UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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OR
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2019
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Date of event requiring this shell company
report
For the transition period from _____________________
to ____________________
Commission file number 001-32702
ALMADEN MINERALS LTD.
(Exact name of Registrant as specified
in its charter)
British Columbia, Canada
(Jurisdiction of incorporation or organization)
1333 Johnston Street, #210, Vancouver,
British Columbia V6H 3R9
(Address of principal executive offices)
Korm Trieu, ktrieu@almadenminerals.com, 1333 Johnston Street,
#210, Vancouver, BC V6H 3R9
(Name, Telephone, E-mail and/or Facsimile number and Address of Company
Contact Person)
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Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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Common Stock without Par Value
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AAU
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NYSE American
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Securities registered or to be registered
pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital
or common stock as of the close of the period covered by the annual report.
111,726,719
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.
¨ Yes
x No
If this report is an annual or transition report, indicate by check
mark if the registrant is not required to file report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
¨ Yes
x No
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
x Yes ¨
No
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
x Yes ¨
No
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨
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Accelerated
filer x
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Non-accelerated filer ¨
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Emerging
Growth Company x
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If an emerging growth company that prepares its financial statements
in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
( )
Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:
U.S. GAAP ¨
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International
Financial Reporting Standards as issued x
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Other
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by the International Accounting Standards Board
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If “Other” has been checked in response to the previous question, indicate by
check mark which financial statement item the registrant has elected to follow.
¨ Item
17 ¨ Item 18
If this is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes
x No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDS DURING THE
PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under
a plan confirmed by a court.
¨
Yes ¨ No
TABLE OF CONTENTS
Glossary of Geologic and Mining Terms
Adularia: A colourless, moderate to low-temperature variety of
orthoclase feldspar typically with a relatively high barium content. It is a prominent constituent of low sulphidation epithermal
veins.
Alkalic Intrusive: An igneous rock emplaced below ground level
in which the feldspar is dominantly sodic and or potassic.
Alkalinity: The chemical nature of solutions characterized by
a high concentration of hydroxyl ions.
Alteration: Usually referring to chemical reactions in a rock
mass resulting from the passage of hydrothermal fluids.
Andesite: A dark-coloured, fine-grained extrusive rock that,
when porphyritic, contains phenocrysts composed primarily of zoned sodic plagioclase (esp. andesine) and one or more of the mafic
minerals (eg. Biotite, horn-blende, pyroxene), with a ground-mass composed generally of the same minerals as the phenocrysts; the
extrusive equivalent of diorite. Andesite grades into latite with increasing alkali feldspar content, and into dacite
with more alkali feldspar and quartz. It was named by Buch in 1826 from the Andes Mountains, South America.
Anomalous: A geological feature, often subsurface, distinguished
by geological, geochemical or geophysical means, which is detectably different than the general surroundings and is often of potential
economic value.
Anomaly: Any concentration of metal noticeably above or below
the average background concentration.
Argillic: A form of alteration characterized by the alteration
of original minerals to clays.
Arsenopyrite: A sulphide of arsenic and iron with the chemical
composition FeAsS.
Assay: An analysis to determine the presence, absence or quantity
of one or more components.
Axis: An imaginary hinge line about which the fold limbs are
bent. The axis of a fold can be at the top or bottom of the fold, can be tilted or horizontal.
Batholith: An intrusion, usually granitic, which has a large
exposed surface area and no observable bottom. Usually associated with orogenic belts.
Breccia: Rock consisting of more or less angular fragments in
a matrix of finer-grained material or cementing material.
Brecciated: Rock broken up by geological forces.
Bulk sample: A very large sample, the kind of sample to take
from broken rock or of gravels and sands when testing placer deposits.
Calc-silicate: Calcium-bearing silicate minerals. These minerals
are commonly formed as a result of the interaction of molten rock and its derived, hot hydrothermal fluids with very chemically
reactive calcium carbonate (limestone). Calc-silicate minerals include garnet, pyroxene, amphibole and epidote. These minerals
are commonly described as skarn and are genetically and spatially associated with a wide range of metals.
Chert: A very fine grained siliceous rock. Many limestones contain
nodules and thin lenses of chert.
Chip sample: A sample composed of discontinuous chips taken along
a surface across a given line.
Claim: That portion of public mineral lands, which a party has
staked or marked out in accordance with provincial or state mining laws, to acquire the right to explore for the minerals under
the surface.
Clastic: Consisting of rock material that has been mechanically
derived, transported, and deposited. Such material is also called detrital.
Cleavage: The tendency of a crystal to split, or break, along
planes of structural weakness.
Concordant Bodies: Intrusive igneous bodies whose contacts are
parallel to the bedding of the intruded rock.
Conglomerate: Rock composed of mostly rounded fragments which
are of gravel size or larger in a finer grained matrix.
Craton: A central stable region common to nearly all continents
and composed chiefly of highly metamorphosed Precambrian rocks.
Cretaceous: Geological time period between 136 and 64 million
years ago.
Crystalline: Means the specimen is made up of one or more groups
of crystals.
Cut-off grade: The minimum grade of mineralization used to establish
quantitative and qualitative estimates of total mineralization.
Dacite: A fine grained acid volcanic rock, similar to rhyolite
in which the feldspar is predominantly plagioclase.
Degradation: The ongoing process of erosion in a stream.
Diagenesis: The changes that occur in a sediment during and after
lithification. These changes include compaction, cementation, replacement, and recrystallization.
Diamond drill: A type of rotary drill in which the cutting is
done by abrasion using diamonds embedded in a matrix rather than by percussion. The drill cuts a core of rock which is recovered
in long cylindrical sections.
Dilution: Results from the mixing in of unwanted gangue or waste
rock with the ore during mining.
Dip: Geological measurement of the angle of maximum slope of
planar elements in rocks. Can be applied to beddings, jointing, fault planes, etc.
Discordant Bodies: Intrusive igneous bodies whose contacts cut
across the bedding, or other pre-existing structures, to the intruded rock.
Disseminated deposit: Deposit in which the mineralization is
scattered through a large volume of host rock, sometimes as separate mineral grains, or sometimes along joint or fault surfaces.
Dyke: A tabular, discordant, intrusive igneous body.
Earn in: The right to acquire an interest in a property pursuant
to an Option Agreement.
Ejecta: Pyroclastic material thrown out or ejected by a volcano.
It includes ash, volcanic bombs, and lapilli.
Epithermal: Epithermal deposits are a class of ore deposits that
form generally less than 1 km from surface. These deposits, which can host economic quantities of gold, silver, copper, lead and
zinc are formed as a result of the precipitation of ore minerals from up-welling hydrothermal fluids. There are several classes
of epithermal deposits that are defined on the basis of fluid chemistry and resulting alteration and ore mineralogy. Fluid chemistry
is largely controlled by the proximity to igneous intrusive rocks and as a result igneous fluid content.
Extrusive Rock: Igneous rock that has solidified on the earth’s
surface from volcanic action.
Fault: A fracture in a rock where there had been displacement
of the two sides.
Faults: Breaks in rocks with noticeable movement or displacement
of the rocks on either side of the break.
Feldspar: A group of aluminum silicate minerals closely related
in chemical composition and physical properties. There are two major chemical varieties of feldspar: the potassium aluminum, or
potash, feldspars and the sodium-calcium-aluminum, or plagioclase, feldspars. The feldspars possess a tetrahedral framework of
silicon and oxygen, with the partial substitution of aluminum for the silicon. They make up about 60 percent of the earth’s
crust.
Felsic: Light colored silicate minerals, mainly quartz and feldspar,
or an igneous rock comprised largely of felsic minerals (granite, rhyolite).
Fluid inclusion: Fluid inclusions are "bubbles" of
fluid trapped within the host mineral during its deposition from its parent hydrothermal fluid. They are tiny remnants of the exact
fluid from which the host mineral and its associated ore minerals deposited and they provide direct information about the fluid
composition, temperature and pressure at which the hydrothermal deposit formed.
Folds: Are flexures in bedded or layered rocks. They are formed
when forces are applied gradually to rocks over a long period of time.
Fracture: Breaks in a rock, usually due to intensive folding
or faulting.
Gangue: Term used to describe worthless minerals or rock waste
mixed in with the valuable minerals.
Geochemical Anomaly: An area of elevated values of a particular
element in soil or rock samples collected during the preliminary reconnaissance search for locating favourable metal concentrations
that could indicate the presence of surface or drill targets.
Geochemistry: The study of the chemistry of rocks, minerals,
and mineral deposits.
Geophysics: The study of the physical properties of rocks, minerals,
and mineral deposits.
Gouge: The finely ground rock that results from the abrasion
along a fault surface.
Grade: The concentration of each ore metal in a rock sample,
usually given as weight percent. Where extremely low concentrations are involved, the concentration may be given in grams per tonne
(g/t) or ounces per ton (oz/t). The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as
an average of the grades of a very large number of samples collected from throughout the deposit.
Granite: A coarse grained, plutonic igneous rock that is normally
pale pink, pale pink-brown, or pale grey, and composed of quartz, alkali feldspar, micas and accessory minerals.
Granodiorite: A course grained, plutonic igneous rock that is
normally pale grey, and composed of quartz, calc-alkali feldspar, micas and accessory minerals.
Grid: A network composed of two sets of uniformly spaced parallel
lines, usually intersecting at right angles and forming squares, superimposed on a map, chart, or aerial photograph, to permit
identification of ground locations by means of a system or coordinates and to facilitate computation of direction and distance
and size of geologic, geochemical or geophysical features.
Hectare: A square of 100 meters on each side.
Host rock: The rock within which the ore deposit occurs.
Hydrothermal: Of or pertaining to hot water, to the action of
hot water, or to the products of this action, such as a mineral deposit precipitated from a hot aqueous solution; also, said of
the solution itself. “Hydrothermal” is generally used for any hot water, but has been restricted by some to water of
magmatic origin.
Igneous: Means a rock formed by the cooling of molten silicate
material.
Induced polarization (I.P.) method: The method used to measure
various electrical responses to the passage of alternating currents of different frequencies through near-surface rocks or to the
passage of pulses of electricity.
Intermediate: An igneous rock made up of both felsic and mafic
minerals (diorite).
Intrusion: General term for a body of igneous rock formed below
the surface.
Intrusive Rock: Any igneous rock solidified from magma beneath
the earth’s surface.
Joint venture agreement: An agreement where the parties agree
to the terms on which a property will be jointly explored, developed, and mined. (See also “Option agreement” and “Earn
in”).
Jurassic: Geological time period between 195 and 136 million
years ago.
Kriging: (a) A statistical technique employed in calculating
grade and tonnage of ore reserves from sampling data. The data are handled by computer. (b) A technique for interpolating which
honors data points exactly. An output point is calculated as a linear combination of known data points. Kriging attempts to produce
the best linear unbiased estimate. Used to interpolate between drill holes.
K-silicate: Potassium-bearing silicates. Potassium silicates
are very common rock-forming minerals, however they are also formed by the interaction of hydrothermal fluids derived from the
cooling intrusive rocks that are genetically and spatially associated with porphyry and epithermal deposits. Potassium feldspar
(orthoclase) and potassium mica (biotite) are both commonly closely associated with copper-molybdenum ore in porphyry copper deposits.
K-spar: Potassium feldspar.
Lava: Means an igneous rock formed by the cooling of molten silicate
material which escapes to the earth’s surface or pours out onto the sea floor.
Limestone: Sedimentary rock that is composed mostly of carbonates,
the two most common of which are calcium and magnesium carbonates.
Lithosphere: The crust and upper mantle, located above the asthenosphere
and composing the rigid plates.
Mafic: A general term used to describe ferromagnesian minerals.
Rocks composed mainly of ferromagnesian minerals are correctly termed melanocratic.
Magma: Naturally occurring molten rock material, generated within
the earth and capable of intrusion and extrusion, from which igneous rocks have been derived through solidification and related
processes. It may or may not contain suspended solids (such as crystals and rock fragments) and/or gas phases.
