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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required
to submit such files).
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large
accelerated filer” in Rule 12b-2 of the Exchange Act.
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 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
The following selected financial data of
the Company for Fiscal 2018, Fiscal 2017 and Fiscal 2016 ended December 31st was derived from the consolidated financial statements
of the Company included elsewhere in this 20-F Annual Report. The selected financial data set forth for Fiscal 2015 and Fiscal
2014 ended December 31st are derived from the Company's audited consolidated financial statements, not included herein. The selected
financial data should be read in conjunction with the consolidated financial statements and other information included immediately
following the text of this Annual Report.
The consolidated financial statements of
the Company have been prepared in accordance and compliance with International Financial Reporting Standards as issued by the International
Accounting Standards Board (“IFRS”).
The basis of preparation is described in
Note 2 of the consolidated financial statements.
Table No. 1
Selected Financial Data
International Financial Reporting Standards
(“IFRS”)
(expressed in thousands of Canadian dollars,
except share and per share data)
|
|
Year
Ended
12/31/2018
|
|
|
Year
Ended
12/31/2017
|
|
|
Year
Ended
12/31/2016
|
|
|
Year
Ended
12/31/2015
|
|
|
Year
Ended
12/31/2014
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Other Income (loss)
|
|
|
1,190
|
|
|
|
468
|
|
|
|
444
|
|
|
|
2,711
|
|
|
|
(9,496
|
)
|
Net loss and comprehensive loss
|
|
|
(3,512
|
)
|
|
|
(5,231
|
)
|
|
|
(4,024
|
)
|
|
|
(1,145
|
)
|
|
|
(14,701
|
)
|
Basic net (loss) income per common share
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.02
|
)
|
|
|
(0.23
|
)
|
Diluted net (loss) income per common share
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.02
|
)
|
|
|
(0.23
|
)
|
Weighted average shares (000)
|
|
|
107,584
|
|
|
|
95,873
|
|
|
|
82,323
|
|
|
|
73,249
|
|
|
|
66,331
|
|
Working capital
|
|
|
4,357
|
|
|
|
16,065
|
|
|
|
9,293
|
|
|
|
5,808
|
|
|
|
9,172
|
|
Exploration and evaluation assets
|
|
|
54,678
|
|
|
|
44,804
|
|
|
|
35,985
|
|
|
|
30,538
|
|
|
|
28,645
|
|
Net assets
|
|
|
71,365
|
|
|
|
64,730
|
|
|
|
45,221
|
|
|
|
35,983
|
|
|
|
39,637
|
|
Total assets
|
|
|
73,928
|
|
|
|
66,803
|
|
|
|
47,514
|
|
|
|
38,215
|
|
|
|
42,019
|
|
Capital stock
|
|
|
127,022
|
|
|
|
118,054
|
|
|
|
95,290
|
|
|
|
83,758
|
|
|
|
87,084
|
|
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 12/31/2018
|
|
$
|
1.30
|
|
|
$
|
1.36
|
|
|
$
|
1.23
|
|
|
$
|
1.36
|
|
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
|
|
Table No. 3
Canadian Dollar/U.S. Dollar Exchange
Rates for Previous Six Months
|
|
September
2018
|
|
|
October
2018
|
|
|
November
2018
|
|
|
December
2018
|
|
|
January
2019
|
|
|
February
2019
|
|
High
|
|
$
|
1.32
|
|
|
$
|
1.31
|
|
|
$
|
1.33
|
|
|
$
|
1.36
|
|
|
$
|
1.36
|
|
|
$
|
1.33
|
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Low
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1.29
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|
|
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1.28
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1.31
|
|
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1.32
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1.31
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1.31
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The exchange rate was CDN$1.33/US$1.00 on March 14, 2019.
Risk Factors
General Risk Factors Attendant to Resource Exploration and
Development
Resource exploration and development is
a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting
not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient
in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company
may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such
as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and other factors
such as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals,
and environment protection, the combination of which factors may result in the Company not receiving an adequate return on investment
capital.
Presently, the Company is in the exploration
and development stage and there is no assurance that a commercially viable ore deposit (a reserve) exists in any of its properties
or prospects until further work is done and a comprehensive economic evaluation based upon that work is concluded. In recent years
the Company has financed its operations principally through the sale of equity securities. In the past, it has also financed its
activities by entering into joint venture arrangements and through the sale of an inventory of gold. A commercially viable ore
deposit is dependent on the establishment of economically recoverable reserves, the ability of the Company to obtain the necessary
financing and permitting to complete development and ultimately upon future profitable production or the realization of proceeds
from the disposition of the properties.
Uncertainty in Discovering Commercially
Mineable Ore Deposits
There is no certainty that the expenditures
to be made by the Company in the exploration of its properties as described herein will result in discoveries of mineralized material
in commercial quantities. Most exploration projects do not result in the discovery of commercially mineable ore deposits and no
assurance can be given that any particular level of recovery of ore reserves will in fact be realized or that any identified mineral
deposit will ever qualify as a commercially mineable (or viable) ore body which can be legally and economically exploited. Estimates
of reserves, mineral deposits and production costs can also be affected by such factors as environmental permitting regulations
and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations
and work interruptions. In addition, the grade of ore ultimately mined may differ from that indicated by drilling results. Short
term factors relating to ore reserves, such as the need for orderly development of ore bodies or the processing of new or different
grades, may also have an adverse effect on mining operations and on the results of operations. There can be no assurance that minerals
recovered in small-scale tests will be duplicated in large-scale tests under on-site conditions or in production scale. Material
changes in ore reserves, grades, stripping ratios or recovery rates may affect the economic viability of any project.
History of Net Losses, Lack of Cash
Flow and Assurance of Profitability; Need for Additional Capital
The Company had net losses in a number
of years since its date of incorporation. Due to the nature of the Company’s business, there can be no assurance that the
Company will be profitable. The Company had net losses of $3,511,667 in Fiscal 2018, $5,231,295 in Fiscal 2017, and $4,023,504
in Fiscal 2016.
The Company currently has no revenues from
operations as all of its properties and prospects are in the development stage. There is no assurance that the Company will receive
revenues from operations at any time in the near future. During Fiscal 2018, 2017 and 2016, the Company earned interest income
and other income from Administrative service fees charged to Azucar Minerals Ltd. (formerly Almadex Minerals Limited) (“Azucar”)
and During Fiscal 2018, the Company earned other income from Administrative service fees charged to Almadex Minerals Ltd. (formerly
1154229 B.C Ltd.) (“Almadex”).
At December 31, 2018, the Company had working
capital of $4,356,589 including cash and cash equivalents of $5,080,580. Management estimates that the current cash position and
expected future cash flows from the exercise of outstanding stock options and warrants and equity financing will be sufficient
for the Company to carry out its anticipated exploration and operating plans for fiscal 2019 that includes further development
of the Ixtaca Project. Although Management believes that the Company’s cash resources are sufficient to meet its working
capital and mineral exploration requirements for fiscal 2019, the Company may require additional capital in order to remain operational
in the near future. There is the possibility that the Company may not receive such necessary funding, particularly during a down
economy. Additional funding may not be available, or even if it is available, it may be on unfavorable terms.
The Company has not paid dividends on its
shares since incorporation and the Company does not anticipate doing so in the foreseeable future.
Uncertainty of Obtaining Additional
Funding Requirements
If the Company’s exploration and
development programs are successful, additional capital will be required for the further development of an economic ore body and
to place it in commercial production. The only material sources of future funds presently available to the Company are the sale
of its equity capital, the incurring of debt, or the offering by the Company of an interest in its properties and prospects to
be earned by another party or parties carrying out further development thereof.
Failure to obtain additional financing
on a timely basis could cause the Company to forfeit its interest in such properties, dilute its interests in the properties and/or
reduce or terminate its operations.
Possible Dilution to Present and Prospective Shareholders
The Company’s plan of operation,
in part, contemplates the financing of the conduct of its business by the issuance, for cash, of equity securities of the Company
or incurring debt, or a combination of the two. Any transaction involving the issuance of previously authorized but unissued shares
of common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to present and prospective
holders of common stock. The Company could also seek joint venture partners or funding sources such as royalties or streaming transactions.
These approaches would dilute the Company’s interest in properties it has acquired.
Material Risk of Dilution Presented
by Large Number of Outstanding Share Purchase Options and Warrants
As of March 14, 2019, there were share
purchase options outstanding allowing the holders of these options to purchase 9,757,000 shares of the Company’s common stock
and warrants allowing the holders of these warrants to purchase 11,407,199 shares of the Company’s common stock. Directors
and officers of the Company in the aggregate hold 8,012,000 of these share purchase options and 12,500 of these warrants. An additional
1,745,000 share purchase options are held by employees and consultants of the Company. Given the fact that as of March 14, 2019
there were 111,726,719 shares of common stock outstanding, the exercise of all of the existing share purchase options and warrants
would result in dilution to the existing shareholders and could depress the price of the Company’s shares. The exercise of
all outstanding share purchase options and warrants would cause the number of issued and outstanding common shares to rise 19%.
Volatility of Share Price
Market prices for shares of early stage
companies are often volatile. Factors such as announcements of mineral discoveries, exploration and financial results, and other
factors could have a significant effect on the price of the Company’s shares.
Mineral Prices May Not Support Corporate
Profit
The mining industry in general is intensely
competitive and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market
will exist for the sale of same. Factors beyond the control of the Company may affect the marketability of any substances discovered.
The price of minerals is volatile over short periods of time, and is affected by numerous factors beyond the control of the Company,
including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates
and global or regional consumption patterns, speculative activities and increased production due to improved mining techniques.
Material changes in mineral prices may affect the economic viability of any project.
Laws and Regulations
The current and anticipated future operations
of the Company, including development activities and commencement of production on its properties, require permits from various
federal, territorial and local governmental authorities and such operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances,
land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines
and related facilities generally experience increased costs, and delays in production and other schedules as a result of the need
to comply with applicable laws, regulations and permits. Such operations and exploration activities are also subject to substantial
regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental
agencies. The Company believes it is in substantial compliance with all material laws and regulations which currently apply to
its activities. There can be no assurance, however, that all permits which the Company may require for construction of mining facilities
and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations, or that new legislation
or modifications to existing legislation, would not have an adverse effect on any exploration or mining project which the Company
might undertake.
Failure to comply with applicable laws,
regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or
judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or remedial actions. Parties engaged in exploration and mining operations may be required
to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties
imposed for violation of applicable laws or regulations.
The enactment of new laws or amendments
to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation
thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or
reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.
Environmental
The Company’s exploration and development
activities are subject to extensive laws and regulations governing protection of the environment. The Company is also subject to
various reclamation-related conditions. Reclamation requirements are designed to minimize long-term effects of mining exploitation
and exploration disturbance by requiring the operating company to control possible deleterious effluents and to re-establish to
some degree pre-disturbance land forms and vegetation. The Company is subject to such requirements in connection with its activities
at the Ixtaca gold and silver project (“Ixtaca” or the “Ixtaca Project”). Any significant environmental
issues that may arise, however, could lead to increased reclamation expenditures and could have a material adverse impact on the
Company’s financial resources.
The amounts recorded for reclamation costs
are estimates unique to a property based on estimates provided by independent consulting engineers and the Company’s assessment
of the anticipated timing of future reclamation and remediation work required to comply with existing laws and regulations. There
can also be no assurance that closure estimates prove to be accurate Actual costs incurred in future periods could differ from
amounts estimated. Additionally, future changes to environmental laws and regulations could affect the extent of reclamation and
remediation work required to be performed by the Company. Any such changes in future costs could materially impact the amounts
charged to operations for reclamation and remediation.
Although the Company closely follows and
believes it is operating in compliance with all applicable environmental regulations, there can be no assurance that all future
requirements will be obtainable on reasonable terms. Failure to comply may result in enforcement actions causing operations to
cease or be curtailed and may include corrective measures requiring capital expenditures. Intense lobbying over environmental concerns
by non-governmental organizations (“NGOs”) opposed to mining has caused some governments to cancel or restrict development
of mining projects. Current publicized concern over climate change may lead to carbon taxes, requirements for carbon offset purchases
or new regulation. The costs or likelihood of such potential issues to the Company cannot be estimated at this time.
No Guarantee of Title to Mineral Properties
While the Company has investigated title
to all of its mineral properties and prospects, and, to the best of its knowledge, title to all of its properties and prospects
in which it has the right to acquire or earn an interest are in good standing as of the date of this Annual Report, this should
not be construed as a guarantee of title. The properties and prospects may be subject to prior unregistered agreements or transfers
unknown to the Company and title may be affected by undetected defects, e.g. defects in staking or acquisition process.
There is a risk that title to the mining
concessions, the surface rights and access rights comprising Ixtaca and the necessary infrastructure, may be deficient or subject
to dispute. The procurement or enforcement of such rights can be costly and time consuming. In areas where there are local populations
or land owners, it may be necessary, as a practical matter, to negotiate surface access. Despite having the legal right to access
the surface and carry on construction and mining activities, the Company may not be able to negotiate satisfactory agreements with
existing landowners/occupiers for such access, and therefore it may be unable to carry out activities as planned. In addition,
in circumstances where such access is denied, or no agreement can be reached, the Company may need to rely on the assistance of
local officials or the courts in such jurisdictions, which may delay or impact mining activities as planned.
There is also a risk that the Company’s
exploration, development and mining authorizations and surface rights may be challenged or impugned by third parties. In addition,
there is a risk that the Company will not be able to renew some or all its licenses in the future. Inability to renew a license
could result in the loss of any project located within that license.
Finally, there is a risk that developing
laws and movements respecting the acquisition of lands and other rights of indigenous communities may alter the arrangements made
by prior owners of the lands where Ixtaca is located. Future laws and actions could have a material adverse effect on the Company’s
operations at Ixtaca or on its financial position, cash flow and results of operations.
If title is disputed, the Company will
have to defend its ownership through the courts, which would likely be an expensive and protracted process and have a negative
effect on the Company’s operations and financial condition. In the event of an adverse judgment, the Company could lose its
property rights.
Political, economic and social environment
The Company’s mineral properties
may be adversely affected by political, economic and social uncertainties which could have a material adverse effect on the Company’s
results of operations and financial condition. Areas in which the Company holds or may acquire properties may experience local
political unrest and disruption which could potentially affect the Company’s projects or interests. Changes in leadership,
social or political disruption or unforeseen circumstances affecting political, economic and social structure could adversely affect
the Company’s property interests or restrict its operations. The Company’s mineral exploration and development activities
may be affected by changes in government regulations relating to the mining industry and may include regulations on production,
price controls, labour, export controls, income taxes, expropriation of property, environmental legislation and safety factors.
Any shifts in political attitudes or changes
in laws that may result in, among other things, significant changes to mining laws or any other national legal body of regulations
or policies are beyond the control of the Company and may adversely affect its business. The Company faces the risk that governments
may adopt substantially different policies, which might extend to the expropriation of assets or increased government participation
in the mining sector. In addition, changes in resource development or investment policies, increases in taxation rates, higher
mining fees and royalty payments, revocation or cancellation of mining concession rights or shifts in political attitudes in countries
where the Company holds mineral properties may adversely affect the Company’s business.
The Company’s relationship with communities
in which it operates is critical to the development of the Ixtaca project. Local communities may be influenced by external entities,
groups or organizations opposed to mining activities. In recent years, anti-mining NGO activity in Mexico has increased. These
NGOs have taken such actions as road closures, work stoppages and law suits for damages. These actions relate not only to current
activities but often in respect to the mining activities by prior owners of mining properties. Such actions by NGOs may have a
material adverse effect on the Company’s operations at the Ixtaca Project and on its financial position, cash flow and results
of operations.
Uncertainty in Development of a Commercially
Mineable Ore Deposit
The properties and prospects in which the
Company has an interest are not in commercial production. A commercially viable ore deposit is dependent on the establishment of
economically recoverable reserves, the ability of the Company to obtain the necessary financing and permitting to complete development,
and ultimately upon future profitable production or the realization of proceeds from the disposition of the properties.
Uncertainty of Reserves and Mineralization
Estimates
There are numerous uncertainties inherent
in estimating proven and probable reserves and mineralization, including many factors beyond the control of the Company. The estimation
of reserves and mineralization is a subjective process and the accuracy of any such estimates is a function of the quality of available
data and of engineering and geological interpretation and judgment. Results of drilling, metallurgical testing and production and
the evaluation of mine plans subsequent to the date of any estimate may justify revision of such estimates. No assurances can be
given that the volume and grade of reserves recovered and rates of production will not be less than anticipated. Assumptions about
prices are subject to greater uncertainty and metals prices have fluctuated widely in the past. Declines in the market price of
base or precious metals also may render reserves or mineralization containing relatively lower grades of ore uneconomic to exploit.
Changes in operating and capital costs and other factors including, but not limited to, short-term operating factors such as the
need for sequential development of ore bodies and the processing of new or different ore grades, may materially and adversely affect
reserves.
Dependence on Key Personnel
The Company depends highly on the business
and technical expertise of its management and key personnel, in particular, Duane Poliquin and Morgan Poliquin. There is little
possibility that this dependence will decrease in the near term. As the Company’s operations expand, additional general management
resources may be required. The Company maintains no “Key Man” insurance coverage, and the loss or unavailability of
any of its key personnel could have a negative effect on the Company’s ability to operate effectively.
Conflict of Interest
Some of the Company’s directors and
officers are directors and officers of other natural resource or mining-related companies. Duane Poliquin, Morgan Poliquin, John
McCleary, Mark Brown, William Worrall, Douglas McDonald, and Korm Trieu also serve as directors and/or officers of Azucar Minerals
Ltd., (formerly Almadex Minerals Limited) and Almadex Minerals Ltd. (formerly 1154229 B.C. Ltd.). Gerald Carlson also serves a
director and as the President and CEO of Pacific Ridge Exploration Ltd. and director of New Point Exploration Corp. Mark Brown
also serves as the Chief Financial Officer of Adamera Minerals, Orestone Mining Corp., and Redstar Gold Corp. He also serves as
Executive Chairman of Alianza Minerals Ltd., and director of Avrupa Minerals Ltd., Mountain Boy Minerals, Strategem Capital Corp.,
and Sutter Gold Mining Ltd. Elaine Ellingham also serves as a director of Aurania Resources Ltd. and Wallbridge Mining Company
Ltd. These associations may give rise from time to time to conflicts of interest, as a result of which, the Company may miss the
opportunity to participate in certain transactions.
Foreign Operations
The Company currently has development projects
located in Mexico. The Company’s foreign activities are subject to the risks normally associated with conducting business
in foreign countries, including exchange controls and currency fluctuations, foreign taxation, laws or policies of particular countries,
labor practices and disputes, and uncertain political and economic environments, as well as risks of war and civil disturbances,
or other risks that could cause exploration or development difficulties or stoppages, restrict the movement of funds or result
in the deprivation or loss of contract rights or the taking of property by nationalization or expropriation without fair compensation.
Foreign operations could also be adversely impacted by laws and policies of the U.S. affecting foreign trade, investment and taxation.
Changes to Mexican Mining Taxes
In October 2013, the Mexican Congress approved
a package of tax reforms which included significant changes to the country’s mining royalties and tax structure. These new
laws had an effective date of January 1, 2014. The changes include a 7.5% special mining royalty on earnings before interest, taxes,
depreciation and amortization (“EBITDA”) and an additional 0.5% royalty on gross revenues from precious metal production.
The new law also increases annual taxes on certain inactive exploration concessions by 50% to 100%. These changes may result in
increased holding costs to the Company for its existing mineral concessions. These new taxes and royalties, any future increases
to tax and royalty rates, or any new taxes imposed by the Mexican governmental authorities may materially and adversely affect
the potential to define economic reserves on any Mexican properties and result in the Company’s Mexican properties being
less attractive to potential optionees or joint-venture partners.
Foreign Currency Fluctuations
At the present time, some of the Company’s
activities are carried on outside of Canada. Accordingly, it is subject to risks associated with fluctuations of the rate of exchange
between the Canadian dollar and foreign currencies.
The Company is currently not engaged in
currency hedging to offset any risk of exchange rate fluctuation and currently has no plans to engage in currency hedging.
Operating Hazards and Risks Associated
with the Mining Industry
Mining operations generally involve a high
degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Hazards such
as unusual or unexpected geological formations and other conditions are involved. Operations in which the Company has a direct
or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production
of minerals, any of which could result in work stoppages, damage to or destruction of mines and other producing facilities, damage
to or loss of life and property, environmental damage and possible legal liability for any or all damage or loss. The Company may
become subject to liability for cave-ins and other hazards for which it cannot insure or against which it may elect not to insure
where premium costs are disproportionate to the Company’s perception of the relevant risks. The payment of such insurance
premiums and the incurring of such liabilities would reduce the funds available for exploration activities.
The Ability to Manage Growth
Should the Company be successful in its
efforts to develop its mineral properties or to raise capital for such development or for the development of other mining ventures
it will experience significant growth in operations. If this occurs, management anticipates that additional expansion will be required
in order to continue development. Any expansion of the Company’s business would place further demands on its management,
operational capacity and financial resources. The Company anticipates that it will need to recruit qualified personnel in all areas
of its operations. There can be no assurance that the Company will be effective in retaining its current personnel or attracting
and retaining additional qualified personnel, expanding its operational capacity or otherwise managing growth. The failure to manage
growth effectively could have a material adverse effect on the Company's business, financial condition and results of operations.
Competition
There is competition from other mining
exploration companies with operations similar to those of the Company's. Many of the mining companies with which the Company competes
have operations and financial strength many times greater than that of the Company. Such competitors could outbid the Company for
such projects, equipment or personnel, or produce minerals at a lower cost which would have a negative effect on the Company’s
operations and financial condition.
Lack of a Dividend Policy
The Company does not intend to pay cash
dividends in the foreseeable future, as any earnings are expected to be retained for use in developing and expanding its business.
However, the actual amount of dividends which the Company may pay will remain subject to the discretion of the Company’s
Board of Directors and will depend on results of operations, cash requirements and future prospects of the Company and other factors.
Cybersecurity Risks
As is typical of modern businesses, the
Company is reliant on the continuous and uninterrupted operation of its information technology (“IT”) systems. User
access and security of all Company sites and IT systems can be critical elements to its operations, as is cloud security, security
of all of the Company’s IT systems, and protection against cyber security incidents. Any IT failure pertaining to availability,
access or system security could potentially result in disruption of the activities of the Company and its personnel, and could
adversely affect the reputation, operations or financial performance of the Company.
Potential risks to the Company’s
IT systems could include unauthorized attempts to extract business sensitive, confidential or personal information, denial of access
extortion, corruption of information or disruption of business processes, or by inadvertent or intentional actions by the Company’s
employees or vendors. A cybersecurity incident resulting in a security breach or failure to identify a security threat could disrupt
business and could result in the loss of sensitive, confidential or personal information or other assets, as well as litigation,
regulatory enforcement, violation of privacy or securities laws and regulations, and remediation costs, all of which could materially
impact the Company’s business or reputation.
Foreign Incorporation and Civil Liabilities
The Company was created under amalgamation
under the laws of the Province of British Columbia, Canada. All of the Company’s directors and officers are residents of
Canada and all of the Company’s assets and its subsidiaries are located outside the U.S. Consequently, it may be difficult
for U.S. investors to affect service of process in the U.S. upon those directors and officers who are not residents of the U.S.,
or to realize in the U.S. upon judgments of U.S. courts predicated upon civil liabilities under applicable U.S. laws.
The Company could be deemed a passive
foreign investment company which could have negative consequences for U.S. investors.
The Company could be classified as a Passive
Foreign Investment Company (“PFIC”) under the United States tax code. If the Company is a PFIC, then owners of the
Company’s shares who are U.S. taxpayers generally will be required to include distributions or any gain realized upon a disposition
or deemed disposition of shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless
the taxpayer timely makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the
Company’s shares.
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Item 4.
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Information on the Company
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History and Development of the Company
The head office of the Company is located
at 1333 Johnston Street, Suite 210, Vancouver, British Columbia, Canada, V6H 3R9. The registered and records office of the Company
is 1177 West Hastings Street, Suite 1710, Vancouver, British Columbia, Canada, V6E 2L3.
The contact persons are Duane Poliquin,
Chairman and Morgan Poliquin, President. The telephone number is (604) 689-7644. The fax number is (604) 689-7645. The email address
is info@almadenminerals.com. The web-site address is www.almadenminerals.com.
The Company was formed by amalgamation
under the laws of the Province of British Columbia of its predecessor companies, Almaden Resources Corporation and Fairfield Minerals
Ltd. on February 1, 2002. The Company operates under the
Business Corporations Act
(British Columbia)
.
Effective July 31, 2015, the Company effected
a corporate reorganization pursuant to a statutory plan of arrangement (“Plan of Arrangement”) involving the Company’s
then wholly owned subsidiary, Azucar, as described below.
The Company’s common shares began
trading on The Toronto Stock Exchange (“TSX”) under the symbol “AMM” on February 11, 2002 and on the NYSE
American (formerly the NYSE MKT), under the symbol “AAU” on December 19, 2005. Almaden Resources Corporation’s
initial public offering on the Vancouver Stock Exchange was pursuant to a prospectus dated October 10, 1986. The shares of Fairfield
Minerals Ltd. began trading on the Vancouver Stock Exchange on July 18, 1986 and on The Toronto Stock Exchange on May 21, 1990.
There have been no public takeover offers
by third parties in respect of the Company’s shares and the Company has made no public takeover offers in respect of any
other company’s shares.
Organizational Structure
The Company currently has three wholly-owned
subsidiaries. These subsidiaries are:
Subsidiaries
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Jurisdiction
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Nature of operations
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Puebla Holdings Inc.
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Canada
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Holding company
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Minera Gorrion, S.A. de C.V.
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Mexico
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Exploration company
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Molinos de Puebla, S.A. de C.V.
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Mexico
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Holding company
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Business of the Company
The Company is engaged in the business
of the acquisition, exploration and when warranted, development of mineral properties. The Company currently has material property
interests in Mexico. The Company's property interests are at the exploration and development stage. The Company has not generated
any revenues from operations.
Corporate Reorganization
The Company entered into an Arrangement
Agreement dated May 11, 2015 involving the spinout, pursuant to a statutory Plan of Arrangement, of Almaden’s early stage
exploration projects, royalty interests and other non-core assets into a new public Company called Azucar (formerly Almadex Minerals
Limited), which trades on the TSX Venture Exchange under the symbol “AMZ” and the OTCQX marketplace under the symbol
“AXDDF”, pursuant to which Azucar acquired the following key assets:
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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;
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•
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a 2% NSR on the Company’s Tuligtic property in Mexico, which hosts the Company’s
Ixtaca gold-silver development project;
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a 1.5% NSR on the Caballo Blanco gold deposit in Mexico, a development project operated
by Timmins Gold Corp.;
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a 2% NSR on the Elk gold deposit in Canada, an advanced exploration project operated
by JDL Gold Corp. (formerly Gold Mountain Mining Corp.);
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•
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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;
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equity holdings in several publicly-listed companies;
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1,597 ounces of gold bullion; and
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•
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approximately $3 million in cash.
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On July 31, 2015, all conditions to the
statutory Plan of Arrangement regarding the spinout were satisfied or waived and the spinout was effective. Almaden’s shareholders
approved the Plan of Arrangement and exchanged their existing common shares of Almaden for one “new” Almaden common
share and 0.6 common share of Azucar.
The Company entered into an Administrative
Services Agreement with Azucar dated May 15, 2015, as amended by First Amending Agreement dated December 16, 2015 (the “Agreement”).
Under the Agreement, the Company is the sole and exclusive manager of Azucar, and provides Azucar with general management services
and day-to-day operation of Azucar. These services include:
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Office space;
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Executive personnel and human resources;
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Geological technical support; and
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Accounting and financial services.
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Azucar compensates the Company 30% of the
Company’s actual monthly cost of rent for any shared facilities, and 30% of any shared personnel’s fees and/or wages.
Azucar pays the Company any reasonable fees or costs incurred on behalf of Azucar by the Company which were approved by Azucar.
Effective May 18, 2018, Azucar effected
a corporate reorganization pursuant to a statutory plan of arrangement involving Azucar’s then wholly owned subsidiary, Almadex
Minerals Ltd. (“Almadex”, formerly 1154229 B.C. Ltd.). Consequent upon this corporate reorganization the Company entered
into an Administrative Services Agreement with Almadex dated March 29, 2018 (the “Almadex Agreement”). Under the Almadex
Agreement, the Company is the sole and exclusive manager of Almadex, and provides Almadex with general management services and
day-to-day operation of Almadex. These services include:
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Office space;
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Executive personnel and human resources;
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•
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Geological technical support; and
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•
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Accounting and financial services.
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Almadex compensates the Company 20% of
the Company’s actual monthly cost of rent for any shared facilities, and 20% of any shared personnel’s fees and/or
wages. Almadex pays the Company any reasonable fees or costs incurred on behalf of Almadex by the Company which were approved by
Almadex.
Both the Agreement and the Almadex Agreement
(together, the “Administrative Services Agreements”) have initial 5-year terms, with subsequent automatic 1-year renewals
unless terminated pursuant to the terms permitted under the Administrative Services Agreements. The Administrative Services Agreements
include a Change of Control clause. If either party is subject to a Change of Control during the term of the respective Administrative
Services Agreement, the Administrative Services Agreement shall automatically terminate within 48 hours of the Change of Control
unless agreed to in writing by both parties. The target of the Change of Control shall then pay the other party $2 million as compensation
for the unplanned termination of the Company’s engagement and significant disruption to the other party’s business.
“Change of Control” means the date upon which, without the written concurrence of the target of the Change of Control,
any person (as that term is defined in the
Securities Act
(British Columbia)) makes and does not withdraw a take-over bid
(as that term is defined in the
Securities Act
(British Columbia)) or acquires, directly or indirectly, that number of common
shares of the target which equals or exceeds twenty percent (20%) of the then issued common shares of the target.
Business Overview
Maintaining properties
The following is a general statement about
government requirements for holding mineral properties in the jurisdictions where the Company currently holds material mineral
property interests.
In Mexico, mining law is a federal matter.
The government requires annual assessment work and expenditures per hectare which increase with the size and age of the claim.
Under the tax reforms effective January 1, 2014, if a concession holder has not conducted exploration or exploitation activities
during a two-year period, the concession holder would have to pay an additional 50% of the taxes payable per hectare if within
the last 11 years, and an additional 100% of the taxes payable if after year 12. Land taxes per hectare also have to be paid by
January 31 and July 31 each year. Both amounts are subject to inflation accounting and the inflation adjustment number for each
fiscal period is published in the official gazette. Under the Mexican Constitution and the mining and environmental laws of Mexico,
all mining projects are subject to Federal legal control. This control is exercised from the exploration phase through the closure
phase of a mining project. Prior to the initiation of exploration activities, concession owners are required to file a notice of
commencement of exploration activities in conformity with Mexican Official Norm 120 (NOM-120); prior to initiation of construction
activities (and also in some more intrusive exploration activities), mining projects are required to apply for and obtain an environmental
impact authorization and a land use permit from the Mexican Federal environmental agency SEMARNAT (Secretaria de Medio Ambiente
y Recursos Naturales). This requires the presentation of an environmental impact manifest and a technical study which deals with
the impacts, the environmental mitigation, and habitat compensation to the satisfaction of the authorities having environmental
jurisdiction.
