment of which is tied to some production unit such as ton 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.
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.
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
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.
10
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.
Tonne: Metric ton – 1,000 kilograms – equivalent to 1.1023 tons.
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.
Glossary of Abbreviations
Ag: Silver
Ag g/t: Silver grade measured in grams per metric ton
Converts to ounces per ton by dividing by 34.286
Au: Gold
Au g/t: Gold grade measured in grams per metric ton
Converts to ounces per ton by dividing by 34.286
Cu: Copper
g/t: grams per tonne
IP: Induced Polarization geophysical survey
masl: meters above sea level
NSR: net smelter returns royalty
Oz: Troy ounce
QA/QC: Quality Assurance/Quality Control
tpd: Tonnes per day
ton: Short ton (2,000 pounds)
tonne: Metric ton (1000 kilograms - 2204.62 pounds)
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NOTES CONCERNING TERMINOLOGY RELATED TO RESOURCES AND RESERVES
Please see “CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL RESOURCE AND
MINERAL RESERVE ESTIMATES,” below.
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 (“NI 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, November 27, 2010 and May 10, 2014, 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
became Canadian 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 (the “Commission”), a reserve is
termed a “mineral deposit”.
Definitions
Qualified Person
Mineral Resource and Mineral Reserve estimates and resulting technical reports under NI 43-101 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 a university degree, or equivalent accreditation, 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
12
Qualified Persons with respect to the work for which they are taking responsibility and that such persons are
provided adequate documentation.
Preliminary Economic Assessment (PEA)
A study, other than a Pre-Feasibility or Feasibility Study, that includes an economic analysis of the potential
viability of mineral resources.
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.
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 recognized 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 judgment 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.
13
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. 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.
14
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, 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 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 mineral deposits that may
not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure
requirements under U.S. 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 millimeter (mm) = 0.039 inches (in)
1.0 meter (m) = 3.28 feet (ft)
1.0 kilometer (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.
15
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this Annual Report on Form 20-F of Almaden Minerals Ltd. (“Almaden” or the
“Company”), and the exhibits attached hereto that are not historical facts are forward-looking statements within
the meaning of U.S. and Canadian securities legislation and the U.S. Private Securities Litigation Reform Act of
1995 that involve risks and uncertainties. Such forward-looking statements include, but are not limited to,
statements with respect to anticipated results and developments in the Company’s operations, planned exploration
and development of the Company’s properties, plans related to the Company’s 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 Reserves, 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 and forward-looking information are based, in part, on assumptions and
factors that may change and are subject to a variety of known and unknown risks, uncertainties and other factors
which could cause actual events or results, performance or achievements of the Company to differ materially
from those expressed or implied by the forward-looking statements and forward-looking information. Some of
the important risks, uncertainties and other factors that could affect forward-looking statements and forward-
looking information include, but are not limited to, those described further in the sections entitled “ITEM 3. KEY
INFORMATION - Risk Factors”, “ITEM 4. INFORMATION ON THE COMPANY - Business Overview”,
“ITEM 4. INFORMATION ON THE COMPANY – Principal Property Interests” 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, uncertainties and other factors materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those described in the Company’s forward-
looking statements or forward-looking information. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ materially from those anticipated in such
statements and information. The forward-looking statements and forward-looking information are based on
beliefs, expectations and opinions of the Company’s management on the date of this Annual Report on Form 20-
F and speak only as of the date hereof and the Company does not undertake any obligation to publicly update
forward-looking statements or forward-looking information contained herein to reflect events or circumstances
after the date hereof, except as required by law. For the reasons set forth above, investors should not place undue
reliance on forward-looking statements.
Forward-looking statements and other information contained herein concerning the mining industry and the
Company’s expectations concerning the mining industry are based on estimates prepared by the Company using
data from publicly available sources as well as from market research and industry analysis and on assumptions
based on data and knowledge of this industry which the Company believes to be reasonable. However, this data
is inherently imprecise, although generally indicative of relative market positions, market shares and performance
characteristics. While the Company is not aware of any misstatements regarding any mining industry data
presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.
Certain historical and forward-looking information contained in this Annual Report on Form 20-F has been
provided by, or derived from information provided by, certain persons other than the Company. Although the
Company does not have any knowledge that would indicate that any such information is untrue or incomplete,
the Company assumes no responsibility for the accuracy and completeness of such information or the failure by
such other persons to disclose events which may have occurred or may affect the completeness or accuracy of
such information, but which is unknown to the Company.
16
Please consult the Company’s public filings at www.sec.gov for further, more detailed information concerning
these matters.
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 2018, Fiscal 2017 and Fiscal 2016 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 set forth for Fiscal 2015 and Fiscal 2014 ended December
31st are derived from the Company's audited consolidated financial statements, not included herein. 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 and compliance with
International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).
The basis of preparation is described in Note 2 of the consolidated financial statements.
Table No. 1
Selected Financial Data
International Financial Reporting Standards (“IFRS”)
(expressed in thousands of Canadian dollars, except share and per share data)
Year
Ended
12/31/2018
$ -
1,190
(3,512)
(0.03)
(0.03)
107,584
4,357
54,678
71,365
73,928
127,022
-
Year
Ended
12/31/2017
$ -
468
(5,231)
(0.05)
(0.05)
95,873
16,065
44,804
64,730
66,803
118,054
-
Year
Ended
12/31/2016
$ -
444
(4,024)
(0.05)
(0.05)
82,323
9,293
35,985
45,221
47,514
95,290
-
Year
Ended
12/31/2015
$ -
2,711
(1,145)
(0.02)
(0.02)
73,249
5,808
30,538
35,983
38,215
83,758
-
Year
Ended
12/31/2014
$ -
(9,496)
(14,701)
(0.23)
(0.23)
66,331
9,172
28,645
39,637
42,019
87,084
-
Revenues
Other Income (loss)
Net loss and comprehensive loss
Basic net (loss) income per common share
Diluted net (loss) income per common
share
Weighted average shares (000)
Working capital
Exploration and evaluation assets
Net assets
Total assets
Capital stock
Dividends declared per share
Canadian/U.S. Dollar Exchange Rates
In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian dollars (CDN$).
17
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
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 12/31/2018
Fiscal Year Ended 12/31/2017
Fiscal Year Ended 12/31/2016
Fiscal Year Ended 12/31/2015
Fiscal Year Ended 12/31/2014
Average
High
Low
Close
$1.30
1.30
1.32
1.28
1.10
$1.36
1.37
1.46
1.40
1.16
$1.23
1.21
1.25
1.17
1.06
$1.36
1.25
1.34
1.38
1.16
Table No. 3
Canadian Dollar/U.S. Dollar Exchange Rates for Previous Six Months
High
Low
September
2018
October
2018
November
2018
December
2018
$1.32
1.29
$1.31
1.28
$1.33
1.31
$1.36
1.32
January
2019
$1.36
1.31
February
2019
$1.33
1.31
The exchange rate was CDN$1.33/US$1.00 on March 14, 2019.
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 other factors such 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 and development stage and there is no assurance that a commercially
viable ore deposit (a reserve) exists in any of its properties or prospects until further work is done and a
comprehensive economic evaluation based upon that work is concluded. In recent years the Company has
financed its operations principally through the sale of equity securities. In the past, it has also financed its activities
by entering into joint venture arrangements and through the sale of an inventory of gold. A commercially viable
ore deposit is dependent on the establishment of economically recoverable reserves, the ability of the Company
to obtain the necessary financing and permitting 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 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,
18
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 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; Need for Additional Capital
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 losses
of $3,511,667 in Fiscal 2018, $5,231,295 in Fiscal 2017, and $4,023,504 in Fiscal 2016.
The Company currently has no revenues from operations as all of its properties and prospects are in the
development stage. There is no assurance that the Company will receive revenues from operations at any time in
the near future. During Fiscal 2018, 2017 and 2016, the Company earned interest income and other income from
Administrative service fees charged to Azucar Minerals Ltd. (formerly Almadex Minerals Limited) (“Azucar”)
and During Fiscal 2018, the Company earned other income from Administrative service fees charged to Almadex
Minerals Ltd. (formerly 1154229 B.C Ltd.) (“Almadex”).
At December 31, 2018, the Company had working capital of $4,356,589 including cash and cash equivalents of
$5,080,580. Management estimates that the current cash position and expected future cash flows from the
exercise of outstanding stock options and warrants and equity financing will be sufficient for the Company to
carry out its anticipated exploration and operating plans for fiscal 2019 that includes further development of the
Ixtaca Project. Although Management believes that the Company’s cash resources are sufficient to meet its
working capital and mineral exploration requirements for fiscal 2019, the Company may require additional capital
in order to remain operational in the near future. There is the possibility that the Company may not receive such
necessary funding, particularly during a down economy. Additional funding may not be available, or even if it is
available, it may be on unfavorable terms.
The Company has not paid dividends on its shares since incorporation and the Company does not anticipate doing
so in the foreseeable future.
Uncertainty of Obtaining Additional Funding Requirements
If the Company’s exploration and development programs are successful, additional capital will be required for
the further development of an economic ore body and to place it in commercial production. The only material
sources of future funds presently available to the Company are the sale of its equity capital, the incurring of debt,
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, of equity 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 could also seek joint venture partners or funding sources such as royalties or
streaming transactions. These approaches would dilute the Company’s interest in properties it has acquired.
Material Risk of Dilution Presented by Large Number of Outstanding Share Purchase Options and
Warrants
As of March 14, 2019, there were share purchase options outstanding allowing the holders of these options to
purchase 9,757,000 shares of the Company’s common stock and warrants allowing the holders of these warrants
to purchase 11,407,199 shares of the Company’s common stock. Directors and officers of the Company in the
aggregate hold 8,012,000 of these share purchase options and 12,500 of these warrants. An additional 1,745,000
share purchase options are held by employees and consultants of the Company. Given the fact that as of March
14, 2019 there were 111,726,719 shares of common stock outstanding, the exercise of all of the existing share
purchase options and warrants would result in dilution to the existing shareholders and could depress the price of
19
the Company’s shares. The exercise of all outstanding share purchase options and warrants would cause the
number of issued and outstanding common shares to rise 19%.
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.
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.
Laws and 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 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.
Environmental
The Company’s exploration and development activities are subject to extensive laws and regulations governing
protection of the environment. The Company is also subject to various reclamation-related conditions.
Reclamation requirements are designed to minimize long-term effects of mining exploitation and exploration
disturbance by requiring the operating company to control possible deleterious effluents and to re-establish to
some degree pre-disturbance land forms and vegetation. The Company is subject to such requirements in
connection with its activities at the Ixtaca gold and silver project (“Ixtaca” or the “Ixtaca Project”). Any significant
environmental issues that may arise, however, could lead to increased reclamation expenditures and could have a
material adverse impact on the Company’s financial resources.
The amounts recorded for reclamation costs are estimates unique to a property based on estimates provided by
independent consulting engineers and the Company’s assessment of the anticipated timing of future reclamation
and remediation work required to comply with existing laws and regulations. There can also be no assurance that
20
closure estimates prove to be accurate Actual costs incurred in future periods could differ from amounts estimated.
Additionally, future changes to environmental laws and regulations could affect the extent of reclamation and
remediation work required to be performed by the Company. Any such changes in future costs could materially
impact the amounts charged to operations for reclamation and remediation.
Although the Company closely follows and believes it is operating in compliance with all applicable
environmental regulations, there can be no assurance that all future requirements will be obtainable on reasonable
terms. Failure to comply may result in enforcement actions causing operations to cease or be curtailed and may
include corrective measures requiring capital expenditures. Intense lobbying over environmental concerns by non-
governmental organizations (“NGOs”) opposed to mining has caused some governments to cancel or restrict
development of mining projects. Current publicized concern over climate change may lead to carbon taxes,
requirements for carbon offset purchases or new regulation. The costs or likelihood of such potential issues to the
Company cannot be estimated at this time.
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.
There is a risk that title to the mining concessions, the surface rights and access rights comprising Ixtaca and the
necessary infrastructure, may be deficient or subject to dispute. The procurement or enforcement of such rights
can be costly and time consuming. In areas where there are local populations or land owners, it may be necessary,
as a practical matter, to negotiate surface access. Despite having the legal right to access the surface and carry on
construction and mining activities, the Company may not be able to negotiate satisfactory agreements with
existing landowners/occupiers for such access, and therefore it may be unable to carry out activities as planned.
In addition, in circumstances where such access is denied, or no agreement can be reached, the Company may
need to rely on the assistance of local officials or the courts in such jurisdictions, which may delay or impact
mining activities as planned.
There is also a risk that the Company’s exploration, development and mining authorizations and surface rights
may be challenged or impugned by third parties. In addition, there is a risk that the Company will not be able to
renew some or all its licenses in the future. Inability to renew a license could result in the loss of any project
located within that license.
Finally, there is a risk that developing laws and movements respecting the acquisition of lands and other rights of
indigenous communities may alter the arrangements made by prior owners of the lands where Ixtaca is located.
Future laws and actions could have a material adverse effect on the Company’s operations at Ixtaca or on its
financial position, cash flow and results of operations.
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.
Political, economic and social environment
The Company’s mineral properties may be adversely affected by political, economic and social uncertainties
which could have a material adverse effect on the Company’s results of operations and financial condition. Areas
in which the Company holds or may acquire properties may experience local political unrest and disruption which
could potentially affect the Company’s projects or interests. Changes in leadership, social or political disruption
or unforeseen circumstances affecting political, economic and social structure could adversely affect the
Company’s property interests or restrict its operations. The Company’s mineral exploration and development
activities may be affected by changes in government regulations relating to the mining industry and may include
regulations on production, price controls, labour, export controls, income taxes, expropriation of property,
environmental legislation and safety factors.
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Any shifts in political attitudes or changes in laws that may result in, among other things, significant changes to
mining laws or any other national legal body of regulations or policies are beyond the control of the Company
and may adversely affect its business. The Company faces the risk that governments may adopt substantially
different policies, which might extend to the expropriation of assets or increased government participation in the
mining sector. In addition, changes in resource development or investment policies, increases in taxation rates,
higher mining fees and royalty payments, revocation or cancellation of mining concession rights or shifts in
political attitudes in countries where the Company holds mineral properties may adversely affect the Company’s
business.
The Company’s relationship with communities in which it operates is critical to the development of the Ixtaca
project. Local communities may be influenced by external entities, groups or organizations opposed to mining
activities. In recent years, anti-mining NGO activity in Mexico has increased. These NGOs have taken such
actions as road closures, work stoppages and law suits for damages. These actions relate not only to current
activities but often in respect to the mining activities by prior owners of mining properties. Such actions by NGOs
may have a material adverse effect on the Company’s operations at the Ixtaca Project and on its financial position,
cash flow and results of operations.
Uncertainty in Development of a Commercially Mineable Ore Deposit
The properties and prospects in which the Company has an interest are not in commercial production. A
commercially viable ore deposit is dependent on the establishment of economically recoverable reserves, the
ability of the Company to obtain the necessary financing and permitting to complete development, and ultimately
upon future profitable production or the realization of proceeds from the disposition of the properties.
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 judgment. 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 limited 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.
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 may be required.
The Company maintains no “Key Man” insurance coverage, and the loss or unavailability of any of its key
personnel could have a negative effect on the Company’s ability to operate effectively.
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, Morgan Poliquin, John McCleary, Mark Brown, William Worrall, Douglas
McDonald, and Korm Trieu also serve as directors and/or officers of Azucar Minerals Ltd., (formerly Almadex
Minerals Limited) and Almadex Minerals Ltd. (formerly 1154229 B.C. Ltd.). Gerald Carlson also serves a
director and as the President and CEO of Pacific Ridge Exploration Ltd. and director of New Point Exploration
Corp. Mark Brown also serves as the Chief Financial Officer of Adamera Minerals, Orestone Mining Corp., and
Redstar Gold Corp. He also serves as Executive Chairman of Alianza Minerals Ltd., and director of Avrupa
Minerals Ltd., Mountain Boy Minerals, Strategem Capital Corp., and Sutter Gold Mining Ltd. Elaine Ellingham
also serves as a director of Aurania Resources Ltd. and Wallbridge Mining Company 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.
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Foreign Operations
The Company currently has development projects located in Mexico. The Company’s foreign activities are
subject to the risks normally associated with conducting business in foreign countries, including exchange
controls and currency fluctuations, 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 risks 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 U.S.
affecting foreign trade, investment and taxation.
Changes to Mexican Mining Taxes
In October 2013, the Mexican Congress approved a package of tax reforms which included significant changes
to the country’s mining royalties and tax structure. These new laws had an effective date of January 1, 2014. The
changes include a 7.5% special mining royalty on earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and an additional 0.5% royalty on gross revenues from precious metal production. The new law
also increases annual taxes on certain inactive exploration concessions by 50% to 100%. These changes may
result in increased holding costs to the Company for its existing mineral concessions. These new taxes and
royalties, any future increases to tax and royalty rates, or any new taxes imposed by the Mexican governmental
authorities may materially and adversely affect the potential to define economic reserves on any Mexican
properties and result in the Company’s Mexican properties being less attractive to potential optionees or joint-
venture partners.
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.
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.
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.
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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.
Cybersecurity Risks
As is typical of modern businesses, the Company is reliant on the continuous and uninterrupted operation of its
information technology (“IT”) systems. User access and security of all Company sites and IT systems can be
critical elements to its operations, as is cloud security, security of all of the Company’s IT systems, and protection
against cyber security incidents. Any IT failure pertaining to availability, access or system security could
potentially result in disruption of the activities of the Company and its personnel, and could adversely affect the
reputation, operations or financial performance of the Company.
Potential risks to the Company’s IT systems could include unauthorized attempts to extract business sensitive,
confidential or personal information, denial of access extortion, corruption of information or disruption of
business processes, or by inadvertent or intentional actions by the Company’s employees or vendors. A
cybersecurity incident resulting in a security breach or failure to identify a security threat could disrupt business
and could result in the loss of sensitive, confidential or personal information or other assets, as well as litigation,
regulatory enforcement, violation of privacy or securities laws and regulations, and remediation costs, all of which
could materially impact the Company’s business or reputation.
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 all of the Company’s assets and its
subsidiaries are located outside the U.S. Consequently, it may be difficult for U.S. investors to affect service of
process in the U.S. upon those directors and officers who are not residents of the U.S., or to realize in the U.S.
upon judgments of U.S. courts predicated upon civil liabilities under applicable U.S. laws.
The Company could be deemed a passive foreign investment company which could have negative
consequences for U.S. investors.
The Company could be classified as a Passive Foreign Investment Company (“PFIC”) under the United States
tax code. If the Company is a PFIC, then owners of the Company’s shares who are U.S. taxpayers generally will
be required to include distributions or any gain realized upon a disposition or deemed disposition of shares, as
ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer timely
makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the Company’s
shares.
Item 4. Information on the Company
History and Development of the Company
The head office of the Company is located at 1333 Johnston Street, Suite 210, Vancouver, British Columbia,
Canada, V6H 3R9. The registered and records office of the Company is 1177 West Hastings Street, Suite 1710,
Vancouver, British Columbia, Canada, V6E 2L3.
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 formed by amalgamation under the laws of the Province of British Columbia of its predecessor
companies, Almaden Resources Corporation and Fairfield Minerals Ltd. on February 1, 2002. The Company
operates under the Business Corporations Act (British Columbia).
Effective July 31, 2015, the Company effected a corporate reorganization pursuant to a statutory plan of
arrangement (“Plan of Arrangement”) involving the Company’s then wholly owned subsidiary, Azucar, as
described below.
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The Company’s common shares began trading on The Toronto Stock Exchange (“TSX”) under the symbol
“AMM” on February 11, 2002 and on the NYSE American (formerly the NYSE MKT), 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 three wholly-owned subsidiaries. These subsidiaries are:
Subsidiaries
Puebla Holdings Inc.
Minera Gorrion, S.A. de C.V.
Molinos de Puebla, S.A. de C.V.
Jurisdiction
Canada
Mexico
Mexico
Nature of operations
Holding company
Exploration company
Holding company
Business of the Company
The Company is engaged in the business of the acquisition, exploration and when warranted, development of
mineral properties. The Company currently has material property interests in Mexico. The Company's property
interests are at the exploration and development stage. The Company has not generated any revenues from
operations.
Corporate Reorganization
The Company entered into an Arrangement Agreement dated May 11, 2015 involving the spinout, pursuant to a
statutory Plan of Arrangement, of Almaden’s early stage exploration projects, royalty interests and other non-
core assets into a new public Company called Azucar (formerly Almadex Minerals Limited), which trades on the
TSX Venture Exchange under the symbol “AMZ” and the OTCQX marketplace under the symbol “AXDDF”,
pursuant to which Azucar acquired the following key assets:
a 100% interest in the El Cobre copper-gold porphyry exploration project in Mexico and the Willow
copper-gold porphyry exploration project in Nevada, in addition to a portfolio of 20 other exploration
projects;
a 2% NSR on the Company’s Tuligtic property in Mexico, which hosts the Company’s Ixtaca gold-silver
development project;
a 1.5% NSR on the Caballo Blanco gold deposit in Mexico, a development project operated by Timmins
Gold Corp.;
a 2% NSR on the Elk gold deposit in Canada, an advanced exploration project operated by JDL Gold
Corp. (formerly Gold Mountain Mining Corp.);
a portfolio of 21 additional NSRs on exploration projects in Mexico, Canada and the United States
identified through the Company’s past prospect generator activities;
equity holdings in several publicly-listed companies;
1,597 ounces of gold bullion; and
approximately $3 million in cash.
On July 31, 2015, all conditions to the statutory Plan of Arrangement regarding the spinout were satisfied or
waived and the spinout was effective. Almaden’s shareholders approved the Plan of Arrangement and exchanged
their existing common shares of Almaden for one “new” Almaden common share and 0.6 common share of
Azucar.
The Company entered into an Administrative Services Agreement with Azucar dated May 15, 2015, as amended
by First Amending Agreement dated December 16, 2015 (the “Agreement”). Under the Agreement, the Company
is the sole and exclusive manager of Azucar, and provides Azucar with general management services and day-to-
day operation of Azucar. These services include:
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Office space;
Executive personnel and human resources;
Geological technical support; and
Accounting and financial services.
Azucar compensates the Company 30% of the Company’s actual monthly cost of rent for any shared facilities,
and 30% of any shared personnel’s fees and/or wages. Azucar pays the Company any reasonable fees or costs
incurred on behalf of Azucar by the Company which were approved by Azucar.
Effective May 18, 2018, Azucar effected a corporate reorganization pursuant to a statutory plan of arrangement
involving Azucar’s then wholly owned subsidiary, Almadex Minerals Ltd. (“Almadex”, formerly 1154229 B.C.
Ltd.). Consequent upon this corporate reorganization the Company entered into an Administrative Services
Agreement with Almadex dated March 29, 2018 (the “Almadex Agreement”). Under the Almadex Agreement,
the Company is the sole and exclusive manager of Almadex, and provides Almadex with general management
services and day-to-day operation of Almadex. These services include:
Office space;
Executive personnel and human resources;
Geological technical support; and
Accounting and financial services.
Almadex compensates the Company 20% of the Company’s actual monthly cost of rent for any shared facilities,
and 20% of any shared personnel’s fees and/or wages. Almadex pays the Company any reasonable fees or costs
incurred on behalf of Almadex by the Company which were approved by Almadex.
Both the Agreement and the Almadex Agreement (together, the “Administrative Services Agreements”) have
initial 5-year terms, with subsequent automatic 1-year renewals unless terminated pursuant to the terms permitted
under the Administrative Services Agreements. The Administrative Services Agreements include a Change of
Control clause. If either party is subject to a Change of Control during the term of the respective Administrative
Services Agreement, the Administrative Services Agreement shall automatically terminate within 48 hours of the
Change of Control unless agreed to in writing by both parties. The target of the Change of Control shall then pay
the other party $2 million as compensation for the unplanned termination of the Company’s engagement and
significant disruption to the other party’s business. “Change of Control” means the date upon which, without the
written concurrence of the target of the Change of Control, any person (as that term is defined in the Securities
Act (British Columbia)) makes and does not withdraw a take-over bid (as that term is defined in the Securities
Act (British Columbia)) or acquires, directly or indirectly, that number of common shares of the target which
equals or exceeds twenty percent (20%) of the then issued common shares of the target.
Business Overview
Maintaining properties
The following is a general statement about government requirements for holding mineral properties in the
jurisdictions where the Company currently holds material mineral property interests.
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. Under the tax reforms effective January 1, 2014,
if a concession holder has not conducted exploration or exploitation activities during a two-year period, the
concession holder would have to pay an additional 50% of the taxes payable per hectare if within the last 11 years,
and an additional 100% of the taxes payable if after year 12. 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. 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
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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 the Company’s 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 minerals and environmental protection. The exact effect of
these factors cannot be accurately predicted, but the combination of these factors may make it difficult for the
Company to receive an adequate return on investment.
The Company competes 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 Company’s principal project is in central Mexico. In Mexico, the climate in the project area 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 the Company’s exploration expenditures.
Exploration Program Protocols
General Sample Handling 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 and silver, 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,
27
geographic position or degree of alteration or mineralization. These field duplicates 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 certified standard into the sample stream, spaced at 20
sample intervals. Certified standards are purchased from CDN Resource Laboratories of Langley, BC 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 meterage 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 meterage, written at
the ends of the trays with a marker. 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 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. 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 entered into the Company drill hole 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, meters 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 10, from hardest to softest).
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.
2. Veining and Mineralization: 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.
3. Sample Sheet: A record of the sample intervals, sample numbers and duplicate, blank and analytical standard
numbers.
4. Hole Summary: An abbreviated hole log that summarizes the important features of a drill hole. A summary
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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.
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 Tuligtic Project, which hosts the Company’s Ixtaca discovery, is the only project material to the Company.
The Tuligtic Project is located in Puebla State, Mexico.
PRINCIPAL PROPERTY INTERESTS
The Tuligtic Property/Ixtaca Project – Mexico
Location and Access
The Ixtaca deposit, the epithermal gold-silver target within the Tuligtic Property, is located 8 km northwest of the
town of San Francisco Ixtacamaxtitlán, the county seat of the municipality of Ixtacamaxtitlán, Puebla State. The
Ixtaca project is accessible by driving 40 km east along Highway 119 from Apizaco, an industrial center located
approximately 50 km north of Puebla City by two-lane Highway, and then north approximately 2 km along a
paved road to the town of Santa Maria. The trip from Apizaco to site can be driven in approximately 1.5 hours.
There is also access to the Tuligtic Property using gravel roads from the northeast via Tezhuitan and Cuyoaco,
29
from the south via Libres and from the northwest via Chignahuapan. The Xicohtencatl Industrial complex lies
30 km southwest by paved road from the Ixtaca Project, and houses agricultural, chemical, biomedical and
industrial manufacturing facilities and is serviced by rail. Puebla, the fourth largest city in Mexico has a
population in excess of 4 million people, and includes one of the largest Volkswagen automotive plants outside
Germany.
The Topography on the Tuligtic Property is generally moderate to steep hills with incised stream drainages.
Elevation ranges from 2,300 meters (m) above sea level in the south to 2,800 m in the north. Vegetation is
dominantly cactus and pines and the general area is also somewhat cultivated with subsistence vegetables, bean
and corn crops. The Ixtaca Zone exploration area has been previously cleared and logged. The region has a
temperate climate with mean monthly temperatures ranging from 16°C in June to 12°C in January. The area
experiences approximately 714 mm of precipitation annually with the majority falling during the rainy season,
between June and September. Annual evapotranspiration is estimated to be 774 mm. Exploration can be
conducted year round within the Tuligtic Property; however, road building and drilling operations may be
impacted by weather to some degree during the rainy season. Electricity is available on the Tuligtic Property from
the national electricity grid that services nearby towns such as Santa Maria and Zacatepec. The surface rights
locally are privately owned and Almaden has negotiated voluntary surface land use agreements with surface
landowners within the exploration area prior to beginning activities. To date Almaden has secured through
purchase agreements over 1,139 hectares, from numerous independent owners.
30
Claims and Title
The Tuligtic Property was staked by Almaden in 2001, following the identification of surficial clay deposits that
were interpreted to represent high-level epithermal alteration. The Property originally consisted of approximately
14,000 hectares, but during 2015 Almaden filed applications to reduce the aggregate claim size at Tuligtic to
those areas still considered prospective. The Property is held 100% by Minera Gorrion S.A. de C.V., a subsidiary
of Almaden Minerals Ltd. through the holding company, Puebla Holdings Inc., subject to a 2% NSR in favour of
Almadex Minerals Ltd. The Property currently consists of seven mineral claims totaling 7,220 hectares. Claim
details are summarized below.
Claim Name
Cerro Grande R1
Cerro Grande R3
Cerro Grande R4
Cerro Grande R5
Cerro Grande R6
Cerro Grande 2 R2
Cerro Grande 2 R3
Total
Claim Number Area (hectares)
2,773.00
824.06
540.00
784.97
937.79
652.00
708.00
7,219.82
245486
245488
245489
245490
245491
245493
245494
Valid Until Date
March 5, 2053
March 5, 2053
March 5, 2053
March 5, 2053
March 5, 2053
February 23, 2059
February 23, 2059
To maintain a claim in good standing, the holder is required to meet annual exploration or exploitation expenditure
requirements. Currently, the Tuligtic Property is subject to expenditure requirements of approximately
US$757,000 per year. However, the Company has substantial historic expenditures which can be used to offset
the annual requirements.
Geological Setting of the Tuligtic Project and Ixtaca Zone
The Ixtaca Project is situated within the Trans Mexican Volcanic Belt (TMVB), a Tertiary to recent intrusive
volcanic arc extending approximately east-west across Mexico from coast to coast and ranging in width from 10
to 300km. The TMVB is the most recent episode of a long lasting magmatic activity which, since the Jurassic,
produced a series of partially overlapping arcs as a result of the eastward subduction of the Farallon plate beneath
western Mexico (Ferrari, 2011). The basement rocks of the eastern half of the TMVB are Precambrian terranes,
including biotite orthogneiss and granulite affected by granitic intrusions, grouped into the Oaxaquia
microcontinent (Ferrari et al., 2011; Fuentes-Peralta and Calderon, 2008). These are overlain by the Paleozoic
Mixteco terrane, consisting of a metamorphic sequence known as the Acatlan complex and a fan delta sedimentary
sequence known as the Matzitzi formation. Another sedimentary complex is found on top of the Mixteco terrane,
represented by various paleogeographic elements such as the Mesozoic basins of Tlaxiaco, Zongolica, Zapotitlan,
and Tampico-Misantla (Fuentes-Peralta and Calderon, 2008). The subducting plates associated with the TMVB
are relatively young, with the Rivera plate dated at 10Ma (million years) and the Cocos plate at 11 to 17Ma.
.
The stratigraphy of the Tuligtic area can be divided into two main sequences: a Mesozoic sedimentary rock
sequence related to the Zongolica basin and a sequence of late Tertiary igneous extrusive rocks belonging to the
TMVB (Fuentes-Peralta & Calderon, 2008; Tritlla et al., 2004). The sedimentary sequence is locally intruded by
plutonic rocks genetically related to the TMVB. The sedimentary complex at Tuligtic corresponds to the Upper
Tamaulipas formation (Reyes-Cortes 1997). This formation, Late Jurassic to Early Cretaceous in age, is regionally
described (Reyes-Cortes, 1997) as a sequence of grey-to-white limestone, slightly argillaceous, containing bands
and nodules of black chert. The drilling conducted by Almaden allows for more detailed characterisation of the
Upper Tamaulipas Formation carbonate units in the Tuligtic area. The sequence on the Project consists of clastic
calcareous rocks. The limestone unit variably bedded, generally light grey but locally dark grey to black, with
local chert rich sections graded into what have been named transition units and shale (also black shale). The
transition units are brown calcareous siltstones and grainstones. These rocks are not significant in the succession
but mark the transition from limestone to underlying calcareous shale. Typical of the transition units are coarser
grain sizes. The lower calcareous “shale” units exhibit pronounced laminated bedding and is typically dark grey
to black in colour, although there are green coloured beds as well. The shale units appear to have been subjected
to widespread calc-silicate alteration.
Both the shale and transition units have very limited surface exposure and may be recessive. The entire carbonate
package of rocks has been intensely deformed by the Laramide orogeny, showing complex thrusting and chevron
folding in the hinge zones of a series of thrust-related east verging anticlines in the Ixtaca area (Tritlla et al., 2004;
31
Coller, 2011). The calcareous shale units appear to occupy the cores of the anticlines while the thick bedded
limestone units occupy the cores of major synclines identified in the Ixtaca zone.
The Tamaulipas Formation carbonate rocks are intruded in the mid-Miocene by a series of magmatic rocks. The
compositions are very variable, consisting of hornblende-biotite-bearing tonalites, quartz-plagioclase-hornblende
diorites, and, locally, aphanitic diabase dykes (Carrasco-Nunez et al., 1997). In the central part of the Tuligtic
Property porphyry mineralization is hosted by and associated with a hornblende-biotite-quartz phyric granodiorite
body. The contact between the granodiorite and the limestone is marked by the development of a prograde skarn.
In the Ixtaca deposit epithermal area of the Project, the limestone basement units are crosscut by intermediate
dykes that are often intensely altered. In the vicinity of the Ixtaca zone these dykes are well mineralized especially
at their contacts with limestone country rock. Petrography has shown that epithermal alteration in the dykes,
marked by illite, adularia, quartz and pyrite overprints earlier calc-silicate endoskarn mineralogies (Leitch, 2011).
Two main orientations are identified for dykes in the Ixtaca area; 060 degrees (parallel to the Main Ixtaca and
Ixtaca North zones) and 330 degrees (parallel to the Chemalaco Zone).
An erosional unconformity surface has been formed subsequent to the intrusion of the porphyry mineralization-
associated granodiorites. This paleo topographical surface locally approximates the current topography.
Although not well exposed the unconformity is marked by depression localised accumulations of basal
conglomerate comprised of intrusive and sedimentary boulders.
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 primarily 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 wall rock 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 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.