Massive: Implies large mass. Applied in the context of hand specimens
of, for example, sulphide ores, it usually means the specimen is composed essentially of sulphides with few, if any, other constituents.
Metamorphic: Means any rock which is altered within the earth’s
crust by the effects of heat and/or pressure and/or chemical reactions. Pertains to the process of metamorphism or to its results.
Metasediment: A sediment or sedimentary rock that shows evidence
of having been subjected to metamorphism.
Metavolcanic: An informal term for volcanic rocks that show evidence
of having been subject to metamorphism.
Mineral claim: A legal entitlement to minerals in a certain defined
area of ground.
Mineral Deposit or Mineralized Material: A mineralized underground
body which has been intersected by sufficient closely spaced drill holes and/or underground sampling to support sufficient tonnage
and average grade of metal(s) to warrant further exploration-development work. This deposit does not qualify as a commercially
mineable ore body (Reserves), as prescribed under Commission standards, until a final and comprehensive economic, technical, and
legal feasibility study based upon the test results is concluded.
Mineral: A naturally occurring, inorganic, solid element or compound
that possesses an orderly internal arrangement of atoms and a unique set of physical and chemical properties.
Mineralization: Usually implies minerals of value occurring in
rocks.
National Instrument 43-101 or NI 43-101: A rule developed by
the Canadian Securities Administrators and administered by the provincial securities commissions that govern how issuers disclose
scientific and technical information about their mineral projects to the public. It covers oral statements as well as written documents
and websites. It requires that all disclosure be based on advice by a “qualified person” and in some circumstances
that the person be independent of the issuer and the property.
Net profits interest: A contractual granted right to some portion
of the profits after deduction of expenses sometimes expressed as a form of royalty.
Net smelter returns: Means the amount actually paid to the mine
or mill owner from the sale of ore, minerals and other materials or concentrates mined and removed from mineral properties. A royalty
based on net smelter returns usually provides cash flow that is free of any operating or capital costs and environmental liabilities.
Option agreement: An agreement where the optionee can exercise
certain options to acquire or increase an interest in a property by making periodic payments or share issuances or both to the
optionor or by exploring, developing or producing from the optionor’s property or both. Usually upon the acquisition of such
interest, unless it is a 100% interest, all operations thereafter are on a joint venture basis.
Ordinary kriging: The basic technique of kriging and uses a weighted
average of neighboring samples to estimate the 'unknown' value at a given location. Weights are optimized using the semi-variogram
model, the location of the samples and all the relevant inter-relationships between known and unknown values. The technique also
provides a "standard error" which may be used to quantify confidence levels.
Ore: A natural aggregate of one or more minerals which may be
mined and sold at a profit, or from which some part may be profitably separated.
Ore reserve: The measured quantity and grade of all or part of
a mineralized body in a mine or undeveloped mineral deposit for which the mineralization is sufficiently defined and measured on
three sides to form the basis of at least a preliminary mine production plan for economically viable mining.
Orogeny: The process of forming mountains by folding and thrusting.
Outcrop: An in situ exposure of bedrock.
Overburden: A general term for any material covering or obscuring
rocks from view.
oz/t or opt: Ounces per ton.
Paleozoic: An era of geologic time, from the end of the Precambrian
to the beginning of the Mesozoic, or from about 570 to about 225 million years ago.
Phenocrysts: An unusually large crystal in a relatively finer
grained matrix.
Pluton: Term for an igneous intrusion, usually formed from magma.
Porphyry: An igneous rock composed of larger crystals set within
a finer ground mass.
Pyroclastic rock: A rock of volcanic origin consisting of highly variable mixture
of rock fragments, cinders and ashes and bits of crystals and glass.
Quartz monzonite: A course grained, plutonic igneous rock that
is normally pale pink, and composed of quartz, alkali feldspar, micas and accessory minerals.
Rare Earth: A group of rare metallic chemical elements with consecutive
atomic numbers of 57 to 71.
Reclamation bond: A bond usually required by governmental mining
regulations when mechanized work on a property is contemplated. Proceeds of the bond are used to reclaim any workings or put right
any damage if reclamation undertaken does not satisfy the requirements of the regulations.
Reserve: That part of a mineral deposit which could be economically
extracted or produced at the time of the reserve determination.
Reserves: A natural aggregate of one or more minerals which,
at a specified time and place, may be mined and sold at a profit, or from which some part may be profitably separated.
Reverse circulation drill: A rotary percussion drill in which
the drilling mud and cuttings return to the surface through the drill pipe.
Rhyolite: The fine grained equivalent of granite.
Royalty interest: A royalty, the calculation and payment of which
is tied to some production unit such as ton of concentrate or ounce of gold or silver produced. A common form of royalty interest
is based on the net smelter return.
Sample: Small amount of material that is supposed to be absolutely
typical or representative of the object being sampled.
Sandstone: Composed of sand-sized fragments cemented together.
As a rule the fragments contain a high percentage of quartz.
Sedimentary: A rock formed from cemented or compacted sediments.
Sediments: Are composed of the debris resulting from the weathering
and breakup of other rocks that have been deposited by or carried to the oceans by rivers, or left over from glacial erosion or
sometimes from wind action.
Selvage: A marginal zone, as in a dyke or vein, having some distinctive
feature of fabric or composition.
Sericite: A fine-grained variety of mica occurring in small scales,
especially in schists.
Shale: An argillaceous rock consisting of silt or clay-sized
particles cemented together. Most shales are quite soft, because they contain large amounts of clay minerals.
Silicate: Most rocks are made up of a small number of silicate
minerals ranging from quartz (SiO2) to more complex minerals such as orthoclase feldspar (KAlSi3O8) or hornblende (Ca2Na(Mg,Fe)4(Al,Fe,Ti)Si8)22(OH)2).
Sill: Tabular intrusion which is sandwiched between layers in
the host rock.
Skarn: A thermally altered impure limestone in which material
has been added to the original rock. Skarns are generally characterized by the presence of calcium and silica rich minerals. Many
skarns contain sulphide minerals which in some cases can be of economic value.
Stock: An igneous intrusive body of unknown depth with a surface
exposure of less than 104 square kilometres. The sides, or contacts, of a stock, like those of a batholith, are usually steep and
broaden with depth.
Stockwork: A mineral deposit consisting of a three-dimensional
network of closely spaced planar or irregular veinlets.
Strike: The bearing, or magnetic compass direction, of an imaginary
line formed by the intersection of a horizontal plane with any planar surface, most commonly with bedding planes or foliation planes
in rocks.
Sulphide minerals: A mineral compound characterized by the linkage
of sulfur with a metal or semimetal; e.g., galena.
Syncline: A fold in which the bed has been forced down in the
middle or up on the sides to form a trough.
Tailings: Material rejected from a mill after recoverable valuable
minerals have been extracted.
Tailings pond: A pond where tailings are disposed of.
Tonne: Metric ton – 1,000 kilograms – equivalent
to 1.1023 tons.
Triassic: Geological time period between 225 and 195 million
years ago.
Tuff: A finer grained pyroclastic rock made up mostly of ash
and other fine grained volcanic material.
Veins: The mineral deposits that are found filling openings in
rocks created by faults or replacing rocks on either side of faults.
Vuggy silica: In a high sulphidation epithermal environment,
the highly acidic waters have dissolved everything but silica resulting in a highly porous and pox marker rock which is a good
host for gold deposition. It is an indicator mineralization typical of epithermal rocks.
Waste: Rock which is not ore. Usually referred to that rock which
has to be removed during the normal course of mining in order to get at the ore.
Glossary of Abbreviations
Ag: Silver
Ag g/t: Silver grade measured in grams per metric ton
Converts to ounces per ton by dividing by 34.286
Au: Gold
Au g/t: Gold grade measured in grams per metric ton
Converts to ounces per ton by dividing by 34.286
Cu: Copper
g/t: grams per tonne
IP: Induced Polarization geophysical survey
masl: meters above sea level
MPa: Megapascal or one million pascals.
NSR: net smelter returns royalty
Oz: Troy ounce
QA/QC: Quality Assurance/Quality Control
tpd: Tonnes per day
ton: Short ton (2,000 pounds)
tonne: Metric ton (1000 kilograms - 2204.62 pounds)
NOTES CONCERNING TERMINOLOGY RELATED TO RESOURCES AND RESERVES
Please see “CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL
RESOURCE AND MINERAL RESERVE ESTIMATES,” below.
The terms "mineral resource", "measured mineral resource",
"indicated mineral resource", "inferred mineral resource", “mineral reserve”, “probable mineral
reserve” and “proven mineral reserve” used in this Annual Report are Canadian mining terms as defined in accordance
with National Instrument 43-101 (“NI 43-101”), Standards of Disclosure for Mineral Projects under the guidelines set
out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council. On November 14, 2004, November 27, 2010 and May 10, 2014, CIM Council adopted an update to
the CIM Definition Standards to reflect the more detailed guidance available and effect certain editorial changes required to maintain
consistency with current regulations. This version of the CIM Definition Standards includes further editorial changes required
to maintain compatibility with the new version of National Instrument 43-101 which became Canadian law in 2011. The CIM Definition
Standards can be viewed on the CIM website at www.cim.org. In accordance with Industry Guide 7, Description of Property by Issuers
Engaged or to be Engaged in Significant Mining Operations, issued by the U. S. Securities and Exchange Commission (the “Commission”),
a reserve is termed a “mineral deposit”.
Definitions
Qualified Person
Mineral Resource and Mineral Reserve estimates and resulting technical
reports under NI 43-101 must be prepared by or under the direction of, and dated and signed by, a Qualified Person. A “Qualified
Person” means an individual who is an engineer or geoscientist with a university degree, or equivalent accreditation, with
at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination
of these; has experience relevant to the subject matter of the mineral project and the technical report; and is a member or licensee
in good standing of a professional association. The Qualified Person(s) should be clearly satisfied that they could face their
peers and demonstrate competence and relevant experience in the commodity, type of deposit and situation under consideration. If
doubt exists, the person must either seek or obtain opinions from other colleagues or demonstrate that he or she has obtained assistance
from experts in areas where he or she lacked the necessary expertise. Determination of what constitutes relevant experience can
be a difficult area and common sense has to be exercised. For example, in estimating Mineral Resources for vein gold mineralization,
experience in a high-nugget, vein-type mineralization such as tin, uranium etc. should be relevant whereas experience in massive
base metal deposits may not be. As a second example, for a person to qualify as a Qualified Person in the estimation of Mineral
Reserves for alluvial gold deposits, he or she would need to have relevant experience in the evaluation and extraction of such
deposits. Experience with placer deposits containing minerals other than gold, may not necessarily provide appropriate relevant
experience for gold. In addition to experience in the style of mineralization, a Qualified Person preparing or taking responsibility
for Mineral Resource estimates must have sufficient experience in the sampling, assaying, or other property testing techniques
that are relevant to the deposit under consideration in order to be aware of problems that could affect the reliability of the
data. Some appreciation of extraction and processing techniques applicable to that deposit type might also be important.
Estimation of Mineral Resources is often a team effort, for example,
involving one person or team collecting the data and another person or team preparing the Mineral Resource estimate. Within this
team, geologists usually occupy the pivotal role. Estimation of Mineral Reserves is almost always a team effort involving a number
of technical disciplines, and within this team mining engineers have an important role. Documentation for a Mineral Resource and
Mineral Reserve estimate must be compiled by, or under the supervision of, a Qualified Person(s), whether a geologist, mining engineer
or member of another discipline. It is recommended that, where there is a clear division of responsibilities within a team, each
Qualified Person should accept responsibility for his or her particular contribution. For example, one Qualified Person could accept
responsibility for the collection of Mineral Resource data, another for the Mineral Reserve estimation process, another for the
mining study, and the project leader could accept responsibility for the overall document. It is important that the Qualified Person
accepting overall responsibility for a Mineral Resource and/or Mineral Reserve estimate and supporting documentation, which has
been prepared in whole or in part by others, is satisfied that the other contributors are Qualified Persons with respect to the
work for which they are taking responsibility and that such persons are provided adequate documentation.