Competition
The mineral property exploration and development
business, in general, is intensively competitive and there is not any assurance that even if commercial quantities of ore are discovered,
a ready market will exist for sale of same. Numerous factors beyond the Company’s control may affect the marketability of
any substances discovered. These factors include market fluctuations; the proximity and capacity of natural resource markets and
processing equipment; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted,
but the combination of these factors may make it difficult for the Company to receive an adequate return on investment.
The Company competes with many companies
possessing greater financial resources and technical facilities for the acquisition of mineral concessions, claims, leases and
other mineral interests as well as for the recruitment and retention of qualified employees.
Seasonality
The Company’s principal project is
in central Mexico. In Mexico, the climate in the project area is marked by dry, cold winters and a distinct rainy season. The rainy
season typically begins in May or June and continues until late September to October. In most years roads remain passable and exploration
can be done throughout the rainy season. Seasonal changes do not have a material impact on the Company’s exploration expenditures.
Exploration Program Protocols
General Sample
Handling and Quality Control Program for Exploration Programs
The Company employs
a strict quality control program for samples taken during its exploration programs. For drilling programs a quality control program
is in place which includes the insertion of blanks, field duplicates and certified standards into the sample stream.
Chain of Custody
Samples of rock
and drill core and cuttings are sealed by the sampler and kept under control of a qualified person until they are shipped to a
laboratory.
Sample Handling
Sample handling
for drilling programs is described more fully below. Soil and stream sediment samplers have been trained to industry standard levels
of sampling methodology. In general, the Company sieves stream sediment samples to -20 mesh in the field during preparation. Samplers
are required to not wear any jewellery or clothing or use equipment which may contaminate the sample. All sample locations are
geographically located at the time of sampling using the Global Positioning System. The Company has prepared standardized sample
information cards for samplers to record information concerning the sample location, type and medium. Outcrop, float and dump rock
samples are collected by geologists who record similarly ordered geologic information relating to the sample taken.
Blanks
Blank material,
a sample of crushed and pulverized rock, known to contain very low or non-detectable concentration of gold and silver, is inserted
as a pulp into the sample stream on an interval of every 20 samples. Blanks are intended to detect possible contamination.
Duplicates
During drill programs
the Company routinely includes a field duplicate into the sample stream, spaced at 20 sample intervals. Field duplicate samples
are splits of drill core or reverse circulation cuttings from the sample interval. The resulting two field duplicate samples are
submitted with separate sample numbers “blind” to the assay lab and separately treated as normal samples. The samples
are taken randomly with no regard to rock type, 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/Ixtaca Project
– Mexico
Location and Access
The Ixtaca deposit, the epithermal gold-silver
target within the Tuligtic Property, is located 8 km northwest of the town of San Francisco Ixtacamaxtitlán, the county
seat of the municipality of Ixtacamaxtitlán, Puebla State. The Ixtaca project is accessible by driving 40 km east along
Highway 119 from Apizaco, an industrial center located approximately 50 km north of Puebla City by two-lane Highway, and then north
approximately 2 km along a paved road to the town of Santa Maria. The trip from Apizaco to site can be driven in approximately
1.5 hours. There is also access to the Tuligtic Property using gravel roads from the northeast via Tezhuitan and Cuyoaco, 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 Ixtaca Project, and houses agricultural, chemical, biomedical and
industrial manufacturing facilities and is serviced by rail. Puebla, the fourth largest city in Mexico has a population in excess
of 4 million people, and includes one of the largest Volkswagen automotive plants outside Germany.
The
Topography on the Tuligtic Property is generally moderate to steep hills with incised stream drainages. Elevation ranges
from 2,300 meters (m) above sea level in the south to 2,800 m in the north. Vegetation is dominantly cactus and pines and the general
area is also somewhat cultivated with subsistence vegetables, bean and corn crops. The Ixtaca Zone exploration area has been previously
cleared and logged. The region has a temperate climate with mean monthly temperatures ranging from 16°C in June to 12°C
in January. The area experiences approximately 714 mm of precipitation annually with the majority falling during the rainy season,
between June and September. Annual evapotranspiration is estimated to be 774 mm. Exploration can be conducted year round within
the Tuligtic Property; however, road building and drilling operations may be impacted by weather to some degree during the rainy
season. Electricity is available on the Tuligtic Property from the national electricity grid that services nearby towns such as
Santa Maria and Zacatepec. The surface rights locally are privately owned and Almaden has negotiated voluntary surface land use
agreements with surface landowners within the exploration area prior to beginning activities. To date Almaden has secured through
purchase agreements over 1,139 hectares, from numerous independent owners.
Claims and Title
The Tuligtic Property was staked by Almaden
in 2001, following the identification of surficial clay deposits that were interpreted to represent high-level epithermal alteration.
The Property originally consisted of approximately 14,000 hectares, but during 2015 Almaden filed applications to reduce the aggregate
claim size at Tuligtic to those areas still considered prospective. The Property is held 100% by Minera Gorrion S.A. de C.V., a
subsidiary of Almaden Minerals Ltd. through the holding company, Puebla Holdings Inc., subject to a 2% NSR in favour of Almadex
Minerals Ltd. The Property currently consists of seven mineral claims totaling 7,220 hectares. Claim details are summarized below.
Claim Name
|
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 Tuligtic Property is subject
to expenditure requirements of approximately US$757,000 per year. However, the Company has substantial historic expenditures which
can be used to offset the annual requirements.
Geological Setting of the Tuligtic
Project and Ixtaca Zone
The Ixtaca Project is situated within the
Trans Mexican Volcanic Belt (TMVB), a Tertiary to recent intrusive volcanic arc extending approximately east-west across Mexico
from coast to coast and ranging in width from 10 to 300km. The TMVB is the most recent episode of a long lasting magmatic activity
which, since the Jurassic, produced a series of partially overlapping arcs as a result of the eastward subduction of the Farallon
plate beneath western Mexico (Ferrari, 2011). The basement rocks of the eastern half of the TMVB are Precambrian terranes, including
biotite orthogneiss and granulite affected by granitic intrusions, grouped into the Oaxaquia microcontinent (Ferrari et al., 2011;
Fuentes-Peralta and Calderon, 2008). These are overlain by the Paleozoic Mixteco terrane, consisting of a metamorphic sequence
known as the Acatlan complex and a fan delta sedimentary sequence known as the Matzitzi formation. Another sedimentary complex
is found on top of the Mixteco terrane, represented by various paleogeographic elements such as the Mesozoic basins of Tlaxiaco,
Zongolica, Zapotitlan, and Tampico-Misantla (Fuentes-Peralta and Calderon, 2008). The subducting plates associated with the TMVB
are relatively young, with the Rivera plate dated at 10Ma (million years) and the Cocos plate at 11 to 17Ma.
The stratigraphy of the Tuligtic area can
be divided into two main sequences: a Mesozoic sedimentary rock sequence related to the Zongolica basin and a sequence of late
Tertiary igneous extrusive rocks belonging to the TMVB (Fuentes-Peralta & Calderon, 2008; Tritlla et al., 2004). The sedimentary
sequence is locally intruded by plutonic rocks genetically related to the TMVB. The sedimentary complex at Tuligtic corresponds
to the Upper Tamaulipas formation (Reyes-Cortes 1997). This formation, Late Jurassic to Early Cretaceous in age, is regionally
described (Reyes-Cortes, 1997) as a sequence of grey-to-white limestone, slightly argillaceous, containing bands and nodules of
black chert. The drilling conducted by Almaden allows for more detailed characterisation of the Upper Tamaulipas Formation carbonate
units in the Tuligtic area. The sequence on the Project consists of clastic calcareous rocks. The limestone unit variably bedded,
generally light grey but locally dark grey to black, with local chert rich sections graded into what have been named transition
units and shale (also black shale). The transition units are brown calcareous siltstones and grainstones. These rocks are not significant
in the succession but mark the transition from limestone to underlying calcareous shale. Typical of the transition units are coarser
grain sizes. The lower calcareous “shale” units exhibit pronounced laminated bedding and is typically dark grey to
black in colour, although there are green coloured beds as well. The shale units appear to have been subjected to widespread calc-silicate
alteration.
Both the shale and transition units have
very limited surface exposure and may be recessive. The entire carbonate package of rocks has been intensely deformed by the Laramide
orogeny, showing complex thrusting and chevron folding in the hinge zones of a series of thrust-related east verging anticlines
in the Ixtaca area (Tritlla et al., 2004; Coller, 2011). The calcareous shale units appear to occupy the cores of the anticlines
while the thick bedded limestone units occupy the cores of major synclines identified in the Ixtaca zone.
The Tamaulipas Formation carbonate rocks
are intruded in the mid-Miocene by a series of magmatic rocks. The compositions are very variable, consisting of hornblende-biotite-bearing
tonalites, quartz-plagioclase-hornblende diorites, and, locally, aphanitic diabase dykes (Carrasco-Nunez et al., 1997). In the
central part of the Tuligtic Property porphyry mineralization is hosted by and associated with a hornblende-biotite-quartz phyric
granodiorite body. The contact between the granodiorite and the limestone is marked by the development of a prograde skarn.
In the Ixtaca deposit epithermal area of
the Project, the limestone basement units are crosscut by intermediate dykes that are often intensely altered. In the vicinity
of the Ixtaca zone these dykes are well mineralized especially at their contacts with limestone country rock. Petrography has shown
that epithermal alteration in the dykes, marked by illite, adularia, quartz and pyrite overprints earlier calc-silicate endoskarn
mineralogies (Leitch, 2011). Two main orientations are identified for dykes in the Ixtaca area; 060 degrees (parallel to the Main
Ixtaca and Ixtaca North zones) and 330 degrees (parallel to the Chemalaco Zone).
An erosional unconformity surface has been
formed subsequent to the intrusion of the porphyry mineralization-associated granodiorites. This paleo topographical surface locally
approximates the current topography. Although not well exposed the unconformity is marked by depression localised accumulations
of basal conglomerate comprised of intrusive and sedimentary boulders.
Two styles of alteration and mineralization
have been identified in the area: (1) copper-molybdenum porphyry style alteration and mineralization hosted by diorite and quartz-diorite
intrusions; (2) silver-gold low-sulphidation epithermal quartz-bladed calcite veins hosted primarily by carbonate rocks and spatially
associated with overlying volcanic hosted texturally destructive clay alteration and replacement silicification.
Outcropping porphyry-style alteration and
mineralization is observed in the bottoms of several drainages where the altered intrusive complex is exposed in erosional windows
beneath post mineral unconsolidated ash deposits. Multiple late and post mineral intrusive phases have been identified crossing
an early intensely altered and quartz-veined medium-grained feldspar phyric diorite named the Principal Porphyry. Other intrusive
types include late and post mineral mafic dykes and an inter-mineral feldspar-quartz phyric diorite. Late mineral mafic dykes are
fine grained and altered to chlorite with accessory pyrite. Calc-silicate (garnet-clinopyroxene) altered limestone occurs in proximity
to the intrusive contacts and is crosscut by late quartz-pyrite veins. Early biotite alteration of the principal porphyry consists
of biotite-orthoclase flooding of the groundmass. Quartz veins associated with early alteration have irregular boundaries and are
interpreted to be representative of A-style porphyry veins. These are followed by molybdenite veins which are associated with the
same wall rock alteration. Chalcopyrite appears late in the early alteration sequence. Late alteration is characterized by intense
zones of muscovite-illite-pyrite overprinting earlier quartz-K-feldspar-pyrite ± chalcopyrite veining and replacing earlier
hydrothermal orthoclase and biotite. Stockwork quartz-pyrite crosscuts the A-style veins and is associated with muscovite-illite
alteration of biotite. The quartz-sericite alteration can be texturally destructive resulting in white friable quartz veined and
pyrite rich rock. Pyrite is observed replacing chalcopyrite and in some instances chalcopyrite remains only as inclusions within
late stage pyrite grains.
Epithermal mineralization on the Tuligtic
Property is considered to have no genetic relationship to the porphyry alteration and mineralization described above. The epithermal
system is well preserved and there is evidence of a paleosurface as steam heated kaolinite and replacement silica alteration occur
at higher elevations where the upper part of the Coyoltepec pyroclastic deposit is preserved.
The Upper Tamaulipas formation carbonates
(limestone and shale units), the dykes that crosscut it and the upper Coyoltepec volcanic subunit (variously referred to as volcanics,
tuff or ash) are the host rocks to the epithermal system at Ixtaca. The epithermal alteration occurs over a roughly 5 by 5 kilometre
area and occurs as intense kaolinite-alunite alteration and silicification in volcanic rocks. This alteration is interpreted to
represent the upper portion of a well preserved epithermal system. The bulk of the mineralisation occurs in the carbonate (limestone
and shale) as colloform banded epithermal vein zones. Unlike many epithermal vein systems in Mexico, the bulk of the veining in
the Ixtaca zone has low base metal contents and gold and silver occur as electrum and other sulphides. SEM work has demonstrated
that silver does not occur with galena or tetrahedrite in any significant way. In the main limestone unit (80% of recoverable metal
in the FS) the silver to gold ratio of the mineralisation is roughly estimated to average ~65:1 while in the shale it is roughly
estimated to be slightly higher at ~75:1.
History of Past Work
To the Company’s knowledge, no modern
exploration has been conducted on the Ixtaca Project prior to Almaden’s acquisition of claims during 2001 and there is no
record of previous mining; as such, this is a maiden discovery.
During January 2003, Almaden completed
a program of geologic mapping, rock, stream silt sampling and induced polarization (IP) geophysical surveys at the Tuligtic Property
(then known as the “Santa Maria Prospect”). The exploration identified both a porphyry copper and an epithermal gold
target within an approximately 5 x 5km area of intensely altered rock. At the porphyry copper target, stockwork quartz-pyrite veins
associated with minor copper mineralization overprint earlier potassic alteration within a multi-phase intrusive body. A single
north-south oriented IP survey line identified a greater than 2km long elevated chargeability response coincident with the exposed
altered and mineralized intrusive system. Volcanic rocks exposed 1km to the south of the mineralized intrusive display replacement
silicification and sinter indicative of the upper parts of an epithermal system (the “Ixtaca Zone”). Quartz-calcite
veins returning anomalous values in gold and silver and textural evidence of boiling have been identified within limestone roughly
100m below the sinter. The sinter and overlying volcanic rocks are anomalous in mercury, arsenic, and antimony.
Additional IP surveys and soil sampling
were conducted in January and February 2005, further defining the porphyry copper target as an area of high chargeability and elevated
copper, molybdenum, silver and gold in soil. A total of eight (8) east-west oriented lines, 3km in length, spaced at intervals
of 200m have been completed over mineralized intrusive rocks intermittently exposed within gullies cutting through the overlying
unmineralized ash deposits.
The Tuligtic Property was optioned to Pinnacle
Mines Ltd. in 2006 and the option agreement was terminated in 2007 without completing significant exploration.
The Property was subsequently optioned
to Antofagasta Minerals S.A. (Antofagasta) on March 23, 2009. During 2009 and 2010 Antofagasta, under Almaden operation, carried
out IP geophysical surveys and a diamond drill program targeting the copper porphyry prospect. Three additional IP survey lines
were completed, and in conjunction with the previous nine (9) IP lines, a 2 x 2.5km chargeability high anomaly, open to the west
and south, was defined. The 2009 drilling consisted of 2,973m within seven (7) holes that largely intersected skarn type mineralization.
On February 16, 2010, Almaden announced
that Antofagasta terminated its option to earn an interest in the Property.
In July 2010, Almaden initiated a preliminary
diamond drilling program to test epithermal alteration within the Tuligtic Property, resulting in the discovery of the Ixtaca Zone.
The target was based on exploration data gathered by Almaden since 2001 including high gold and silver in soil and a chargeability
and resistivity high anomaly (derived from an IP geophysical survey conducted by Almaden) topographically beneath Cerro Caolin,
a prominent clay and silica altered hill. This alteration, barren in gold and silver, was interpreted by Almaden to represent the
top of an epithermal system which required drill testing to depth. The first hole, TU-10-001 intersected 302.42 metres of 1.01g/t
gold and 48g/t silver and multiple high grade intervals including 44.35 metres of 2.77g/t gold and 117.7g/t silver.
Present Condition of Project
Geology and Mineral Resources
The veining of Ixtaca epithermal system
displays characteristics representative of low and intermediate sulphidation deposits. These include typical mill feed and gangue
mineralogy (electrum Ag-sulphides, sphalerite, galena, adularia, quartz and carbonates), mineralization dominantly in open space
veins (colloform banding, cavity filling).
At the base of the overlying clay altered
volcanics disseminated gold-silver mineralisation occurs in association with pyrite and minor veining. Locally this mineralisation
can be high grade but largely associated with lower Ag:Au ratios roughly estimated to average 20:1.
To date two main vein orientations have
been identified in the Ixtaca deposit:
|
•
|
060 trending sheeted veins hosted by limestone;
|
|
•
|
330 trending veins hosted by shale;
|
The bulk of the resource and over 80% of
the mill feed is hosted by the limestone in the Main Ixtaca and Ixtaca North zones as swarms of sheeted and anastomosing high grade
banded epithermal veins. There is no disseminated mineralisation within the host rock to the vein swarms, which is barren and unaltered
limestone. To the northeast of the limestone hosted mineralisation, the Chemalaco zone, a 330 striking and west dipping vein zone
hosted by shale, also forms part of the deeper resource.
Rock Creek Mill
Almaden entered into an option agreement
to acquire the Rock Creek Mill in October 2015. The Rock Creek Mill is a completed mill located outside of Nome, Alaska which only
operated for several months before its owner suspended its mining operation in 2008. The mill has been kept in excellent condition
on care and maintenance.
The Rock Creek Mill was built to process
7,000 tonnes per day. It includes a three-stage crushing plant, gravity circuit, ball mill, floatation cells and leaching facilities.
Also included in the option agreement are conveyors, metallurgical and chemical fire assay laboratories, a water treatment plant,
full electrical circuitry and generators, and spare parts.
Almaden exercised its right and option
under the option agreement and has purchased the Rock Creek Mill and related assets for a total of US$6,500,000, subject to adjustment
under certain circumstances, on the following basis:
On execution of agreement
|
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
|
Paid
|
In addition to the cash payments, Almaden
also issued to the optionor 407,997 Almaden common shares valued at $273,358 upon receipt of regulatory approval, which were issued
on November 25, 2016.
During the year ended December 31, 2018,
Almaden obtained ownership and title to the mill equipment.
The Rock Creek Mill has been incorporated
into the cost estimates for the Ixtaca Feasibility Study.
Amended Preliminary Economic Assessment
On January 22, 2016, Almaden filed a NI
43-101 Technical Report titled "Preliminary Economic Assessment of the Ixtaca Project”, which provided further detail
to its December 9, 2015 press release summarizing the results of integrating the optioned Rock Creek Mill and a smaller, higher
grade, payback focused pit on potential mine economics. Almaden subsequently filed an amended technical report on SEDAR on April
13, 2016 (the “Amended PEA”), however the amendments were not material changes and the Report’s data, inputs,
interpretation, conclusions and results all remained unchanged.
The Amended PEA followed the historical
PEAs released in 2014 and 2015 (“Historical PEAs”) which evaluated larger throughput development alternatives. The
primary reasons for providing an update to the Historical PEAs were to show the impact of significantly reduced initial capital
cost on project economics and, given the significant decrease in precious metals prices, to demonstrate the viability of a mine
plan which focused on the near surface high grade limestone hosted portions of the Ixtaca Zone deposit.
This mine plan was a smaller higher grade
scenario than those described in Almaden’s Historical PEA studies. In addition, the Amended PEA incorporated the optioned
Rock Creek mill as well as results from various engineering studies related to the project which had been conducted since the Historical
PEAs were completed. The Amended PEA incorporated:
|
•
|
The same resource model as the Historical PEAs;
|
|
•
|
The Rock Creek Mill, which was optioned by the Company in October 2015, with average throughput
of 7,500 tonnes per day;
|
|
•
|
A smaller, near surface and payback focussed pit;
|
|
•
|
A mine production schedule which targets higher grades earlier;
|
|
•
|
Optimised waste placement and tailings management facilities;
|
|
•
|
A 2% NSR now held by Almadex Minerals Ltd.
|
Pre-Feasibility Study (“PFS”)
Upon completion of the Amended PEA, Almaden
began the work required for a Pre-Feasibility Study on the Ixtaca Project. During 2016, Almaden completed the necessary geotechnical,
geomechanical, and hydrologic field programs, and also optimized site layout through updated waste placement and facilities locations.
A new metallurgical program was also completed on the limestone domain, which represents approximately 82% of the total gold equivalent
ounces produced over the life of the mine in the PFS.
The completed PFS was filed on SEDAR on
May 17, 2017 and included an updated resource model. The mine production schedule also included the optioned Rock Creek Mill while
targeting higher grades earlier, using smaller, payback focused starter pits.
Feasibility Study (“Study”)
Upon completion of the PFS, Almaden began
the work required for a Feasibility Study on the Ixtaca Project. The Study and resulting mine plan incorporate significant changes
from the PFS including filtered (dry stack) tailings, ore sorting, increased throughput and an improved mine schedule. Collectively
the changes result in a reduced project footprint and improved economics.
Almaden engaged a team of consultants led
by Moose Mountain Technical Services (“MMTS”) to undertake this Study. MMTS was responsible for mining, metallurgy,
processing, infrastructure and the economic evaluation, APEX Geoscience Ltd. for exploration and drill data QA/QC, Giroux Consultants
for the resources estimation, and SRK Consulting (U.S.), Inc. (“SRK”) for aspects related to geotechnical, tailings
and water management.
The completed Study was filed on SEDAR
on January 24, 2019 and on EDGAR under Form 6-K on January 25, 2019.
STUDY HIGHLIGHTS
(All values shown in this section discussing
the Study are in $US unless noted otherwise. Base case uses $1275/oz gold and $17/oz silver prices. Gold and silver equivalency
calculations assume 75:1 ratio).
|
•
|
Average annual production of 108,500 ounces gold and 7.06 million ounces silver
(203,000 gold equivalent ounces, or 15.2 million silver equivalent ounces) over first 6 years;
|
|
•
|
After-tax internal rate of return (“IRR”) of 42% and after-tax payback
period of 1.9 years;
|
|
•
|
After-tax net present value (“NPV”) of $310 million at a 5% discount
rate;
|
|
•
|
Initial Capital of $174 million;
|
|
•
|
Conventional open pit mining with a Proven and Probable Mineral Reserve of 1.39
million ounces of gold and 85.2 million ounces of silver;
|
|
•
|
Pre-concentration uses ore sorting to produce a total of 48 million tonnes of mill
feed averaging 0.77 g/t gold and 47.9 g/t silver (2.03 g/t gold equivalent over first 6 years, 1.41 g/t gold equivalent over life
of mine);
|
|
•
|
Average life-of-mine (“LOM”) annual production of 90,800 ounces gold
and 6.14 million ounces silver (173,000 gold equivalent ounces, or 12.9 million silver equivalent ounces);
|
|
•
|
Operating cost $716 per gold equivalent ounce, or $9.55 per silver equivalent ounce;
|
|
•
|
All-in Sustaining Costs (“AISC”), including operating costs, sustaining
capital, expansion capital, private and public royalties, refining and transport of $850 per gold equivalent ounce, or $11.30 per
silver equivalent ounce;
|
|
•
|
Elimination of tailings dam by using filtered tailings significantly reduces the
project footprint and water usage
|
Capital and Operating Costs
Initial capital cost for the Ixtaca gold-silver
project is $174 million and sustaining capital (including expansion capital) is $111 million over the LOM. The estimated expansion
capital of $64.5 million will be funded from cashflow in Year 4 for the throughput ramp-up in Year 5. Estimated LOM operating costs
are $26.8 per tonne mill feed. The following tables summarize the cost components:
Initial Capital Costs ($ millions)
Mining
|
22.2
|
Process
|
80.2
|
Onsite Infrastructure
|
24.3
|
Offsite Infrastructure
|
7.5
|
Indirects, EPCM, Contingency and Owner’s Costs
|
39.9
|
Total
|
174.2
|
Expansion Capital Costs ($ millions)
Mining
|
$ 1.2
|
Process
|
$ 56.9
|
Infrastructure
|
$ 1.5
|
Indirects, EPCM, Contingency and Owner’s Costs
|
$ 5.0
|
Total
|
$ 64.5
|
LOM Average Operating Costs ($)
Mining costs
|
$/tonne milled
|
$15.2
|
Processing
|
$/tonne milled
|
$10.5
|
G&A
|
$/tonne milled
|
$1.1
|
Total
|
$/tonne milled
|
$26.8
|
Economic Results and Sensitivities
A summary of financial outcomes comparing
base case metal prices to alternative metal price conditions are presented below. The Study base case prices are derived from current
common peer usage, while the alternate cases consider the project’s economic outcomes at varying prices witnessed at some
point over the three years prior to this study.
Summary of Ixtaca Economic Sensitivity
to Precious Metal Prices (Base Case is Bold)
Gold Price ($/oz)
|
1125
|
1200
|
1275
|
1350
|
1425
|
Silver Price ($/oz)
|
14
|
15.5
|
17
|
18.5
|
20
|
|
Pre-Tax NPV 5% ($million)
|
229
|
349
|
470
|
591
|
712
|
Pre-Tax IRR (%)
|
35%
|
46%
|
57%
|
67%
|
77%
|
Pre-Tax Payback (years)
|
2.0
|
1.8
|
1.6
|
1.4
|
1.3
|
|
After-Tax NPV 5% ($million)
|
151
|
233
|
310
|
388
|
466
|
After-Tax IRR (%)
|
25%
|
34%
|
42%
|
49%
|
57%
|
After-Tax Payback (years)
|
2.6
|
2.1
|
1.9
|
1.7
|
1.5
|
Mineral Resource Estimate
On January 31, 2013 the Company announced
a maiden resource on the Ixtaca Zone, which was followed by a resource update on January 22, 2014 and another on May 17, 2017.
Since that time an additional 104 holes have been completed, and this data is also included in the Mineral Resource Estimate which
has been prepared in accordance with NI 43-101 by Gary Giroux, P.Eng., qualified person ("QP") under the meaning of NI
43-101, and summarised in the table below. The data available for the resource estimation consisted of 649 drill holes assayed
for gold and silver. Wireframes constraining mineralised domains were constructed based on geologic boundaries defined by mineralisation
intensity and host rock type. Higher grade zones occur where there is a greater density of epithermal veining. These higher grade
domains have good continuity and are cohesive in nature.
Of the total drill holes, 558 intersected
the mineralised solids and were used to make the resource estimate. Capping was completed to reduce the effect of outliers within
each domain. Uniform down hole 3 meter composites were produced for each domain and used to produce semivariograms for each variable.
Grades were interpolated into blocks 10 x 10 x 6 meters in dimension by ordinary kriging. Specific gravities were determined for
each domain from drill core. Estimated blocks were classified as either Measured, Indicated or Inferred based on drill hole density
and grade continuity
Table showing the Measured, Indicated and
Inferred Mineral Resource Statement with the Base Case 0.3 g/t AuEq Cut-Off highlighted from the 8 July 2018 Resource Statement.
Also shown are the 0.5, 0.7 and 1.0 g/t AuEq cut-off results. AuEq calculation is based on average prices of $1250/oz gold and
$18/oz silver.
Cautionary Note to U.S. Investors concerning
estimates of Measured and Indicated Resources
This section uses the terms “measured
resources” and “indicated resources”. U.S. investors are advised that while these terms are recognized and required
by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.
U.S. Investors are cautioned not
to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.
Ixtaca Zone Measured, Indicated and Inferred Mineral Resource
Statement
MEASURED RESOURCE
|
AuEq Cut-off
|
Tonnes > Cut-off
|
Grade>Cut-off
|
Contained Metal x 1,000
|
(g/t)
|
(tonnes)
|
Au (g/t)
|
Ag (g/t)
|
AuEq (g/t)
|
Au (oz)
|
Ag (oz)
|
AuEq (oz)
|
0.30
|
43,380,000
|
0.62
|
36.27
|
1.14
|
862
|
50,590
|
1,591
|
0.50
|
32,530,000
|
0.75
|
44.27
|
1.39
|
788
|
46,300
|
1,454
|
0.70
|
25,080,000
|
0.88
|
51.71
|
1.63
|
711
|
41,700
|
1,312
|
1.00
|
17,870,000
|
1.06
|
61.69
|
1.95
|
608
|
35,440
|
1,118
|
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 (oz)
|
Ag (oz)
|
AuEq (oz)
|
0.30
|
80,760,000
|
0.44
|
22.67
|
0.77
|
1,145
|
58,870
|
1,994
|
0.50
|
48,220,000
|
0.59
|
30.13
|
1.02
|
913
|
46,710
|
1,586
|
0.70
|
29,980,000
|
0.74
|
37.79
|
1.29
|
715
|
36,430
|
1,240
|
1.00
|
16,730,000
|
0.96
|
47.94
|
1.65
|
516
|
25,790
|
888
|
Cautionary Note to U.S. Investors
concerning estimates of Inferred
Resources
This section uses the term “inferred
resources”. U.S. investors are advised that while this term is recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize it. “Inferred resources” have a great amount of uncertainty as
to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part
of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral
Resources may not form the basis of feasibility or other economic studies.
U.S. investors are cautioned not to assume that part
or all of an inferred resource exists, or is economically or legally mineable
.
INFERRED RESOURCE
|
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 (oz)
|
Ag (oz)
|
AuEq (oz)
|
0.30
|
40,410,000
|
0.32
|
16.83
|
0.56
|
412
|
21,870
|
726
|
0.50
|
16,920,000
|
0.44
|
25.43
|
0.80
|
237
|
13,830
|
436
|
0.70
|
7,760,000
|
0.57
|
33.80
|
1.06
|
142
|
8,430
|
264
|
1.00
|
3,040,000
|
0.79
|
43.64
|
1.42
|
77
|
4,270
|
139
|
Notes pertaining to Measured, Indicated
and Inferred Mineral Resource Estimates:
|
1.
|
Ixtaca Mineral Resources Estimate have an effective date of 8 July 2018. The Qualified person
for the estimate is Gary Giroux, P.Eng.
|
|
2.
|
Base Case 0.3 g/t AuEq Cut-Off grade is highlighted. Also shown are the 0.5, 0.7 and 1.0 g/t
AuEq cut-off results. AuEq calculation based on average prices of $1250/oz gold and $18/oz silver. The Base Case cut-off grade
includes consideration of the open pit mining method, 90% metallurgical recovery, mining costs of $1.82/t, average processing costs
of $11.7, G&A costs of $1.81/t
|
|
3.
|
Mineral Resources are reported inclusive of those Mineral Resources that have been converted
to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
|
|
4.
|
The estimate of Mineral Resources may be materially affected by environmental, permitting, legal
or other relevant issues. The Mineral Resources have been classified according to the CIM Definition Standards for Mineral Resources
and Mineral Reserves in effect as of the date of 8 July 2018.
|
|
5.
|
All figures were rounded to reflect the relative accuracy of the estimates and may result in
summation differences.
|
Mineral Reserve Estimate
Mineral Reserves in the table below have
been developed by MMTS with an effective date of November 30, 2018, and are classified using the 2014 CIM Definition Standards.