Epithermal mineralization on the Tuligtic Property is considered to have no genetic relationship to the porphyry
alteration and mineralization described above. The epithermal system is well preserved and there is evidence of
a paleosurface as steam heated kaolinite and replacement silica alteration occur at higher elevations where the
upper part of the Coyoltepec pyroclastic deposit is preserved.
The Upper Tamaulipas formation carbonates (limestone and shale units), the dykes that crosscut it and the upper
Coyoltepec volcanic subunit (variously referred to as volcanics, tuff or ash) are the host rocks to the epithermal
system at Ixtaca. The epithermal alteration occurs over a roughly 5 by 5 kilometre area and occurs as intense
kaolinite-alunite alteration and silicification in volcanic rocks. This alteration is interpreted to represent the upper
portion of a well preserved epithermal system. The bulk of the mineralisation occurs in the carbonate (limestone
and shale) as colloform banded epithermal vein zones. Unlike many epithermal vein systems in Mexico, the bulk
of the veining in the Ixtaca zone has low base metal contents and gold and silver occur as electrum and other
sulphides. SEM work has demonstrated that silver does not occur with galena or tetrahedrite in any significant
way. In the main limestone unit (80% of recoverable metal in the FS) the silver to gold ratio of the mineralisation
32
is roughly estimated to average ~65:1 while in the shale it is roughly estimated to be slightly higher at ~75:1.
History of Past Work
To the Company’s knowledge, no modern exploration has been conducted on the Ixtaca Project prior to
Almaden’s acquisition of claims during 2001 and there is no record of previous mining; as such, this is a maiden
discovery.
During January 2003, Almaden completed a program of geologic mapping, rock, stream silt sampling and induced
polarization (IP) geophysical surveys at the Tuligtic Property (then known as the “Santa Maria Prospect”). The
exploration identified both a porphyry copper and an epithermal gold target within an approximately 5 x 5km
area of intensely altered rock. At the porphyry copper target, stockwork quartz-pyrite veins associated with minor
copper mineralization overprint earlier potassic alteration within a multi-phase intrusive body. A single north-
south oriented IP survey line identified a greater than 2km long elevated chargeability response coincident with
the exposed altered and mineralized intrusive system. Volcanic rocks exposed 1km to the south of the mineralized
intrusive display replacement silicification and sinter indicative of the upper parts of an epithermal system (the
“Ixtaca Zone”). Quartz-calcite veins returning anomalous values in gold and silver and textural evidence of
boiling have been identified within limestone roughly 100m below the sinter. The sinter and overlying volcanic
rocks are anomalous in mercury, arsenic, and antimony.
Additional IP surveys and soil sampling were conducted in January and February 2005, further defining the
porphyry copper target as an area of high chargeability and elevated copper, molybdenum, silver and gold in soil.
A total of eight (8) east-west oriented lines, 3km in length, spaced at intervals of 200m have been completed over
mineralized intrusive rocks intermittently exposed within gullies cutting through the overlying unmineralized ash
deposits.
The Tuligtic Property was optioned to Pinnacle Mines Ltd. in 2006 and the option agreement was terminated in
2007 without completing significant exploration.
The Property was subsequently optioned to Antofagasta Minerals S.A. (Antofagasta) on March 23, 2009. During
2009 and 2010 Antofagasta, under Almaden operation, carried out IP geophysical surveys and a diamond drill
program targeting the copper porphyry prospect. Three additional IP survey lines were completed, and in
conjunction with the previous nine (9) IP lines, a 2 x 2.5km chargeability high anomaly, open to the west and
south, was defined. The 2009 drilling consisted of 2,973m within seven (7) holes that largely intersected skarn
type mineralization.
On February 16, 2010, Almaden announced that Antofagasta terminated its option to earn an interest in the
Property.
In July 2010, Almaden initiated a preliminary diamond drilling program to test epithermal alteration within the
Tuligtic Property, resulting in the discovery of the Ixtaca Zone. The target was based on exploration data gathered
by Almaden since 2001 including high gold and silver in soil and a chargeability and resistivity high anomaly
(derived from an IP geophysical survey conducted by Almaden) topographically beneath Cerro Caolin, a
prominent clay and silica altered hill. This alteration, barren in gold and silver, was interpreted by Almaden to
represent the top of an epithermal system which required drill testing to depth. The first hole, TU-10-001
intersected 302.42 metres of 1.01g/t gold and 48g/t silver and multiple high grade intervals including 44.35 metres
of 2.77g/t gold and 117.7g/t silver.
Present Condition of Project
Geology and Mineral Resources
The veining of Ixtaca epithermal system displays characteristics representative of low and intermediate
sulphidation deposits. These include typical mill feed and gangue mineralogy (electrum Ag-sulphides, sphalerite,
galena, adularia, quartz and carbonates), mineralization dominantly in open space veins (colloform banding,
cavity filling).
33
At the base of the overlying clay altered volcanics disseminated gold-silver mineralisation occurs in association
with pyrite and minor veining. Locally this mineralisation can be high grade but largely associated with lower
Ag:Au ratios roughly estimated to average 20:1.
To date two main vein orientations have been identified in the Ixtaca deposit:
060 trending sheeted veins hosted by limestone;
330 trending veins hosted by shale;
The bulk of the resource and over 80% of the mill feed is hosted by the limestone in the Main Ixtaca and Ixtaca
North zones as swarms of sheeted and anastomosing high grade banded epithermal veins. There is no
disseminated mineralisation within the host rock to the vein swarms, which is barren and unaltered limestone. To
the northeast of the limestone hosted mineralisation, the Chemalaco zone, a 330 striking and west dipping vein
zone hosted by shale, also forms part of the deeper resource.
Rock Creek Mill
Almaden entered into an option agreement to acquire the Rock Creek Mill in October 2015. The Rock Creek Mill
is a completed mill located outside of Nome, Alaska which only operated for several months before its owner
suspended its mining operation in 2008. The mill has been kept in excellent condition on care and maintenance.
The Rock Creek Mill was built to process 7,000 tonnes per day. It includes a three-stage crushing plant, gravity
circuit, ball mill, floatation cells and leaching facilities. Also included in the option agreement are conveyors,
metallurgical and chemical fire assay laboratories, a water treatment plant, full electrical circuitry and generators,
and spare parts.
Almaden exercised its right and option under the option agreement and has purchased the Rock Creek Mill and
related assets for a total of US$6,500,000, subject to adjustment under certain circumstances, on the following
basis:
On execution of agreement
On or before December 31, 2015
On or before March 31, 2016
On or before June 15, 2017
On or before June 15, 2018
US$250,000
US$250,000
US$250,000
US$2,000,000
US$3,750,000
Paid
Paid
Paid
Paid
Paid
In addition to the cash payments, Almaden also issued to the optionor 407,997 Almaden common shares valued
at $273,358 upon receipt of regulatory approval, which were issued on November 25, 2016.
During the year ended December 31, 2018, Almaden obtained ownership and title to the mill equipment.
The Rock Creek Mill has been incorporated into the cost estimates for the Ixtaca Feasibility Study.
Amended Preliminary Economic Assessment
On January 22, 2016, Almaden filed a NI 43-101 Technical Report titled "Preliminary Economic Assessment of
the Ixtaca Project”, which provided further detail to its December 9, 2015 press release summarizing the results
of integrating the optioned Rock Creek Mill and a smaller, higher grade, payback focused pit on potential mine
economics. Almaden subsequently filed an amended technical report on SEDAR on April 13, 2016 (the
“Amended PEA”), however the amendments were not material changes and the Report’s data, inputs,
interpretation, conclusions and results all remained unchanged.
The Amended PEA followed the historical PEAs released in 2014 and 2015 (“Historical PEAs”) which evaluated
larger throughput development alternatives. The primary reasons for providing an update to the Historical PEAs
were to show the impact of significantly reduced initial capital cost on project economics and, given the significant
decrease in precious metals prices, to demonstrate the viability of a mine plan which focused on the near surface
high grade limestone hosted portions of the Ixtaca Zone deposit.
34
This mine plan was a smaller higher grade scenario than those described in Almaden’s Historical PEA studies.
In addition, the Amended PEA incorporated the optioned Rock Creek mill as well as results from various
engineering studies related to the project which had been conducted since the Historical PEAs were completed.
The Amended PEA incorporated:
The same resource model as the Historical PEAs;
The Rock Creek Mill, which was optioned by the Company in October 2015, with average throughput of
7,500 tonnes per day;
A smaller, near surface and payback focussed pit;
A mine production schedule which targets higher grades earlier;
Optimised waste placement and tailings management facilities;
A 2% NSR now held by Almadex Minerals Ltd.
Pre-Feasibility Study (“PFS”)
Upon completion of the Amended PEA, Almaden began the work required for a Pre-Feasibility Study on the
Ixtaca Project. During 2016, Almaden completed the necessary geotechnical, geomechanical, and hydrologic field
programs, and also optimized site layout through updated waste placement and facilities locations. A new
metallurgical program was also completed on the limestone domain, which represents approximately 82% of the
total gold equivalent ounces produced over the life of the mine in the PFS.
The completed PFS was filed on SEDAR on May 17, 2017 and included an updated resource model. The mine
production schedule also included the optioned Rock Creek Mill while targeting higher grades earlier, using
smaller, payback focused starter pits.
Feasibility Study (“Study”)
Upon completion of the PFS, Almaden began the work required for a Feasibility Study on the Ixtaca Project. The
Study and resulting mine plan incorporate significant changes from the PFS including filtered (dry stack) tailings,
ore sorting, increased throughput and an improved mine schedule. Collectively the changes result in a reduced
project footprint and improved economics.
Almaden engaged a team of consultants led by Moose Mountain Technical Services (“MMTS”) to undertake this
Study. MMTS was responsible for mining, metallurgy, processing, infrastructure and the economic evaluation,
APEX Geoscience Ltd. for exploration and drill data QA/QC, Giroux Consultants for the resources estimation,
and SRK Consulting (U.S.), Inc. (“SRK”) for aspects related to geotechnical, tailings and water management.
The completed Study was filed on SEDAR on January 24, 2019 and on EDGAR under Form 6-K on January 25,
2019.
STUDY HIGHLIGHTS
(All values shown in this section discussing the Study are in $US unless noted otherwise. Base case uses $1275/oz
gold and $17/oz silver prices. Gold and silver equivalency calculations assume 75:1 ratio).
Average annual production of 108,500 ounces gold and 7.06 million ounces silver (203,000 gold
equivalent ounces, or 15.2 million silver equivalent ounces) over first 6 years;
After-tax internal rate of return (“IRR”) of 42% and after-tax payback period of 1.9 years;
After-tax net present value (“NPV”) of $310 million at a 5% discount rate;
Initial Capital of $174 million;
Conventional open pit mining with a Proven and Probable Mineral Reserve of 1.39 million ounces of
gold and 85.2 million ounces of silver;
Pre-concentration uses ore sorting to produce a total of 48 million tonnes of mill feed averaging 0.77 g/t
gold and 47.9 g/t silver (2.03 g/t gold equivalent over first 6 years, 1.41 g/t gold equivalent over life of
mine);
35
Average life-of-mine (“LOM”) annual production of 90,800 ounces gold and 6.14 million ounces silver
(173,000 gold equivalent ounces, or 12.9 million silver equivalent ounces);
Operating cost $716 per gold equivalent ounce, or $9.55 per silver equivalent ounce;
All-in Sustaining Costs (“AISC”), including operating costs, sustaining capital, expansion capital,
private and public royalties, refining and transport of $850 per gold equivalent ounce, or $11.30 per
silver equivalent ounce;
Elimination of tailings dam by using filtered tailings significantly reduces the project footprint and water
usage
Capital and Operating Costs
Initial capital cost for the Ixtaca gold-silver project is $174 million and sustaining capital (including expansion
capital) is $111 million over the LOM. The estimated expansion capital of $64.5 million will be funded from
cashflow in Year 4 for the throughput ramp-up in Year 5. Estimated LOM operating costs are $26.8 per tonne
mill feed. The following tables summarize the cost components:
Initial Capital Costs ($ millions)
Mining
Process
Onsite Infrastructure
Offsite Infrastructure
Indirects, EPCM, Contingency and Owner’s Costs
Total
Expansion Capital Costs ($ millions)
Mining
Process
Infrastructure
Indirects, EPCM, Contingency and Owner’s Costs
Total
LOM Average Operating Costs ($)
Mining costs
Processing
G&A
Total
$/tonne milled
$/tonne milled
$/tonne milled
$/tonne milled
Economic Results and Sensitivities
22.2
80.2
24.3
7.5
39.9
174.2
$1.2
$56.9
$1.5
$5.0
$64.5
$15.2
$10.5
$1.1
$26.8
A summary of financial outcomes comparing base case metal prices to alternative metal price conditions are
presented below. The Study base case prices are derived from current common peer usage, while the alternate
cases consider the project’s economic outcomes at varying prices witnessed at some point over the three years
prior to this study.
36
Summary of Ixtaca Economic Sensitivity to Precious Metal Prices (Base Case is Bold)
Gold Price ($/oz)
Silver Price ($/oz)
Pre-Tax NPV 5% ($million)
Pre-Tax IRR (%)
Pre-Tax Payback (years)
After-Tax NPV 5% ($million)
After-Tax IRR (%)
After-Tax Payback (years)
Mineral Resource Estimate
1125
14
229
35%
2.0
151
25%
2.6
1200
15.5
349
46%
1.8
233
34%
2.1
1275
17
470
57%
1.6
310
42%
1.9
1350
18.5
591
67%
1.4
388
49%
1.7
1425
20
712
77%
1.3
466
57%
1.5
On January 31, 2013 the Company announced a maiden resource on the Ixtaca Zone, which was followed by a
resource update on January 22, 2014 and another on May 17, 2017. Since that time an additional 104 holes have
been completed, and this data is also included in the Mineral Resource Estimate which has been prepared in
accordance with NI 43-101 by Gary Giroux, P.Eng., qualified person ("QP") under the meaning of NI 43-101,
and summarised in the table below. The data available for the resource estimation consisted of 649 drill holes
assayed for gold and silver. Wireframes constraining mineralised domains were constructed based on geologic
boundaries defined by mineralisation intensity and host rock type. Higher grade zones occur where there is a
greater density of epithermal veining. These higher grade domains have good continuity and are cohesive in
nature.
Of the total drill holes, 558 intersected the mineralised solids and were used to make the resource estimate.
Capping was completed to reduce the effect of outliers within each domain. Uniform down hole 3 meter
composites were produced for each domain and used to produce semivariograms for each variable. Grades were
interpolated into blocks 10 x 10 x 6 meters in dimension by ordinary kriging. Specific gravities were determined
for each domain from drill core. Estimated blocks were classified as either Measured, Indicated or Inferred based
on drill hole density and grade continuity
Table showing the Measured, Indicated and Inferred Mineral Resource Statement with the Base Case 0.3 g/t AuEq
Cut-Off highlighted from the 8 July 2018 Resource Statement. Also shown are the 0.5, 0.7 and 1.0 g/t AuEq cut-
off results. AuEq calculation is based on average prices of $1250/oz gold and $18/oz silver.
37
Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources
This section uses the terms “measured resources” and “indicated resources”. U.S.
investors are advised that while these terms are recognized and required by Canadian
regulations, the U.S. Securities and Exchange Commission does not recognize them.
U.S. Investors are cautioned not to assume that any part or all of mineral deposits
in these categories will ever be converted into reserves.
Ixtaca Zone Measured, Indicated and Inferred Mineral Resource Statement
MEASURED RESOURCE
AuEq
Cut-off
(g/t)
0.30
0.50
0.70
1.00
AuEq
Cut-off
(g/t)
0.30
0.50
0.70
1.00
AuEq
Cut-off
(g/t)
0.30
0.50
0.70
1.00
Tonnes > Cut-off
Grade>Cut-off
Contained Metal x 1,000
(tonnes) Au (g/t)
0.62
0.75
0.88
1.06
43,380,000
32,530,000
25,080,000
17,870,000
Ag (g/t)
36.27
44.27
51.71
61.69
AuEq (g/t)
1.14
1.39
1.63
1.95
Au (oz)
862
788
711
608
Ag (oz) AuEq (oz)
50,590
1,591
1,454
46,300
1,312
41,700
1,118
35,440
INDICATED RESOURCE
Tonnes > Cut-off
Grade>Cut-off
Contained Metal x 1,000
(tonnes) Au (g/t)
0.44
0.59
0.74
0.96
80,760,000
48,220,000
29,980,000
16,730,000
Ag (g/t)
22.67
30.13
37.79
47.94
AuEq (g/t)
0.77
1.02
1.29
1.65
Au (oz)
1,145
913
715
516
Ag (oz) AuEq (oz)
58,870
1,994
46,710
1,586
36,430
1,240
25,790
888
Cautionary Note to U.S. Investors concerning estimates of Inferred
Resources
This section uses the term “inferred resources”. U.S. investors are advised that while this
term is recognized and required by Canadian regulations, the U.S. Securities and
Exchange Commission does not recognize it. “Inferred resources” 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 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 other economic studies. U.S.
investors are cautioned not to assume that part or all of an inferred resource exists,
or is economically or legally mineable.
INFERRED RESOURCE
Tonnes > Cut-off
Grade>Cut-off
Contained Metal x 1,000
(tonnes) Au (g/t)
0.32
0.44
0.57
0.79
40,410,000
16,920,000
7,760,000
3,040,000
Ag (g/t)
16.83
25.43
33.80
43.64
AuEq (g/t)
0.56
0.80
1.06
1.42
Au (oz)
412
237
142
77
Ag (oz) AuEq (oz)
21,870
726
13,830
436
8,430
264
4,270
139
Notes pertaining to Measured, Indicated and Inferred Mineral Resource Estimates:
1.
Ixtaca Mineral Resources Estimate have an effective date of 8 July 2018. The Qualified person for the estimate is Gary
Giroux, P.Eng.
2. Base Case 0.3 g/t AuEq Cut-Off grade is highlighted. Also shown are the 0.5, 0.7 and 1.0 g/t AuEq cut-off results.
AuEq calculation based on average prices of $1250/oz gold and $18/oz silver. The Base Case cut-off grade includes
38
consideration of the open pit mining method, 90% metallurgical recovery, mining costs of $1.82/t, average processing
costs of $11.7, G&A costs of $1.81/t
3. Mineral Resources are reported inclusive of those Mineral Resources that have been converted to Mineral Reserves.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal or other relevant
issues. The Mineral Resources have been classified according to the CIM Definition Standards for Mineral Resources
and Mineral Reserves in effect as of the date of 8 July 2018.
5. All figures were rounded to reflect the relative accuracy of the estimates and may result in summation differences.
Mineral Reserve Estimate
Mineral Reserves in the table below have been developed by MMTS with an effective date of November 30,
2018, and are classified using the 2014 CIM Definition Standards. The Mineral Reserves are based on an
engineered open pit mine plan.
Mineral Reserves
Diluted
Tonnes
Grades
(millions) Au (g/t)
31.6
41.4
73.1
0.70
0.51
0.59
Average
Ag (g/t)
43.5
30.7
36.3
Contained Metal
Au - '000 ozs Ag - '000 ozs
714
673
1,387
44,273
40,887
85,159
Proven
Probable
TOTAL
Mineral Reserves have an effective date of November 30, 2018. The qualified person responsible for the
Mineral Reserves is Jesse Aarsen, P.Eng of Moose Mountain Technical Services.
The cut-off grade used for ore/waste determination is NSR>=$14/t
All Mineral Reserves in this table are Proven and Probable Mineral Reserves. The Mineral Reserves
are not in addition to the Mineral Resources but are a subset thereof. All Mineral Reserves stated above
account for mining loss and dilution.
Associated metallurgical recoveries (gold and silver, respectively) have been estimated as 90% and 90%
for limestone, 50% and 90% for volcanic, 50% and 90% for black shale.
Reserves are based on a US$1,300/oz gold price, US$17/oz silver price and an exchange rate of
US$1.00:MXP20.00.
Reserves are converted from resources through the process of pit optimization, pit design, production
schedule and supported by a positive cash flow model.
Rounding as required by reporting guidelines may result in summation differences.
Legal, political, environmental, or other risks that could materially affect the potential development of the Mineral
Reserves are provided in this Form 20F under the heading “Risk Factors”.
Mine Plan
The Ixtaca gold-silver project is planned as a typical open pit mining operation using contractor mining. Initial
production will ramp up to a mill feed rate of 7,650 tonnes per day followed by an expansion to 15,300 tonnes
per day from Year 5 onwards.
An ore control system is planned to provide field control for the loading equipment to selectively mine ore grade
material separately from the waste.
Mining operations will be based on 365 operating days per year with three 8 hour shifts per day.
39
Processing
The Study reflects the Rock Creek process plant which has been purchased by Almaden. Run of mine ore will be
crushed in a three-stage crushing circuit to -9 mm.
The Study also incorporates ore sorting, test work for which has shown the ability to separate barren or low grade
limestone host rock encountered within the vein swarm from vein and veined material (see Almaden news release
of July 16th 2018). Product from the secondary crusher will be screened in to coarse (+20mm), mid-size (12 to 20
mm), and fine (-12mm) fractions. Coarse and mid-size ore will be sorted by an XRT ore sort machine to eject
waste rock. Fine ore will bypass the ore sorting and is sent directly to the mill.
Ore sort waste from Limestone and Black Shale is below waste/ore cutoff grade and is placed in the waste rock
dump. Ore sort ‘waste’ from the Volcanic unit is low grade ore and will be stockpiled for processing later in the
mine life. Ore sorting pre-concentration increases the mill feed gold and silver grades by 32% and 31%
respectively compared to run of mine (ROM) grades. The table below shows ROM grades with ore sort waste
removed from the ROM, and the resulting mill feed.
Ore Sort Mill Feed grade improvement
ROM
Ore
51.5
0.572
37.5
12.2
0.517
44.4
9.4
0.790
18.6
73.1
0.591
36.3
million tonnes
Au g/t
Ag g/t
million tonnes
Au g/t
Ag g/t
million tonnes
Au g/t
Ag g/t
million tonnes
Au g/t
Ag g/t
Limestone
Black Shale
Volcanic
TOTAL
Ore sort
Waste
18.8
0.24
12.0
6.3
0.25
20.0
-
-
-
25.1
0.24
14.0
Mill
Feed
32.7
0.763
52.2
5.8
0.806
70.8
9.4
0.790
18.6
48.0
0.773
47.9
Crushed ore is transported to the grinding circuit by an over land conveyor. Grinding to 75 microns is carried out
with ball milling in a closed circuit with cyclones. Cyclone underflow is screened and the screen undersize is
treated in semi-batch centrifugal gravity separators to produce a gravity concentrate.
The gravity concentrate will be treated in an intensive leach unit with gold and silver recovered from
electrowinning cells.
The cyclone overflow will be treated in a flotation unit to produce a flotation concentrate. After regrinding the
flotation concentrate leaching will be carried out in 2 stages. CIL leaching for 24 hours will complete gold
extraction, followed by agitated tank leaching to complete silver leaching. A carbon desorption process will
recover gold and silver from the CIL loaded carbon, and a Merrill Crowe process will recover gold and silver
from pregnant solution from the agitated leach circuit.
Cyanide destruction on leach residue is carried out using the SO2/Air process. Final tailings are thickened and
filtered then dry stacked and co-disposed with mine waste rock.
Average process recoveries from mill feed to final product over the life of mine are summarized below for each
ore type.
40
Average Life of Mine Process Recoveries from Mill Feed
Limestone
Volcanic
Black Shale
Gold
88.5%
64.4%
54.5%
Silver
86.8%
76.3%
84.7%
Water and Waste Management
One of Almaden’s top priorities at Ixtaca is water quality and a mine plan that provides a permanent and consistent
long-term supply of water for residents. The plan outlined in the Study has evolved through the open dialogue
between the Company and residents over the past number of years and as part of the Social Investment Plan
consultation (see section below on “Community”).
Rainfall in the Ixtaca vicinity falls primarily during a relatively short rainy season. With no local water storage
facilities, the flash flows of water are currently lost to the communities. Under the Study, rainwater will be
captured during the rainy season in the water storage reservoir and slowly released during the dry season, for use
by both the mining operation and local residents.
Extensive geochemical studies have evaluated the potential for acid rock drainage and metal leaching from the
waste rock and tailings using globally accepted standardised methods of laboratory testing and in compliance
with Mexican regulations. Most of the waste rock at Ixtaca is limestone, and the studies of both waste rock and
tailings have consistently shown that there is more than enough neutralising potential present in the waste rock to
neutralise any acid generated. Testing to date also indicates low potential for metal leaching. These results along
with the excellent access to potential markets in the growing industrial state of Puebla, indicate the potential for
rock waste and tailings from the Ixtaca deposit to be secondary resources such as aggregate and cement feedstock.
These opportunities will be fully examined in 2019 as part of the Company’s commitment to best sustainable
practices.
In consideration of these findings and the hydrologic conditions at Ixtaca, Almaden and its consultants reviewed
Best Available Technology and Best Applicable Practice in the design and planning of tailings management at
Ixtaca, which resulted in selecting a dry-stack tailings facility which would include co-disposal of waste with
filtered tailings, use much less water than traditional slurry facilities, reduce the mine footprint, allow for better
dust control, and enable earlier rehabilitation of the tailings and waste disposal areas.
Community Consultations
Almaden has a long history of engagement with communities in the region around the Ixtaca Project. Amongst
many other initiatives, the Company has trained and employed drillers and driller helpers from the local area, held
nine large-scale community meetings totalling over 4,100 people, taken 480 local adults on tours of operating
mines in Mexico, and held monthly technical meetings on a diverse range of aspects relating to the mining
industry and the Ixtaca project. On December 9, 2018, Almaden hosted the most recent large-scale community
meeting which was attended by over 800 people, including representatives of the new Federal Government in
Mexico.
In 2017, Almaden engaged a third-party consultant to lead a community consultation and impact assessment at
the Ixtaca Project. In Mexico, only the energy industry requires completion of such an assessment (known in
Mexico as a Trámite Evaluación de Impacto Social, or “EVIS”) as part of the permitting process. The purpose of
these studies is to identify the people in the area of influence of a project (“Focus Area”), and assess the potential
positive and negative consequences of project development to assist in the development of mitigation measures
and the formation of social investment plans. To Almaden’s knowledge, this is the first time a formal EVIS has
been completed in the minerals industry in Mexico, and as such reflects the Company’s commitment to best
national and international standards in Ixtaca project development.
The EVIS and subsequent work on the development of a Social Investment Plan were conducted according to
41
Mexican and international standards such as the Guiding Principles on Business and Human Rights, the Equator
Principles, and the OECD Guidelines for Multinational Enterprises and Due Diligence Guidance for Meaningful
Stakeholder Engagement in the Extractive Sector.
Fieldwork for the EVIS was conducted by an interdisciplinary group of nine anthropologists, ethnologists and
sociologists graduated from various universities, who lived in community homes within the Ixtaca Focus Area
during the study to allow for ethnographic immersion and an appreciation for the local customs and way of life.
This third-party consultation sought voluntary participation from broad, diverse population groups, with specific
attention to approximately one thousand persons in the Focus Area.
This extensive consultation resulted in changes to some elements of the mine design, including the planned
construction of a permanent water reservoir to serve the local area long after mine closure, and the shift to dry-
stack filtered waste management. The Company looks forward to advancing further elements of the community
Social Investment Plan as mine permitting and construction advance.
Economic Contributions
The Study anticipates that approximately 600 direct jobs will be created during the peak of construction, and 420
jobs will be generated during operations. Assuming base case metal prices, under this Study Ixtaca is anticipated
to generate approximately US$130 million in Federal taxes, US$50 million in State taxes and US$30 million in
Municipal taxes.
Closure and Reclamation
Mine waste areas will be reclaimed and re-vegetated at the end of mining activity. At closure, all buildings will
be removed and remaining facilities, except for the water storage dam (WSD), will be reclaimed and re-vegetated.
The WSD and the availability of this water to the local communities will remain after closure.
Opportunities
Several opportunities excluded from the base case economics have been identified in the Study.
Results from the ore sorting tests identified several opportunities to increase the ore sort efficiency and
could result in a further increase in mill feed grades. These opportunities will be investigated with future
test work.
Gold extraction recoveries in the minor black shale unit are currently impeded by the presence of
carbonaceous material. Recent test work including carbon pre-flotation and ultra-fine gravity separation
has demonstrated that the carbon can be liberated and removed with a significant improvement in gold
recovery. This test work is ongoing and is expected to improve the black shale gold recovery.
Test work carried out on Ixtaca limestone waste rock samples concluded that Ixtaca limestone waste
rock is suitable for many types of concrete use and other applications such as shotcrete, subgrade, asphalt
aggregate or railroad ballast with little effort and processing. Concrete produced with tests on Ixtaca
limestone aggregate performed very well, achieving the 28-day design compressive strength of 30 MPa
already at 7 days, and more than 40 MPa at 28 and 56 days.
Ixtaca is connected by 60 km of paved road to the industrial city Apizaco, 120 km of paved road to the
state capital of Puebla, and 170 km of paved road to Mexico City.
The sale of limestone ore sort rejects (a waste product) as an aggregate presents a very significant
potential source of revenue to the Project at no additional capital or operating cost to the Project. There
is also potential to sell some of the ROM waste rock as an aggregate.
Fine aggregate from crushing and grinding operations is also expected to perform in a similar way to the
coarse aggregate. Chemical analysis of the fine aggregate indicates that it is also suitable as a raw
material for the production of lime cement or Portland cement if properly processed and blended with
suitable silica aluminates.
42
Next Engineering and Development Steps
The Company is pursuing the optimization opportunities noted above and has submitted its environmental permit
application to Mexican authorities.
Qualified Persons, Sample Preparation, Analyses, Quality Control and Assurance
The independent qualified persons responsible for preparing the Study are: Jesse Aarsen, P.Eng. and Tracey
Meintjes, P.Eng. of MMTS; Edward Wellman PE, PG, CEG and Clara Balasko, P.E. of SRK; Kris Raffle, P.Geo.
of APEX Geoscience Ltd.; and Gary Giroux, M.A.Sc., P.Eng. of Giroux Consultants Ltd.; all of whom act as
independent consultants to the Company, are Qualified Persons as defined by National Instrument 43-101 ("NI
43-101").
The analyses used in the preparation of the mineral resource statement were carried out at ALS Chemex
Laboratories of North Vancouver (“ALS”) using industry standard analytical techniques. All strongly altered or
epithermal-mineralized intervals of core have been sampled. Almaden employs a maximum sample length of 2
to 3m in unmineralized lithologies, and a maximum sample length of 1m in mineralized lithologies. During the
years 2010 and 2011, Almaden employed a minimum sample length of 20cm. The minimum sample length was
increased to 50cm from 2012 onwards to ensure the availability of sufficient material for replicate analysis. Drill
core is half-sawn using industry standard diamond core saws. After cutting, half the core is placed in a new plastic
sample bag and half is placed back in the core box. Sample numbers are written on the outside of the sample bags
and a numbered tag placed inside the bag. Sample bags are sealed using a plastic cable tie. Sample numbers are
checked against the numbers on the core box and the sample book.
ALS sends its own trucks to the Ixtaca project to take custody of the samples at the Santa Maria core facility and
transports them to its sample preparation facility in Guadalajara or Zacatecas, Mexico. Prepared sample pulps are
then forwarded by ALS personnel to the ALS North Vancouver, British Columbia laboratory, which is ISO/IEC
17025:2017 and ISO 9001: 2015 certified, for analysis.
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. In addition to the in-house QAQC measures employed by
Almaden, Kris Raffle, P.Geo. of APEX Geoscience Ltd., completed an independent review of blank, field
duplicate and certified standard analyses. All QAQC values falling outside the limits of expected variability were
flagged and followed through to ensure completion of appropriate reanalyses. No discrepancies were noted within
the drill hole database, and all QAQC failures were dealt with and handled with appropriate reanalyses.
The mineral resource estimate referenced in this document was prepared by Gary Giroux, P.Eng., an independent
Qualified Person as defined by NI 43-101.
Current Work
The Company is pursuing the optimization opportunities noted above and has submitted its environmental permit
application to Mexican authorities. The Company has also appointed Auramet International, LLC, as Financial
Advisor in conjunction with project financing for the Ixtaca Project.
Upcoming / Outlook
Almaden has sufficient cash on hand to conduct its anticipated work program for the next fiscal year at Ixtaca.
Continuing work on Ixtaca will be focused on the environmental permit application, project financing discussions,
and advanced engineering.
43
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, 2018, 2017, and 2016 appearing under Item 18 – 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 (“IFRS”).
The Company is in the business of exploring its principal mineral property in Mexico with the aim of developing
it to a stage where it can be exploited at a profit or to arrange joint ventures or other business transactions 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.
The Company receives other income from Administrative Services Agreements with Azucar and Almadex.
Under those Agreements, the Company is the sole and exclusive manager of Azucar and Almadex. Azucar and
Almadex compensate the Company 30% and 20%, respectively, of the Company’s actual monthly cost of rent for
any shared facilities, and 30% and 20%, respectively, of any shared personnel’s fees and/or wages. Azucar and
Almadex also pay the Company any reasonable fees or costs incurred on behalf of Azucar and Almadex by the
Company which were approved by Azucar and Almadex. The Administrative Services Agreements have an
initial 5-year term, with subsequent automatic 1 year renewals unless terminated pursuant to the terms permitted
under the Agreements. The Agreements include a Change of Control clause. If either party is subject to a Change
of Control during the term of the respective Agreement, the Agreement shall automatically terminate within 48
hours of the Change of Control unless agreed to in writing by both parties. The target of the Change of Control
shall then pay the other party $2 million as compensation for the unplanned termination of the Company’s
engagement and significant disruption to the other party’s business. “Change of Control” means the date upon
which, without the written concurrence of the target of the Change of Control, any person (as that term is defined
in the Securities Act (British Columbia)) makes and does not withdraw a take-over bid (as that term is defined in
the Securities Act (British Columbia)) or acquires, directly or indirectly, that number of common shares of the
target which equals or exceeds twenty percent (20%) of the then issued common shares of the target.
