Washington, D.C. 20549
For the transition period from _____________________
to ____________________
(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.
Securities registered or to be registered
pursuant to Section 12(g) of the Act.
Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act.
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.
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.
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.
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.
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
Registrant was required to submit and post such files).
Indicate by check mark weather the registrant is a large accelerated
filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer”
in Rule 12b-2 of the Exchange Act.
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:
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).
(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.
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”.
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 Qualified Persons with respect to the
work for which they are taking responsibility and that such persons are provided adequate documentation.
A study, other than a Pre-Feasibility or Feasibility Study, that
includes an economic analysis of the potential viability of mineral resources.
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.
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 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 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.
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.
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.
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 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.
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.
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.
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.
Unless otherwise indicated, all dollar ($) amounts referred to herein
are in Canadian dollars.
Statements contained in this Annual Report on Form 20-F of the Registrant,
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.
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
2017, Fiscal 2016 and Fiscal 2015 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 2014 and Fiscal 2013 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 3 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
|
|
Year
|
|
Year
|
|
Year
|
|
Year
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
12/31/2017
|
|
12/31/2016
|
|
12/31/2015
|
|
12/31/2014
|
|
12/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
220
|
|
Other Income (loss)
|
|
|
468
|
|
|
|
444
|
|
|
|
2,711
|
|
|
|
(9,496
|
)
|
|
|
-
|
|
Net loss and comprehensive loss
|
|
|
(5,231
|
)
|
|
|
(4,024
|
)
|
|
|
(1,145
|
)
|
|
|
(14,701
|
)
|
|
|
(6,357
|
)
|
Basic net (loss) income per common share
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.02
|
)
|
|
|
(0.23
|
)
|
|
|
(0.10
|
)
|
Diluted net (loss) income per common share
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.02
|
)
|
|
|
(0.23
|
)
|
|
|
(0.10
|
)
|
Weighted average shares (000)
|
|
|
95,873
|
|
|
|
82,323
|
|
|
|
73,249
|
|
|
|
66,331
|
|
|
|
62,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital
|
|
|
16,065
|
|
|
|
9,293
|
|
|
|
5,808
|
|
|
|
9,172
|
|
|
|
12,676
|
|
Exploration and evaluation assets
|
|
|
44,804
|
|
|
|
35,985
|
|
|
|
30,538
|
|
|
|
28,645
|
|
|
|
24,447
|
|
Net assets
|
|
|
64,730
|
|
|
|
45,221
|
|
|
|
35,983
|
|
|
|
39,637
|
|
|
|
47,891
|
|
Total assets
|
|
|
66,803
|
|
|
|
47,514
|
|
|
|
38,215
|
|
|
|
42,019
|
|
|
|
48,988
|
|
Capital stock
|
|
|
118,054
|
|
|
|
95,290
|
|
|
|
83,758
|
|
|
|
87,084
|
|
|
|
81,151
|
|
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$).
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 31
st
, 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
|
|
Average
|
|
High
|
|
Low
|
|
Close
|
Fiscal Year Ended 12/31/2017
|
|
$
|
1.30
|
|
|
$
|
1.37
|
|
|
$
|
1.21
|
|
|
$
|
1.25
|
|
Fiscal Year Ended 12/31/2016
|
|
|
1.32
|
|
|
|
1.46
|
|
|
|
1.25
|
|
|
|
1.34
|
|
Fiscal Year Ended 12/31/2015
|
|
|
1.28
|
|
|
|
1.40
|
|
|
|
1.17
|
|
|
|
1.38
|
|
Fiscal Year Ended 12/31/2014
|
|
|
1.10
|
|
|
|
1.16
|
|
|
|
1.06
|
|
|
|
1.16
|
|
Fiscal Year Ended 12/31/2013
|
|
|
1.03
|
|
|
|
1.07
|
|
|
|
0.98
|
|
|
|
1.06
|
|
Table No. 3
Canadian Dollar/U.S. Dollar Exchange Rates for Previous Six Months
|
|
September
2017
|
|
October
2017
|
|
November
2017
|
|
December
2017
|
|
January
2018
|
|
February
2018
|
High
|
|
$
|
1.25
|
|
|
$
|
1.29
|
|
|
$
|
1.29
|
|
|
$
|
1.29
|
|
|
$
|
1.25
|
|
|
$
|
1.28
|
|
Low
|
|
|
1.21
|
|
|
|
1.25
|
|
|
|
1.27
|
|
|
|
1.25
|
|
|
|
1.23
|
|
|
|
1.23
|
|
The exchange rate was CDN$1.29/US$1.00 on March 28, 2018.
Risk Factors
General Risk Factors Attendant to Resource Exploration and Development
Resource exploration and development is a speculative business,
characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the
failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and
quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected
by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations,
the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government
regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environment
protection, the combination of which factors may result in the Company not receiving an adequate return on investment capital.
Presently, the Company is in the exploration 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. The Company has financed its operations
principally through the sale of equity securities, entering into joint venture arrangements and the sale of its inventory of gold.
The recoverability of mineral properties is dependent on the establishment of economically recoverable reserves, the ability of
the Company to obtain the necessary financing to complete development and ultimately upon future profitable production or the realization
of proceeds from the disposition of the properties.
Uncertainty in Discovering Commercially Mineable Ore Deposits
There is no certainty that the expenditures to be made by the Company
in the exploration of its properties as described herein will result in discoveries of mineralized material in commercial quantities.
Most exploration projects do not result in the discovery of commercially mineable ore deposits and no assurance can be given that
any particular level of recovery of ore reserves will in fact be realized or that any identified mineral deposit will ever qualify
as a commercially mineable (or viable) ore body which can be legally and economically exploited. Estimates of reserves, mineral
deposits and production costs can also be affected by such factors as environmental permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In
addition, the grade of ore ultimately mined may differ from that indicated by drilling results. Short term factors relating to
ore reserves, such as the need for orderly development of ore bodies or the processing of new or different grades, may also have
an adverse effect on mining operations and on the results of operations. There can be no assurance that minerals recovered in small-scale
tests will be duplicated in large-scale tests under on-site conditions or in production scale. Material changes in ore reserves,
grades, stripping ratios or recovery rates may affect the economic viability of any project.
History of Net Losses, Lack of Cash Flow and Assurance of Profitability
The Company had net losses in a number of years since its date of
incorporation. Due to the nature of the Company’s business, there can be no assurance that the Company will be profitable.
The Company had net losses of $5,231,295 in Fiscal 2017, $4,023,504 in Fiscal 2016, and $1,144,525 in Fiscal 2015.
The Company currently has no revenues from operations as all of
its properties and prospects are in the exploration stage. There is no assurance that the Company will receive revenues from operations
at any time in the near future. During Fiscal 2017, 2016 and Fiscal 2015, the Company earned interest income and other income from
Administrative service fees charged to Almadex Minerals Limited (“Almadex”).
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.
Mineral Prices May Not Support Corporate Profit
The mining industry in general is intensely competitive and there
is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the
sale of same. Factors beyond the control of the Company may affect the marketability of any substances discovered. The price of
minerals is volatile over short periods of time, and is affected by numerous factors beyond the control of the Company, including
international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global
or regional consumption patterns, speculative activities and increased production due to improved mining techniques. Material changes
in mineral prices may affect the economic viability of any project.
Environmental Regulations
The current and anticipated future operations of the Company, including
development activities and commencement of production on its properties, require permits from various federal, territorial and
local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development,
mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally
experience increased costs, and delays in production and other schedules as a result of the need to comply with applicable laws,
regulations and permits. Such operations and exploration activities are also subject to substantial regulation under these laws
by governmental agencies and may require that the Company obtain permits from various governmental 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 environment protection. The Company is also subject to various reclamation-related
conditions. 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 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.
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.
Volatility of Share Price
Market prices for shares of early stage companies are often volatile.
Factors such as announcements of mineral discoveries, exploration and financial results, and other factors could have a significant
effect on the price of the Company’s shares.
Material Risk of Dilution Presented by Large Number of Outstanding
Share Purchase Options and Warrants
As of March 28, 2018, there were share purchase options outstanding
allowing the holders of these options to purchase 9,590,000 shares of common stock and warrants allowing the holders of these warrants
to purchase 8,132,262 shares of common stock. Directors and officers of the Company hold 8,112,000 of these share purchase options
and 50,000 of these warrants. An additional 1,478,000 share purchase options are held by employees and consultants of the Company.
Given the fact that as of March 28, 2018 there were 102,199,625 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 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 15%.
No Proven Reserves
The properties and prospects in which the Company has an interest
or the properties in which the Company has the right to earn an interest are in the exploration and development stage only, are
without a known body of economically viable ore and are not in commercial production. If the Company does not ultimately find a
body of economically recoverable ore, it would either have to acquire additional exploration projects, or terminate its operations.
Uncertainty of Reserves and Mineralization Estimates
There are numerous uncertainties inherent in estimating proven and
probable reserves and mineralization, including many factors beyond the control of the Company. The estimation of reserves and
mineralization is a subjective process and the accuracy of any such estimates is a function of the quality of available data and
of engineering and geological interpretation and 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.
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. The new taxes and royalties may also 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 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.
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 Almadex Minerals Limited. 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 President, CEO and director of Big Sky Petroleum Corporation, and Mountain Boy Minerals Ltd. He also
serves as Executive Chairman of Alianza Minerals Ltd., and director and/or officer of Avrupa Minerals Ltd., Strategem Capital Corp.,
Paget Minerals Corp, Sutter Gold Mining Ltd., Affinor Growers Ltd., Redstar Gold Corp., Orestone Mining Corp. and Adamera Minerals
Corp. David Strang also serves as a director, CEO and President of Ero Copper Corporation. 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.
Foreign Operations
The Company currently has exploration projects located in Mexico.
The Company’s foreign activities are subject to the risk 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 risk
that could cause exploration or development difficulties or stoppages, restrict the movement of funds or result in the deprivation
or loss of contract rights or the taking of property by nationalization or expropriation without fair compensation. Foreign operations
could also be adversely impacted by laws and policies of the U.S. affecting foreign trade, investment and taxation.
Foreign Currency Fluctuations
At the present time, some of the Company’s activities are
carried on outside of Canada. Accordingly, it is subject to risks associated with fluctuations of the rate of exchange between
the Canadian dollar and foreign currencies.
The Company is currently not engaged in currency hedging to offset
any risk of exchange rate fluctuation and currently has no plans to engage in currency hedging.
Operating Hazards and Risks Associated with the Mining Industry
Mining operations generally involve a high degree of risk, which
even a combination of experience, knowledge and careful evaluation may not be able to overcome. Hazards such as unusual or unexpected
geological formations and other conditions are involved. Operations in which the Company has a direct or indirect interest will
be subject to all the hazards and risks normally incidental to exploration, development and production of minerals, any of which
could result in work stoppages, damage to or destruction of mines and other producing facilities, damage to or loss of life and
property, environmental damage and possible legal liability for any or all damage or loss. The Company may become subject to liability
for cave-ins and other hazards for which it cannot insure or against which it may elect not to insure where premium costs are disproportionate
to the Company’s perception of the relevant risks. The payment of such insurance premiums and the incurring of such liabilities
would reduce the funds available for exploration activities.
The Ability to Manage Growth
Should the Company be successful in its efforts to develop its mineral
properties or to raise capital for such development or for the development of other mining ventures it will experience significant
growth in operations. If this occurs management anticipates that additional expansion will be required in order to continue development.