Preliminary Economic Assessment (PEA)
A study, other than a Pre-Feasibility or Feasibility Study, that includes
an economic analysis of the potential viability of mineral resources.
Preliminary Feasibility Study (Pre-Feasibility Study)
The CIM Definition Standards requires the completion of a Preliminary
Feasibility Study as the minimum prerequisite for the conversion of Mineral Resources to Mineral Reserves.
A Preliminary Feasibility Study is a comprehensive study of a range
of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining
method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective
method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on mining, processing,
metallurgical, economic, marketing, legal, environmental, social and governmental considerations and the evaluation of any other
relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource
may be classified as a Mineral Reserve.
Feasibility Study
A Feasibility Study is a comprehensive technical and economic study
of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed
mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with
any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting
that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for
a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence
level of the study will be higher than that of a Pre-Feasibility Study.
Exploration Information
Exploration information means geological, geophysical, geochemical,
sampling, drilling, trenching, analytical testing, assaying, mineralogical, metallurgical and other similar information concerning
a particular property that is derived from activities undertaken to locate, investigate, define or delineate a mineral prospect
or mineral deposit. It is recognized that in the review and compilation of data on a project or property, previous or historical
estimates of tonnage and grade, not meeting the minimum requirement for classification as Mineral Resource, may be encountered.
If a Qualified Person reports Exploration Information in the form of tonnage and grade, it must be clearly stated that these estimates
are conceptual or order of magnitude and that they do not meet the criteria of a Mineral Resource.
Mineral Resource
A Mineral Resource is a concentration or occurrence of solid material
of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects
for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of
a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. 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.
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 a lower level of confidence than a Measured Mineral Resource, and may only be converted to a Probable Mineral
Reserve. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource
or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.
Inferred Mineral Resource
An Inferred Mineral Resource is that part of a Mineral Resource for
which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence
is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource must not be converted
to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated
Mineral Resources with continued exploration.
However, due to the uncertainty that may be attached to Inferred Mineral
Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured
Mineral Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application
of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure. Inferred Mineral
Resources must be excluded from estimates forming the basis of feasibility or other economic studies.
Indicated Mineral Resource
An “Indicated Mineral Resource” is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of
the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered
through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably assumed. Mineralization may be classified as an Indicated Mineral Resource
by the Qualified Person when the nature, quality, quantity and distribution of data are such as to allow confident interpretation
of the geological framework and to reasonably assume the continuity of mineralization. The Qualified Person must recognize the
importance of the Indicated Mineral Resource category to the advancement of the feasibility of the project. An Indicated Mineral
Resource estimate is of sufficient quality to support a Preliminary Feasibility Study which can serve as the basis for major development
decisions.
Measured Mineral Resource
A “Measured Mineral Resource” is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they
can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration,
sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough to confirm both geological and grade continuity. Mineralization or other natural
material of economic interest may be classified as a Measured Mineral Resource by the Qualified Person when the nature, quality,
quantity and distribution of data are such that the tonnage and grade of the mineralization can be estimated to within close limits
and that variation from the estimate would not significantly affect potential economic viability. This category requires a high
level of confidence in, and understanding of, the geology and controls of the mineral deposit.
Mineral Reserve
Mineral Reserves are sub-divided in order of increasing confidence into
Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven
Mineral Reserve.
A Mineral Reserve is the economically mineable part of a Measured or
Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information
on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic
extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material
is mined. Mineral Reserves are those parts of Mineral Resources which, after the application of all mining factors, result in an
estimated tonnage and grade which, in the opinion of the Qualified Person(s) making the estimates, is the basis of an economically
viable project after taking account of all relevant processing, metallurgical, economic, marketing, legal, environment, socio-economic
and government factors. Mineral Reserves are inclusive of diluting material that will be mined in conjunction with the Mineral
Reserves and delivered to the treatment plant or equivalent facility. The term “Mineral Reserve” need not necessarily
signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify
that there are reasonable expectations of such approvals.
Probable Mineral Reserve
A “Probable Mineral Reserve” is the economically mineable
part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility
Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors
that demonstrate, at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve
A “Proven Mineral Reserve” is the economically mineable
part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified. Application of the Proven Mineral Reserve category implies that the Qualified Person has
the highest degree of confidence in the estimate with the consequent expectation in the minds of the readers of the report. The
term should be restricted to that part of the deposit where production planning is taking place and for which any variation in
the estimate would not significantly affect potential economic viability.
CAUTIONARY NOTE TO U.S. INVESTORS REGARDING MINERAL RESOURCE AND MINERAL
RESERVE ESTIMATES
As used in this Annual Report on Form 20-F, the terms “Mineral
Reserve,” “Proven Mineral Reserve” and “Probable Mineral Reserve” are Canadian mining terms defined
in accordance with NI 43-101 and the CIM Standards. These definitions differ from the definitions in SEC Industry Guide 7 under
the U.S. Securities Act. Under SEC Industry Guide 7, a reserve is defined as that part of a mineral deposit which could be economically
and legally extracted or produced at the time the reserve determination is made. The terms “Mineral Resource,” “Measured
Mineral Resource,” “Indicated Mineral Resource” and “Inferred Mineral Resource” are defined in and
required to be used by NI 43-101. However, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted
to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that all, or any part,
of a mineral deposit in these categories will ever be converted into reserves. “Indicated Mineral Resource” and “Inferred
Mineral Resource” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and
legal feasibility. It cannot be assumed that all, or any part, of an Indicated Mineral Resource or an Inferred Mineral Resource
will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis
of Feasibility or Preliminary Feasibility studies, except in rare cases. Investors are cautioned not to assume that all, or any
part, of an Inferred Mineral Resource exists or is economically or legally mineable. Disclosure of “contained ounces”
in a resource is permitted disclosure under Canadian regulations. However, the SEC normally only permits issuers to report mineralization
that does not constitute “reserves” by SEC standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this Annual Report on Form 20-F and the exhibits filed herewith or incorporated by reference
herein contain descriptions of mineral deposits that may not be comparable to similar information made public by U.S. companies
subject to the reporting and disclosure requirements under U.S. federal securities laws and the rules and regulations promulgated
thereunder. Further, the term “mineralized material” as used in this Annual Report on Form 20-F does not indicate “reserves”
by SEC standards. We cannot be certain that mineralized material will ever be confirmed or converted into SEC Industry Guide 7
compliant "reserves". Investors are cautioned not to assume that mineralized material will ever be confirmed or converted
into reserves or that mineralized material can be economically or legally extracted.
Conversion Table
Metric / Imperial
1.0 millimeter (mm) = 0.039 inches (in)
1.0 meter (m) = 3.28 feet (ft)
1.0 kilometer (km) = 0.621 miles (mi)
1.0 hectare (ha) = 2.471 acres (ac)
1.0 gram (g) = 0.032 troy ounces (oz)
1.0 metric tonne (t) = 1.102 short tons (ton)
1.0 g/t = 0.029 oz/ton
Unless otherwise indicated, all dollar ($) amounts referred to herein
are in Canadian dollars.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements contained in this Annual Report on Form 20-F of Almaden Minerals
Ltd. (“Almaden” or the “Company”), and the exhibits attached hereto that are not historical facts are forward-looking
statements within the meaning of U.S. and Canadian securities legislation and the U.S. Private Securities Litigation Reform Act
of 1995 that involve risks and uncertainties.
Such forward-looking statements include, but are not limited to, statements
regarding the permitting review process for the Ixtaca project and the outcome of legal actions in Mexico that are based on assumptions
about: the permitting and legal regimes in Mexico; economic and political conditions; success of exploration, development and environmental
protection and remediation activities; the Company’s belief that Ixtaca will, long after final closure, make meaningful and
enduring positive contributions to surrounding communities and beyond, the Company’s expectation that the project would employ
over 400 people over an 11-year mine life and would also provide updated infrastructure to the region, the impact of the project's
proposed dry-stack tailing facilities, the Company’s belief that the Ixtaca deposit can be an economically robust project
that could provide the basis for further investment in the area. These statements relate to analyses and other information that
are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning
Mineral Reserve and Mineral Resource estimates may also be deemed to constitute forward-looking statements to the extent that they
involve estimates of the mineralization that will be encountered if a property is developed, and in the case of Mineral Reserves,
such statements reflect the conclusion based on certain assumptions that the mineral deposit can be economically exploited. Any
statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does
not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”,
“estimates” or “intends”, or stating that certain actions, events or results “may”, “could”,
“would”, “might” or “will” (or the negative and grammatical variations of any of these terms
and similar expressions) be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements.
Forward-looking statements and forward-looking information are based, in part, on assumptions and factors that may change and are
subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results, performance
or achievements of the Company to differ materially from those expressed or implied by the forward-looking statements and forward-looking
information. Some of the important risks, uncertainties and other factors that could affect forward-looking statements and forward-looking
information include, but are not limited to, those described further in the sections entitled “ITEM 3. KEY INFORMATION -
Risk Factors”, “ITEM 4. INFORMATION ON THE COMPANY - Business Overview”, “ITEM 4. INFORMATION ON THE COMPANY
– Principal Property Interests” and “ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS” and in the exhibits
attached to this Annual Report on Form 20-F. Should one or more of these risks, uncertainties and other factors materialize, or
should underlying assumptions prove incorrect, actual results may vary materially from those described in the Company’s forward-looking
statements or forward-looking information. There can be no assurance that forward-looking statements will prove to be accurate,
as actual results and future events could differ materially from those anticipated in such statements and information. The forward-looking
statements and forward-looking information are based on beliefs, expectations and opinions of the Company’s management on
the date of this Annual Report on Form 20-F and speak only as of the date hereof and the Company does not undertake any obligation
to publicly update forward-looking statements or forward-looking information contained herein to reflect events or circumstances
after the date hereof, except as required by law. For the reasons set forth above, investors should not place undue reliance on
forward-looking statements.
Forward-looking statements and other information contained herein concerning
the mining industry and the Company’s expectations concerning the mining industry are based on estimates prepared by the
Company using data from publicly available sources as well as from market research and industry analysis and on assumptions based
on data and knowledge of this industry which the Company believes to be reasonable. However, this data is inherently imprecise,
although generally indicative of relative market positions, market shares and performance characteristics. While the Company is
not aware of any misstatements regarding any mining industry data presented herein, the industry involves risks and uncertainties
and is subject to change based on various factors.
Certain historical and forward-looking information contained in this
Annual Report on Form 20-F has been provided by, or derived from information provided by, certain persons other than the Company.
Although the Company does not have any knowledge that would indicate that any such information is untrue or incomplete, the Company
assumes no responsibility for the accuracy and completeness of such information or the failure by such other persons to disclose
events which may have occurred or may affect the completeness or accuracy of such information, but which is unknown to the Company.
Please consult the Company’s public filings at www.sec.gov for
further, more detailed information concerning these matters.