Fiscal 2018 compared to Fiscal 2017
For the year ended December 31, 2018 (“Fiscal 2018”), the Company recorded a comprehensive loss of
$3,511,667 or $0.03 per common share compared to a comprehensive loss of $5,231,295 or $0.05 per common
share for the year ended December 31, 2017 (“Fiscal 2017”). The decrease in comprehensive loss of $1,719,628
was primarily a result of a decrease in operating expense totalling $998,008 and an increase in other income of
$721,620 from interest income and administrative service fees.
Because the Company is an exploration company, it has no revenue from mining operations. Other income of
$1,190,068 (Fiscal 2017 - $468,448) during Fiscal 2018, consisted of mainly interest income earned on its cash
balances and other income from administrative services fees of $950,352 (Fiscal 2017 - $654,741). Also included
in other income is a foreign exchange gain of $239,716 (Fiscal 2017 foreign exchange loss - $184,533) due to a
higher exchange rate on USD cash balances during Fiscal 2018.
Operating expenses were $4,701,735 during Fiscal 2018 (Fiscal 2017 - $5,699,743). Certain operating expenses
were reported on a gross basis and recovered through other income from the administrative services agreements
with Azucar and Almadex starting May 18, 2018 after the Azucar corporate reorganization. The decrease in
operating expenses of $998,008 is mainly the result of a decrease in share-based payments by $1,384,330 due to
a lower share price that reduces the fair values of stock options granted during Fiscal 2018 and an increase in
salaries and benefits of $378,043 due to new hires as the Company plans to enter into development stage and
requires additional personnel for such development stage activities.
44
Fiscal 2017 compared to Fiscal 2016
For the year ended December 31, 2017 (“Fiscal 2017”), the Company recorded a net loss and comprehensive loss
of $5,231,295 or $0.05 per share compared to a net loss of $4,023,504 or $0.05 per share for the year ended
December 31, 2016 (“Fiscal 2016”). The increase in net loss of $1,207,791 was primarily a result of increased
operating expenses, in particularly in compensation, share-based payments and professional fees.
Because the Company is an exploration company, it has no revenue from mining operations. Other income of
$468,448 (Fiscal 2016 - $443,560) during Fiscal 2017, consisted of mainly interest income and other income from
administrative services fees earned from Almadex partially offset by foreign exchange loss.
Operating expenses were $5,699,743 during Fiscal 2017 (Fiscal 2016 - $4,467,064). Certain operating expenses
were reported on a gross basis and recovered through interest and other income at approximately 30% from the
administrative services agreement with Almadex. The increase in operating expenses of $1,232,679 was mainly
the result of increased professional fees related to corporate legal services performed in Mexico. Salaries and
benefits, stock exchange fees, and directors’ fees were increased compared to the same time last year as a result
of normal course of operating a public company. Share-based payments increased by $824,060 due to stock
option grants during the period.
Liquidity and Capital Resources
As at December 31, 2018, the Company’s working capital position was $4,356,589. Management estimates that
the current cash position and expected future cash flows from the exercise of outstanding stock options and
warrants and equity financing will be sufficient for the Company to carry out its anticipated exploration and
operating plans for fiscal 2019 that includes further development of the Ixtaca Project.
Management believes that the Company’s cash resources are sufficient to meet its working capital and mineral
exploration requirements for its next fiscal year.
Fiscal 2018
At the end of Fiscal 2018, the Company had working capital of $4,356,589 including cash and cash equivalents
of $5,080,580 compared to working capital of $16,065,496 including cash and cash equivalents of $16,334,534
at the end of Fiscal 2017. The decrease in working capital of $11,708,907 is mainly due to the cash expenditures
on mill mobilization expenses and option payments on the Rock Creek mill recorded in the property, plant and
equipment.
The Company has a deferred income tax liability in the amount of $1,434,882. The deferred income tax liability
relates to the Mexican income tax and Special Mining Duty associated with the Ixtaca Project.
Management believes that the Company’s cash resources are sufficient to meet its working capital and mineral
exploration requirements for its next fiscal year.
Net cash used in operating activities during Fiscal 2018, was $1,919,921 (Fiscal 2017 - $2,674,767), after
adjusting for non-cash activities.
Net cash used in investing activities during Fiscal 2018, was $18,171,752 (Fiscal 2017 - $12,808,053). Significant
items include expenditures on exploration and evaluation assets of $9,674,048 (Fiscal 2017 - $8,860,153), and
deposit on mill equipment of $7,694,900 (Fiscal 2017 - $3,642,826).
Net cash from financing activities during Fiscal 2018, was $8,837,719 (Fiscal 2017 - $22,047,348) as a result of
a non-brokered private placement that closed on June 7, 2018, net of share issue costs.
Management estimates that the current cash position and potential future cash flows from in the money stock
options and warrants will be sufficient for the Company to carry out its anticipated exploration and operating
plans for the foreseeable future. There may be circumstances where, for sound business reasons, a reallocation
of funds may be necessary in order for the Company to achieve its stated business objectives.
Fiscal 2017
At the end of Fiscal 2017, the Company had working capital of $16,065,496 including cash and cash equivalents
of $16,334,534 compared to working capital of $9,293,081 including cash and cash equivalents of $9,770,006 at
45
the end of Fiscal 2016. The increase in working capital of $6,772,415 is mainly due to increase in cash flow from
financing raised through two private placements completed during the year.
The Company has a deferred income tax liability in the amount of $1,434,882. The deferred income tax liability
relates to the Mexican income tax and Special Mining Duty associated with the Ixtaca Project.
On February 7, 2017, the Company closed a non-brokered private placement for gross proceeds of $3,401,199
and on June 1, 2017, the Company closed a bought deal private placement for gross proceeds of $17,251,150. As
a result of both financings, the Company has been able to raise money even in a very challenging financial
marketplace.
Net cash used in operating activities during Fiscal 2017, was $2,674,767 (Fiscal 2016 - $2,321,136), after
adjusting for non-cash activities.
Net cash used in investing activities during Fiscal 2017, was $12,808,053 (Fiscal 2016 - $5,524,623). Significant
items include expenditures on exploration and evaluation assets of $8,860,153 (Fiscal 2016 - $5,177,485), and
deposit on mill equipment of $3,642,826 (Fiscal 2016 - $324,600).
Net cash from financing activities during Fiscal 2017, was $22,047,348 (Fiscal 2016 - $11,392,987) as a result of
a non-brokered private placement that closed on February 7, 2017, and a bought deal private placement which
closed on June 1, 2017, and options and warrants exercised, net of share issue costs.
Fiscal 2016
At the end of Fiscal 2016, the Company had working capital of $9,293,081 including cash and cash equivalents
of $9,770,006 compared to working capital of $5,808,473 including cash and cash equivalents of $6,222,778 at
the end of Fiscal 2015. The increase in working capital of $3,484,608 was mainly due to a non-brokered private
placement that closed on May 25, 2016 for gross proceeds of $4,359,260, and $7,130,747 received through the
exercise of 4,592,667 warrants during 2016.
Cash used in operations during Fiscal 2016 was $2,321,136 (Fiscal 2015 - $3,015,966) after adjusting for non-
cash activities.
Cash used in investing activities during Fiscal 2016 was $5,524,623 (Fiscal 2015 - $4,362,807). Significant items
include expenditures on mineral property interests of $5,177,485 (Fiscal 2015 - $3,668,974) primarily on land
acquisition of $1,578,436 (Fiscal 2015 - $831,455) and exploration costs on the Tuligtic property of $3,868,910
(Fiscal 2015 - $3,048,151). The Company also invested $324,600 (Fiscal 2015 - $692,000) pursuant to the terms
of an Asset Purchase Option Agreement dated October 16, 2015 with Alaska Gold Company, LLC and Bering
Straits Native Corporation (the “Asset Purchase Option Agreement”) in respect of an option on certain mining
equipment referred to as the “Rock Creek mill”.
On May 25, 2016, the Company closed a non-brokered private placement by the issuance of 3,229,082 units at a
price of $1.35 per unit for gross proceeds to the Company of $4,359,260. Each unit consists of one common
share and one-half of one non-transferable common share purchase warrant. Each whole warrant allows the
holder to purchase one common share of the Company at a price of $2.00 per share until November 25, 2018.
Share issue costs included a finder’s fee of $147,925 in cash, and finders’ warrants to purchase up to 45,944
common shares at a price of $1.44 per common share until November 25, 2018. The fair value of the finders’
warrants was $17,918. In connection with the private placement, the Company also incurred $119,689 in share
issue costs. These amounts were recorded as reduction to share capital. The proceeds of the private placement
were allocated entirely to share capital.
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
During 2018, prices of precious metals continued to be quite volatile, with the gold price starting the year at over
US$1350/ounce before dropping to a low of about US$1175/ounce in August 2018 and finishing the year at about
US$1280/ounce. This was a very similar price range as was experienced in 2017. The price of silver followed a
similar volatile trajectory as that of gold, starting the year at over US$17.60 before falling to under
US$14.00/ounce in November and finishing the year at about US$15.50/ounce. Unlike gold which in 2018 traded
46
within a similar price range as it did in 2017, silver was under more pressure in 2018 than the previous year,
hitting lower lows and not reaching the same highs.
The volatility of the gold and silver prices as well as the lack of momentum to break through or meet the prior
year price ranges contributed to a tepid environment for financing mineral exploration and development activities.
In addition, traditional sources of financing to this sector continue to be impacted by the increasing popularity of
index funds, which gain exposure to the sector through purchases and sales through exchanges, as opposed to
transactions directly with issuers in the form of financings. Furthermore, some of the higher risk capital which
had previously targeted the exploration and mining sector has been drawn to other areas such as blockchain and
lifestyle companies. Capital is still available for well defined and advanced opportunities, but increasingly the
sources of capital are fewer but larger, as are the financing transactions themselves.
It remains unclear how long the depressed financing market for exploration and development activities will
continue. With fewer but larger capital sources, there has recently been a wave of consolidation of major
companies seeking to become more attractive to major equity funds by improving their balance sheets, creating
greater asset and jurisdiction diversification, and generating increased trading liquidity. The major companies are
also re-committing themselves to balance sheet discipline and profitability after many years of underperformance.
One avenue to accomplish greater profitability is through the synergies of consolidation combined with greater
restraint when it comes to major project development activities. In addition, it’s expected that these companies
and others like them will seek to increase profitability by reducing or eliminating “greenfield” exploration and
acquisition activity. So, while these mergers help the participants compete for scarce investor attention, they are
unlikely to help address the long term need for a pipeline of new projects to replace declining and higher cost
reserves held within many of these companies.
Geopolitical uncertainty continued in 2018 as the utility of traditional global political and trade alliances has been
openly questioned at the highest levels. While 2018 saw an agreement reached between the U.S., Mexico and
Canada relating to a modernized NAFTA deal it has not yet been ratified by all parties and the process of
renegotiation was a turbulent one. The increasing acrimony and polarization of domestic politics in many
countries is also contributing to international tensions. Currency markets have responded with increased volatility.
Given that varying proportions of the costs of production in mining operations are valued in the local currencies,
whereas the metals themselves are generally sold in U.S. dollars, currency exchange rates can have a significant
impact on operating conditions.
The uncertain times have led to 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 mineral industry than many other industries, and because of current conditions these concepts
are under question by many vested interest groups.
At the same time, just as it is more difficult to raise capital for new discoveries, it is also becoming more difficult
to develop new resources once they have been discovered. Environmental groups have successfully lobbied for
more wilderness areas and parks where exploration and mining activities are prohibited. Indigenous groups are
actively asserting their interests and there is a rise of militant national and religious groups in many parts of the
world. A global network of ideologically-driven anti-mining activists leverages both the real and perceived
interests of the environmental and indigenous groups in an attempt to stifle resource development despite the
increasing need for such resources as global living standards advance. Pressure from such groups can lead to
increased regulation and this must be monitored closely to recognize a point where it becomes excessive. Many
governments are pursuing regulations and taxes on emissions of so called “greenhouse gases” that could raise
costs for many industries including metal mining. As more and more stakeholders become interested in mining
ventures there is an increasing need to maintain cooperation with valid concerned groups, particularly among the
local communities where projects are located. 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, quality exploration projects based on sound geological work
continues.
Both the scarcity of funding for new discoveries and the difficulty in developing new resources are likely to limit
the supply of metals to a growing and developing global population. The Company believes that in the long term,
metal prices will be constructive for both exploration and development activities. The Company plans to continue
47
advancing the Ixtaca project with the aim of developing it into one of the more attractive advanced and modern
projects in the world.
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 Company’s office lease effective April 1, 2017 through to March 31, 2022. 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.
On January 29, 2013, the Company entered into contracts with its Chairman and President for an annual
remuneration of $240,000 and $265,000 respectively effective January 1, 2013, for two years, renewable for two
additional successive terms of 24 months each. Effective December 31, 2015, the Chairman’s contract was
mutually terminated and effective January 1, 2016, the Company and the Chairman entered into a new contract
for an annual remuneration of $240,000 for two years, renewable for two additional successive terms of 24 months
each. The Chairman’s contract and the President’s contract were amended April 1, 2016 and further amended on
January 1, 2019 to make their term indefinite. Effective May 24, 2011, as amended April 1, 2016, the Company
and the Chief Financial Officer (“CFO”) entered into an Employment Agreement for an indefinite term and,
effective September 22, 2014, as amended April 1, 2016, the Company and the Vice President, Corporate
Development (“VP”) entered into an Employment Agreement for an indefinite term. Effective January 1, 2016,
the Chairman’s and President’s base salaries (“Base Salary”) were $240,000 and $265,000, respectively, and the
CFO’s and VP’s Base Salaries were $185,000 and $175,000, respectively. Effective January 1, 2017, the
Chairman’s, President’s, CFO’s and VP’s Base Salaries were $240,000, $305,000, $203,500 and $192,500,
respectively. Under the Administrative Services Agreements between the Company and each of Azucar Minerals
Ltd. and Almadex Minerals Ltd. the Company provides management services to Azucar and Almadex. Azucar
compensates the Company 30% of any shared personnel remuneration and office overhead expenses, while
Almadex compensates the Company 20% of any shared personnel remuneration and office overhead expenses.
Therefore, Almaden currently recovers 50% of the contractual compensation amounts for the Chairman, Chief
Executive Officer, Chief Financial Officer and Vice President, Corporate Development.
Table No. 4
Contractual Obligations of the Company
Payments due by period
Operating lease
Total
$ 611,638
Less than
1 year
$179,706
1 – 3
years
$383,848
3 – 5
years
$48,084
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.
Significant accounting judgments and estimates
Significant assumptions about the future and other sources of judgments and estimates that management has made
at the statement of financial position dates, 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 The analysis of the functional currency for each entity of the Company determined by conducting an
48
analysis of the consideration factors identified in IAS 21, “The Effect of Changes in Foreign Exchange
Rates”. 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.
o The determination that the carrying amount of the Tuligtic Project will be recovered through use rather
than sale.
Estimates
o
o
o
o
o
o
The recoverability of accounts receivable which is included in the consolidated statements of financial
position;
The estimated useful lives of property, plant and equipment which are included in the consolidated
statements of financial position and the related depreciation included in profit or loss;
The recoverability of the value of the exploration and evaluation assets which is recorded in the
consolidated statements of financial position;
The Company uses the Black-Scholes option pricing model to determine the fair value of options and
warrants in order to calculate share-based payments expense and the fair value of finders’ warrants and
stock options. Certain inputs into the model are estimates that involve considerable judgment or could
be affected by significant factors that are out of the Company’s control;
The provision for income taxes which is included in profit or loss and the composition of deferred income
tax liability included in the consolidated statement of financial position and the evaluation of the
recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the
underlying future tax deductions against future taxable income prior to expiry of those deductions;
The assessment of indications of impairment of each exploration and evaluation asset and related
determination of the net realizable value and write-down of those assets where applicable;
Item 6. Directors, Senior Management and Employees
Table No. 5 lists the directors of the Company as of March 14, 2019. The directors have served in their respective
capacities since their election and/or appointment and will serve until the next annual general meeting of the
Company or until a successor is duly elected, unless the office is vacated in accordance with the Articles of the
Company. All directors are residents and citizens of Canada.
Name
James Duane Poliquin
John D. McCleary(2)(3)
Morgan Poliquin
Gerald G. Carlson(1)(2)(3)
Mark T. Brown (1)(3)
William J. Worrall(1)(2)(3)
Elaine Ellingham(5)
Table No. 5
Directors of the Company
Age
78
78
47
73
50
86
60
Date First Elected or Appointed
February 1, 2002(4)
February 1, 2002(4)
February 1, 2002(4)
February 1, 2002(4)
May 30, 2011
May 7, 2013
February 27, 2018
(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
(5) Elaine Ellingham was appointed an additional Director of the Company on February 27, 2018
Duane Poliquin was a director of Almaden Resources Corporation since September 1980, Jack McCleary since
June 1991 and Morgan Poliquin since June 1999.
Duane Poliquin was a director of Fairfield Minerals Ltd. since June 1996, and Gerald G. Carlson since July 1998.
49
Table No.6 lists the Executive Officers of the Company as of March 14, 2019. 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 with the exception of Laurence Morris,
who is a resident of Nicaragua and citizen of the United Kingdom.
Table No. 6
Executive Officers of the Company
Position
Name
James Duane Poliquin Chairman of the Board
Morgan Poliquin
Korm Trieu
Douglas McDonald
Laurence Morris
(1) Date of issue of the Certificate of Amalgamation
President and Chief Executive Officer
Chief Financial Officer
Vice-President, Corporate Development
Vice-President, Operations & Projects
Age
78
47
53
50
65
Date First Appointed
February 1, 2002 (1)
March 1, 2007
May 30, 2011
September 22, 2014
April 30, 2018
Duane Poliquin was appointed an Officer of Almaden Resources Corporation in September 1980 and of Fairfield
Minerals Ltd. in June 1996.
Duane Poliquin is a registered professional geological engineer with over 50 years of 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,
Azucar Minerals Ltd. and Almadex Minerals Ltd. of which he also serves as Chairman of the Board and a director.
John D. (Jack) McCleary is a registered professional geologist with over 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 is also a director of Azucar Minerals Ltd. and Almadex Minerals
Ltd. He spends less than 5% of his time on the affairs of the Company.
Morgan Poliquin is a registered professional geological engineer with over 20 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 directing the exploration programs and the affairs of the Company in
Almaden, Azucar Minerals Ltd. and Almadex Minerals Ltd. of which he also serves as President, CEO and a
director.
Gerald G. Carlson has been involved in mineral exploration and junior exploration company management for
over 45 years. Mr. Carlson has a B.A.Sc. from the University of Toronto, a M.Sc. from Michigan Technological
University and a Ph.D. from Dartmouth College. He is President, CEO and a director of Pacific Ridge Exploration
Ltd., a gold and zinc exploration company listed on the TSX-V and a director of Cyntar Ventures Inc. listed on
the CSE. He is a past President of AME BC (formerly the B.C. and Yukon Chamber of Mines), Director and past
President of the Society of Economic Geologists Canada Foundation, a Fellow of the Society of Economic
Geologists, a member of Engineers and Geoscientists BC, Engineers Yukon and the Canadian Institute of Mining,
Metallurgy & Petroleum. Mr. Carlson spends less than 5% of his time on the affairs of the Company.
Mark T. Brown is a Chartered Professional Accountant (CPA, CA) 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 (now TSX) 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.
50
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 Executive Chairman of Alianza Minerals Ltd. and
Avrupa Minerals Ltd., both mineral exploration companies listed on the TSX-V. Mr. Brown also serves as a
Director, President, or Chief Financial Officer of the following companies:
a. Director - Strategem Capital Corp., an investment issuer listed on the TSX-V.
b. Director - Sutter Gold Mining Ltd., a gold exploration company listed on the TSX-V.
c. Director – Azucar Minerals Ltd., an exploration company listed on the TSX-V.
d. Director - Almadex Minerals Ltd., an exploration company listed on the TSX-V.
e. Chief Financial Officer - Adamera Minerals Corp., an exploration company listed on the TSX-V.
f. Chief Financial Officer – Redstar Gold Corp., an exploration company listed on the TSX-V.
g. Chief Financial Officer – Orestone Mining Corp., an exploration company listed on the TSX-V.
h. Director – Mountain Boy Minerals Ltd., an exploration company listed on the TSX-V.
Mr. Brown was a director of Ascent Industries Corp. (formerly Paget Minerals Ltd.) until February 13, 2019. On
March 4, 2019, Ascent industries Corp. instituted proceedings under the Companies’ Creditors Arrangement Act
(Canada).
William J. Worrall is a retired lawyer with over 55 years practice primarily in the areas of securities, national
and transnational corporate and commercial transactions, including mergers and acquisitions, with emphasis on
junior resource companies engaged in mining and oil and gas exploration and development. Mr. Worrall spends
less than 5% of his time on the affairs of the Company. He is also a director of Azucar Minerals Ltd. and Almadex
Minerals Ltd.
Elaine Ellingham is a professional geoscientist with over 35 years of experience in the mining industry, having
held senior positions in several mining companies. Ms. Ellingham serves as President of Ellingham Consulting,
an independent consulting firm providing geological and advisory services. She spent eight years with the
Toronto Stock Exchange serving in various capacities, including four years as the TSX National Leader of Mining
& International Business Development. Ms. Ellingham has also served as interim CEO and Director of Richmont
Mines Inc. and Senior Vice President, Investor Relations at IAMGOLD, in addition to other corporate
development experience with Campbell Resources and Rio Algom Limited. She is also an active director on the
Boards of Aurania Resources, Alamos Gold and the Prospectors and Developers Association of Canada. Ms.
Ellingham spends less than 5% of her time on the affairs of the Company.
Korm Trieu is a Chartered Professional Accountant (CPA, CA) and holds a Bachelor of Science degree from the
University of British Columbia and has spent over 20 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 approximately all of his business time on
the affairs of the Company along with Azucar Minerals Ltd. and Almadex Minerals Ltd. of which he is also the
Chief Financial Officer.
Douglas McDonald holds a Bachelor of Commerce degree and an M.A. Sc. specializing in mineral economics
from the University of British Columbia and has over 20 years of experience in the resource, foreign trade and
resource policy arenas. Prior to joining Almaden, he worked with an investment dealer where he advised
numerous mineral resource companies regarding M&A opportunities and assisted them in accessing capital
markets. He also spent 5 years as a Foreign Service officer with the Canadian government, where he focused on
international trade issues, primarily concerning their impact on the resources industry. Mr. McDonald spends all
of his business time on the affairs of the Company, along with Azucar Minerals Ltd. and Almadex Minerals Ltd.
of which he is also a director and the Vice President, Corporate Development.
Laurence Morris is a mining engineer and geologist with more than 35 years of experience in the metals and
mining business. Mr. Morris has broad international experience in construction, operating and planning roles
ranging from exploration stage to large scale operating mines in a variety of commodities and countries. From
2015 to 2017, Mr. Morris was the Mine Manager for First Quantum Minerals at their US$5.5 billion Cobre
Panama project, where he was responsible for transitioning the project from a greenfields site to an operating
mine, including mine planning, mining team assembly and training, setting up operating procedures and technical
services. Prior to this Mr. Morris has held several key positions including Vice President of Operations for
51
Minefinders Corporation Ltd. from 2010 to 2013. In that position, he oversaw all aspects of development, mining
operations, exploration activities and resource management at the Dolores mine in Mexico. Prior to joining
Minefinders in 2010, Mr. Morris worked in mine management for First Quantum Minerals Ltd. in Zambia and
Mauritania. Mr. Morris holds an Honours Bachelor of Science in Geology from the University of Sheffield.
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 2018, the Chairman was remunerated at his base salary of $240,000 per annum and the Chief
Executive Officer was remunerated at his base salary of $335,000 per annum. The Chief Executive Officer’s
employment contract included terms for two additional successive terms of 24 months each (the “Extended
Term”) ending January 29, 2019. Effective December 31, 2015, the Hawk Mountain Resources Ltd. contract was
terminated by mutual consent with the Company and the Chairman entered into a new employment contract
directly with the Company. The new employment contract includes a base salary of $240,000 per annum and has
an effective date of January 1, 2016. It has an initial two-year term and is renewable for two additional successive
terms of 24 months each (the “Extended Term”) ending December 31, 2021. On January 1, 2019, both the Chief
Executive Officer’s and Chairman’s employment contracts were amended to remove the Extended Term thereby
making their terms indefinite.
During Fiscal 2018, the Chief Financial Officer (“CFO”) and the Vice President, Corporate Development were
remunerated at their base salary of $225,000 CAD and $212,000 CAD. The Vice President, Operations & Projects
was compensated at his annual fee of $250,000 USD per annum. Each of the CFO’s and Vice Presidents’
employment agreements have indefinite terms.
Under Administrative Services Agreements between the Company and each of Azucar Minerals Ltd. and
Almadex Minerals Ltd., the Company provides management services to Azucar and Almadex. Azucar
compensates the Company 30% of any shared personnel remuneration and office overhead expenses, while
Almadex compensates the Company 20% of any shared personnel remuneration and office overhead expenses.
Therefore, Almaden currently recovers 50% of the contractual compensation amounts for the Chairman, Chief
Executive Officer, Chief Financial Officer and Vice President, Corporate Development.
All non-management Directors are to be compensated $12,000 yearly and the Chairs of the Audit Committee and
Compensation, Nominating and Corporate Governance Committee are to be compensated $5,000 yearly, effective
January 1, 2017. The Compensation Committee also recommended that, with respect to Director stock options,
up to 400,000 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, or will receive compensation on termination.
Total compensation paid by the Company directly and/or indirectly to all directors and executive officers during
Fiscal 2018 was $1,022,079 (Fiscal 2017 - $883,400) after recovery by the Company of 50% of executive officer
compensation pursuant to the terms of the Administrative Services Agreements between the Company and each
of Azucar and Almadex
52
Table No. 7
Summary Compensation Table
Annual Compensation
Long-Term Compensation
Awards
Fiscal
Year
2018(2)
2017
2016
2018(2)
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2017
2016
2018
2018(2)
2017
2016
2018(2)
2017
2016
2018
Salary(1)
Bonus
Other Annual
Compensation
Restricted
Stock
Awards
$138,194
$168,000
$168,000
$192,895
$213,500
$185,500
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$129,556
$142,450
$129,500
$122,071
$134,750
$122,500
$246,488
Nil
Nil
Nil
$66,250
$85,400
$92,750
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$27,750
$35,613
$38,850
$28,875
$33,688
$18,375
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
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
Options/
SARS
Granted
(#)
650,000
715,000
550,000
1,000,000
1,365,000
700,000
218,000
332,000
218,000
Nil
Nil
Nil
172,000
290,000
100,000
68,000
457,000
68,000
285,000
215,000
5,000
Nil
100,000
400,000
400,000
255,000
290,000
150,000
200,000
275,000
170,000
300,000
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
Nil
Nil
Nil
Nil
Nil
Nil
Nil
$17,0000(3)(5)
$17,0000(3)(5)
$10,000(3)(5)
Nil
Nil
$7,000(3)
$12,000(3)
$12,000(3)
$7,000(3)
$17,000(3)(4)
$17,000(3)(4)
$10,000(3)(4)
$12,000(3)
$12,000(3)
$7,000(3)
$12,000(3)
$12,000(3)
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Name and
Principle Position
Duane Poliquin
Chairman of the Board &
Director
Morgan Poliquin
President, Chief Executive
Officer & Director
Jack McCleary
Director
Joseph Montgomery
Former Director(6)
Gerald G. Carlson
Director
Mark T. Brown
Director
William J. Worrall
Director
David Strang(7)
Former Director
Elaine Ellingham(8)
Director
Korm Trieu
Chief Financial Officer
Douglas McDonald
Vice President, Corporate
Development
Laurence Morris(9)
Vice President, Operations
& Projects
(1)
Since the effectiveness of the Plan of Arrangement with Azucar on July 31, 2015, Azucar has compensated the Company 30% of any
shared personnel’s fees and/or wages. The above table reflects only the compensation for each individual paid by Almaden after
recovery of such 30% from Azucar.
Effective May 18, 2018, Almadex has compensated the Company 20% of any shared personnel’s fees and/or wages. The above table
reflects only the compensation for each individual paid by Almaden after recovery of such 20% from Almadex.
Director’s fees.
Audit Committee Chairman’s fees.
Compensation Committee Chairman’s fees.
Joseph Montgomery resigned as a Director of the Company effective August 8, 2016.
David Strang commenced as a Director of the Company effective August 8, 2016 and resigned effective June 27, 2018.
Elaine Ellingham commenced as a Director of the Company effective February 27, 2018.
Laurence Morris commenced as Vice President, Operations & Projects effective April 30, 2018 and pursuant to his Independent
Contractor Agreement dated January 15, 2018 is compensated at an annual fee of $250,000 USD.
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Remuneration on Termination
The Company has the following termination clauses within its executive employment contracts.
53
(1) Chairman
The Company entered into a new Executive Employment Contract (the “DP Agreement”) dated January 1, 2016,
as amended by Amending Agreement dated April 1, 2016 and Second Amending Agreement made January 1,
2019 (the “DP Agreement”) between the Company and Duane Poliquin (the “Executive” under the DP
Agreement) which replaces an expired Executive Compensation Contract dated January 29, 2013 (the “HMR
Agreement”) between the Company and Hawk Mountain Resources Ltd. (“Management Company”), a private
company of which Duane Poliquin (the “Executive” under the HMR Agreement) is a shareholder, which was
terminated by mutual agreement on December 31, 2015. The DP Agreement will terminate or may be terminated
for any one of the following reasons:
(a)
Voluntarily by the Executive, upon at least three (3) months prior written notice of termination by the
Executive to the Company; or
(b) without Cause, upon at least three (3) months prior written notice of termination by the Company to the
Executive; or
by the Company for Cause; or
upon the death or disability of the Executive; or
upon retirement by the Executive.
(c)
(d)
(e)
Termination by the Executive Voluntarily or by the Company for Cause
If the Executive shall voluntarily terminate employment under the DP Agreement or if the employment of the
Executive thereunder is terminated by the Company for Cause, then all compensation and benefits as theretofore
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 under the DP Agreement shall mean:
(a)
(b)
(c)
(d)
the repeated and demonstrated failure by the Executive to perform the Executive’s material duties under
the DP Agreement, after demand for substantial performance is delivered by the Company to the
Executive that specifically identifies the manner in which the Company believes the Executive has not
substantially performed by the Executive under the DP Agreement; or
the willful engagement by the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise; or
any other willful violation by the Executive of the provisions of the DP Agreement; or
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 the DP Agreement for any reason except for
Cause or Disability 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, less all statutory withholdings
and deductions. All the benefits theretofore provided to the Executive shall be continued as if the Executive was
still an employee 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 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 an
employee 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 within 60 days of the Executive’s death. If no Executive’s Designate
survives the Executive, the entire amount shall be paid to the Executive’s estate. 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
54
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
For purposes of the DP Agreement, a Change in Control shall be deemed to have occurred if:
(i)
(ii)
(iii)
(iv)
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
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 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
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; or
the business or businesses of the Company for which the Executive’s services are principally
performed, are disposed of by the Company pursuant to a partial or complete liquidation, dissolution,
consolidation or merger of the Company, or a sale or transfer of all or a significant portion of the
Company’s assets.
Notwithstanding any other provisions in the DP Agreement regarding termination, if any of the events described
above constituting a Change in Control shall have occurred during the 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
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.
For purposes of the DP Agreement, “Good Reason” shall mean, without the Executive’s express written consent,
any of the following:
(i)
(ii)
(iii)
the assignment to 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 Executive’s Base Salary as in effect on the date of the DP
Agreement 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 in the DP Agreement 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);
55
(iv)
(v)
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 services with the Company; or
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree
to perform the DP Agreement or, if the business of the Company for which the Executive’s services
are principally performed is sold or transferred, the purchaser or transferee of such business shall fail
to agree to provide the Executive with the same or a comparable position, duties, remuneration and
benefits for the Executive as provided immediately prior to the Change in Control.
Following a Change in Control during the Term, the Executive shall be entitled to terminate the Executive’s
employment for Good Reason.
In the event the Executive is entitled to a severance payment under the DP Agreement, then in addition to such
severance payment, the Executive 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 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 releases the Company and its affiliates from
all claims and liabilities arising out of the Executive’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form,
substance and timeliness.
(2)
President & CEO
The Executive Employment Contract dated January 29, 2013, as amended by Amending Agreement dated April
1, 2016 and Second Amending Agreement made January 1, 2019 (the “MP Agreement”) between the Company
and Morgan Poliquin (the “Executive” under the MP Agreement) will terminate or may be terminated for any one
of the following reasons:
(a) voluntarily by the Executive, upon at least three (3) months prior written notice of termination by the
Executive to the Company; or
(b) without Cause, upon at least three (3) months prior written notice of termination by the Company to the
Executive; or
(c) by the Company for Cause; or
(d) upon the death or disability of the Executive; or
(e) upon retirement by the Executive.
Termination by the Executive Voluntarily or by the Company for Cause
If the Executive shall voluntarily terminate employment under the MP Agreement or if the employment of the
Executive is terminated by the Company for Cause, then all compensation and benefits as theretofore 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 the
MP Agreement, after demand for substantial performance is delivered by the Company to the Executive that
specifically identifies the manner in which the Company believes the Executive has not substantially
performed the Executive’s duties under the MP Agreement; or(
(b) the willful engagement by the Executive in misconduct which is materially injurious to the Company,
56
monetarily or otherwise; or
(c) any other willful violation by the Executive of the provisions of the MP 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 the MP Agreement for any reason except for
Cause 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, less all statutory withholdings and
deductions. All the benefits theretofore provided to the Executive shall be continued as if the Executive was still
an employee 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 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 an
employee 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 within sixty (60) days of the Executive’s death. If no Executive’s
Designate survives the Executive, the entire amount shall be paid to the Executive’s estate. 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
For purposes of the MP 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 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%) or more of the outstanding common shares of the Company; or
(iv) the business or businesses of the Company for which the Executive’s services are principally
performed, are disposed of by the Company pursuant to a partial or complete liquidation, dissolution,
consolidation or merger of the Company, or a sale or transfer of all or a significant portion of the
Company’s assets.