Any expansion of the Company’s business would place further demands on its management, operational capacity and financial
resources. The Company anticipates that it will need to recruit qualified personnel in all areas of its operations. There can be
no assurance that the Company will be effective in retaining its current personnel or attracting and retaining additional qualified
personnel, expanding its operational capacity or otherwise managing growth. The failure to manage growth effectively could have
a material adverse effect on the Company's business, financial condition and results of operations.
Lack of a Dividend Policy
The Company does not intend to pay cash dividends in the foreseeable
future, as any earnings are expected to be retained for use in developing and expanding its business. However, the actual amount
of dividends which the Company may pay will remain subject to the discretion of the Company’s Board of Directors and will
depend on results of operations, cash requirements and future prospects of the Company and other factors.
Competition
There is competition from other mining exploration companies with
operations similar to those of the Company's. Many of the mining companies with which the Company competes have operations and
financial strength many times greater than that of the Company. Such competitors could outbid the Company for such projects, equipment
or personnel, or produce minerals at a lower cost which would have a negative effect on the Company’s operations and financial
condition.
Dependence on Key Personnel
The Company depends highly on the business and technical expertise
of its management and key personnel, in particular, Duane Poliquin and Morgan Poliquin. There is little possibility that this dependence
will decrease in the near term. As the Company’s operations expand, additional general management resources 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.
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.
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 declared a PFIC, then owners of the Company’s
shares who are U.S. taxpayers generally will be required to treat any so-called "excess distribution" received on its
shares, or any gain realized upon a disposition of shares, as ordinary income and to pay an interest charge on a portion of such
distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market election
with respect to the Company’s shares. A U.S. taxpayer who makes a QEF election generally must report on a current basis its
share of the Company’s net capital gain and ordinary earnings for any year in which the Company is classified as a PFIC,
whether or not the Company distributes any amounts to its shareholders.
Item 4. Information on the Company
History and Development of the Company
The head office of the Registrant (sometimes referred to in this
Annual Report on Form 20-F as “Almaden” or 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, Almadex Minerals Limited (“Almadex”), as described below.
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 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 two wholly-owned subsidiaries that were
formed to hold properties in their respective jurisdictions. These subsidiaries are:
Subsidiaries
|
Jurisdiction
|
|
Nature of operations
|
Puebla Holdings Inc.
|
Canada
|
|
holding company
|
Minera Gorrion, S.A. de C.V.
|
Mexico
|
|
exploration company
|
The Company formerly had an additional eight wholly-owned subsidiaries.
However, during Fiscal 2015, these subsidiaries were spun out to Almadex as part of the Plan of Arrangement as described below.
The eight formerly wholly-owned subsidiaries are:
Former Subsidiaries
|
Jurisdiction
|
|
Nature of operations
|
Almaden America Inc.
|
USA
|
|
exploration company
|
Republic Resources Ltd.
|
Canada
|
|
service company
|
Ixtaca Precious Metals Inc.
|
Canada
|
|
holding company
|
Pangeon Holdings Ltd.
|
Canada
|
|
holding company
|
Almaden de Mexico, S.A. de C.V.
|
Mexico
|
|
exploration company
|
Minera Gavilan, S.A. de C.V.
|
Mexico
|
|
exploration company
|
Compania Minera Zapata, S.A. de C.V.
|
Mexico
|
|
exploration company
|
Minera Alondra, S.A. de C.V.
|
Mexico
|
|
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 Almadex, which trades on the TSX Venture Exchange under the
symbol “AMZ” and the OTCQX marketplace under the symbol “AXDDF”. Almadex would hold 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,
many of which are located in eastern Mexico in geological environments similar to the Company’s Ixtaca and Caballo Blanco
discoveries;
|
•
|
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 Almadex.
The Company has also entered into an Administrative Services Agreement
with Almadex 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 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 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. Almadex pays the Company
any reasonable fees or costs incurred on behalf of Almadex by the Company which were approved by Almadex.
The Agreement has an initial 5-year term, with subsequent automatic
1-year renewals unless terminated pursuant to the terms permitted under the Agreement. The Agreement includes a Change of Control
clause. If either party is subject to a 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 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 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 mineral and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination
of these factors may make it difficult for 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, 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 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/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 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
Property using gravel roads from the northeast via Tezhuitan and Cuyoaco, from the south via Libres and from the northwest via
Chignahuapan. The X
icohtencatl Industrial complex lies 30 km southwest by paved road from
the Tuligtic 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 Project 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 average temperatures ranging from 19°C in June to 10°C in December. The area experiences
about 600 mm of precipitation annually with the majority falling during the rainy season, between June and September. Exploration
can be conducted year round within the Property. Electricity is available on the Property as the national electricity grid services
nearby towns such as Santa Maria and Zacatepec. Water for exploration is available from year-round natural springs located at higher
elevations above and upstream of the Ixtaca deposit. The surface rights locally are privately owned and where Almaden is exploring
the Company has negotiated surface land use agreements with surface rights landowners.
Claims and Title
The Tuligtic property was staked by the Company 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 an application 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. Claim details are summarized below.
Claim Name
|
Claim Number
|
Area (hectares)
|
Valid Until Date
|
Cerro Grande R1
|
245486
|
2,773.00
|
March 5, 2053
|
Cerro Grande R3
|
245488
|
824.06
|
March 5, 2053
|
Cerro Grande R4
|
245489
|
540.00
|
March 5, 2053
|
Cerro Grande R5
|
245490
|
784.97
|
March 5, 2053
|
Cerro Grande R6
|
245491
|
937.79
|
March 5, 2053
|
Cerro Grande 2 R2
|
245493
|
652.00
|
February 23, 2059
|
Cerro Grande 2 R3
|
245494
|
708.00
|
February 23, 2059
|
Total
|
|
7,219.82
|
|
To maintain a claim in good standing, the holder is required to
meet annual exploration or exploitation expenditure requirements. Currently, the property is subject to expenditure requirements
of C$1.3 million 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
Within the Tuligtic Project, argillaceous limestone of the Late
Jurassic to Early Cretaceous Upper Tamaulipas formation is underlain by transitional calcareous clastic rocks including siltstone,
grainstone, mudstone, and calcareous shale. During the Laramide orogeny the carbonate package was intensely deformed into a series
of thrust-related east verging anticlines. Calcareous shale units appear to occupy the cores of the anticlines while the thick
bedded limestone/mudstone units occupy the cores of major synclines at the Ixtaca Zone. These carbonate basement units are crosscut
by intensely altered intermediate composition dykes in the Tertiary. The deformed Mesozoic sedimentary sequence is discordantly
overlain by epithermal altered Cenozoic bedded crystal tuff of the upper Coyoltepec subunit. The Coyoltepec volcanics are locally
oxidized and weathered near surface and along structures.
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 unoxidised
and 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 veining of Ixtaca epithermal system
displays characteristics representative of intermediate and low sulphidation deposits. These include typical ore and gangue mineralogy
(electrum, sphalerite, galena, adularia, carbonates), mineralization dominantly in open space veins (colloform banding, cavity
filling).
Mineralized hydrothermal breccias showing multiphase development
are commonly encountered within the main veins. Hydrothermal silicic/carbonate breccia zones occur within the limestone and dip
steeply. These breccias are dominantly controlled by the main faults.
The Upper Tamaulipas formation, the dykes that crosscut it and the
upper Coyoltepec volcanic subunit are the main host rocks to the epithermal vein system at Ixtaca. In the Main and Ixtaca North
zones veining strikes dominantly ENE-WNW (060 degrees) parallel to a major dyke trend and at a very high angle to the N to NNW
bedding and fold structures within the limestones. The veins of the Chemalaco Zone are hosted by the shaley carbonate units and
strike to the NNW, dipping to the SSW. In the footwall to Chemalaco Zone a parallel dyke has been identified which is altered and
mineralized. The Chemalaco Zone and the dyke are interpreted to strike parallel to bedding and to core an antiform comprised of
calcareous shale.
Studies of mineral assemblages in hand specimen, transmitted and
reflected light microscopy and SEM analyses were carried out in order to construct a paragenetic sequence of mineral formation.
This work revealed that veining occurred in three main stages. The first stage is barren calcite veining. This is followed by buff
brown and pink colloform carbonate and silicate veins containing abundant silver minerals and lower gold. The third stage of veining
contains both gold and silver mineralization. The dominant gold-bearing mineral is electrum, with varying Au:Ag ratios. The majority
of grains contain 40-60 wt (weight) % gold but a few have down to 20 wt% (Staffurth, 2012). Gold content occasionally varies within
electrum grains, and some larger grains seem to be composed of aggregates of several smaller grains of differing composition (Staffurth,
2012). Electrum often appears to have been deposited with late galena-clausthalite both of which are found as inclusions or in
fractures in pyrite. It is also closely associated with silver minerals such as uytenbogaardtite (Ag
3
AuS
2
).
This mineral is associated with electrum, chalcopyrite, galena, alabandite, silver minerals and quartz in stage three mineralization.
Apart from electrum, the dominant silver bearing minerals are polybasite (-pearceite) and argentian tetrahedrite plus minor acanthite-naumannite,
pyrargyrite and stephanite. They are associated with sulphides or are isolated in gangue minerals.
The vein-related mineralization at Ixtaca does not have hard geologic
boundaries. The mineralized zones are essentially vein zones, the outer boundaries of which are grade boundaries associated with
decreased vein density.
History of Past Work
To the Company’s knowledge, no modern exploration was carried
out on the project prior to Almaden’s acquisition of the property area by staking in 2001. Evidence of historic mining of
clay (kaolinite) deposits from surface is evident throughout the property area. Almaden acquired the initial claims of the Tuligtic
Project in 2001 following the identification of surficial clay deposits that were interpreted to represent high-level epithermal
alteration. Subsequent geologic mapping, rock, stream silt, soil sampling and induced polarization (IP) geophysical surveys identified
porphyry copper and epithermal gold targets within an approximately 5 x 5 km area of intensely altered rock.
On May 9, 2002 Almaden entered into a joint venture agreement with
BHP Billiton World Exploration Inc. (BHP) to undertake exploration in eastern Mexico. Initial helicopter-borne reconnaissance programs
were completed in May 2003 and March 2004 on select targets within the joint venture area of interest. The work resulted in the
acquisition of five (5) separate properties, in addition to the previously acquired Cerro Grande of the present day Tuligtic Property.
Following a review of the initial exploration data, effective January 20, 2005, BHP relinquished its interest in the six properties
to Almaden. The joint venture was terminated in 2006.
Later in 2006, the Tuligtic project was optioned to Pinnacle Mines
Ltd. In 2007 this option agreement was terminated. In 2009 the property was optioned to Antofagasta Minerals S.A. under terms whereby
it could earn a 75% interest in the property. In 2009 and 2010 Antofagasta Minerals S.A., under Almaden operation, conducted a
geophysical and exploration drilling program on the copper porphyry area of the project. The program consisted of three lines of
IP geophysics and 2,522 meters of diamond drilling in six holes. The IP chargeability results, along with that of previous programs
carried out by Almaden, defined a 2 by 2.5 kilometer chargeability high the limits of which are currently only defined to the west
and south. The drilling intersected skarn and porphyry copper-molybdenum mineralization in an intrusive complex. Four of the six
drill holes were oriented within thirty degrees of north south and located within a 200 by 300 meter area roughly in the central
portion of the IP chargeability anomaly. These holes were selected based on intensely altered and quartz-veined porphyry exposed
in the drainages in the central portion of the chargeability anomaly. The drilling program encountered sub economic porphyry mineralization.