The Mineral Reserves are based on an engineered open pit mine plan.
Mineral Reserves
|
Tonnes
|
Diluted Average Grades
|
Contained Metal
|
|
(millions)
|
Au (g/t)
|
Ag (g/t)
|
Au - '000 ozs
|
Ag - '000 ozs
|
Proven
|
31.6
|
0.70
|
43.5
|
714
|
44,273
|
Probable
|
41.4
|
0.51
|
30.7
|
673
|
40,887
|
TOTAL
|
73.1
|
0.59
|
36.3
|
1,387
|
85,159
|
|
•
|
Mineral Reserves have an effective date of November 30, 2018. The qualified person responsible for
the Mineral Reserves is Jesse Aarsen, P.Eng of Moose Mountain Technical Services.
|
|
|
|
|
•
|
The cut-off grade used for ore/waste determination is NSR>=$14/t
|
|
|
|
|
•
|
All Mineral Reserves in this table are Proven and Probable Mineral Reserves.
The Mineral Reserves are not in addition to the Mineral Resources but are a subset thereof. All Mineral Reserves stated above account
for mining loss and dilution.
|
|
|
|
|
•
|
Associated metallurgical recoveries (gold and silver, respectively) have been estimated as 90% and 90% for limestone,
50% and 90% for volcanic, 50% and 90% for black shale.
|
|
|
|
|
•
|
Reserves are based on a US$1,300/oz gold price, US$17/oz silver price and an
exchange rate of US$1.00:MXP20.00.
|
|
|
|
|
•
|
Reserves are converted from resources through the process of pit optimization, pit design, production schedule and
supported by a positive cash flow model.
|
|
|
|
|
•
|
Rounding as required by reporting guidelines may result in summation differences.
|
Legal, political,
environmental, or other risks that could materially affect the potential development of the Mineral Reserves are provided in this
Form 20F under the heading “Risk Factors”.
Mine Plan
The Ixtaca gold-silver project is planned
as a typical open pit mining operation using contractor mining. Initial production will ramp up to a mill feed rate of 7,650 tonnes
per day followed by an expansion to 15,300 tonnes per day from Year 5 onwards.
An ore control system is planned to provide
field control for the loading equipment to selectively mine ore grade material separately from the waste.
Mining operations will be based on 365
operating days per year with three 8 hour shifts per day.
Processing
The Study reflects the Rock Creek process
plant which has been purchased by Almaden. Run of mine ore will be crushed in a three-stage crushing circuit to -9 mm.
The Study also incorporates ore sorting,
test work for which has shown the ability to separate barren or low grade limestone host rock encountered within the vein swarm
from vein and veined material (see Almaden news release of July 16
th
2018). Product from the secondary crusher will
be screened in to coarse (+20mm), mid-size (12 to 20 mm), and fine (-12mm) fractions. Coarse and mid-size ore will be sorted by
an XRT ore sort machine to eject waste rock. Fine ore will bypass the ore sorting and is sent directly to the mill.
Ore sort waste from Limestone and Black
Shale is below waste/ore cutoff grade and is placed in the waste rock dump. Ore sort ‘waste’ from the Volcanic unit
is low grade ore and will be stockpiled for processing later in the mine life. Ore sorting pre-concentration increases the mill
feed gold and silver grades by 32% and 31% respectively compared to run of mine (ROM) grades. The table below shows ROM grades
with ore sort waste removed from the ROM, and the resulting mill feed.
Ore Sort Mill Feed grade improvement
|
|
ROM
|
Ore sort
|
Mill
|
|
|
Ore
|
Waste
|
Feed
|
Limestone
|
million tonnes
|
51.5
|
18.8
|
32.7
|
Au g/t
|
0.572
|
0.24
|
0.763
|
Ag g/t
|
37.5
|
12.0
|
52.2
|
Black Shale
|
million tonnes
|
12.2
|
6.3
|
5.8
|
Au g/t
|
0.517
|
0.25
|
0.806
|
Ag g/t
|
44.4
|
20.0
|
70.8
|
Volcanic
|
million tonnes
|
9.4
|
-
|
9.4
|
Au g/t
|
0.790
|
-
|
0.790
|
Ag g/t
|
18.6
|
-
|
18.6
|
TOTAL
|
million tonnes
|
73.1
|
25.1
|
48.0
|
Au g/t
|
0.591
|
0.24
|
0.773
|
Ag g/t
|
36.3
|
14.0
|
47.9
|
Crushed ore is transported to the grinding
circuit by an over land conveyor. Grinding to 75 microns is carried out with ball milling in a closed circuit with cyclones. Cyclone
underflow is screened and the screen undersize is treated in semi-batch centrifugal gravity separators to produce a gravity concentrate.
The gravity concentrate will be treated
in an intensive leach unit with gold and silver recovered from electrowinning cells.
The cyclone overflow will be treated in
a flotation unit to produce a flotation concentrate. After regrinding the flotation concentrate leaching will be carried out in
2 stages. CIL leaching for 24 hours will complete gold extraction, followed by agitated tank leaching to complete silver leaching.
A carbon desorption process will recover gold and silver from the CIL loaded carbon, and a Merrill Crowe process will recover gold
and silver from pregnant solution from the agitated leach circuit.
Cyanide destruction
on leach residue is carried out using the SO
2
/Air process. Final tailings are thickened and filtered then dry stacked
and co-disposed with mine waste rock.
Average process recoveries from mill feed
to final product over the life of mine are summarized below for each ore type.
Average Life of Mine Process Recoveries
from Mill Feed
|
Gold
|
Silver
|
Limestone
|
88.5%
|
86.8%
|
Volcanic
|
64.4%
|
76.3%
|
Black Shale
|
54.5%
|
84.7%
|
Water and Waste Management
One of Almaden’s top priorities at
Ixtaca is water quality and a mine plan that provides a permanent and consistent long-term supply of water for residents. The plan
outlined in the Study has evolved through the open dialogue between the Company and residents over the past number of years and
as part of the Social Investment Plan consultation (see section below on “Community”).
Rainfall in the Ixtaca vicinity falls primarily
during a relatively short rainy season. With no local water storage facilities, the flash flows of water are currently lost to
the communities. Under the Study, rainwater will be captured during the rainy season in the water storage reservoir and slowly
released during the dry season, for use by both the mining operation and local residents.
Extensive geochemical studies have evaluated
the potential for acid rock drainage and metal leaching from the waste rock and tailings using globally accepted standardised methods
of laboratory testing and in compliance with Mexican regulations. Most of the waste rock at Ixtaca is limestone, and the studies
of both waste rock and tailings have consistently shown that there is more than enough neutralising potential present in the waste
rock to neutralise any acid generated. Testing to date also indicates low potential for metal leaching. These results along with
the excellent access to potential markets in the growing industrial state of Puebla, indicate the potential for rock waste and
tailings from the Ixtaca deposit to be secondary resources such as aggregate and cement feedstock. These opportunities will be
fully examined in 2019 as part of the Company’s commitment to best sustainable practices.
In consideration of these findings and
the hydrologic conditions at Ixtaca, Almaden and its consultants reviewed Best Available Technology and Best Applicable Practice
in the design and planning of tailings management at Ixtaca, which resulted in selecting a dry-stack tailings facility which would
include co-disposal of waste with filtered tailings, use much less water than traditional slurry facilities, reduce the mine footprint,
allow for better dust control, and enable earlier rehabilitation of the tailings and waste disposal areas.
Community Consultations
Almaden has a long history of engagement
with communities in the region around the Ixtaca Project. Amongst many other initiatives, the Company has trained and employed
drillers and driller helpers from the local area, held nine large-scale community meetings totalling over 4,100 people, taken 480
local adults on tours of operating mines in Mexico, and held monthly technical meetings on a diverse range of aspects relating
to the mining industry and the Ixtaca project. On December 9, 2018, Almaden hosted the most recent large-scale community meeting
which was attended by over 800 people, including representatives of the new Federal Government in Mexico.
In 2017, Almaden engaged a third-party
consultant to lead a community consultation and impact assessment at the Ixtaca Project. In Mexico, only the energy industry requires
completion of such an assessment (known in Mexico as a Trámite Evaluación de Impacto Social, or “EVIS”)
as part of the permitting process. The purpose of these studies is to identify the people in the area of influence of a project
(“Focus Area”), and assess the potential positive and negative consequences of project development to assist in the
development of mitigation measures and the formation of social investment plans. To Almaden’s knowledge, this is the first
time a formal EVIS has been completed in the minerals industry in Mexico, and as such reflects the Company’s commitment to
best national and international standards in Ixtaca project development.
The EVIS and subsequent work on the development
of a Social Investment Plan were conducted according to Mexican and international standards such as the Guiding Principles on Business
and Human Rights, the Equator Principles, and the OECD Guidelines for Multinational Enterprises and Due Diligence Guidance for
Meaningful Stakeholder Engagement in the Extractive Sector.
Fieldwork for the EVIS was conducted by
an interdisciplinary group of nine anthropologists, ethnologists and sociologists graduated from various universities, who lived
in community homes within the Ixtaca Focus Area during the study to allow for ethnographic immersion and an appreciation for the
local customs and way of life. This third-party consultation sought voluntary participation from broad, diverse population groups,
with specific attention to approximately one thousand persons in the Focus Area.
This extensive consultation resulted in
changes to some elements of the mine design, including the planned construction of a permanent water reservoir to serve the local
area long after mine closure, and the shift to dry-stack filtered waste management. The Company looks forward to advancing further
elements of the community Social Investment Plan as mine permitting and construction advance.
Economic Contributions
The Study anticipates that approximately
600 direct jobs will be created during the peak of construction, and 420 jobs will be generated during operations. Assuming base
case metal prices, under this Study Ixtaca is anticipated to generate approximately US$130 million in Federal taxes, US$50 million
in State taxes and US$30 million in Municipal taxes.
Closure and Reclamation
Mine waste areas will be reclaimed and
re-vegetated at the end of mining activity. At closure, all buildings will be removed and remaining facilities, except for the
water storage dam (WSD), will be reclaimed and re-vegetated. The WSD and the availability of this water to the local communities
will remain after closure.
Opportunities
Several opportunities excluded from the
base case economics have been identified in the Study.
|
•
|
Results from the ore sorting tests identified
several opportunities to increase the ore sort efficiency and could result in a further increase in mill feed grades. These opportunities
will be investigated with future test work.
|
|
•
|
Gold extraction recoveries in the minor
black shale unit are currently impeded by the presence of carbonaceous material. Recent test work including carbon pre-flotation
and ultra-fine gravity separation has demonstrated that the carbon can be liberated and removed with a significant improvement
in gold recovery. This test work is ongoing and is expected to improve the black shale gold recovery.
|
|
•
|
Test work carried out on Ixtaca limestone
waste rock samples concluded that Ixtaca limestone waste rock is suitable for many types of concrete use and other applications
such as shotcrete, subgrade, asphalt aggregate or railroad ballast with little effort and processing. Concrete produced with tests
on Ixtaca limestone aggregate performed very well, achieving the 28-day design compressive strength of 30 MPa already at 7 days,
and more than 40 MPa at 28 and 56 days.
|
Ixtaca is connected by 60 km
of paved road to the industrial city Apizaco, 120 km of paved road to the state capital of Puebla, and 170 km of paved road to
Mexico City.
The sale of limestone ore sort
rejects (a waste product) as an aggregate presents a very significant potential source of revenue to the Project at no additional
capital or operating cost to the Project. There is also potential to sell some of the ROM waste rock as an aggregate.
|
•
|
Fine aggregate from crushing and grinding
operations is also expected to perform in a similar way to the coarse aggregate. Chemical analysis of the fine aggregate indicates
that it is also suitable as a raw material for the production of lime cement or Portland cement if properly processed and blended
with suitable silica aluminates.
|
Next Engineering and Development Steps
The Company is pursuing the optimization
opportunities noted above and has submitted its environmental permit application to Mexican authorities.
Qualified Persons, Sample Preparation,
Analyses, Quality Control and Assurance
The independent qualified persons responsible
for preparing the Study are: Jesse Aarsen, P.Eng. and Tracey Meintjes, P.Eng. of MMTS; Edward Wellman PE, PG, CEG and Clara Balasko,
P.E. of SRK; Kris Raffle, P.Geo. of APEX Geoscience Ltd.; and Gary Giroux, M.A.Sc., P.Eng. of Giroux Consultants Ltd.; all of whom
act as independent consultants to the Company, are Qualified Persons as defined by National Instrument 43-101 ("NI 43-101").
The analyses used in the preparation of
the mineral resource statement were carried out at ALS Chemex Laboratories of North Vancouver (“ALS”) using industry
standard analytical techniques. All strongly altered or epithermal-mineralized intervals of core have been sampled. Almaden employs
a maximum sample length of 2 to 3m in unmineralized lithologies, and a maximum sample length of 1m in mineralized lithologies.
During the years 2010 and 2011, Almaden employed a minimum sample length of 20cm. The minimum sample length was increased to 50cm
from 2012 onwards to ensure the availability of sufficient material for replicate analysis. Drill core is half-sawn using industry
standard diamond core saws. After cutting, half the core is placed in a new plastic sample bag and half is placed back in the core
box. Sample numbers are written on the outside of the sample bags and a numbered tag placed inside the bag. Sample bags are sealed
using a plastic cable tie. Sample numbers are checked against the numbers on the core box and the sample book.
ALS sends its own trucks to the Ixtaca
project to take custody of the samples at the Santa Maria core facility and transports them to its sample preparation facility
in Guadalajara or Zacatecas, Mexico. Prepared sample pulps are then forwarded by ALS personnel to the ALS North Vancouver, British
Columbia laboratory, which is ISO/IEC 17025:2017 and ISO 9001: 2015 certified, for analysis.
For gold, samples are first analysed by
fire assay and atomic absorption spectroscopy (“AAS”). Samples that return values greater than 10 g/t gold using this
technique are then re-analysed by fire assay but with a gravimetric finish. Silver is first analysed by Inductively Coupled Plasma
- Atomic Emission Spectroscopy (“ICP-AES”). Samples that return values greater than 100 g/t silver by ICP-AES are then
re analysed by HF-HNO3-HCLO4 digestion with HCL leach and ICP-AES finish. Of these samples those that return silver values greater
than 1,500 g/t are further analysed by fire assay with a gravimetric finish. Blanks, field duplicates and certified standards were
inserted into the sample stream as part of Almaden’s quality assurance and control program which complies with National Instrument
43-101 requirements. In addition to the in-house QAQC measures employed by Almaden, Kris Raffle, P.Geo. of APEX Geoscience Ltd.,
completed an independent review of blank, field duplicate and certified standard analyses. All QAQC values falling outside
the limits of expected variability were flagged and followed through to ensure completion of appropriate reanalyses. No discrepancies
were noted within the drill hole database, and all QAQC failures were dealt with and handled with appropriate reanalyses.
The mineral resource estimate referenced
in this document was prepared by Gary Giroux, P.Eng., an independent Qualified Person as defined by NI 43-101.
Current Work
The Company is pursuing the optimization
opportunities noted above and has submitted its environmental permit application to Mexican authorities. The Company has also appointed
Auramet International, LLC, as Financial Advisor in conjunction with project financing for the Ixtaca Project.
Upcoming / Outlook
Almaden has sufficient cash on hand to
conduct its anticipated work program for the next fiscal year at Ixtaca. Continuing work on Ixtaca will be focused on the environmental
permit application, project financing discussions, and advanced engineering.
|
Item 5.
|
Operating and Financial Review and Prospects
|
Operating Results
The following discussion and analysis of
the results of operations and the Company’s financial position should be read in conjunction with the consolidated financial
statements and related notes for the years ended December 31, 2018, 2017, and 2016 appearing under Item 18 – Financial Statements
and listed under Item 19 – Exhibits.
The Company’s consolidated financial
statements are stated in Canadian Dollars and have been prepared in accordance and compliance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS”).
The Company is in the business of exploring
its principal mineral property in Mexico with the aim of developing it to a stage where it can be exploited at a profit or to arrange
joint ventures or other business transactions whereby other companies provide, in whole or in part, funding for development and
exploitation. At that stage, the Company’s operations would, to some extent, be dependent on the world market prices of any
minerals mined. The Company does not have producing properties and operations on its properties.
The Company receives other income from
Administrative Services Agreements with Azucar and Almadex. Under those Agreements, the Company is the sole and exclusive manager
of Azucar and Almadex. Azucar and Almadex compensate the Company 30% and 20%, respectively, of the Company’s actual monthly
cost of rent for any shared facilities, and 30% and 20%, respectively, of any shared personnel’s fees and/or wages. Azucar
and Almadex also pay the Company any reasonable fees or costs incurred on behalf of Azucar and Almadex by the Company which were
approved by Azucar and Almadex. The Administrative Services Agreements have an initial 5-year term, with subsequent automatic 1
year renewals unless terminated pursuant to the terms permitted under the Agreements. The Agreements include a Change of Control
clause. If either party is subject to a Change of Control during the term of the respective Agreement, the Agreement shall automatically
terminate within 48 hours of the Change of Control unless agreed to in writing by both parties. The target of the Change of Control
shall then pay the other party $2 million as compensation for the unplanned termination of the Company’s engagement and significant
disruption to the other party’s business. “Change of Control” means the date upon which, without the written
concurrence of the target of the Change of Control, any person (as that term is defined in the
Securities Act
(British Columbia))
makes and does not withdraw a take-over bid (as that term is defined in the
Securities Act
(British Columbia)) or acquires,
directly or indirectly, that number of common shares of the target which equals or exceeds twenty percent (20%) of the then issued
common shares of the target.
Fiscal 2018 compared to Fiscal 2017
For the year ended December 31, 2018 (“Fiscal
2018”), the Company recorded a comprehensive loss of $3,511,667 or $0.03 per common share compared to a comprehensive loss
of $5,231,295 or $0.05 per common share for the year ended December 31, 2017 (“Fiscal 2017”). The decrease in comprehensive
loss of $1,719,628 was primarily a result of a decrease in operating expense totalling $998,008 and an increase in other income
of $721,620 from interest income and administrative service fees.
Because the Company is an exploration company,
it has no revenue from mining operations. Other income of $1,190,068 (Fiscal 2017 - $468,448) during Fiscal 2018, consisted of
mainly interest income earned on its cash balances and other income from administrative services fees of $950,352 (Fiscal 2017
- $654,741). Also included in other income is a foreign exchange gain of $239,716 (Fiscal 2017 foreign exchange loss - $184,533)
due to a higher exchange rate on USD cash balances during Fiscal 2018.
Operating expenses were $4,701,735 during
Fiscal 2018 (Fiscal 2017 - $5,699,743). Certain operating expenses were reported on a gross basis and recovered through other income
from the administrative services agreements with Azucar and Almadex starting May 18, 2018 after the Azucar corporate reorganization.
The decrease in operating expenses of $998,008 is mainly the result of a decrease in share-based payments by $1,384,330 due to
a lower share price that reduces the fair values of stock options granted during Fiscal 2018 and an increase in salaries and benefits
of $378,043 due to new hires as the Company plans to enter into development stage and requires additional personnel for such development
stage activities.
Fiscal 2017 compared to Fiscal 2016
For the year ended December 31, 2017 (“Fiscal
2017”), the Company recorded a net loss and comprehensive loss of $5,231,295 or $0.05 per share compared to a net loss of
$4,023,504 or $0.05 per share for the year ended December 31, 2016 (“Fiscal 2016”). The increase in net loss of $1,207,791
was primarily a result of increased operating expenses, in particularly in compensation, share-based payments and professional
fees.
Because the Company is an exploration company,
it has no revenue from mining operations. Other income of $468,448 (Fiscal 2016 - $443,560) during Fiscal 2017, consisted of mainly
interest income and other income from administrative services fees earned from Almadex partially offset by foreign exchange loss.
Operating expenses were $5,699,743 during
Fiscal 2017 (Fiscal 2016 - $4,467,064). Certain operating expenses were reported on a gross basis and recovered through interest
and other income at approximately 30% from the administrative services agreement with Almadex. The increase in operating expenses
of $1,232,679 was mainly the result of increased professional fees related to corporate legal services performed in Mexico. Salaries
and benefits, stock exchange fees, and directors’ fees were increased compared to the same time last year as a result of
normal course of operating a public company. Share-based payments increased by $824,060 due to stock option grants during the period.
Liquidity and Capital Resources
As at December 31, 2018, the Company’s
working capital position was $4,356,589. Management estimates that the current cash position and expected future cash flows from
the exercise of outstanding stock options and warrants and equity financing will be sufficient for the Company to carry out its
anticipated exploration and operating plans for fiscal 2019 that includes further development of the Ixtaca Project.
Management believes that the Company’s
cash resources are sufficient to meet its working capital and mineral exploration requirements for its next fiscal year.
Fiscal 2018
At the end of Fiscal 2018, the Company
had working capital of $4,356,589 including cash and cash equivalents of $5,080,580 compared to working capital of $16,065,496
including cash and cash equivalents of $16,334,534 at the end of Fiscal 2017. The decrease in working capital of $11,708,907 is
mainly due to the cash expenditures on mill mobilization expenses and option payments on the Rock Creek mill recorded in the property,
plant and equipment.
The Company has a deferred income tax liability
in the amount of $1,434,882. The deferred income tax liability relates to the Mexican income tax and Special Mining Duty associated
with the Ixtaca Project.
Management believes that the Company’s
cash resources are sufficient to meet its working capital and mineral exploration requirements for its next fiscal year.
Net cash used in operating activities during
Fiscal 2018, was $1,919,921 (Fiscal 2017 - $2,674,767), after adjusting for non-cash activities.
Net cash used in investing activities during
Fiscal 2018, was $18,171,752 (Fiscal 2017 - $12,808,053). Significant items include expenditures on exploration and evaluation
assets of $9,674,048 (Fiscal 2017 - $8,860,153), and deposit on mill equipment of $7,694,900 (Fiscal 2017 - $3,642,826).
Net cash from financing activities during
Fiscal 2018, was $8,837,719 (Fiscal 2017 - $22,047,348) as a result of a non-brokered private placement that closed on June 7,
2018, net of share issue costs.
Management estimates that the current cash
position and potential future cash flows from in the money stock options and warrants will be sufficient for the Company to carry
out its anticipated exploration and operating plans for the foreseeable future. There may be circumstances where, for sound business
reasons, a reallocation of funds may be necessary in order for the Company to achieve its stated business objectives.
Fiscal 2017
At the end of Fiscal 2017, the Company
had working capital of $16,065,496 including cash and cash equivalents of $16,334,534 compared to working capital of $9,293,081
including cash and cash equivalents of $9,770,006 at the end of Fiscal 2016. The increase in working capital of $6,772,415 is mainly
due to increase in cash flow from financing raised through two private placements completed during the year.
The Company has a deferred income tax liability
in the amount of $1,434,882. The deferred income tax liability relates to the Mexican income tax and Special Mining Duty associated
with the Ixtaca Project.
On February 7, 2017, the Company closed
a non-brokered private placement for gross proceeds of $3,401,199 and on June 1, 2017, the Company closed a bought deal private
placement for gross proceeds of $17,251,150. As a result of both financings, the Company has been able to raise money even in a
very challenging financial marketplace.
Net cash used in operating activities during
Fiscal 2017, was $2,674,767 (Fiscal 2016 - $2,321,136), after adjusting for non-cash activities.
Net cash used in investing activities during
Fiscal 2017, was $12,808,053 (Fiscal 2016 - $5,524,623). Significant items include expenditures on exploration and evaluation assets
of $8,860,153 (Fiscal 2016 - $5,177,485), and deposit on mill equipment of $3,642,826 (Fiscal 2016 - $324,600).
Net cash from financing activities during
Fiscal 2017, was $22,047,348 (Fiscal 2016 - $11,392,987) as a result of a non-brokered private placement that closed on February
7, 2017, and a bought deal private placement which closed on June 1, 2017, and options and warrants exercised, net of share issue
costs.
Fiscal 2016
At the end of Fiscal 2016, the Company
had working capital of $9,293,081 including cash and cash equivalents of $9,770,006 compared to working capital of $5,808,473 including
cash and cash equivalents of $6,222,778 at the end of Fiscal 2015. The increase in working capital of $3,484,608 was mainly due
to a non-brokered private placement that closed on May 25, 2016 for gross proceeds of $4,359,260, and $7,130,747 received through
the exercise of 4,592,667 warrants during 2016.
Cash used in operations during Fiscal 2016
was $2,321,136 (Fiscal 2015 - $3,015,966) after adjusting for non-cash activities.
Cash used in investing activities during
Fiscal 2016 was $5,524,623 (Fiscal 2015 - $4,362,807). Significant items include expenditures on mineral property interests of
$5,177,485 (Fiscal 2015 - $3,668,974) primarily on land acquisition of $1,578,436 (Fiscal 2015 - $831,455) and exploration costs
on the Tuligtic property of $3,868,910 (Fiscal 2015 - $3,048,151). The Company also invested $324,600 (Fiscal 2015 - $692,000)
pursuant to the terms of an Asset Purchase Option Agreement dated October 16, 2015 with Alaska Gold Company, LLC and Bering Straits
Native Corporation (the “Asset Purchase Option Agreement”) in respect of an option on certain mining equipment referred
to as the “Rock Creek mill”.
On May 25, 2016, the Company closed a non-brokered
private placement by the issuance of 3,229,082 units at a price of $1.35 per unit for gross proceeds to the Company of $4,359,260.
Each unit consists of one common share and one-half of one non-transferable common share purchase warrant. Each whole warrant allows
the holder to purchase one common share of the Company at a price of $2.00 per share until November 25, 2018. Share issue costs
included a finder’s fee of $147,925 in cash, and finders’ warrants to purchase up to 45,944 common shares at a price
of $1.44 per common share until November 25, 2018. The fair value of the finders’ warrants was $17,918. In connection with
the private placement, the Company also incurred $119,689 in share issue costs. These amounts were recorded as reduction to share
capital. The proceeds of the private placement were allocated entirely to share capital.
Research and Development, Patents
and Licenses
The Company conducts no Research and Development
activities, nor is it dependent upon any patents or licenses.
Trend information
During 2018, prices of precious metals
continued to be quite volatile, with the gold price starting the year at over US$1350/ounce before dropping to a low of about US$1175/ounce
in August 2018 and finishing the year at about US$1280/ounce. This was a very similar price range as was experienced in 2017. The
price of silver followed a similar volatile trajectory as that of gold, starting the year at over US$17.60 before falling to under
US$14.00/ounce in November and finishing the year at about US$15.50/ounce. Unlike gold which in 2018 traded within a similar price
range as it did in 2017, silver was under more pressure in 2018 than the previous year, hitting lower lows and not reaching the
same highs.
The volatility of the gold and silver prices
as well as the lack of momentum to break through or meet the prior year price ranges contributed to a tepid environment for financing
mineral exploration and development activities. In addition, traditional sources of financing to this sector continue to be impacted
by the increasing popularity of index funds, which gain exposure to the sector through purchases and sales through exchanges, as
opposed to transactions directly with issuers in the form of financings. Furthermore, some of the higher risk capital which had
previously targeted the exploration and mining sector has been drawn to other areas such as blockchain and lifestyle companies.
Capital is still available for well defined and advanced opportunities, but increasingly the sources of capital are fewer but larger,
as are the financing transactions themselves.
It remains unclear how long the depressed
financing market for exploration and development activities will continue. With fewer but larger capital sources, there has recently
been a wave of consolidation of major companies seeking to become more attractive to major equity funds by improving their balance
sheets, creating greater asset and jurisdiction diversification, and generating increased trading liquidity. The major companies
are also re-committing themselves to balance sheet discipline and profitability after many years of underperformance. One avenue
to accomplish greater profitability is through the synergies of consolidation combined with greater restraint when it comes to
major project development activities. In addition, it’s expected that these companies and others like them will seek to increase
profitability by reducing or eliminating “greenfield” exploration and acquisition activity. So, while these mergers
help the participants compete for scarce investor attention, they are unlikely to help address the long term need for a pipeline
of new projects to replace declining and higher cost reserves held within many of these companies.
Geopolitical uncertainty continued in 2018
as the utility of traditional global political and trade alliances has been openly questioned at the highest levels. While 2018
saw an agreement reached between the U.S., Mexico and Canada relating to a modernized NAFTA deal it has not yet been ratified by
all parties and the process of renegotiation was a turbulent one. The increasing acrimony and polarization of domestic politics
in many countries is also contributing to international tensions. Currency markets have responded with increased volatility. Given
that varying proportions of the costs of production in mining operations are valued in the local currencies, whereas the metals
themselves are generally sold in U.S. dollars, currency exchange rates can have a significant impact on operating conditions.
The uncertain times have led to some cash
strapped governments to seek or threaten higher tax and royalty policies while others consider lowering them to attract investment.
Globalization of trade and markets has been more important to the mineral industry than many other industries, and because of current
conditions these concepts are under question by many vested interest groups.
At the same time, just as it is more difficult
to raise capital for new discoveries, it is also becoming more difficult to develop new resources once they have been discovered.
Environmental groups have successfully lobbied for more wilderness areas and parks where exploration and mining activities are
prohibited. Indigenous groups are actively asserting their interests and there is a rise of militant national and religious
groups in many parts of the world. A global network of ideologically-driven anti-mining activists leverages both the real and perceived
interests of the environmental and indigenous groups in an attempt to stifle resource development despite the increasing need for
such resources as global living standards advance. Pressure from such groups can lead to increased regulation and this must
be monitored closely to recognize a point where it becomes excessive. Many governments are pursuing regulations and taxes on emissions
of so called “greenhouse gases” that could raise costs for many industries including metal mining. As more and
more stakeholders become interested in mining ventures there is an increasing need to maintain cooperation with valid concerned
groups, particularly among the local communities where projects are located. Some of these issues tend to restrict the areas where
mineral exploration and development of new mines can occur. This should make areas permissive to exploration more attractive and
a previously discerned need for new, quality exploration projects based on sound geological work continues.
Both the scarcity of funding for new discoveries
and the difficulty in developing new resources are likely to limit the supply of metals to a growing and developing global population.
The Company believes that in the long term, metal prices will be constructive for both exploration and development activities.
The Company plans to continue advancing the Ixtaca project with the aim of developing it into one of the more attractive advanced
and modern projects in the world.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements
other than the lease related to its office premises as disclosed below.
Contractual
Obligations
The Company is obligated under an operating
lease for its office premises with the following aggregate minimum lease payments to the Company’s office lease effective
April 1, 2017 through to March 31, 2022. The Company does have government requirements in work and/or taxes to maintain other claims
held. The decision to keep or abandon such claims is not contractual but at the discretion of the Company. All other property option
payments on the Company’s projects have been assumed by third parties who are earning their interests in the projects.