Notwithstanding any other provisions in the MP Agreement regarding termination, if any of the events described
above constituting a Change in Control shall have occurred during the Term, upon the termination of the
Executive’s employment (unless such termination is because of the Executive’s Death or Disability, by the
57
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.
For purposes of the MP Agreement, “Good Reason” shall mean, without the Executive’s express written consent,
any of the following:
(i)
the assignment to 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 of the MP
Agreement 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 in the MP Agreement 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 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
(v)
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree
to perform the MP Agreement or, if the business of the Company for which the Executive’s services
are principally performed is sold or transferred, the purchaser or transferee 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, the Executive shall be entitled to terminate the Executive’s
employment for Good Reason.
In the event the Executive is entitled to a severance payment under the MP 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 releases the Company and its affiliates from
all claims and liabilities arising out of the Executive’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form,
substance and timeliness.
(3) CFO
The Employment Agreement dated May 24, 2011 as amended April 1, 2016 (the “KT Agreement”) between the
Company and Korm Trieu (the “Employee” under the KT Agreement) may be terminated for any one of the
following reasons:
58
(a) voluntarily by the Employee, upon at least sixty (60) days prior written notice of termination by the
Employee to the Company; or
(b) by the Company for cause; or
(c) without cause, upon payment of twelve (12) months of the Employee’s then current Base Salary to the
Employee; or
(d) upon the physical and/or mental impairment of the Employee.
Termination by the Employee Voluntarily or by the Company for Cause
If the Employee shall voluntarily terminate employment under the KT Agreement or if the employment of the
Employee is terminated by the Company for cause, then all compensation and benefits as theretofore provided
shall terminate immediately upon the effective date of termination and no special severance compensation will
be paid.
Cause to terminate the Employee’s employment shall mean:
(a)
(b)
the repeated and demonstrated failure by the Executive to perform the Employee’s material duties under the
KT Agreement, after demand for substantial performance is delivered by the Company to the Employee that
specifically identifies the manner in which the Company believes the Employee has not substantially
performed the Employee’s duties under the KT Agreement; or
the willful engagement by the Employee in misconduct which is materially injurious to the Company,
monetarily or otherwise; or
(c) any other willful violation by the Employee of the provisions of the KT Agreement; or
(d) the Employee is convicted of a criminal offence involving fraud or dishonesty.
Termination by the Company Without Cause
If the Company elects to terminate the Employee’s employment for reasons other than cause, the Company shall
pay the Employee, in one lump sum or in installments at the Company’s discretion, a severance payment equal
to twelve (12) months of the Employee’s then current Based Salary.
Termination upon the physical and/or mental impairment of the Employee
If the Company terminates the Employee’s employment for physical and/or mental impairment, the Company’s
financial obligation to the Employee is limited to that which the Employee would otherwise receive if the
Company terminated the Employee’s employment for no reason.
Termination Following Change in Control
For purposes of the KT 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 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
59
(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%) or more of the outstanding common shares of the Company; or
(iv) the business or businesses of the Company for which the Employee’s services are principally
performed, are disposed of by the Company pursuant to a partial or complete liquidation, dissolution,
consolidation or merger of the Company, or a sale or transfer of all or a significant portion of the
Company’s assets.
Notwithstanding any other provisions in the KT Agreement regarding termination, if any of the events described
above constituting a Change in Control shall have occurred during the course of the KT Agreement, upon the
termination of the Employee’s employment (unless such termination is because of the Employee’s Death or
Disability, by the Company for cause or by the Employee other than for “Good Reason”, as defined below) the
Employee 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 two (2) times the Employee’s then current Base Salary.
For purposes of the KT Agreement, “Good Reason” shall mean, without the Employee’s express written consent,
any of the following:
(i)
the assignment to the Employee of any duties inconsistent with the status or authority of the Employee’s
office, or the Employee’s removal from such position, or a substantial alteration in the nature or status
of the Employee’s authorities or responsibilities from those in effect immediately prior to the Change
in Control;
(ii) a reduction by the Company in the Employee’s Base Salary as in effect on the date of the KT Agreement
or as the same may have been increased from time to time, or a failure by the Company to increase the
Employee’s Base Salary as provided for in the KT Agreement or at a rate commensurate with that of
other key employees of the Company;
(iii) the relocation of the office of the Company where the Employee 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 Employee 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 Employee’s business travel obligations prior to the Change in Control);
(iv) the failure by the Company to continue to provide the Employee with benefits at least as favourable as
those enjoyed by the Employee 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 Employee of
any material fringe benefit enjoyed by the Employee at the time of the Change in Control, or the failure
by the Company to provide the Employee with the number of entitled vacation days to which the
Employee has earned on the basis of years of service with the Company; or
(v) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree
to perform the KT Agreement or, if the business of the Company for which the Employee’s services
are principally performed is sold or transferred, the purchaser or transferee of such business shall fail
to agree to provide the Employee with the same or a comparable position, duties, salary and benefits as
provided to the Employee by the Company immediately prior to the Change in Control.
Following a Change in Control during the course of the KT Agreement, the Employee shall be entitled to
terminate the Employee’s employment for Good Reason.
The Employee’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 releases the Company and its affiliates from
all claims and liabilities arising out of the Employee’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form,
substance and timeliness.
60
(4) Vice President, Corporate Development
The Employment Agreement dated September 22, 2014 as amended April 1, 2016 (the “DM Agreement”)
between the Company and Douglas McDonald (the “Employee” under the DM Agreement) may be terminated
for any one of the following reasons:
(a) voluntarily by the Employee, upon at least sixty (60) days prior written notice of termination by the
Employee to the Company; or
(b) by the Company for cause; or
(c) without cause, upon payment of twelve (12) months of the Employee’s then current Base Salary to the
Employee; or
(d) upon the physical and/or mental impairment of the Employee.
Termination by the Employee Voluntarily or by the Company for Cause
If the Employee shall voluntarily terminate employment under the DM Agreement or if the employment of the
Employee is terminated by the Company for cause, then all compensation and benefits as theretofore provided
shall terminate immediately upon the effective date of termination and no special severance compensation will
be paid.
Cause to terminate the Employee’s employment shall mean:
(a)
(b)
the repeated and demonstrated failure by the Employee to perform the Employee’s material duties under the
DM Agreement, after demand for substantial performance is delivered by the Company to the Employee
that specifically identifies the manner in which the Company believes the Employee has not substantially
performed the Employee’s duties under the DM Agreement; or
the willful engagement by the Employee in misconduct which is materially injurious to the Company,
monetarily or otherwise; or
(c) any other willful violation by the Employee of the provisions of the DM Agreement; or
(d) the Employee is convicted of a criminal offence involving fraud or dishonesty.
Termination by the Company Without Cause
If the Company elects to terminate the Employee’s employment for reasons other than cause, the Company shall
pay the Employee, in one lump sum or in installments at the Company’s discretion, a severance payment equal
to twelve (12) months of the Employee’s then current Base Salary.
Termination upon the physical and/or mental impairment of the Employee
If the Company terminates the Employee’s employment for physical and/or mental impairment, the Company’s
financial obligation to the Employee is limited to that which the Employee would otherwise receive if the
Company terminated the Employee’s employment for no reason.
Termination Following Change in Control
For purposes of the DM 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 the Board of Directors and any new
directors, whose appointment by the Board of Directors or nomination for election by the Company’s
61
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%) or more of the outstanding common shares of the Company; or
(iv) the business or businesses of the Company for which the Employee’s services are principally
performed, are disposed of by the Company pursuant to a partial or complete liquidation, dissolution,
consolidation or merger of the Company, or a sale or transfer of all or a significant portion of the
Company’s assets.
Notwithstanding any other provisions in the DM Agreement regarding termination, if any of the events described
above constituting a Change in Control shall have occurred during the course of the DM Agreement, upon the
termination of the Employee’s employment (unless such termination is because of the Employee’s Death or
Disability, by the Company for cause or by the Employee other than for “Good Reason”, as defined below) the
Employee 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 two (2) times the Employee’s then current Base Salary.
For purposes of the DM Agreement, “Good Reason” shall mean, without the Employee’s express written consent,
any of the following:
(i)
the assignment to the Employee of any duties inconsistent with the status or authority of the
Employee’s office, or the Employee’s removal from such position, or a substantial alteration in the
nature or status of the Employee’s authorities or responsibilities from those in effect immediately prior
to the Change in Control;
(ii) a reduction by the Company in the Employee’s Base Salary as in effect on the date of the DM
Agreement or as the same may have been increased from time to time, or a failure by the Company to
increase the Employee’s Base Salary as provided for in the DM Agreement or at a rate commensurate
with that of other key employees of the Company;
(iii) the relocation of the office of the Company where the Employee 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 Employee 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 Employee’s business travel obligations prior to the Change in Control);
(iv) the failure by the Company to continue to provide the Employee with benefits at least as favourable as
those enjoyed by the Employee 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 Employee of
any material fringe benefit enjoyed by the Employee at the time of the Change in Control, or the failure
by the Company to provide the Employee with the number of entitled vacation days to which the
Employee has earned on the basis of years of service with the Company; or
(v)
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree
to perform the DM Agreement or, if the business of the Company for which the Employee’s services
are principally performed is sold or transferred, the purchaser or transferee of such business shall fail
to agree to provide the Employee with the same or a comparable position, duties, salary and benefits
as provided to the Employee by the Company immediately prior to the Change in Control.
Following a Change in Control during the course of the DM Agreement, the Employee shall be entitled to
terminate the Employee’s employment for Good Reason.
62
The Employee’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 releases the Company and its affiliates from
all claims and liabilities arising out of the Employee’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form,
substance and timeliness.
(5) Vice President, Operations & Projects
The Independent Contractor Agreement dated January 15, 2018 (the “LM Agreement”) between the Company
and Laurence Morris (the “Contractor” under the LM Agreement) may be terminated for any one of the following
reasons:
a.
b.
c.
d.
by Contractor, at any time, without cause or reason, upon 90 days written notice to the Company;
by the Company, for cause, at any time in the event of a failure by Contractor to comply with any of the
provisions of the LM Agreement, including, without limitation, a persistent failure on the part of Contractor
to follow the directions of the Board or CEO or any act of gross negligence or wilful misconduct on the part
of Contractor, where the Company has communicated such failure to Contractor and a reasonable
opportunity to cure the failure has been provided, or by the Company immediately upon the death or
incapacity of Contractor or upon Contractor no longer being qualified, under applicable corporate or
securities laws or stock exchange requirements, to be the Vice-President Operations & Projects of the
Company;
by Contractor, for cause, at any time in the event of a failure by the Company to comply with any of the
provisions of the LM Agreement, where such failure has been communicated to the Company and a
reasonable opportunity to cure the failure has been provided; or
by the Company, at any time, without cause or reason, upon 90 days written notice to Contractor;
and upon any such termination, the Board shall be at liberty to remove Contractor from any office held by
Contractor in the Company or any of its subsidiaries and to make or cause to be made whatever regulatory or
stock exchange filings are required in the circumstances.
Termination Following Change in Control
A Change of Control means the occurrence of any of the following events:
a.
b.
any Person acquiring fifty percent (50%) or more of the issued and outstanding shares of the Company; or
any Person acquiring all or substantially all of the assets of the Company, provided that for the purposes of
the applicable section and the LM Agreement, "Person" means a third party that is operating at arm's length
from Contractor. For greater certainty, "Person" shall not include any person, partnership, corporation or
other entity with which Contractor is involved directly or indirectly as principal, agent, shareholder of more
than 2% of such entity’s voting securities, officer, employee or in any other manner whatsoever.
If a Change of Control occurs and (i) thereafter the Company terminates Contractor’s engagement under the LM
Agreement otherwise than for cause or (ii) Contractor elects to terminate his engagement under the LM
Agreement by notifying the Company of such election in writing within ten (10) calendar days after the
occurrence of a Change of Control, Contractor’s engagement shall immediately terminate and the Company shall
provide Contractor with a payment equivalent to two (2x) times the Contractor’s Annual Fee, payable, at the
Company’s discretion, either in one lump sum within five (5) business days from the effective date of termination
of Contractor’s engagement hereunder or in two or more equal instalments over the three (3) months period
commencing on the effective date of termination of Contractor’s engagement under the LM Agreement, with the
first such instalment payable within five (5) business days from the effective date of termination of Contractor’s
engagement under the LM Agreement, and upon Contractor’s receipt of such lump sum payment or the last
instalment payment, the LM Agreement shall terminate.
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
63
commissions’ requirements and regulations.
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 provides that stock options may
be granted from time to time provided that incentive stock options in favor 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 and by the optionee’s personal
representatives in the event of death for a period ending on the earlier of the expiry date of the option and twelve
months after the date of death.
The exercise price of all incentive stock options granted under the Plan is 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 Company’s shares on the Toronto Stock Exchange 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 2018, Fiscal 2017 and Fiscal 2016 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 14, 2019 are set forth in Table
No. 8, as well as the number of options granted to directors, executive officers, employees and consultants as a group.
64
Name
Duane Poliquin
Chairman of the Board & Director
Morgan Poliquin
President, Director &
Chief Executive Officer
Jack McCleary
Director
Gerald G. Carlson
Director
Mark T. Brown
Director
William J. Worrall
Director
Elaine Ellingham
Director
Korm Trieu
Chief Financial Officer
Douglas McDonald
Vice President, Corporate Development
Laurence Morris
Vice President, Operations & Projects
Total Directors/Officers (10 persons)
Total Employees/Consultants (16 persons)
Total Directors/Officers/Employees/Consultants
Table No. 8
Stock Options Outstanding
Number of Options Outstanding Exercise Price CDN$
100,000
300,000
165,000
500,000
150,000
50,000
100,000
150,000
350,000
315,000
500,000
700,000
200,000
300,000
250,000
207,000
25,000
100,000
68,000
100,000
50,000
25,000
50,000
115,000
50,000
100,000
50,000
72,000
50,000
25,000
117,000
115,000
100,000
50,000
100,000
18,000
25,000
115,000
250,000
5,000
100,000
30,000
400,000
75,000
115,000
75,000
150,000
100,000
30,000
50,000
75,000
100,000
20,000
100,000
180,000
300,000
8,012,000
1,845,000
9,857,000
$1.99
1.34
1.40
0.98
1.25
0.79
0.86
1.32
1.34
1.40
1.53
0.98
1.25
0.86
0.84
1.35
1.99
0.98
0.83
1.25
0.79
1.99
1.34
1.40
0.98
1.25
0.79
0.86
0.84
1.99
1.34
1.40
1.14
0.98
1.25
0.83
0.84
1.40
0.98
0.83
1.25
0.83
1.08
1.89
1.40
1.03
0.98
1.25
0.86
0.84
1.84
1.40
0.98
1.25
0.86
1.11
Expiry Date
05/04/2019
07/02/2019
09/19/2019
06/08/2020
09/30/2020
09/30/2020
12/13/2020
07/02/2019
07/02/2019
09/19/2019
04/30/2020
06/08/2020
09/30/2020
12/13/2020
02/07/2021
03/17/2019
05/04/2019
06/08/2020
09/30/2020
09/30/2020
09/30/2020
05/04/2019
07/02/2019
09/19/2019
06/08/2020
09/30/2020
09/30/2020
12/13/2020
02/07/2021
05/04/2019
07/02/2019
09/19/2019
04/30/2020
06/08/2020
09/30/2020
09/30/2020
02/07/2021
09/19/2019
06/08/2020
09/30/2020
09/30/2020
12/13/2020
03/29/2021
06/12/2019
09/19/2019
04/10/2020
06/08/2020
09/30/2020
12/13/2020
02/07/2021
05/19/2019
09/19/2019
06/08/2020
09/30/2020
12/13/2020
02/07/2021
65
No funds were set aside or accrued by the Company during Fiscal 2018 to provide pension, retirement or similar
benefits for directors or executive officers.
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 and 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 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 of Directors of the Company 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.
66
Chief Executive Officer (‘CEO’)
Reports to:
The Board of Directors of the Company (the “Board”)
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 of the Company 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.
-
-
-
67
(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 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 in establishing effective means of control and co-ordination of the operations and
activities of the Company and identifying, in conjunction with the CEO, the key risks with respect to the Company
and its business and reviewing with the CEO 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 Company and any deficiencies are made known to the Audit
Committee.
Vice President, Corporate Development
Reports to:
The CEO of the Company
Responsibilities:
The Vice President, Corporate Development is responsible for:
- Developing and managing relationships with current and prospective business partners, investment bankers,
financial analysts and the media;
- Preparing and presenting comprehensive reviews and analysis of business opportunities to senior
management and to the Board;
- Managing and developing relationships with new and existing institutional investors;
- Assisting the CEO in preparing and presenting to investors, the executive team and the Board;
- Conducting technical and financial analysis to determine the impact of growth opportunities on various
metrics and to establish an execution plan as needed.
The Vice President, Corporate Development shall assist the CEO in establishing and managing relationships with
key stakeholders, identifying and analysing new growth and investment opportunities, as well as the development,
communication and implementation of corporate strategies related to executing the business plans of the
Company.
The Vice President, Corporate Development in conjunction with the CEO shall represent the Company at industry
functions to investors, both potential and existing, as well as ensure the Company is protected through due
diligence activities and provide reasonable assurance as to impact of emerging business opportunities for the
Company and interested parties through the use of technical and financial analyses.
68
Vice President, Operations & Projects
Reports to:
The CEO of the Company
Responsibilities:
The Vice President, Operations & Projects is responsible for:
- Plan and manage the construction and operations of the Ixtaca Project;
- Develop and oversee the implementation of all required project execution systems and procedures including
project controls, procurement of contracts, engineering construction, quality assurance and quality control;
- Ensure the project objectives, scope and plan are well defined and understood by the project team and
stakeholders;
- Ensures the compliance with health, safety, environmental and community regulations and corporate
standards;
- Developing and recommending production strategies, together with capital budget and operating budget
requirements to optimize short and long-range production capabilities while minimizing exposure to
economic and environmental risk;
- Oversee all site activities, site services, construction, pre-commissioning and commissioning;
- Assisting the CEO in preparing and presenting to the investors, the executive team and the Board;
The Vice President, Operations & Projects shall assist the CEO in establishing and managing relationships with
key stakeholders. The Vice President, Operations & Projects shall also conducts technical and financial analysis
to determine the impact of growth opportunities on various metrics and to establish an execution plan as needed.
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, 2018 there were five (5) 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.
69
Table No. 9
Meetings Attended
Director
Duane Poliquin
Morgan Poliquin
Jack McCleary
Gerald G. Carlson
Mark T. Brown
William J. Worrall
David Strang (1)
Elaine Ellingham
Number
5
5
5
5
5
5
1
5
(1) David Strang resigned as a Director on June 27, 2018
The Chairman 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 2018, five (5) 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.
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 American Company Guide Rules. The current Board is composed of seven
members. The Board has determined that a majority of directors, namely 5 directors, are independent - Jack
McCleary, Gerald Carlson, William J. Worrall, Elaine Ellingham and Mark T. Brown. Two directors – Duane
Poliquin and Morgan Poliquin – are not independent because, in addition to their being the Chairman and Chief
Executive Officer/President of the Company, respectively, they each have Executive Employment Contracts with
the Company and, therefore, they each have a material relationship with the Company. The basis for determination
of independence is under Canadian securities instrument NI 52-110 and NYSE American Exchange Company Guide
Rules.
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.
70
The Board 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 position 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 be available on the Company’s website at www.almadenminerals.com.
Audit Committee
The members of the Audit Committee are Messrs. William Worrall, Gerald Carlson and Mark T. Brown. The Audit
Committee met four (4) times during Fiscal 2018. The full text of the initial Audit Committee Charter is an exhibit
to the 2003 20-F Annual Report filed 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 is an exhibit to the 2005 20-F
Annual Report filed with the Commission on March 30, 2006.
Nominating and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee are Jack McCleary, William Worrall and
Gerald Carlson. The Nominating and Corporate Governance Committee met five (5) time during Fiscal 2018. The
full text of the initial Corporate Governance Charter is an exhibit to the 2003 20-F Annual Report filed 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 is an exhibit to the 2005 20-F Annual Report filed with the
Commission on March 30, 2006.
Compensation Committee
The members of the Compensation Committee are Jack McCleary, William Worrall, Mark T. Brown and Gerald
Carlson. The Compensation Committee met five (5) times during Fiscal 2018 with Jack McCleary, Mark T. Brown,
Gerald Carlson and William Worrall attending all five (5) meetings. The Responsibilities and Duties of the
Compensation Committee is an exhibit to the 2005 20-F Annual Report filed with the Commission on March 30,
2006.
Orientation and Continuing Education
The Nomination and Corporate Governance Committee is responsible for recommending to the Board an orientation
and education program for new directors.
Director Term Limits and other Mechanisms of Board Renewal
The Company has not adopted term limits or other mechanisms for Board renewal. The Company does not consider
it is yet appropriate to force any term limits or other mechanisms of Board renewal at this time.
Policies Regarding the Representation of Women on the Board
There is currently one woman on the Company’s Board representing 14.3% of the Board. The Company plans to
adopt a written policy with respect to the identification and nomination of women directors (the “Diversity Policy”).
The Diversity Policy will require that the Board consider diversity on the Board from a number of aspects, including
but not limited to gender, age, ethnicity and cultural diversity. In addition, when assessing and identifying potential
new members to join the Board or the Company’s executive team, the Board will consider the current level of diversity
on the Board and the executive team. As the Diversity Policy has not yet been adopted, the Company is not yet able
to measure its effectiveness.
71
Consideration of the Representation of Women in the Director Identification and Selection Process
Pursuant to the Diversity Policy, the Board will consider and evaluate the representation of women on the Board when
identifying and nominating candidates for election and re-election to the Board. The Company will focus its search
for new directors purely based on the qualification of potential candidates, regardless of their gender.
Consideration Given to the Representation of Women in Executive Officer Appointments
Pursuant to the Diversity Policy, the Board will consider and evaluate the representation of women in the Company’s
executive officer positions when identifying and nominating candidates for appointment as executive officers. The
Company will focus its search for new executive officers purely based on the qualification of potential candidates,
regardless of their gender.
The Company’s Targets Regarding the Representation of Women on the Board and in Executive Officer
Positions
The Company has not established a target for the representation of women on the Board or in executive officer
positions of the Company by a specific date. The Company does not think it is appropriate to set targets because the
Company focuses its search for new directors and executive officers purely based on the qualification of potential
candidates, regardless of their gender.
Number of Women on the Board and in Executive Officer Positions
As at the date of this Form 20-F Annual Report, one of the Company’s directors (representing 14.3% of the
Company’s seven directors) and none of the Company’s executive officers are women.
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 or engagement to undertake to abide by the COBE. Directors are bound to observe the Code adopted by
the Board.
72
All Directors, Officers and Employees (“Individuals”) sign a 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, 2018, the Company operated with nine people in Canada, of which six are administrative
personnel and three are exploration personnel. There are no full-time employees in the U.S. or Mexico. None of
the Company’s employees are covered by a collective bargaining agreement.
Share Ownership
Table No. 10 lists, as of March 14, 2019, 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
Name of Beneficial Owner
Jack McCleary
Common Duane Poliquin
Common Morgan Poliquin
Common
Common Gerald G. Carlson
Common Mark T. Brown
Common William J. Worrall
Common Korm Trieu
Common Doug McDonald
Elaine Ellingham
Common
Laurence Morris
Common
Total Directors/Officers
Amounts and Nature of
Beneficial Ownership
4,033,146(1)(11)
4,502,422(2)(11)
837,711(3)
603,306(4)
575,000(5)
558,366(6)
647,144(7)
578,719(8)
437,500(9)
300,000(10)
13,073,314
Percent of
Class*
3.57%
3.93%
0.75%
0.54%
0.51%
0.50%
0.58%
0.52%
0.39%
0.27%
11.54%
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
Of these shares 1,365,000 represent currently exercisable stock options.
Of these shares 2,765,000 represent currently exercisable stock options. 83,600 of these shares are held indirectly through
Kohima Pacific Gold Corp., a company owned by Mr. Poliquin.
Of these shares 550,000 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 512,000 represent currently exercisable stock options.
Of these shares 550,000 represent currently exercisable stock options.
Of these shares 500,000 represent currently exercisable stock options.
Of these shares 595,000 represent currently exercisable stock options. 7,500 of these shares are held indirectly by Mr. Trieu’s wife.
Of these shares, 475,000 represent currently exercisable stock options. 7,500 of those shares are held indirectly by Shari
Investments, an entity controlled by Mr. McDonald.
Of these shares 400,000 represent currently exercisable stock options, 12,500 represent currently exercisable warrants.
Of these shares 300,000 represent currently exercisable stock options.
Pursuant to a Voting Trust Agreement (Exhibit 3 to this 20-F Annual Report), Duane Poliquin and Morgan Poliquin (the
“Trustees”) jointly hold voting power over any of the Company’s common shares legally and beneficially owned by Mr. Ernesto
Echavarria, a resident of Mexico. On August 10, 2015, Mr. Echavarria, who is not an executive officer or director of the Company,
made a filing with the System for Electronic Disclosure by Insiders (“SEDI”), Canada’s on-line, browser-based service for the
filing and viewing of insider reports as required by various provincial securities rules and regulations, disclosing that his ownership
of Almaden common shares had fallen below the 10% threshold for such reporting. Based on such filing, Mr. Echavarria hold
less than 10% of the Company’s common shares. Mr. Echavarria also holds warrants to acquire an additional 126,100 of such
shares.
*Based on 111,726,719 shares outstanding as of March 14, 2019 and stock options and warrants held by each beneficial owner.
73
Item 7. Major Shareholders and Related Party Transactions
The Company is a publicly owned Canadian company, the shares of which are owned by residents of the U.S.,
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 company. Table No. 11
lists, as of March 14, 2019, 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
Common
Common
Name of Beneficial Owner
Duane Poliquin
Morgan Poliquin
Amounts and Nature of
Beneficial Ownership
4,033,146(1)(3)
4,502,422(2)(3)
Percent of
Class*
3.57%
3.93%
(1)
(2)
(3)
Of these shares 1,365,000 represent currently exercisable stock options.
Of these shares 2,765,000 represent currently exercisable stock options. 83,600 of these shares are held indirectly through
Kohima Pacific Gold Corp., a company owned by Mr. Poliquin.
Pursuant to a Voting Trust Agreement (Exhibit 3 to this 20-F Annual Report), Duane Poliquin and Morgan Poliquin (the
“Trustees”) jointly hold voting power over any of the Company’s common shares legally and beneficially owned by Mr. Ernesto
Echavarria, a resident of Mexico. On August 10, 2015, Mr. Echavarria, who is not an executive officer or director of the Company,
made a filing with the System for Electronic Disclosure by Insiders (“SEDI”), Canada’s on-line, browser-based service for the
filing and viewing of insider reports as required by various provincial securities rules and regulations, disclosing that his ownership
of Almaden common shares had fallen below the 10% threshold for such reporting. Based on such filing, Mr. Echavarria hold
less than 10% of the Company’s common shares. Mr. Echavarria also holds warrants to acquire an additional 126,100 of such
shares.
*Based on 111,726,719 shares outstanding as of March 14, 2019 and stock options and warrants held by each beneficial owner.
Related party transactions
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 Business Corporations Act (British
Columbia).
(a) Compensation of key management personnel
Key management includes members of the Board, the Chairman, the President and Chief Executive Officer, the
Chief Financial Officer, the Vice President, Operations & Projects, and the Vice President, Corporate
Development. The aggregate compensation paid or payable to key management for services is as follows, after
recovery of 30% of executive officer compensation from Azucar and 20% of executive officer compensation from
Almadex:
Salaries, fees and benefits
Share-based payments
Directors’ fees
February 28,
2019
$211,585
116,250
70,000
$397,835
December 31,
2018
$ 952,079
1,090,540
70,000
$2,112,619
December 31,
2017
$ 813,400
2,216,170
70,000
$3,099,570
December 31,
2016
$ 755,475
1,537,060
41,000
$2,333,535
74
(b) Almadex Minerals Limited (“Almadex”)
Effective August 1, 2015, the Company recovers a portion of expenses from Azucar pursuant to the administrative
service agreement between the Company and Azucar.
Effective May 18, 2018, the Company also recovers a portion of expenses from Almadex pursuant to the
administrative service agreement between the Company and Almadex.
During the year ended December 31, 2018, the Company received $542,657 (2017 - $499,798; 2016 - $464,498)
from Azucar for administrative services fees included in other income and received $243,498 (2017 - $Nil; 2016
- $Nil) from Almadex for administrative services fees included in other income.
At December 31, 2018, included in accounts receivable is $170,181 (2017 - $195,551) due from Azucar and
$116,268 (December 31, 2017 - $Nil) due from Almadex in relation to expenses recoveries.
At December 31, 2018, the Company accrued $37,533 (2017 - $153,038) payable to Almadex for drilling
equipment rental services in Mexico.
(c) Other related party transactions
During the year ended December 31, 2018, the Company employed the Chairman’s daughter for a salary of
$48,800 less statutory deductions (2017 - $43,800; 2016 - $38,800) for marketing and administrative 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 Company in which any director, executive officer, or beneficial holder of
more than 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.
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 Company knows of no material, active or pending legal proceedings against it; 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 American (formerly the NYSE MKT) 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 American.
75
Table No. 12 lists the high and low prices for the shares of Almaden Minerals Ltd. common stock on NYSE
American for the preceding five years. Table No. 13 lists the high and low prices for shares of Almaden Minerals
Ltd. common stock on TSX for the preceding five years.
Table No. 12
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Table No. 13
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
High
$1.05
1.75
1.88
1.27
1.94
High
$1.35
2.33
2.44
1.57
2.11
Year Ended
12/31/2018
12/31/2017
12/31/2016
12/31/2015
12/31/2014
Year Ended
12/31/2018
12/31/2017
12/31/2016
12/31/2015
12/31/2014
Low
$0.48
0.71
0.50
0.48
0.86
Low
$0.63
0.92
0.73
0.65
1.02
Table No. 14 lists the quarterly high and low prices for shares of Almaden Minerals Ltd. common stock on NYSE
American for the two most recent full financial years. Table No. 15 lists the quarterly high and low prices for
shares of Almaden Minerals Ltd. common stock on TSX for the two most recent full financial years.
Table No. 14
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Quarter Ended
12/31/2018
09/30/2018
06/30/2018
03/31/2018
12/31/2017
09/30/2017
06/30/2017
03/31/2017
High
$0.69
0.75
0.87
1.05
1.24
1.32
1.75
1.30
Low
$0.48
0.56
0.70
0.78
0.71
1.10
1.13
0.95
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Table No. 15
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Quarter Ended
12/31/2018
09/30/2018
06/30/2018
03/31/2018
12/31/2017
09/30/2017
06/30/2017
03/31/2017
High
$0.91
0.98
1.10
1.35
1.56
1.68
2.33
1.70
Low
$0.63
0.74
0.91
1.03
0.92
1.34
1.51
1.27
Table No.16 lists the high and low prices for shares of Almaden Minerals Ltd. common stock on NYSE American
for the most recent six months. Table No. 17 lists the high and low prices for shares of Almaden Minerals Ltd.
common stock on TSX for the most recent six months.
Table No. 16
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Table No. 17
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
High
$0.79
0.90
0.69
0.60
0.65
0.69
High
$1.03
1.19
0.91
0.79
0.83
0.90
Month Ended
02/28/2019
01/31/2019
12/31/2018
11/30/2018
10/31/2018
09/30/2018
Month Ended
02/28/2019
01/31/2019
12/31/2018
11/30/2018
10/31/2018
09/30/2018
Low
$0.63
0.66
0.54
0.48
0.49
0.58
Low
$0.83
0.89
0.74
0.63
0.63
0.74
The closing price of the Company’s common stock was $0.63 (US$) on the NYSE American and $0.83 (C$) on TSX
on February 28, 2019.
In recent years, securities markets in Canada and the U.S. 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
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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 28, 2019, the shareholders' list for the Company’s common shares showed 252 registered shareholders
and 111,726,719 shares outstanding. 213 of these registered shareholders are U.S. residents, owning 23,129,329
shares representing 21% of the issued and outstanding shares of common stock. 28 of these registered shareholders
are Canadian residents, owning 86,739,511 shares representing 78% of the issued and outstanding shares of common
stock. 11 of these registered shareholders are of other countries, owning 1,857,879 shares representing 1% of the
issued and outstanding shares of common stock.
Table No. 18 lists changes, if any, in issued shares to March 14, 2019:
Table No. 18
Shares Issued to March 14, 2019
Balance, December 31, 2018
Balance, March 14, 2019
Item 10. Additional Information
Number
111,726,719
111,726,719
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. There were no flow-through shares
issued in Fiscal 2018, Fiscal 2017 and Fiscal 2016. In Fiscal 2011, the Company issued 100,000 flow-through
shares. Flow-through shares differ from other common shares in one aspect only, namely the tax benefits
connected with the expenditures associated with the funds raised through the sale of flow through shares flow
through to the shareholder rather than the Company; 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 in Canada. These tax benefits are available only to shareholders residing in Canada.
Shareholders residing in the U.S. 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 are an exhibit to the 2005 20-F Annual Report filed with the Commission on March 30, 2006,
and replaced 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
78
“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 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
company 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 company
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
and, in furtherance thereof, the Company is party to indemnification agreements with such individuals. 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 of the Company 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
79
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 the 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 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, 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 in the Articles 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 an exhibit to the 2005 Form 20-F Annual Report filed with the Commission
on March 30, 2006.
Shareholder Rights Plan
On April 13, 2011, the Company’s Board of Directors adopted a Shareholder Rights Plan Agreement (the “Rights
Plan”) between the Company and Computershare Investor Services Inc. (“Computershare”) as Rights Agent. The
Rights Plan was subsequently approved by the shareholders of the Company at the Annual General and Special
Meeting held June 28, 2011, reconfirmed by the shareholders of the Company at the 2014 Annual General Meeting
and amended and reconfirmed at the 2017 Annual General Meeting. The primary objective of the Rights Plan is to
ensure, to the extent possible, that all shareholders of the Company are treated fairly in connection with any take-over
bid for the Company by (a) providing shareholders with adequate time to properly assess a take-over bid without
undue pressure and (b) providing the Board with more time to fully consider an unsolicited take-over bid, and, if
applicable, to explore other alternatives to maximize shareholder value.