The mineralized intersections, despite being largely in skarn and uneconomic, are considered by the Company to be encouraging for
the greater porphyry potential of the system. Antofagasta Minerals S.A. terminated its option on the project in March 2010.
In July 2010 Almaden initiated a diamond drilling program on the
gold-silver epithermal vein target area of the project located roughly 1 kilometer to the south of the porphyry prospect on the
project. The first hole in this program (results announced in August 2010) intersected a zone of banded carbonate-quartz epithermal
veining with gold and silver values. This hole constitutes the discovery of the Ixtaca Zone of veining. The entire hole cut through
a vein zone of varying intensity of veining and intersected 302.41m of 1.01 g/t Au & 48 g/t Ag. Within this broad zone of veining
several higher grade veins were intersected including 44.35 meters of 2.77 g/t Au and 117.7 g/t Ag. Immediately after this discovery
the Company initiated a follow-up drill program. Between 2010 and 2013, Almaden’s exploration at the Ixtaca Zone of the Tuligtic
Property included geologic mapping and prospecting, alteration mineralogic characterization, rock and soil geochemical sampling,
ground magnetics, IP and resistivity, Controlled Source Audio-frequency Magnetotelluric (CSAMT), and Controlled Source Induced
Polarization (CSIP) geophysical surveys resulting in the identification of several anomalous zones.
Present Condition of Project
Geology and Mineral Resources
The Tuligtic Property covers a roughly 5 by 5 kilometre area of
high level epithermal alteration characterised by 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 epithermal system is hosted
by both volcanic rocks and older carbonate units. Minor disseminated and vein mineralisation is hosted by the volcanic rocks (referred
to as tuff, ash and volcanics). The bulk of the deposit is hosted by the carbonate units as vein swarms.
The Ixtaca deposit is a low sulphidation epithermal vein system.
Most of the gold silver mineralisation occurs as zones of high grade vein and veinlets (vein swarms) in the carbonate basement
units. A small portion of the gold silver mineralisation occurs above the unconformity as disseminated mineralisation in the altered
volcanic rocks. The mineralisation is not oxidised and is hosted by classic banded and colloform low-sulphidation style carbonate-quartz
veining. To date two main vein orientations have been identified in the Ixtaca deposit:
•
|
060 degrees trending sheeted veins hosted by limestone;
|
•
|
330 degrees trending veins hosted by shale;
|
|
|
|
On January 31, 2013, the Company announced a maiden resource on
the Ixtaca Zone. Subsequent drilling focused on expanding and infilling the known resource base for the Preliminary Economic Assessment
(PEA) which utilised the NI 43-101 Compliant Updated Mineral Resource Estimate released January 22, 2014. The data available for
the maiden resource estimation consisted of 423 drill holes assayed for gold and silver. The estimate was constrained by three
dimensional solids representing different lithologic and mineralized domains. Of the total drill holes 400 intersected the mineralized
solids and were used to make the resource estimate. Capping was completed to reduce the effect of outliers within each domain.
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.
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 held by Almadex Minerals Limited.
|
|
|
|
Rock Creek Mill
Subsequent to the issuance of the Updated Mineral Resource Estimate,
Almaden entered into an option agreement to acquire the Rock Creek Mill in October 2015. Rock Creek 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 on maintenance.
The 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.
Under the option agreement, Almaden has the exclusive right and
option to purchase the Mill and related assets for a total of US$6,500,000, subject to adjustment under certain circumstances,
under the following terms:
On execution of agreement
|
US$250,000
|
Paid
|
On or before December 31, 2015
|
US$250,000
|
Paid
|
On or before March 31, 2016
|
US$250,000
|
Paid
|
On or before June 15, 2017
|
US$2,000,000
|
Paid
|
On or before June 15, 2018
|
US$3,750,000
|
|
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.
The Rock Creek Mill purchase price was substantially less than the
estimated cost of new equipment included in the original PEA and is incorporated into the new costs estimates for the Ixtaca Preliminary
Feasibility Study.
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 includes
an updated resource model. The mine production schedule includes the optioned Rock Creek Mill while targeting higher grades earlier,
and uses smaller, payback focused starter pits.
HIGHLIGHTS
(base case uses US$1250/oz gold and US$18/oz silver prices)
:
•
|
Pre-tax NPV(5%) of US$484 million and internal rate of return of 54%;
|
•
|
After-tax NPV(5%) of US$310 million and internal rate of return of 41%;
|
•
|
Initial Capital of US$117 million;
|
•
|
After-tax payback of initial capital in 2.2 years;
|
•
|
Total Life of Mine production of 1.04 million ounces of gold and 70.9 million ounces
of silver doré produced on site (2.07 million gold equivalent ounces, or 143 million silver-equivalent ounces at a 69:1
silver to gold ratio);
|
•
|
Average annual production over the first 9 years of 88,780 ounces gold and 5.47
million ounces silver (168,100 gold equivalent ounces, or 11.6 million silver equivalent ounces);
|
•
|
Operating cost US$706 per gold equivalent ounce, or US$10.20 per silver equivalent
ounce;
|
•
|
All-in Sustaining Costs (“AISC”), including operating costs, sustaining
capital, expansion capital, private and public royalties, refining and transport of US$862 per gold equivalent ounce, or US$12.50
per silver equivalent ounce;
|
•
|
Proven and Probable Mineral Reserves of 65 million tonnes averaging 0.62 g/t gold
and 37.8 g/t silver (average head grade of 1.16 g/t gold equivalent using a 69:1 silver to gold ratio).
|
|
|
|
Mineral Resource Estimate
The mineral resource estimate at the Ixtaca Zone encompasses the
Ixtaca Main, North, and Chemalaco Zones. 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. Between that time and publication of the PFS, 33,618 metres of drilling
were completed in 122 holes, and this data was also included in the current Mineral Resource Estimate. A total of 472 drill holes
intersected the mineralized 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 semi-variograms 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.
The Base Case uses a 0.3g/t gold equivalent (“AuEq”)
Cut-off, with 0.5, 0.7 and 1.0 g/t results included. The AuEq calculation is based upon average prices of US$1250/oz gold and US$18/oz
silver.
Cautionary Note to U.S. Investors concerning estimates of Measured
and Indicated Resources
This section uses the terms “measured resources”
and “indicated resources”. We advise U.S. investors 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.
MEASURED RESOURCE
|
AuEq Cut-off
|
Tonnes > Cut-off
|
Grade>Cut-off
|
Contained Metal x 1,000
|
(g/t)
|
(tonnes)
|
Au (g/t)
|
Ag (g/t)
|
AuEq (g/t)
|
Au (ozs)
|
Ag (ozs)
|
AuEq (ozs)
|
0.30
|
42,450,000
|
0.57
|
35.74
|
1.09
|
779
|
48,780
|
1,482
|
0.50
|
30,940,000
|
0.71
|
44.39
|
1.34
|
701
|
44,160
|
1,337
|
0.70
|
23,310,000
|
0.83
|
52.47
|
1.59
|
625
|
39,320
|
1,192
|
1.00
|
16,430,000
|
1.01
|
62.28
|
1.91
|
533
|
32,900
|
1,006
|
|
INDICATED RESOURCE
|
AuEq Cut-off
|
Tonnes > Cut-off
|
Grade>Cut-off
|
Contained Metal x 1,000
|
(g/t)
|
(tonnes)
|
Au (g/t)
|
Ag (g/t)
|
AuEq (g/t)
|
Au (ozs)
|
Ag (ozs)
|
AuEq (ozs)
|
0.30
|
83,370,000
|
0.45
|
22.54
|
0.77
|
1,195
|
60,410
|
2,064
|
0.50
|
50,220,000
|
0.60
|
29.56
|
1.02
|
964
|
47,730
|
1,650
|
0.70
|
32,280,000
|
0.75
|
35.72
|
1.26
|
776
|
37,070
|
1,311
|
1.00
|
18,260,000
|
0.97
|
43.47
|
1.59
|
568
|
25,520
|
936
|
Cautionary Note to U.S. Investors concerning estimates of
Inferred
Resources
This section uses the term “inferred resources”.
We advise U.S. investors 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
|
AuEq Cut-off
|
Tonnes > Cut-off
|
Grade>Cut-off
|
Contained Metal x 1,000
|
(g/t)
|
(tonnes)
|
Au (g/t)
|
Ag (g/t)
|
AuEq (g/t)
|
Au (ozs)
|
Ag (ozs)
|
AuEq (ozs)
|
0.30
|
47,050,000
|
0.30
|
19.15
|
0.58
|
457
|
28,970
|
874
|
0.50
|
19,860,000
|
0.45
|
27.31
|
0.85
|
288
|
17,440
|
540
|
0.70
|
10,260,000
|
0.61
|
32.98
|
1.09
|
202
|
10,880
|
359
|
1.00
|
4,430,000
|
0.88
|
38.50
|
1.43
|
125
|
5,480
|
204
|
A mining design, cost model and production schedule have been developed
for the Ixtaca Zone, focused on the near surface high grade limestone hosted portions of the Ixtaca Zone deposit. The mine schedule
includes an open pit mining operation with a process plant to produce gold and silver dore. The plant will operate initially at
an average plant throughput of 7,650 tonnes per day (tpd) and expanding to 15,300 tpd by Year 5. The process plant is designed
to be the Rock Creek Mill relocated to the property and includes conventional crushing, grinding, gravity, floation, and concentrate
leaching using Carbon in pulp (CIP). In the PFS the limestone host rock comprised 82% of the metal produced, volcanic 8% and black
shale 10% on a gold-equivalent basis using a 69:1 silver to gold ratio.
Mining will utilize a contractor owned an operated fleet. A series
of pit optimizations have been completed using the resource block model, applying a range of metal prices and recoveries, estimated
costs for mining, processing, and pit slopes. The operational pits are designed based on the optimized shell, and the potentially
mineable portion of the resource is estimated within those pits. The ultimate pit contains a total of 65.1 million tonnes of mill
feed at strip ratio of 5.01:1. The mill feed tonnages include a mining loss dilution. Mineral Reserves are shown in the below table
assuming an NSR cut-off grade of $15.40/t and are stated as Run of Mine (ROM) which represents tonnes of ore delivered to the mill.
Mining recovery is 95% for all rock-types. All Inferred Resource Class material is treated as waste in calculating economic pit
limits and in subsequent reserves reporting, scheduling and economics. The total mineable reserves from the Pre-Feasibility Study
are given below:
Recovered In-pit Resources and Diluted Grade
|
|
Run of Mine
Tonnes
|
Diluted Average Grades
|
Contained Metal
|
|
(millions)
|
Au (g/t)
|
Ag (g/t)
|
Au – ‘000 ozs
|
Ag – ‘000 ozs
|
Proven
|
28.4
|
0.68
|
45.0
|
623
|
41,032
|
Probable
|
36.8
|
0.57
|
32.0
|
669
|
37,793
|
TOTAL
|
65.1
|
0.62
|
37.7
|
1,292
|
78,825
|
Notes:
|
1.
|
Mineral
Reserves have an effective date of March 30, 2017. All Mineral Reserves are Proven and
Probable, and are not in addition to Mineral Resources, but are a subset thereof. All
Mineral Reserves account for mining loss and dilution.
|
|
2.
|
Reserves
are converted from resources through the process of pit optimization, pit design, production
schedule and supported by a positive cash flow model.
|
|
3.
|
Reserves
are based on a gold price of US$1,250/oz and silver price of US$18.00, and an exchange
rate of US$1.00 to MXP20.00.
|
|
4.
|
Associated
metallurgical recoveries of gold and silver, respectively, have been estimated at 90%
and 90% for limestone, 50% and 90% for volcanic, and 50% and 90% for black shale.
|
Estimated mining inventory is comprised of 326 million tonnes of
rock and 65 million tonnes of mill feed with an average mill feed grade of 0.62 grams per tonne gold and 37.7 grams per tonne silver.