PART I
Item 1. Identity of Directors, Senior Management and Advisors
Not applicable
Item 2. Offer Statistics and Expected Timetable
Not applicable
Item 3. Key Information
The following selected financial data of the Company for Fiscal 2019,
Fiscal 2018 and Fiscal 2017 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 2016 and Fiscal 2015 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
|
Year
|
Year
|
Year
|
Year
|
|
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
|
12/31/2019
|
12/31/2018
|
12/31/2017
|
12/31/2016
|
12/31/2015
|
Revenues
|
$ -
|
$ -
|
$ -
|
$ -
|
$ -
|
Other Income (loss)
|
678
|
1,190
|
468
|
444
|
2,711
|
Net loss and comprehensive loss
|
(3,763)
|
(3,512)
|
(5,231)
|
(4,024)
|
(1,145)
|
Basic net (loss) income per common share
|
(0.03)
|
(0.03)
|
(0.05)
|
(0.05)
|
(0.02)
|
Diluted net (loss) income per common share
|
(0.03)
|
(0.03)
|
(0.05)
|
(0.05)
|
(0.02)
|
Weighted average shares (000)
|
111,727
|
107,584
|
95,873
|
82,323
|
73,249
|
Working capital
|
1,748
|
4,357
|
16,065
|
9,293
|
5,808
|
Exploration and evaluation assets
|
56,973
|
54,678
|
44,804
|
35,985
|
30,538
|
Net assets
|
68,585
|
71,365
|
64,730
|
45,221
|
35,983
|
Total assets
|
74,064
|
73,928
|
66,803
|
47,514
|
38,215
|
Capital stock
|
127,022
|
127,022
|
118,054
|
95,290
|
83,758
|
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 31st, the average rates for the period, the range of
high and low rates and the close for the period. Table No. 3 sets forth the range of high and low rates for each month during the
previous six months. For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers
in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number
of Canadian Dollars required under that formula to buy one U.S. Dollar. The average rate means the average of the exchange rates
on the last day of each month during the period.
Table No. 2
Canadian Dollar/U.S. Dollar Exchange Rates for Five Most Recent Financial
Years
|
Average
|
High
|
Low
|
Close
|
Fiscal Year Ended 12/31/2019
|
$1.33
|
$1.36
|
$1.30
|
$1.30
|
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
|
|
|
|
|
|
Table No. 3
Canadian Dollar/U.S. Dollar Exchange Rates for Previous Six Months
|
September
2019
|
October
2019
|
November
2019
|
December
2019
|
January
2020
|
February
2020
|
High
|
$1.33
|
$1.33
|
$1.33
|
$1.33
|
$1.32
|
$1.34
|
Low
|
1.32
|
1.31
|
1.31
|
1.30
|
1.30
|
1.32
|
The exchange rate was CDN$1.41/US$1.00 on March 26, 2020.
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 $3,763,075 in Fiscal 2019, $3,511,667 in Fiscal 2018, and $5,231,295 in Fiscal 2017.
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 2019, 2018 and 2017, the Company earned interest income and other income from Administrative
service fees charged to Azucar Minerals Ltd. (“Azucar”) and, during Fiscal 2019 and 2018, the Company earned other
income from Administrative service fees charged to Almadex Minerals Ltd. (“Almadex”).
At December 31, 2019, the Company had working capital of $1,748,508
including cash and cash equivalents of $912,214. 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 2020 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 2020, 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 if it is available, may not be on favorable 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 26, 2020, there were share purchase options outstanding
allowing the holders of these options to purchase 11,137,000 shares of the Company’s common stock and warrants allowing the
holders of these warrants to purchase 10,341,350 shares of the Company’s common stock. Directors and officers of the Company
in the aggregate hold 9,287,000 of these share purchase options and 12,500 of these warrants. An additional 1,850,000 share purchase
options are held by employees and consultants of the Company. Given the fact that as of March 26, 2020 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 Company’s exploration activities are subject to extensive
federal, provincial, state and local laws and regulations governing prospecting, development, production, exports, taxes, labour
standards, occupational health and safety, mine safety and other matters in all the jurisdictions in which it operates. These laws
and regulations are subject to change, can become more stringent and compliance can therefore become more costly. These factors
may affect both the Company’s ability to undertake exploration and development activities in respect of future properties
in the manner contemplated, as well as its ability to continue to explore, develop and operate those properties in which it currently
has an interest or in respect of which it has obtained exploration and development rights to date. The Company applies the expertise
of its management, advisors, employees and contractors to ensure compliance with current laws and relies on its land men and legal
counsel in both Mexico and Canada.
Failure to comply with applicable laws and regulations may result
in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities enjoining,
curtailing or closing operations or requiring corrective measures, installation of additional equipment or remedial actions, any
of which could result in the Company incurring significant expenditures. The Company may also be required to compensate private
parties suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible
that future laws and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities,
could cause additional expense, capital expenditures, restrictions on or suspensions of our operations and delays in the exploration
and development of Ixtaca.
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 Mexico 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.
Risks related to International Labour Organization (“ILO”) Convention 169
Compliance
The Company may, or may in the future, operate in areas presently or
previously inhabited or used by indigenous peoples. As a result, the Company’s operations are subject to national and international
laws, codes, resolutions, conventions, guidelines and other similar rules respecting the rights of indigenous peoples, including
the provisions of ILO Convention 169. ILO Convention 169 mandates, among other things, that governments consult with indigenous
peoples who may be impacted by mining projects prior to granting rights, permits or approvals in respect of such projects.
ILO Convention 169 has been ratified by Mexico. It is possible however
that Mexico may not (i) have implemented procedures to ensure their compliance with ILO Convention 169 or (ii) have complied with
the requirements of ILO Convention 169 despite implementing such procedures.
Government compliance with ILO Convention 169 can result in delays and
significant additional expenses to the Company arising from the consultation process with indigenous peoples in relation to the
Company’s exploration, mining or development projects. Moreover, any actual or perceived past contraventions, or potential
future actual or perceived contraventions, of ILO Convention 169 by ratifying governments in the countries in which the Company
operates create a risk that the permits, rights, approvals, and other governmental authorizations that the Company has relied upon,
or may in the future rely upon, to carry out its operations or plans in such countries could be challenged by or on behalf of indigenous
peoples in such countries.
Such challenges may result in, without limitation, additional expenses
with respect to the Company’s operations, the suspension, revocation or amendment of the Company’s rights or mining,
environmental or export permits, a delay or stoppage of the Company’s development, exploration or mining operations, the
refusal by governmental authorities to grant new permits or approvals required for the Company’s continuing operations until
the settlement of such challenges, or the requirement for the responsible government to undertake the requisite consultation process
in accordance with ILO Convention 169.
As a result of the inherent uncertainty in respect of such proceedings,
the Company is unable to predict what the results of any such challenges would be; however, any ILO Convention 169 proceedings
relating to the Company’s operations in Mexico may have a material adverse effect on the business, operations, and financial
condition of the Company.
As a result of social media and other web-based applications, companies today are at much
greater risk of losing control over how they are perceived
Damage to the Company’s reputation can be the result of the actual
or perceived occurrence of any number of events, and could include any negative publicity, whether true or not. Although the Company
places a great emphasis on protecting its image and reputation, it does not ultimately have direct control over how it is perceived
by others. Reputation loss may lead to increased challenges in developing and maintaining community relations, decreased investor
confidence and act as an impediment to the Company’s overall ability to advance its projects, thereby having a material adverse
impact on the Company’s business, financial condition or results of operations.
The Company may be subject to legal proceedings that arise in the ordinary course of business
Due to the nature of its business, the Company may be subject to regulatory
investigations, claims, lawsuits and other proceedings in the ordinary course of its business. The Company’s operations are
subject to the risk of legal claims by employees, unions, contractors, lenders, suppliers, joint venture partners, shareholders,
governmental agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other
litigation. Plaintiffs may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating
to such lawsuits may remain unknown for substantial periods of time. Defense and settlement costs can be substantial, even with
respect to claims that have no merit. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty
inherent in litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty
of predicting decisions of judges and juries and the possibility that decisions may be reversed on appeal. The litigation process
could, as a result, take away from the time and effort of the Company’s management and could force the Company to pay substantial
legal fees or penalties. There can be no assurances that the resolutions of any such matters will not have a material adverse effect
on the Company’s business, financial condition and results of operations.
Title to mineral properties
While the Company has investigated title to its mineral properties,
this should not be construed as a guarantee of title. The properties may be subject to prior unregistered agreements or transfers
and title may be affected by undetected defects. Title to Almaden’s mining concessions may also be adversely affected by
the Amparo as discussed on page 78 under the heading “Legal Proceedings”.
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 additional disputes. The procurement
or enforcement of such rights, or any dispute with respect to 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, this could have a material adverse effect
on the Company and the Company may need to rely on the assistance of local officials or the courts in such jurisdictions or pursue
other alternatives, which may suspend, 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.
Environmental
The Company’s exploration and development activities are subject
to extensive laws and regulations governing environment protection. The Company is also subject to various reclamation-related
conditions. 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 Ixtaca. 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.
There can also be no assurance that closure estimates prove to be accurate.
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. 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 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.
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 T. Brown,
William Worrall, Douglas McDonald, and Korm Trieu also serve as directors and/or officers of Azucar Minerals Ltd. and Almadex Minerals
Ltd. Gerald Carlson also serves as director and as the President and CEO of Pacific Ridge Exploration Ltd. Mark T. 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 as a director of Avrupa Minerals Ltd., Mountain Boy Minerals, East West Petroleum Corp., and Strategem
Capital Corp. He is also a Director and CEO of Mich Resources Ltd. Elaine Ellingham also serves as a director of Alamos Gold Inc.
and Blue Thunder Mining Inc. 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, a majority 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.
Item 4. Information on the Company
History and Development of the Company
The head office of the Company is located at 1333 Johnston Street, Suite
210, Vancouver, British Columbia, Canada, V6H 3R9. The registered and records office of the Company is 1177 West Hastings Street,
Suite 1710, Vancouver, British Columbia, Canada, V6E 2L3.
The contact person is Korm Trieu, Chief Financial Officer. The telephone
number is (604) 689-7644. The fax number is (604) 689-7645. The email address is ktrieu@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 (direct or indirect) subsidiaries. These subsidiaries are:
Subsidiaries
|
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
|
Business of the Company
The Company is engaged in the business of the acquisition, exploration
and when warranted, development of mineral properties. The Company currently has material property interests in Mexico. The Company's
property interests are at the exploration and development stage. The Company has not generated any revenues from operations.
Corporate Reorganization
The Company entered into an Arrangement Agreement dated May 11, 2015
involving the spinout, pursuant to a statutory Plan of Arrangement, of Almaden’s early stage exploration projects, royalty
interests and other non-core assets into a new public company called Azucar (formerly Almadex Minerals Limited), which trades on
the TSX Venture Exchange under the symbol “AMZ” and the OTCQX marketplace under the symbol “AXDDF”, pursuant
to which Azucar acquired the following key assets:
-
a 100% interest in the El Cobre copper-gold porphyry exploration project in Mexico and
the Willow copper-gold porphyry exploration project in Nevada, in addition to a portfolio of 20 other exploration projects;
-
a 2% NSR on the Company’s Tuligtic property in Mexico, which hosts the Company’s
Ixtaca gold-silver development project;
-
a 1.5% NSR on the Caballo Blanco gold deposit in Mexico, a development project operated
by Timmins Gold Corp.;
-
a 2% NSR on the Elk gold deposit in Canada, an advanced exploration project operated
by JDL Gold Corp. (formerly Gold Mountain Mining Corp.);
-
a portfolio of 21 additional NSRs on exploration projects in Mexico, Canada and the
United States identified through the Company’s past prospect generator activities;
-
equity holdings in several publicly-listed companies;
-
1,597 ounces of gold bullion; and
-
approximately $3 million in cash.
On July 31, 2015, all conditions to the statutory Plan of Arrangement
regarding the spinout were satisfied or waived and the spinout was effective. Almaden’s shareholders approved the Plan of
Arrangement and exchanged their existing common shares of Almaden for one “new” Almaden common share and 0.6 common
share of Azucar.
The Company entered into an Administrative Services Agreement with Azucar
dated May 15, 2015, as amended by First Amending Agreement dated December 16, 2015 (the “Agreement”). Under the Agreement,
the Company is the sole and exclusive manager of Azucar, and provides Azucar with general management services and day-to-day operation
of Azucar. These services include:
-
Office space;
-
Executive personnel and human resources;
-
Geological technical support; and
-
Accounting and financial services.
Azucar compensates the Company 40% (2018 – 30%) of the Company’s
actual monthly cost of rent for any shared facilities, and 40% (2018 – 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”).