The full text of the Rights Plan was filed under cover of Form 6-K with the Commission on April 15, 2011 and
is also available on SEDAR and the Company’s website.
Advance Notice Policy
On January 28, 2013 the Company’s Board of Directors approved and adopted an Advance Notice Policy, as
amended on May 1, 2015 (the “Policy”) which, among other things, includes a provision that requires advance
notice to the Company in circumstances where nominations of persons for election to the Board of Directors are
made by shareholders of the Company other than pursuant to: (i) a requisition of a meeting made pursuant to the
provisions of the Business Corporations Act (British Columbia) (the “BCBCA”): or (ii) a shareholder proposal
made pursuant to the provisions of the BCBCA.
80
The Policy, among other things, fixes a deadline by which holders of record of common shares of the Company
must submit director nominations to the Company prior to any annual or special meeting of shareholders and set
forth the information that a shareholder must include in the notice to the Company for the notice to be in proper
written form.
In the case of an annual meeting of shareholders, notice to the Company must be made not less than 30 nor more
than 65 days prior to the date of the annual meeting; provided, however, that in the event the annual meeting is to
be held on a date that is less than 50 days after the date on which the first public announcement of the date of the
annual meeting was made, notice may be made not later than the close of business on the 10th day following such
public announcement.
In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Company
must be made not later than the close of business on the 15th day following the day on which the first public
announcement of the date of the special meeting was made.
The full text of the Amended Advance Notice Policy is an exhibit to the 2017 20-F Annual Report filed with the
Commission on March 29, 2018.
Multiple Voting Policy for Uncontested Elections of Directors
The Board believes that each of its members should carry the confidence and support of the Company’s
shareholders and, accordingly, has adopted, effective May 15, 2017, an Amended Majority Voting Policy for the
election of directors for non-contested meetings. The Amended Majority Voting Policy provides that, in a non-
contested election of directors, voting will be by ballot and, if the number of shares “withheld” for any nominee
exceeds the number of shares voted “for” the nominee, then, notwithstanding that such director is duly elected as
a matter of corporate law, he or she shall, immediately following the date of the final scrutineer’s report on the
ballot, tender his or her written resignation to the Chairman of the Board. A “non-contested election” means an
election where the number of nominees for director is not greater than the number of directors to be elected.
Under the Amended Majority Voting Policy, the Board will consider such offer of resignation and shall make a
determination whether or not to accept or reject the resignation no later than 90 days following the date of the
applicable shareholders’ meeting and shall accept the resignation absent exceptional circumstances. The Board
will promptly announce its decision via press release. If the Board determines not to accept the resignation, the
press release must fully state the reasons for its decision. No director who is required to tender his or her
resignation shall participate in any meeting of the Board at which the resignation is considered. If a resignation
is accepted by the Board, and subject to any corporate law restrictions, the Board may leave any resulting vacancy
unfilled until the Company’s next annual general meeting, or may appoint a new director to fill the vacancy who
the Board considers to merit the confidence of the shareholders, or may call a special meeting of shareholders at
which there will be presented a management nominee or nominees to fill the vacant position or positions.
The full text of the Amended Multiple Voting Policy is an exhibit to 2017 20-F Annual Report filed with the
Commission on March 29, 2018.
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. Executive Compensation Contract dated effective as of January 29, 2013 between the Company and Hawk
Mountain Resources Ltd. (“Hawk”) whereby Hawk agrees to provide the services of Duane Poliquin as Executive
Chairman for a term of 2 years renewable for two additional successive terms of 24 months for remuneration of
$240,000 per annum. The agreement was terminated by mutual agreement on December 31, 2015. The full text
of the Executive Compensation Contract is filed as an exhibit to the 2012 20-F Annual Report with the
Commission on March 28, 2013.
2. Executive Compensation Contract dated effective as of January 29, 2013 as amended by Amending Agreement
dated April 1, 2016 and Second Amending Agreement dated January 1, 2019 between the Company and Morgan
Poliquin (“M. Poliquin”) whereby M. Poliquin agrees to provide the services of President and Chief Executive
Officer for an indefinite term for remuneration of $265,000 per annum. The full text of the Executive
81
Compensation Contract is filed as an exhibit to the 2012 20-F Annual Report with the Commission on March 28,
2013, of the Amending Agreement filed as an exhibit to the 2016 20-F Annual Report with the Commission on
March 30, 2017 and of the Second Amending Agreement dated January 1, 2019 as filed as an exhibit to this fiscal
2018 20-F Annual Report.
3. Administrative Services Agreement between the Company and Azucar Minerals Ltd. (“Azucar”) dated May
15, 2015, as amended by First Amending Agreement dated December 16, 2015 (the “Agreement”). Under the
Agreement, the Company provides management services to Azucar as the sole and exclusive manager, including
the authority to manage the assets, operations, business, and administrative affairs of Azucar. Azucar
compensates the Company 30% of the Company’s actual monthly cost of rent for any shared facilities, and 30%
of any shared personnel’s fees and/or wages. Azucar also pays the Company any reasonable fees or costs incurred
on behalf of Azucar by the Company which were approved by Azucar. The Agreement has an initial 5-year term,
with subsequent automatic 1 year renewals unless terminated pursuant to the terms permitted under the Agreement
and include a Change of Control clause. If either party is subject to Change of Control during the term of the
Agreement, the Agreement shall automatically terminate within 48 hours of the Change of Control unless agreed
to in writing by both parties. The target of the Change of Control shall then pay the other party $2 million as
compensation for the unplanned termination of the Company’s engagement. “Change of Control” means the date
upon which, without the target of the Change of Control, any person (as that term is defined in the Securities Act
(British Columbia)) makes and does not withdraw a take-over bid (as that term is defined in the Securities Act
(British Columbia)) or acquires, directly or indirectly, that number of common shares of the target which equals
or exceeds twenty percent (20%) of the then issued common shares of the target. The full text of the
Administrative Services Agreement is filed as an exhibit to the 2015 20-F Annual Report with the Commission
on March 31, 2016.
4. Termination Agreement dated effective December 31, 2015 between the Company and Hawk Mountain
Resources Ltd. for the services of Duane Poliquin as Executive Chairman. The full text of the Termination
Agreement is filed as an exhibit to the 2015 20-F Annual Report with the Commission on March 31, 2016.
5. Executive Employment Contract dated effective as of January 1, 2016 as amended on April 1, 2016 and Second
Amending Agreement dated January 1, 2019 between the Company and Duane Poliquin to serve as Executive
Chairman for an indefinite term, for remuneration of $240,000 per annum. The full text of the Executive
Compensation Contract is filed as an exhibit to the 2015 20-F Annual Report with the Commission on March 31,
2016/ The Amending Agreement filed as an exhibit to the 2016 20-F Annual Report with the Commission on
March 30, 2017; and of the Second Amending Agreement dated January 1, 2019 as filed as an exhibit to this
fiscal 2018 20-F Annual Report
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 Company's common shares.
There are no limitations under the laws of Canada or in the organizing documents of the Company on the right of
non-Canadians to hold or vote securities of the Company, except that the Investment Canada Act may require that
a "non-Canadian" not acquire "control" of the Company without prior review and approval by the Minister of
Innovation, Science and Economic Development. The acquisition of one third or more of the voting shares of the
Company would give rise a rebuttable presumption of the acquisition of control, and the acquisition of more than
fifty percent of the voting shares of the Company would be deemed to be an acquisition of control. In addition,
the Investment Canada Act provides the Canadian government with broad discretionary powers in relation to
national security to review and potentially prohibit, condition or require the divestiture of, any investment in the
Company by a non-Canadian, including non-control level investments. "Non-Canadian" generally means an
individual who is neither a Canadian citizen nor a permanent resident of Canada within the meaning of the
Immigration and Refugee Protection Act (Canada) who has been ordinarily resident in Canada for not more than
one year after the time at which he or she first became eligible to apply for Canadian citizenship, or a corporation,
partnership, trust or joint venture that is ultimately controlled by non-Canadians.
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
82
stock will vary according to the status of that holder as an individual, trust, company 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 U.S., 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 U.S. 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 “Canadian Tax Act" or “ITA”) and the Canada-United States Tax Convention (the
“Convention”) as at the date of the Registration Statement and the current administrative practices of Canada
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 Company for a shareholder of the Company
who is not a resident of Canada but is a resident of the U.S. and who will acquire and hold shares of common
stock of the Company as capital property for the purposes of 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 Company 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 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 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 company resident in Canada.
The Company 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 U.S. and the dividends are beneficially owned by and paid to such shareholder,
and to 5 percent if the shareholder is also a company that beneficially owns at least 10 percent of the voting stock
of the payor company.
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 Company had increased by reason of the payment of such dividend. The Company will
furnish additional tax information to shareholders in the event of such a dividend. Interest paid or deemed to be
paid on the Company’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 eliminates Canadian tax on interest paid or deemed to be paid by the Company to U.S.
residents. 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 U.S. and
is exempt from income tax under the laws of the U.S.
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
stock of the Company 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
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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 Company 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
Company 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 U.S. 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 U.S. Federal Income Tax Consequences
The following is a discussion of material U.S. federal income tax consequences generally applicable to a U.S.
Holder (as defined below) of 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, possibly 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. It is not
intended to be, nor should it be construed to be, legal or tax advice to any U.S. Holder or prospective holder and
not an opinion or representation with respect to the U.S. Federal income tax consequences to any U.S. Holder or
prospective holder is made. The following summary was not written and is 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. U.S. Holders and prospective holders of 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 shares of the Company who is a citizen or resident of the U.S.
(as defined under Treasury Regulation Section 301.7701(b) or any applicable income tax convention), a company
(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 U.S. 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 U.S. and control of a U.S. 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 shares through the exercise of employee stock options or otherwise as
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compensation for services. This summary is limited to U.S. Holders who own 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 shares of the Company.
Distribution on Shares of the Company
U.S. Holders receiving dividend distributions (including constructive dividends) with respect to shares of the
Company are required to include in gross income for U.S. 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 U.S. federal income tax liability or, alternatively, may be
deducted in computing the U.S. Holder’s U.S. 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. Unless the distribution constitutes
“qualified dividend income” as defined in Section 1(h)(11), dividend income will be taxed at marginal tax rates
applicable to ordinary income.
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 or other disposition of the foreign
currency, including an exchange for U.S. dollars.
Dividends paid on the shares of the Company will not generally be eligible for the dividends received deduction
provided to companies receiving dividends from certain U.S. corporations. A U.S. Holder which is a corporation
may, under certain circumstances, be entitled to a 70% deduction of the U.S. source portion of dividends received
from the Company (unless the Company qualifies as 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. In addition, as discussed under the Controlled Foreign Corporation section below, distributions from
controlled foreign corporations to certain U.S. corporate shareholders may be entitled to a dividend received
deduction for the foreign source portion of the dividend.
The so-called Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017 by the U.S. government.
The Tax Act broadly changes the taxation of foreign earnings attributable to certain U.S. Holders from a
worldwide tax regime to a territorial regime. The Tax Act created a transition tax that creates a deemed
repatriation of previously untaxed foreign earnings and profits. Certain U.S. Holders may be subject to this
transition tax and recognize taxable income due to undistributed earnings and profits of the Company.
Foreign Tax Credit
A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership
of 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. 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 a U.S. Holder’s ability to claim the foreign tax credit.
Furthermore, a foreign tax credit may not be claimed when a U.S. Holder is entitled to a dividend received
deduction. 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 shares of the Company should consult their own tax advisors
regarding their individual circumstances.
Disposition of Shares of the Company
For U.S. tax purposes, a U.S. Holder will generally recognize gain or loss upon the sale of 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 his, her or its shares of the Company. 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. Capital gain will then be classified
as a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.
Preferential tax rates apply to long-term capital gains of U.S. Holders which are individuals, estates or trusts.
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
85
which are not companies, 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 taxable corporations (other than companies 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.
Net Investment Tax
U.S. Holders may also be subject to the Net Investment Income Tax, which is imposed on certain U.S. taxpayers’
income from investments, such as dividends, interest and capital gains. Individual taxpayers are liable for a 3.8
percent Net Investment Income Tax on the lesser of their net investment income, or the amount by which their
modified adjusted gross income exceeds certain statutory thresholds based on their filing status. U.S. Holders or
prospective U.S. Holders should consult their tax advisors to determine if the Net Investment Income Tax will
apply in their individual circumstances.
Other Considerations
In the following circumstances, the above sections of the discussion may not describe the U.S. federal income tax
consequences resulting from the holding and disposition of shares of the Company.
Passive Foreign Investment Company
As a foreign company 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 company that is not formed in the U.S. and, for any taxable year, either (i) 75% or more of its gross income
is “passive income”, which includes among other types of income, interest, dividends and certain rents and
royalties or (ii) the average percentage, by fair market value (or, if the company is a controlled foreign company
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 rules governing PFICs can have significant tax effects on U.S. shareholders of foreign companies. U.S.
shareholder’s income or gain, with respect to a disposition or deemed disposition of PFIC 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. The elections available to U.S. shareholders of a
PFIC are made on a shareholder-by-shareholder basis, and U.S. shareholders should consult with tax advisors as
soon as possible to determine the what election, if any, such U.S. shareholder should make the timing for making
such election can have consequences on the U.S. shareholders tax position with respect to its ownership in a PFIC.
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 company qualifies as a PFIC his pro-rata share of the company'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 Company’s taxable year ends, regardless of whether such
amounts are actually distributed. A QEF election also allows the Electing U.S. Holder to (i) 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 company'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 company'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 Company 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 company 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.
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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 company. 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 Company 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 company is a PFIC for any taxable year during which a Non-electing U.S. shareholder holds shares, then the
company will continue to be treated as a PFIC with respect to such 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 shares had been
sold on the last day of the last taxable year for which it was a PFIC. If the company 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 company is a PFIC and the U.S. shareholder holds shares of the company) (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.
Under an alternative method, U.S. Holders who hold (actually or constructively) marketable stock of a PFIC may
elect to mark such stock to the market annually (a “mark-to-market election”). If such an election is made, such
U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above. However,
if the mark-to-market election is made by a Non-Electing U.S. Holder after the beginning of the holding period
for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other
amounts taxable with respect to the Company shares. A U.S. Holder who makes the mark-to-market election will
include in income for each taxable year for which the election is in effect an amount equal to the excess, if any,
of the fair market value of the shares of the Company as of the close of such tax year over such U.S. Holder’s
adjusted basis in such common shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the
excess, if any, of such U.S. Holder’s adjusted tax basis in the shares over the fair market value of such shares as
of the close of the tax year, or (ii) the excess, if any, of (a) the mark-to-market gains for the shares in the Company
included by such U.S. Holder for prior tax years, including any amount which would have been treated as a mark-
to-market gain for any prior tax year but for the Section 1291 rules discussed above with respect to Non-Electing
U.S. Holders, over (b) the mark-to-market losses for shares that were allowed as deductions for prior tax years.
A U.S. Holder’s adjusted tax basis in the shares of the Company will be adjusted to reflect the amount included
in or deducted from income as a result of a mark-to-market election. A mark-to-market election applies to the
taxable year in which the election is made and to each subsequent taxable year, unless the Company’s shares
cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. U.S. Holders
should consult their tax advisors regarding the manner of making such an election.
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Controlled Foreign Corporation
If more than 50% of the total combined voting power of all classes of stock entitled to vote or more than 50% of
the total value of the stock of the Company is owned, directly, indirectly 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
or 10% or more of the total value of all classes of stock of the Company (“10% U.S. Holders”), 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 share of (i) Subpart F income of the CFC, (ii) the CFC’s earnings from certain investments in U.S.
property, (iii) global intangible low-taxed income (“GILTI), and (iv) base erosion minimum tax amounts for
certain 10% U.S. Holders with sufficient gross receipts that make deductible payments to related foreign parties
in tax years after December 31. 2018. 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 Company which is or was a 10% U.S. Holder at any time during the five-year period
ending with the sale or exchange will be treated as dividend income to the extent of earnings and profits of the
Company (accumulated only while the shares were held by the 10%U.S. Holder and while the Company was a
CFC attributable to the shares sold or exchanged. Certain U.S. corporations that are 10% U.S. Holders may be
entitled to a dividend received deduction for the foreign source portion of dividends received from the Company
as discussed above.
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. Holders of the CFC. This rule generally will be effective for taxable years of
10% U.S. Holders beginning after 1997 and for taxable years of foreign company’s ending with or within such
taxable years of 10% U.S. Holders. 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 beyond the scope of this discussion.
Information Reporting and Backup Withholding
In general, unless a U.S. Holder belongs to a category of certain exempt recipients (such as corporations),
information reporting requirements will apply to distributions as well as proceeds of sales from the sale of shares
of the Company that are effected through the U.S. office of a broker or the non-U.S. office of a broker that has
certain connections with the United States. Backup withholding may apply to these payments if a U.S. Holder
fails to provide a correct taxpayer identification number or certification of exempt status, fails to report in full
dividend and interest income or, in certain circumstances, fails to comply with applicable certification
requirements. Any amounts withheld under the backup withholding rules will be allowed as a refund or credit
against a U.S. Holder’s U.S. federal income tax, provided the U.S. Holder furnishes the required information to
the IRS in a timely manner. Other filing requirements may also apply. U.S. Holders should consult with their
own tax advisors concerning their particular reporting requirements.
U.S. Holder’s should consult with their tax advisors to determine if holding common shares in the Company
will create any other disclosure or reporting requirements for U.S. tax purposes.
Documents on Display
Any of the documents referred to above can be viewed at the registered office of the Company located at 1177
West Hastings Street, Suite 1710, Vancouver, British Columbia, Canada, V6E 2L3.
This Annual Report and the Company’s recent 6-K filings can be viewed on the U.S. Securities and Exchange
Commission’s EDGAR web-site at www.sec.gov./edgar/searchedgar/companysearch.html.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
The Company’s primary mineral exploration properties are located in Mexico. As a Canadian company,
Almaden’s cash balances are kept primarily in Canadian funds, while many exploration and property expenses
are denominated in U.S. 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 to, conduct hedging to reduce its exchange rate risk. A 10% change in the U.S. dollar exchange
rate relative to the Canadian dollar would change the Company’s net loss by $47,000. A 10% change in the
Mexican peso exchange rate relative to the Canadian dollar would change the Company’s net loss by $25,000.
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Item 12. Description of Securities Other than Equity Securities
Not Applicable
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not Applicable
PART II
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
Not Applicable
Item 15. Controls and Procedures
Disclosure Controls and Procedures
The Company conducted an evaluation of the effectiveness of the design and operation of its 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, 2018. This evaluation was conducted under the supervision and with the
participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer.
Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded
that, as of December 31, 2018, the Company’s disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed by the Company 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. The Company also concluded that its 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 its management, including the Company’s Chief Executive Officer and
Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company’s 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 assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2018. 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 (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on its assessment, management concluded that, as of December 31, 2018, the Company’s internal
control over financial reporting was effective.
There were no changes in the Company’s internal control over financial reporting that occurred during the year
ended December 31, 2018 that has materially affected, or that is reasonably likely to materially affect, the
Company’s internal control over financial reporting.
89
Attestation Report of the Registered Accounting Firm.
This Annual Report on Form 20-F does not include an attestation report of the Company’s registered public
accounting firm regarding internal control over financial reporting. Management’s report was not subject to
attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and
Exchange Commission that permit the Company to provide only management’s report in this Form 20-F Annual
Report.
Item 16A. Audit Committee Financial Expert
The Company’s Board of Directors has determined that Mr. Mark T. Brown is the Company's audit committee
financial expert. Mr. Brown has extensive business and financial experience. He has served as a director of a
number of other publicly traded companies over the past 20 years, and currently serves as a director of eight other
publicly traded mineral exploration companies. Mr. Brown is independent as defined by Section 803(A) of the
NYSE American 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 U.S. 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 Company’s website at
www.almadenminerals.com. The Codes may also be viewed as filed on EDGAR 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 “Codes”). The Codes may be viewed on
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 or engagement to undertake to abide by the COBE. Directors are bound to observe the Code adopted by
the Board.
All Directors, Officers and Employees (“Individuals”) sign a 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
Audit Committee's pre-approval policies and procedures
The Audit Committee nominates and engages the independent auditors to audit the financial statements, and
approves all audit services, audit-related services, tax services and other services provided by Davidson &
Company LLP. Any services provided by Davidson & Company LLP that are not specifically included within
the scope of the audit must be preapproved by the Audit Committee prior to any engagement. The Audit
Committee is permitted to approve certain fees for audit-related services, tax services and other services before
the completion of the engagement.
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
90
engagements for those fiscal years.
Table No. 19
Principal Accountant Fees
Audit fees
Audit-related fees
Tax fees
Other fees
December 31,
2018
$38,000
2,800
-
-
December 31,
2017
$38,000
12,898
-
-
Fiscal 2018 and Fiscal 2017 audit fees relate to the annual audit of the Company’s consolidated financial
statements, effectiveness of the Company’s internal control over financial reporting and review of the Form 20-
F. Audit-related fees relate to accounting advisory services. Tax fees relate to the completion of income tax
returns and tax consulting services. Other fees relate to services other than audit fees, audit-related fees, and tax
fees described above.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
The Company’s class of common shares is listed on the NYSE American and the Toronto Stock Exchange. Under
the rules of the NYSE American, listed companies are generally required to have a majority of their Board of
Directors be “independent” as defined by the NYSE American Company Guide Rules. Currently, as permitted
under applicable Canadian regulations, the Company’s Board consists of 7 directors, of which 5 are considered
to be “independent.” In the opinion of management, the Company’s corporate governance practices do not differ
in any significant way from those required of U.S. domestic companies listed on the NYSE American.
Item 16H. Mine Safety Disclosure
Not applicable.
Item 17. Financial Statements
PART III
The Company has provided financial statements pursuant to Item 18 of this Form 20-F.
Item 18. Financial Statements
The Company’s consolidated financial statements and notes thereto are expressed in Canadian Dollars (CDN$)
and are prepared in accordance and compliance with International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board (“IASB”).
Item 19. Exhibits
A. The financial statements and notes thereto as required under Item 18 are attached hereto and found
immediately following the text of this Annual Report.
Audited Financial Statements
Independent registered Public Accounting Firm reports on the consolidated financial statements, dated March
14, 2019
Consolidated statements of financial position at December 31, 2018 and 2017
Consolidated statements of comprehensive loss for the years ended December 31, 2018, 2017 and 2016
91
Consolidated statements of changes in equity for the years ended December 31, 2018, 2017 and 2016
Consolidated statements of cash flows for the years ended December 31, 2018, 2017 and 2016
Summary of significant accounting policies and other explanatory information
B. Index to Exhibits
1.
1.1
2.
3.
4.
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
5.
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 or debt securities being registered
- Refer to Exhibit No. 1.
Voting trust agreements. The Voting Trust Agreement dated December 17, 2009 between Ernesto Echavarria,
as grantor, and Messrs Duane and Morgan Poliquin, as voting trustees.
- Incorporated by reference to the Company’s Form 20-F for the year ended December 31, 2013 and filed with
the Commission on March 31, 2014.
Executive Compensation Contract dated January 29, 2013 with Hawk Mountain Resources Ltd.
- Incorporated by reference to the Company’s Form 20-F for the year ended December 31, 2012 and filed with
the Commission on March 28, 2013.
Executive Compensation Contract dated January 29, 2013 with Morgan Poliquin
- Incorporated by reference to the Company’s Form 20-F for the year ended December 31, 2012 and filed with
the Commission on March 28, 2013.
Assignment of Rights Agreement dated March 11, 2013 with Don David Gold Mexico, S.A. de C.V.
- Incorporated by reference to the Company’s Form 20-F for the year ended December 31, 2013 and filed with
the Commission on March 31, 2014.
Sale and Purchase Agreement dated June 20, 2013 with Tarsis Resources Ltd.
- Incorporated by reference to the Form 6-K and filed with the Commission on June 20, 2013.
Amendment Agreement dated November 26, 2013 with Candymin, S.A. de C.V. and Mr. Charlie Warren
- Incorporated by reference to the Company’s Form 20-F for the year ended December 31, 2013 and filed with
the Commission on March 31, 2014.
Arrangement Agreement dated May 11, 2015 in connection with the Company’s statutory Plan of Arrangement
with Almadex and filed with the Commission on March 31, 2016.
Administrative Services Agreement between the Company and Almadex Minerals Limited dated May 15, 2015
and filed with the Commission on March 31, 2016.
First Amending Agreement to the May 15, 2015 Administrative Services Agreement between the Company and
Almadex Minerals Limited dated December 16, 2015 and filed with the Commission on March 31, 2016.
Termination Agreement effective December 31, 2015 between the Company and Hawk Mountain Resources
Ltd. and filed with the Commission on March 31, 2016.
Executive Employment Contract between the Company and Duane Poliquin dated effective January 1, 2016
and filed with the Commission on March 31, 2016.
Deloitte Letter to the Securities and Exchange Commission dated March 29, 2016 and filed with the
Commission on March 31, 2016.
Amending Agreement dated April 1, 2016 to the Executive Compensation Contract with Morgan Poliquin
dated January 29, 2013 and filed with the Commission on March 30, 2017.
Amending Agreement dated April 1, 2016 to the Executive Employment Contract with Duane Poliquin dated
January 1, 2016 and filed with the Commission on March 30, 2017.
Amending agreement to the Executive Compensation Contract with Morgan Poliquin dated January 1, 2019.
Amending agreement to the Executive Compensation Contract with Duane Poliquin dated January 1, 2019.
Administrative Services Agreement between the Company and Almadex Minerals Ltd. (formerly 1154229 B.C.
Ltd.) dated March 29, 2018.
List of foreign patents – N/A
92
6.
7.
8.
9.
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
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
11
11.1
11.2
11.3
11.4
11.5
11.6
11.7 Whistleblower Policy
Privacy Policy
11.8
- 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.
Shareholder Rights Plan dated April 13, 2011, as amended and reconfirmed at the 2017 Annual General
Meeting
- Incorporated by reference to the Form 6-K filed with the Commission on April 15, 2011.
11.10 Amended Advance Notice Policy dated January 28, 2013, as amended May 1, 2015 as filed with the
11.9
Commission on March 29, 2018.
11.11 Amended Majority Voting Policy – adopted by the Board of Directors on May 7, 2013, as amended effective
May 15, 2017 as filed with the Commission on March 29, 2018.
12.1
12.2
13.1
13.2
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
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
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
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
93
Consolidated Financial Statements of
Almaden Minerals Ltd.
For the years ended December 31, 2018, 2017 and 2016
Almaden Minerals Ltd.
December 31, 2018, 2017 and 2016
Table of contents
Independent Auditors’ Report
Consolidated statements of financial position
Consolidated statements of comprehensive loss
Consolidated statements of cash flows
Consolidated statements of changes in equity
1-2
3
4
5
6
Notes to the consolidated financial statements
7-35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors of
Almaden Minerals Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Almaden Minerals Ltd. (the “Company”), which
comprise the consolidated statements of financial position as of December 31, 2018 and 2017, the consolidated statements of
comprehensive loss, cash flows, and changes in equity for the years ended December 31, 2018, 2017, and 2016 and the related
notes, comprising a summary of significant accounting policies and other explanatory information (collectively referred to as
the consolidated financial statements).
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
Company as at December 31, 2018 and 2017 and its financial performance and its cash flows for the years ended December
31, 2018, 2017 and 2016 in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
Change in Accounting Principle
Without qualifying our opinion on the consolidated financial statements, we draw attention to Note 3 to the financial
statements, which indicates that the Company has changed its method of accounting for financial instruments in 2018 due to
adoption of IFRS 9 – Financial Instruments.
Basis for Opinion
A - 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.
B - Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement, whether due to error or fraud. Those standards also require that we
comply with ethical requirements, including independence. We are required to be independent with respect to the Company in
accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the PCAOB.
An audit includes performing procedures to assess the risks of material misstatements of the consolidated financial statements,
whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included obtaining and
examining, on a test basis, audit evidence regarding the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on our 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, we consider internal
control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control. The Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies and principles 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 reasonable basis
for our audit opinion.
Other Matters
We have served as the Company’s auditor since 2015.
Vancouver, Canada
March 14, 2019
“DAVIDSON & COMPANY LLP”
Chartered Professional Accountants
Almaden Minerals Ltd.
Consolidated statements of financial position
(Expressed in Canadian dollars)
ASSETS
Current assets
Cash and cash equivalents (Note 11)
Accounts receivable and prepaid expenses (Note 4)
Non-current assets
Deposit on mill equipment (Note 5)
Property, plant and equipment (Note 6)
Exploration and evaluation assets (Note 7)
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables (Note 9 (b))
Non-current liabilities
Deferred income tax liability (Note 12)
Total liabilities
EQUITY
Share capital (Note 8)
Reserves (Note 8)
Deficit
Total equity
TOTAL EQUITY AND LIABILITIES
Commitments (Note 13)
Subsequent events (Note 17)
December 31,
2018
$
December 31,
2017
$
5,080,580
404,416
5,484,996
-
13,764,928
54,678,470
68,443,398
73,928,394
16,334,534
368,963
16,703,497
4,923,209
372,292
44,804,198
50,099,699
66,803,196
1,128,407
638,001
1,434,882
2,563,289
1,434,882
2,072,883
127,022,366
16,706,832
(72,364,093)
71,365,105
73,928,394
118,054,463
15,528,276
(68,852,426)
64,730,313
66,803,196
The accompanying notes are an integral part of these consolidated financial statements.
These consolidated financial statements are authorized for issue by the Board of Directors on March 14, 2019.
They are signed on the Company’s behalf by:
/s/Duane Poliquin
Director
/s/Mark T. Brown
Director
Almaden Minerals Ltd.
Consolidated statements of comprehensive loss
(Expressed in Canadian dollars)
Expenses
Professional fees
Salaries and benefits (Note 9(a))
Travel and promotion
Depreciation (Note 6)
Office and license (Note 9(b))
Rent (Note 9(b))
Stock exchange fees
Insurance
Transfer agent fees
Directors’ fees (Note 9(a))
General exploration expenses
Share-based payments (Note 8(d) and 9(a))
Other income (loss)
Interest and other income (Note 9(b))
Loss on sale of property, plant and equipment (Note 6)
Foreign exchange gain (loss)
Loss before income taxes
Deferred income tax recovery (Note 12)
Net loss for the year
2018
$
602,402
1,858,788
267,832
28,277
127,678
191,829
158,304
66,942
20,943
70,000
-
1,308,740
4,701,735
Year ended December 31,
2016
$
420,684
1,381,060
259,840
27,039
120,972
146,759
115,364
60,499
23,370
41,000
1,467
1,869,010
4,467,064
2017
$
567,877
1,480,745
286,920
28,274
145,965
173,891
164,075
55,007
33,919
70,000
-
2,693,070
5,699,743
950,352
-
239,716
1,190,068
(3,511,667)
-
(3,511,667)
654,741
(1,760)
(184,533)
468,448
(5,231,295)
-
(5,231,295)
550,271
(3,985)
(102,726)
443,560
(4,023,504)
-
(4,023,504)
Total comprehensive loss for the year
(3,511,667)
(5,231,295)
(4,023,504)
Basic and diluted net loss per share (Note 10)
(0.03)
(0.05)
(0.05)
The accompanying notes are an integral part of these consolidated financial statements.
Almaden Minerals Ltd.
Consolidated statements of cash flows
(Expressed in Canadian dollars)
Operating activities
Net loss for the year
Items not affecting cash
Depreciation
Unrealized foreign exchange
Loss on disposal of property, plant and equipment
Share-based payments
Changes in non-cash working capital components
Accounts receivable and prepaid expenses
Trade and other payables
Net cash used in operating activities
Investing activities
Deposit on mill equipment
Property, plant and equipment – purchase
Exploration and evaluation assets – costs
Net cash used in investing activities
Financing activities
Issuance of shares, net of share issue costs
Options exercised
Share issuance cost on cashless exercise of options (Note 8(d))
Warrants and finders’ warrants exercised
Net cash from financing activities
Change in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental cash and cash equivalents information (Note 11)
2018
$
Year ended December 31,
2016
$
2017
$
(3,511,667)
(5,231,295)
(4,023,504)
28,277
-
-
1,308,740
28,274
-
1,760
2,693,070
27,039
9,575
3,985
1,869,010
(35,453)
290,182
(1,919,921)
11,935
(178,511)
(2,674,767)
2,566
(209,807)
(2,321,136)
(7,694,900)
(802,804)
(9,674,048)
(18,171,752)
(3,642,826)
(305,074)
(8,860,153)
(12,808,053)
(324,600)
(22,538)
(5,177,485)
(5,524,623)
8,838,441
16,560
(17,282)
-
8,837,719
19,115,418
1,105,290
(203,232)
2,029,872
22,047,348
4,091,646
143,490
-
7,157,851
11,392,987
(11,253,954)
16,334,534
5,080,580
6,564,528
9,770,006
16,334,534
3,547,228
6,222,778
9,770,006
The accompanying notes are an integral part of these consolidated financial statements.
Almaden Minerals Ltd.