On January 29, 2013, the Company entered
into contracts with its Chairman and President for an annual remuneration of $240,000 and $265,000 respectively effective January
1, 2013, for two years, renewable for two additional successive terms of 24 months each. Effective December 31, 2015, the Chairman’s
contract was mutually terminated and effective January 1, 2016, the Company and the Chairman entered into a new contract for an
annual remuneration of $240,000 for two years, renewable for two additional successive terms of 24 months each. The Chairman’s
contract and the President’s contract were amended April 1, 2016 and further amended on January 1, 2019 to make their term
indefinite. Effective May 24, 2011, as amended April 1, 2016, the Company and the Chief Financial Officer (“CFO”) entered
into an Employment Agreement for an indefinite term and, effective September 22, 2014, as amended April 1, 2016, the Company and
the Vice President, Corporate Development (“VP”) entered into an Employment Agreement for an indefinite term. Effective
January 1, 2016, the Chairman’s and President’s base salaries (“Base Salary”) were $240,000 and $265,000,
respectively, and the CFO’s and VP’s Base Salaries were $185,000 and $175,000, respectively. Effective January 1, 2017,
the Chairman’s, President’s, CFO’s and VP’s Base Salaries were $240,000, $305,000, $203,500 and $192,500,
respectively. Under the Administrative Services Agreements between the Company and each of Azucar Minerals Ltd. and Almadex Minerals
Ltd. the Company provides management services to Azucar and Almadex. Azucar compensates the Company 30% of any shared personnel
remuneration and office overhead expenses, while Almadex compensates the Company 20% of any shared personnel remuneration and office
overhead expenses. Therefore, Almaden currently recovers 50% of the contractual compensation amounts for the Chairman, Chief Executive
Officer, Chief Financial Officer and Vice President, Corporate Development.
Table No. 4
Contractual Obligations of the Company
|
|
Payments due by period
|
|
|
|
Total
|
|
|
Less than
1 year
|
|
|
1 – 3
years
|
|
|
3 – 5
years
|
|
|
More than 5 years
|
|
Operating lease
|
|
$
|
611,638
|
|
|
$
|
179,706
|
|
|
$
|
383,848
|
|
|
$
|
48,084
|
|
|
|
-
|
|
Contractual obligations of the Company
in the above table exclude future option payments required to maintain the Company’s interest in certain mineral properties.
Significant
accounting judgments and estimates
Significant assumptions about the future
and other sources of judgments and estimates that management has made at the statement of financial position dates, that could
result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from
assumptions made, relate to, but are not limited to, the following:
Critical
Judgments
|
o
|
The analysis of the functional currency for each entity of the Company determined by conducting
an 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 useful lives of property, plant and equipment which are included in the consolidated
statements of financial position and the related depreciation included in profit or loss;
|
|
o
|
The recoverability of the value of the exploration and evaluation assets which is recorded in the
consolidated statements of financial position;
|
|
o
|
The Company uses the Black-Scholes option pricing model to determine the fair value of options
and warrants in order to calculate share-based payments expense and the fair value of finders’ warrants and stock options.
Certain inputs into the model are estimates that involve considerable judgment or could be affected by significant factors that
are out of the Company’s control;
|
|
o
|
The provision for income taxes which is included in profit or loss and the composition of deferred
income tax liability included in the consolidated statement of financial position and the evaluation of the recoverability of deferred
tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future
taxable income prior to expiry of those deductions;
|
|
o
|
The assessment of indications of impairment of each exploration and evaluation asset and related
determination of the net realizable value and write-down of those assets where applicable;
|
|
Item 6.
|
Directors, Senior Management
and Employees
|
Table No. 5 lists the directors of the
Company as of March 14, 2019. The directors have served in their respective capacities since their election and/or appointment
and will serve until the next annual general meeting of the Company or until a successor is duly elected, unless the office is
vacated in accordance with the Articles of the Company. All directors are residents and citizens of Canada.
Table No. 5
Directors of the Company
Name
|
Age
|
Date First Elected or Appointed
|
James Duane Poliquin
|
78
|
February 1, 2002
(4)
|
John D. McCleary
(2)(3)
|
78
|
February 1, 2002
(4)
|
Morgan Poliquin
|
47
|
February 1, 2002
(4)
|
Gerald G. Carlson
(1)(2)(3)
|
73
|
February 1, 2002
(4)
|
Mark T. Brown
(1)(3)
|
50
|
May 30, 2011
|
William J. Worrall
(1)(2)(3)
|
86
|
May 7, 2013
|
Elaine Ellingham
(5)
|
60
|
February 27, 2018
|
(1)
Member of Audit Committee
(2)
Member of Nominating and Corporate Governance
Committee
(3)
Member of Compensation Committee
(4)
Date of issue of the Certificate of Amalgamation
(5)
Elaine Ellingham was appointed an additional
Director of the Company on February 27, 2018
Duane Poliquin was a director of Almaden
Resources Corporation since September 1980, Jack McCleary since June 1991 and Morgan Poliquin since June 1999.
Duane Poliquin was a director of Fairfield
Minerals Ltd. since June 1996, and Gerald G. Carlson since July 1998.
Table No.6 lists the Executive Officers
of the Company as of March 14, 2019. The Executive Officers serve at the pleasure of the Board of Directors, subject to the terms
of executive compensation agreements hereinafter described. All Executive Officers are residents and citizens of Canada with the
exception of Laurence Morris, who is a resident of Nicaragua and citizen of the United Kingdom.
Table No. 6
Executive Officers of the Company
Name
|
Position
|
Age
|
Date First Appointed
|
James Duane Poliquin
|
Chairman of the Board
|
78
|
February 1, 2002
(1)
|
Morgan Poliquin
|
President and Chief Executive Officer
|
47
|
March 1, 2007
|
Korm Trieu
|
Chief Financial Officer
|
53
|
May 30, 2011
|
Douglas McDonald
|
Vice-President, Corporate Development
|
50
|
September 22, 2014
|
Laurence Morris
|
Vice-President, Operations & Projects
|
65
|
April 30, 2018
|
(1)
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, Azucar Minerals Ltd. and Almadex Minerals Ltd. of
which he also serves as Chairman of the Board and a director.
John D. (Jack) McCleary
is a registered
professional geologist with over 40 years’ experience in petroleum and mineral exploration. He has held executive positions
with several junior resource companies over his career and for several years was a Vice President of Dominion Securities Ltd. He
served as a director and President of Canadian Hydro Developers Inc. until December 1995 at which time he retired and as a director
and President of Troymin Resources Ltd. until April 2003 at which time Troymin amalgamated with Santoy Resources Ltd. where he
served as a director for 5 years. Mr. McCleary is also a director of Azucar Minerals Ltd. and Almadex Minerals Ltd. He spends less
than 5% of his time on the affairs of the Company.
Morgan Poliquin
is a registered
professional geological engineer with over 20 years’ experience in mineral exploration since graduating with a B.A.Sc. degree
in geological engineering from the University of British Columbia (1994). In 1996 he earned a M.Sc. in geology from the University
of Auckland, New Zealand studying geothermal and epithermal deposits in the South Pacific including the Emperor Gold Deposit, Fiji.
In 2010, Dr. Poliquin earned his Ph.D. in Geology from the Camborne School of Mines, University of Exeter. He is President and
CEO of the Company and oversees corporate matters as well as directing the Company’s exploration program. Dr. Poliquin spends
virtually all of his time directing the exploration programs and the affairs of the Company in Almaden, Azucar Minerals Ltd. and
Almadex Minerals Ltd. of which he also serves as President, CEO and a director.
Gerald G. Carlson
has been involved
in mineral exploration and junior exploration company management for over 45 years. Mr. Carlson has a B.A.Sc. from the University
of Toronto, a M.Sc. from Michigan Technological University and a Ph.D. from Dartmouth College. He is President, CEO and a director
of Pacific Ridge Exploration Ltd., a gold and zinc exploration company listed on the TSX-V and a director of Cyntar Ventures Inc.
listed on the CSE. He is a past President of AME BC (formerly the B.C. and Yukon Chamber of Mines), Director and past President
of the Society of Economic Geologists Canada Foundation, a Fellow of the Society of Economic Geologists, a member of Engineers
and Geoscientists BC, Engineers Yukon and the Canadian Institute of Mining, Metallurgy & Petroleum. Mr. Carlson spends less
than 5% of his time on the affairs of the Company.
Mark T. Brown
is a Chartered Professional
Accountant (CPA, CA) and earned a Bachelor’s Degree in Commerce from the University of British Columbia in 1990. Mr. Brown
received his Chartered Accountant’s designation in 1993 while working at Price Waterhouse, Chartered Accountants. From 1994
to 1997, he was the controller of two TSE (now TSX) 300 mining companies, one after the other, each of which produced in excess
of 100,000 ounces of gold annually. At the end of 1997, Mr. Brown joined Pacific Opportunity Capital Ltd. which was set up to provide
business financial support, both administratively and for transactions and negotiations, to public and private emerging companies.
Mr. Brown spends approximately 5% of his time on the affairs of the Company. He also serves as a Director and Executive Chairman
of Alianza Minerals Ltd. and Avrupa Minerals Ltd., both mineral exploration companies listed on the TSX-V. Mr. Brown also serves
as a Director, President, or Chief Financial Officer of the following companies:
|
a.
|
Director - Strategem Capital Corp., an investment issuer listed on the TSX-V.
|
|
b.
|
Director - Sutter Gold Mining Ltd., a gold exploration company listed on the TSX-V.
|
|
c.
|
Director – Azucar Minerals Ltd., an exploration company listed on the TSX-V.
|
|
d.
|
Director - Almadex Minerals Ltd., an exploration company listed on the TSX-V.
|
|
e.
|
Chief Financial Officer - Adamera Minerals Corp., an exploration company listed on the TSX-V.
|
|
f.
|
Chief Financial Officer – Redstar Gold Corp., an exploration company listed on the TSX-V.
|
|
g.
|
Chief Financial Officer – Orestone Mining Corp., an exploration company listed on the TSX-V.
|
|
h.
|
Director – Mountain Boy Minerals Ltd., an exploration company listed on the TSX-V.
|
Mr. Brown was a director of Ascent Industries
Corp. (formerly Paget Minerals Ltd.) until February 13, 2019. On March 4, 2019, Ascent industries Corp. instituted proceedings
under the Companies’ Creditors Arrangement Act (Canada).
William J. Worrall
is a retired
lawyer with over 55 years practice primarily in the areas of securities, national and transnational corporate and commercial transactions,
including mergers and acquisitions, with emphasis on junior resource companies engaged in mining and oil and gas exploration and
development. Mr. Worrall spends less than 5% of his time on the affairs of the Company. He is also a director of Azucar Minerals
Ltd. and Almadex Minerals Ltd.
Elaine Ellingham
is a professional
geoscientist with over 35 years of experience in the mining industry, having held senior positions in several mining companies.
Ms. Ellingham serves as President of Ellingham Consulting, an independent consulting firm providing geological and advisory services.
She spent eight years with the Toronto Stock Exchange serving in various capacities, including four years as the TSX National Leader
of Mining & International Business Development. Ms. Ellingham has also served as interim CEO and Director of Richmont Mines
Inc. and Senior Vice President, Investor Relations at IAMGOLD, in addition to other corporate development experience with Campbell
Resources and Rio Algom Limited. She is also an active director on the Boards of Aurania Resources, Alamos Gold and the Prospectors
and Developers Association of Canada. Ms. Ellingham spends less than 5% of her time on the affairs of the Company.
Korm Trieu
is a Chartered Professional
Accountant (CPA, CA) and holds a Bachelor of Science degree from the University of British Columbia and has spent over 20 years
in corporate finance, administration and tax services, primarily in the natural resource, financial service and real estate sectors.
From 2008-2011, he served as Vice President Finance for Sprott Resource Lending Corp. where he oversaw the Finance and Administration
departments of a natural resource lending company. Mr. Trieu spends approximately all of his business time on the affairs of the
Company along with Azucar Minerals Ltd. and Almadex Minerals Ltd. of which he is also the Chief Financial Officer.
Douglas McDonald
holds a Bachelor
of Commerce degree and an M.A. Sc. specializing in mineral economics from the University of British Columbia and has over 20 years
of experience in the resource, foreign trade and resource policy arenas. Prior to joining Almaden, he worked with an investment
dealer where he advised numerous mineral resource companies regarding M&A opportunities and assisted them in accessing capital
markets. He also spent 5 years as a Foreign Service officer with the Canadian government, where he focused on international trade
issues, primarily concerning their impact on the resources industry. Mr. McDonald spends all of his business time on the affairs
of the Company, along with Azucar Minerals Ltd. and Almadex Minerals Ltd. of which he is also a director and the Vice President,
Corporate Development.
Laurence Morris
is a mining engineer
and geologist with more than 35 years of experience in the metals and mining business. Mr. Morris has broad international experience
in construction, operating and planning roles ranging from exploration stage to large scale operating mines in a variety of commodities
and countries. From 2015 to 2017, Mr. Morris was the Mine Manager for First Quantum Minerals at their US$5.5 billion Cobre Panama
project, where he was responsible for transitioning the project from a greenfields site to an operating mine, including mine planning,
mining team assembly and training, setting up operating procedures and technical services. Prior to this Mr. Morris has held several
key positions including Vice President of Operations for Minefinders Corporation Ltd. from 2010 to 2013. In that position, he oversaw
all aspects of development, mining operations, exploration activities and resource management at the Dolores mine in Mexico. Prior
to joining Minefinders in 2010, Mr. Morris worked in mine management for First Quantum Minerals Ltd. in Zambia and Mauritania.
Mr. Morris holds an Honours Bachelor of Science in Geology from the University of Sheffield.
There are no arrangements or understandings
with any two or more directors or executive officers pursuant to which any such person was selected as a director or executive
officer. Duane Poliquin, Chairman of the Board and Director, is the father of Morgan Poliquin, President, Chief Executive Officer
and Director.
During Fiscal 2018, the Chairman was remunerated
at his base salary of $240,000 per annum and the Chief Executive Officer was remunerated at his base salary of $335,000 per annum.
The Chief Executive Officer’s employment contract included terms for two additional successive terms of 24 months each (the
“Extended Term”) ending January 29, 2019. Effective December 31, 2015, the Hawk Mountain Resources Ltd. contract was
terminated by mutual consent with the Company and the Chairman entered into a new employment contract directly with the Company.
The new employment contract includes a base salary of $240,000 per annum and has an effective date of January 1, 2016. It has an
initial two-year term and is renewable for two additional successive terms of 24 months each (the “Extended Term”)
ending December 31, 2021. On January 1, 2019, both the Chief Executive Officer’s and Chairman’s employment contracts
were amended to remove the Extended Term thereby making their terms indefinite.
During Fiscal 2018, the Chief Financial
Officer (“CFO”) and the Vice President, Corporate Development were remunerated at their base salary of $225,000 CAD
and $212,000 CAD. The Vice President, Operations & Projects was compensated at his annual fee of $250,000 USD per annum. Each
of the CFO’s and Vice Presidents’ employment agreements have indefinite terms.
Under Administrative Services Agreements
between the Company and each of Azucar Minerals Ltd. and Almadex Minerals Ltd., the Company provides management services to Azucar
and Almadex. Azucar compensates the Company 30% of any shared personnel remuneration and office overhead expenses, while Almadex
compensates the Company 20% of any shared personnel remuneration and office overhead expenses. Therefore, Almaden currently recovers
50% of the contractual compensation amounts for the Chairman, Chief Executive Officer, Chief Financial Officer and Vice President,
Corporate Development.
All non-management Directors are to be compensated $12,000 yearly
and the Chairs of the Audit Committee and Compensation, Nominating and Corporate Governance Committee are to be compensated $5,000
yearly, effective January 1, 2017. The Compensation Committee also recommended that, with respect to Director stock options, up
to 400,000 options be granted to each non-management Director. Directors are entitled to reimbursement for reasonable travel and
other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors
may award special remuneration to any director undertaking any special services on behalf of the Company other than services ordinarily
required of a director. Other than indicated below no director received any compensation for his services as a director, including
committee participation and/or special assignments, or will receive compensation on termination.
Total compensation paid by the Company
directly and/or indirectly to all directors and executive officers during Fiscal 2018 was $1,022,079 (Fiscal 2017 - $883,400) after
recovery by the Company of 50% of executive officer compensation pursuant to the terms of the Administrative Services Agreements
between the Company and each of Azucar and Almadex
Table No. 7
Summary Compensation Table
Annual Compensation
|
Long-Term Compensation
Awards
|
Name and
Principle Position
|
Fiscal
Year
|
Salary
(1)
|
Bonus
|
Other Annual
Compensation
|
Restricted
Stock
Awards
|
Options/
SARS
Granted
(#)
|
LTIP
Payouts
|
All Other
Compensation
|
Duane Poliquin
|
2018
(2)
|
$138,194
|
Nil
|
Nil
|
Nil
|
650,000
|
Nil
|
Nil
|
Chairman of the Board &
|
2017
|
$168,000
|
Nil
|
Nil
|
Nil
|
715,000
|
Nil
|
Nil
|
Director
|
2016
|
$168,000
|
Nil
|
Nil
|
Nil
|
550,000
|
Nil
|
Nil
|
Morgan Poliquin
|
2018
(2)
|
$192,895
|
$66,250
|
Nil
|
Nil
|
1,000,000
|
Nil
|
Nil
|
President, Chief Executive
|
2017
|
$213,500
|
$85,400
|
Nil
|
Nil
|
1,365,000
|
Nil
|
Nil
|
Officer & Director
|
2016
|
$185,500
|
$92,750
|
Nil
|
Nil
|
700,000
|
Nil
|
Nil
|
Jack McCleary
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
218,000
|
Nil
|
$17,0000
(3)(5)
|
Director
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
332,000
|
Nil
|
$17,0000
(3)(5)
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
218,000
|
Nil
|
$10,000
(3)(5)
|
Joseph Montgomery
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Former Director
(6)
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$7,000
(3)
|
Gerald G. Carlson
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
172,000
|
Nil
|
$12,000
(3)
|
Director
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
290,000
|
Nil
|
$12,000
(3)
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
100,000
|
Nil
|
$7,000
(3)
|
Mark T. Brown
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
68,000
|
Nil
|
$17,000
(3)(4)
|
Director
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
457,000
|
Nil
|
$17,000
(3)(4)
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
68,000
|
Nil
|
$10,000
(3)(4)
|
William J. Worrall
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
285,000
|
Nil
|
$12,000
(3)
|
Director
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
215,000
|
Nil
|
$12,000
(3)
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
5,000
|
Nil
|
$7,000
(3)
|
David Strang
(7)
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$12,000
(3)
|
Former Director
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
100,000
|
Nil
|
$12,000
(3)
|
|
2016
|
Nil
|
Nil
|
Nil
|
Nil
|
400,000
|
Nil
|
Nil
|
Elaine Ellingham
(8)
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
400,000
|
Nil
|
Nil
|
Director
|
|
|
|
|
|
|
|
|
Korm Trieu
|
2018
(2)
|
$129,556
|
$27,750
|
Nil
|
Nil
|
255,000
|
Nil
|
Nil
|
Chief Financial Officer
|
2017
|
$142,450
|
$35,613
|
Nil
|
Nil
|
290,000
|
Nil
|
Nil
|
|
2016
|
$129,500
|
$38,850
|
Nil
|
Nil
|
150,000
|
Nil
|
Nil
|
Douglas McDonald
|
2018
(2)
|
$122,071
|
$28,875
|
Nil
|
Nil
|
200,000
|
Nil
|
Nil
|
Vice President, Corporate
|
2017
|
$134,750
|
$33,688
|
Nil
|
Nil
|
275,000
|
Nil
|
Nil
|
Development
|
2016
|
$122,500
|
$18,375
|
Nil
|
Nil
|
170,000
|
Nil
|
Nil
|
Laurence Morris
(9)
|
2018
|
$246,488
|
Nil
|
Nil
|
Nil
|
300,000
|
Nil
|
Nil
|
Vice President, Operations & Projects
|
|
|
|
|
|
|
|
|
|
(1)
|
Since the effectiveness of the Plan of Arrangement with Azucar on July 31, 2015, Azucar has compensated the Company 30% of
any shared personnel’s fees and/or wages. The above table reflects only the compensation for each individual paid by Almaden
after recovery of such 30% from Azucar.
|
|
(2)
|
Effective May 18, 2018, Almadex has compensated the Company 20% of any shared personnel’s fees and/or wages. The above
table reflects only the compensation for each individual paid by Almaden after recovery of such 20% from Almadex.
|
|
(4)
|
Audit Committee Chairman’s fees.
|
|
(5)
|
Compensation Committee Chairman’s fees.
|
|
(6)
|
Joseph Montgomery resigned as a Director of the Company effective August 8, 2016.
|
|
(7)
|
David Strang commenced as a Director of the Company effective August 8, 2016 and resigned effective June 27, 2018.
|
|
(8)
|
Elaine Ellingham commenced as a Director of the Company effective February 27, 2018.
|
|
(9)
|
Laurence Morris commenced as Vice President, Operations & Projects effective April 30, 2018 and pursuant to his Independent
Contractor Agreement dated January 15, 2018 is compensated at an annual fee of $250,000 USD.
|
Remuneration on Termination
The Company has the following termination clauses within its
executive employment contracts.
The Company entered into a new Executive
Employment Contract (the “DP Agreement”) dated January 1, 2016, as amended by Amending Agreement dated April 1, 2016
and Second Amending Agreement made January 1, 2019 (the “DP Agreement”) between the Company and Duane Poliquin (the
“Executive” under the DP Agreement) which replaces an expired Executive Compensation Contract dated January 29, 2013
(the “HMR Agreement”) between the Company and Hawk Mountain Resources Ltd. (“Management Company”), a private
company of which Duane Poliquin (the “Executive” under the HMR Agreement) is a shareholder, which was terminated by
mutual agreement on December 31, 2015. The DP Agreement will terminate or may be terminated for any one of the following reasons:
|
(a)
|
Voluntarily by the Executive, upon at least three (3) months prior written notice of termination
by the Executive to the Company; or
|
|
(b)
|
without Cause, upon at least three (3) months prior written notice of termination by the Company
to the Executive; or
|
|
(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, 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, 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.
The Executive Employment Contract dated
January 29, 2013, as amended by Amending Agreement dated April 1, 2016 and Second Amending Agreement made January 1, 2019 (the
“MP Agreement”) between the Company and Morgan Poliquin (the “Executive” under the MP Agreement) will terminate
or may be terminated for any one of the following reasons:
|
(a)
|
voluntarily by the Executive, upon at least three (3) months prior written notice of termination
by the Executive to the Company; or
|
|
(b)
|
without Cause, upon at least three (3) months prior written notice of termination by the Company
to the Executive; or
|
|
(c)
|
by the Company for Cause; or
|
|
(d)
|
upon the death or disability of the Executive; or
|
|
(e)
|
upon retirement by the Executive.
|
Termination by the Executive Voluntarily
or by the Company for Cause
If the Executive shall voluntarily terminate
employment under the MP Agreement or if the employment of the Executive is terminated by the Company for Cause, then all compensation
and benefits as theretofore provided shall terminate immediately upon the effective date of termination and no special severance
compensation will be paid.
Cause
to terminate the Executive’s employment shall mean:
|
(a)
|
the repeated and demonstrated failure by the Executive to perform the Executive’s material
duties under the MP Agreement, after demand for substantial performance is delivered by the Company to the Executive that specifically
identifies the manner in which the Company believes the Executive has not substantially performed the Executive’s duties
under the MP Agreement; or(
|
|
(b)
|
the willful engagement by the Executive in misconduct which is materially injurious to the Company,
monetarily or otherwise; or
|
|
(c)
|
any other willful violation by the Executive of the provisions of the MP Agreement; or
|
|
(d)
|
the Executive is convicted of a criminal offence involving fraud or dishonesty.
|
Termination by the Company Without Cause
If the Company shall terminate the Executive’s
employment under the MP Agreement for any reason except for Cause then, upon the effective date of termination, the Company shall
pay the Executive in one lump sum an amount equal to two (2) times the Executive’s then current Base Salary, less all statutory
withholdings and deductions. All the benefits theretofore provided to the Executive shall be continued as if the Executive was
still an employee of the Company for a period of twelve (12) months from the date of termination or until equal or better benefits
are provided by a new employer, whichever shall first occur.
Termination by Death or Disability
If the Executive dies or becomes disabled
before the Executive’s employment is otherwise terminated, the Company shall pay the Executive or the Executive’s estate,
an amount of compensation equal to six (6) months of the Executive’s then current Base Salary and all the benefits theretofore
provided to the Executive shall be continued, for a period of six (6) months from the date of Death or Disability as if the Executive
were still an employee of the Company. If such termination is due to the Executive’s Death, payment shall be made in one
lump sum to the Executive’s Designate within sixty (60) days of the Executive’s death. If no Executive’s Designate
survives the Executive, the entire amount shall be paid to the Executive’s estate. If such termination is due to the Executive’s
Disability, payment shall be made in one lump sum to the Executive within sixty (60) days of the Executive’s Disability.
The compensation provided under this paragraph shall be in addition to that payable from any insurance coverage providing compensation
upon Death or Disability.
Termination Following Change in Control
For purposes
of the MP Agreement, a Change in Control shall be deemed to have occurred if:
|
(i)
|
any person or any person and such person’s associates or affiliates, as such terms are defined
in the
Securities Act
(British Columbia) (the “Act”), makes a tender, take-over or exchange offer, circulates
a proxy to shareholders or takes other steps to effect a takeover of the control of the Company, whether by way of a reverse take-over,
formal bid, causing the election or appointment of a majority of directors of the Company or otherwise in any manner whatsoever;
or
|
|
(ii)
|
during any period of eighteen (18) consecutive months (not including any period prior to the Effective
Date), individuals who at the beginning of such period constituted the Board of Directors and any new directors, whose appointment
by the Board of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least three
quarters (3/4) of the Board of Directors then still in office who either were directors at the beginning of the period or whose
appointment or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board of
Directors; or
|
|
(iii)
|
the acquisition by any person or by any person and such person’s affiliates or associates,
as such terms are defined in the Act, and whether directly or indirectly, of common shares of the Company at the time held by such
person and such person’s affiliates and associates, totals for the first time, twenty percent (20%) or more of the outstanding
common shares of the Company; or
|
|
(iv)
|
the business or businesses of the Company for which the Executive’s services are principally
performed, are disposed of by the Company pursuant to a partial or complete liquidation, dissolution, consolidation or merger of
the Company, or a sale or transfer of all or a significant portion of the Company’s assets.
|
Notwithstanding any other provisions in
the MP Agreement regarding termination, if any of the events described above constituting a Change in Control shall have occurred
during the Term, upon the termination of the Executive’s employment (unless such termination is because of the Executive’s
Death or Disability, by the 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, 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.
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.
(5)
|
Vice
President, Operations & Projects
|
The Independent Contractor Agreement dated
January 15, 2018 (the “LM Agreement”) between the Company and Laurence Morris (the “Contractor” under the
LM Agreement) may be terminated for any one of the following reasons:
|
a.
|
by Contractor, at any time, without cause or reason, upon 90 days written notice to the Company;
|
|
b.
|
by the Company, for cause, at any time in the event of a failure by Contractor to comply with any
of the provisions of the LM Agreement, including, without limitation, a persistent failure on the part of Contractor to follow
the directions of the Board or CEO or any act of gross negligence or wilful misconduct on the part of Contractor, where the Company
has communicated such failure to Contractor and a reasonable opportunity to cure the failure has been provided, or by the Company
immediately upon the death or incapacity of Contractor or upon Contractor no longer being qualified, under applicable corporate
or securities laws or stock exchange requirements, to be the Vice-President Operations & Projects of the Company;
|
|
c.
|
by Contractor, for cause, at any time in the event of a failure by the Company to comply with any
of the provisions of the LM Agreement, where such failure has been communicated to the Company and a reasonable opportunity to
cure the failure has been provided; or
|
|
d.
|
by the Company, at any time, without cause or reason, upon 90 days written notice to Contractor;
|
and upon any such termination, the Board
shall be at liberty to remove Contractor from any office held by Contractor in the Company or any of its subsidiaries and to make
or cause to be made whatever regulatory or stock exchange filings are required in the circumstances.
Termination Following Change in Control
A Change of Control means the occurrence
of any of the following events:
|
a.
|
any Person acquiring fifty percent (50%) or more of the issued and outstanding shares of the Company;
or
|
|
b.
|
any Person acquiring all or substantially all of the assets of the Company, provided that for the
purposes of the applicable section and the LM Agreement, "Person" means a third party that is operating at arm's length
from Contractor. For greater certainty, "Person" shall not include any person, partnership, corporation or other entity
with which Contractor is involved directly or indirectly as principal, agent, shareholder of more than 2% of such entity’s
voting securities, officer, employee or in any other manner whatsoever.
|
If a Change of Control occurs and (i) thereafter
the Company terminates Contractor’s engagement under the LM Agreement otherwise than for cause or (ii) Contractor elects
to terminate his engagement under the LM Agreement by notifying the Company of such election in writing within ten (10) calendar
days after the occurrence of a Change of Control, Contractor’s engagement shall immediately terminate and the Company shall
provide Contractor with a payment equivalent to two (2x) times the Contractor’s Annual Fee, payable, at the Company’s
discretion, either in one lump sum within five (5) business days from the effective date of termination of Contractor’s engagement
hereunder or in two or more equal instalments over the three (3) months period commencing on the effective date of termination
of Contractor’s engagement under the LM Agreement, with the first such instalment payable within five (5) business days from
the effective date of termination of Contractor’s engagement under the LM Agreement, and upon Contractor’s receipt
of such lump sum payment or the last instalment payment, the LM Agreement shall terminate.
Stock options
Incentive stock options to purchase securities
from the Company are granted to directors, executive officers, employees and consultants of the Company on terms and conditions
acceptable to the regulatory authorities in Canada, notably the Toronto Stock Exchange, and in accordance with the requirements
of the applicable Canadian securities commissions’ requirements and regulations.
The Company has a formal written stock
option plan (“Plan”) which permits the issuance of up to 10% of the Company’s issued share capital from time
to time during the term of the Plan and provides that stock options may be granted from time to time provided that incentive stock
options in favor of any consultant or person providing investor relations services cannot exceed 2% in any 12 month period. No
incentive stock option granted under the Plan is transferable by the optionee other than by will or the laws of descent and distribution,
and each incentive stock option is exercisable during the lifetime of the optionee only by such optionee and by the optionee’s
personal representatives in the event of death for a period ending on the earlier of the expiry date of the option and twelve months
after the date of death.
The exercise price of all incentive stock
options granted under the Plan is determined in accordance with Toronto Stock Exchange guidelines and cannot be less than the Market
Price on the date of the grant. Market Price is the volume weighted average trading price of the Company’s shares on the
Toronto Stock Exchange for the five trading days immediately preceding the date of the grant. The maximum term of each incentive
stock option is five years. Options granted to consultants or persons providing Investor Relations Activities (as defined in the
Plan) shall vest in stages with no more than ¼ of such options being exercisable in any three month period. All options
granted during Fiscal 2018, Fiscal 2017 and Fiscal 2016 vested on the date granted. Under the requirements of the Toronto Stock
Exchange, all unallocated options under the Plan must be approved by the Board of Directors, including a majority of the unrelated
directors and by the shareholders every three years after the institution of the Plan. Insiders and affiliates of insiders entitled
to receive a benefit under the Plan are not entitled to vote for such approval.