Consequent upon this corporate reorganization the Company entered into an Administrative Services Agreement with Almadex dated
March 29, 2018 (the “Almadex Agreement”). Under the Almadex Agreement, the Company is the sole and exclusive manager
of Almadex, and provides Almadex with general management services and day-to-day operation of Almadex. These services include:
-
Office space;
-
Executive personnel and human resources;
-
Geological technical support; and
-
Accounting and financial services.
Almadex compensates the Company 20% of the Company’s actual monthly
cost of rent for any shared facilities, and 20% of any shared personnel’s fees and/or wages. Almadex pays the Company any
reasonable fees or costs incurred on behalf of Almadex by the Company which were approved by Almadex.
Both the Agreement and the Almadex Agreement (together, the “Administrative
Services Agreements”) have initial 5-year terms, with subsequent automatic 1-year renewals unless terminated pursuant to
the terms permitted under the Administrative Services Agreements. The Administrative Services Agreements include a Change of Control
clause. If either party is subject to a Change of Control during the term of the respective Administrative Services Agreement,
the Administrative Services Agreement shall automatically terminate within 48 hours of the Change of Control unless agreed to in
writing by both parties. The target of the Change of Control shall then pay the other party $2 million as compensation for the
unplanned termination of the Company’s engagement and significant disruption to the other party’s business. “Change
of Control” means the date upon which, without the written concurrence of the target of the Change of Control, any person
(as that term is defined in the Securities Act (British Columbia)) makes and does not withdraw a take-over bid (as that
term is defined in the Securities Act (British Columbia)) or acquires, directly or indirectly, that number of common shares
of the target which equals or exceeds twenty percent (20%) of the then issued common shares of the target.
Business Overview
Maintaining properties
The following is a general statement about government requirements for
holding mineral properties in the jurisdictions where the Company currently holds material mineral property interests.
In Mexico, mining law is a federal matter. The government requires annual
assessment work and expenditures per hectare which increase with the size and age of the claim. Under the tax reforms effective
January 1, 2014, if a concession holder has not conducted exploration or exploitation activities during a two-year period, the
concession holder would have to pay an additional 50% of the taxes payable per hectare if within the last 11 years, and an additional
100% of the taxes payable if after year 12. Land taxes per hectare also have to be paid by January 31 and July 31 each year. Both
amounts are subject to inflation accounting and the inflation adjustment number for each fiscal period is published in the official
gazette. Under the Mexican Constitution and the mining and environmental laws of Mexico, all mining projects are subject to Federal
legal control. This control is exercised from the exploration phase through the closure phase of a mining project. Prior to the
initiation of exploration activities, concession owners are required to file a notice of commencement of exploration activities
in conformity with Mexican Official Norm 120 (NOM-120); prior to initiation of construction activities (and also in some more intrusive
exploration activities), mining projects are required to apply for and obtain an 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 drill 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 Core Box 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 drill 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 Xicohtencatl Industrial complex lies 30 km southwest
by paved road from the Ixtaca Project, and houses agricultural, chemical, biomedical and industrial manufacturing facilities and
is serviced by rail. Puebla, the fourth largest city in Mexico has a population in excess of 4 million people, and includes one
of the largest Volkswagen automotive plants outside Germany.
The Topography on
the Tuligtic Property is generally moderate to steep hills with incised stream drainages. Elevation ranges from 2,300 meters (m)
above sea level in the south to 2,800 m in the north. Vegetation is dominantly cactus and pines and the general area is also somewhat
cultivated with subsistence vegetables, bean and corn crops. The Ixtaca Zone exploration area has been previously cleared and logged.
The region has a temperate climate with mean monthly temperatures ranging from 16°C in June to 12°C in January. The area
experiences approximately 714 mm of precipitation annually with the majority falling during the rainy season, between June and
September. Annual evapotranspiration is estimated to be 774 mm. Exploration can be conducted year round within the Tuligtic Property;
however, road building and drilling operations may be impacted by weather to some degree during the rainy season. Electricity is
available on the Tuligtic Property from the national electricity grid that services nearby towns such as Santa Maria and Zacatepec.
The surface rights locally are privately owned and Almaden has negotiated voluntary surface land use agreements with surface landowners
within the exploration area prior to beginning activities. To date Almaden has secured through purchase agreements over 1,139 hectares,
from numerous independent owners.
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 (the “Original Concessions”), as shown below:
Claim Name
|
Claim Number
|
Area (hectares)
|
Valid Until Date
|
Cerro Grande
|
219469
|
11,202
|
March 5, 2053
|
Cerro Grande 2
|
233434
|
3,028
|
February 23, 2059
|
Total
|
|
14,230
|
|
On April 7, 2015, Ejido Tecoltemi, a community granted communal agrarian
lands by the Mexican Government and whose lands (the “Ejido Lands”) overlap a small portion (~330 Ha) of the far southeastern
corner of the Original Concessions, initiated legal proceedings (the “Amparo”) in a lower court in Puebla state against
Mexican mining authorities seeking a declaration that Mexico’s mineral title system is unconstitutional because indigenous
consultation is not required before the granting of mineral title.
Shortly after the Amparo was filed, the lower court ordered the suspension
of Almaden from conducting exploration and exploitation work over those portions of the Original Concessions which overlap with
the Ejido Lands. Mineral tenure over the Ejido Lands is not material to Almaden. The Ejido Lands do not overlap the Ixtaca Project
or its environmental or social area of impact. Almaden has never tried to negotiate access to the Ejido Lands, never conducted
exploration work on the Ejido Lands, and has no interest in conducting any future exploration or development work over the Ejido
Lands.
Later in 2015, Almaden filed applications to reduce the aggregate claim
size at Tuligtic to those areas still considered prospective (the “New Concessions”), as shown below, and cancel
any of its claims overlapping the Ejido Lands. The applicable Mexican mining authorities issued the New Concessions and accepted
the abandonment of the Original Concessions in May and June of 2017.
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
|
|
In June 2017, the Ejido Tecoltemi filed a legal complaint regarding
the granting of the New Concessions, and on February 1, 2018, the court reviewing the complaint ruled the Ejido’s complaint
was founded.
On December 21, 2018, the General Directorate of Mines issued a resolution
that the New Concessions are left without effect, and the Original Concessions are in full force and effect. On February 13, 2019,
the General Directorate of Mines delivered, to the court hearing the Amparo, mining certificates stating that the Original Concessions
are valid, and the New Concessions are cancelled.
On April 15, 2019, the lower court in Puebla State ruled that Mexico’s
mineral title system is unconstitutional. The Original Concessions were ruled to be illegal, but the mineral rights over that land
were ordered to be held for Almaden until such time as indigenous consultation can be completed.
The Company is currently appealing this and other related rulings in
Mexico. The opinion of the Company’s Mexican counsel is that the New Concessions remain in full force and effect. Almaden
continues to file taxes and assessment reports on the basis that it owns the New Concessions, which have been accepted by the Mexican
mining authorities, and Almaden has not received any notifications from the Mexican mining authorities regarding unpaid taxes on
the Original Concessions. However, at the current time applicable Mexican mining authority records show the Original Concessions
as Almaden’s sole mineral claims to the Ixtaca Project.
It is important to note that the Original Concessions provide Almaden
with the same exploration and mining rights over the Company’s Ixtaca Project as the New Concessions. Further information
on this matter, as well as the lawsuit (“Amparo”) relating to the Original Concessions, is provided in “Legal
Proceedings”.
The claims owned by Almaden with respect to the Property are 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.
To maintain a claim in good standing, the holder is required to meet
annual exploration or exploitation expenditure requirements. Currently, based on the New Concessions, 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. An update to the FS was filed on SEDAR and EDGAR on
October 3, 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 16th 2018). Product from the secondary crusher will be screened in to coarse (+20mm),
mid-size (12 to 20 mm), and fine (-12mm) fractions. Coarse and mid-size ore will be sorted by an XRT ore sort machine to eject
waste rock. Fine ore will bypass the ore sorting and is sent directly to the mill.
Ore sort waste from Limestone and Black Shale is below waste/ore cutoff
grade and is placed in the waste rock dump. Ore sort ‘waste’ from the Volcanic unit is low grade ore and will be stockpiled
for processing later in the mine life. Ore sorting pre-concentration increases the mill feed gold and silver grades by 32% and
31% respectively compared to run of mine (ROM) grades. The table below shows ROM grades with ore sort waste removed from the ROM,
and the resulting mill feed.
Ore Sort Mill Feed grade improvement
|
|
ROM
|
Ore 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 SO2/Air process. Final tailings are thickened and filtered then dry stacked and co-disposed with mine
waste rock.
Average process recoveries from mill feed to final product over the
life of mine are summarized below for each ore type.
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 were 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 June 25, 2019, the most recent large-scale community meeting hosted by the Company was attended by
over 2,000 people, including representatives of the State and Federal Governments 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 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. As noted in the Company’s press release
of October 29, 2019, the environmental permit review has been suspended by Mexican environmental 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 presently focused
on permitting activities at Ixtaca, having submitted its environmental permit application (“MIA”) in early 2019. In
October, 2019, the Company announced that SEMARNAT, Mexico’s environmental authority, had suspended their review of the
Company’s MIA pending resolution of the Amparo (see section “Legal Proceedings”). The Company is currently pursuing
a solution to this suspension through the Courts and directly with SEMARNAT.
Upcoming / Outlook
Almaden has sufficient cash on hand to conduct its anticipated
work program for the next fiscal year. Continuing work at Ixtaca will be focused on resolving the suspension of the MIA permit
review by SEMARNAT.
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, 2019, 2018, and 2017 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 or 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 40% (2018 – 30%) and 20% (2018 – 20%), respectively, of the Company’s actual monthly
overhead costs including any shared personnels’ fees and/or wages. Azucar and Almadex also pay the Company any reasonable
fees or costs incurred on their behalf by the Company which were approved by Azucar or Almadex, respectively. 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 respective 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 Agreement, that 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 2019 compared to Fiscal 2018
For the year ended December 31, 2019 (“Fiscal 2019”),
the Company recorded a comprehensive loss of $3,763,075 or $0.03 per common share compared to a comprehensive loss of $3,511,667
or $0.03 per common share for the year ended December 31, 2018 (“Fiscal 2018”). The increase of $251,408 was primarily
a result of an increase in impairment of exploration and evaluation assets of $501,620 from concession taxes paid on dropped claims
from the Tuligtic property and finance fees of $204,231 due to project financing efforts. These expenses were offset by $375,620
decrease in share-based payments due to a lower share price and a $243,796 decrease in salaries and benefits as no cash bonuses
were paid or accrued in 2019.
Because the Company is an exploration company, it has no revenue from
mining operations. Other income of $677,954 (Fiscal 2018 - $1,190,068) during Fiscal 2019, consisted primarily of interest income
earned on its cash balances of $41,650 (Fiscal 2018 - $164,435) and income from administrative services fees earned from Azucar
of $639,320 (Fiscal 2018 - $542,657), and from Almadex of $320,093 (Fiscal 2018 - $243,260). The Company has an administrative
services agreement with these two companies whereby overhead and salaries expenses are proportionally allocated as described under
the heading “Transactions with Related Parties”.
Operating expenses were $4,441,029 during Fiscal 2019 (Fiscal
2018 - $4,701,735). Certain operating expenses were reported on a gross basis and recovered through other income from the administrative
services agreements with Azucar and Almadex. The decrease in operating expenses of $260,706 is mainly due a decrease in share-based
payments relating to lower share price in calculating the fair value from stock options granted of $375,620 and a decrease in salaries
and benefits of $243,796 due to no bonuses awarded in 2019. Operating expenses increased in the area of finance related activities
such as the gold loan transaction with Almadex that resulted in an increase in arrangement fee of $50,000 and an increase in finance
cost of $216,918 from reviewing project development financing alternatives.
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.
Liquidity and Capital Resources
As at December 31, 2019, the Company’s working capital position
was $1,748,508. 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 2020 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, but the Company may decide to raise
additional funds through the sale of equity in fiscal 2020 depending upon favorable market conditions.