Consolidated statements of changes in equity
(Expressed in Canadian dollars)
Share capital
Reserves
Amount
payments Warrants
Share-based
Balance, January 1, 2016
Share-based payments
Private placements, net
Finders' warrants issued pursuant to private placement
Shares issued for cash on exercise of finders’ warrants
Fair value of finders’ warrants transferred to share capital
Shares issued for cash on exercise of warrants
Shares issued for cash on exercise of stock options
Fair value of cash stock options transferred to share capital
Shares issued on cashless exercise of stock options
Fair value of cashless stock options transferred to share capital
Total comprehensive loss for the year
Balance, December 31, 2016
Share-based payments
Private placements, net
Finders' warrants issued pursuant to private placement
Shares issued for cash on exercise of finders’ warrants
Fair value of finders’ warrants transferred to share capital
Shares issued for cash on exercise of warrants
Shares issued for cash on exercise of stock options
Fair value of cash stock options transferred to share capital
Shares issued on cashless exercise of stock options
Shares issuance cost on cashless exercise of options
Fair value of cashless stock options transferred to share capital
Total comprehensive loss for the year
Balance, December 31, 2017
Share-based payments
Private placements, net
Finders' warrants issued pursuant to private placement
Shares issued for cash on exercise of stock options
Fair value of cash stock options transferred to share capital
Shares issued on cashless exercise of stock options
Shares issuance cost on cashless exercise of options
Fair value of cashless stock options transferred to share capital
Total comprehensive loss for the year
Number of
shares
78,062,984
-
3,229,082
-
35,200
-
4,592,667
182,000
-
63,510
-
-
86,165,443
-
12,377,207
-
30,472
-
1,986,667
1,107,000
-
532,836
-
-
-
$
83,757,687
-
4,073,728
-
27,104
5,984
7,130,747
143,490
43,180
-
108,300
-
95,290,220
-
18,934,727
-
43,205
12,797
1,986,667
1,105,290
496,859
-
(203,232)
387,930
-
102,199,625
-
9,440,000
-
23,000
-
64,094
-
-
-
118,054,463
-
8,838,441
(36,566)
16,560
6,670
-
(17,282)
160,080
-
$
11,323,063
1,869,010
-
-
-
-
-
-
(43,180)
-
(108,300)
-
13,040,593
2,693,070
-
-
-
-
-
-
(496,859)
-
-
(387,930)
-
14,848,874
1,308,740
-
-
-
(6,670)
-
-
(160,080)
-
$
499,574
-
-
17,918
-
(5,984)
-
-
-
-
-
-
511,508
-
-
180,691
-
(12,797)
-
-
-
-
-
-
-
679,402
-
-
36,566
-
-
-
-
-
-
Total
reserves
$
11,822,637
1,869,010
-
17,918
-
(5,984)
-
-
(43,180)
-
(108,300)
-
13,552,101
2,693,070
-
180,691
-
(12,797)
-
-
(496,859)
-
-
(387,930)
-
15,528,276
1,308,740
-
36,566
-
(6,670)
-
-
(160,080)
-
Deficit
$
(59,597,627)
-
-
-
-
-
-
-
-
-
-
(4,023,504)
(63,621,131)
-
-
-
-
-
-
-
-
-
-
-
(5,231,295)
(68,852,426)
-
-
-
-
-
-
-
-
(3,511,667)
(72,364,093)
Total
$
35,982,697
1,869,010
4,073,728
17,918
27,104
-
7,130,747
143,490
-
-
-
(4,023,504)
45,221,190
2,693,070
18,934,727
180,691
43,205
-
1,986,667
1,105,290
-
-
(203,232)
-
(5,231,295)
64,730,313
1,308,740
8,838,441
-
16,560
-
-
(17,282)
-
(3,511,667)
71,365,105
Balance, December 31, 2018
111,726,719
127,022,366
15,990,864
715,968
16,706,832
The accompanying notes are an integral part of these consolidated financial statements.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
1.
Nature of operations
Almaden Minerals Ltd. (the “Company” or “Almaden”) was formed by amalgamation under the laws of
the Province of British Columbia, Canada on February 1, 2002. The Company is an exploration stage
public company that is engaged directly in the exploration and development of exploration and
evaluation properties in Canada and Mexico. The address of the Company’s registered office is Suite
1710 –1177 West Hastings Street, Vancouver, BC, Canada V6E 2L3.
The Company is in the business of exploring and developing mineral projects and its principal asset is
the Ixtaca precious metals project located on its Tuligtic claim in Mexico. The Company has not yet
determined whether this project has economically recoverable mineral reserves. The recoverability of
amounts shown for mineral properties is dependent upon the 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 exploration and evaluation assets.
2.
Basis of presentation
(a) Statement of Compliance with International Financial Reporting Standards (“IFRS”)
These consolidated financial statements have been prepared in accordance and compliance with
IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations of the
International Financial Reporting Interpretations Committee (“IFRIC”).
(b) Basis of preparation
These consolidated financial statements have been prepared on a historical cost basis.
These consolidated financial statements, including comparatives, have been prepared on the basis of
IFRS standards that are effective as at December 31, 2018.
Certain amounts in prior years have been reclassified to conform to the current period presentation.
(c) Functional currency
The functional and reporting currency of the Company and 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
consolidated 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.
7
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
2.
Basis of presentation (Continued)
(d) Significant accounting judgments and estimates (Continued)
Significant assumptions about the future and other sources of judgements and estimates that
management has made at the statement of financial position dates, 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 The analysis of the functional currency for each entity of the Company determined by
conducting an analysis of the consideration factors identified in IAS 21, “The Effect of
Changes in Foreign Exchange Rates”. 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.
o The determination that the carrying amount of the Tuligtic Project will be recovered
through use rather than sale (Notes 7 and 12).
Estimates
o The recoverability of accounts receivable which is included in the consolidated
statements of financial position;
o The estimated useful lives of property, plant and equipment which are included in the
consolidated statements of financial position and the related depreciation included in
profit or loss;
o The recoverability of the value of the exploration and evaluation assets which is recorded
in the consolidated statements of financial position (Note 3(f));
o The Company uses the Black-Scholes option pricing model to determine the fair value of
options and warrants in order to calculate share-based payments expense and the fair
value of finders’ warrants and stock options. Certain inputs into the model are estimates
that involve considerable judgment or could be affected by significant factors that are out
of the Company’s control;
o The provision for income taxes which is included in profit or loss and the composition of
deferred income tax liability included in the consolidated statement of financial position
and the evaluation of the recoverability of deferred tax assets based on an assessment
of the Company’s ability to utilize the underlying future tax deductions against future
taxable income prior to expiry of those deductions;
o The assessment of indications of impairment of each exploration and evaluation asset
and related determination of the net realizable value and write-down of those assets
where applicable (Note 3(f));
8
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies
(a) Basis of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries as follows:
Jurisdiction
Nature of operations
Puebla Holdings Inc.
Minera Gorrion, S.A. de C.V.
Molinos de Puebla, S.A. de C.V.
Canada
Mexico
Mexico
Holding company
Exploration company
Holding company
Inter-company balances and transactions, including unrealized income and expenses arising from
inter-company transactions, are eliminated in preparing these consolidated financial statements.
(b) Foreign currencies
Transactions in currencies other than the functional currency are recorded at the rates of exchange
prevailing on the transaction dates. 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
The Company has initially adopted IFRS 9, Financial Instruments (“IFRS 9”) from January 1, 2018.
The effect of initially applying this standard did not have a material impact on the Company’s financial
statements. A number of other new standards are also effective from January 1, 2018, however, were
also deemed to not have a material impact on the Company's financial statements.
IFRS 9 sets out requirements for recognizing and measuring financial assets, financial liabilities and
some contracts to buy or sell non-financial items. This standard replaces IAS 39, Financial
Instruments: Recognition and Measurement (“IAS 39”). There was no material impact to the
Company’s consolidated financial statements as a result of transitioning to IFRS 9.
The details of the new significant accounting policies and the nature and effect of the changes to
previous accounting policies are set out below.
(i) Classification and measurement of financial assets and liabilities
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of
financial liabilities. However, it eliminates the previous IAS 39 categories for financial assets held to
maturity, loans and receivables, and available for sale.
The adoption of IFRS 9 has not had a significant effect on the Company’s accounting policies related
to financial liabilities. The impact of IFRS 9 on the classification and measurement of financial assets
is set out below.
9
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies (Continued)
(c) Financial instruments (continued)
A financial asset is classified as measured at: amortized cost, fair value through other comprehensive
income (FVOCI), or fair value through profit or loss (FVTPL). The classification of financial assets is
generally based on the business model in which a financial asset is managed and its contractual cash
flow characteristics. Derivatives embedded in contracts where the host is a financial asset in the
scope of the standard are never separated. Instead, the hybrid financial instrument as a whole is
assessed for classification. The Company's financial assets consist primarily of cash and cash
equivalents, and accounts receivable are classified at amortized cost.
(ii) Impairment of financial assets
An ‘expected credit loss’ (ECL) model applies to financial assets measured at amortized cost,
contract assets and debt investments at FVOCI, but not to investments in equity instruments. The
Company's financial assets measured at amortized cost and subject to the ECL model include cash
and cash equivalents, and accounts receivable.
The adoption of the ECL impairment model had no impact on the carrying amounts of the
Company's financial assets on the transition date, given the accounts receivable are substantially all
current and there has been minimal historical customer default. Neither cash and cash equivalents or
accounts receivable have been subject to historical credit risk.
(d) Cash and cash equivalents
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.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses, and are depreciated annually on a declining-balance basis if available-for-use at the following
rates:
Automotive equipment
Furniture, fixtures and other
Computer hardware and software
Geological library
Field equipment
Mill equipment
30%
20%
30%
20%
20%
Straight line over mine life (11 years)
10
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies (Continued)
(f) Exploration and evaluation assets
The Company is in the exploration stage with respect to its investment in exploration and evaluation
assets 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 from farm-out arrangements or recovery of costs against the cost of the related
claims. Acquisition costs include, but are not exclusive to land surface rights acquired. Deferred
exploration costs include, but are not exclusive to geological, geophysical studies, annual mining
taxes, exploratory drilling and sampling. At such time as commercial production commences, these
costs will be charged to profit or loss on a unit-of-production method based on proven and probable
reserves. The aggregate costs related to abandoned mineral claims are charged to profit or loss 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:
(i)
the period for which the Company has the right to explore in the specific area has expired
during the period or will expire in the near future, and is not expected to be renewed;
(ii) substantive expenditure on further exploration for and evaluation of mineral resources in the
specific area is neither budgeted nor planned;
(iii) 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
(iv) 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 may be reversed 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 profit or loss costs recovered on exploration and evaluation assets when
amounts received or receivable are in excess of the carrying amount.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area
of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are
first tested for impairment and then reclassified to development asset within property, plant and
equipment.
All capitalized exploration and evaluation expenditures are monitored for indications of impairment.
11
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies (Continued)
(f) Exploration and evaluation assets (Continued)
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 profit or loss.
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.
(g)
Impairment of property, plant and equipment
Property, plant and equipment are reviewed for impairment at least annually, or 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.
An asset’s recoverable amount is the higher of fair value less costs of disposal and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value, using a
pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying
amount, the carrying amount is reduced to the recoverable amount by way of recording an impairment
charge to profit or loss. Where an impairment subsequently reverses, the carrying amount is
increased to the revised estimate of recoverable amount but only to the extent that this does not
exceed the carrying value that would have been determined if no impairment had previously been
recognized.
(h)
Income taxes
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized
in profit or loss except to the extent that it relates to items recognized directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for the following temporary differences: the initial recognition of assets
or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled
entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition,
deferred tax is not recognized for taxable temporary differences arising on the initial recognition of
goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively enacted by
the reporting date.
12
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies (Continued)
(h)
Income taxes (Continued)
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax
liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary
differences, to the extent that it is probable that future taxable profits will be available against which
they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.
(i) Share-based payments
The Company’s stock option plan allows Company employees, directors, officers and consultants to
acquire shares of the Company. The fair value of options granted is recognized as share-based
payment expense with a corresponding increase in equity reserves. An individual is classified as an
employee when the individual is an employee for legal or tax purposes (direct employee) or provides
services similar to those performed by a direct employee.
Fair value is measured at grant date, and each tranche is recognized using the graded vesting
method over the period during which the options vest. The fair value of the options granted is
measured using the Black-Scholes option pricing model, taking into account the terms and conditions
upon which the options were granted. At each financial position reporting date, the amount
recognized as an expense is adjusted to reflect the actual number of stock options that are expected
to vest. In situations where equity instruments are issued to consultants and some or all of the goods
or services received by the entity as consideration cannot be specifically identified, they are measured
at the fair value of the share-based payment. Otherwise, share-based payments are measured at the
fair value of goods or services received.
(j) Share capital
Proceeds from the exercise of stock options and warrants are recorded as share capital in the amount
for which the option or warrant enabled the holder to purchase a share in the Company, in addition to
the proportionate amount of reserves originally created at the issuance of the stock options or
warrants. Share capital issued for non-monetary consideration is valued at the closing market price at
the date of issuance. The proceeds from the issuance of units are allocated between common shares
and common share purchase warrants based on the residual value method. Under this method, the
proceeds are allocated to common shares based on the fair value of a common share at the
announcement date of the unit offering and any residual remaining is allocated to common share
purchase warrants.
13
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies (Continued)
(k) Reclamation and closure cost obligations
Decommissioning and restoration provisions are recorded when a present legal or constructive
obligation exists as a result of past events where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a reliable estimate of the
amount of the obligation can be made.
The amount recognized as a provision is the best estimate of the consideration required to settle the
present obligation at the reporting date, taking into account the risks and uncertainties surrounding the
obligation and discount rates. Where a provision is measured using the cash flows estimated to settle
the present obligation, its carrying amount is the present value of those cash flows discounted for the
market discount rate.
Over time the discounted liability is increased for the changes in the present value based on the
current market discount rates and liability risks. When some or all of the economic benefits required
to settle a provision are expected to be recovered from a third party, the receivable is recognized as
an asset if it is virtually certain that reimbursement will be received and the amount receivable can be
measured reliably.
When the Company enters into an option agreement on its exploration and evaluations assets, as part
of the option agreement, responsibility for any reclamation and remediation becomes the
responsibility of the optionee.
(l) Net loss per share
The Company presents the basic and diluted net 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 net loss per share is
determined by adjusting the net loss attributable to common shareholders and the weighted average
number of common shares outstanding for the effects of all dilutive potential common shares (Note
10).
14
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
3.
Significant accounting policies (Continued)
(m) Application of new and revised accounting standards effective January 1, 2018
The following new accounting standards and amendments which the Company adopted and are
effective for the Company's annual consolidated financial statements commencing January 1, 2018:
Financial instruments
IFRS 9 - In July 2014, the IASB issued the final version of IFRS 9 to replace IAS 39. IFRS 9
provides a revised model for recognition and measurement of financial instruments and a single,
forward-looking 'expected loss' impairment model. IFRS 9 also includes a substantially reformed
approach to hedge accounting. The standard is effective for annual periods beginning on or after
January 1, 2018, with early adoption permitted. The Company determined that the adoption of
this standard did not have a significant impact on its future consolidated financial statements.
(n) Future accounting standards
Certain pronouncements were issued by the IASB or IFRIC but are not yet effective as at
December 31, 2018. The Company intends to adopt these standards and interpretations when they
become effective. The Company does not expect these standards to have an impact on its
consolidated financial statements. Pronouncements that are not applicable to the Company have
been excluded from those described below.
The following are the accounting standards issued but not yet effective.
Leases
IFRS 16 - In January 2016, the IASB issued IFRS 16, Leases ("IFRS 16") which replaces IAS 17,
Leases and its associated interpretative guidance. IFRS 16 applies a control model to the
identification of leases, distinguishing between a lease and a service contract on the basis of whether
the customer controls the asset being leased. For those assets determined to meet the definition of a
lease, IFRS 16 introduces significant changes to the accounting by lessees, introducing a single, on-
balance sheet accounting model that is similar to current finance lease accounting, with limited
exceptions for short-term leases or leases of low-value assets. Lessor accounting remains similar to
current accounting practice. The standard is effective for annual periods beginning on or after
January 1, 2019.
The Company went through the process of reviewing contracts and identifying those that might be
relevant under the new standard. Specific leases identified for further review included office leases
and an equipment/service contract for a printer. Based on the assessment of the standard, the
Company estimates that it will recognize as a lessee, the right-of-use lease assets and related
liabilities for existing operating leases of approximately $400,000.
15
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
4.
Accounts receivable and prepaid expenses
Accounts receivable and prepaid expenses consist of the following:
Accounts receivable (Note 9(b))
Prepaid expenses
December 31, December 31,
2017
$ 243,971
124,992
$ 368,963
2018
$ 300,700
103,716
$ 404,416
At December 31, 2018, the Company has recorded value added taxes of $444,994 (2017 - $444,729)
included in exploration and evaluation assets as the value added tax relates to certain projects and is
expected to be recovered when the assets are sold (Note 7).
5.
Deposit on mill equipment
On October 16, 2015, the Company entered into a Mill Purchase Option Agreement (the “Agreement’)
to acquire the Rock Creek mill. Pursuant to the Agreement, Almaden has the exclusive right and
option to purchase the mill for total cash payments of $6,500,000 USD (completed), plus the issuance
of 407,997 common shares (issued with a fair value of $273,358), subject to adjustment in certain
circumstances (the “Option”).
Deposit on mill equipment consisted of the following payments:
Balance, December 31, 2016
Additions: purchase price deposits
Additions: mobilization payments
Balance, December 31, 2017
Additions: purchase price deposits
Additions: mobilization payments
Transfer to property, plant and equipment
Balance, December 31, 2018
$
USD
2,000,000
767,500
3,750,000
2,211,300
$
CAD
1,280,383
2,647,600
995,226
4,923,209
4,876,500
2,818,400
12,618,109
(12,618,109)
-
Almaden has exercised the Option by making the final option payment on June 12, 2018 for
$3,750,000 USD ($4,876,500 CAD). As such, during the year ended December 31, 2018, Almaden
obtained ownership and title to the mill equipment, and transferred the balance to property, plant and
equipment (Note 6).
A mobilization plan is in progress to move the Rock Creek mill from Nome, Alaska to the Tuligtic
property. Mill mobilization payments of $2,211,300 USD ($2,818,400 CAD) were paid during the year
ended December 31, 2018 for the dismantlement of the mill.
16
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
6.
Property, plant and equipment
Automotive
equipment
Furniture
and fixtures
and other
Computer
hardware
Computer
software
Geological
library
Field
equipment
Mill
equipment
$
$
$
$
$
$
$
Total
$
Cost
December 31, 2017
110,040
154,093
247,199
189,563
51,760
245,647
265,997
1,264,299
Additions
Transfer from deposit
on mill equipment
-
-
4,126
1,697
7,204
-
-
-
-
-
-
-
789,777
802,804
12,618,109 12,618,109
December 31, 2018
110,040
158,219
248,896
196,767
51,760
245,647
13,673,883 14,685,212
Accumulated depreciation
December 31, 2017
110,040
134,484
213,702
164,211
49,366
220,204
Depreciation
-
4,444
10,176
8,089
479
5,089
December 31, 2018
110,040
138,928
223,878
172,300
49,845
225,293
-
-
-
892,007
28,277
920,284
Carrying amounts
December 31, 2017
December 31, 2018
-
-
19,609
33,497
25,352
19,291
25,018
24,467
2,394
1,915
25,443
265,997
372,292
20,354
13,673,883 13,764,928
The Company acquired the Rock Creek mill (Note 5) on June 12, 2018. As at December 31, 2018,
mill equipment of $13,673,883 is recorded in property, plant and equipment and will be depreciated
when the mill equipment is in the condition and location ready for its intended use, which will
commence once the Company enters the commercial production phase.
On August 9, 2018, the Company paid $250,000 USD ($326,000 CAD) to extend the mill storage in
Alaska, USA for one additional year. On July 1, 2018, an additional mill mobilization payment of
$352,200 USD ($463,777 CAD) was made. Both these transactions were recorded in mill equipment
under property, plant and equipment.
17
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
6.
Property, plant and equipment (Continued)
Automotive
equipment
Furniture
and fixtures
and other
Computer
hardware
Computer
software
Geological
library
Field
equipment
Mill
equipment
$
$
$
$
$
$
$
Total
$
Cost
December 31, 2016
146,569
135,064
231,451
185,263
51,760
245,647
-
995,754
Additions
Disposals
-
19,029
15,748
4,300
(36,529)
-
-
-
-
-
-
-
265,997
305,074
-
(36,529)
December 31, 2017
110,040
154,093
247,199
189,563
51,760
245,647
265,997
1,264,299
Accumulated depreciation
December 31, 2016
144,559
131,569
204,742
155,024
48,766
213,842
Disposals
Depreciation
(34,769)
-
-
-
250
2,915
8,960
9,187
-
600
-
6,362
December 31, 2017
110,040
134,484
213,702
164,211
49,366
220,204
-
-
-
-
898,502
(34,769)
28,274
892,007
Carrying amounts
December 31, 2016
2,010
3,495
26,709
30,239
December 31, 2017
-
19,609
33,497
25,352
2,994
2,394
31,805
-
97,252
25,443
265,997
372,292
During the year ended December 31, 2017, the Company disposed certain of its property, plant and
equipment for $Nil proceeds and recorded a loss on disposal of property, plant and equipment of
$1,760.
The Company has acquired containers to begin a mobilization plan to move the Rock Creek mill from
Nome, Alaska to Mexico. As at December 31, 2017, container costs of $199,952 and crane of
$66,045 are recorded in property, plant and equipment and will be depreciated when the mill
equipment is in the condition and location ready for its intended use.
18
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
7.
Exploration and evaluation assets
Tuligtic
Other Property
Total
$
7,537,578
1,622,374
9,159,952
37,266,620
993,311
59,038
145,524
742,157
4,510,034
457,968
568,476
168,725
161,671
444,994
8,251,898
45,518,518
$
1
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
1
54,678,470
Exploration and evaluation assets
Acquisition costs:
Opening balance - (December 31, 2017)
Additions
Closing balance - (December 31, 2018)
Deferred exploration costs:
$
7,537,577
1,622,374
9,159,951
Opening balance - (December 31, 2017)
37,266,620
Costs incurred during the period
Drilling and related costs
Professional/technical fees
Claim maintenance/lease costs
Geochemical, metallurgy
Technical studies
Travel and accommodation
Geology, geophysics and exploration
Supplies and misc.
Environmental
Value-added tax (Note 4)
Total deferred exploration costs during the period
Closing balance - (December 31, 2018)
Total exploration and evaluation assets
993,311
59,038
145,524
742,157
4,510,034
457,968
568,476
168,725
161,671
444,994
8,251,898
45,518,518
54,678,469
19
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
7.
Exploration and evaluation assets (Continued)
Exploration and evaluation assets
Acquisition costs:
Opening balance - (December 31, 2016)
Additions
Closing balance - (December 31, 2017)
Deferred exploration costs:
Tuligtic
$
4,780,570
2,757,007
7,537,577
Opening balance - (December 31, 2016)
31,204,785
Costs incurred during the period
Drilling and related costs
Professional/technical fees
Claim maintenance/lease costs
Geochemical, metallurgy
Technical studies
Travel and accommodation
Geology, geophysics and exploration
Supplies and misc.
Water exploration
Environmental
Value-added tax (Note 4)
Total deferred exploration costs during the period
Closing balance - (December 31, 2017)
Total exploration and evaluation assets
1,053,771
112,191
160,251
746,103
1,698,055
390,927
795,731
118,015
7,981
534,081
444,729
6,061,835
37,266,620
44,804,197
Other
Property
$
1
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
4,780,571
2,757,007
7,537,578
31,204,785
1,053,771
112,191
160,251
746,103
1,698,055
390,927
795,731
118,015
7,981
534,081
444,729
6,061,835
37,266,620
1
44,804,198
The following is a description of the Company’s most significant property interests and related
spending commitments:
(a) Tuligtic
In 2001, the Company acquired by staking a 100% interest in the Tuligtic property in Puebla, Mexico.
The property contains the Ixtaca Zone.
(b) Other Property
The Company holds a 40% carried interest in the Logan property located in the Yukon Territory,
Canada. The project is carried at a nominal value of $1.
20
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves
(a) Authorized share capital
At December 31, 2018, 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 2018, 2017 and 2016
On June 7, 2018, the Company closed a non-brokered private placement by the issuance of
9,440,000 units at a price of $1.00 per unit for gross proceeds of $9,440,000. Each unit consists of
one common share and one-half of one non-transferable common share purchase warrant. Each
whole warrant allows the holder to purchase one common share of the Company at a price of $1.35
per share until June 7, 2022. The warrants are subject to an acceleration provision whereby if,
commencing October 8, 2018, the daily volume weighted average trading price of the common shares
on the Toronto stock exchange is higher than $2.00 for 20 consecutive trading days then, on the 20th
consecutive trading day of any such period (the “Acceleration Trigger Date”), the expiry date of the
warrants may be accelerated by the Company to the 30th trading day after the Acceleration Trigger
Date by the issuance of a news release announcing such acceleration within three trading days of the
Acceleration Trigger Date. Share issuance costs included finders’ fee of $384,900 in cash, and
finders’ warrants to purchase up to 192,450 common shares at a price of $1.35 per common share
until June 7, 2020. The fair value of the finders’ warrants was $36,566 per statement of equity. In
connection with the private placement, the Company also incurred $216,659 in other cash share
issuance costs. These amounts were recorded as a reduction to share capital. The proceeds of the
private placement were allocated entirely to share capital.
On June 1, 2017, the Company closed a bought deal private placement by the issuance of 9,857,800
units at a price of $1.75 per unit for gross proceeds of $17,251,150. Each unit consists of one
common share and one-half of one non-transferable common share purchase warrant. Each whole
warrant allows the holder to purchase one common share of the Company at a price of $2.45 per
share until June 1, 2020. Share issue costs included a finder’s fee of $1,035,069 in cash, and finders’
warrants to purchase up to 295,734 common shares at a price of $2.00 per common share until June
1, 2019. The fair value of the finders’ warrants was $171,526. In connection with the private
placement, the Company also incurred $296,823 in other cash share issue costs. These amounts
were recorded as a reduction to share capital. The proceeds of the private placement were allocated
entirely to share capital.
On February 7, 2017, the Company closed a non-brokered private placement by the issuance of
2,519,407 units at a price of $1.35 per unit for gross proceeds of $3,401,199. Each unit consists of
one common share and one-half of one non-transferable common share purchase warrant. Each
whole warrant allows the holder to purchase one common share of the Company at a price of $2.00
per share until August 7, 2019. Share issue costs included a finder’s fee of $88,631 in cash, and
finders’ warrants to purchase up to 17,911 common shares at a price of $1.35 per common share until
August 7, 2019. The fair value of the finders’ warrants was $9,165. In connection with the private
placement, the Company also incurred $116,408 in other cash share issue costs. These amounts
were recorded as a reduction to share capital. The proceeds of the private placement were allocated
entirely to share capital.
21
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(b) Details of private placement and other issues of common shares in 2018, 2017 and 2016
(continued)
On May 25, 2016, the Company closed a non-brokered private placement by the issuance of
3,229,082 units at a price of $1.35 per unit for gross proceeds to the Company of $4,359,260. Each
unit consists of one common share and one-half of one non-transferable common share purchase
warrant. Each whole warrant allows the holder to purchase one common share of the Company at a
price of $2.00 per share until November 25, 2018. Share issue costs included a finder’s fee of
$147,925 in cash, and finders’ warrants to purchase up to 45,944 common shares at a price of $1.44
per common share until November 25, 2018. The fair value of the finders’ warrants was $17,918. In
connection with the private placement, the Company also incurred $119,689 in share issue costs.
These amounts were recorded as reduction to share capital. The proceeds of the private placement
were allocated entirely to share capital.
(c) Warrants
The continuity of warrants for the years ended December 31, 2018, 2017 and 2016 are as follows:
Expiry date
November 25, 2018
November 25, 2018
June 1, 2019
August 7, 2019
August 7, 2019
June 1, 2020
June 7, 2020
June 7, 2022
Warrants outstanding
and exercisable
Weighted average
exercise price
Exercise December 31,
2017
1,614,541
22,972
295,734
1,259,704
10,411
4,928,900
-
-
price
$2.00
$1.44
$2.00
$2.00
$1.35
$2.45
$1.35
$1.35
Issued Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
192,450
4,720,000
8,132,262
4,912,450
$ 2.27
$ 1.35
-
-
Expired
(1,614,541)
(22,972)
-
-
-
-
-
-
December 31,
2018
-
-
295,734
1,259,704
10,411
4,928,900
192,450
4,720,000
(1,637,513)
11,407,199
$ 1.99
$ 1.91
The weighted average remaining life of warrants outstanding at December 31, 2018 was 2.14 years
(2017 – 1.95 years).
Expiry date
November 17, 2017
November 25, 2018
November 25, 2018
June 1, 2019
August 7, 2019
August 7, 2019
June 1, 2020
Warrants outstanding
and exercisable
Weighted average
exercise price
Exercise December 31,
2016
2,036,667
1,614,541
45,944
-
-
-
-
price
$1.00
$2.00
$1.44
$2.00
$2.00
$1.35
$2.45
Issued
-
-
-
295,734
1,259,704
17,911
4,928,900
Exercised
(1,986,667)
-
(22,972)
-
-
(7,500)
-
Expired
(50,000)
-
-
-
-
-
-
December 31,
2017
-
1,614,541
22,972
295,734
1,259,704
10,411
4,928,900
3,697,152
6,502,249
(2,017,139)
(50,000)
8,132,262
$ 1.44
$ 2.34
$ 1.01
$ 1.00
$ 2.27
22
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(c) Warrants (continued)
The weighted average remaining life of warrants outstanding at December 31, 2017 was 1.95 years
(2016 – 1.34 years).
Expiry date
February 11, 2016
February 11, 2016
July 17, 2016
July 17, 2016
November 17, 2017
November 17, 2017
November 25, 2018
November 25, 2018
Warrants outstanding
and exercisable
Weighted average
exercise price
Exercise December 31,
2015
2,210,000
49,410
4,376,000
186,000
2,253,334
35,200
-
-
price
$ 1.76
$ 1.12
$ 1.58
$ 1.32
$ 1.00
$ 0.77
$ 2.00
$ 1.44
Issued
-
-
-
-
-
-
1,614,541
45,944
Exercised
-
-
(4,376,000)
-
(216,667)
(35,200)
-
-
Expired/ December 31,
2016
-
-
-
-
2,036,667
-
1,614,541
45,944
cancelled
(2,210,000)
(49,410)
-
(186,000)
-
-
-
-
9,109,944
1,660,485
(4,627,867)
(2,445,410)
3,697,152
$ 1.47
$ 1.98
$ 1.55
$ 1.71
$ 1.44
The weighted average fair value of finders’ warrants granted during the years ended December 31,
2018, 2017 and 2016 calculated using the Black-Scholes model at the issue dates, are as follows:
Weighted average assumptions used
Number
of
warrants
192,450
295,734
17,911
45,944
Date of issue
June 7, 2018
June 1, 2017
February 7, 2017
May 25, 2016
Fair value
per share
Risk free
interest
rate
Expected
life
(in years)
Expected
volatility
Expected
dividends
$ 0.19
$ 0.58
$ 0.51
$ 0.39
1.94%
0.71%
0.72%
0.59%
2
2
2.50
2
54.02%
66.26%
61.54%
55.53%
$Nil
$Nil
$Nil
$Nil
23
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(d) Share purchase option compensation plan
The Company’s stock option plan permits the issuance of options up to a maximum of 10% of the
Company’s issued share capital. Stock options issued 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, 2018, the Company had reserved 1,465,672 stock options that may
be 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 immediately 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 during 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 years
ended December 31, 2018, 2017 and 2016 vested on the grant date.
The Company’s stock option plan permits the option holder to exercise cashless by surrendering a
portion of the underlying option shares to pay for the exercise price and the corresponding withholding
taxes, if applicable.
The continuity of stock options for the year ended December 31, 2018, 2017 and 2016 are as follows:
24
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(d) Share purchase option compensation plan (Continued)
Expiry date
April 4, 2018
May 6, 2018
June 8, 2018
June 18, 2018
June 29, 2018
August 9, 2018
September 15, 2018
December 11, 2018
December 11, 2018
December 11, 2018
January 2, 2019
March 17, 2019
May 4, 2019
May 19, 2019
June 12, 2019
July 2, 2019
July 2, 2019
July 2, 2019
September 19, 2019
April 10, 2020
April 30, 2020
April 30, 2020
April 30, 2020
June 8, 2020
September 30, 2020
September 30, 2020
September 30, 2020
December 13, 2020
February 7, 2021
March 29, 2021
December 12, 2021
Options outstanding
and exercisable
Weighted average
exercise price
(i)
Exercise
price
$ 1.74
$ 1.41
$ 1.44
$ 1.46
$ 1.71
$ 1.91
$ 1.85
$ 0.72
$ 1.68
$ 1.80
$ 1.04
$ 1.35
$ 1.99
$ 1.84
$ 1.89
$ 1.32
$ 1.19
$ 1.34
$ 1.40
$ 1.03
$ 1.53
$ 1.14
$ 1.04
$ 0.98
$ 1.25
$ 0.83
$ 0.79
$ 0.86
$ 1.11
$ 1.08
$ 1.00
December 31,
2017
90,000
100,000
1,915,000
250,000
15,000
491,000
170,000
590,000
150,000
20,000
375,000
207,000
175,000
75,000
75,000
150,000
60,000
1,427,000
1,160,000
-
500,000
100,000
-
-
1,195,000
-
-
-
-
-
-
Granted
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
90,000
-
-
100,000
2,180,000
-
106,000
170,000
762,000
300,000
400,000
200,000
Exercised
-
-
-
-
-
-
-
(575,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Expired
(90,000)
(100,000)
(1,915,000)
(250,000)
(15,000)
(491,000)
(170,000)
(15,000)
(150,000)
(20,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(100,000)
-
-
-
-
-
-
December 31,
2018
-
-
-
-
-
-
-
-
-
-
375,000
207,000
175,000
75,000
75,000
150,000
60,000
1,427,000
1,160,000
90,000
500,000
100,000
100,000
2,180,000
1,095,000
106,000
170,000
762,000
300,000
400,000
200,000
9,290,000
4,308,000
(575,000)
(3,316,000)
9,707,000
$ 1.39
$ 0.97
$ 0.72
$ 1.54
$1.19
(i) In accordance with the Company’s stock option plan, options holders exercised 552,000 stock options on
a cashless basis at an exercise price of $0.72. The total number of shares issued in connection with the
cashless exercise of options was 64,094.