The names and titles of the directors and
executive officers of the Company to whom outstanding stock options have been granted and the number of common shares subject to
such options as of March 14, 2019 are set forth in Table No. 8, as well as the number of options granted to directors, executive
officers, employees and consultants as a group.
Table No. 8
Stock Options Outstanding
Name
|
Number of Options Outstanding
|
Exercise Price CDN$
|
Expiry Date
|
Duane Poliquin
|
100,000
|
$1.99
|
05/04/2019
|
Chairman of the Board & Director
|
300,000
|
1.34
|
07/02/2019
|
|
165,000
|
1.40
|
09/19/2019
|
|
500,000
|
0.98
|
06/08/2020
|
|
150,000
|
1.25
|
09/30/2020
|
|
50,000
|
0.79
|
09/30/2020
|
|
100,000
|
0.86
|
12/13/2020
|
Morgan Poliquin
|
150,000
|
1.32
|
07/02/2019
|
President, Director &
|
350,000
|
1.34
|
07/02/2019
|
Chief Executive Officer
|
315,000
|
1.40
|
09/19/2019
|
|
500,000
|
1.53
|
04/30/2020
|
|
700,000
|
0.98
|
06/08/2020
|
|
200,000
|
1.25
|
09/30/2020
|
|
300,000
|
0.86
|
12/13/2020
|
|
250,000
|
0.84
|
02/07/2021
|
Jack McCleary
|
207,000
|
1.35
|
03/17/2019
|
Director
|
25,000
|
1.99
|
05/04/2019
|
|
100,000
|
0.98
|
06/08/2020
|
|
68,000
|
0.83
|
09/30/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
50,000
|
0.79
|
09/30/2020
|
Gerald G. Carlson
|
25,000
|
1.99
|
05/04/2019
|
Director
|
50,000
|
1.34
|
07/02/2019
|
|
115,000
|
1.40
|
09/19/2019
|
|
50,000
|
0.98
|
06/08/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
50,000
|
0.79
|
09/30/2020
|
|
72,000
|
0.86
|
12/13/2020
|
|
50,000
|
0.84
|
02/07/2021
|
Mark T. Brown
|
25,000
|
1.99
|
05/04/2019
|
Director
|
117,000
|
1.34
|
07/02/2019
|
|
115,000
|
1.40
|
09/19/2019
|
|
100,000
|
1.14
|
04/30/2020
|
|
50,000
|
0.98
|
06/08/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
18,000
|
0.83
|
09/30/2020
|
|
25,000
|
0.84
|
02/07/2021
|
William J. Worrall
|
115,000
|
1.40
|
09/19/2019
|
Director
|
250,000
|
0.98
|
06/08/2020
|
|
5,000
|
0.83
|
09/30/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
30,000
|
0.83
|
12/13/2020
|
Elaine Ellingham
|
400,000
|
1.08
|
03/29/2021
|
Director
|
|
|
|
Korm Trieu
|
75,000
|
1.89
|
06/12/2019
|
Chief Financial Officer
|
115,000
|
1.40
|
09/19/2019
|
|
75,000
|
1.03
|
04/10/2020
|
|
150,000
|
0.98
|
06/08/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
30,000
|
0.86
|
12/13/2020
|
|
50,000
|
0.84
|
02/07/2021
|
Douglas McDonald
|
75,000
|
1.84
|
05/19/2019
|
Vice President, Corporate Development
|
100,000
|
1.40
|
09/19/2019
|
|
20,000
|
0.98
|
06/08/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
180,000
|
0.86
|
12/13/2020
|
Laurence Morris
|
300,000
|
1.11
|
02/07/2021
|
Vice President, Operations & Projects
|
|
|
|
Total Directors/Officers (10 persons)
|
8,012,000
|
|
|
Total Employees/Consultants (16 persons)
|
1,845,000
|
|
|
Total Directors/Officers/Employees/Consultants
|
9,857,000
|
|
|
No funds were set aside or accrued by the
Company during Fiscal 2018 to provide pension, retirement or similar benefits for directors or executive officers.
General
The Toronto Stock Exchange (“TSX”)
and the applicable Canadian securities law and regulation require that the Company comply with National Instrument 58-101 (
Disclosure
of Corporate Governance Practices)
or any replacement of that instrument. The Company is also, under applicable Canadian securities
law and regulation, required to comply with National Policy 58-201 (
Corporate Governance Guidelines).
National Instrument
58-101 and National Policy 58-201 (for convenience referred to in the aggregate as the “guidelines”) deal with matters
such as the constitution and independence of corporate boards, their functions, the effectiveness and education of the board members
and other matters. The Company’s statement as to compliance with the guidelines and its approach to corporate governance
is set forth below.
Corporate Governance
The Company’s Board and management
are committed to the highest standards of corporate governance. The Company’s corporate governance practices are in accordance
with the guidelines. The Company is also cognizant of and compliant with various corporate governance requirements in Canada and
is in compliance with applicable U.S. requirements.
The Company’s prime objective in
directing and managing its business and affairs is to enhance shareholder value. The Company views effective corporate governance
as a means of improving corporate performance and accordingly of benefit to the Company and all shareholders.
The Company also believes that director
and management honesty and integrity are essential factors in ensuring good and effective corporate governance. To that end the
Company’s directors have adopted various codes and policies for the Company, its directors, officers, employees and consultants.
The codes and policies adopted to date are as follows: Audit Committee Charter, Nominating and Corporate Governance Committee-Responsibilities
and Duties, Compensation Committee-Responsibilities and Duties, Code of Business Ethics, Code of Business Conduct and Ethics for
Directors, Communications Policy, Securities Trading Policy, Whistleblowers Policy and Privacy Policy (the “Codes”).
The Codes may be viewed on the Company’s website at www.almadenminerals.com. The Codes may also be viewed as filed on EDGAR
as an exhibit to the 2005 20-F Annual Report filed with the Commission on March 30, 2006. Any amendments to the Codes or waivers
of the provision of any Codes will be posted on the Company’s website within 5 business days of such amendment or waiver.
Executive Officer Position Descriptions
Chairman of the Board (‘Chairman’)
Responsibilities:
|
-
|
Leads the Board of Directors of the Company and also takes a hands-on role in the Company’s
day-to-day management.
|
|
-
|
Helps the CEO to oversee all the operational aspects involved in running the Company, including
project selection and planning.
|
|
-
|
Takes overall responsibility for the Company’s direction and growth, seeking to generate
significant financial gains for the shareholders.
|
|
-
|
Oversees relationships with the communities and stakeholders in the areas where the Company operates,
with the intent of ensuring the Company’s activities are of benefit to all.
|
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.
Vice President, Operations &
Projects
Reports to:
The CEO of the Company
Responsibilities:
The Vice President, Operations & Projects
is responsible for:
|
-
|
Plan and manage the construction and operations of the Ixtaca Project;
|
|
-
|
Develop and oversee the implementation of all required project execution systems and procedures
including project controls, procurement of contracts, engineering construction, quality assurance and quality control;
|
|
-
|
Ensure the project objectives, scope and plan are well defined and understood by the project team
and stakeholders;
|
|
-
|
Ensures the compliance with health, safety, environmental and community regulations and corporate
standards;
|
|
-
|
Developing and recommending production strategies, together with capital budget and operating budget
requirements to optimize short and long-range production capabilities while minimizing exposure to economic and environmental risk;
|
|
-
|
Oversee all site activities, site services, construction, pre-commissioning and commissioning;
|
|
-
|
Assisting the CEO in preparing and presenting to the investors, the executive team and the Board;
|
The Vice President, Operations & Projects
shall assist the CEO in establishing and managing relationships with key stakeholders. The Vice President, Operations & Projects
shall also conducts technical and financial analysis to determine the impact of growth opportunities on various metrics and to
establish an execution plan as needed.
Mandate of the Board
The mandate of the Board is to supervise
the management of the business and affairs of the Company and to act with a view to the best interests of the Company. In fulfilling
its mandate, the Board, among other matters, is responsible for:
|
(a)
|
adopting a strategic planning process and approving, on at least an annual basis, a strategic plan,
taking into 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, 2018
there were five (5) meetings of the Board. The frequency of meetings as well as the nature of agenda items change, depending upon
the state of the Company’s affairs and in light of opportunities or risks which the Company is subject to. Table No. 9 indicates
the number of meetings attended by each director.
Table No. 9
Meetings Attended
Director
|
Number
|
Duane Poliquin
|
5
|
Morgan Poliquin
|
5
|
Jack McCleary
|
5
|
Gerald G. Carlson
|
5
|
Mark T. Brown
|
5
|
William J. Worrall
|
5
|
David Strang
(1)
|
1
|
Elaine Ellingham
|
5
|
(1)
David Strang resigned as a Director on June 27,
2018
The Chairman is the chair of meetings of
the Board of directors and is not an independent director. Meetings of the independent members of the Board may be held periodically
as convened by the independent Board members. In Fiscal 2018, five (5) meetings of the independent Board members were convened.
In carrying out its mandate, the Board
and each committee of the Board, relies primarily on management and its employees to provide it with regular detailed reports on
the operations of the Company and its financial position. Certain members of management are also on the Board and provide the Board
with direct access to information concerning their areas of responsibility. Management personnel are also regularly asked to attend
Board meetings to provide information, answer questions and receive the direction of the Board. The reports and information provided
to the Board enable them to monitor and manage the risks associated with the Company’s operations and its compliance with
legal and safety requirements, environmental issues and the financial position and liquidity of the Company.
The Board discharges its responsibilities
directly and through committees. At regularly scheduled meetings, members of the Board and management discuss the broad range of
matters and issues relevant to the Company’s business interests and the Board is responsible for the approval of the Company’s
Strategic Plan. In addition, the Board receives reports from management on the Company’s operational and financial performance.
Between scheduled meetings, matters requiring Board authorization is effected by means of signed Consent Resolutions.
Board Assessment
The Nomination and Corporate Governance
Committee reports to the Board periodically on the evaluation of the Board’s performance and that of the individual directors.
The Performance of the Chief Executive Officer is evaluated by the Compensation Committee.
Composition of the Board
The guidelines recommend that a board of
directors be constituted with a majority of individuals who qualify as independent directors.
In deciding whether a particular director
is independent, the Board examined the factual circumstances of each director and considered them in the context of many factors,
including the definitions in the guidelines and the requirements and policies of NYSE American Company Guide Rules. The current
Board is composed of seven members. The Board has determined that a majority of directors, namely 5 directors, are independent
- Jack McCleary, Gerald Carlson, William J. Worrall, Elaine Ellingham and Mark T. Brown. Two directors – Duane Poliquin and
Morgan Poliquin – are not independent because, in addition to their being the Chairman and Chief Executive Officer/President
of the Company, respectively, they each have Executive Employment Contracts with the Company and, therefore, they each have a material
relationship with the Company. The basis for determination of independence is under Canadian securities instrument NI 52-110 and
NYSE American Exchange Company Guide Rules.
The Company does not have a controlling
or significant shareholder. The Board believes that the membership of the Board fairly reflects the investment in the Company by
minority shareholders.
The Board
considers its size and composition to be appropriate and effective for carrying out its responsibilities. However, the Board may
consider adding an additional director if a suitable candidate can be found who may bring additional experience or knowledge to
the Board.
Board Committees
The Board currently has three committees
the Audit Committee, the Nomination and Corporate Governance Committee and the Compensation Committee. Each member of each committee
is an independent director. Each committee is responsible for determining its own rules of procedure and may, from time to time,
develop written descriptions for the responsibilities of the chair of such committee. No written position descriptions have yet
been developed.
Mandates of each of the committees and
the Codes undergo review periodically (in some cases mandated as annually) to bring them into line with changing Canadian and U.S.
securities and corporate governance requirements and to reflect amendments that may be considered appropriate to make them more
effective. Any revisions to the mandates and Codes will be available on the Company’s website at www.almadenminerals.com.
Audit Committee
The members of the Audit Committee are
Messrs. William Worrall, Gerald Carlson and Mark T. Brown. The Audit Committee met four (4) times during Fiscal 2018. The full
text of the initial Audit Committee Charter is an exhibit to the 2003 20-F Annual Report filed with the Commission on May 11, 2004.
After review, the charter was altered to more properly define the functions of the Audit Committee. The revised charter is an exhibit
to the 2005 20-F Annual Report filed with the Commission on March 30, 2006.
Nominating and Corporate Governance
Committee
The members of the Nominating and Corporate
Governance Committee are Jack McCleary, William Worrall and Gerald Carlson. The Nominating and Corporate Governance Committee met
five (5) time during Fiscal 2018. The full text of the initial Corporate Governance Charter is an exhibit to the 2003 20-F Annual
Report filed with the Commission on May 11, 2004. After review, the Responsibilities and Duties of the Nominating and Corporate
Governance Committee were altered to more properly define the functions of the Nominating and Corporate Committee. The revised
Responsibilities and Duties is an exhibit to the 2005 20-F Annual Report filed with the Commission on March 30, 2006.
Compensation Committee
The members of the Compensation Committee
are Jack McCleary, William Worrall, Mark T. Brown and Gerald Carlson. The Compensation Committee met five (5) times during Fiscal
2018 with Jack McCleary, Mark T. Brown, Gerald Carlson and William Worrall attending all five (5) meetings. The Responsibilities
and Duties of the Compensation Committee is an exhibit to the 2005 20-F Annual Report filed with the Commission on March 30, 2006.
Orientation and Continuing Education
The Nomination and Corporate Governance
Committee is responsible for recommending to the Board an orientation and education program for new directors.
Director Term Limits and other Mechanisms
of Board Renewal
The Company has not adopted term limits
or other mechanisms for Board renewal. The Company does not consider it is yet appropriate to force any term limits or other mechanisms
of Board renewal at this time.
Policies Regarding the Representation
of Women on the Board
There is currently one woman on the Company’s
Board representing 14.3% of the Board. The Company plans to adopt a written policy with respect to the identification and nomination
of women directors (the “Diversity Policy”). The Diversity Policy will require that the Board consider diversity on
the Board from a number of aspects, including but not limited to gender, age, ethnicity and cultural diversity. In addition, when
assessing and identifying potential new members to join the Board or the Company’s executive team, the Board will consider
the current level of diversity on the Board and the executive team. As the Diversity Policy has not yet been adopted, the Company
is not yet able to measure its effectiveness.
Consideration of the Representation
of Women in the Director Identification and Selection Process
Pursuant to the Diversity Policy, the Board
will consider and evaluate the representation of women on the Board when identifying and nominating candidates for election and
re-election to the Board. The Company will focus its search for new directors purely based on the qualification of potential candidates,
regardless of their gender.
Consideration Given to the Representation
of Women in Executive Officer Appointments
Pursuant to the Diversity Policy, the Board
will consider and evaluate the representation of women in the Company’s executive officer positions when identifying and
nominating candidates for appointment as executive officers. The Company will focus its search for new executive officers purely
based on the qualification of potential candidates, regardless of their gender.
The Company’s Targets Regarding
the Representation of Women on the Board and in Executive Officer Positions
The Company has not established a target
for the representation of women on the Board or in executive officer positions of the Company by a specific date. The Company does
not think it is appropriate to set targets because the Company focuses its search for new directors and executive officers purely
based on the qualification of potential candidates, regardless of their gender.
Number of Women on the Board and in
Executive Officer Positions
As at the date of this Form 20-F Annual
Report, one of the Company’s directors (representing 14.3% of the Company’s seven directors) and none of the Company’s
executive officers are women.
Decisions Requiring Board Approval
In addition to those matters which must
by law be approved by the Board, management is also required to seek Board approval for any major acquisition, disposition or expenditure.
Management is also required to consult with the Board before entering into any venture which is outside of the Company’s
existing line of business.
Changes in officers are to be approved
by the Board including changes in officers of the Company’s principal operating subsidiaries.
In certain circumstances it may be appropriate
for an individual director to engage an outside advisor at the expense of the Company. The engagement of the outside advisor would
be subject to the approval of the Nomination and Corporate Governance Committee.
Communications and Investor Relations
The Company has adopted a Communications
Policy, the purpose and aim of which is as follows:
|
(a)
|
Controls the communications between the Company and its external stakeholders;
|
|
(b)
|
Complies with its continuous and timely disclosure obligations;
|
|
(c)
|
Avoids selective disclosure of Company information;
|
|
(d)
|
Protects and prevents the improper use or disclosure of material information and confidential information;
|
|
(e)
|
Educates the Company’s personnel on the appropriate use and disclosure of material information
and confidential information;
|
|
(f)
|
Fosters and facilitates compliance with applicable laws; and
|
|
(g)
|
Creates formal Disclosure Officers to help achieve the above objectives.
|
In accordance with the Communications Policy
of the Company, designated Disclosure Officers receive and respond to shareholder enquiries. Shareholder enquiries and concerns
are dealt with promptly by Disclosure Officers of the Company.
Ethical Business Conduct
The Company has adopted a Code of Business
Conduct and Ethics for Directors (“Code”), a Code of Business Ethics (“COBE”), a Securities Trading Policy
and a Privacy Policy. Employees and consultants are required as a term of employment or engagement to undertake to abide by the
COBE. Directors are bound to observe the Code adopted by the Board.
All Directors, Officers and Employees (“Individuals”)
sign a Certification (“Certification”) stating they have read the Code of Business Ethics policy (“Policy”)
of the Company and have complied with such Policy in all respects. The Certification further acknowledges that all members of the
Individual’s family, all other persons who live with the Individual and all holding companies and other related entities
of the Individual and all such persons or companies acting on behalf of or at the request of any of the foregoing also complied
with such Policy. The Certification also states that any violation of such Policy may constitute grounds for immediate suspension
or dismissal.
Each director is expected and required
by statute to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence
and skill that a reasonably prudent individual would exercise in comparable circumstances and in accordance with the
Business
Corporations Act
(British Columbia) and the Company’s Articles.
Employees
As of December 31, 2018, the Company operated
with nine people in Canada, of which six are administrative personnel and three are exploration personnel. There are no full-time
employees in the U.S. or Mexico. None of the Company’s employees are covered by a collective bargaining agreement.
Share Ownership
Table No. 10 lists, as of March 14, 2019,
directors and executive officers who beneficially own the Company's voting securities and the amount of the Company’s voting
securities owned by the directors and executive officers as a group.
Table No. 10
Shareholdings of Directors and Executive
Officers
Title of
Class
|
Name of Beneficial Owner
|
Amounts and Nature of
Beneficial Ownership
|
Percent of
Class*
|
Common
|
Duane Poliquin
|
4,033,146
(1)(11)
|
3.57%
|
Common
|
Morgan Poliquin
|
4,502,422
(2)(11)
|
3.93%
|
Common
|
Jack McCleary
|
837,711
(3)
|
0.75%
|
Common
|
Gerald G. Carlson
|
603,306
(4)
|
0.54%
|
Common
|
Mark T. Brown
|
575,000
(5)
|
0.51%
|
Common
|
William J. Worrall
|
558,366
(6)
|
0.50%
|
Common
|
Korm Trieu
|
647,144
(7)
|
0.58%
|
Common
|
Doug McDonald
|
578,719
(8)
|
0.52%
|
Common
|
Elaine Ellingham
|
437,500
(9)
|
0.39%
|
Common
|
Laurence Morris
|
300,000
(10)
|
0.27%
|
|
Total Directors/Officers
|
13,073,314
|
11.54%
|
|
(1)
|
Of these shares 1,365,000 represent currently
exercisable stock options.
|
|
(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 550,000 represent currently exercisable stock options.
|
|
(6)
|
Of these shares 500,000 represent currently exercisable stock options.
|
|
(7)
|
Of these shares 595,000 represent currently exercisable stock options. 7,500 of these shares are
held indirectly by Mr. Trieu’s wife.
|
|
(8)
|
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.
|
|
(9)
|
Of these shares 400,000 represent currently
exercisable stock options, 12,500 represent currently exercisable warrants.
|
|
(10)
|
Of these shares 300,000 represent currently exercisable stock options.
|
|
(11)
|
Pursuant to a Voting Trust Agreement (Exhibit 3 to this 20-F Annual Report), Duane Poliquin and
Morgan Poliquin (the “Trustees”) jointly hold voting power over any of the Company’s common shares legally and
beneficially owned by Mr. Ernesto Echavarria, a resident of Mexico. On August 10, 2015, Mr. Echavarria, who is not an executive
officer or director of the Company, made a filing with the System for Electronic Disclosure by Insiders (“SEDI”), Canada’s
on-line, browser-based service for the filing and viewing of insider reports as required by various provincial securities rules
and regulations, disclosing that his ownership of Almaden common shares had fallen below the 10% threshold for such reporting.
Based on such filing, Mr. Echavarria hold less than 10% of the Company’s common shares. Mr. Echavarria also holds warrants
to acquire an additional 126,100 of such shares.
|
*Based on 111,726,719 shares outstanding
as of March 14, 2019 and stock options and warrants held by each beneficial owner.
|
Item 7.
|
Major Shareholders
and Related Party Transactions
|
The Company is a publicly owned Canadian
company, the shares of which are owned by residents of the U.S., residents of Canada and other foreign residents. To the extent
known by the directors and executive officers of the Company, the Company is not directly or indirectly owned or controlled by
another company. Table No. 11 lists, as of March 14, 2019, the only persons or companies beneficially owning more than 5% of the
Company’s voting securities.
Table No. 11
Shareholdings of Beneficial Owners
Title of
|
|
Amounts and Nature of
|
Percent of
|
Class
|
Name of Beneficial Owner
|
Beneficial Ownership
|
Class*
|
Common
|
Duane Poliquin
|
4,033,146
(1)(3)
|
3.57%
|
Common
|
Morgan Poliquin
|
4,502,422
(2)(3)
|
3.93%
|
|
(1)
|
Of these shares 1,365,000 represent currently
exercisable stock options.
|
|
(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 (the “Trustees”) jointly hold voting power over any of the Company’s common shares legally and
beneficially owned by Mr. Ernesto Echavarria, a resident of Mexico. On August 10, 2015, Mr. Echavarria, who is not an executive
officer or director of the Company, made a filing with the System for Electronic Disclosure by Insiders (“SEDI”), Canada’s
on-line, browser-based service for the filing and viewing of insider reports as required by various provincial securities rules
and regulations, disclosing that his ownership of Almaden common shares had fallen below the 10% threshold for such reporting.
Based on such filing, Mr. Echavarria hold less than 10% of the Company’s common shares. Mr. Echavarria also holds warrants
to acquire an additional 126,100 of such shares.
|
*Based on 111,726,719 shares outstanding
as of March 14, 2019 and stock options and warrants held by each beneficial owner.
Related party
transactions
Certain officers and directors of the Company
are also officers or directors of companies with which the Company has agreements and may not be considered at arm's-length to
such agreements. However, any agreement or any to be negotiated between the Company and such other companies has been or will be
approved by directors of the Company, in accordance with the common law and the provisions of the
Business Corporations Act
(British Columbia)
.
|
(a)
|
Compensation of key management personnel
|
Key management includes
members of the Board, the Chairman, the President and Chief Executive Officer, the Chief Financial Officer, the Vice President,
Operations & Projects, and the Vice President, Corporate Development. The aggregate compensation paid or payable to key management
for services is as follows, after recovery of 30% of executive officer compensation from Azucar and 20% of executive officer compensation
from Almadex:
|
|
|
February 28,
2019
|
|
|
|
December 31,
2018
|
|
|
|
December 31,
2017
|
|
|
|
December 31,
2016
|
|
Salaries, fees and benefits
|
|
$
|
211,585
|
|
|
$
|
952,079
|
|
|
$
|
813,400
|
|
|
$
|
755,475
|
|
Share-based payments
|
|
|
116,250
|
|
|
|
1,090,540
|
|
|
|
2,216,170
|
|
|
|
1,537,060
|
|
Directors’ fees
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
41,000
|
|
|
|
$
|
397,835
|
|
|
$
|
2,112,619
|
|
|
$
|
3,099,570
|
|
|
$
|
2,333,535
|
|
|
(b)
|
Almadex Minerals Limited (“Almadex”)
|
Effective August 1, 2015, the Company recovers
a portion of expenses from Azucar pursuant to the administrative service agreement between the Company and Azucar.
Effective May 18, 2018, the Company also
recovers a portion of expenses from Almadex pursuant to the administrative service agreement between the Company and Almadex.
During the year ended December 31, 2018,
the Company received $542,657 (2017 - $499,798; 2016 - $464,498) from Azucar for administrative services fees included in other
income and received $243,498 (2017 - $Nil; 2016 - $Nil) from Almadex for administrative services fees included in other income.
At December 31, 2018, included in accounts
receivable is $170,181 (2017 - $195,551) due from Azucar and $116,268 (December 31, 2017 - $Nil) due from Almadex in relation to
expenses recoveries.
At December 31, 2018, the Company accrued
$37,533 (2017 - $153,038) payable to Almadex for drilling equipment rental services in Mexico.
|
(c)
|
Other related party transactions
|
During the year ended December 31, 2018,
the Company employed the Chairman’s daughter for a salary of $48,800 less statutory deductions (2017 - $43,800; 2016 - $38,800)
for marketing and administrative services provided to the Company.
Other than as disclosed above, there have
been no transactions or proposed transactions, which have materially affected or will materially affect the Company in which any
director, executive officer, or beneficial holder of more than 10% of the outstanding common stock, or any of their respective
relatives, spouses, associates or affiliates has had or will have any direct or material indirect interest. As stated above, management
believes the transactions referenced above were on terms at least as favorable to the Company as the Company could have obtained
from unaffiliated parties.
|
Item 8.
|
Financial Information
|
The financial statements as required under
Item 8 are attached hereto and found immediately following the text of this Annual Report.
Legal Proceedings
The Company knows of no material, active
or pending legal proceedings against it; nor is the Company involved as a plaintiff in any material proceeding or pending litigation.
Dividends
The Company has not declared any dividends
since inception and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain
future earnings for use in its operations and the expansion of its business.
Significant Changes
There have been no significant changes
of financial condition since the most recent audited financial statements included within this Annual Report on Form 20-F.
|
Item 9.
|
Offer and Listing of Securities
|
The Company's common shares trade on The
Toronto Stock Exchange ("TSX") in Toronto, Ontario, Canada having the symbol "AMM” and on the NYSE American
(formerly the NYSE MKT) in New York, New York, U.S.A. having the symbol “AAU” and CUSIP #020283107.
The Company’s common shares commenced
trading on February 11, 2002 on TSX and December 19, 2005 on the American Stock Exchange, now the NYSE American.
Table No. 12 lists the high and low prices
for the shares of Almaden Minerals Ltd. common stock on NYSE American for the preceding five years. Table No. 13 lists the high
and low prices for shares of Almaden Minerals Ltd. common stock on TSX for the preceding five years.
Table No. 12
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Year Ended
|
High
|
Low
|
12/31/2018
|
$1.05
|
$0.48
|
12/31/2017
|
1.75
|
0.71
|
12/31/2016
|
1.88
|
0.50
|
12/31/2015
|
1.27
|
0.48
|
12/31/2014
|
1.94
|
0.86
|
Table No. 13
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Year Ended
|
High
|
Low
|
12/31/2018
|
$1.35
|
$0.63
|
12/31/2017
|
2.33
|
0.92
|
12/31/2016
|
2.44
|
0.73
|
12/31/2015
|
1.57
|
0.65
|
12/31/2014
|
2.11
|
1.02
|
Table No. 14 lists the quarterly high and
low prices for shares of Almaden Minerals Ltd. common stock on NYSE American for the two most recent full financial years. Table
No. 15 lists the quarterly high and low prices for shares of Almaden Minerals Ltd. common stock on TSX for the two most recent
full financial years.
Table No. 14
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Quarter Ended
|
High
|
Low
|
12/31/2018
|
$0.69
|
$0.48
|
09/30/2018
|
0.75
|
0.56
|
06/30/2018
|
0.87
|
0.70
|
03/31/2018
|
1.05
|
0.78
|
12/31/2017
|
1.24
|
0.71
|
09/30/2017
|
1.32
|
1.10
|
06/30/2017
|
1.75
|
1.13
|
03/31/2017
|
1.30
|
0.95
|
Table No. 15
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Quarter Ended
|
High
|
Low
|
12/31/2018
|
$0.91
|
$0.63
|
09/30/2018
|
0.98
|
0.74
|
06/30/2018
|
1.10
|
0.91
|
03/31/2018
|
1.35
|
1.03
|
12/31/2017
|
1.56
|
0.92
|
09/30/2017
|
1.68
|
1.34
|
06/30/2017
|
2.33
|
1.51
|
03/31/2017
|
1.70
|
1.27
|
Table No.16 lists the high and low prices for shares of Almaden
Minerals Ltd. common stock on NYSE American for the most recent six months. Table No. 17 lists the high and low prices for shares
of Almaden Minerals Ltd. common stock on TSX for the most recent six months.
Table No. 16
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Month Ended
|
High
|
Low
|
02/28/2019
|
$0.79
|
$0.63
|
01/31/2019
|
0.90
|
0.66
|
12/31/2018
|
0.69
|
0.54
|
11/30/2018
|
0.60
|
0.48
|
10/31/2018
|
0.65
|
0.49
|
09/30/2018
|
0.69
|
0.58
|
Table No. 17
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Month Ended
|
High
|
Low
|
02/28/2019
|
$1.03
|
$0.83
|
01/31/2019
|
1.19
|
0.89
|
12/31/2018
|
0.91
|
0.74
|
11/30/2018
|
0.79
|
0.63
|
10/31/2018
|
0.83
|
0.63
|
09/30/2018
|
0.90
|
0.74
|
The closing price of the Company’s
common stock was $0.63 (US$) on the NYSE American and $0.83 (C$) on TSX on February 28, 2019.
In recent years, securities markets in
Canada and the U.S. have experienced a high level of price and volume volatility, and the market price of many resource companies,
particularly those considered speculative exploration companies, have experienced wide fluctuations in price which have not necessarily
been related to operating performance or underlying asset values on prospects of such companies. Exploration for gold and other
minerals is considered high risk and highly speculative in the resource industry and the trading market for precious and base metal
exploration companies is characteristically volatile, with wide fluctuations of price and volume only in part related to progress
of exploration. There can be no assurance that continual fluctuations in the Company’s share price and volume will not occur.
The Company's common stock is issued in
registered form and the following information is from the Company’s registrar and transfer agent, Computershare Investor
Services Inc. located in Vancouver, British Columbia and Toronto, Ontario, Canada.
On February 28, 2019, the shareholders'
list for the Company’s common shares showed 252 registered shareholders and 111,726,719 shares outstanding. 213 of these
registered shareholders are U.S. residents, owning 23,129,329 shares representing 21% of the issued and outstanding shares of common
stock. 28 of these registered shareholders are Canadian residents, owning 86,739,511 shares representing 78% of the issued and
outstanding shares of common stock. 11 of these registered shareholders are of other countries, owning 1,857,879 shares representing
1% of the issued and outstanding shares of common stock.