A total of 1.04 million ounces of gold and 70.9 million ounces of silver would be produced over the 14 year mine life.
The ultimate open pit is separated into seven mining phases. The
mine plan consists of one year of pre-stripping (prior to ore processing start-up), and fourteen years of open pit mining. Stockpile
reclaim will be fed to the processing facility throughout the mine life. All open pit ore and reclaimed stockpile material will
be fed to a primary crusher near the pit rim and transported to the processing facility on an overland conveyor.
Processing will use the Rock Creek Mill which was optioned by the
Company in October 2015. The plant will operate initially at an average throughput of 7,650 tpd and expanding to 15,300 tpd by
year 5, producing gold and silver doré on site. The process plant includes the following key design criteria:
•
|
Three-stage crushing followed by grinding to P80 passing 75 microns;
|
•
|
Gravity concentration with intensive leaching of gravity concentrate;
|
•
|
Flotation of gravity concentration tails;
|
•
|
Carbon-in-Pulp (CIP) to recover gold and silver from flotation concentrate and gravity leach tails;
|
•
|
An elution circuit to strip loaded carbon, electrowinning and smelting to produce a precious metal doré;
|
•
|
Cyanide destruction;
|
•
|
Final tailings are thickened, then delivered to the tailings management facility.
|
|
|
|
The following table summarizes the production and processing parameters:
Projected Production and Processing Summary
|
Ore Reserves
|
65 million tonnes
|
Average Processing Rate
|
7,650 tpd Year 1 to 4, 15,300 tpd Year 5 onwards
|
Life of Mine (LOM) Strip Ratio
|
5 : 1
|
|
|
|
Gold
|
Silver
|
Average Mill Feed Grade
|
0.62 g/t
|
37.7 g/t
|
Average Process Recoveries
|
81%
|
90%
|
Average Annual Production LOM (ounces)
|
78,100
|
5,290,000
|
Total Production (ounces)
|
1,043,000
|
70,932,000
|
The total estimated initial capital cost is US$116.9 million. Sustaining
capital is estimated at US$119.7 million over the life of the mine (LOM). The estimated capital and operating costs estimates have
a level of accuracy of +/-20% within the PFS.
The initial capital costs are summarized below:
Projected Initial Capital Costs (USD million)
|
|
Base Case
|
Mining
|
$12.1
|
Process
|
$35.6
|
Tailings Management Facility (TMF)
|
$11.7
|
Water Management
|
$5.4
|
Onsite Infrastructure
|
$7.6
|
Offsite Infrastructure
|
$7.8
|
Environmental
|
$1.8
|
Indirects, EPCM, Contingency and Owner’s Costs
|
$34.9
|
Total
|
$116.9
|
* Numbers may not add due to rounding
The sustaining capital includes expansion capital of US$72 million
which would be funded from cash flow. The expansion capital costs are summarized below:
Expansion Capital Costs (US$ millions)
|
|
Mining
|
$1.3
|
Process
|
$35.4
|
Infrastructure
|
$12.2
|
TMF and Water Management
|
$3.4
|
Indirects, EPCM, Contingency and Owner’s Costs
|
$19.7
|
Total
|
$
72.1
|
The total LOM operating costs are US$22.5/tonne mill feed. This
estimate includes contractor mining, processing, general & administrative, general mine expense, re-handle, reclamation, Tailings
Management Facility and water management operating costs during the period of operations. Initial capital costs are not included
in the LOM operating costs.
The LOM average costs are summarized below:
Summary of Average LOM Operating Costs (US$/tonne mill feed)
|
|
Base Case
|
|
Mining costs
|
$1.70
|
$/tonne mined
|
|
|
|
Mining costs
|
$10.0
|
$/tonne milled
|
Processing
|
$11.6
|
$/tonne milled
|
G&A
|
$0.8
|
$/tonne milled
|
Total
|
$22.5
|
$/tonne milled
|
* Numbers may not add due to rounding
The PFS project economics are based on a gold price of US$1250/oz
and silver price of US$18/oz. Project revenue is split between gold and silver with 51% of the revenue from gold and 49% from silver.
The after-tax economic analysis includes a corporate tax rate of 30% as well as two new Mexican mining duties of a 7.5% special
mining duty and a 0.5% extraordinary mining duty. All in unit sustaining costs are summarized below:
Summary All-in sustaining cost (exclusive of initial capital)
|
|
Total
US$ million
|
US$/ Oz
AuEq
|
US$/ Oz
AgEq
|
Cash operating Cost
|
1,463
|
706
|
10.2
|
Sustaining Capital Cost
|
119
|
58
|
0.8
|
Almadex Royalty
|
50
|
24
|
0.4
|
Mexican royalty taxes
|
74
|
36
|
0.5
|
Refining + Transport
|
79
|
38
|
0.6
|
Total
|
1,785
|
862
|
12.5
|
A summary of financial outcomes comparing base case metal prices
to two alternative metal price situations is presented below. The PFS base case prices are derived from a combination of spot prices
and 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 the date of the PFS.
Summary of Economic Results and Sensitivities to Metals Price (US$ Million)
|
|
Lower Case
|
Base Case
|
Upper Case
|
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Gold Price (US$/oz)
|
$1150
|
$1250
|
$1350
|
Silver Price (US$/oz)
|
$15
|
$18
|
$21
|
NPV (5% discount rate)
|
$275
|
$175
|
$484
|
$310
|
$693
|
$443
|
Internal Rate of Return (%)
|
38%
|
28%
|
54%
|
41%
|
70%
|
52%
|
Payback (years)
|
2.4
|
2.6
|
2.0
|
2.2
|
1.6
|
1.9
|
The operating costs (“Opex”) are projected to be US$22.5
per tonne milled. The following table shows the sensitivity of project economics to a 10% change in the operating costs, assuming
base case metals prices.
Summary of Economic Results and Sensitivities to Operating Costs (US$ Million)
|
|
Lower Case
|
Base Case
|
Upper Case
|
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Opex (US$/t milled)
|
-10%
|
$22.5/t
|
+10%
|
NPV (5% discount rate)
|
$581
|
$372
|
$484
|
$310
|
$386
|
$248
|
Internal Rate of Return (%)
|
61%
|
46%
|
54%
|
41%
|
48%
|
35%
|
Payback (years)
|
1.9
|
2.1
|
2.0
|
2.2
|
2.1
|
2.3
|
The Initial Capital cost is estimated to be US$116.9 million. The
following table shows the sensitivity of project economics to a 10% change in the initial capital costs, assuming base case metals
prices.
Summary of Economic Results and Sensitivities to Capital Cost (US$ Million)
|
|
Lower Case
|
Base Case
|
Upper Case
|
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Initial Capital (US$m)
|
-10%
|
116.9
|
+10%
|
NPV (5% discount rate)
|
$495
|
$318
|
$484
|
$310
|
$473
|
$302
|
Internal Rate of Return (%)
|
60%
|
45%
|
54%
|
41%
|
50%
|
37%
|
Payback (years)
|
1.9
|
2.1
|
2.0
|
2.2
|
2.1
|
2.3
|
The Ixtaca Project is also sensitive to the exchange rate between
U.S. dollars and Mexican Pesos (“MXN”). The PFS assumes an exchange rate of 20 MXN per U.S. dollar, and the following
table shows the sensitivity of project economics to different exchange rates assuming base case metals prices.
Summary of Economic Results and Sensitivities to Exchange Rate (US$ Million)
|
|
Lower Case
|
Base Case
|
Upper Case
|
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Pre-Tax
|
After-Tax
|
Exchange Rate (MXN:USD)
|
18
|
20
|
22
|
NPV (5% discount rate)
|
$380
|
$243
|
$484
|
$310
|
$569
|
$364
|
Internal Rate of Return (%)
|
47%
|
35%
|
54%
|
41%
|
60%
|
45%
|
Payback (years)
|
2.1
|
2.3
|
2.0
|
2.2
|
1.9
|
2.1
|
Almaden has secured through purchase agreements from numerous independent
owners approximately 1,018 hectares which represents the majority of land required for the proposed production plan. This was completed
through friendly land purchase agreements with locals, considering fair market value. There are no communities that require relocation
as part of the Project development. Mineral Claim owners have the right to obtain the temporary occupancy, or creation of land
easements required to carry out exploration and mining operations, under the Federal Mining Law.
Sample Preparation, Analyses and Security
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 are 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 Minerals (ALS) sends its own trucks to the 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 for analysis.
Drill core samples have been subject to gold determination via a
50 gram (g) Atomic Absortion (AA) finish Fire Assay (FA) fusion with a lower detection limit of 0.005ppm Au (5ppb) and upper limit
of 10ppm Au (ALS method Au-AA24). Over limit gold values (>10ppm Au) are subject to gravimetric analysis (ALS method Au-GRA22).
Silver, base metal and pathfinder elements for drill core samples are analyzed by ICP-AES, with a 4-acid digestion, a lower detection
limit of 0.5ppm Ag and upper detection limit of 100ppm Ag (ALS method ME-ICP61). Over limit silver values (>100ppm Ag) are subject
to 4-acid digestion ICP-AES analysis with an upper limit of 1,500ppm Ag (ALS method ME-OG62). Ultra-high grade silver values (>1,500ppm
Ag) are subject to gravimetric analysis with an upper detection limit of 10,000ppm Ag (Ag-GRA22).
Quality Assurance/Quality Control (QA/QC)
For the Tuligtic rock grab sample and soil geochemical programs,
the Company utilizes external quality assurance and quality control (QA/QC) measures employed by ALS. QA/QC measures at ALS include
routine screen tests to verify crushing efficiency, sample preparation duplicates (every 50 samples), and analytical quality controls
(blanks, standards, and duplicates). QC samples are inserted with each analytical run, with the minimum number of QC samples dependent
on the rack size specific to the chosen analytical method. Results for quality control samples that fall beyond the established
limits are automatically red-flagged for serious failures and yellow-flagged for borderline results. Every batch of samples is
subject to a dual approval and review process, both by the individual analyst and the Department Manager, before final approval
and certification.
Drill core samples are subject to Almaden’s internal QA/QC
program that includes the insertion of analytical standard, blank and duplicate samples into the sample stream. A total of 15 QA/QC
samples are present in every 100 samples sent to the laboratory.
QA/QC sample results are reviewed following receipt of each analytical
batch. QA/QC samples falling outside established limits are flagged and subject to review and possibly re-analysis, along with
the 10 preceding and succeeding samples. Where the re-analyses fall within acceptable QA/QC limits the values are added to the
drill core assay database.