25
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(d) Share purchase option compensation plan (Continued)
The weighted average remaining life of stock options outstanding at December 31, 2018 was 1.24
years (2017 – 1.33 years).
Expiry date
January 6, 2017
May 4, 2017
June 8, 2017
August 26, 2017
September 11, 2017
November 22, 2017
April 4, 2018
May 6, 2018
June 8, 2018
June 18, 2018
June 29, 2018
August 9, 2018
September 15, 2018
December 11, 2018
December 11, 2018
December 11, 2018
January 2, 2019
March 17, 2019
May 4, 2019
May 19, 2019
June 12, 2019
July 2, 2019
July 2, 2019
July 2, 2019
September 19, 2019
April 30, 2020
April 30, 2020
September 30, 2020
Options outstanding
and exercisable
Weighted average
exercise price
Exercise
price
$ 0.98
$ 1.91
$ 1.98
$ 0.74
$ 2.31
$ 2.22
$ 1.74
$ 1.41
$ 1.44
$ 1.46
$ 1.71
$ 1.91
$ 1.85
$ 0.72
$ 1.68
$ 1.80
$ 1.04
$ 1.35
$ 1.99
$ 1.84
$ 1.89
$ 1.32
$ 1.19
$ 1.34
$ 1.40
$ 1.53
$ 1.14
$ 1.25
December 31,
2016
1,180,000
175,000
75,000
1,310,000
500,000
100,000
90,000
100,000
1,915,000
250,000
15,000
491,000
170,000
724,000
150,000
20,000
375,000
-
-
-
-
150,000
60,000
-
-
-
-
-
Granted
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
207,000
175,000
75,000
75,000
-
-
1,427,000
1,160,000
500,000
100,000
1,195,000
(i)
(i)
(i)
Exercised
(1,180,000)
(75,000)
-
(1,310,000)
-
-
-
-
-
-
-
-
-
(134,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Expired
-
(100,000)
(75,000)
-
(500,000)
(100,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31,
2017
-
-
-
-
-
-
90,000
100,000
1,915,000
250,000
15,000
491,000
170,000
590,000
150,000
20,000
375,000
207,000
175,000
75,000
75,000
150,000
60,000
1,427,000
1,160,000
500,000
100,000
1,195,000
7,850,000
4,914,000
(2,699,000)
(775,000)
9,290,000
$ 1.29
$ 1.39
$ 0.88
$ 2.21
$1.39
(j) In accordance with the Company’s stock option plan, options holders exercised 350,000; 1,150,000 and
92,000 stock options on a cashless basis at an exercise price of $0.98, $0.74 and $0.72, respectively.
The total number of shares issued in connection with the cashless exercise of options was 532,836.
26
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(d) Share purchase option compensation plan (Continued)
The weighted average remaining life of stock options outstanding at December 31, 2017 was 1.33
years (2016 – 1.13 years).
Expiry date
May 6, 2016
June 8, 2016
July 14, 2016
August 15, 2016
October 10, 2016
January 6, 2017
May 4, 2017
June 8, 2017
August 26, 2017
September 11, 2017
November 22, 2017
April 4, 2018
May 6, 2018
June 8, 2018
June 18, 2018
June 29, 2018
August 9, 2018
September 15, 2018
December 11, 2018
December 11, 2018
December 11, 2018
January 2, 2019
July 2, 2019
July 2, 2019
Options outstanding
and exercisable
Weighted average
exercise price
Exercise
price
$ 1.33
$ 2.89
$ 1.37
$ 2.57
$ 1.23
$ 0.98
$ 1.91
$ 1.98
$ 0.74
$ 2.31
$ 2.22
$ 1.74
$ 1.41
$ 1.44
$ 1.46
$ 1.71
$ 1.91
$ 1.85
$ 0.72
$ 1.68
$ 1.80
$ 1.04
$ 1.32
$ 1.19
December 31,
2015
65,000
2,145,000
130,000
150,000
150,000
1,180,000
200,000
75,000
1,445,000
500,000
100,000
90,000
-
-
250,000
-
-
-
756,000
-
-
375,000
150,000
-
(i)
(i)
Granted Exercised
-
-
(120,000)
-
(150,000)
-
-
-
(135,000)
-
-
-
-
-
-
-
-
-
(32,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
1,915,000
-
15,000
491,000
170,000
-
150,000
20,000
-
-
60,000
Expired /
cancelled
(65,000)
(2,145,000)
(10,000)
(150,000)
-
-
(25,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31,
2016
-
-
-
-
-
1,180,000
175,000
75,000
1,310,000
500,000
100,000
90,000
100,000
1,915,000
250,000
15,000
491,000
170,000
724,000
150,000
20,000
375,000
150,000
60,000
7,761,000
2,921,000
(437,000)
(2,395,000)
7,850,000
$ 1.65
$ 1.55
$ 1.08
$ 2.81
$ 1.29
(i) In accordance with the Company’s stock option plan, options holders exercised 105,000 and 150,000
stock options on a cashless basis at an exercise price of $1.37 and $1.23. The total number of shares
issued in connection with the cashless exercise of options was 63,510.
27
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
8.
Share capital and reserves (Continued)
(d) Share purchase option compensation plan (continued)
The weighted average fair value of options granted during the years ended December 31, 2018, 2017
and 2016, calculated using the Black-Scholes model at grant date, are as follows:
Weighted average assumptions used
Number
of
options Date of grant
762,000 December 13, 2018
200,000 December 12, 2018
170,000 September 26, 2018
106,000 August 15, 2018
2,180,000 June 18, 2018
100,000 May 7, 2018
90,000 April 10, 2018
400,000 March 29, 2018
300,000 February 7, 2018
1,195,000 December 22, 2017
100,000 November 23, 2017
500,000 September 12, 2017
1,160,000 August 25, 2017
75,000 June 12, 2017
75,000 May 19, 2017
175,000 May 4, 2017
207,000 March 17, 2017
1,427,000 January 11, 2017
60,000 December 21, 2016
20,000 November 2, 2016
150,000 October 6, 2016
170,000 September 15, 2016
491,000 August 9, 2016
15,000 June 29, 2016
1,915,000 June 8, 2016
100,000 May 6, 2016
Fair
value per
share
Risk free
interest
rate
$0.24
$0.28
$0.25
$0.21
$0.29
$0.33
$0.31
$0.42
$0.48
$0.62
$0.50
$0.55
$0.48
$0.63
$0.60
$0.63
$0.47
$0.54
$0.42
$0.69
$0.57
$0.70
$0.76
$0.87
$0.62
$0.52
1.89%
2.06%
2.19%
2.09%
1.85%
1.95%
1.85%
1.94%
1.99%
1.71%
1.46%
1.59%
1.24%
0.88%
0.72%
0.71%
0.80%
0.75%
0.83%
0.54%
0.60%
0.58%
0.50%
0.54%
0.54%
0.54%
Expected
life
(in years)
2
3
2
2
2
2
2
3
3
3
3
2.5
2
2
2
2
2
2
2
2
2
2
2
2
2
2
Expected
volatility
49.38%
49.50%
47.93%
48.39%
51.53%
55.21%
55.18%
55.10%
64.14%
65.20%
63.93%
63.12%
62.80%
65.95%
65.65%
65.77%
61.28%
68.94%
70.18%
68.31%
68.47%
68.08%
67.52%
66.44%
64.68%
63.84%
Expected
dividends
$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
Total share-based payments expenses as a result of options granted and vested during the year ended
December 31, 2018 was $1,308,740 (2017 - $2,693,070; 2016 -$1,869,010).
28
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
9. 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, Vice President Operations & Projects, and the Vice President, Corporate
Development. The net aggregate compensation paid or payable to key management for services after
recovery from Azucar Minerals Ltd. and Almadex Minerals Ltd. (Note 9 (b)) is as follows:
December 31,
2018
December 31,
2017
December 31,
2016
Salaries and benefits
Share-based payments
Directors’ fees
$
$
952,079 $
1,090,540
70,000
2,112,619 $
813,400
2,216,170
70,000
3,099,570
$
$
755,475
1,537,060
41,000
2,333,535
(b) Almadex Minerals Ltd (“Almadex”)
Effective August 1, 2015, the Company recovers a portion of expenses from Azucar pursuant to an
administrative services agreement between the Company and Azucar.
Effective May 18, 2018, the Company also recovers a portion of expenses from Almadex pursuant to
the administrative service agreements between the Company and Almadex.
During the year ended December 31, 2018, the Company received $542,657 (2017 - $499,798; 2016
- $464,498) from Azucar for administrative services fees included in other income and received
$243,260 (2017 - $Nil; 2016 - $Nil) from Almadex for administrative services fees included in other
income.
At December 31, 2018, included in accounts receivable is $170,181 (2017 - $195,551) due from
Azucar and $116,268 (2017 - $Nil) due from Almadex in relation to expenses recoveries.
At December 31, 2018, the Company accrued $37,533 (2017 - $153,038) payable to Almadex for
drilling equipment rental services in Mexico.
(c) Other related party transactions
During the year ended December 31, 2018, the Company employed the Chairman’s daughter for a
salary of $48,800 less statutory deductions (2017 - $43,800; 2016 - $38,800) for marketing and
administrative services provided to the Company.
29
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
10.
Net loss per share
Basic and diluted net loss per share
The calculation of basic net loss per share for the year ended December 31, 2018 was based on the
loss attributable to common shareholders of $3,511,667 (2017 - $5,231,295; 2016 - $4,023,504) and a
weighted average number of common shares outstanding of 107,584,263 (2017 - 95,873,417, 2016 -
82,322,754).
The calculation of diluted net loss per share for the year ended December 31, 2018, 2017 and 2016
did not include the effect of stock options and warrants as they are anti-dilutive.
11. Supplemental cash flow information
Supplemental information regarding non-cash transactions is as follows:
Investing and financing activities
December 31,
2018
December 31,
2017
December 31,
2016
Exploration and evaluation assets expenditures
included in trade and other payables
$ 694,167
$ 493,943
$ 535,254
Fair value of finders’ warrants
36,566
180,691
17,918
Fair value of finders’ warrants transferred to share
capital on exercise of finders’ warrants
-
12,797
5,984
Fair value of cash stock options transferred to
share capital on exercise of options
6,670
496,859
43,180
Fair value of cashless stock options transferred to
share capital on exercise of options
160,080
387,930
108,300
30
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
11. Supplemental cash flow information (Continued)
Supplemental information regarding the split between cash and cash equivalents is as follows:
Cash
Term Deposits
12.
Income Taxes
December 31,
2018
December 31,
2017
$ 2,580,580
2,500,000
$ 5,080,580
$ 1,449,184
14,885,350
$ 16,334,534
(a) The provision for income taxes differs from the amounts computed by applying the Canadian
statutory rates to the net loss before income taxes due to the following:
Loss before income taxes
Statutory rate
December 31,
2018
$ (3,511,667)
27.00%
December 31,
2017
$ (5,231,295)
26.00%
December 31,
2016
$ (4,023,504)
26.00%
Expected income tax
Effect of different tax rates in foreign jurisdictions
Non-deductible share-based payments
Other permanent items
Change in deferred tax assets not recognized
Impact of change in tax rates
Impact of change in expected manner of recovery
Share issuance costs
True-ups and other
Deferred income tax (recovery) expenses
(948,150)
(38,010)
353,360
2,766
151,738
-
-
(172,294)
650,590
$ -
(1,360,137)
9,728
700,198
3,360
1,921,226
(348,020)
-
(399,602)
(526,753)
$ -
(1,046,111)
343
485,943
2,022
3,518,776
-
853,274
(39,241)
(3,775,006)
$ -
In September 2017, the British Columbia (BC) Government proposed changes to the general
corporate income tax rate to increase the rate from 11% to 12% effective January 1, 2018 and
onwards. This change in tax rate was substantively enacted on October 26, 2017. The relevant
deferred tax balances have been remeasured to reflect the increase in the Company’s combined
Federal and Provincial (BC) general corporate income tax rate from 26% to 27%.
(b) The Company’s deferred income tax recovery and deferred income tax liability relates to the
Mexican income tax and Special Mining Duty (“SMD”) associated with the Tuligtic project. As a
consequence of the Company’s spin-out, management has determined that the Company will
most likely recover the carrying amount of the Tuligtic property through use rather than through
sale. Before the spin-out was planned, it was management’s expectation that the carrying
amount of the Tuligtic property would be recovered through sale rather than through use. Given
this change in expected manner of recovery, the Company has reflected the tax impacts in the
financial statements.
31
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
12.
Income Taxes (Continued)
The significant components of deferred income tax assets (liabilities) are as follows:
Deferred tax assets
Non-capital losses
Deferred tax liabilities
Exploration and evaluation assets
December 31,
2018
December 31,
2017
$ 4,282,555
$ 4,282,555
(5,717,437)
(5,717,437)
Net deferred tax liabilities
$ (1,434,882)
$ (1,434,882)
(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:
Non-capital loss carry forwards
Capital loss carry forwards
Exploration and evaluation assets
Share issue costs
Property, plant and equipment
Cumulative eligible capital deduction
Investment tax credit
December 31,
2018
December 31,
2017
$ 18,758,080
24,538,993
8,221,842
1,554,264
483,609
-
239,849
$ 53,796,637
$ 17,803,193
24,538,993
8,221,842
1,778,234
10,127
507,429
239,849
$ 53,099,667
At December 31, 2018, the Company had operating loss carry forwards available for tax purposes in
Canada of $17,858,501 (2017 - $15,706,045) which expire between 2032 and 2038 and in Mexico of
$15,173,872 (2017 - $16,378,174) which expire between 2022 and 2028.
13. Commitments
The Company has entered into an operating lease for office premises effective April 1, 2017 through
to March 31, 2022.
As at December 31, 2018, the remaining payments for operating lease are due as follows:
Office lease
2019
$179,706
2020
$191,512
2021
$192,336
2022
$ 48,084
2023
-
Total
$611,638
32
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
14. Financial instruments
The fair values of the Company’s cash and cash equivalents, accounts receivable and trade and other
payables approximate their carrying values because of the short-term nature of these instruments.
The Company does not carry any financial instruments at fair value.
The Company is exposed to certain financial risks, including currency risk, credit risk, liquidity risk,
interest rate risk and commodity and equity 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 Company is affected by changes in exchange rates
between the Canadian dollar, the US dollar and the Mexican peso. The Company does not
invest in foreign currency contracts to mitigate the risks.
As at December 31, 2018, the Company is exposed to foreign exchange risk through the
following monetary assets and liabilities denominated in currencies other than the functional
currency of the applicable subsidiary:
All amounts in Canadian dollars
Cash and cash equivalents
Accounts receivable and prepaid expenses
Total assets
Trade and other payables
Total liabilities
Net assets
US dollar
$ 1,004,652
-
$ 1,004,652
Mexican peso
$ 293,525
82
$ 293,607
$ 531,083
$ 531,083
$ 40,373
$ 40,373
$ 473,569
$ 253,234
A 10% change in the US dollar exchange rate relative to the Canadian dollar would change
the Company’s net loss by $47,000.
A 10% change in the Mexican peso relative to the Canadian dollar would change the
Company’s net loss by $25,000.
(b)
Credit risk
The Company’s cash and cash equivalents are held in large financial institutions, located in
both Canada and Mexico. Cash equivalents mature at less than ninety days during the twelve
months following the statement of financial position date. The Company’s excise tax included
in accounts receivable and prepaid expenses consists primarily of sales tax due from the
federal government of Canada.
33
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
14. Financial instruments (Continued)
(b)
Credit risk (Continued)
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, 2018, 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. The Company is exposed to varying
interest rates on cash and cash equivalents. The Company has no interest bearing debt.
A 1% change in the interest rate would change the Company’s net loss by $51,000.
(e)
Commodity and equity price risk
The ability of the Company to explore its exploration and evaluation assets and the future
profitability of the Company are directly related to the market price of gold and other precious
metals. The Company monitors gold prices to determine the appropriate course of action to
be taken by the Company. Equity price risk is defined as the potential adverse impact on the
Company’s performance due to movements in individual equity prices or general movements
in the level of the stock market.
34
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2018, 2017 and 2016
Expressed in Canadian dollars
15. Management of capital
The Company considers its capital to consist of components of equity. 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 exploration and evaluation assets 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 the 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. There were no changes to the Company’s approach to the
management of capital during the period.
16. Segmented information
The Company operates in one reportable operating segment, being the acquisition and exploration of
mineral resource properties.
The Company’s non-current assets are located in the following geographic locations:
Canada
United States
Mexico
17. Subsequent events
December 31,
2018
$ 86,372
13,673,883
54,683,143
$ 68,443,398
December 31,
2017
$ 120,803
5,168,856
44,810,040
$ 50,099,699
On January 3, 2019, the Company granted certain consultant, officers and directors an aggregate of
425,000 stock options in accordance with the terms of the Company’s stock option plan, each of
which is exercisable into one common share at an exercise price of $0.84 per share until February 7,
2021.
On March 1, 2019, the Company granted a consultant an aggregate of 100,000 stock options in
accordance with the terms of the Company’s stock option plan, each of which is exercisable into one
common share at an exercise price of $0.90 per share until March 29, 2021.
35
ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
ALMADEN MINERALS LTD.
AND
1154229 B.C. LTD.
MARCH 29, 2018
VAN01: 5075175: v3
Table of Contents
ARTICLE 1 INTERPRETATION ...............................................................................................1
1.1
1.2
1.3
1.4
1.5
1.6
Definitions..................................................................................................................... 1
Interpretation ................................................................................................................. 3
Choice of Law ............................................................................................................... 4
Currency ........................................................................................................................ 4
Attornment .................................................................................................................... 4
Ambiguities ................................................................................................................... 4
ARTICLE 2 APPOINTMENT AND DELEGATION .................................................................4
2.1
2.2
2.3
Appointment as Manager and Delegation: Management Services ............................... 4
Exclusivity .................................................................................................................... 6
Appointment of Agents ................................................................................................. 6
ARTICLE 3 CONCERNING MANAGER; REPRESENTATIONS AND WARRANTIES .....7
3.1
3.2
3.3
3.4
3.5
Standard of Care ........................................................................................................... 7
Representations and Warranties .................................................................................... 8
Liability of Manager ..................................................................................................... 9
Relationship of Manager and the Managed Entity ..................................................... 10
Directors and Officers Liability Insurance ................................................................. 10
ARTICLE 4 PERSONNEL AND SHARED FACILITIES .......................................................11
4.1
4.2
Personnel Expenses ..................................................................................................... 11
Use of Shared Facilities .............................................................................................. 11
ARTICLE 5 FEES AND PAYMENT ........................................................................................11
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
Budgets Relating to Services ...................................................................................... 11
Fees Payable by Managed Entity ................................................................................ 11
Change in Services ...................................................................................................... 11
Invoice......................................................................................................................... 12
Payment....................................................................................................................... 12
Interest......................................................................................................................... 12
Proration ...................................................................................................................... 12
Payments in Respect of Taxes .................................................................................... 12
Excluded Services ....................................................................................................... 13
ARTICLE 6 TERM AND TERMINATION .............................................................................13
6.1
6.2
6.3
Term of Agreement ..................................................................................................... 13
Termination of Agreement .......................................................................................... 13
Conduct After Notice of Termination ......................................................................... 14
VAN01: 5075175: v3
Table of Contents
6.4
Conduct After Termination ......................................................................................... 15
ARTICLE 7 RECORDS AND REPORTING ...........................................................................15
7.1
7.2
7.3
Records and Reporting ................................................................................................ 15
Audit Right.................................................................................................................. 15
Inspection Right of Manager ...................................................................................... 16
ARTICLE 8 INDEMNIFICATION ...........................................................................................16
8.1
Indemnification of Manager ....................................................................................... 16
ARTICLE 9 CONFIDENTIALITY AND NON-SOLICITATION ...........................................18
9.1
9.2
9.3
9.4
9.5
Confidentiality ............................................................................................................ 18
Injunctive Relief.......................................................................................................... 19
Return of Confidential Information ............................................................................ 19
Non-Solicitation .......................................................................................................... 20
Survival ....................................................................................................................... 20
ARTICLE 10 FORCE MAJEURE .............................................................................................20
10.1
Force Majeure ............................................................................................................. 20
ARTICLE 11 GENERAL PROVISIONS ..................................................................................21
11.1 Exchange Acceptance ................................................................................................. 21
11.2
Further Assurances...................................................................................................... 21
11.3 Assignment ................................................................................................................. 21
11.4 Enurement ................................................................................................................... 22
11.5 Entire Agreement ........................................................................................................ 22
11.6 Notice .......................................................................................................................... 22
11.7 Amendment ................................................................................................................. 23
11.8
Severability ................................................................................................................. 23
11.9 Counterpart Execution ................................................................................................ 23
11.10 Effective Date ............................................................................................................. 23
11.11 Arbitration ................................................................................................................... 23
VAN01: 5075175: v3
THIS ADMINISTRATIVE SERVICES AGREEMENT made effective as of the 29th day of
March, 2018.
BETWEEN:
ALMADEN MINERALS LTD., a company incorporated under
the laws of the Province of British Columbia with an office at Suite
210, 1333 Johnston Street, Vancouver, British Columbia, V6H
3R9 (“Manager”)
- and -
1154229 B.C. LTD., a company incorporated under the laws of
the Province of British Columbia with an office at Suite 210, 1333
Johnston Street, Vancouver, British Columbia, V6H 3R9
(“Managed Entity”)
WHEREAS the Managed Entity requires office space, furnishings and equipment,
communications facilities, accounting services, marketing services, secretarial services, and the
administrative services and personnel necessary to fulfil the basic day-to-day responsibilities
imposed on the Managed Entity, to carry out and ensure compliance with the requirements of a
reporting issuer, and to generally carry on its business, and has no permanent staff to perform these
duties;
AND WHEREAS Manager has the necessary space, equipment, personnel and expertise
to provide all of the services and facilities required by the Managed Entity and the Managed Entity
wishes to engage Manager to provide such services and facilities;
NOW THEREFORE, THIS AGREEMENT WITNESSETH that in consideration of
the covenants herein contained and such other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged by the Parties), the Parties hereby agree as follows:
ARTICLE 1
INTERPRETATION
1.1
Definitions
In this Agreement, the following terms will have the meanings set out below unless the context
otherwise requires:
“Affiliate” of a person (the “Subject Person”) means any other person that directly or
indirectly controls, is controlled by or is under common control with the Subject Person.
For purposes of this definition, “control” of a person means (i) ownership of more than 50%
of the issued shares or other equity interests of such person or (ii) the power to direct the
management or policies of a person, whether through the ownership of more than 50% of
the voting power of such person, through the power to appoint more than half of the
VAN01: 5075175: v3
members of the board of directors or similar governing body of such person, or through
contractual or other arrangements;
“Annual Budget” means, in respect of any Fiscal Year, an annual budget estimating the
costs, on a monthly basis, of providing the Services and access to, and use of the Personnel
and assets contained in, the Shared Facilities, such budget to include a reasonable
description of the method and basis for determining the costs to be allocated;
“Applicable Law” means, with respect to any person, property, transaction, event or other
matter, any law, rule, statute, regulation, order, judgment, decree, treaty or other requirement
having the force of law (collectively the “Law”) relating or applicable to such person,
property, transaction, event or other matter. Applicable Law also includes, where
appropriate, any interpretation of the Law (or any part) by any person having jurisdiction
over it, or charged with its administration or interpretation;
“Confidential Information” means the confidential, secret or proprietary information of
one Party or any of its Affiliates (the “Disclosing Party”), including data, technical
information, financial information including prices, business information including business
plans, strategies and practices, information relating to customers and prospective customers,
trade secrets, know-how, methods, procedures, reports, budgets, computer tapes and other
storage media, technology, files, documentation, and software of the Disclosing Party which
has been or may hereafter be disclosed, directly or indirectly, to any other Party (the
“Receiving Party”) either orally, in writing, electronically or in any other material form or
medium pursuant to and in conjunction with this Agreement, and includes all information
relating to any arbitration proceeding under Section 11.11;
“Disclosing Party” has the meaning ascribed thereto in the definition of “Confidential
Information” set out herein;
“Documentation” has the meaning ascribed thereto in Section 7.1;
“Exchange” means the TSX Venture Exchange and any other stock exchange which lists
the Managed Entity’s Securities as applicable;
“Fiscal Year” means a twelve month period proposed by the Manager and agreed to by the
Managed Entity, acting reasonably;
“Force Majeure Event” has the meaning ascribed thereto in Section 10.1;
“G&A Overhead Charge” has the meaning ascribed thereto in Section 4.1;
“Governmental Authority” means any nation, federal government, province, state,
municipality or other political subdivision of any of the foregoing, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by any of the foregoing;
- 2 -
“including” means including, without limitation, and “includes” means includes, without
limitation;
“Parties” means Manager and Managed Entity and “Party” means any one of them;
“Personnel” has the meaning ascribed thereto in Section 4.1;
“Receiving Party” has the meaning ascribed thereto in the definition of “Confidential
Information”;
“Services” has the meaning ascribed thereto in Section 2.1;
“Shared Facilities” has the meaning ascribed thereto in Section 4.2; and
“Taxes” includes all goods and services, sales, use, transfer, stamp, value added, gross
receipts or excise tax or any similar taxes, fees, duties or imposts.
1.2
Interpretation
For the purposes of this Agreement, except as otherwise expressly provided:
(a)
(b)
(c)
(d)
(e)
(f)
the headings in this Agreement are included for convenience of reference only and
in no way define or limit any of the provisions hereof or otherwise affect their
construction or interpretation;
words importing the singular number include the plural and vice versa and words
importing gender include the masculine, feminine and neuter genders;
“this Agreement” means this Agreement, including the Schedules hereto, and not
any particular Section or other subdivision, recital or Schedule hereof, as the same
may, from time to time, be supplemented or amended in accordance with the terms
hereof;
the words “hereof”, “herein”, “hereto” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular Section
or other subdivision, recital or Schedule hereof;
all references in this Agreement to a designated “Section” or other subdivision,
recital or “Schedule” hereof are references to the designated Section or other
subdivision, recital or Schedule to, this Agreement;
a reference to a statute in this Agreement includes all regulations, rules, policies or
instruments made thereunder, all amendments to the statute, regulations, rules,
policies or instruments in force from time to time, and any statutes, regulations,
rules, policies or instruments that supplement or supersede such statute, regulations,
rules, policies or instruments;
(g)
the word “or” is not exclusive;
- 3 -
(h)
(i)
the word “including” is not limiting, whether or not non-limiting language (such
as “without limitation” or “but not limited to” or words of similar import) is used
with reference thereto; and
all references to “approval”, “authorization” or “consent” in this Agreement
means written approval, authorization or consent, unless expressly stated to the
contrary.
1.3
Choice of Law
This Agreement will be governed by the laws of the Province of British Columbia and the laws of
Canada applicable therein and shall be construed, interpreted and performed in accordance
therewith.
1.4
Currency
In this Agreement, all amounts are stated and payable in Canadian currency.
1.5
Attornment
Subject to Section 11.11, any legal action or proceedings with respect to this Agreement shall be
brought in the courts of the Province of British Columbia and the courts of appeal therefrom. Each
Party hereby attorns to and accepts for itself and in respect of its assets, irrevocably and
unconditionally, the jurisdiction of such courts.
1.6
Ambiguities
Each of the Parties has participated in the drafting of this Agreement and any rule of construction
to the effect that ambiguities are to be resolved against the drafting Party shall not apply to the
interpretation of this Agreement.
ARTICLE 2
APPOINTMENT AND DELEGATION
2.1
Appointment as Manager and Delegation: Management Services
The Managed Entity hereby engages and appoints Manager as the sole and exclusive manager of
the Managed Entity and delegates to Manager, and Manager hereby accepts such sole and
exclusive engagement and appointment as well as the delegation of, authority to manage the assets,
operations, business and administrative affairs of the Managed Entity. Manager hereby agrees to
supply to the Managed Entity all services, staff and expertise as determined necessary by the
Manager to properly and efficiently manage the assets, operations, business and administrative
affairs of the Managed Entity. In particular, but without limitation, Manager agrees to provide, as
may be required and at the specific request of the Managed Entity:
(a)
senior executive services, including, without limitation, business planning, support,
guidance and policy making in respect of the Managed Entity;
- 4 -
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
board of directors and general management services in respect of the business and
affairs of the Managed Entity, including providing, as requested by the Managed
Entity, individuals for such board of directors and executive positions as may be
required by the Managed Entity;
accounting and financial services, including coordination and management of the
Managed Entity’s accounting, treasury, information, income tax, reporting systems
and internal controls;
cash management and investment services, including arranging, assisting and
negotiating banking and financing arrangements for the Managed Entity and
assisting in the preparation of financial statements and other financial reports,
coordinating external audits and financial planning and budgeting;
reporting services to the Managed Entity’s directors with respect to the business
and affairs of the Managed Entity as may be requested by the Managed Entity’s
directors from time to time;
corporate secretarial services, including, without limitation, assistance with the
maintenance of corporate records and minutes of meetings;
stock exchange and governmental relations services including, without limitation,
assisting in the representation of the Managed Entity to the Exchange, securities
regulators or other governmental and regulatory agencies;
the coordination of such audit, legal, insurance and other third party professional or
non-professional services in respect of the Managed Entity as determined necessary
by Manager (it being understood and agreed that the fees and expenses of third
parties will be expenses of the Managed Entity);
incidental assistance with corporate communications programs, including investor
relationship management, branding of the Managed Entity, and corporate brochures
regarding the Managed Entity; provided that these services shall not constitute
professional investor relations services under the rules of the Exchange, if
applicable, or other securities regulatory policies;
information technology services, including updating and maintenance of the
Managed Entity’s website;
the coordination of risk management services including, without limitation, risk
assessment, evaluation of insurance coverages, negotiation with insurance brokers,
carriers and underwriters and processing and administration of insurance claims
and including loss prevention services, health and safety advisory services and
property risk management;
(l)
negotiation, on behalf of and in the name of the Managed Entity, of agreements
with the Managed Entity’s customers and other material contracts with third parties
- 5 -
necessary for the proper operation of business and assets of the Managed Entity,
including with respect to the items listed in this Section 2.1;
(m)
human resources and staffing services including, without limitation, advisory and
to employee hiring, employee relations,
administration services relating
compensation programs, employee benefit programs and personnel and industrial
relations matters;
(n)
(o)
(p)
(q)
(r)
(s)
(t)
assessment, negotiation and implementation, on behalf of and in the name of the
Managed Entity, of major acquisitions and sales of subsidiaries, businesses or
assets;
the preparation and filing of all required tax returns for the Managed Entity and
reports to governmental and regulatory agencies in compliance with all statutory
regulations;
the co-ordination and submission, on behalf of and in the name of the Managed
Entity, of applications for all necessary permits, licenses or other required approvals
from Governmental Authorities;
the management of the defence and prosecution of litigation and other legal services
furnished by independent counsel and providing advice and recommendations with
respect thereto;
oversight of joint ventures, options and similar arrangements, on behalf of and in
the name of the Managed Entity, including representation by the Manager’s
personnel on technical or management committees;
the management of community relations and communications with the various
stakeholders including local communities and municipalities, aboriginal groups,
ejidos and requisite government agencies and departments; and
such other executive functions in connection with the management of the business
and affairs of the Managed Entity as determined necessary or advisable by
Manager,
(collectively, the “Services”).
2.2
Exclusivity
The Managed Entity shall not engage or appoint any person other than the Manager to manage the
Managed Entity or its assets, operations, business or administrative affairs, without the prior
written consent of the Manager.
2.3
Appointment of Agents
(a)
Notwithstanding that the Managed Entity has engaged and appointed the Manager
as the sole and exclusive manager of the Managed Entity pursuant to Section 2.1,
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Manager shall have the right to provide the Services, or any part thereof, through
agents, affiliates or independent contractors; provided that Manager shall ensure
that such agents, affiliates or independent contractors comply with the terms and
conditions of this Agreement that are relevant to the performance of their assigned
tasks. Manager shall ensure that such agents, affiliates or independent contractors
contractually are legally responsible for their conduct under the standards
applicable to Manager pursuant to this Agreement.
(b) Manager may rely and act upon information or advice received from advisors,
accountants, legal counsel and others, provided Manager satisfies the standard of
care described in Section 3.1 in relying and acting upon information received from
such person.
ARTICLE 3
CONCERNING MANAGER; REPRESENTATIONS AND WARRANTIES
3.1
Standard of Care
Manager shall provide the Services in a proper, workmanlike and efficient manner, in accordance
with accepted mining industry and other relevant professional standards, practices and applicable
laws, and shall exercise that degree of care, and skill that a reasonably prudent person would
exercise in comparable circumstances. The Manager shall not be in breach of its standard of care
if its inability or failure to perform results from the actions of the Managed Entity or the failure of
the Managed Entity to perform acts or to contribute amounts required of it by this Agreement.
For greater certainty, the foregoing standard of care by the Manager is qualified as follows:
(a) Manager shall not provide any services in respect of which a registration of the
Manager in any capacity would be required under applicable securities laws or
other Applicable Laws;
(b)
(c)
(d)
the Managed Entity acknowledges that although during the course of providing the
Services, Manager may provide the Managed Entity assistance with tax, accounting
or legal matters, the Managed Entity shall not be relying on Manager for
professional advice or opinions on tax, accounting or legal matters;
the Managed Entity specifically acknowledges Manager shall at no time provide
the Managed Entity with any tax or accounting advice, opinion, analysis or similar
services; and
the Managed Entity specifically acknowledges Manager shall at no time provide
the Managed Entity with any professional legal advice, opinion, analysis or similar
services, including with respect to the interpretation or enforcement of any rights,
obligations, duties or remedies that the Managed Entity may have in any matter and
that any communication between the Managed Entity and Manager shall not
necessarily be considered to be legally privileged.