During fiscal 2019, the Company filed a preliminary short-form base
shelf prospectus in certain jurisdictions of Canada and a corresponding Form F-10 Registration Statement with the SEC. A final
short-form base shelf prospectus was never filed and therefore the Form F-10 Registration Statement is not in effect. The Company
may determine to file a preliminary short-form base shelf prospectus in the future depending on timing and market conditions, but
currently has no specific plans to do so.
On March 10, 2020, the Company announced a proposed non-brokered private
placement of 4,900,000 common shares units at a price of $0.41 per unit for gross proceeds of $2,009,000. Each unit would consist
of one common share and one non-transferable common stock warrant. Each warrant will entitle the holder to purchase one common
share of the Company at a price of $0.65 per share for 3 years following the closing of the placement. Subsequently, on March 19,
2020, the Company announced a re-pricing of the proposed non-brokered private placement to amend terms of the offering as follows:
|
·
|
The purchase price of the Units of the Offering has been reduced from $0.41 to $0.37 per Unit.
|
|
·
|
The exercise price of each share purchase Warrant has been reduced from $0.65 to $0.50.
|
|
·
|
The size of the Offering has been increased from up to 4,900,000 Units to up to 5,400,000 Units,
which may be increased.
|
All other material terms of the previously announced Offering remain
the same. Closing of the placement is anticipated to be on or about March 27, 2020 and is subject to market conditions and receipt
of applicable regulatory approvals.
Fiscal 2019
At the end of Fiscal 2019, the Company had working capital of $1,748,508
including cash and cash equivalents of $912,214 compared to working capital of $4,356,589 including cash and cash equivalents of
$5,080,580 at the end of Fiscal 2018. The decrease in working capital of $2,608,081 is mainly due to the cash balances used for
expenditures in exploration and evaluation assets and corporate affairs.
The Company has long term liabilities of $4,577,916 at the end of Fiscal
2019 compared to $1,434,882 at the end of Fiscal 2018 that relates to deferred income tax liability from the Mexican income tax
and Special Mining Duty associated with the Ixtaca project. Other components of long-term liabilities relate to long-term portion
of lease liabilities of $170,731, gold loan payable of $2,541,338 and derivative financial liabilities of $430,965.
On May 14, 2019, the Company entered into a secured gold loan agreement
with Almadex which provides access to approximately $3 million, with only minor dilution to shareholders. With this additional
cash, Management believes that the Company’s cash resources are sufficient to meet its minimum working capital for its next
fiscal year.
Net cash used in operating activities during Fiscal 2019, was $1,892,325
(Fiscal 2018 - $1,919,921), after adjusting for non-cash activities.
Net cash used in investing activities during Fiscal 2019, was $3,751,770
(Fiscal 2018 - $18,171,752). Significant items include expenditures on exploration and evaluation assets of $3,324,173 (Fiscal
2018 - $9,674,048) mainly to complete the feasibility study and start its development activities in Mexico.
Net cash from financing activities during Fiscal 2019, was $1,475,729
(Fiscal 2018 - $8,837,719) as a result of net proceeds of gold in trust.
Management estimates that the current cash position and potential future
cash flows will be sufficient for the Company to carry out its business plans for the upcoming year. Management is sourcing project
financing options to advance the Ixtaca project during its development stage.
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.
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.
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 the latter part of 2019, the prices of gold and silver began
to firm up although not without sudden sharp moves both up and down. More significant price action really started after year end
and continues at the time of writing with a general upward trend in the prices of both metals. Volatility is against a background
of Central Banks lowering interest rates but with little room to lower them further. Countries around the world have accumulated
massive debts even during good times and further stimulus from deficit spending seems far less effective than in the past. Consumers
have accumulated a lot of debt because of low interest rates and the likelihood that more consumer spending can bail everything
out appears low. The brutal fighting in Syria and the massive refugee exodus towards Europe along with civic unrest in many countries
have shaken confidence in the ability of governments and international bodies to deal with crises.
Against this background, we now have the turmoil resulting from the
progression of the COVID-19 Coronavirus pandemic crisis. It is impossible to say how far this may go, but the effects are already
drastic. World trade is sharply down, oil prices are have collapsed and stock indexes are plunging. Situations where all these
things are happening together are the classic reason for owning gold and silver as preservers of savings and value; nevertheless,
even the values of precious metals and the securities of companies engaged in their exploration, development and production are
not immune to the repercussions that have resulted from the crisis.
Because of difficult financial conditions around the world, mining exploration
has suffered and much resource development (including Almaden’s) has been held up by opposition from local anti-development
activists, with many supported by financing from wealthy groups and Non-Government Organizations (“NGO’s”) located
primarily in developed nations in North America and Europe. In many cases this opposition is starting to be seen as unreasonable
and against the interests of the local people as well as the countries themselves. Nevertheless, the demand and need for precious
and other metals will continue to grow. The reserves of known deposits are being depleted and the need for replacement is rising.
There are fewer advanced projects in the pipeline, and management anticipates that their value will come to be recognized by both
investors and the jurisdictions where they occur.
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 effective April 1, 2017 through to March 31, 2022. The Company has government
requirements in work and/or taxes to maintain claims held. The decision to keep or abandon such claims is not contractual but at
the discretion of the Company.
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
|
|
$431,932
|
$191,512
|
$240,420
|
-
|
-
|
|
|
|
|
|
|
|
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 40% (2018 – 30%) of any shared personnel
remuneration and office overhead expenses, while Almadex compensates the Company 20% (2018 – 20%) of any shared personnel
remuneration and office overhead expenses. Therefore, Almaden currently recovers 60% (2018 – 50%) of the contractual compensation
amounts for the Chairman, Chief Executive Officer, Chief Financial Officer and Vice President, Corporate Development.
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; and
|
|
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,
warrants, and derivative financial liabilities 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 property
plan and equipment and related determination of the net realizable value and write-down of those assets where applicable;
|
|
o
|
The estimated incremental borrowing rate used to calculate the lease liabilities;
|
|
o
|
The estimated fair value of gold in trust; and
|
|
o
|
The estimated initial fair value of gold loan payable.
|
Item 6. Directors, Senior Management and Employees
Table No. 5 lists the directors of the Company as of March 26, 2020.
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
|
79
|
February 1, 2002(4)
|
John D. McCleary(2)(3)
|
79
|
February 1, 2002(4)
|
Morgan Poliquin
|
48
|
February 1, 2002(4)
|
Gerald G. Carlson(1)(2)(3)
|
74
|
February 1, 2002(4)
|
Mark T. Brown (1)(3)
|
51
|
May 30, 2011
|
William J. Worrall(1)(2)(3)
|
87
|
May 7, 2013
|
Elaine Ellingham(5)
|
61
|
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
26, 2020. 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
|
79
|
February 1, 2002 (1)
|
Morgan Poliquin
|
President and Chief Executive Officer
|
48
|
March 1, 2007
|
Korm Trieu
|
Chief Financial Officer
|
54
|
May 30, 2011
|
Douglas McDonald
|
Vice-President, Corporate Development
|
51
|
September 22, 2014
|
Laurence Morris
|
Vice-President, Operations & Projects
|
66
|
April 30, 2018
|
John A. Thomas
|
Vice-President, Project Development
|
72
|
September 9, 2019
|
(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. He is 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 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 – Azucar Minerals Ltd., an exploration company listed on the TSX-V.
|
|
c.
|
Director - Almadex Minerals Ltd., an exploration company listed on the TSX-V.
|
|
d.
|
Director – East West Petroleum Corp., an oil and gas company listed on the TSX-V.
|
|
e.
|
Chief Executive Officer and Director – Mich Resources, an exploration company listed on the
CSE.
|
|
f.
|
Chief Financial Officer - Adamera Minerals Corp., an exploration company listed on the TSX-V.
|
|
g.
|
Chief Financial Officer – Redstar Gold Corp., an exploration company listed on the TSX-V.
|
|
h.
|
Chief Financial Officer – Orestone Mining Corp., an exploration company listed on the TSX-V.
|
|
i.
|
Director – Mountain Boy Minerals Ltd., an exploration company listed on the TSX-V.
|
Mr. Brown was formerly a director of Ascent Industries Corp. (formerly
Paget Minerals Ltd.), a company listed on the Canadian Securities Exchange, until February 13, 2019. On March 1, 2019, Ascent industries
Corp. instituted proceedings under the Companies’ Creditors Arrangement Act (Canada). On April 5, 2019, Ascent sold its Canadian
Assets, repaid all liabilities, and has excess cash on hand such that it expects to be discharged from the CCAA process.
Mr. Brown was formerly a director of Sutter Gold Mining Inc. (“SGM”)
until May 21, 2019. On May 6, 2019, SGM received a cease trade order issued by the British Columbia Securities Commission for failure
to file audited financial statements and Management’s Discussion & Analysis for the year ended December 31, 2018. SGM’s
listing on the TSX Venture Exchange remains suspended until SGM meets TSX Venture Exchange’s requirements and upon the revocation
of the cease trade order. On May 17, 2019, pursuant to an order of the Supreme Court of British Columbia, a receiver was appointed
for SGM in order to sell all the assets of SGM and repay the lender.
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 corporate 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 Alamos Gold Inc., Blue Thunder Mining Inc. 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 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 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. He is a Fellow of the Institute of Materials,
Minerals and Mining (IOM3), a voluntary director of the IOM3’s Minerals Technology Division, and an active writer on mining
and environmental matters. He is a registered project manager and a member of the Association of Project Management.
John A. Thomas is a professional engineer, who holds a BSc, an
MSc and a PhD in chemical engineering from the University of Manchester in the United Kingdom. He also received a diploma in accounting
and finance from the U.K. Association of Certified Accountants. He has over 45 years of experience in the mining industry, including
both base metal and precious metal projects in several countries including Brazil, Venezuela, Costa Rica, Russia, Kazakhstan, Canada
and Zambia. His experience covers a wide range of activities in the mining industry from process development, management of feasibility
studies, engineering and management of construction, and operation of mines. He served as VP Projects for Atlantic Gold for six
years during which time he acted as a Qualified Person under NI 43-101 for the construction of the Moose River Consolidated Mine.
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 2019, the Chairman was remunerated at his base salary
of $240,000 per annum, of which he has agreed to defer payment of $64,000, 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 2019, the Chief Financial Officer (“CFO”)
and the Vice President, Corporate Development (“VPCD”) were remunerated at their base salary of $225,000 CAD and $212,000
CAD, respectively. Each of the CFO’s and VPCD’s employment agreements have indefinite terms. The Vice President, Operations
& Projects and Vice President, Project Development were compensated at an annual fee of $178,330 USD and monthly fees of $10,000
CAD, respectively.