Current Work
Since the completion of the Pre-Feasibility Study, work on the Ixtaca
project has focused on collecting the data necessary for completion of a Full Feasibility Study, which is expected to be completed
during 2018. Various feasibility-related programs are currently underway, including:
•
|
Feasibility-level engineering design;
|
•
|
Additional geotechnical evaluations in areas of infrastructure and pit slope;
|
•
|
Continued monitoring of water quality and flow;
|
•
|
Metallurgical test work to further refine the process flowsheet
|
|
|
|
The Company has completed the required studies and prepared the
initial draft Environmental Impact Assessment (MIA), which has been submitted to a third-party for review before the final document
is submitted.
A Social Impact Assessment of the Ixtaca project has been completed
by Mexico City based consulting group which concluded that Almaden has consulted widely with the Focus Area communities, the project
was well understood, and the SIA was successful in providing people with an opportunity to clearly express their views on the impacts
of the project development.
Exploration drilling has continued both within the PFS pit area
and in zones outside the PFS pit and resource area, with the focus of the drilling to add additional resources which could potentially
be mined either by open pit or underground methods for inclusion in future engineering studies. Recent holes have intersected significant
mineralisation and veining inside the PFS pit, including within material that had been previously designated as waste material
in the PFS. Other holes have expanded the Main Ixtaca Zone to depth and intersected mineralization immediately outside the PFS
pit.
Results of this drilling included:
Hole TU-17-532 SECTION 50025 NORTH Az. 070, Dip -80 (BENEATH
PFS PIT)
101.45 meters @ 1.94 g/t Au and 12.7 g/t Ag
Including 46.20 meters @ 3.87 g/t Au and 15.1 g/t Ag
And 28.95 meters @ 5.61 g/t Au
and 19.7 g/t Ag
And 13.10 meters @ 9.35 g/t Au
and 25.5 g/t Ag
Hole GMET-17-13 SECTION 49950 NORTH Az. 070, Dip -35 (WITHIN
PFS PIT)
53.90 meters @ 0.48 g/t Au and 37.8 g/t Ag
Including 7.00 meters @ 1.11 g/t Au and 95.3 g/t Ag
Hole GMET-17-14 SECTION 49950 NORTH Az. 070, Dip -60 (WITHIN
AND BENEATH PFS PIT)
24.00 meters @ 1.90 g/t Au and 16.3 g/t Ag
Including 12.00m @ 3.66 g/t Au and 26.6 g/t Ag
And 5.00 m @ 7.91 g/t Au and 33.8
g/t Ag
57.55 meters @ 1.29 g/t Au and 23.5 g/t Ag
Including 3.00 meters @ 16.87 g/t Au and 37.7 g/t
Beyond the Ixtaca deposit, other exploration targets exist on the
Tuligtic property. The Tuligtic claim covers an area of high level epithermal clay alteration. The project area is partially covered
by volcanic ash deposits which mask underlying alteration, potential vein zones and associated soil responses. In areas devoid
of this covering ash, soil sampling has defined several distinct zones of elevated gold and silver values and trace elements typically
associated with epithermal vein systems. The other altered and geochemically anomalous areas could represent additional zones of
underlying quartz-carbonate epithermal veining like the Ixtaca zone.
Several recent holes have been drilled in the Tano Zone, which is
located about 1.2 kilometers southwest along strike from the Main Ixtaca Zone and the PFS pit. The Tano zone covers an area of
exposed volcanic and breccia hosted alteration and elevated gold in soil samples.
Hole TU-17-530 Az. 270, Dip -50
46.00 meters @ 0.57 g/t Au and 2.2 g/t Ag
Including 26.00 meters @ 0.71 g/t Au and 2.3 g/t Ag
And 6.00 meters @ 1.06 g/t Au and 2.3 g/t Ag
Hole TU-17-531 Az. 000, Dip -50
10.00 meters @ 2.11 g/t Au and 1.6 g/t Ag
Including 6.00 meters @ 3.38 g/t Au and 2.0 g/t Ag
And 2.00 meters @ 8.17 g/t Au and
3.8 g/t Ag
Hole TU-17-533 Az. 185, Dip -55
10.50 meters @ 0.83 g/t Au and 2.4 g/t Ag
Including 3.00m @ 1.26 g/t Au and 1.5 g/t Ag
There is no drilling between these holes and the PFS pit area, along
the 060 Azimuth trend of the Main Ixtaca Zone, and this gap is considered highly prospective. Further drilling in the Tano Zone
area is currently underway.
Upcoming / Outlook
Almaden has sufficient cash on hand to conduct its anticipated work
program for the next fiscal year at Ixtaca. Advanced engineering studies related to the Feasibility Study will continue to be the
emphasis of this year’s work program, as well as preparations necessary to advance permitting activities for the Ixtaca project,
which includes the filing of the Environmental Impact Assessment. The Company will also continue the exploration drill program
to test for additional high grade vein structures immediately adjacent to known mineralisation within and around the PFS pit.
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, 2017, 2016, and 2015 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 an Administrative Services
Agreement with Almadex Minerals Limited. Under the Agreement, the Company is the sole and exclusive manager of Almadex. Almadex
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. Almadex also pays the Company any reasonable fees or costs incurred on behalf of Almadex by
the Company which were approved by Almadex. The Administrative Services Agreement has an initial 5-year term, with subsequent automatic
1 year renewals unless terminated pursuant to the terms permitted under the Agreement. The Agreement includes a Change of Control
clause. If either party is subject to a 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 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 2017 compared to Fiscal 2016
For the year ended December 31, 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. 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 (2016 - $443,560) during the year ended December 31, 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 the year ended December
31, 2017 (December 31, 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.
Fiscal 2016 compared to Fiscal 2015
For the year ended December 31, 2016, the Company recorded a net
loss and comprehensive loss of $4,023,504 or $0.05 per share compared to a net loss of $1,477,977 or $0.02 per share for the year
ended December 31, 2015. The increase in net loss of $2,545,527 was primarily a result of the gain recognized in the transfer of
spin-out assets to Almadex of $3,115,422 offset by the other comprehensive loss of $333,452 in 2015.
The Company has no revenues from mining operations as it only conducted
exploration and development work. Other income (loss) of $443,504 (2015 – $2,710,588) during the year ended December 31,
2016 consisted mainly of interest income and administrative service fees whereas in 2015, assets spun-out to Almadex generated
other sources of income. Interest income during the year ended December 31, 2016 increased by $246,868 as a result of higher cash
balances available for investment. The administrative service fees in 2016 also increased by $238,374 compared to 2015 as a result
of a full year charge whereas in 2015, the Company only earned 5 months of services fees from August 1, 2015 to December 31, 2015.
Operating expenses were $4,467,064 during the year ended December
31, 2016 (2015 - $4,259,713). The increase operating expenses of $207,351 was mainly the result of higher salaries of $574,494
offset by decreases in professional fees, stock exchange fees, and depreciation as a result of the corporate reorganization completed
in 2015. The increase in salaries was due to the Chairman and the CEO’s salaries recorded in salaries and benefits to reflect
their functions related to operating a public company rather than general exploration services performed in 2015. The spin-out
transactions in 2015 produced higher operating expenses in professional fees and stock exchange fees.
Liquidity and Capital Resources
As at December 31, 2017, the Company’s working capital position
was $16,065,496. 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 2018 that includes further development of the Ixtaca property.
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 2017
At December 31, 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 December 31, 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.
Management believes that the Company’s cash resources are
sufficient to meet its working capital and mineral exploration requirements for its next fiscal year. 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 the year ended December
31, 2017, was $2,674,767 (2016 - $2,321,136), after adjusting for non-cash activities.
Net cash used in investing activities during the year ended December
31, 2017, was $12,808,053 (2016 - $5,524,623). Significant items include expenditures on exploration and evaluation assets of $8,860,153
(2016 - $5,177,485), and deposit on mill equipment of $3,642,826 (2016 - $324,600).
Net cash from financing activities during the year December 31,
2017, was $22,047,348 (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.
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 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.
Fiscal 2015
At the end of Fiscal 2015, the Company had a working capital of
$5,808,473 including cash and cash equivalents of $6,222,778 compared to working capital of $9,171,791 including cash and cash
equivalents of $8,172,598 at the end of Fiscal 2014. The decline in working capital of $3,363,318 was mainly due to current assets
spun out to Almadex including Marketable Securities and Gold Inventory. During Fiscal 2015, the Company closed two non-brokered
private placements for gross proceeds of $8,905,000 to continue the Ixtaca exploration and development program.
Cash used in operations during Fiscal 2015 was $3,015,966 (Fiscal
2014 - $2,910,414) after adjusting for non-cash activities.
Cash used in investing activities during Fiscal 2015 was $4,362,807
(Fiscal 2014 - $6,792,511). Significant items include expenditures on mineral property interests of $3,668,974 (Fiscal 2014 - $6,946,559)
primarily on land acquisition of $831,455 (Fiscal 2014 - $1,137,914) and exploration costs on the Tuligtic property of $3,048,151
(Fiscal 2014 - $5,155,990). The Company also invested $692,000 (Fiscal 2014 - $Nil) 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 February 11, 2015, the Company closed on a non-brokered private
placement by the issuance of 4,420,000 units at a price of $1.25 per unit for gross proceeds to the Company of $5,525,000 less
share issue costs of $372,763. Each unit consisted of one common share and one-half of one non-transferrable common share purchase
warrant. Each whole warrant allows the holder to purchase one common share at a price of $2.00 per common share until February
11, 2016. A finder’s fee of $212,626 in cash and finder’s warrants to purchase up to 49,410 common shares at a price
of $1.28 per common share until February 11, 2016 was paid on a portion of the placement. The fair value of the finder’s
warrants of $13,341 was estimated using the Black-Scholes option pricing model.
On November 17, 2015, the Company closed on a non-brokered private
placement by the issuance of 4,506,666 units at a price of $0.75 per unit for gross proceeds to the Company of $3,380,000 less
share issue costs of $122,609. Each unit consisted of one common share and one-half of one non-transferrable common share purchase
warrant. Each whole warrant allows the holder to purchase one common share at a price of $1.00 per common share until November
17, 2017. A finder’s fee of $73,550 in cash and finder’s warrants to purchase up to 35,200 common shares at a price
of $0.77 per common share until November 17, 2017 was paid on a portion of the placement. The fair value of the finder’s
warrants of $5,984 was estimated using the Black-Scholes option pricing model.
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 2017, prices of precious metals continued to be quite volatile,
with the gold price trading at a low of about US$1160/ounce in January 2017 and a high of over US$1350/ounce in July, before finishing
the year at US$1300/ounce. The price of silver followed a similar volatile trajectory, trading at a low of about US$15.30 in January
2017 and a high of over US$18.00 in August, before finishing the year at about US$16.90/ounce. The volatility of the gold and silver
prices contributed to an uncertain environment for mine planning and design and for the capital markets, which was not conducive
to a vibrant financing environment for mining and mineral exploration companies. In addition, traditional sources of financing
to this sector have been 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. Capital is still available
for mining and mineral exploration companies, but increasingly the sources of capital are fewer but larger, as are the financing
transactions themselves.
It remains unclear how long the volatility in metals prices will
continue, and whether or when the financing climate for mining and mineral exploration companies will improve. In prior years,
significant selling on Comex and redemptions from gold and silver funds contributed to the steep reduction in metal prices. These
lower prices in turn resulted in large producers selling non-core or high cost assets, suspending or shelving new mine construction,
and initiating severe cost control measures, including sharply reducing exploration expenditures. The lower price environment also
led to large write-downs of assets and recent acquisitions by many companies, and resulted in significant reductions to mineable
reserves worldwide. Lower prices also resulted in miners selectively mining higher grade portions of a deposit, which may effectively
sterilize lower grade portions from ever being mined even with higher prices at a later date. Reserves are also declining
due to mining operations, yet generally speaking these depleted reserves are not being replaced because of reduced exploration
efforts over the past several years.