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3.2
Representations and Warranties
(a) Manager represents and warrants to the Managed Entity, and acknowledges that the
Managed Entity is relying thereon, that:
(i)
it is a valid and subsisting corporation duly incorporated under the laws of
its jurisdiction of incorporation and has full corporate power and capacity
to execute and deliver this Agreement and to observe and perform its
covenants and obligations hereunder and has taken all necessary corporate
proceedings and obtained all necessary approvals in respect thereof and,
upon execution and delivery of this Agreement by it, this Agreement will
constitute a legal, valid and binding obligation of Manager enforceable
against it in accordance with its terms except that:
(A)
(B)
enforceability may be limited by bankruptcy, insolvency or other
laws affecting creditors’ rights generally;
equitable remedies, including the remedies of specific performance
and injunctive relief, are available only in the discretion of an
arbitrator or any court having jurisdiction; and
(C)
a court may stay proceedings before them by virtue of equitable or
statutory powers.
(ii)
neither the execution of this Agreement nor the provision of Services
hereunder conflict with, result in a breach of or accelerate the performance
required by any agreement to which it, or any of its Affiliates, is a party;
and
(iii)
neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby, result in a breach of the laws of any
applicable jurisdiction or its, or any of its Affiliates’ constating documents.
(b) Managed Entity represents and warrants to the Manager, and acknowledges that
Manager is relying thereon, that:
(i)
it is a valid and subsisting corporation duly incorporated under the laws of
its jurisdiction of incorporation and has full corporate power and capacity
to execute and deliver this Agreement and to observe and perform its
covenants and obligations hereunder and has taken all necessary corporate
proceedings and obtained all necessary approvals in respect thereof and,
upon execution and delivery of this Agreement by it, this Agreement will
constitute a legal, valid and binding obligation of Managed Entity
enforceable against it in accordance with its terms except that:
(A)
enforceability may be limited by bankruptcy, insolvency or other
laws affecting creditors’ rights generally;
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(B)
equitable remedies, including the remedies of specific performance
and injunctive relief, are available only in the discretion of an
arbitrator or any court having jurisdiction; and
(C)
a court may stay proceedings before them by virtue of equitable or
statutory powers.
neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby conflict with, result in a breach of or
accelerate the performance required by any agreement to which it is a party;
neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby, result in a breach of the laws of any
applicable jurisdiction or its constating documents; and
its articles permit the delegation of authority to manage the assets,
operations, business and administrative affairs of the Managed Entity to the
Manager pursuant to Section 2.1.
(ii)
(iii)
(iv)
3.3
Liability of Manager
Manager shall not be liable for any error of judgment or for any loss suffered by the Managed
Entity in connection with the matters to which this Agreement relates, except a loss resulting from
fraud, willful misconduct or Gross Negligence. For purposes of this Agreement “Gross
Negligence” means any wanton or reckless act or omission not justified by any special
circumstances as amounts to a willful and utter disregard for harmful and avoidable consequences,
but shall not include any act or omission of a Manager done or omitted to be done, if resulting
from:
(a)
(b)
the direction of, or with the knowledge and concurrence, of the Managed Entity; or
an action taken in good faith by a Manager to protect life, health or property.
Notwithstanding anything herein contained to the contrary, in no event whatsoever will the
Manager, its directors, officers, employees, agents, contractors or affiliates, be liable for any claim
for:
(i)
(ii)
punitive, exemplary or aggravated damages of any kind;
damages for loss of profits or revenue, decline in earnings, decline in
production, loss of opportunities, or loss of goodwill;
(iii)
indirect or consequential losses or any other indirect damages or loss;
(iv)
contribution, indemnity or set-off in respect of any claims against the
Managed Entity by any third party; or
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(v)
any damages whatsoever relating to interruption, delays, errors or
omissions.
(vi) Notwithstanding the provisions of any legislation in Canada or otherwise
and whether or not advised of the possibility of those damages.
Without limiting the generality of the above Section 3.3, the maximum total liability of the
Manager, and its suppliers, directors, officers, agents, representatives, shareholders and
employees, for any claim whatsoever, under any circumstances, regardless of the cause of action
and including without limitation claims for breach of contract, tort, negligence or otherwise, and
the Managed Entity’s sole remedy therefore, shall be strictly limited to an award not to exceed the
greater of:
(x)
$500,000; and
(y)
the amount of fees actually paid by the Managed Entity to the Manager under the
terms of this Agreement during the six (6) months prior to the date that the claim
arose.
3.4
Relationship of Manager and the Managed Entity
(a)
(b)
The provision by the Manager of the Services under this Agreement shall be strictly
as an independent contractor. Nothing contained in this Agreement shall create or
imply any agency relationship among or between any of the Parties or any of their
Affiliates, nor shall this Agreement be deemed to constitute a joint venture or
partnership between the Parties or any of their Affiliates, nor shall this Agreement
create any fiduciary relationship between the Parties or any of their Affiliates.
Unless otherwise agreed to between the Managed Entity and the Manager, any
directors, officers, employees or consultants of the Manager or its Affiliates who
are also directors, officers, consultants or employees of the Managed Entity or any
of their Affiliates shall be paid by the Manager for serving in such capacity and
shall not receive any remuneration from the Managed Entity therefore, except for
stock options or other share based compensation granted by the Managed Entity in
its sole discretion. For greater certainty, any stock options or other share based
compensation granted by the Managed Entity to a director, officer, employee or
consultant of the Managed Entity is intended and deemed to be remuneration in
respect of an employment relationship or consultant relationship, as the case may
be, between that person and the Managed Entity. All other remuneration is intended
and deemed to be in respect of an employment or consultant relationship, as the
case may be, with the Manager.
3.5
Directors and Officers Liability Insurance
During the term of this Agreement, the Managed Entity shall at all times maintain in good standing
a Directors and Officers liability insurance with coverage acceptable to the directors and officers
provided by the Manager.
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ARTICLE 4
PERSONNEL AND SHARED FACILITIES
4.1
Personnel Expenses
The Managed Entity shall have access to and use of the services by the personnel set out in
Schedule 4.1 (the “Personnel”). The allocation of costs for the Personnel to the Managed Entity
shall be twenty percent (20%) of the Manager’s actual monthly costs of the Personnel’s fees and/or
wages, as applicable (“Personnel Expenses”).
4.2
Use of Shared Facilities
The Managed Entity shall have access to, and use of the assets contained in, the facilities set out
on Schedule 4.2 (the “Shared Facilities”). The allocation of costs for the Shared Facilities to the
Managed Entity shall be twenty percent (20%) of the Manager’s actual monthly costs of rent for
the Shared Facilities (the “G&A Overhead Charge”).
ARTICLE 5
FEES AND PAYMENT
5.1
Budgets Relating to Services
Manager shall prepare and deliver to the Managed Entity an Annual Budget. In the event that
Manager anticipates that the total annual costs of providing the Services during the Fiscal Year
will exceed the costs outlined in an Annual Budget by greater than twenty percent (20%), Manager
shall use commercially reasonable efforts to inform the Managed Entity of such increased costs as
soon as the Manager is aware of such increased cost. Any additional cost shall be allocated in the
same manner and on the same basis as costs for similar line items have been allocated in the Annual
Budget for that Fiscal Year. Notwithstanding the foregoing, Manager shall not be required to itself
bear the cost of any material departures from the Annual Budget. Nothing contained in this
Agreement shall oblige Manager, in the absence of express agreement to the contrary, to incur any
indebtedness for or on behalf of, or advance any credit to the Managed Entity.
5.2
Fees Payable by Managed Entity
Fees payable to the Manager by the Managed Entity will consist of the following components:
(a)
(b)
(c)
the Personnel Expenses;
the G&A Overhead Charge; and
other reasonable services and costs that may be incurred by Manager on behalf of
the Managed Entity and approved by the Managed Entity.
5.3
Change in Services
In the event that the Managed Entity determines during a Fiscal Year, following the delivery of an
Annual Budget, that it requires any change in the Services it receives, the Managed Entity shall
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provide notice to Manager and the quantity and level of Services shall be changed as agreed
between the Parties, acting reasonably. The costs of such change shall be (i) determined in the
same manner and on the same basis as in the Annual Budget, and (ii) allocated to, and paid by, the
Managed Entity, unless otherwise agreed by the Parties. The quantity and level of Services
provided at the end of a Fiscal Year shall form the basis of the quantity and level of Services to be
included in the Annual Budget for the following Fiscal Year, unless otherwise agreed to in writing
by the Parties. Manager cannot materially change the quantity or level of Services provided to the
Managed Entity pursuant to an Annual Budget without the prior written consent of the Managed
Entity.
5.4
Invoice
Invoices will be issued by Manager to the Managed Entity on a monthly basis.
5.5
Payment
The Managed Entity shall pay each invoice delivered pursuant to Section 5.4 within ten (10) days
of receipt. The Managed Entity also agrees to advance funds against written cash calls (in the form
of invoices) for reasonably immediate expenditure requirements of Manager (such as to pay for or
secure services, to secure contractors, deposits and the like) and to honour all agreements which
Manager enters into in good faith on behalf of the Managed Entity with third parties in the course
of performing the Services.
Manager shall provide the Managed Entity with such further information as it may reasonably
request in relation to any amount shown on any invoices delivered in accordance with this Section
5.5, including reasonably satisfactory evidence of any reimbursable costs and expenses.
5.6
Interest
If either Party defaults in the payment when due of any sum payable under this Agreement
(howsoever determined) the liability of such Party shall be increased to include interest on such
sum from the date when such payment is due until the date of actual payment (as well after as
before judgment) at the rate of eight percent (8%) per annum. Such interest shall accrue from day
to day.
5.7
Proration
All fees payable under this Agreement shall be computed on a calendar month basis and shall be
prorated for any partial month.
5.8
Payments in Respect of Taxes
The amounts to be billed by Manager for the Services and third party costs under this Agreement
may be subject to GST, PST or other general sales tax, value added tax or any like service or sales
tax or withholding tax which may be payable from time to time. All amounts payable under this
Agreement shall be paid by the Managed Entity free and clear of any deductions or claims for set-
offs, including for withholding taxes. If any amounts are required to be withheld by Applicable
Law, the Managed Entity shall be obliged to pay an additional amount over the amount invoiced
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as shall leave Manager receiving the same net amount as the Manager invoiced the Managed Entity
for. Any such additional amount paid for withholding by the Managed Entity shall be refunded if
recovered by Manager and Manager shall promptly apply to recover or reduce any such
withholding amounts.
5.9
Excluded Services
Services provided by the Manager are described in Section 2.1. The following is a non-inclusive
listing of services and costs that are not included in the services provided by the Manager: external
legal, audit, IT, insurance, filing fees, regulatory fees, property maintenance fees, travel, interest
and bank charges, costs related to raising capital, registrar and transfer agency fees, proxy
solicitation fees, costs related to business (including office supplies) and property acquisitions.
However, if Manager pays for any of these costs on behalf of the Managed Entity, these costs will
be invoiced by Manager and the Managed Entity will reimburse Manager for these costs plus the
G&A Overhead Charge.
ARTICLE 6
TERM AND TERMINATION
6.1
Term of Agreement
The term of this Agreement shall commence on the date hereof and shall continue for a five (5)
year term with subsequent automatic one (1) year renewal terms, unless terminated pursuant to
Section 6.2 hereof.
6.2
Termination of Agreement
(a)
(b)
(c)
This Agreement may be terminated by either Party giving at least six (6) months
written notice prior to the expiry of the term of this Agreement (or such shorter
period as the Parties may mutually agree upon in writing) to the other Party of
termination. On the giving of such notice by the Managed Entity, or at any time
thereafter, either Party shall have the right to elect to immediately terminate the
Manager’s engagement, and upon such election, the Managed Entity shall pay to
the Manager a lump sum equal to the average monthly fees for four (4) months.
The average monthly fees shall be calculated over the twelve (12) months prior to
the notice of termination, provided that if this Agreement has not been in existence
for twelve (12) months at the time of notice of termination, then the average
monthly fees shall be calculated over the period of time that this Agreement has
been in existence.
This Agreement may be terminated immediately by the Managed Entity in the event
of the commission by Manager of any fraudulent act.
This Agreement may be terminated immediately by either Party where a winding-
up, liquidation, dissolution, bankruptcy, sale of substantially all assets, sale of
business or insolvency proceeding have been commenced or are being
contemplated by the other Party.
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(d)
(e)
Upon termination of this Agreement, stock options or other securities based
incentive awards granted by the Managed Entity to executive officers, directors and
other Manager personnel provided by the Manager will vest and expire in
accordance with the Managed Entity’s stock option plan or securities based
compensation plan.
The Parties acknowledge that the terms of Subsection 6.2(a) were agreed to by the
Parties on the basis of the pre-existing and on-going relationship of the Parties such
that it was mutually understood that no notice of termination would be given by
either Party without advance planning on the part of both Parties to permit an
orderly transition and minimize business disruption following the giving of such
notice. If, however, either Party is subject to a Change of Control during the term
of this Agreement (such Party referred to in this Subsection 6.2(e) as the “Target”)
there will not be adequate time for such advance planning and, notwithstanding
anything to the contrary contained in this Agreement, the Parties agree that upon a
Change of Control the Manager’s engagement hereunder shall, unless otherwise
agreed to in writing by both Parties, automatically terminate 48 hours after the
Change of Control with immediate effect and the Target shall forthwith upon such
termination pay to the other Party $2 million as compensation for the unplanned
termination of the Manager’s engagement hereunder and the significant disruption
to the business of the other Party as a result of such unplanned termination, such
amount being a genuine pre-estimate by the Parties of the loss such other Party will
suffer as a consequence thereof. For purposes of this Agreement, “Change of
Control” means the date upon which, without the Target’s written concurrence
therewith, any person (as that term is defined in the Securities Act (British
Columbia)) makes and does not withdraw a take over bid (as that term is defined in
the Securities Act (British Columbia)) or acquires, directly or indirectly, that
number of common shares of the Target which equals or exceeds twenty percent
(20%) of the then issued common shares of the Target.
6.3
Conduct After Notice of Termination
From the time of receipt of notice of termination of this Agreement:
(a) Manager shall not enter into any new arrangements or agreements on behalf of the
Managed Entity (unless already legally committed to do so) without the Managed
Entity’s prior consent, such consent not to be unreasonably withheld; and
(b)
notwithstanding any termination of this Agreement, the Managed Entity shall
continue to be bound by any agreements:
(i)
(ii)
contracted for on its behalf by Manager prior to Manager’s receipt of notice
of termination; or
contracted for on its behalf by Manager after Manager’s receipt of notice of
termination with the Managed Entity’s prior written consent.
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6.4
Conduct After Termination
From the effective date of termination of this Agreement:
(a)
(b)
agreements or obligations which have been executed or incurred by Manager in
connection with or related to Services provided to the Managed Entity shall be
assigned over to the Managed Entity and the Managed Entity shall indemnify
Manager in connection with the due performance of such agreements;
the Managed Entity shall cease to use Manager’s premises, facilities, equipment,
phone numbers and any other items that are the property of Manager and shall make
arrangements for the orderly transition of the Services by advice letter to Manager;
(c) Manager shall be the sole and exclusive owner of the business contacts and investor
database maintained by Manager; and
(d) Manager shall furnish to the Managed Entity at Managed Entity’s cost within sixty
(60) days of the effective date of termination (provided that the Managed Entity has
paid all outstanding or potential future fees, costs and expenses of the Manager
hereunder) all books, records, electronic data and other information pertaining to
the Managed Entity, together with all other materials pertaining to the Managed
Entity in its possession, at Managed Entity’s cost. For a period of six (6) years
following the effective date of the termination of this Agreement, Manager shall
provide the Managed Entity and any successor manager of the Managed Entity with
any information from its records that the Managed Entity may reasonably require
and the Manager shall be reimbursed for its reasonable costs and expenses thereof.
ARTICLE 7
RECORDS AND REPORTING
7.1
Records and Reporting
Manager shall maintain, at all times, copies of all records related to the Services and the fees
invoiced to the Managed Entity for such Services (collectively, “Documentation”). Manager will
retain such Documentation for not less than seven (7) years from the date of its creation. Manager
shall prepare such other reports detailing amounts invoiced to the Managed Entity hereunder as
may be reasonably required by the Managed Entity from time to time.
7.2
Audit Right
(a)
Upon reasonable notice from the Managed Entity, Manager shall provide to the
Managed Entity’s external auditors and such other persons as the Parties may agree
upon in writing, from time to time, access to Manager’s locations during normal
business hours for the purposes of performing audits of the Manager’s performance
of the Services under this Agreement, including access to:
(i)
the parts of the Shared Facilities at or from which Manager is providing the
Services;
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(ii)
the Personnel who are providing the Services;
(iii)
all Documentation relating to the Services; and
(iv)
all physical assets that belong to or are charged to the Managed Entity.
Manager shall provide full co-operation and assistance to any such entity exercising
the right of audit hereunder as may reasonably be required. Nothing in this
Agreement shall be deemed to allow the Managed Entity’s external auditors or any
other person automatic access to legally privileged documents. Any audit
conducted on behalf of the Managed Entity shall not interfere with Manager’s
operations.
The Managed Entity shall be responsible for any additional costs or expenses
reasonably incurred by Manager in connection with any audits conducted as
provided for pursuant to this Section 7.2.
All written exceptions to and claims upon the Manager for discrepancies disclosed
by such audit shall be made not more than three (3) months after receipt of the audit,
or they shall be deemed waived.
The Managed Entity’s external auditors or other persons shall not have the right to
audit records and accounts of the Manager relating to Services more than twenty-
four (24) months after the end of such Fiscal Year in which such Services were
provided.
(b)
(c)
(d)
7.3
Inspection Right of Manager
For the sole purpose of enabling Manager to perform the Services and only to the extent required
to enable such performance, the Managed Entity shall allow Manager, its employees and
authorized agents’ reasonable access to the Managed Entity’s properties, business premises and
business records upon reasonable notice to the Managed Entity. The Managed Entity shall ensure
that its employees, and any contractors, consultants, advisors or auditors engaged by it, co-operate
fully with Manager in its performance of the Services. Nothing in this Agreement shall be deemed
to allow Manager automatic access to legally privileged documents.
ARTICLE 8
INDEMNIFICATION
8.1
Indemnification of Manager
Manager (and each of its Affiliates, directors, officers, employees, consultants and agents) (each
an “Indemnified Party”) shall be indemnified and saved harmless by the Managed Entity from
and against all liabilities and expenses (including judgments, fines, penalties, amounts paid in
settlement and counsel fees), reasonably incurred in connection with any action, suit or proceeding
to which an Indemnified Party may hereafter be made a party by reason of the Manager providing
Services hereunder to the Managed Entity provided that Manager shall not be finally adjudged in
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such action, suit or proceeding as liable for or guilty of fraud, wilful misconduct, or Gross
Negligence, in relation to the matter or matters in respect of which indemnification is claimed.
For purposes of the preceding paragraph: (i) “action, suit or proceeding” shall include every
action, suit or proceeding, civil, criminal or other; (ii) the right of indemnification conferred
thereby shall extend to any threatened action, suit or proceeding and the failure to institute it shall
be deemed its final determination; and (iii) advances must be made by the Managed Entity against
costs, expenses and fees incurred in respect of the matter or matters as to which indemnification is
claimed, provided that Manager or other Indemnified Party receiving such advance agrees to repay
to the Managed Entity any amounts so advanced if the Managed Entity is finally adjudged in such
action, suit or proceeding as liable for or guilty of fraud, wilful misconduct, or Gross Negligence
in relation to the matter or matters in respect of which indemnification is claimed. The foregoing
right of indemnification shall not be exclusive of any other rights to which Manager may be entitled
as a matter of law or which may be lawfully granted to Manager.
The Indemnified Party shall give the Managed Entity prompt written notice of any such action,
suit or proceeding of which the Indemnified Party has knowledge and the Managed Entity shall
undertake the investigation and defence thereof on behalf of the Indemnified Party, including
employment of counsel acceptable to such Indemnified Party, and make payment of all expenses.
No admission of liability and no settlement of any action, suit or proceeding shall be made without
the consent of the Managed Entity and the Indemnified Parties affected, such consent not to be
unreasonably withheld.
Notwithstanding that the Managed Entity shall undertake the investigation and defence of any
action, suit or proceeding, an Indemnified Party shall have the right to employ separate counsel in
any such action, suit or proceeding and participate in the defence thereof, but the fees and expenses
of such counsel shall be at the expense of the Indemnified Party unless:
(a)
(b)
(c)
employment of such counsel has been authorised by the Managed Entity;
the Managed Entity has not assumed the defence of the action, suit or proceeding
within a reasonable period of time after receiving notice thereof;
the named parties to any such action, suit or proceeding include both the Managed
Entity and the Indemnified Party and the Indemnified Party shall have been advised
by counsel that there may be a conflict of interest between the Managed Entity and
the Indemnified Party; or
(d)
there are one or more legal defences available to the Indemnified Party which are
different from or in addition to those available to the Managed Entity.
It is the intention of the Managed Entity to constitute Manager as trustee for the other under this
Section 8.1 and Manager agrees to accept such trust and to hold and enforce such covenants on
behalf of Indemnified Parties.
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Each of the Managed Entity and Manager shall use their reasonable commercial endeavours to
ensure that the relevant policies of insurance maintained by them contain waivers of subrogation
as against one another.
The provisions of Article 8 shall survive termination of this Agreement.
ARTICLE 9
CONFIDENTIALITY AND NON-SOLICITATION
9.1
Confidentiality
Each Party shall use the Confidential Information of the other Party only for the purposes
contemplated by this Agreement. The Receiving Party shall use commercially reasonable efforts
to ensure that the Confidential Information of a Disclosing Party is not used, disclosed, published,
released, transferred or otherwise made available in any form to, for the use or benefit of, any
person (other than its Affiliates) except as provided in this Article 9, without such Disclosing
Party’s approval, which may be unreasonably withheld. Each Receiving Party shall, however, be
permitted to disclose relevant aspects of a Disclosing Party’s Confidential Information to its
officers and employees, and to the officers and employees of its Affiliates, to the extent that such
disclosure is reasonably necessary for the performance of its duties and obligations under this
Agreement; provided, however, that such Party shall take all commercially reasonable measures
to ensure that Confidential Information of another Party is not disclosed or duplicated in
contravention of the provisions of this Agreement by such officers and employees and such
officers and employees are familiar with the requirements of this Article 9. A Receiving Party shall
also be permitted to disclose relevant aspects of a Disclosing Party’s Confidential Information to
its directors, professional advisors, subcontractors, suppliers and agents on such terms which are
reasonable considering the sensitivity of the Confidential Information, legal requirements and the
identity of the disclosee, which terms shall at least include the requirements set forth in this Section
9.1. The obligations in this Article 9 shall not restrict any disclosure by any Receiving Party
pursuant to:
(1)
(2)
(3)
any Applicable Law;
by order of any court of competent jurisdiction or Governmental Authority;
disclosure as is required in the course of arbitral or judicial proceedings to
enforce rights or remedies under this Agreement,
providing that the Receiving Party has taken all reasonable steps to obtain an arbitral or judicial
order to close such proceedings and files relating to such information to all Persons other than the
parties thereto, unless such process has been waived in writing by the Party whose Confidential
Information is to be disclosed, provided that the Receiving Party shall endeavour to give prompt
notice to the Disclosing Party of any such requirement to disclose.
For greater certainty, for purposes of this Article 9, Confidential Information does not include
information that is demonstrated by the Receiving Party to have been:
- 18 -
(a)
(b)
(c)
(d)
at any time generally available to the public, other than by reason of the Receiving
Party’s failure to comply with the terms hereof;
lawfully obtained by the Receiving Party from a third party who is, to the best of
the knowledge of the Receiving Party, not under an obligation of confidentiality
with respect to such Information;
in the Receiving Party’s possession prior to the date the same Information is
obtained hereunder; or
ascertained or developed independently by the Receiving Party without reference
to the Information obtained hereunder.
9.2
Injunctive Relief
Each Receiving Party recognizes that its unauthorized disclosure of Confidential Information of a
Disclosing Party may give rise to irreparable injury to the Disclosing Party and acknowledges that
remedies other than injunctive relief may not be adequate. Accordingly, each Party has the right
to seek equitable and injunctive relief on an interim and interlocutory basis in any court of
competent jurisdiction to prevent the unauthorized possession, use, or disclosure or knowledge of
any Confidential Information of that Party, as well as to such damages or other relief as is
occasioned by such unauthorized possession, use, disclosure or knowledge.
9.3
Return of Confidential Information
Each Party shall:
(a)
(b)
(c)
at the request of the Disclosing Party at any time;
after the Receiving Party’s need for it has expired; or
in connection with the termination of this Agreement, whether in whole or in part,
promptly return to the Disclosing Party, or use all commercially reasonable efforts to erase and
destroy, all of the Confidential Information of the Disclosing Party in its possession or control or
such portion of it as has been requested by the Disclosing Party; provided that the Receiving Party
shall only be required to use reasonable efforts to return or destroy any Confidential Information
stored electronically, and the Receiving Party shall not be required to return or destroy any
electronic copy of Confidential Information created pursuant to its standard electronic backup and
archival procedures, provided further that: (i) personnel whose functions are not primarily
information technology in nature do not access such retained copies; and (ii) personnel whose
functions are primarily information technology in nature access such copies only as reasonably
necessary for the performance of their information technology duties (e.g., for purposes of system
recovery). Notwithstanding the foregoing provisions of this Section 9.3(c), the Receiving Party
may retain: (x) a list of all Confidential Information so as to be able to identify the nature of the
Confidential Information that the Receiving Party has returned or destroyed; provided, however,
that a copy of such list is provided to the Disclosing Party contemporaneously with the return or
- 19 -
destruction of such Confidential Information; and (y) any Confidential Information referred to in
minutes of a meeting of the Receiving Party’s board of directors or a committee thereof.
9.4
Non-Solicitation
Except with the prior written permission of the Manager, neither the Managed Entity, nor any of
its representatives, will solicit or cause to be solicited, for employment or consulting engagement
with the Managed Entity or its affiliates, any employee of the Manger or any person who performs
functions on behalf of the Manager that are similar to those ordinarily performed by employees.
For the purposes of this section, solicitation shall not include solicitation of employees where such
solicitation is solely through advertising in periodicals of general circulation, the internet or an
employee search firm on behalf of a party or its representatives, so long as the party or its
representative did not direct or encourage such search firm to solicit a specifically named employee
of the Manager.
9.5
Survival
This Article 9 shall survive the termination or expiry of this Agreement for a period of two years
from the date of such termination or expiry.
ARTICLE 10
FORCE MAJEURE
10.1 Force Majeure
(a)
Neither Party shall be liable for a failure or delay in the performance of its
obligations pursuant to this Agreement, provided that such failure or delay is
caused, directly or indirectly, by fire, flood, earthquake, elements of nature or acts
of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, or
strikes, lock outs or labour disruptions, acts of any Governmental Authorities
having jurisdiction, the issuance or promulgation of any Applicable Law, inability
to obtain or delays by a Governmental Authority in granting or issuing any
necessary license, permit or authorization, actions or interference by local
communities, aboriginal peoples or non-governmental organizations, interruptions
or shortages of labour, transportation, fuel, electricity, materials, machinery,
equipment or parts, or any other causes beyond the reasonable control of such Party,
whether or not similar to the foregoing list of causes (each, a “Force Majeure
Event”). Lack of funds or finances shall not be a Force Majeure Event. Upon the
occurrence of a Force Majeure Event, the affected Party shall promptly deliver
notice to the other Party of the Force Majeure Event, particulars of the suspension
of performance and the expected duration thereof. Thereafter, the affected Party
shall, except as set out in Section 10.1(c), be excused from any further performance
of those of its obligations pursuant to this Agreement affected by the Force Majeure
Event only for so long as:
(i)
such Force Majeure Event continues and for so long thereafter as such Party
may reasonably require to alleviate the effect of the Force Majeure Event;
- 20 -
(ii)
(iii)
the affected Party continues to use commercially reasonable efforts to
recommence performance whenever and to whatever extent possible
without delay; and
the affected Party provides written updates to the other Party at reasonable
intervals as to the status of the Force Majeure Event, efforts to alleviate the
effect of the Force Majeure Event, efforts to recommence performance and
the expected duration of the Force Majeure Event.
(b)
(c)
If a Force Majeure Event prevents, or in all likelihood will prevent, Manager from
providing all or part of a Service, the Managed Entity may at its option, procure
any affected Service or portion thereof from alternate sources until Manager is
again able to provide such Service. Manager shall not be required to compensate
the Managed Entity for any costs and expenses relating to the services obtained
from such alternate sources.
Upon the occurrence of a Force Majeure Event, Managed Entity shall not be
excused from its obligation to pay the fee for the services; provided, however, that
if Section 10.1(b) is applicable, the Parties agree that the fees payable hereunder
shall be equitably reduced to reflect Services not received by the Managed Entity
from Manager during the duration of the Force Majeure Event.
ARTICLE 11
GENERAL PROVISIONS
11.1 Exchange Acceptance
This Agreement may be subject to the acceptance for filing thereof by the Exchange on which the
Managed Entity’s shares are listed for trading. If this Agreement is not accepted for filing by the
Exchange, the Parties will forthwith negotiate such amendments to this Agreement as may be
necessary to secure such acceptance for filing. If such amendments cannot be mutually agreed
upon, then either party may, by notice to the other, terminate this Agreement, provided that in such
case all amounts owing for Services pursuant to Section 2.1 incurred prior to the date of such
termination will be a debt of the Managed Entity owing to Manager and due and payable forthwith.
11.2 Further Assurances
A Party shall, upon request of the other Party, execute and deliver or cause to be executed and
delivered all such documents, deeds and other instruments of further assurance and do or cause to
be done all such acts and things as may be reasonably necessary or advisable to implement and
give full effect to the provisions of this Agreement.
11.3 Assignment
This Agreement shall not be assigned by the Managed Entity without the prior written consent of
Manager. Upon notice to the Managed Entity, Manager may transfer or assign any and all rights
granted hereunder to any of its successors or Affiliates.
- 21 -
11.4 Enurement
This Agreement shall enure to the benefit of and be binding upon the Parties and their respective
successors and permitted assigns.
11.5 Entire Agreement
This Agreement constitutes the entire agreement between the Parties pertaining to the subject
matter hereof and supersedes and replaces all prior understandings, agreements, negotiations or
discussions, whether written or oral, between the Parties with respect thereto. There are no
representations, warranties, terms, conditions, undertakings or collateral agreements or
understanding, express or implied, between the Parties other than those expressly set forth in this
Agreement.
11.6 Notice
Any notice required or permitted to be given hereunder shall be in writing and shall be properly
given, if delivered personally, or by mail or by facsimile or other similar form of communication
addressed:
(a)
to the Managed Entity at:
1154229 B.C. LTD.
Suite 210, 1333 Johnston St.
Vancouver, British Columbia
V6H 3R9
Attention: Morgan Poliquin
Facsimile No.: (604) 689-7645
(b)
to Manager at:
ALMADEN MINERALS LTD.
Suite 210, 1333 Johnston St.
Vancouver, British Columbia
V6H 3R9
Attention: Morgan Poliquin
Facsimile No.: (604) 689-7645
Any notice, direction or other instrument given as aforesaid shall be deemed to have been
effectively given, if sent by facsimile or other similar form of telecommunications on the next
business day following such transmission or, if delivered, to have been received on the date of
such delivery or, if mailed, to have been received seven days after the mailing thereof. Either Party
may change its address for service from time to time by notice given in accordance with the
foregoing and any subsequent notice shall be sent to the Party at its changed address.
- 22 -
11.7 Amendment
This Agreement may not be amended, changed, supplemented or otherwise modified in any respect
except by written instrument executed by the Parties hereto or their respective successors or
permitted assigns.
11.8 Severability
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as
to that jurisdiction, be ineffective to the extent of such prohibition or unenforceability and will be
severed from the balance of this Agreement, all without affecting the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
11.9 Counterpart Execution
This Agreement may be executed by facsimile or other electronic means and in any number of
counterparts and each of such counterparts shall for all purposes be deemed to be an original, and
all such counterparts shall together constitute one and the same instrument.
11.10 Effective Date
Notwithstanding the date or dates upon which this Agreement is executed by either Party, this
Agreement shall be in full force and effect between the Parties effective as of and from the date
first above written.
11.11 Arbitration
All disputes arising out of or in connection with this Agreement or in respect of any legal
relationship associated therewith or derived therefrom shall be referred to and finally resolved by
arbitration administered by the International Centre for Dispute Resolution (the “ICDR”) under
its International Arbitration Rules (the “Rules”). Upon referral of a dispute to arbitration, the
Parties will endeavor to agree on the appointment of a sole arbitrator, failing which the arbitrator
will be appointed in accordance with the ICDR Rules. The place of the arbitration shall be
Vancouver, British Columbia. The language of the arbitration shall be English.
- 23 -
IN WITNESS WHEREOF the Parties have caused this Agreement to be duly executed
as of the date and year first above written.
ALMADEN MINERALS LTD.
~ Per: ~ .. --...__
Name: Korm Trieu
Title: CFO
- 24 - SCHEDULE 4.1
Monthly Cost of the Personnel
The following are the Manager’s actual monthly costs of the Personnel as at the date of this
Agreement:
Position
Monthly Cost
Chairman of the Board of Directors
President and Chief Executive Officer
Vice President of Corporate Development
Chief Financial Officer
Senior Geologist
Accounting/Admin/Marketing Support
$4,000
$5,583
$3,533
$3,750
$1,667
$2,730
SCHEDULE 4.2
Shared Facilities
1.
The following is the physical address of the Shared Facilities
Suite 210, 1333 Johnston St.
Vancouver, British Columbia
V6H 3R9
Almaden Minerals Ltd.
Corporate Organizational Chart
December 31, 2018
Almaden Minerals Ltd.
(“Almaden”)
Canada
TSX: AMM
NYSE American: AAU
Molinos de Puebla
(“Molinos”)
Mexico
99.99%
Rock Creek Mill
Puebla Holdings Inc.
(“Puebla”)
Canada
100%
Minera Gorrión SA de CV
(“Gorrión”)
Mexico
49,999 shares
99.9%
Tuligtic / Ixtaca Project
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 14, 2019
/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 14, 2019
/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, 2018 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 14, 2019
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, 2018 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 14, 2019
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