Table No. 18 lists changes, if any, in issued shares to March
14, 2019:
Table No. 18
Shares Issued to March 14, 2019
|
Number
|
|
Balance, December 31, 2018
|
111,726,719
|
Balance, March 14, 2019
|
111,726,719
|
|
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 2018, Fiscal 2017 and Fiscal 2016. In Fiscal 2011, the Company
issued 100,000 flow-through shares. Flow-through shares differ from other common shares in one aspect only, namely the tax benefits
connected with the expenditures associated with the funds raised through the sale of flow through shares flow through to the shareholder
rather than the Company; all other rights of the shareholder remain unchanged. Companies must specifically identify the expenditures
associated with the funds raised through the sale of flow-through shares. Companies raising capital through flow-through shares
must expend the funds on qualifying natural resources exploration in Canada. These tax benefits are available only to shareholders
residing in Canada. Shareholders residing in the U.S. and other non-Canadian shareholders, receive no tax benefits through the
purchase of flow-through shares.
Memorandum and Articles
At the Annual and Special General meeting
of the Company held on May 18, 2005, shareholders passed appropriate resolutions to complete the transition procedures in accordance
with the
Business Corporations Act
(British Columbia), (the “BCBCA”), to increase the number of common shares
which the Company is authorized to issue to an unlimited number of common shares and to cancel the Company’s Articles and
adopt new Articles to take advantage of provisions of the BCBCA. The BCBCA was adopted in British Columbia on March 29, 2004 replacing
the
Company Act
(the “Former Act”). The BCBCA requires the provisions formerly required in the Memorandum to
be in the Articles. The BCBCA eliminates the requirement for a Memorandum.
The revised Articles are an exhibit to
the 2005 20-F Annual Report filed with the Commission on March 30, 2006, and replaced the Memorandum and Articles as filed with
the Commission on May 17, 2002.
Articles
The Company was formed through the amalgamation
of Fairfield Minerals Ltd. and Almaden Resources Corporation effective December 31, 2001 under the
Company Act
of British
Columbia (the “Company Act”). On March 29, 2004, British Columbia adopted the
Business Corporations Act
(British
Columbia) (the “BCBCA”) to replace the Company Act. Companies registered under the Company Act are required to transition
to the BCBCA. At the Annual and Special General meeting of the Company held on May 18, 2005, shareholders passed appropriate resolutions
to complete the transition procedures to cancel the Company’s Articles and adopt new Articles, which includes an increase
of the number of common shares which the Company is authorized to issue to an unlimited number of common shares. The Company’s
new Articles became effective in June 2005 (the “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
Amended Advance Notice Policy is an exhibit to the 2017 20-F Annual Report filed with the Commission on March 29, 2018.
Multiple Voting Policy for Uncontested
Elections of Directors
The Board believes that each of its members
should carry the confidence and support of the Company’s shareholders and, accordingly, has adopted, effective May 15, 2017,
an Amended Majority Voting Policy for the election of directors for non-contested meetings. The Amended Majority Voting Policy
provides that, in a non-contested election of directors, voting will be by ballot and, if the number of shares “withheld”
for any nominee exceeds the number of shares voted “for” the nominee, then, notwithstanding that such director is duly
elected as a matter of corporate law, he or she shall, immediately following the date of the final scrutineer’s report on
the ballot, tender his or her written resignation to the Chairman of the Board. A “non-contested election” means an
election where the number of nominees for director is not greater than the number of directors to be elected. Under the Amended
Majority Voting Policy, the Board will consider such offer of resignation and shall make a determination whether or not to accept
or reject the resignation no later than 90 days following the date of the applicable shareholders’ meeting and shall accept
the resignation absent exceptional circumstances. The Board will promptly announce its decision via press release. If the Board
determines not to accept the resignation, the press release must fully state the reasons for its decision. No director who is required
to tender his or her resignation shall participate in any meeting of the Board at which the resignation is considered. If a resignation
is accepted by the Board, and subject to any corporate law restrictions, the Board may leave any resulting vacancy unfilled until
the Company’s next annual general meeting, or may appoint a new director to fill the vacancy who the Board considers to merit
the confidence of the shareholders, or may call a special meeting of shareholders at which there will be presented a management
nominee or nominees to fill the vacant position or positions.
The full text of the
Amended Multiple Voting Policy is an exhibit to 2017 20-F Annual Report filed with the Commission on March 29, 2018.
Material Contracts
The following is a summary of each material contract, other
than contracts entered into in the ordinary course of business, to which we or any member of the group is a party, for the two
years preceding the date of this document.
1. Executive Compensation
Contract dated effective as of January 29, 2013 between the Company and Hawk Mountain Resources Ltd. (“Hawk”) whereby
Hawk agrees to provide the services of Duane Poliquin as Executive Chairman for a term of 2 years renewable for two additional
successive terms of 24 months for remuneration of $240,000 per annum. The agreement was terminated by mutual agreement on December
31, 2015. The full text of the Executive Compensation Contract is filed as an exhibit to the 2012 20-F Annual Report with the Commission
on March 28, 2013.
2. Executive Compensation
Contract dated effective as of January 29, 2013 as amended by Amending Agreement dated April 1, 2016 and Second Amending Agreement
dated January 1, 2019 between the Company and Morgan Poliquin (“M. Poliquin”) whereby M. Poliquin agrees to provide
the services of President and Chief Executive Officer for an indefinite term for remuneration of $265,000 per annum. The full text
of the Executive Compensation Contract is filed as an exhibit to the 2012 20-F Annual Report with the Commission on March 28, 2013,
of the Amending Agreement filed as an exhibit to the 2016 20-F Annual Report with the Commission on March 30, 2017 and of the Second
Amending Agreement dated January 1, 2019 as filed as an exhibit to this fiscal 2018 20-F Annual Report.
3. Administrative Services Agreement between
the Company and Azucar Minerals Ltd. (“Azucar”) dated May 15, 2015, as amended by First Amending Agreement dated December
16, 2015 (the “Agreement”). Under the Agreement, the Company provides management services to Azucar as the sole and
exclusive manager, including the authority to manage the assets, operations, business, and administrative affairs of Azucar. Azucar
compensates the Company 30% of the Company’s actual monthly cost of rent for any shared facilities, and 30% of any shared
personnel’s fees and/or wages. Azucar also pays the Company any reasonable fees or costs incurred on behalf of Azucar by
the Company which were approved by Azucar. The Agreement has an initial 5-year term, with subsequent automatic 1 year renewals
unless terminated pursuant to the terms permitted under the Agreement and include a Change of Control clause. If either party is
subject to Change of Control during the term of the Agreement, the Agreement shall automatically terminate within 48 hours of the
Change of Control unless agreed to in writing by both parties. The target of the Change of Control shall then pay the other party
$2 million as compensation for the unplanned termination of the Company’s engagement. “Change of Control” means
the date upon which, without the target of the Change of Control, any person (as that term is defined in the
Securities Act
(British Columbia)) makes and does not withdraw a take-over bid (as that term is defined in the
Securities Act
(British
Columbia)) or acquires, directly or indirectly, that number of common shares of the target which equals or exceeds twenty percent
(20%) of the then issued common shares of the target. The full text of the Administrative Services Agreement is filed as an exhibit
to the 2015 20-F Annual Report with the Commission on March 31, 2016.
4. Termination Agreement
dated effective December 31, 2015 between the Company and Hawk Mountain Resources Ltd. for the services of Duane Poliquin as Executive
Chairman. The full text of the Termination Agreement is filed as an exhibit to the 2015 20-F Annual Report with the Commission
on March 31, 2016.
5. Executive Employment
Contract dated effective as of January 1, 2016 as amended on April 1, 2016 and Second Amending Agreement dated January 1, 2019
between the Company and Duane Poliquin to serve as Executive Chairman for an indefinite term, for remuneration of $240,000 per
annum. The full text of the Executive Compensation Contract is filed as an exhibit to the 2015 20-F Annual Report with the Commission
on March 31, 2016/ The Amending Agreement filed as an exhibit to the 2016 20-F Annual Report with the Commission on March 30, 2017;
and of the Second Amending Agreement dated January 1, 2019 as filed as an exhibit to this fiscal 2018 20-F Annual Report
Exchange controls
Except as discussed above,
the Company is not aware of any Canadian federal or provincial laws, decrees or regulations that restrict the export or import
of capital, including foreign exchange controls, or that affect the remittance of interest, dividends or other payments to non-Canadian
holders of the Company's common shares. There are no limitations under the laws of Canada or in the organizing documents of the
Company on the right of non-Canadians to hold or vote securities of the Company, except that the Investment Canada Act may require
that a "non-Canadian" not acquire "control" of the Company without prior review and approval by the Minister
of Innovation, Science and Economic Development. The acquisition of one third or more of the voting shares of the Company would
give rise a rebuttable presumption of the acquisition of control, and the acquisition of more than fifty percent of the voting
shares of the Company would be deemed to be an acquisition of control. In addition, the Investment Canada Act provides the Canadian
government with broad discretionary powers in relation to national security to review and potentially prohibit, condition or require
the divestiture of, any investment in the Company by a non-Canadian, including non-control level investments. "Non-Canadian"
generally means an individual who is neither a Canadian citizen nor a permanent resident of Canada within the meaning of the Immigration
and Refugee Protection Act (Canada) who has been ordinarily resident in Canada for not more than one year after the time at which
he or she first became eligible to apply for Canadian citizenship, or a corporation, partnership, trust or joint venture that is
ultimately controlled by non-Canadians.
Taxation
The following summary of the material Canadian
federal income tax consequences generally applicable in respect of the common stock reflects the Company’s opinion. The tax
consequences to any particular holder of common 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.
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Item 11.
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Quantitative and Qualitative Disclosures about Market
Risk
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The Company’s primary mineral exploration
properties are located in Mexico. As a Canadian company, Almaden’s cash balances are kept primarily in Canadian funds, while
many exploration and property expenses are denominated in U.S. dollars or the Mexican peso. Therefore, the Company is exposed to
some exchange rate risk. The Company considers the amount of risk to be manageable and does not currently, nor is likely in the
foreseeable future to, conduct hedging to reduce its exchange rate risk. A 10% change in the U.S. dollar exchange rate relative
to the Canadian dollar would change the Company’s net loss by $47,000. A 10% change in the Mexican peso exchange rate relative
to the Canadian dollar would change the Company’s net loss by $25,000.
|
Item 12.
|
Description of Securities Other than Equity Securities
|
Not Applicable
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and Directors of
Almaden Minerals Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements
of Almaden Minerals Ltd. (the “Company”), which comprise the consolidated statements of financial position as of December
31, 2018 and 2017, the consolidated statements of comprehensive loss, cash flows, and changes in equity for the years ended December
31, 2018, 2017, and 2016 and the related notes, comprising a summary of significant accounting policies and other explanatory information
(collectively referred to as the consolidated financial statements).
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the Company as at December 31, 2018 and 2017 and its financial performance
and its cash flows for the years ended December 31, 2018, 2017 and 2016 in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
Change in Accounting Principle
Without qualifying our opinion on the consolidated financial statements,
we draw attention to Note 3 to the financial statements, which indicates that the Company has changed its method of accounting
for financial instruments in 2018 due to adoption of IFRS 9 – Financial Instruments.
Basis for Opinion
A - Management’s Responsibility for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
B - Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free from material misstatement, whether due to error or fraud.
Those standards also require that we comply with ethical requirements, including independence. We are required to be independent
with respect to the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial
statements with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB. We are a public accounting firm registered with the PCAOB.
An audit includes performing procedures to assess the risks of material
misstatements of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to
those risks. Such procedures included obtaining and examining, on a test basis, audit evidence regarding the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks
of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting
policies and principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits
is sufficient and appropriate to provide a reasonable basis for our audit opinion.
Other Matters
We have served as the Company’s auditor since 2015.
“DAVIDSON & COMPANY LLP”
Vancouver, Canada
|
|
Chartered Professional Accountants
|
March 14, 2019
Almaden Minerals Ltd.
Consolidated statements of financial position
(Expressed in Canadian dollars)
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
$
|
|
|
|
$
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents (Note 11)
|
|
|
5,080,580
|
|
|
|
16,334,534
|
|
Accounts receivable and prepaid expenses (Note 4)
|
|
|
404,416
|
|
|
|
368,963
|
|
|
|
|
5,484,996
|
|
|
|
16,703,497
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Deposit on mill equipment (Note 5)
|
|
|
-
|
|
|
|
4,923,209
|
|
Property, plant and equipment (Note 6)
|
|
|
13,764,928
|
|
|
|
372,292
|
|
Exploration and evaluation assets (Note 7)
|
|
|
54,678,470
|
|
|
|
44,804,198
|
|
|
|
|
68,443,398
|
|
|
|
50,099,699
|
|
TOTAL ASSETS
|
|
|
73,928,394
|
|
|
|
66,803,196
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables (Note 9 (b))
|
|
|
1,128,407
|
|
|
|
638,001
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Deferred income tax liability (Note 12)
|
|
|
1,434,882
|
|
|
|
1,434,882
|
|
Total liabilities
|
|
|
2,563,289
|
|
|
|
2,072,883
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Share capital (Note 8)
|
|
|
127,022,366
|
|
|
|
118,054,463
|
|
Reserves (Note 8)
|
|
|
16,706,832
|
|
|
|
15,528,276
|
|
Deficit
|
|
|
(72,364,093
|
)
|
|
|
(68,852,426
|
)
|
Total equity
|
|
|
71,365,105
|
|
|
|
64,730,313
|
|
TOTAL EQUITY AND LIABILITIES
|
|
|
73,928,394
|
|
|
|
66,803,196
|
|
Commitments (Note 13)
Subsequent events (Note 17)
The accompanying notes are an integral part of these consolidated financial statements.
These consolidated financial statements are authorized for issue by the Board of Directors
on March 14, 2019.
They are signed on the Company’s behalf by:
/s/Duane Poliquin
|
|
/s/Mark T. Brown
|
Director
|
|
Director
|
Almaden Minerals Ltd.
Consolidated statements of comprehensive loss
(Expressed in Canadian dollars)
|
|
|
|
|
Year ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Expenses
|
|
$
|
|
|
$
|
|
|
$
|
|
Professional fees
|
|
|
602,402
|
|
|
|
567,877
|
|
|
|
420,684
|
|
Salaries and benefits (Note 9(a))
|
|
|
1,858,788
|
|
|
|
1,480,745
|
|
|
|
1,381,060
|
|
Travel and promotion
|
|
|
267,832
|
|
|
|
286,920
|
|
|
|
259,840
|
|
Depreciation (Note 6)
|
|
|
28,277
|
|
|
|
28,274
|
|
|
|
27,039
|
|
Office and license (Note 9(b))
|
|
|
127,678
|
|
|
|
145,965
|
|
|
|
120,972
|
|
Rent (Note 9(b))
|
|
|
191,829
|
|
|
|
173,891
|
|
|
|
146,759
|
|
Stock exchange fees
|
|
|
158,304
|
|
|
|
164,075
|
|
|
|
115,364
|
|
Insurance
|
|
|
66,942
|
|
|
|
55,007
|
|
|
|
60,499
|
|
Transfer agent fees
|
|
|
20,943
|
|
|
|
33,919
|
|
|
|
23,370
|
|
Directors’ fees (Note 9(a))
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
41,000
|
|
General exploration expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
1,467
|
|
Share-based payments (Note 8(d) and 9(a))
|
|
|
1,308,740
|
|
|
|
2,693,070
|
|
|
|
1,869,010
|
|
|
|
|
4,701,735
|
|
|
|
5,699,743
|
|
|
|
4,467,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income (Note 9(b))
|
|
|
950,352
|
|
|
|
654,741
|
|
|
|
550,271
|
|
Loss on sale of property, plant and equipment (Note 6)
|
|
|
-
|
|
|
|
(1,760
|
)
|
|
|
(3,985
|
)
|
Foreign exchange gain (loss)
|
|
|
239,716
|
|
|
|
(184,533
|
)
|
|
|
(102,726
|
)
|
|
|
|
1,190,068
|
|
|
|
468,448
|
|
|
|
443,560
|
|
Loss before income taxes
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
|
|
(4,023,504
|
)
|
Deferred income tax recovery (Note 12)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss for the year
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
|
|
(4,023,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the year
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
|
|
(4,023,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share (Note 10)
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
The accompanying notes are an integral part of these consolidated financial statements.
Almaden Minerals Ltd.
Consolidated statements of cash flows
(Expressed in Canadian dollars)
|
|
Year ended December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
|
|
(4,023,504
|
)
|
Items not affecting cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
28,277
|
|
|
|
28,274
|
|
|
|
27,039
|
|
Unrealized foreign exchange
|
|
|
-
|
|
|
|
-
|
|
|
|
9,575
|
|
Loss on disposal of property, plant and equipment
|
|
|
-
|
|
|
|
1,760
|
|
|
|
3,985
|
|
Share-based payments
|
|
|
1,308,740
|
|
|
|
2,693,070
|
|
|
|
1,869,010
|
|
Changes in non-cash working capital components
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable and prepaid expenses
|
|
|
(35,453
|
)
|
|
|
11,935
|
|
|
|
2,566
|
|
Trade and other payables
|
|
|
290,182
|
|
|
|
(178,511
|
)
|
|
|
(209,807
|
)
|
Net cash used in operating activities
|
|
|
(1,919,921
|
)
|
|
|
(2,674,767
|
)
|
|
|
(2,321,136
|
)
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit on mill equipment
|
|
|
(7,694,900
|
)
|
|
|
(3,642,826
|
)
|
|
|
(324,600
|
)
|
Property, plant and equipment – purchase
|
|
|
(802,804
|
)
|
|
|
(305,074
|
)
|
|
|
(22,538
|
)
|
Exploration and evaluation assets – costs
|
|
|
(9,674,048
|
)
|
|
|
(8,860,153
|
)
|
|
|
(5,177,485
|
)
|
Net cash used in investing activities
|
|
|
(18,171,752
|
)
|
|
|
(12,808,053
|
)
|
|
|
(5,524,623
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares, net of share issue costs
|
|
|
8,838,441
|
|
|
|
19,115,418
|
|
|
|
4,091,646
|
|
Options exercised
|
|
|
16,560
|
|
|
|
1,105,290
|
|
|
|
143,490
|
|
Share issuance cost on cashless exercise of options (Note 8(d))
|
|
|
(17,282
|
)
|
|
|
(203,232
|
)
|
|
|
-
|
|
Warrants and finders’ warrants exercised
|
|
|
-
|
|
|
|
2,029,872
|
|
|
|
7,157,851
|
|
Net cash from financing activities
|
|
|
8,837,719
|
|
|
|
22,047,348
|
|
|
|
11,392,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
(11,253,954
|
)
|
|
|
6,564,528
|
|
|
|
3,547,228
|
|
Cash and cash equivalents, beginning of year
|
|
|
16,334,534
|
|
|
|
9,770,006
|
|
|
|
6,222,778
|
|
Cash and cash equivalents, end of year
|
|
|
5,080,580
|
|
|
|
16,334,534
|
|
|
|
9,770,006
|
|
Supplemental cash and cash equivalents information (Note 11)
The accompanying notes are an integral part of these consolidated financial statements.
Almaden Minerals Ltd.
Consolidated statements of changes in equity
(Expressed in Canadian dollars)
|
|
Share capital
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
Number of shares
|
|
|
Amount
|
|
|
Share-based payments
|
|
|
Warrants
|
|
|
Total
reserves
|
|
|
Deficit
|
|
|
Total
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Balance, January 1, 2016
|
|
|
78,062,984
|
|
|
|
83,757,687
|
|
|
|
11,323,063
|
|
|
|
499,574
|
|
|
|
11,822,637
|
|
|
|
(59,597,627
|
)
|
|
|
35,982,697
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
1,869,010
|
|
|
|
-
|
|
|
|
1,869,010
|
|
|
|
-
|
|
|
|
1,869,010
|
|
Private placements, net
|
|
|
3,229,082
|
|
|
|
4,073,728
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,073,728
|
|
Finders' warrants issued pursuant to private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,918
|
|
|
|
17,918
|
|
|
|
-
|
|
|
|
17,918
|
|
Shares issued for cash on exercise of finders’ warrants
|
|
|
35,200
|
|
|
|
27,104
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,104
|
|
Fair value of finders’ warrants transferred to share capital
|
|
|
-
|
|
|
|
5,984
|
|
|
|
-
|
|
|
|
(5,984
|
)
|
|
|
(5,984
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued for cash on exercise of warrants
|
|
|
4,592,667
|
|
|
|
7,130,747
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,130,747
|
|
Shares issued for cash on exercise of stock options
|
|
|
182,000
|
|
|
|
143,490
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
143,490
|
|
Fair value of cash stock options transferred to share capital
|
|
|
-
|
|
|
|
43,180
|
|
|
|
(43,180
|
)
|
|
|
-
|
|
|
|
(43,180
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued on cashless exercise of stock options
|
|
|
63,510
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Fair value of cashless stock options transferred to share capital
|
|
|
-
|
|
|
|
108,300
|
|
|
|
(108,300
|
)
|
|
|
-
|
|
|
|
(108,300
|
)
|
|
|
-
|
|
|
|
-
|
|
Total comprehensive loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,023,504
|
)
|
|
|
(4,023,504
|
)
|
Balance, December 31, 2016
|
|
|
86,165,443
|
|
|
|
95,290,220
|
|
|
|
13,040,593
|
|
|
|
511,508
|
|
|
|
13,552,101
|
|
|
|
(63,621,131
|
)
|
|
|
45,221,190
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
2,693,070
|
|
|
|
-
|
|
|
|
2,693,070
|
|
|
|
-
|
|
|
|
2,693,070
|
|
Private placements, net
|
|
|
12,377,207
|
|
|
|
18,934,727
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18,934,727
|
|
Finders' warrants issued pursuant to private placement
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
180,691
|
|
|
|
180,691
|
|
|
|
-
|
|
|
|
180,691
|
|
Shares issued for cash on exercise of finders’ warrants
|
|
|
30,472
|
|
|
|
43,205
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43,205
|
|
Fair value of finders’ warrants transferred to share capital
|
|
|
-
|
|
|
|
12,797
|
|
|
|
-
|
|
|
|
(12,797
|
)
|
|
|
(12,797
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued for cash on exercise of warrants
|
|
|
1,986,667
|
|
|
|
1,986,667
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,986,667
|
|
Shares issued for cash on exercise of stock options
|
|
|
1,107,000
|
|
|
|
1,105,290
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,105,290
|
|
Fair value of cash stock options transferred to share capital
|
|
|
-
|
|
|
|
496,859
|
|
|
|
(496,859
|
)
|
|
|
-
|
|
|
|
(496,859
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued on cashless exercise of stock options
|
|
|
532,836
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issuance cost on cashless exercise of options
|
|
|
-
|
|
|
|
(203,232
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(203,232
|
)
|
Fair value of cashless stock options transferred to share capital
|
|
|
-
|
|
|
|
387,930
|
|
|
|
(387,930
|
)
|
|
|
-
|
|
|
|
(387,930
|
)
|
|
|
-
|
|
|
|
-
|
|
Total comprehensive loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(5,231,295
|
)
|
|
|
(5,231,295
|
)
|
Balance, December 31, 2017
|
|
|
102,199,625
|
|
|
|
118,054,463
|
|
|
|
14,848,874
|
|
|
|
679,402
|
|
|
|
15,528,276
|
|
|
|
(68,852,426
|
)
|
|
|
64,730,313
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
1,308,740
|
|
|
|
-
|
|
|
|
1,308,740
|
|
|
|
-
|
|
|
|
1,308,740
|
|
Private placements, net
|
|
|
9,440,000
|
|
|
|
8,838,441
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,838,441
|
|
Finders' warrants issued pursuant to private placement
|
|
|
-
|
|
|
|
(36,566
|
)
|
|
|
-
|
|
|
|
36,566
|
|
|
|
36,566
|
|
|
|
-
|
|
|
|
-
|
|
Shares issued for cash on exercise of stock options
|
|
|
23,000
|
|
|
|
16,560
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,560
|
|
Fair value of cash stock options transferred to share capital
|
|
|
-
|
|
|
|
6,670
|
|
|
|
(6,670
|
)
|
|
|
-
|
|
|
|
(6,670
|
)
|
|
|
-
|
|
|
|
-
|
|
Shares issued on cashless exercise of stock options
|
|
|
64,094
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Shares issuance cost on cashless exercise of options
|
|
|
-
|
|
|
|
(17,282
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17,282
|
)
|
Fair value of cashless stock options transferred to share capital
|
|
|
-
|
|
|
|
160,080
|
|
|
|
(160,080
|
)
|
|
|
-
|
|
|
|
(160,080
|
)
|
|
|
-
|
|
|
|
-
|
|
Total comprehensive loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,511,667
|
)
|
|
|
(3,511,667
|
)
|
Balance, December 31, 2018
|
|
|
111,726,719
|
|
|
|
127,022,366
|
|
|
|
15,990,864
|
|
|
|
715,968
|
|
|
|
16,706,832
|
|
|
|
(72,364,093
|
)
|
|
|
71,365,105
|
|
The accompanying notes are an integral part of these consolidated financial statements.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
Almaden Minerals Ltd. (the “Company” or “Almaden”)
was formed by amalgamation under the laws of the Province of British Columbia, Canada on February 1, 2002. The Company is an exploration
stage public company that is engaged directly in the exploration and development of exploration and evaluation properties in Canada
and Mexico. The address of the Company’s registered office is Suite 1710 –1177 West Hastings Street, Vancouver, BC,
Canada V6E 2L3.
The Company is in the business of exploring and developing
mineral projects and its principal asset is the Ixtaca precious metals project located on its Tuligtic claim in Mexico. The Company
has not yet determined whether this project has economically recoverable mineral reserves. The recoverability of amounts shown
for mineral properties is dependent upon the establishment of a sufficient quantity of economically recoverable reserves, the ability
of the Company to obtain the necessary financing or participation of joint venture partners to complete development of the properties,
and upon future profitable production or proceeds from the disposition of exploration and evaluation assets.
|
(a)
|
Statement of Compliance with International Financial Reporting Standards (“IFRS”)
|
These consolidated financial statements have been prepared
in accordance and compliance with IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations
of the International Financial Reporting Interpretations Committee (“IFRIC”).
These consolidated financial statements have been prepared
on a historical cost basis.
These consolidated financial statements, including comparatives,
have been prepared on the basis of IFRS standards that are effective as at December 31, 2018.
Certain amounts in prior years have been reclassified
to conform to the current period presentation.
The functional and reporting currency of the Company and
its subsidiaries is the Canadian dollar.
|
(d)
|
Significant accounting judgments and estimates
|
The preparation of these consolidated financial statements
requires management to make judgements and estimates that affect the reported amounts of assets and liabilities at the date of
the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ
from these judgements and estimates. The consolidated financial statements include judgements and estimates which, by their nature,
are uncertain. The impacts of such judgements and estimates are pervasive throughout the consolidated financial statements, and
may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period
in which the estimate is revised and the revision affects both current and future periods.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
2.
|
|
Basis of presentation
(Continued)
|
|
(d)
|
Significant accounting judgments and estimates (Continued)
|
Significant assumptions about the future and other sources
of judgements and estimates that management has made at the statement of financial position dates, that could result in a material
adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate
to, but are not limited to, the following:
Critical Judgments
|
o
|
The analysis of the functional currency for each entity of the Company determined by conducting
an analysis of the consideration factors identified in IAS 21, “The Effect of Changes in Foreign Exchange Rates”. In
concluding that the Canadian dollar is the functional currency of the parent and its subsidiary companies, management considered
the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates.
As no single currency was clearly dominant, the Company also considered secondary indicators including the currency in which funds
from financing activities are denominated and the currency in which funds are retained.
|
|
o
|
The determination that the carrying amount of the Tuligtic Project will be recovered through use
rather than sale (Notes 7 and 12).
|
Estimates
|
o
|
The recoverability of accounts receivable which is included in the consolidated statements of financial
position;
|
|
o
|
The estimated useful lives of property, plant and equipment which are included in the consolidated
statements of financial position and the related depreciation included in profit or loss;
|
|
o
|
The recoverability of the value of the exploration and evaluation assets which is recorded in the
consolidated statements of financial position (Note 3(f));
|
|
o
|
The Company uses the Black-Scholes option pricing model to determine the fair value of options
and warrants in order to calculate share-based payments expense and the fair value of finders’ warrants and stock options.
Certain inputs into the model are estimates that involve considerable judgment or could be affected by significant factors that
are out of the Company’s control;
|
|
o
|
The provision for income taxes which is included in profit or loss and the composition of deferred
income tax liability included in the consolidated statement of financial position and the evaluation of the recoverability of deferred
tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future
taxable income prior to expiry of those deductions;
|
|
o
|
The assessment of indications of impairment of each exploration and evaluation asset and related
determination of the net realizable value and write-down of those assets where applicable (Note 3(f));
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
|
|
(
a)
|
Basis of consolidation
|
These consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries as follows:
|
|
Jurisdiction
|
|
Nature of operations
|
|
|
|
|
|
|
Puebla Holdings Inc.
|
Canada
|
|
Holding company
|
|
Minera Gorrion, S.A. de C.V.
|
Mexico
|
|
Exploration company
|
|
Molinos de Puebla, S.A. de C.V.
|
Mexico
|
|
Holding company
|
Inter-company balances and transactions, including unrealized
income and expenses arising from inter-company transactions, are eliminated in preparing these consolidated financial statements.
Transactions in currencies other than the functional currency
are recorded at the rates of exchange prevailing on the transaction dates. At each financial position reporting date, monetary
assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement
of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
|
(c)
|
Financial instruments
|
The Company has initially adopted IFRS 9,
Financial
Instruments
(“IFRS 9”) from January 1, 2018. The effect of initially applying this standard did not have a material
impact on the Company’s financial statements. A number of other new standards are also effective from January 1, 2018, however,
were also deemed to not have a material impact on the Company's financial statements.
IFRS 9 sets out requirements for recognizing and measuring
financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39,
Financial
Instruments: Recognition and Measurement
(“IAS 39”). There was no material impact to the Company’s consolidated
financial statements as a result of transitioning to IFRS 9.
The details of the new significant accounting policies
and the nature and effect of the changes to previous accounting policies are set out below.
|
(i)
|
Classification and measurement of financial assets and liabilities
|
IFRS 9 largely retains the existing requirements
in IAS 39 for the classification and measurement of financial liabilities. However, it eliminates the previous IAS 39 categories
for financial assets held to maturity, loans and receivables, and available for sale.
The adoption of IFRS 9 has not had a significant
effect on the Company’s accounting policies related to financial liabilities. The impact of IFRS 9 on the classification
and measurement of financial assets is set out below.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
(Continued)
|
|
(c)
|
Financial instruments (continued)
|
A financial asset is classified as measured at:
amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL). The classification
of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow
characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated.
Instead, the hybrid financial instrument as a whole is assessed for classification. The Company's financial assets consist primarily
of cash and cash equivalents, and accounts receivable are classified at amortized cost.
|
(ii)
|
Impairment of financial assets
|
An ‘expected credit loss’ (ECL) model
applies to financial assets measured at amortized cost, contract assets and debt investments at FVOCI, but not to investments in
equity instruments. The Company's financial assets measured at amortized cost and subject to the ECL model include cash and cash
equivalents, and accounts receivable.