One of the easiest areas to cut costs is by cutting or eliminating
exploration and acquisition activity. With the recovery in the precious metals markets and relatively improved financing
climate starting in 2016, we saw many large miners return to exploration after a prolonged reduction in activity. However, in the
wake of the difficult operating environment up until mid-2016, most of these companies are still quite risk-averse and as a result,
what exploration is taking place is focused near their own mine operations in an attempt to replace the depleted reserves, and
very little early-stage, regional exploration is being supported by them. For the same reason, M&A activity has been muted
as a number of miners are still working through acquisitions which were predicated on higher metal prices, while others are fully
occupied with balance sheet issues or optimization of their existing mine plans.
Much of the volatility in precious metals prices is caused by uncertainties
regarding economic growth of the major economies and the policy response of central bankers to the economic environment. Geopolitical
uncertainty continued in 2017 as the utility of traditional global political and trade alliances as been openly questioned at the
highest levels. 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, environmental groups have successfully lobbied for
more wilderness areas and parks where exploration and mining activities are prohibited. Indigenous groups are actively pursuing
land claims and there is a rise of militant national and religious groups in many parts of the world. Pressure from such
groups can lead to increased regulation and this must be monitored closely to recognize a point where it becomes excessive. 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 community where the project is
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.
The world may be slow to find direction within the current climate,
and a further deterioration of these conditions remains a serious threat. If such deterioration occurs, and depending on the policy
response of domestic governments, lower industrial activity may be the result and this could lower the demand for base metals,
although management believes that precious metals will continue to be in demand as a store of value.
The Company plans to continue its work programs on the Ixtaca project
with the aim of it developing into one of the more attractive advanced projects in the world in the expectation that the markets
for gold and silver projects will improve.
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. 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. Table No. 4 lists the total contractual obligations as at December 31,
2017 for each period. Under an Administrative Services Agreement between the Company and Almadex Minerals Limited, the Company
provides management services to Almadex. Almadex compensates the Company 30% of any shared personnel remuneration and office overhead
expenses. Therefore, Almaden currently recovers 30% 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
|
|
|
Total
|
|
Less than
1 year
|
|
1 – 3
years
|
|
3 – 5
years
|
|
More than
5 years
|
Operating lease
|
|
$
|
647,234
|
|
|
$
|
148,410
|
|
|
$
|
305,066
|
|
|
$
|
193,758
|
|
|
|
-
|
|
Executive contracts
(1)
|
|
$
|
1,295,000
|
|
|
$
|
575,000
|
|
|
$
|
480,000
|
|
|
$
|
240,000
|
|
|
|
-
|
|
(1)
Pursuant to the terms
of the Administrative Services Agreement between the Company and Almadex Minerals Limited, the Company currently recovers 30%
of the contractual compensation amounts for the Chairman and Chief Executive Officer, as the executive contracts for the CFO and
VP are not considered long term contractual obligations of the Company.
Contractual obligations of the Company in the above table exclude
future option payments required to maintain the Company’s interest in certain mineral properties and option payments under
the Asset Purchase Option Agreement in respect to the Rock Creek mill.
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 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
|
The recoverability of accounts receivable which is included in the consolidated statements of financial
position;
|
|
o
|
The estimated annual gains or losses from income and dilution on the former investment in associate;
|
|
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 the 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;
|
|
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 and are 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;
|
Item 6. Directors, Senior Management and Employees
Table No. 5 lists the directors of the Company as of March 28, 2018.
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.
Table No. 5
Directors of the Company
Name
|
|
Age
|
|
Date First Elected or Appointed
|
James Duane Poliquin
|
|
|
77
|
|
|
February 1, 2002
(4)
|
John D. McCleary
(2)(3)
|
|
|
77
|
|
|
February 1, 2002
(4)
|
Morgan Poliquin
|
|
|
46
|
|
|
February 1, 2002
(4)
|
Gerald G. Carlson
(1)(2)(3)
|
|
|
72
|
|
|
February 1, 2002
(4)
|
Mark T. Brown
(1)(3)
|
|
|
49
|
|
|
30-May-11
|
William J. Worrall
(1)(2)(3)
|
|
|
85
|
|
|
7-May-13
|
David Strang
(5)
|
|
|
49
|
|
|
8-Aug-16
|
Elaine Ellingham
(6)
|
|
|
59
|
|
|
27-Feb-18
|
(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)
David Strang was appointed a Director of
the Company on August 8, 2016 following the resignation of Joseph Montgomery
(6)
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.
Table No.6 lists the Executive Officers of the Company as of March
28, 2018. 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.
Table No. 6
Executive Officers of the Company
Name
|
Position
|
Age
|
Date First Appointed
|
James Duane Poliquin
|
Chairman of the Board
|
77
|
February 1, 2002
(4)
|
Morgan Poliquin
|
President and Chief Executive Officer
|
46
|
1-Mar-07
|
Korm Trieu
|
Chief Financial Officer
|
52
|
30-May-11
|
Douglas McDonald
|
Vice-President, Corporate Development
|
49
|
22-Sep-14
|
(4)
Date of issue of the Certificate of Amalgamation
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 and Almadex Minerals Limited 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 Almadex Minerals Limited and 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 and Almadex Minerals Limited 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 40 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 New Point Exploration Corp. listed
on the CSE. He is a past President of AME BC (formerly the B.C. and Yukon Chamber of Mines), President of the Society of Economic
Geologists Canada Foundation, a Fellow of the Society of Economic Geologists, a member of the Professional Engineers and Geoscientists
of British Columbia, the Professional Engineers of the Yukon Territory and the Canadian Institute of Mining, Metallurgy & Petroleum.
Mr. Carlson spends less than 5% of his time on the affairs of the Company.
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. 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 - Big Sky Petroleum Ltd., an oil and gas company listed on the TSX-V.
|
|
b.
|
Director - Strategem Capital Corp., an investment issuer listed on the TSX-V.
|
|
c.
|
Director - Sutter Gold Mining Ltd., a gold exploration company listed on the TSX-V.
|
|
d.
|
President, CEO and Director - Paget Minerals Ltd., an exploration company listed on the TSX-V.
|
|
e.
|
Director - Almadex Minerals Limited, an exploration company listed on the TSX-V.
|
|
f.
|
Chief Financial Officer - Adamera Minerals Corp., an exploration company listed on the TSX-V.
|
|
g.
|
Chief Financial Officer – Redstar Gold Corp., an exploration company listed on the TSX-V.
|
|
h.
|
Chief Financial Officer – Orestone Mining Corp., an exploration company listed on the TSX-V.
|
|
i.
|
President, CEO and Director – Mountain Boy Minerals Ltd., an exploration company listed on
the TSX-V.
|
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 Almadex Minerals Limited.
David Strang
holds a Bachelor of Science in Applied Earth
Sciences from Stanford University. David serves as Director, CEO and President of Ero Copper Corporation. Previously, David served
as Director, CEO and President of Lumina Copper Corp. and Lumina Royalty Corp. He also served as CEO and President of Global Copper
Corp. and Lumina Resources Corp. Mr. Strang spends less than 5% of his time on the affairs of the Company.
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, Wallbridge Mining 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 and
Almadex Minerals Limited 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 and Almadex
Minerals Limited of which he is also a director and the Vice President, Corporate Development.
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 2017, 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 $305,000 per annum. The Chief Executive
Officer’s employment contract includes terms for two additional successive terms of 24 months each (the “Extended Term”)
ending December 31, 2018. 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.
During Fiscal 2017, the Chief Financial Officer (“CFO”)
was remunerated at his base salary of $203,500, and the Vice President, Corporate Development (“VP”) was remunerated
at his base salary of $192,500 per annum. Each of the CFO’s and VP’s employment agreements have indefinite terms.
Under an Administrative Services Agreement between the Company and
Almadex Minerals Limited, the Company provides management services to Almadex. Almadex compensates the Company 30% of any shared
personnel remuneration and office overhead expenses. Therefore, Almaden currently recovers 30% 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 be compensated $5,000 yearly,
effective January 1, 2017. The Compensation Committee also recommended that, with respect to Director stock options, up to 250,000
options be granted to each non-management Director. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket
expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award special
remuneration to any director undertaking any special services on behalf of the Company other than services ordinarily required
of a director. Other than indicated below no director received any compensation for his services as a director, including committee
participation and/or special assignments, or will receive compensation on termination.
Total compensation paid by the Company directly and/or indirectly
to all directors and executive officers during Fiscal 2017 was $883,400 (Fiscal 2016 - $796,475) after recovery by the Company
of 30% of executive officer compensation pursuant to the terms of the Administrative Services Agreement between the Company and
Almadex Minerals Limited.
Table No. 7
Summary Compensation Table
|
Long-Term Compensation
|
Annual Compensation
|
Awards
|
|
|
|
|
|
Restricted
|
Options/
|
|
|
Name and
|
Fiscal
|
|
|
Other Annual
|
Stock
|
SARS
|
LTIP
|
All Other
|
Principle Position
|
Year
|
Salary
(1)
|
Bonus
|
Compensation
|
Awards
|
Granted
|
Payouts
|
Compensation
|
|
|
|
|
|
|
(#)
|
|
|
Duane Poliquin
Chairman of the Board & Director
|
2017
2016
2015
|
$168,000
$168,000
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
715,000
550,000
485,000
|
Nil
Nil
Nil
|
Nil
Nil
$193,333
(2)
|
Morgan Poliquin
President, Chief Executive Officer & Director
|
2017
2016
2015
|
$213,500
$185,500
$231,875
|
$85,400
$92,750
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
1,365,000
700,000
965,000
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Jack McCleary
Director
|
2017
2016
2015
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
332,000
218,000
207,000
|
Nil
Nil
Nil
|
$17,0000
(3)(5)
$10,000
(3)(5)
$10,000
(3)(5)
|
Joseph Montgomery
Former Director
(8)
|
2017
2016
2015
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
145,000
|
Nil
Nil
Nil
|
Nil
$7,000
(3)
$7,000
(3)
|
Gerald G. Carlson
Director
|
2017
2016
2015
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
290,000
100,000
237,000
|
Nil
Nil
Nil
|
$12,000
(3)
$7,000
(3)
$7,000
(3)
|
Barry W. Smee
Former Director
(7)
|
2017
2016
2015
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
$7,000
(3)
|
Mark T. Brown
Director
|
2017
2016
2015
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
457,000
68,000
232,000
|
Nil
Nil
Nil
|
$17,000
(3)(4)
$10,000
(3)(4)
$11,200
(3)(4)(6)
|
William J. Worrall
Director
|
2017
2016
2015
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
215,000
5,000
145,000
|
Nil
Nil
Nil
|
$12,000
(3)
$7,000
(3)
$7,000
(3)
|
David Strang
(9)
Director
|
2017
2016
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
100,000
400,000
|
Nil
Nil
|
$12,000
(3)
Nil
|
Korm Trieu
Chief Financial Officer
|
2017
2016
2015
|
$142,450
$129,500
$161,875
|
$35,613
$38,850
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
290,000
150,000
145,000
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Douglas McDonald
Vice President, Corporate Development
|
2017
2016
2015
|
$134,750
$122,500
$153,125
|
$33,688
$18,375
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
275,000
170,000
130,000
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
|
(1)
|
Since the effectiveness
of the Plan of Arrangement with Almadex on July 31, 2015, Almadex 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 Almadex.
|
|
(2)
|
For geological services
provided to the Company and general and administrative services provided by Hawk Mountain
Resources Ltd., a private company of which Duane Poliquin is a shareholder. Effective
December 31, 2015, the Hawk Mountain Resources Ltd. contract was terminated by mutual
agreement.
|
|
(4)
|
Audit Committee Chairman’s
fees.
|
|
(5)
|
Compensation Committee
Chairman’s fees.
|
|
(6)
|
For administrative services
provided by Pacific Opportunity Capital Ltd., a company controlled by Mark T. Brown and
his family.
|
|
(7)
|
Barry
Smee resigned as a Director of the Company effective January 31, 2015.
|
|
(8)
|
Joseph Montgomery resigned
as a Director of the Company effective August 8, 2016.
|
|
(9)
|
David Strang commenced
as a Director of the Company effective August 8, 2016.
|
Remuneration on Termination
The Company has the following termination clauses within its executive employment contracts.