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 40% (2018 – 30%) of any shared personnel remuneration and office overhead expenses, while Almadex compensates
the Company 20% (2018 – 20%) of any shared personnel remuneration and office overhead expenses. Therefore, Almaden currently
recovers 60% (2018 – 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 as indicated in Table No. 7 below, no director received any compensation for their 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 2019 was $751,291 (Fiscal 2018 - $1,022,079) after recovery by the Company of
60% (2018 - 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
|
Long-Term Compensation
|
Annual Compensation
|
Awards
|
|
|
|
|
|
Restricted
|
Options/
|
|
|
Name and
|
Fiscal
|
|
|
Other Annual
|
Stock
|
SARS
|
LTIP
|
All Other
|
Principle Position
|
Year
|
Salary
|
Bonus
|
Compensation
|
Awards
|
Granted
|
Payouts
|
Compensation
|
|
|
|
|
|
|
(#)
|
|
|
Duane Poliquin
|
2019(1)(2)
|
$96,000(10)
|
Nil
|
Nil
|
Nil
|
565,000
|
Nil
|
Nil
|
Chairman of the Board &
|
2018(1)(2)
|
$138,194
|
Nil
|
Nil
|
Nil
|
650,000
|
Nil
|
Nil
|
Director
|
2017(1)
|
$168,000
|
Nil
|
Nil
|
Nil
|
715,000
|
Nil
|
Nil
|
Morgan Poliquin
|
2019(1)(2)
|
$134,000
|
Nil
|
Nil
|
Nil
|
1,065,000
|
Nil
|
Nil
|
President, Chief Executive
|
2018(1)(2)
|
$192,895
|
$66,250
|
Nil
|
Nil
|
1,000,000
|
Nil
|
Nil
|
Officer & Director
|
2017(1)
|
$213,500
|
$85,400
|
Nil
|
Nil
|
1,365,000
|
Nil
|
Nil
|
Jack McCleary
|
2019
|
Nil
|
Nil
|
Nil
|
Nil
|
232,000
|
Nil
|
$17,0000(3)(5)
|
Director
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
218,000
|
Nil
|
$17,0000(3)(5)
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
332,000
|
Nil
|
$17,0000(3)(5)
|
Gerald G. Carlson
|
2019
|
Nil
|
Nil
|
Nil
|
Nil
|
240,000
|
Nil
|
$12,000(3)
|
Director
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
172,000
|
Nil
|
$12,000(3)
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
290,000
|
Nil
|
$12,000(3)
|
Mark T. Brown
|
2019
|
Nil
|
Nil
|
Nil
|
Nil
|
282,000
|
Nil
|
$17,000(3)(4)
|
Director
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
68,000
|
Nil
|
$17,000(3)(4)
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
457,000
|
Nil
|
$17,000(3)(4)
|
William J. Worrall
|
2019
|
Nil
|
Nil
|
Nil
|
Nil
|
115,000
|
Nil
|
$12,000(3)
|
Director
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
285,000
|
Nil
|
$12,000(3)
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
215,000
|
Nil
|
$12,000(3)
|
David Strang(6)
|
2019
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Former Director
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$12,000(3)
|
|
2017
|
Nil
|
Nil
|
Nil
|
Nil
|
100,000
|
Nil
|
$12,000(3)
|
Elaine Ellingham(7)
|
2019
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
$12,000(3)
|
Director
|
2018
|
Nil
|
Nil
|
Nil
|
Nil
|
400,000
|
Nil
|
Nil
|
Korm Trieu
|
2019(1)(2)
|
$90,000
|
Nil
|
Nil
|
Nil
|
240,000
|
Nil
|
Nil
|
Chief Financial Officer
|
2018(1)(2)
|
$129,556
|
$27,750
|
Nil
|
Nil
|
255,000
|
Nil
|
Nil
|
|
2017(1)
|
$142,450
|
$35,613
|
Nil
|
Nil
|
290,000
|
Nil
|
Nil
|
Douglas McDonald
|
2019(1)(2)
|
$84,800
|
Nil
|
Nil
|
Nil
|
175,000
|
Nil
|
Nil
|
Vice President, Corporate
|
2018(1)(2)
|
$122,071
|
$28,875
|
Nil
|
Nil
|
200,000
|
Nil
|
Nil
|
Development
|
2017(1)
|
$134,750
|
$33,688
|
Nil
|
Nil
|
275,000
|
Nil
|
Nil
|
Laurence Morris(8)
|
2019
|
$236,491
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Vice President, Operations & Projects
|
2018
|
$246,488
|
Nil
|
Nil
|
Nil
|
300,000
|
Nil
|
Nil
|
John A. Thomas (9)
|
2019
|
$40,000
|
Nil
|
Nil
|
Nil
|
300,000
|
Nil
|
Nil
|
Vice President, Project Development
|
|
|
|
|
|
|
|
|
|
(1)
|
Azucar has compensated the Company, from August 1, 2015 to December 31, 2018, 30% and, during Fiscal 2019, 40% of any shared
personnel fees and/or wages. The above table reflects only the compensation for each individual paid by Almaden after recovery
of such 30% or 40% 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)
|
David Strang commenced as a Director of the Company effective August 8, 2016 and resigned effective June 27, 2018.
|
|
(7)
|
Elaine Ellingham commenced as a Director of the Company effective February 27, 2018.
|
|
(8)
|
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 $178,330 USD during 2019 and $187,497 USD during
2018.
|
|
(9)
|
John A. Thomas commenced as Vice President, Project Development effective September 9, 2019 and pursuant to his Independent
Contractor Agreement dated July 1, 2019 is compensated at a rate of $10,000 per month.
|
|
(10)
|
Duane Poliquin has agreed to defer payment to him of $64,000 of this amount.
|
Remuneration on Termination
The Company has the following termination clauses within its executive employment contracts.
The Company entered into a new Executive Employment Contract 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 (15th) day following the date of termination a lump sum payment equal to three
(3) times the Executive’s then current Base Salary. In addition, all benefits then applicable to the Executive shall be continued
for a period of eighteen (18) months after the date of termination.
For purposes of the DP Agreement, “Good Reason” shall mean,
without the Executive’s express written consent, any of the following:
|
(i)
|
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 (15th) day following the date of termination a lump sum severance payment equal
to three (3) times the Executive’s then current Base Salary. In addition, all benefits then applicable to the Executive shall
be continued for a period of eighteen (18) months after the date of termination.
For purposes of the MP Agreement, “Good Reason” shall mean,
without the Executive’s express written consent, any of the following:
|
(i)
|
the assignment to the Executive of any duties inconsistent with the status or authority of the
Executive’s office, or the Executive’s removal from such position, or a substantial alteration in the nature or status
of the Executive’s authorities or responsibilities from those in effect immediately prior to the Change in Control;
|
|
(ii)
|
a reduction by the Company in the Executive’s Base Salary as in effect on the date of the
MP Agreement or as the same may have been increased from time to time, or a failure by the Company to increase the Executive’s
Base Salary as provided for in the MP Agreement or at a rate commensurate with that of other key executives of the Company;
|
|
(iii)
|
the relocation of the office of the Company where the Executive is employed at the time of the
Change in Control (the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the
Company’s requiring the Executive to be based more than fifty (50) miles away from the CIC Location (except for requiring
travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations
prior to the Change in Control);
|
|
(iv)
|
the failure by the Company to continue to provide the Executive with benefits at least as favourable
as those enjoyed by the Executive prior to the Change in Control, the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive
at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of entitled vacation
days to which the Executive has earned on the basis of years of service with the Company; or
|
|
(v)
|
the failure of the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform the MP Agreement or, if the business of the Company for which the Executive’s services are principally performed
is sold or transferred, the purchaser or transferee of such business shall fail to agree to provide the Executive with the same
or a comparable position, duties, salary and benefits as provided to the Executive by the Company immediately prior to the Change
in Control.
|
Following a Change in Control during the Term, the Executive shall be
entitled to terminate the Executive’s employment for Good Reason.
In the event the Executive is entitled to a severance payment under
the MP Agreement, then in addition to such severance payment, the Executive shall be entitled to employment search assistance to
secure other comparable employment for a period not to exceed one (1) year or until such comparable employment is found, whichever
is the sooner, with fees for such assistance to be paid by the Company.
The Executive’s right to receive the aforementioned payment and
benefits is expressly contingent upon the signing of a waiver and release satisfactory to the Company which releases the Company
and its affiliates from all claims and liabilities arising out of the Executive’s employment and termination thereof and
including confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form, substance and
timeliness.
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 (15th) day following the date of termination
a lump sum severance payment equal to two (2) times the Employee’s then current Base Salary.
For purposes of the KT Agreement, “Good Reason” shall mean,
without the Employee’s express written consent, any of the following:
|
(i)
|
the assignment to the Employee of any duties inconsistent with the status or authority of the Employee’s
office, or the Employee’s removal from such position, or a substantial alteration in the nature or status of the Employee’s
authorities or responsibilities from those in effect immediately prior to the Change in Control;
|
|
(ii)
|
a reduction by the Company in the Employee’s Base Salary as in effect on the date of the
KT Agreement or as the same may have been increased from time to time, or a failure by the Company to increase the Employee’s
Base Salary as provided for in the KT Agreement or at a rate commensurate with that of other key employees of the Company;
|
|
(iii)
|
the relocation of the office of the Company where the Employee is employed at the time of the Change
in Control (the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the Company’s
requiring the Employee to be based more than fifty (50) miles away from the CIC Location (except for requiring travel on the Company’s
business to an extent substantially consistent with the Employee’s business travel obligations prior to the Change in Control);
|
|
(iv)
|
the failure by the Company to continue to provide the Employee with benefits at least as favourable
as those enjoyed by the Employee prior to the Change in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the Employee of any material fringe benefit enjoyed by the Employee
at the time of the Change in Control, or the failure by the Company to provide the Employee with the number of entitled vacation
days to which the Employee has earned on the basis of years of service with the Company; or
|
|
(v)
|
the failure of the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform the KT Agreement or, if the business of the Company for which the Employee’s services are principally performed
is sold or transferred, the purchaser or transferee of such business shall fail to agree to provide the Employee with the same
or a comparable position, duties, salary and benefits as provided to the Employee by the Company immediately prior to the Change
in Control.
|
Following a Change in Control during the course of the KT Agreement,
the Employee shall be entitled to terminate the Employee’s employment for Good Reason.
The Employee’s right to receive the aforementioned payment and
benefits is expressly contingent upon the signing of a waiver and release satisfactory to the Company which releases the Company
and its affiliates from all claims and liabilities arising out of the Employee’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form, substance and timeliness.
|
(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 (15th) day following the date of termination
a lump sum severance payment equal to two (2) times the Employee’s then current Base Salary.
For purposes of the DM Agreement, “Good Reason” shall mean,
without the Employee’s express written consent, any of the following:
|
(i)
|
the assignment to the Employee of any duties inconsistent with the status or authority of the Employee’s
office, or the Employee’s removal from such position, or a substantial alteration in the nature or status of the Employee’s
authorities or responsibilities from those in effect immediately prior to the Change in Control;
|
|
(ii)
|
a reduction by the Company in the Employee’s Base Salary as in effect on the date of the
DM Agreement or as the same may have been increased from time to time, or a failure by the Company to increase the Employee’s
Base Salary as provided for in the DM Agreement or at a rate commensurate with that of other key employees of the Company;
|
|
(iii)
|
the relocation of the office of the Company where the Employee is employed at the time of the Change
in Control (the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the Company’s
requiring the Employee to be based more than fifty (50) miles away from the CIC Location (except for requiring travel on the Company’s
business to an extent substantially consistent with the Employee’s business travel obligations prior to the Change in Control);
|
|
(iv)
|
the failure by the Company to continue to provide the Employee with benefits at least as favourable
as those enjoyed by the Employee prior to the Change in Control, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the Employee of any material fringe benefit enjoyed by the Employee
at the time of the Change in Control, or the failure by the Company to provide the Employee with the number of entitled vacation
days to which the Employee has earned on the basis of years of service with the Company; or
|
|
(v)
|
the failure of the Company to obtain a satisfactory agreement from any successor to assume and
agree to perform the DM Agreement or, if the business of the Company for which the Employee’s services are principally performed
is sold or transferred, the purchaser or transferee of such business shall fail to agree to provide the Employee with the same
or a comparable position, duties, salary and benefits as provided to the Employee by the Company immediately prior to the Change
in Control.
|
Following a Change in Control during the course of the DM Agreement,
the Employee shall be entitled to terminate the Employee’s employment for Good Reason.
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 of 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 under the LM
Agreement 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.
|
(6)
|
Vice President, Project Development
|
The Independent Contractor Agreement dated July 1, 2019 (the “JT
Agreement”) between the Company and John A. Thomas (the “Contractor” under the JT Agreement) may be terminated
for any one of the following reasons:
|
a.
|
by Contractor, at any time, without cause or reason, upon 30 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 JT 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, Project Development 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 JT 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 30 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.