The adoption of the ECL impairment model had no
impact on the carrying amounts of the Company's financial assets on the transition date, given the accounts receivable are substantially
all current and there has been minimal historical customer default. Neither cash and cash equivalents or accounts receivable have
been subject to historical credit risk.
|
(d)
|
Cash and cash equivalents
|
Cash equivalents include money market instruments which
are readily convertible into cash or have maturities at the date of purchase of less than ninety days.
|
(e)
|
Property, plant and equipment
|
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses, and are depreciated annually on a declining-balance basis if available-for-use
at the following rates:
Automotive equipment
|
30%
|
Furniture, fixtures and other
|
20%
|
Computer hardware and software
|
30%
|
Geological library
|
20%
|
Field equipment
|
20%
|
Mill equipment
|
Straight line over mine life (11 years)
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
(Continued)
|
|
(f)
|
Exploration and evaluation assets
|
The Company is in the exploration stage with respect to
its investment in exploration and evaluation assets and, accordingly, follows the practice of capitalizing all costs relating to
the acquisition of, exploration for and development of mineral claims to which the Company has rights and crediting all proceeds
received from farm-out arrangements or recovery of costs against the cost of the related claims. Acquisition costs include, but
are not exclusive to land surface rights acquired. Deferred exploration costs include, but are not exclusive to geological, geophysical
studies, annual mining taxes, exploratory drilling and sampling. At such time as commercial production commences, these costs will
be charged to profit or loss on a unit-of-production method based on proven and probable reserves. The aggregate costs related
to abandoned mineral claims are charged to profit or loss at the time of any abandonment or when it has been determined that there
is evidence of an impairment.
The Company considers the following facts and circumstances
in determining if it should test exploration and evaluation assets for impairment:
|
(i)
|
the period for which the Company has the right to explore in the specific area has expired during
the period or will expire in the near future, and is not expected to be renewed;
|
|
(ii)
|
substantive expenditure on further exploration for and evaluation of mineral resources in the specific
area is neither budgeted nor planned;
|
|
(iii)
|
exploration for and evaluation of mineral resources in the specific area have not led to the discovery
of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific
area; and
|
|
(iv)
|
sufficient data exists to indicate that, although a development in the specific area is likely
to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development
or by sale.
|
An impairment charge may be reversed but only to the extent
that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized.
General exploration costs in areas of interest in which the Company has not secured rights are expensed as incurred.
The recoverability of amounts shown for exploration and
evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing
to complete development of the properties, and on future production or proceeds of disposition.
The Company recognizes in profit or loss costs recovered
on exploration and evaluation assets when amounts received or receivable are in excess of the carrying amount.
Once the technical feasibility and
commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation
assets attributable to that area of interest are first tested for impairment and then reclassified to development asset within
property, plant and equipment.
All capitalized exploration and evaluation expenditures
are monitored for indications of impairment.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
(Continued)
|
|
(f)
|
Exploration and evaluation assets (Continued)
|
Where a potential impairment is indicated, assessments
are performed for each area of interest. To the extent that exploration expenditure is not expected to be recovered, it is charged
to profit or loss. Exploration areas where reserves have been discovered, but require major capital expenditure before production
can begin, are continually evaluated to ensure that commercial quantities of reserves exist or to ensure that additional exploration
work is underway as planned.
|
(g)
|
Impairment of property, plant and equipment
|
Property, plant and equipment are reviewed for impairment
at least annually, or if there is any indication that the carrying amount may not be recoverable. If any such indication is present,
the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate
cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to
which the asset belongs.
An asset’s recoverable amount is the higher of fair
value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset or cash generating
unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount by way of recording
an impairment charge to profit or loss. Where an impairment subsequently reverses, the carrying amount is increased to the revised
estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined
if no impairment had previously been recognized.
Income tax expense comprises current and deferred tax.
Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to items recognized directly
in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable
on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognized in respect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to
investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the
foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition
of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
(Continued)
|
|
(h)
|
Income taxes (Continued)
|
Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same
tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses,
tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available
against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realized.
The Company’s stock option
plan allows Company employees, directors, officers and consultants to acquire shares of the Company. The fair value of options
granted is recognized as share-based payment expense with a corresponding increase in equity reserves. An individual is classified
as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to
those performed by a direct employee
.
Fair value is measured at grant date, and each tranche
is recognized using the graded vesting method over the period during which the options vest. The fair value of the options granted
is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were
granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number
of stock options that are expected to vest. In situations where equity instruments are issued to consultants and some or all of
the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair
value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.
Proceeds from the exercise of stock options and warrants
are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company,
in addition to the proportionate amount of reserves originally created at the issuance of the stock options or warrants. Share
capital issued for non-monetary consideration is valued at the closing market price at the date of issuance. The proceeds from
the issuance of units are allocated between common shares and common share purchase warrants based on the residual value method.
Under this method, the proceeds are allocated to common shares based on the fair value of a common share at the announcement date
of the unit offering and any residual remaining is allocated to common share purchase warrants.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
(Continued)
|
|
(k)
|
Reclamation and closure cost obligations
|
Decommissioning and restoration provisions are recorded
when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation
can be made.
The amount recognized as a provision is the best estimate
of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties
surrounding the obligation and discount rates. Where a provision is measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash flows discounted for the market discount rate.
Over time the discounted liability is increased for the
changes in the present value based on the current market discount rates and liability risks. When some or all of the economic benefits
required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it
is virtually certain that reimbursement will be received and the amount receivable can be measured reliably.
When the Company enters into an option agreement on its
exploration and evaluations assets, as part of the option agreement, responsibility for any reclamation and remediation becomes
the responsibility of the optionee.
The Company presents the basic and diluted net loss per
share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted
average number of common shares outstanding during the period. Diluted net loss per share is determined by adjusting the net loss
attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive
potential common shares (Note 10).
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
3.
|
|
Significant accounting policies
(Continued)
|
|
(m)
|
Application of new and revised accounting standards effective January 1, 2018
|
The following new accounting standards and amendments
which the Company adopted and are effective for the Company's annual consolidated financial statements commencing January 1, 2018:
Financial instruments
IFRS 9 - In July 2014, the IASB issued the final version
of IFRS 9 to replace IAS 39. IFRS 9 provides a revised model for recognition and measurement of financial instruments and a single,
forward-looking 'expected loss' impairment model. IFRS 9 also includes a substantially reformed approach to hedge accounting. The
standard is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. The Company determined
that the adoption of this standard did not have a significant impact on its future consolidated financial statements.
|
(n)
|
Future accounting standards
|
Certain pronouncements were issued by the IASB or IFRIC
but are not yet effective as at December 31, 2018. The Company intends to adopt these standards and interpretations when they
become effective. The Company does not expect these standards to have an impact on its consolidated financial statements. Pronouncements
that are not applicable to the Company have been excluded from those described below.
The following are the accounting standards issued
but not yet effective.
Leases
IFRS 16 - In January 2016, the IASB issued IFRS 16,
Leases
("IFRS 16") which replaces IAS 17,
Leases
and its associated interpretative guidance. IFRS 16 applies a control
model to the identification of leases, distinguishing between a lease and a service contract on the basis of whether the customer
controls the asset being leased. For those assets determined to meet the definition of a lease, IFRS 16 introduces significant
changes to the accounting by lessees, introducing a single, on-balance sheet accounting model that is similar to current finance
lease accounting, with limited exceptions for short-term leases or leases of low-value assets. Lessor accounting remains similar
to current accounting practice. The standard is effective for annual periods beginning on or after January 1, 2019.
The Company went through the process of reviewing contracts
and identifying those that might be relevant under the new standard. Specific leases identified for further review included office
leases and an equipment/service contract for a printer. Based on the assessment of the standard, the Company estimates that it
will recognize as a lessee, the right-of-use lease assets and related liabilities for existing operating leases of approximately
$400,000.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
4.
|
|
Accounts receivable and prepaid expenses
|
Accounts receivable and prepaid expenses consist of the following:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
Accounts receivable (Note 9(b))
|
|
$
|
300,700
|
|
|
$
|
243,971
|
|
Prepaid expenses
|
|
|
103,716
|
|
|
|
124,992
|
|
|
|
$
|
404,416
|
|
|
$
|
368,963
|
|
At December 31, 2018, the Company has recorded value
added taxes of $444,994 (2017 - $444,729) included in exploration and evaluation assets as the value added tax relates to certain
projects and is expected to be recovered when the assets are sold (Note 7).
5.
|
|
Deposit on mill equipment
|
On October 16, 2015, the Company entered into a Mill
Purchase Option Agreement (the “Agreement’) to acquire the Rock Creek mill. Pursuant to the Agreement, Almaden has
the exclusive right and option to purchase the mill for total cash payments of $6,500,000 USD (completed), plus the issuance of
407,997 common shares (issued with a fair value of $273,358), subject to adjustment in certain circumstances (the “Option”).
Deposit on mill equipment consisted of the following
payments:
|
|
$
|
|
|
$
|
|
|
|
USD
|
|
|
CAD
|
|
Balance, December 31, 2016
|
|
|
|
|
|
|
1,280,383
|
|
Additions: purchase price deposits
|
|
|
2,000,000
|
|
|
|
2,647,600
|
|
Additions: mobilization payments
|
|
|
767,500
|
|
|
|
995,226
|
|
Balance, December 31, 2017
|
|
|
|
|
|
|
4,923,209
|
|
Additions: purchase price deposits
|
|
|
3,750,000
|
|
|
|
4,876,500
|
|
Additions: mobilization payments
|
|
|
2,211,300
|
|
|
|
2,818,400
|
|
|
|
|
|
|
|
|
12,618,109
|
|
Transfer to property, plant and equipment
|
|
|
|
|
|
|
(12,618,109
|
)
|
Balance, December 31, 2018
|
|
|
|
|
|
|
-
|
|
Almaden has exercised the Option by making the final
option payment on June 12, 2018 for $3,750,000 USD ($4,876,500 CAD). As such, during the year ended December 31, 2018, Almaden
obtained ownership and title to the mill equipment, and transferred the balance to property, plant and equipment (Note 6).
A mobilization plan is in progress to move the Rock
Creek mill from Nome, Alaska to the Tuligtic property. Mill mobilization payments of $2,211,300 USD ($2,818,400 CAD) were paid
during the year ended December 31, 2018 for the dismantlement of the mill.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
6.
|
|
Property, plant and equipment
|
|
|
Automotive
equipment
|
|
|
Furniture and
fixtures and other
|
|
|
Computer hardware
|
|
|
Computer software
|
|
|
Geological library
|
|
|
Field equipment
|
|
|
Mill
equipment
|
|
|
Total
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
110,040
|
|
|
|
154,093
|
|
|
|
247,199
|
|
|
|
189,563
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
265,997
|
|
|
|
1,264,299
|
|
Additions
|
|
|
-
|
|
|
|
4,126
|
|
|
|
1,697
|
|
|
|
7,204
|
|
|
|
-
|
|
|
|
-
|
|
|
|
789,777
|
|
|
|
802,804
|
|
Transfer from deposit on mill equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12,618,109
|
|
|
|
12,618,109
|
|
December 31, 2018
|
|
|
110,040
|
|
|
|
158,219
|
|
|
|
248,896
|
|
|
|
196,767
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
13,673,883
|
|
|
|
14,685,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
110,040
|
|
|
|
134,484
|
|
|
|
213,702
|
|
|
|
164,211
|
|
|
|
49,366
|
|
|
|
220,204
|
|
|
|
-
|
|
|
|
892,007
|
|
Depreciation
|
|
|
-
|
|
|
|
4,444
|
|
|
|
10,176
|
|
|
|
8,089
|
|
|
|
479
|
|
|
|
5,089
|
|
|
|
-
|
|
|
|
28,277
|
|
December 31, 2018
|
|
|
110,040
|
|
|
|
138,928
|
|
|
|
223,878
|
|
|
|
172,300
|
|
|
|
49,845
|
|
|
|
225,293
|
|
|
|
-
|
|
|
|
920,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
-
|
|
|
|
19,609
|
|
|
|
33,497
|
|
|
|
25,352
|
|
|
|
2,394
|
|
|
|
25,443
|
|
|
|
265,997
|
|
|
|
372,292
|
|
December 31, 2018
|
|
|
-
|
|
|
|
19,291
|
|
|
|
25,018
|
|
|
|
24,467
|
|
|
|
1,915
|
|
|
|
20,354
|
|
|
|
13,673,883
|
|
|
|
13,764,928
|
|
The Company acquired the Rock Creek mill (Note 5) on
June 12, 2018. As at December 31, 2018, mill equipment of $13,673,883 is recorded in property, plant and equipment and will be
depreciated when the mill equipment is in the condition and location ready for its intended use, which will commence once the Company
enters the commercial production phase.
On August 9, 2018, the Company paid $250,000 USD ($326,000
CAD) to extend the mill storage in Alaska, USA for one additional year. On July 1, 2018, an additional mill mobilization payment
of $352,200 USD ($463,777 CAD) was made. Both these transactions were recorded in mill equipment under property, plant and equipment.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
6.
|
|
Property, plant and equipment
(Continued)
|
|
|
Automotive
equipment
|
|
|
Furniture and fixtures and other
|
|
|
Computer hardware
|
|
|
Computer software
|
|
|
Geological library
|
|
|
Field equipment
|
|
|
Mill equipment
|
|
|
Total
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
146,569
|
|
|
|
135,064
|
|
|
|
231,451
|
|
|
|
185,263
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
-
|
|
|
|
995,754
|
|
Additions
|
|
|
-
|
|
|
|
19,029
|
|
|
|
15,748
|
|
|
|
4,300
|
|
|
|
-
|
|
|
|
-
|
|
|
|
265,997
|
|
|
|
305,074
|
|
Disposals
|
|
|
(36,529
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(36,529
|
)
|
December 31, 2017
|
|
|
110,040
|
|
|
|
154,093
|
|
|
|
247,199
|
|
|
|
189,563
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
265,997
|
|
|
|
1,264,299
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
144,559
|
|
|
|
131,569
|
|
|
|
204,742
|
|
|
|
155,024
|
|
|
|
48,766
|
|
|
|
213,842
|
|
|
|
-
|
|
|
|
898,502
|
|
Disposals
|
|
|
(34,769
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(34,769
|
)
|
Depreciation
|
|
|
250
|
|
|
|
2,915
|
|
|
|
8,960
|
|
|
|
9,187
|
|
|
|
600
|
|
|
|
6,362
|
|
|
|
-
|
|
|
|
28,274
|
|
December 31, 2017
|
|
|
110,040
|
|
|
|
134,484
|
|
|
|
213,702
|
|
|
|
164,211
|
|
|
|
49,366
|
|
|
|
220,204
|
|
|
|
-
|
|
|
|
892,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
2,010
|
|
|
|
3,495
|
|
|
|
26,709
|
|
|
|
30,239
|
|
|
|
2,994
|
|
|
|
31,805
|
|
|
|
-
|
|
|
|
97,252
|
|
December 31, 2017
|
|
|
-
|
|
|
|
19,609
|
|
|
|
33,497
|
|
|
|
25,352
|
|
|
|
2,394
|
|
|
|
25,443
|
|
|
|
265,997
|
|
|
|
372,292
|
|
During the year ended December 31, 2017, the Company
disposed certain of its property, plant and equipment for $Nil proceeds and recorded a loss on disposal of property, plant and
equipment of $1,760.
The Company has acquired containers to begin a mobilization
plan to move the Rock Creek mill from Nome, Alaska to Mexico. As at December 31, 2017, container costs of $199,952 and crane of
$66,045 are recorded in property, plant and equipment and will be depreciated when the mill equipment is in the condition and location
ready for its intended use.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
7.
|
|
Exploration and evaluation assets
|
|
|
Tuligtic
|
|
|
Other Property
|
|
|
Total
|
|
Exploration and evaluation assets
|
|
$
|
|
|
$
|
|
|
$
|
|
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance - (December 31, 2017)
|
|
|
7,537,577
|
|
|
|
1
|
|
|
|
7,537,578
|
|
Additions
|
|
|
1,622,374
|
|
|
|
-
|
|
|
|
1,622,374
|
|
Closing balance - (December 31, 2018)
|
|
|
9,159,951
|
|
|
|
1
|
|
|
|
9,159,952
|
|
Deferred exploration costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance - (December 31, 2017)
|
|
|
37,266,620
|
|
|
|
-
|
|
|
|
37,266,620
|
|
Costs incurred during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling and related costs
|
|
|
993,311
|
|
|
|
-
|
|
|
|
993,311
|
|
Professional/technical fees
|
|
|
59,038
|
|
|
|
-
|
|
|
|
59,038
|
|
Claim maintenance/lease costs
|
|
|
145,524
|
|
|
|
-
|
|
|
|
145,524
|
|
Geochemical, metallurgy
|
|
|
742,157
|
|
|
|
-
|
|
|
|
742,157
|
|
Technical studies
|
|
|
4,510,034
|
|
|
|
-
|
|
|
|
4,510,034
|
|
Travel and accommodation
|
|
|
457,968
|
|
|
|
-
|
|
|
|
457,968
|
|
Geology, geophysics and exploration
|
|
|
568,476
|
|
|
|
-
|
|
|
|
568,476
|
|
Supplies and misc.
|
|
|
168,725
|
|
|
|
-
|
|
|
|
168,725
|
|
Environmental
|
|
|
161,671
|
|
|
|
-
|
|
|
|
161,671
|
|
Value-added tax (Note 4)
|
|
|
444,994
|
|
|
|
-
|
|
|
|
444,994
|
|
Total deferred exploration costs during the period
|
|
|
8,251,898
|
|
|
|
-
|
|
|
|
8,251,898
|
|
Closing balance - (December 31, 2018)
|
|
|
45,518,518
|
|
|
|
-
|
|
|
|
45,518,518
|
|
Total exploration and evaluation assets
|
|
|
54,678,469
|
|
|
|
1
|
|
|
|
54,678,470
|
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
7.
|
|
Exploration and evaluation assets
(Continued)
|
|
|
Tuligtic
|
|
|
Other Property
|
|
|
Total
|
|
Exploration and evaluation assets
|
|
$
|
|
|
$
|
|
|
$
|
|
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance - (December 31, 2016)
|
|
|
4,780,570
|
|
|
|
1
|
|
|
|
4,780,571
|
|
Additions
|
|
|
2,757,007
|
|
|
|
-
|
|
|
|
2,757,007
|
|
Closing balance - (December 31, 2017)
|
|
|
7,537,577
|
|
|
|
1
|
|
|
|
7,537,578
|
|
Deferred exploration costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance - (December 31, 2016)
|
|
|
31,204,785
|
|
|
|
-
|
|
|
|
31,204,785
|
|
Costs incurred during the period
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling and related costs
|
|
|
1,053,771
|
|
|
|
-
|
|
|
|
1,053,771
|
|
Professional/technical fees
|
|
|
112,191
|
|
|
|
-
|
|
|
|
112,191
|
|
Claim maintenance/lease costs
|
|
|
160,251
|
|
|
|
-
|
|
|
|
160,251
|
|
Geochemical, metallurgy
|
|
|
746,103
|
|
|
|
-
|
|
|
|
746,103
|
|
Technical studies
|
|
|
1,698,055
|
|
|
|
-
|
|
|
|
1,698,055
|
|
Travel and accommodation
|
|
|
390,927
|
|
|
|
-
|
|
|
|
390,927
|
|
Geology, geophysics and exploration
|
|
|
795,731
|
|
|
|
-
|
|
|
|
795,731
|
|
Supplies and misc.
|
|
|
118,015
|
|
|
|
-
|
|
|
|
118,015
|
|
Water exploration
|
|
|
7,981
|
|
|
|
-
|
|
|
|
7,981
|
|
Environmental
|
|
|
534,081
|
|
|
|
-
|
|
|
|
534,081
|
|
Value-added tax (Note 4)
|
|
|
444,729
|
|
|
|
-
|
|
|
|
444,729
|
|
Total deferred exploration costs during the period
|
|
|
6,061,835
|
|
|
|
-
|
|
|
|
6,061,835
|
|
Closing balance - (December 31, 2017)
|
|
|
37,266,620
|
|
|
|
-
|
|
|
|
37,266,620
|
|
Total exploration and evaluation assets
|
|
|
44,804,197
|
|
|
|
1
|
|
|
|
44,804,198
|
|
The following is a description of
the Company’s most significant property interests and related spending commitments:
In 2001, the Company acquired by staking a 100% interest
in the Tuligtic property in Puebla, Mexico. The property contains the Ixtaca Zone.
The Company holds a 40% carried interest in the Logan
property located in the Yukon Territory, Canada. The project is carried at a nominal value of $1.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
|
|
(a)
|
Authorized share capital
|
At December 31, 2018, the authorized share capital comprised
an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.
|
(b)
|
Details of private placement and other issues of common shares in 2018, 2017
and 2016
|
On June 7, 2018, the Company closed a non-brokered private
placement by the issuance of 9,440,000 units at a price of $1.00 per unit for gross proceeds of $9,440,000. Each unit consists
of one common share and one-half of one non-transferable common share purchase warrant. Each whole warrant allows the holder to
purchase one common share of the Company at a price of $1.35 per share until June 7, 2022. The warrants are subject to an acceleration
provision whereby if, commencing October 8, 2018, the daily volume weighted average trading price of the common shares on the Toronto
stock exchange is higher than $2.00 for 20 consecutive trading days then, on the 20th consecutive trading day of any such period
(the “Acceleration Trigger Date”), the expiry date of the warrants may be accelerated by the Company to the 30th trading
day after the Acceleration Trigger Date by the issuance of a news release announcing such acceleration within three trading days
of the Acceleration Trigger Date. Share issuance costs included finders’ fee of $384,900 in cash, and finders’ warrants
to purchase up to 192,450 common shares at a price of $1.35 per common share until June 7, 2020. The fair value of the finders’
warrants was $36,566 per statement of equity. In connection with the private placement, the Company also incurred $216,659 in other
cash share issuance costs. These amounts were recorded as a reduction to share capital. The proceeds of the private placement were
allocated entirely to share capital.
On June 1, 2017, the Company closed a bought deal private
placement by the issuance of 9,857,800 units at a price of $1.75 per unit for gross proceeds of $17,251,150. Each unit consists
of one common share and one-half of one non-transferable common share purchase warrant. Each whole warrant allows the holder to
purchase one common share of the Company at a price of $2.45 per share until June 1, 2020. Share issue costs included a finder’s
fee of $1,035,069 in cash, and finders’ warrants to purchase up to 295,734 common shares at a price of $2.00 per common share
until June 1, 2019. The fair value of the finders’ warrants was $171,526. In connection with the private placement, the Company
also incurred $296,823 in other cash share issue costs. These amounts were recorded as a reduction to share capital. The proceeds
of the private placement were allocated entirely to share capital.
On February 7, 2017, the Company closed a non-brokered
private placement by the issuance of 2,519,407 units at a price of $1.35 per unit for gross proceeds of $3,401,199. Each unit consists
of one common share and one-half of one non-transferable common share purchase warrant. Each whole warrant allows the holder to
purchase one common share of the Company at a price of $2.00 per share until August 7, 2019. Share issue costs included a finder’s
fee of $88,631 in cash, and finders’ warrants to purchase up to 17,911 common shares at a price of $1.35 per common share
until August 7, 2019. The fair value of the finders’ warrants was $9,165. In connection with the private placement, the Company
also incurred $116,408 in other cash share issue costs. These amounts were recorded as a reduction to share capital. The proceeds
of the private placement were allocated entirely to share capital.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
(Continued)
|
|
(b)
|
Details of private placement and other issues of common shares in 2018, 2017 and 2016
(continued)
|
On May 25, 2016, the Company closed a non-brokered private
placement by the issuance of 3,229,082 units at a price of $1.35 per unit for gross proceeds to the Company of $4,359,260. Each
unit consists of one common share and one-half of one non-transferable common share purchase warrant. Each whole warrant allows
the holder to purchase one common share of the Company at a price of $2.00 per share until November 25, 2018. Share issue costs
included a finder’s fee of $147,925 in cash, and finders’ warrants to purchase up to 45,944 common shares at a price
of $1.44 per common share until November 25, 2018. The fair value of the finders’ warrants was $17,918. In connection with
the private placement, the Company also incurred $119,689 in share issue costs. These amounts were recorded as reduction to share
capital. The proceeds of the private placement were allocated entirely to share capital.
The continuity of warrants for the years ended December
31, 2018, 2017 and 2016 are as follows:
|
|
Exercise
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Expiry date
|
|
price
|
|
|
2017
|
|
|
Issued
|
|
|
Exercised
|
|
|
Expired
|
|
|
2018
|
|
November 25, 2018
|
|
$
|
2.00
|
|
|
|
1,614,541
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,614,541
|
)
|
|
|
-
|
|
November 25, 2018
|
|
$
|
1.44
|
|
|
|
22,972
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(22,972
|
)
|
|
|
-
|
|
June 1, 2019
|
|
$
|
2.00
|
|
|
|
295,734
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
295,734
|
|
August 7, 2019
|
|
$
|
2.00
|
|
|
|
1,259,704
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,259,704
|
|
August 7, 2019
|
|
$
|
1.35
|
|
|
|
10,411
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,411
|
|
June 1, 2020
|
|
$
|
2.45
|
|
|
|
4,928,900
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,928,900
|
|
June 7, 2020
|
|
$
|
1.35
|
|
|
|
-
|
|
|
|
192,450
|
|
|
|
-
|
|
|
|
-
|
|
|
|
192,450
|
|
June 7, 2022
|
|
$
|
1.35
|
|
|
|
-
|
|
|
|
4,720,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,720,000
|
|
Warrants outstanding and exercisable
|
|
|
|
|
|
|
8,132,262
|
|
|
|
4,912,450
|
|
|
|
-
|
|
|
|
(1,637,513
|
)
|
|
|
11,407,199
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
2.27
|
|
|
$
|
1.35
|
|
|
|
-
|
|
|
$
|
1.99
|
|
|
$
|
1.91
|
|
The weighted average remaining life of warrants outstanding
at December 31, 2018 was 2.14 years (2017 – 1.95 years).
|
|
Exercise
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Expiry date
|
|
price
|
|
|
2016
|
|
|
Issued
|
|
|
Exercised
|
|
|
Expired
|
|
|
2017
|
|
November 17, 2017
|
|
$
|
1.00
|
|
|
|
2,036,667
|
|
|
|
-
|
|
|
|
(1,986,667
|
)
|
|
|
(50,000
|
)
|
|
|
-
|
|
November 25, 2018
|
|
$
|
2.00
|
|
|
|
1,614,541
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,614,541
|
|
November 25, 2018
|
|
$
|
1.44
|
|
|
|
45,944
|
|
|
|
-
|
|
|
|
(22,972
|
)
|
|
|
-
|
|
|
|
22,972
|
|
June 1, 2019
|
|
$
|
2.00
|
|
|
|
-
|
|
|
|
295,734
|
|
|
|
-
|
|
|
|
-
|
|
|
|
295,734
|
|
August 7, 2019
|
|
$
|
2.00
|
|
|
|
-
|
|
|
|
1,259,704
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,259,704
|
|
August 7, 2019
|
|
$
|
1.35
|
|
|
|
-
|
|
|
|
17,911
|
|
|
|
(7,500
|
)
|
|
|
-
|
|
|
|
10,411
|
|
June 1, 2020
|
|
$
|
2.45
|
|
|
|
-
|
|
|
|
4,928,900
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,928,900
|
|
Warrants outstanding and exercisable
|
|
|
|
|
|
|
3,697,152
|
|
|
|
6,502,249
|
|
|
|
(2,017,139
|
)
|
|
|
(50,000
|
)
|
|
|
8,132,262
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.44
|
|
|
$
|
2.34
|
|
|
$
|
1.01
|
|
|
$
|
1.00
|
|
|
$
|
2.27
|
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital
and reserves
(Continued)
|
The weighted average remaining life of warrants outstanding
at December 31, 2017 was 1.95 years (2016 – 1.34 years).
|
|
Exercise
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
Expired/
|
|
|
December 31,
|
|
Expiry date
|
|
price
|
|
|
2015
|
|
|
Issued
|
|
|
Exercised
|
|
|
cancelled
|
|
|
2016
|
|
February 11, 2016
|
|
$
|
1.76
|
|
|
|
2,210,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,210,000
|
)
|
|
|
-
|
|
February 11, 2016
|
|
$
|
1.12
|
|
|
|
49,410
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(49,410
|
)
|
|
|
-
|
|
July 17, 2016
|
|
$
|
1.58
|
|
|
|
4,376,000
|
|
|
|
-
|
|
|
|
(4,376,000
|
)
|
|
|
-
|
|
|
|
-
|
|
July 17, 2016
|
|
$
|
1.32
|
|
|
|
186,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(186,000
|
)
|
|
|
-
|
|
November 17, 2017
|
|
$
|
1.00
|
|
|
|
2,253,334
|
|
|
|
-
|
|
|
|
(216,667
|
)
|
|
|
-
|
|
|
|
2,036,667
|
|
November 17, 2017
|
|
$
|
0.77
|
|
|
|
35,200
|
|
|
|
-
|
|
|
|
(35,200
|
)
|
|
|
-
|
|
|
|
-
|
|
November 25, 2018
|
|
$
|
2.00
|
|
|
|
-
|
|
|
|
1,614,541
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,614,541
|
|
November 25, 2018
|
|
$
|
1.44
|
|
|
|
-
|
|
|
|
45,944
|
|
|
|
-
|
|
|
|
-
|
|
|
|
45,944
|
|
Warrants outstanding and exercisable
|
|
|
|
|
|
|
9,109,944
|
|
|
|
1,660,485
|
|
|
|
(4,627,867
|
)
|
|
|
(2,445,410
|
)
|
|
|
3,697,152
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.47
|
|
|
$
|
1.98
|
|
|
$
|
1.55
|
|
|
$
|
1.71
|
|
|
$
|
1.44
|
|
The weighted average fair value of finders’ warrants
granted during the years ended December 31, 2018, 2017 and 2016 calculated using the Black-Scholes model at the issue dates, are
as follows:
Weighted average assumptions used
Number of warrants
|
|
|
Date of issue
|
|
Fair value per share
|
|
|
Risk free interest rate
|
|
|
Expected life
(in years)
|
|
|
Expected volatility
|
|
|
Expected dividends
|
|
192,450
|
|
|
June 7, 2018
|
|
$
|
0.19
|
|
|
|
1.94
|
%
|
|
|
2
|
|
|
|
54.02
|
%
|
|
$Nil
|
|
295,734
|
|
|
June 1, 2017
|
|
$
|
0.58
|
|
|
|
0.71
|
%
|
|
|
2
|
|
|
|
66.26
|
%
|
|
$Nil
|
|
17,911
|
|
|
February 7, 2017
|
|
$
|
0.51
|
|
|
|
0.72
|
%
|
|
|
2.50
|
|
|
|
61.54
|
%
|
|
$Nil
|
|
45,944
|
|
|
May 25, 2016
|
|
$
|
0.39
|
|
|
|
0.59
|
%
|
|
|
2
|
|
|
|
55.53
|
%
|
|
$Nil
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
(Continued)
|
|
(d)
|
Share purchase option compensation plan
|
The Company’s stock option plan permits the issuance
of options up to a maximum of 10% of the Company’s issued share capital. Stock options issued to any consultant or person
providing investor relations services cannot exceed 2% of the issued and outstanding common shares in any twelve month period.