(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 (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
|
|
(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
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)
|
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
|
|
(b)
|
the willful engagement by the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise; or
|
|
(c)
|
any other willful violation by the Executive of the provisions of the DP 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 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 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)
|
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 DP Agreement regarding
termination, if any of the events described above constituting a Change in Control shall have occurred during the Term or an Extended
Term, upon the termination of the Executive’s employment (unless such termination is because of the Executive’s Death
or Disability, by the Company for Cause or by the Executive other than for “Good Reason”, as defined below) the Executive
shall be entitled to and will receive no later than the fifteenth (15
th
) 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)
|
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 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;
|
|
(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 services 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 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, or an Extended 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 (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,
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 or an Extended
Term, upon the termination of the Executive’s employment (unless such termination is because of the Executive’s Death
or Disability, by the Company for Cause or by the Executive other than for “Good Reason”, as defined below) the Executive
shall be entitled to and will receive no later than the fifteenth (15
th
) 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, or an Extended 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:
|
(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)
|
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
|
|
(b)
|
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
|
|
(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 (15
th
) 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.
(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)
|
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
|
|
(b)
|
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 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 (15
th
) 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.
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.
Stock options
Incentive stock options to purchase securities from the Company
are granted to directors, executive officers, employees and consultants of the Company on terms and conditions acceptable to the
regulatory authorities in Canada, notably the Toronto Stock Exchange, and in accordance with the requirements of the applicable
Canadian securities commissions’ requirements and 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 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 2017, Fiscal
2016 and Fiscal 2015 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
28, 2018 are set forth in Table No. 8, as well as the number of options granted to directors, executive officers, employees and
contractors as a group.
Table No. 8
Stock Options Outstanding
Name
|
Number of Options Outstanding
|
Exercise Price CDN$
|
Expiry Date
|
Duane Poliquin
|
500,000
|
$1.44
|
6/8/2018
|
Chairman of the Board & Director
|
50,000
|
1.85
|
9/15/2018
|
|
100,000
|
0.72
|
12/11/2018
|
|
100,000
|
1.99
|
5/4/2019
|
|
300,000
|
1.34
|
7/2/2019
|
|
165,000
|
1.40
|
9/19/2019
|
|
150,000
|
1.25
|
9/30/2020
|
|
|
|
|
Morgan Poliquin
|
700,000
|
1.44
|
6/8/2018
|
President, Director &
|
300,000
|
0.72
|
12/11/2018
|
Chief Executive Officer
|
250,000
|
1.04
|
1/2/2019
|
|
150,000
|
1.32
|
7/2/2019
|
|
350,000
|
1.34
|
7/2/2019
|
|
315,000
|
1.40
|
9/19/2019
|
|
500,000
|
1.53
|
4/30/2020
|
|
200,000
|
1.25
|
9/30/2020
|
|
|
|
|
Jack McCleary
|
100,000
|
1.44
|
6/8/2018
|
Director
|
68,000
|
1.91
|
8/9/2018
|
|
50,000
|
1.85
|
9/15/2018
|
|
207,000
|
1.35
|
3/17/2019
|
|
25,000
|
1.99
|
5/4/2019
|
|
100,000
|
1.25
|
9/30/2020
|
|
|
|
|
Gerald G. Carlson
|
50,000
|
1.44
|
6/8/2018
|
Director
|
50,000
|
1.85
|
9/15/2018
|
|
72,000
|
0.72
|
12/11/2018
|
|
50,000
|
1.04
|
1/2/2019
|
|
25,000
|
1.99
|
5/4/2019
|
|
50,000
|
1.34
|
7/2/2019
|
|
115,000
|
1.40
|
9/19/2019
|
|
100,000
|
1.25
|
9/30/2020
|
|
|
|
|
Mark T. Brown
|
50,000
|
1.44
|
6/8/2018
|
Director
|
18,000
|
1.91
|
8/9/2018
|
|
25,000
|
1.04
|
1/2/2019
|
|
25,000
|
1.99
|
5/4/2019
|
|
117,000
|
1.34
|
7/2/2019
|
|
115,000
|
1.40
|
9/19/2019
|
|
100,000
|
1.14
|
4/30/2020
|
|
100,000
|
1.25
|
9/30/2020
|
|
|
|
|
William J. Worrall
|
250,000
|
1.46
|
6/18/2018
|
Director
|
5,000
|
1.91
|
8/9/2018
|
|
30,000
|
0.72
|
12/11/2018
|
|
115,000
|
1.40
|
9/19/2019
|
|
100,000
|
1.25
|
9/30/2020
|
|
|
|
|
David Strang
|
400,000
|
1.91
|
08/09//2018
|
Director
|
100,000
|
1.25
|
9/30/2020
|
|
|
|
|
Korm Trieu
|
75,000
|
1.74
|
4/4/2018
|
Chief Financial Officer
|
150,000
|
1.44
|
6/8/2018
|
|
30,000
|
0.72
|
12/11/2018
|
|
50,000
|
1.04
|
1/2/2019
|
|
75,000
|
1.89
|
6/12/2019
|
|
115,000
|
1.40
|
9/19/2019
|
|
100,000
|
1.25
|
9/30/2020
|
|
|
|
|
Douglas McDonald
|
20,000
|
1.44
|
6/8/2018
|
Vice President, Corporate Development
|
30,000
|
0.72
|
12/11/2018
|
|
150,000
|
1.68
|
12/11/2018
|
|
75,000
|
1.84
|
5/19/2019
|
|
100,000
|
1.40
|
9/19/2019
|
|
100,000
|
1.25
|
9/30/2020
|
Total Directors/Officers (9
persons)
|
7,812,000
|
|
|
Total Employees/Consultants (14
persons)
|
1,478,000
|
|
|
Total Directors/Officers/Employees/Consultants
|
9,290,000
|
|
|
No funds were set aside or accrued by the Company during Fiscal
2017 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.
|
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:
|
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.
|
|
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.
|
|
2.
|
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.
|
|
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.
|
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.
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 account the risk and opportunities of the Company’s business;
|
|
(b)
|
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, 2017 there were seven (7)
meetings of the Board. The frequency of meetings as well as the nature of agenda items change, depending upon the state of the
Company’s affairs and in light of opportunities or risks which the Company is subject to. Table No. 9 indicates the number
of meetings attended by each director.
Table No. 9
Meetings Attended
Director
|
Number
|
Duane Poliquin
|
7
|
Morgan Poliquin
|
7
|
Jack McCleary
|
6
|
Gerald G. Carlson
|
5
|
Mark T. Brown
|
7
|
William J. Worrall
|
6
|
David Strang
|
5
|
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 2017, seven (7) 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 MKT Company Guide Rules. The current Board is composed of eight members.
The Board has determined that a majority of directors, namely 6 directors, are independent - Jack McCleary, David Strang, 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 MKT 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.
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 2017. 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 two (2) time during
Fiscal 2017. 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 four (4) times during Fiscal 2017 with Jack McCleary,
Mark T. Brown and William Worrall attending all four (4) meetings and Gerald Carlson attending three (3) of the four (4) 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
12.5% 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.
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 12.5% of the Company’s eight 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.
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, 2017, the Company operated with nine people in
Canada, of which six are administrative personnel and three are exploration personnel, some of which are retained on a contractual
basis. There are no full time employees in the 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 28, 2018, 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
|
|
Amounts and Nature of
|
Percent of
|
Class
|
Name of Beneficial Owner
|
Beneficial Ownership
|
Class*
|
Common
|
Duane Poliquin
|
4,053,146
(1)10)
|
3.91%
|
Common
|
Morgan Poliquin
|
4,467,964
(2)(10)
|
4.26%
|
Common
|
Jack McCleary
|
897,711
(3)
|
0.87%
|
Common
|
Gerald G. Carlson
|
594,700
(4)
|
0.58%
|
Common
|
David Strang
|
500,000
(5)
|
0.49%
|
Common
|
Mark T. Brown
|
595,000
(6)
|
0.58%
|
Common
|
William J. Worrall
|
554,780
(7)
|
0.54%
|
Common
|
Elaine Ellingham
|
-
|
-
|
Common
|
Korm Trieu
|
643,698
(8)
|
0.63%
|
Common
|
Doug McDonald
|
575,273
(9)
|
0.56%
|
Common
|
Total Directors/Officers
|
12,882,272
|
12.41%
|
|
(1)
|
Of
these shares 1,365,000 represent currently exercisable stock options, 50,000 represent
currently exercisable warrants.
|
|
(2)
|
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.
|
|
(3)
|
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.
|
|
(4)
|
Of these shares 512,000
represent currently exercisable stock options.
|
|
(5)
|
Of these shares 500,000
represent currently exercisable stock options.
|
|
(6)
|
Of
these shares 550,000 represent currently exercisable stock options. 20,000 of these shares
are held indirectly by Pacific Opportunity Capital Ltd. (“POC”), a company
controlled by Mr. Brown and his family.
|
|
(7)
|
Of these shares 500,000
represent currently exercisable stock options.
|
|
(8)
|
Of these shares 595,000
represent currently exercisable stock options. 7,500 of these shares are held indirectly
by Mr. Trieu’s wife.
|
|
(9)
|
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.
|
|
(10)
|
Pursuant to a Voting Trust
Agreement (Exhibit 3 to this 20-F Annual Report), Duane Poliquin and Morgan Poliquin
jointly hold voting power over 6,979,275 of the Company’s common shares otherwise
legally and beneficially owned by Mr. Ernesto Echavarria, as well as over any common
shares issued to Mr. Echavarria upon the exercise of his warrants to acquire an additional
126,100 of the Company’s common shares.
|
*Based on 102,199,625 shares outstanding as of March 28, 2018 and
stock options and warrants held by each beneficial owner.
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 28, 2018, 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
|
|
Amounts and Nature of
|
Percent of
|
Class
|
Name of Beneficial Owner
|
Beneficial Ownership
|
Class*
|
Common
|
Duane Poliquin
|
4,053,146
(1)(3)
|
3.91%
|
Common
|
Morgan Poliquin
|
4,467,964
(2)(3)
|
4.26%
|
|
(1)
|
Of
these shares 1,365,000 represent currently exercisable stock options, 50,000 represent
currently exercisable warrants.
|
|
(2)
|
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.
|
|
(3)
|
Pursuant to a Voting Trust
Agreement (Exhibit 3 to this 20-F Annual Report), Duane Poliquin and Morgan Poliquin
jointly hold voting power over 6,979,275 of the Company’s common shares otherwise
legally and beneficially owned by Mr. Ernesto Echavarria, as well as over any common
shares issued to Mr. Echavarria upon the exercise of his warrants to acquire an additional
126,100 of the Company’s common shares.
|
*Based on 102,199,625 shares outstanding as of March 28, 2018 and
stock options and warrants held by each beneficial owner.
Related party transactions
Certain geological, technical, professional and general and administrative
services were provided to the Company by the Chairman and/or a company controlled by Duane Poliquin operated through Hawk Mountain
Resources Ltd., a private company of which Duane Poliquin is a shareholder.
The costs of such services for Fiscal 2017 ended December 31, 2017
were $168,000, Fiscal 2016 ended December 31, 2016 were $168,000, and Fiscal 2015 ended December 31, 2015 were $193,333.
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 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 Almadex Minerals Limited:
|
|
February 28,
2018
|
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Salaries and benefits
|
|
$
|
156,667
|
|
|
$
|
813,400
|
|
|
$
|
755,475
|
|
|
$
|
740,208
|
(i)
|
Share-based payments
|
|
|
144,000
|
|
|
|
2,216,170
|
|
|
|
1,537,060
|
|
|
|
725,165
|
|
Directors’ fees
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
41,000
|
|
|
|
48,000
|
|
|
|
$
|
370,667
|
|
|
$
|
3,099,570
|
|
|
$
|
2,333,535
|
|
|
$
|
1,513,373
|
|
|
(i)
|
For
the year ended December 31, 2015, Hawk Mountain Resources Ltd. (“Hawk Mountain”),
a private company of which the Chairman of the Company is a shareholder, was paid $193,333
for geological services provided to the Company and is recorded in general exploration
expenses.
|
|
(b)
|
Almadex Minerals Limited (“Almadex”)
|
Effective August 1, 2015, approximately 30% of administrative expenses
is recovered from Almadex pursuant to the Administrative Service Agreement.
During the year ended December 31, 2017, the Company received $499,798
(2016 - $464,498; 2015 - $181,405) from Almadex for administrative services fees included in other income.
At December 31, 2017, the Company accrued $153,038 (2016 - $63,429)
payable to Almadex for drilling equipment rental services in Mexico.
At December 31, 2017, included in accounts receivable is $195,551
(2016 - $149,429) due from Almadex in relation to administrative expenses recoveries.
|
(c)
|
Other related party transactions
|
During the year ended December 31, 2017, the Company paid a company
controlled by a Mark Brown $Nil (2016 - $Nil; 2015 - $1,200) for administrative services provided to the Company.
During the year ended December 31, 2017, the Company employed the
Chairman’s daughter for a salary of $43,800 less statutory deductions (2016 - $38,800; 2015 - $43,225) 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 Registrant 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 MKT (formerly the American Stock
Exchange) in New York, New York, U.S.A. having the symbol “AAU” and CUSIP #020283107.
The Company’s common shares commenced trading on February
11, 2002 on TSX and December 19, 2005 on the American Stock Exchange, now the NYSE MKT.
Table No. 12 lists the high and low prices for the shares of Almaden
Minerals Ltd. common stock on NYSE MKT 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 MKT
(expressed in US$)
Year Ended
|
High
|
Low
|
12/31/2017
|
$1.75
|
$0.71
|
12/31/2016
|
1.88
|
0.50
|
12/31/2015
|
1.27
|
0.48
|
12/31/2014
|
1.94
|
0.86
|
12/31/2013
|
3.25
|
1.03
|
Table No. 13
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Year Ended
|
High
|
Low
|
12/31/2017
|
$2.33
|
$0.92
|
12/31/2016
|
2.44
|
0.73
|
12/31/2015
|
1.57
|
0.65
|
12/31/2014
|
2.11
|
1.02
|
12/31/2013
|
3.19
|
1.08
|
Table No. 14 lists the quarterly high and low prices for shares
of Almaden Minerals Ltd. common stock on NYSE MKT for the two most recent full financial years. Table No. 15 lists the quarterly
high and low prices for shares of Almaden Minerals Ltd. common stock on TSX for the two most recent full financial years.
Table No. 14
Almaden Minerals Ltd.
Stock Trading Activity
NYSE MKT
(expressed in US$)
Quarter Ended
|
High
|
Low
|
31/12/2017
|
$1.24
|
$0.71
|
30/09/2017
|
1.32
|
1.10
|
30/06/2017
|
1.75
|
1.130
|
31/03/2017
|
1.30
|
0.95
|
12/31/2016
|
1.54
|
0.75
|
9/30/2016
|
1.88
|
1.30
|
6/30/2016
|
1.67
|
0.65
|
3/31/2016
|
0.81
|
0.50
|
Table No. 15
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Quarter Ended
|
High
|
Low
|
12/31/2017
|
$1.56
|
$0.92
|
30/09/2017
|
1.68
|
1.34
|
30/06/2017
|
2.33
|
1.51
|
31/03/2017
|
1.70
|
1.27
|
12/31/2016
|
1.97
|
1.01
|
9/30/2016
|
2.44
|
1.70
|
6/30/2016
|
2.17
|
0.88
|
3/31/2016
|
1.12
|
0.73
|
Table No.16 lists the high and low prices for shares of Almaden Minerals Ltd. common
stock on NYSE MKT for the most recent six months. Table No. 17 lists the high and low prices for shares of Almaden Minerals Ltd.
common stock on TSX for the most recent six months.
Table No. 16
Almaden Minerals Ltd.
Stock Trading Activity
NYSE MKT
(expressed in US$)
Month Ended
|
High
|
Low
|
2/28/2018
|
$0.97
|
$0.82
|
1/31/2018
|
1.05
|
0.87
|
12/31/2017
|
1.05
|
0.71
|
11/30/2017
|
1.06
|
0.85
|
10/31/2017
|
1.24
|
1.00
|
9/30/2017
|
1.32
|
1.15
|
Table No. 17
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Month Ended
|
High
|
Low
|
2/28/2018
|
$1.20
|
$1.05
|
1/31/2018
|
1.35
|
1.07
|
12/31/2017
|
1.34
|
0.92
|
11/30/2017
|
1.35
|
1.09
|
10/31/2017
|
1.56
|
1.26
|
9/30/2017
|
1.61
|
1.34
|
The closing price of the Company’s common stock was $0.85
(US$) on the NYSE MKT and $1.09 (C$) on TSX on February 28, 2018.
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 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, 2018, the shareholders' list for the Company’s
common shares showed 239 registered shareholders and 89,598,481 shares outstanding. 190 of these registered shareholders are U.S.
residents, owning 19,674,581 shares representing 22% of the issued and outstanding shares of common stock. 36 of these registered
shareholders are Canadian residents, owning 69,029,771 shares representing 77% of the issued and outstanding shares of common stock.
13 of these registered shareholders are of other countries, owning 1,026,978 shares representing 1% of the issued and outstanding
shares of common stock.
Table No. 18 lists changes, if any, in issued shares to March 28, 2018:
Table No. 18
Shares Issued to March 28, 2018
|
Number
|
|
Balance, December 31, 2017
|
102,199,625
|
Balance, March 28, 2018
|
102,199,625
|
Item 10. Additional Information
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 2017, Fiscal 2016 and Fiscal 2015. 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 “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 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.
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 10
th
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 15
th
day following
the day on which the first public announcement of the date of the special meeting was made.
The full text of the Advance Notice Policy is
an exhibit to the 2012 20-F Annual Report filed with the Commission on March 28, 2013.
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 this 20-F Annual Report filed with the Commission.
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. Advance Notice Policy dated January 28, 2013, as amended May 1, 2015 whereby the Policy,
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. The full text of the Policy 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 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.
3. Executive Compensation Contract dated effective
as of January 29, 2013 as amended by Amending Agreement dated April 1, 2016 between the Company and Morgan Poliquin (“Poliquin”)
whereby Poliquin agrees to provide the services of President and Chief Executive Officer for a term of 2 years renewable for two
additional successive terms of 24 months for remuneration of $265,000 per annum. 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 and of the Amending Agreement filed
as an exhibit to the 2016 20-F Annual Report with the Commission on March 30, 2017.
4. Assignment of Rights Agreement dated March
11, 2013 between the Company’s wholly-owned subsidiary, Compania Minera Zapata, S.A. de C.V., and Don David Gold Mexico,
S.A. de C.V. (“Don David”) whereby Don David purchased the Company’s 100% interest in the San Pedro and Fuego
prospects by paying US$100,000 plus Added Value Tax plus US$16,555 being Don David’s pro-rata share of the mineral taxes
paid on January 31, 2013 together with a 2% NSR. The full text of the Assignment of Rights Agreement is filed as an exhibit to
the 2013 20-F Annual Report with the Commission on March 25, 2014.
5. Sale and Purchase Agreement dated June 20,
2013 between the Company and its wholly-owned subsidiaries, Minera Gavilan, S.A. de C.V. and Almaden America Inc., and Tarsis Resources
Ltd. (“Tarsis”) whereby Tarsis purchased the Company’s 100% interests in the Yago, Mezquites, Cofradia, Llano
Grande, BP and Black Jack Springs prospects issuing 4,000,000 shares of Tarsis to the Company together with a 2% NSR. The full
text of the Sale and Purchase Agreement was furnished to the Commission under cover of Form 6-K on June 20, 2013.
6. Amendment Agreement dated November 26, 2013
between the Company’s wholly-owned subsidiary, Minera Gavilan, S.A. de C.V., Candymin, S.A. de C.V. (“Candymin”)
and Mr. Charlie Edward Warren (“Warren”) whereby the Company and Candymin obtained a reduction in a royalty with respect
to the Caballo Blanco prospect for total payment to Warren of US$750,000 (the Company US$350,000/Candymin US$400,000) and the Company
issuing Warren 20,000 shares of the Company. The full text of the Amendment of Rights Agreement is filed as an exhibit to the 2013
20-F Annual Report with the Commission on March 25, 2014.
7. Arrangement Agreement dated May 11, 2015 to spinout, pursuant
to a statutory Plan of Arrangement, Almaden’s early stage exploration projects, royalty interests and other non-core assets
into a new public Company called Almadex. 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 Almadex. The full
text of the Arrangement Agreement is filed as an exhibit to the 2015 20-F Annual Report with the Commission on March 31, 2016.
8. Administrative Services Agreement between the Company and Almadex
Minerals Limited (“Almadex”) 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 Almadex as the sole and exclusive manager,
including the authority to manage the assets, operations, business, and administrative affairs of Almadex. Almadex 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. Almadex also pays the Company any reasonable fees or costs incurred on behalf of Almadex by the Company which
were approved by Almadex. 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 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. 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.
9. 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.
10. Executive Employment Contract dated effective
as of January 1, 2016 between the Company and Duane Poliquin to serve 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 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 and of the Amending Agreement
filed as an exhibit to the 2016 20-F Annual Report with the Commission on March 30, 2017.
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 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 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 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 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.
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.
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 $165,000. A 10% change in the Mexican peso exchange rate relative to the Canadian
dollar would change the Company’s net loss by $6,400.
Item 12. Description of Securities Other than Equity Securities
Not Applicable