At December 31, 2018, the Company had reserved 1,465,672 stock options that may be granted. The exercise price of any option cannot
be less than the volume weighted average trading price of the shares for the five trading days immediately preceding the date of
the grant.
The maximum term of all options is five years. The Board
of Directors determines the term of the option (to a maximum of five years) and the time during which any option may vest. Options
granted to consultants or persons providing investor relations services shall vest in stages with no more than 25% of such option
being exercisable in any three month period. All options granted during the years ended December 31, 2018, 2017 and 2016 vested
on the grant date.
The Company’s stock option plan permits the option holder to exercise
cashless by surrendering a portion of the underlying option shares to pay for the exercise price and the corresponding withholding
taxes, if applicable.
The continuity of stock options for the year ended December
31, 2018, 2017 and 2016 are as follows:
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
(Continued)
|
|
(d)
|
Share purchase option compensation plan
(Continued)
|
Expiry date
|
|
Exercise
price
|
|
|
December 31,
2017
|
|
|
Granted
|
|
|
Exercised
|
|
|
Expired
|
|
|
December 31,
2018
|
|
April 4, 2018
|
|
$
|
1.74
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(90,000
|
)
|
|
|
-
|
|
May 6, 2018
|
|
$
|
1.41
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(100,000
|
)
|
|
|
-
|
|
June 8, 2018
|
|
$
|
1.44
|
|
|
|
1,915,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,915,000
|
)
|
|
|
-
|
|
June 18, 2018
|
|
$
|
1.46
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(250,000
|
)
|
|
|
-
|
|
June 29, 2018
|
|
$
|
1.71
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,000
|
)
|
|
|
-
|
|
August 9, 2018
|
|
$
|
1.91
|
|
|
|
491,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(491,000
|
)
|
|
|
-
|
|
September 15, 2018
|
|
$
|
1.85
|
|
|
|
170,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(170,000
|
)
|
|
|
-
|
|
December 11, 2018
|
|
$
|
0.72
|
|
|
|
590,000
|
|
|
|
-
|
|
|
|
(575,000
|
)
(i)
|
|
|
(15,000
|
)
|
|
|
-
|
|
December 11, 2018
|
|
$
|
1.68
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(150,000
|
)
|
|
|
-
|
|
December 11, 2018
|
|
$
|
1.80
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,000
|
)
|
|
|
-
|
|
January 2, 2019
|
|
$
|
1.04
|
|
|
|
375,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
375,000
|
|
March 17, 2019
|
|
$
|
1.35
|
|
|
|
207,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
207,000
|
|
May 4, 2019
|
|
$
|
1.99
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
175,000
|
|
May 19, 2019
|
|
$
|
1.84
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
June 12, 2019
|
|
$
|
1.89
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
July 2, 2019
|
|
$
|
1.32
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
July 2, 2019
|
|
$
|
1.19
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
July 2, 2019
|
|
$
|
1.34
|
|
|
|
1,427,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,427,000
|
|
September 19, 2019
|
|
$
|
1.40
|
|
|
|
1,160,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,160,000
|
|
April 10, 2020
|
|
$
|
1.03
|
|
|
|
-
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
April 30, 2020
|
|
$
|
1.53
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
April 30, 2020
|
|
$
|
1.14
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
April 30, 2020
|
|
$
|
1.04
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
June 8, 2020
|
|
$
|
0.98
|
|
|
|
-
|
|
|
|
2,180,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,180,000
|
|
September 30, 2020
|
|
$
|
1.25
|
|
|
|
1,195,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(100,000
|
)
|
|
|
1,095,000
|
|
September 30, 2020
|
|
$
|
0.83
|
|
|
|
-
|
|
|
|
106,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
106,000
|
|
September 30, 2020
|
|
$
|
0.79
|
|
|
|
-
|
|
|
|
170,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,000
|
|
December 13, 2020
|
|
$
|
0.86
|
|
|
|
-
|
|
|
|
762,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
762,000
|
|
February 7, 2021
|
|
$
|
1.11
|
|
|
|
-
|
|
|
|
300,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
300,000
|
|
March 29, 2021
|
|
$
|
1.08
|
|
|
|
-
|
|
|
|
400,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400,000
|
|
December 12, 2021
|
|
$
|
1.00
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
Options outstanding and exercisable
|
|
|
|
|
|
|
9,290,000
|
|
|
|
4,308,000
|
|
|
|
(575,000
|
)
|
|
|
(3,316,000
|
)
|
|
|
9,707,000
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.39
|
|
|
$
|
0.97
|
|
|
$
|
0.72
|
|
|
$
|
1.54
|
|
|
$
|
1.19
|
|
|
(i)
|
In accordance with the Company’s stock option plan, options holders exercised 552,000 stock
options on a cashless basis at an exercise price of $0.72. The total number of shares issued in connection with the cashless exercise
of options was 64,094.
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
(Continued)
|
|
(d)
|
Share purchase option compensation plan
(Continued)
|
The weighted average remaining life of stock options
outstanding at December 31, 2018 was 1.24 years (2017 – 1.33 years).
Expiry date
|
|
Exercise
price
|
|
|
December 31,
2016
|
|
|
Granted
|
|
|
Exercised
|
|
|
Expired
|
|
|
December 31,
2017
|
|
January 6, 2017
|
|
$
|
0.98
|
|
|
|
1,180,000
|
|
|
|
-
|
|
|
|
(1,180,000
|
)
(i)
|
|
|
-
|
|
|
|
-
|
|
May 4, 2017
|
|
$
|
1.91
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
(75,000
|
)
|
|
|
(100,000
|
)
|
|
|
-
|
|
June 8, 2017
|
|
$
|
1.98
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(75,000
|
)
|
|
|
-
|
|
August 26, 2017
|
|
$
|
0.74
|
|
|
|
1,310,000
|
|
|
|
-
|
|
|
|
(1,310,000
|
)
(i)
|
|
|
-
|
|
|
|
-
|
|
September 11, 2017
|
|
$
|
2.31
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(500,000
|
)
|
|
|
-
|
|
November 22, 2017
|
|
$
|
2.22
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(100,000
|
)
|
|
|
-
|
|
April 4, 2018
|
|
$
|
1.74
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
May 6, 2018
|
|
$
|
1.41
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
June 8, 2018
|
|
$
|
1.44
|
|
|
|
1,915,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,915,000
|
|
June 18, 2018
|
|
$
|
1.46
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
|
June 29, 2018
|
|
$
|
1.71
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
August 9, 2018
|
|
$
|
1.91
|
|
|
|
491,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
491,000
|
|
September 15, 2018
|
|
$
|
1.85
|
|
|
|
170,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,000
|
|
December 11, 2018
|
|
$
|
0.72
|
|
|
|
724,000
|
|
|
|
-
|
|
|
|
(134,000
|
)
(i)
|
|
|
-
|
|
|
|
590,000
|
|
December 11, 2018
|
|
$
|
1.68
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
December 11, 2018
|
|
$
|
1.80
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
January 2, 2019
|
|
$
|
1.04
|
|
|
|
375,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
375,000
|
|
March 17, 2019
|
|
$
|
1.35
|
|
|
|
-
|
|
|
|
207,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
207,000
|
|
May 4, 2019
|
|
$
|
1.99
|
|
|
|
-
|
|
|
|
175,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
175,000
|
|
May 19, 2019
|
|
$
|
1.84
|
|
|
|
-
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
June 12, 2019
|
|
$
|
1.89
|
|
|
|
-
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
July 2, 2019
|
|
$
|
1.32
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
July 2, 2019
|
|
$
|
1.19
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
July 2, 2019
|
|
$
|
1.34
|
|
|
|
-
|
|
|
|
1,427,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,427,000
|
|
September 19, 2019
|
|
$
|
1.40
|
|
|
|
-
|
|
|
|
1,160,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,160,000
|
|
April 30, 2020
|
|
$
|
1.53
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
April 30, 2020
|
|
$
|
1.14
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
September 30, 2020
|
|
$
|
1.25
|
|
|
|
-
|
|
|
|
1,195,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,195,000
|
|
Options outstanding and exercisable
|
|
|
|
|
|
|
7,850,000
|
|
|
|
4,914,000
|
|
|
|
(2,699,000
|
)
|
|
|
(775,000
|
)
|
|
|
9,290,000
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.29
|
|
|
$
|
1.39
|
|
|
$
|
0.88
|
|
|
$
|
2.21
|
|
|
$
|
1.39
|
|
|
(j)
|
In accordance with the Company’s stock option plan, options holders exercised 350,000; 1,150,000
and 92,000 stock options on a cashless basis at an exercise price of $0.98, $0.74 and $0.72, respectively. The total number of
shares issued in connection with the cashless exercise of options was 532,836.
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
(Continued)
|
|
(d)
|
Share purchase option compensation plan
(Continued)
|
The weighted average remaining life of stock options
outstanding at December 31, 2017 was 1.33 years (2016 – 1.13 years).
Expiry date
|
|
Exercise
price
|
|
|
December 31,
2015
|
|
|
Granted
|
|
|
Exercised
|
|
|
Expired / cancelled
|
|
|
December 31,
2016
|
|
May 6, 2016
|
|
$
|
1.33
|
|
|
|
65,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(65,000
|
)
|
|
|
-
|
|
June 8, 2016
|
|
$
|
2.89
|
|
|
|
2,145,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,145,000
|
)
|
|
|
-
|
|
July 14, 2016
|
|
$
|
1.37
|
|
|
|
130,000
|
|
|
|
-
|
|
|
|
(120,000
|
)
(i)
|
|
|
(10,000
|
)
|
|
|
-
|
|
August 15, 2016
|
|
$
|
2.57
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(150,000
|
)
|
|
|
-
|
|
October 10, 2016
|
|
$
|
1.23
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
(150,000
|
)
(i)
|
|
|
-
|
|
|
|
-
|
|
January 6, 2017
|
|
$
|
0.98
|
|
|
|
1,180,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,180,000
|
|
May 4, 2017
|
|
$
|
1.91
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(25,000
|
)
|
|
|
175,000
|
|
June 8, 2017
|
|
$
|
1.98
|
|
|
|
75,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,000
|
|
August 26, 2017
|
|
$
|
0.74
|
|
|
|
1,445,000
|
|
|
|
-
|
|
|
|
(135,000
|
)
|
|
|
-
|
|
|
|
1,310,000
|
|
September 11, 2017
|
|
$
|
2.31
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
November 22, 2017
|
|
$
|
2.22
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
April 4, 2018
|
|
$
|
1.74
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
May 6, 2018
|
|
$
|
1.41
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
June 8, 2018
|
|
$
|
1.44
|
|
|
|
-
|
|
|
|
1,915,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,915,000
|
|
June 18, 2018
|
|
$
|
1.46
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
|
June 29, 2018
|
|
$
|
1.71
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
August 9, 2018
|
|
$
|
1.91
|
|
|
|
-
|
|
|
|
491,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
491,000
|
|
September 15, 2018
|
|
$
|
1.85
|
|
|
|
-
|
|
|
|
170,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
170,000
|
|
December 11, 2018
|
|
$
|
0.72
|
|
|
|
756,000
|
|
|
|
-
|
|
|
|
(32,000
|
)
|
|
|
-
|
|
|
|
724,000
|
|
December 11, 2018
|
|
$
|
1.68
|
|
|
|
-
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
December 11, 2018
|
|
$
|
1.80
|
|
|
|
-
|
|
|
|
20,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,000
|
|
January 2, 2019
|
|
$
|
1.04
|
|
|
|
375,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
375,000
|
|
July 2, 2019
|
|
$
|
1.32
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
July 2, 2019
|
|
$
|
1.19
|
|
|
|
-
|
|
|
|
60,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,000
|
|
Options outstanding and exercisable
|
|
|
|
|
|
|
7,761,000
|
|
|
|
2,921,000
|
|
|
|
(437,000
|
)
|
|
|
(2,395,000
|
)
|
|
|
7,850,000
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.65
|
|
|
$
|
1.55
|
|
|
$
|
1.08
|
|
|
$
|
2.81
|
|
|
$
|
1.29
|
|
|
(i)
|
In accordance with the Company’s stock option plan, options holders exercised 105,000 and
150,000 stock options on a cashless basis at an exercise price of $1.37 and $1.23. The total number of shares issued in connection
with the cashless exercise of options was 63,510.
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
8.
|
|
Share capital and reserves
(Continued)
|
|
(d)
|
Share purchase option compensation plan
(continued)
|
The weighted average fair value of options granted during
the years ended December 31, 2018, 2017 and 2016, calculated using the Black-Scholes model at grant date, are as follows:
Weighted average assumptions used
Number of options
|
|
|
Date of grant
|
|
Fair value per share
|
|
|
Risk free interest rate
|
|
|
Expected life
(in years)
|
|
|
Expected volatility
|
|
|
Expected dividends
|
|
762,000
|
|
|
December 13, 2018
|
|
$
|
0.24
|
|
|
|
1.89
|
%
|
|
|
2
|
|
|
|
49.38
|
%
|
|
$Nil
|
|
200,000
|
|
|
December 12, 2018
|
|
$
|
0.28
|
|
|
|
2.06
|
%
|
|
|
3
|
|
|
|
49.50
|
%
|
|
$Nil
|
|
170,000
|
|
|
September 26, 2018
|
|
$
|
0.25
|
|
|
|
2.19
|
%
|
|
|
2
|
|
|
|
47.93
|
%
|
|
$Nil
|
|
106,000
|
|
|
August 15, 2018
|
|
$
|
0.21
|
|
|
|
2.09
|
%
|
|
|
2
|
|
|
|
48.39
|
%
|
|
$Nil
|
|
2,180,000
|
|
|
June 18, 2018
|
|
$
|
0.29
|
|
|
|
1.85
|
%
|
|
|
2
|
|
|
|
51.53
|
%
|
|
$Nil
|
|
100,000
|
|
|
May 7, 2018
|
|
$
|
0.33
|
|
|
|
1.95
|
%
|
|
|
2
|
|
|
|
55.21
|
%
|
|
$Nil
|
|
90,000
|
|
|
April 10, 2018
|
|
$
|
0.31
|
|
|
|
1.85
|
%
|
|
|
2
|
|
|
|
55.18
|
%
|
|
$Nil
|
|
400,000
|
|
|
March 29, 2018
|
|
$
|
0.42
|
|
|
|
1.94
|
%
|
|
|
3
|
|
|
|
55.10
|
%
|
|
$Nil
|
|
300,000
|
|
|
February 7, 2018
|
|
$
|
0.48
|
|
|
|
1.99
|
%
|
|
|
3
|
|
|
|
64.14
|
%
|
|
$Nil
|
|
1,195,000
|
|
|
December 22, 2017
|
|
$
|
0.62
|
|
|
|
1.71
|
%
|
|
|
3
|
|
|
|
65.20
|
%
|
|
$Nil
|
|
100,000
|
|
|
November 23, 2017
|
|
$
|
0.50
|
|
|
|
1.46
|
%
|
|
|
3
|
|
|
|
63.93
|
%
|
|
$Nil
|
|
500,000
|
|
|
September 12, 2017
|
|
$
|
0.55
|
|
|
|
1.59
|
%
|
|
|
2.5
|
|
|
|
63.12
|
%
|
|
$Nil
|
|
1,160,000
|
|
|
August 25, 2017
|
|
$
|
0.48
|
|
|
|
1.24
|
%
|
|
|
2
|
|
|
|
62.80
|
%
|
|
$Nil
|
|
75,000
|
|
|
June 12, 2017
|
|
$
|
0.63
|
|
|
|
0.88
|
%
|
|
|
2
|
|
|
|
65.95
|
%
|
|
$Nil
|
|
75,000
|
|
|
May 19, 2017
|
|
$
|
0.60
|
|
|
|
0.72
|
%
|
|
|
2
|
|
|
|
65.65
|
%
|
|
$Nil
|
|
175,000
|
|
|
May 4, 2017
|
|
$
|
0.63
|
|
|
|
0.71
|
%
|
|
|
2
|
|
|
|
65.77
|
%
|
|
$Nil
|
|
207,000
|
|
|
March 17, 2017
|
|
$
|
0.47
|
|
|
|
0.80
|
%
|
|
|
2
|
|
|
|
61.28
|
%
|
|
$Nil
|
|
1,427,000
|
|
|
January 11, 2017
|
|
$
|
0.54
|
|
|
|
0.75
|
%
|
|
|
2
|
|
|
|
68.94
|
%
|
|
$Nil
|
|
60,000
|
|
|
December 21, 2016
|
|
$
|
0.42
|
|
|
|
0.83
|
%
|
|
|
2
|
|
|
|
70.18
|
%
|
|
$Nil
|
|
20,000
|
|
|
November 2, 2016
|
|
$
|
0.69
|
|
|
|
0.54
|
%
|
|
|
2
|
|
|
|
68.31
|
%
|
|
$Nil
|
|
150,000
|
|
|
October 6, 2016
|
|
$
|
0.57
|
|
|
|
0.60
|
%
|
|
|
2
|
|
|
|
68.47
|
%
|
|
$Nil
|
|
170,000
|
|
|
September 15, 2016
|
|
$
|
0.70
|
|
|
|
0.58
|
%
|
|
|
2
|
|
|
|
68.08
|
%
|
|
$Nil
|
|
491,000
|
|
|
August 9, 2016
|
|
$
|
0.76
|
|
|
|
0.50
|
%
|
|
|
2
|
|
|
|
67.52
|
%
|
|
$Nil
|
|
15,000
|
|
|
June 29, 2016
|
|
$
|
0.87
|
|
|
|
0.54
|
%
|
|
|
2
|
|
|
|
66.44
|
%
|
|
$Nil
|
|
1,915,000
|
|
|
June 8, 2016
|
|
$
|
0.62
|
|
|
|
0.54
|
%
|
|
|
2
|
|
|
|
64.68
|
%
|
|
$Nil
|
|
100,000
|
|
|
May 6, 2016
|
|
$
|
0.52
|
|
|
|
0.54
|
%
|
|
|
2
|
|
|
|
63.84
|
%
|
|
$Nil
|
Total share-based payments expenses as a result of options
granted and vested during the year ended December 31, 2018 was $1,308,740 (2017 - $
2,693,070
;
2016 -$1,869,010).
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
9.
|
|
Related party transactions and balances
|
|
(a)
|
Compensation of key management personnel
|
Key management includes members of
the Board, the President and Chief Executive Officer, the Chief Financial Officer, Vice President Operations & Projects, and
the Vice President, Corporate Development. The net aggregate compensation paid or payable to key management for services after
recovery from Azucar Minerals Ltd. and Almadex Minerals Ltd. (Note 9 (b)) is as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
$
|
952,079
|
|
|
$
|
813,400
|
|
|
$
|
755,475
|
|
Share-based payments
|
|
|
1,090,540
|
|
|
|
2,216,170
|
|
|
|
1,537,060
|
|
Directors’ fees
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
41,000
|
|
|
|
$
|
2,112,619
|
|
|
$
|
3,099,570
|
|
|
$
|
2,333,535
|
|
|
(b)
|
Almadex Minerals Ltd (“Almadex”)
|
Effective August 1, 2015, the Company recovers a portion
of expenses from Azucar pursuant to an administrative services agreement between the Company and Azucar.
Effective May 18, 2018, the Company also recovers a
portion of expenses from Almadex pursuant to the administrative service agreements between the Company and Almadex.
During the year ended December 31, 2018, the Company
received $542,657 (2017 - $499,798; 2016 - $464,498) from Azucar for administrative services fees included in other income and
received $243,260 (2017 - $Nil; 2016 - $Nil) from Almadex for administrative services fees included in other income.
At December 31, 2018, included in accounts receivable
is $170,181 (2017 - $195,551) due from Azucar and $116,268 (2017 - $Nil) due from Almadex in relation to expenses recoveries.
At December 31, 2018, the Company accrued $37,533 (2017
- $153,038) payable to Almadex for drilling equipment rental services in Mexico.
|
(c)
|
Other related party transactions
|
During the year ended December 31, 2018, the Company
employed the Chairman’s daughter for a salary of $48,800 less statutory deductions (2017 - $43,800; 2016 - $38,800) for marketing
and administrative services provided to the Company.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
Basic and diluted net loss
per share
The calculation of basic net loss per share for the
year ended December 31, 2018 was based on the loss attributable to common shareholders of $3,511,667 (2017 - $5,231,295; 2016
- $4,023,504) and a weighted average number of common shares outstanding of 107,584,263 (2017 - 95,873,417, 2016 - 82,322,754).
The calculation of diluted net
loss per share for the year ended December 31, 2018, 2017 and 2016 did not include the effect of stock options and warrants as
they are anti-dilutive.
11.
|
|
Supplemental cash flow information
|
Supplemental information regarding
non-cash transactions is as follows:
Investing and financing activities
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets expenditures included in trade and other payables
|
|
$
|
694,167
|
|
|
$
|
493,943
|
|
|
$
|
535,254
|
|
Fair value of finders’ warrants
|
|
|
36,566
|
|
|
|
180,691
|
|
|
|
17,918
|
|
Fair value of finders’ warrants transferred to share capital on exercise of finders’ warrants
|
|
|
-
|
|
|
|
12,797
|
|
|
|
5,984
|
|
Fair value of cash stock options transferred to share capital on exercise of options
|
|
|
6,670
|
|
|
|
496,859
|
|
|
|
43,180
|
|
Fair value of cashless stock options transferred to share capital on exercise of options
|
|
|
160,080
|
|
|
|
387,930
|
|
|
|
108,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
11.
|
|
Supplemental cash flow information
(Continued)
|
Supplemental information regarding
the split between cash and cash equivalents is as follows:
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
2,580,580
|
|
|
$
|
1,449,184
|
|
Term Deposits
|
|
|
2,500,000
|
|
|
|
14,885,350
|
|
|
|
$
|
5,080,580
|
|
|
$
|
16,334,534
|
|
|
(a)
|
The provision for income taxes differs from the amounts computed by applying the Canadian
statutory rates to the net loss before income taxes due to the following:
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
Loss before income taxes
|
|
$
|
(3,511,667
|
)
|
|
$
|
(5,231,295
|
)
|
|
$
|
(4,023,504
|
)
|
Statutory rate
|
|
|
27.00
|
%
|
|
|
26.00
|
%
|
|
|
26.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax
|
|
|
(948,150
|
)
|
|
|
(1,360,137
|
)
|
|
|
(1,046,111
|
)
|
Effect of different tax rates in foreign jurisdictions
|
|
|
(38,010
|
)
|
|
|
9,728
|
|
|
|
343
|
|
Non-deductible share-based payments
|
|
|
353,360
|
|
|
|
700,198
|
|
|
|
485,943
|
|
Other permanent items
|
|
|
2,766
|
|
|
|
3,360
|
|
|
|
2,022
|
|
Change in deferred tax assets not recognized
|
|
|
151,738
|
|
|
|
1,921,226
|
|
|
|
3,518,776
|
|
Impact of change in tax rates
|
|
|
-
|
|
|
|
(348,020
|
)
|
|
|
-
|
|
Impact of change in expected manner of recovery
|
|
|
-
|
|
|
|
-
|
|
|
|
853,274
|
|
Share issuance costs
|
|
|
(172,294
|
)
|
|
|
(399,602
|
)
|
|
|
(39,241
|
)
|
True-ups and other
|
|
|
650,590
|
|
|
|
(526,753
|
)
|
|
|
(3,775,006
|
)
|
Deferred income tax (recovery) expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
In September 2017, the British Columbia (BC) Government
proposed changes to the general corporate income tax rate to increase the rate from 11% to 12% effective January 1, 2018 and onwards.
This change in tax rate was substantively enacted on October 26, 2017. The relevant deferred tax balances have been remeasured
to reflect the increase in the Company’s combined Federal and Provincial (BC) general corporate income tax rate from 26%
to 27%.
|
(b)
|
The Company’s deferred income tax recovery and deferred income tax liability
relates to the Mexican income tax and Special Mining Duty (“SMD”) associated with the Tuligtic project. As a consequence
of the Company’s spin-out, management has determined that the Company will most likely recover the carrying amount of the
Tuligtic property through use rather than through sale. Before the spin-out was planned, it was management’s expectation
that the carrying amount of the Tuligtic property would be recovered through sale rather than through use. Given this change in
expected manner of recovery, the Company has reflected the tax impacts in the financial statements.
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
12.
|
|
Income Taxes
(Continued)
|
The significant components of deferred income tax assets
(liabilities) are as follows:
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Non-capital losses
|
|
$
|
4,282,555
|
|
|
$
|
4,282,555
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets
|
|
|
(5,717,437
|
)
|
|
|
(5,717,437
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax liabilities
|
|
$
|
(1,434,882
|
)
|
|
$
|
(1,434,882
|
)
|
|
(c)
|
Deductible temporary differences, unused tax losses and unused tax credits for which no deferred
tax assets have been recognized are attributable to the following:
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Non-capital loss carry forwards
|
|
$
|
18,758,080
|
|
|
$
|
17,803,193
|
|
Capital loss carry forwards
|
|
|
24,538,993
|
|
|
|
24,538,993
|
|
Exploration and evaluation assets
|
|
|
8,221,842
|
|
|
|
8,221,842
|
|
Share issue costs
|
|
|
1,554,264
|
|
|
|
1,778,234
|
|
Property, plant and equipment
|
|
|
483,609
|
|
|
|
10,127
|
|
Cumulative eligible capital deduction
|
|
|
-
|
|
|
|
507,429
|
|
Investment tax credit
|
|
|
239,849
|
|
|
|
239,849
|
|
|
|
$
|
53,796,637
|
|
|
$
|
53,099,667
|
|
At December 31, 2018, the Company had operating loss
carry forwards available for tax purposes in Canada of $17,858,501 (2017 - $15,706,045) which expire between 2032 and 2038 and
in Mexico of $15,173,872 (2017 - $16,378,174) which expire between 2022 and 2028.
The Company has entered into an operating lease for
office premises effective April 1, 2017 through to March 31, 2022.
As at December 31, 2018, the remaining payments for
operating lease are due as follows:
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
Total
|
|
Office lease
|
|
$
|
179,706
|
|
|
$
|
191,512
|
|
|
$
|
192,336
|
|
|
$
|
48,084
|
|
|
|
-
|
|
|
$
|
611,638
|
|
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
14.
|
|
Financial instruments
|
The fair values of the Company’s cash and cash
equivalents, accounts receivable and trade and other payables approximate their carrying values because of the short-term nature
of these instruments.
The Company does not carry any financial instruments
at fair value.
The Company is exposed to certain financial risks, including
currency risk, credit risk, liquidity risk, interest rate risk and commodity and equity price risk.
The Company’s property interests in Mexico make
it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s financial
position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian dollar,
the US dollar and the Mexican peso. The Company does not invest in foreign currency contracts to mitigate the risks.
As at December 31, 2018, the Company is exposed to foreign
exchange risk through the following monetary assets and liabilities denominated in currencies other than the functional currency
of the applicable subsidiary:
All amounts in Canadian dollars
|
|
US dollar
|
|
|
Mexican peso
|
|
Cash and cash equivalents
|
|
$
|
1,004,652
|
|
|
$
|
293,525
|
|
Accounts receivable and prepaid expenses
|
|
|
-
|
|
|
|
82
|
|
Total assets
|
|
$
|
1,004,652
|
|
|
$
|
293,607
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
$
|
531,083
|
|
|
$
|
40,373
|
|
Total liabilities
|
|
$
|
531,083
|
|
|
$
|
40,373
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
$
|
473,569
|
|
|
$
|
253,234
|
|
A 10% change in the US dollar
exchange rate relative to the Canadian dollar would change the Company’s net loss by $47,000.
A 10% change in the Mexican peso relative to the Canadian
dollar would change the Company’s net loss by $25,000.
The Company’s cash and cash equivalents are held
in large financial institutions, located in both Canada and Mexico. Cash equivalents mature at less than ninety days during the
twelve months following the statement of financial position date. The Company’s excise tax included in accounts receivable
and prepaid expenses consists primarily of sales tax due from the federal government of Canada.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
14.
|
|
Financial
instruments
(Continued)
|
|
(b)
|
Credit
risk
(Continued)
|
To mitigate exposure to credit risk on cash and cash
equivalents, the Company has established policies to limit the concentration of credit risk with any given banking institution
where the funds are held, to ensure counterparties demonstrate minimum acceptable credit risk worthiness and ensure liquidity of
available funds.
As at December 31, 2018, the Company’s maximum
exposure to credit risk is the carrying value of its cash and cash equivalents, and accounts receivable.
Liquidity risk is the risk that the Company will not
be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital
structure.
Trade and other payables are due within twelve months
of the statement of financial position date.
Interest rate risk is the risk that the fair value or
future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed
to varying interest rates on cash and cash equivalents. The Company has no interest bearing debt.
A 1% change in the interest rate would change the Company’s
net loss by $51,000.
|
(e)
|
Commodity and equity price risk
|
The ability of the Company to explore its exploration
and evaluation assets and the future profitability of the Company are directly related to the market price of gold and other precious
metals. The Company monitors gold prices to determine the appropriate course of action to be taken by the Company. Equity price
risk is defined as the potential adverse impact on the Company’s performance due to movements in individual equity prices
or general movements in the level of the stock market.
Almaden Minerals Ltd.
|
Notes to the consolidated financial statements
|
For the years ended December 31, 2018, 2017 and 2016
|
Expressed in Canadian dollars
|
15.
|
|
Management of capital
|
The Company considers its capital to consist of components
of equity. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to pursue the exploration of its exploration and evaluation assets and to maintain a flexible capital structure
which optimizes the costs of capital at an acceptable risk.
The Company manages the capital structure and makes
adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain
or adjust the capital structure, the Company may attempt to issue new shares and, acquire or dispose of assets.
In order to maximize ongoing exploration efforts, the
Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in highly liquid
short-term interest-bearing investments with short term maturities, selected with regards to the expected timing of expenditures
from continuing operations.
The Company expects its current capital resources will
be sufficient to carry its exploration plans and operations for the foreseeable future. There were no changes to the Company’s
approach to the management of capital during the period.
16.
|
|
Segmented information
|
The Company operates in one reportable operating segment,
being the acquisition and exploration of mineral resource properties.
The Company’s non-current assets are located in the following geographic
locations:
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
Canada
|
|
$
|
86,372
|
|
|
$
|
120,803
|
|
United States
|
|
|
13,673,883
|
|
|
|
5,168,856
|
|
Mexico
|
|
|
54,683,143
|
|
|
|
44,810,040
|
|
|
|
$
|
68,443,398
|
|
|
$
|
50,099,699
|
|
On January 3, 2019, the Company granted certain consultant,
officers and directors an aggregate of 425,000 stock options in accordance with the terms of the Company’s stock option plan,
each of which is exercisable into one common share at an exercise price of $0.84 per share until February 7, 2021.
On March 1, 2019, the Company granted a consultant an
aggregate of 100,000 stock options in accordance with the terms of the Company’s stock option plan, each of which is exercisable
into one common share at an exercise price of $0.90 per share until March 29, 2021.
35