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
2019, Fiscal 2018 and Fiscal 2017 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
26, 2020 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
|
500,000
|
0.98
|
06/08/2020
|
Chairman of the Board & Director
|
150,000 / 50,000
|
1.25 / 0.79
|
09/30/2020
|
|
100,000
|
0.86
|
12/13/2020
|
|
100,000
|
0.69
|
05/06/2021
|
|
300,000
|
0.80
|
07/07/2021
|
|
165,000
|
0.90
|
09/16/2021
|
Morgan Poliquin
|
500,000
|
1.53
|
04/30/2020
|
President, Director &
|
700,000
|
0.98
|
06/08/2020
|
Chief Executive Officer
|
200,000
|
1.25
|
09/30/2020
|
|
300,000
|
0.86
|
12/13/2020
|
|
250,000
|
0.84
|
02/07/2021
|
|
500,000
|
0.80
|
07/07/2021
|
|
315,000
|
0.90
|
09/16/2021
|
|
375,000
|
0.47
|
03/04/2022
|
Jack McCleary
|
100,000
|
0.98
|
06/08/2020
|
Director
|
68,000 / 100,000 / 50,000
|
0.83 / 1.25 / 0.79
|
09/30/2020
|
|
232,000
|
0.69
|
05/06/2021
|
Gerald G. Carlson
|
50,000
|
0.98
|
06/08/2020
|
Director
|
100,000 / 50,000
|
1.25 / 0.79
|
09/30/2020
|
|
72,000
|
0.86
|
12/13/2020
|
|
50,000
|
0.84
|
02/07/2021
|
|
25,000
|
0.69
|
05/06/2021
|
|
50,000
|
0.80
|
07/07/2021
|
|
115,000
|
0.90
|
09/16/2021
|
Mark T. Brown
|
100,000
|
1.14
|
04/30/2020
|
Director
|
50,000
|
0.98
|
06/08/2020
|
|
100,000 / 18,000
|
1.25 / 0.83
|
09/30/2020
|
|
25,000
|
0.84
|
02/07/2021
|
|
25,000
|
0.69
|
05/06/2021
|
|
117,000
|
0.80
|
07/07/2021
|
|
115,000
|
0.90
|
09/16/2021
|
William J. Worrall
|
250,000
|
0.98
|
06/08/2020
|
Director
|
5,000 / 100,000
|
0.83 / 1.25
|
09/30/2020
|
|
30,000
|
0.86
|
12/13/2020
|
|
115,000
|
0.90
|
09/16/2021
|
Elaine Ellingham
|
400,000
|
1.08
|
03/29/2021
|
Director
|
100,000
|
0.47
|
03/04/2022
|
Korm Trieu
|
75,000
|
1.03
|
04/10/2020
|
Chief Financial Officer
|
150,000
|
0.98
|
06/08/2020
|
|
100,000
|
1.25
|
09/30/2020
|
|
30,000
|
0.86
|
12/13/2020
|
|
50,000 / 75,000
|
0.84 / 0.80
|
02/07/2021
|
|
115,000
|
0.90
|
09/16/2021
|
|
250,000
|
0.47
|
03/04/2022
|
Douglas McDonald
|
20,000
|
0.98
|
06/08/2020
|
Vice President, Corporate Development
|
100,000
|
1.25
|
09/30/2020
|
|
180,000
|
0.86
|
12/13/2020
|
|
75,000
|
0.69
|
05/06/2021
|
|
100,000
|
0.90
|
09/16/2021
|
|
250,000
|
0.47
|
03/04/2022
|
Laurence Morris
|
300,000
|
1.11
|
02/07/2021
|
Vice President, Operations & Projects
|
|
|
|
John A. Thomas
|
50,000
|
0.84
|
02/07/2021
|
Vice President, Project Development
|
100,000
|
0.69
|
05/06/2021
|
|
150,000
|
1.01
|
08/13/2021
|
Total Directors/Officers (11 persons)
|
9,287,000
|
|
|
Total Employees/Consultants (12 persons)
|
1,850,000
|
|
|
Total Directors/Officers/Employees/Consultants
|
11,137,000
|
|
|
No funds were set aside or accrued by the Company during Fiscal 2019
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:
|
-
|
Planning and managing the operations of the Ixtaca Project;
|
|
-
|
Developing and overseeing the implementation of all required project execution systems and procedures
including project controls, procurement of contracts, engineering construction, quality assurance and quality control;
|
|
-
|
Ensuring the project objectives, scope and plan are well defined and understood by the project
team and stakeholders;
|
|
-
|
Ensuring 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;
|
|
-
|
Overseeing all site activities, site services, construction, pre-commissioning and commissioning;
|
|
-
|
Assisting the CEO in preparing and presenting to 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 conduct
technical and financial analysis to determine the impact of growth opportunities on various metrics and to establish an execution
plan as needed.
Vice President, Project Development
Reports to:
The CEO of the Company
Responsibilities:
The Vice President, Project Development is responsible for:
|
-
|
Planning and managing the construction of the Ixtaca Project;
|
|
-
|
Developing and overseeing the implementation of all required project execution systems and procedures
including project controls, procurement of contracts, engineering construction, quality assurance and quality control;
|
|
-
|
Ensuring the project objectives, scope and plan are well defined and understood by the project
team and stakeholders;
|
|
-
|
Ensuring 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;
|
|
-
|
Overseeing all site activities, site services, construction, pre-commissioning and commissioning;
|
|
-
|
Assisting the CEO in preparing and presenting to investors, the executive team and the Board;
|
The Vice President, Project Development shall assist the CEO in establishing
and managing relationships with key stakeholders. The Vice President, Operations & Projects shall also conduct 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, 2019 there were seven (7) meetings
of the Board. The frequency of meetings as well as the nature of agenda items change, depending upon the state of the Company’s
affairs and in light of opportunities or risks which the Company is subject to. Table No. 9 indicates the number of meetings attended
by each director.
Table No. 9
Meetings Attended
Director
|
Number
|
Duane Poliquin
|
7
|
Morgan Poliquin
|
7
|
Jack McCleary
|
7
|
Gerald G. Carlson
|
7
|
Mark T. Brown
|
7
|
William J. Worrall
|
7
|
Elaine Ellingham
|
7
|
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 2019, seven (7) meetings of the independent Board members were convened.
In carrying out its mandate, the Board and each committee of the Board,
relies primarily on management and its employees to provide it with regular detailed reports on the operations of the Company and
its financial position. Certain members of management are also on the Board and provide the Board with direct access to information
concerning their areas of responsibility. Management personnel are also regularly asked to attend Board meetings to provide information,
answer questions and receive the direction of the Board. The reports and information provided to the Board enable them to monitor
and manage the risks associated with the Company’s operations and its compliance with legal and safety requirements, environmental
issues and the financial position and liquidity of the Company.
The Board discharges its responsibilities directly and through committees.
At regularly scheduled meetings, members of the Board and management discuss the broad range of matters and issues relevant to
the Company’s business interests and the Board is responsible for the approval of the Company’s Strategic Plan. In
addition, the Board receives reports from management on the Company’s operational and financial performance. Between scheduled
meetings, matters requiring Board authorization is effected by means of signed Consent Resolutions.
Board Assessment
The Nomination and Corporate Governance Committee reports to the Board
periodically on the evaluation of the Board’s performance and that of the individual directors. The Performance of the Chief
Executive Officer is evaluated by the Compensation Committee.
Composition of the Board
The guidelines recommend that a
board of directors be constituted with a majority of individuals who qualify as “independent” directors.
In deciding whether a particular director is independent, the Board
examined the factual circumstances of each director and considered them in the context of many factors, including the definitions
in the guidelines and the requirements and policies of NYSE 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 Administrators’ National Instrument NI
52-110 - Audit Committees (“NI 15-110”) 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 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 Audit Committee Charter is an exhibit to
the 2005 20-F Annual Report filed with the Commission on March 30, 2006.
The members of the Audit Committee
are Messrs. Mark T. Brown, William J. Worrall and Gerald G. Carlson, all of whom are independent (on the basis determined as set
forth above) and “financially literate” within the meaning of NI 52-110, in that each of them has the ability to read
and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial
statements. The members of the Audit Committee have the respective education and experience set out below that is relevant to the
performance of such member’s responsibilities as an Audit Committee member:
Mark T. Brown is a Chartered Professional Accountant
(CPA, CA) and holds a Bachelor’s Degree in Commerce from the University of British Columbia. Mr. Brown received his Chartered
Accountant’s designation in 1993 while working at Price Waterhouse, Chartered Accountants. Mr. Brown has extensive business
and financial experience, has served as a director of a number of other publicly traded companies over the past 20 years, and currently
serves as a director or Chief Financial Officer of eight other publicly traded companies.
William J. Worrall is a retired lawyer who holds
a Bachelor of Laws Degree from the University of British Columbia. Before he retired, Mr. Worrall practiced law for over 55 years
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 is also a
director of two other publicly traded companies.
Gerald G. Carlson holds 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 a publicly traded company listed on the TSX-V and a director of a publicly traded company 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.
The Audit Committee met four (4)
times during Fiscal 2019.
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 seven (7) time during Fiscal 2019. 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 seven (7) times
during Fiscal 2019 with Jack McCleary, Mark T. Brown, Gerald Carlson and William Worrall attending all seven (7) 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) is 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, 2019, 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 26, 2020, directors and executive officers
who beneficially own the Company's voting securities and the amount of the Company’s voting securities owned by the directors
and executive officers as a group.
Table No. 10
Shareholdings of Directors and Executive Officers
Title of
|
|
Amounts and Nature of
|
Percent of
|
Class
|
Name of Beneficial Owner
|
Beneficial Ownership
|
Class*
|
Common
|
Duane Poliquin
|
4,018,146(1)(12)
|
3.55%
|
Common
|
Morgan Poliquin
|
4,867,422(2)(12)
|
4.24%
|
Common
|
Jack McCleary
|
767,711(3)
|
0.68%
|
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
|
897,144(7)
|
0.80%
|
Common
|
Doug McDonald
|
828,719(8)
|
0.74%
|
Common
|
Elaine Ellingham
|
537,500(9)
|
0.48%
|
Common
|
Laurence Morris
|
300,000(10)
|
0.27%
|
Common
|
John A. Thomas
|
300,000(11)
|
0.27%
|
|
Total Directors/Officers
|
14,253,314
|
12.57%
|
|
(1)
|
Of these shares 1,365,000 represent currently
exercisable stock options.
|
|
(2)
|
Of these shares 3,140,000 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 845,000 represent currently exercisable stock options. 7,500 of these shares are
held indirectly by Mr. Trieu’s wife.
|
|
(8)
|
Of these shares, 725,000 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 500,000 represent currently
exercisable stock options, 12,500 represent currently exercisable warrants.
|
|
(10)
|
Of these shares 300,000 represent currently exercisable stock options.
|
|
(11)
|
Of these shares 300,000 represent currently exercisable stock options.
|
|
(12)
|
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 holds less than 10% of the Company’s common shares.
|
*Based on 111,726,719 shares outstanding as of March 26, 2020 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 26, 2020, 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
|
4,018,146(1)(3)
|
3.55%
|
Common
|
Morgan Poliquin
|
4,867,422(2)(3)
|
4.24%
|
|
(1)
|
Of these shares 1,365,000 represent currently
exercisable stock options.
|
|
(2)
|
Of these shares 3,140,000 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.
|
*Based on 111,726,719 shares outstanding as of March 26, 2020 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, Corporate Development, the
Vice President, Operations and Projects, and the Vice President, Project Development. The aggregate compensation paid or payable
to key management for services is as follows, after recovery of 40% (2018 – 30%, 2017 – 30%) of executive officer compensation
from Azucar and 20% (2018 – 20%) of executive officer compensation from Almadex:
|
|
|
February 29,
2020
|
|
|
|
December 31,
2019
|
|
|
|
December 31,
2018
|
|
|
|
December 31,
2017
|
|
Salaries, fees and benefits
|
|
$
|
31,867
|
|
|
$
|
681,291
|
|
|
$
|
952,079
|
|
|
$
|
813,400
|
|
Share-based payments
|
|
|
-
|
|
|
|
768,020
|
|
|
|
1,090,540
|
|
|
|
2,216,170
|
|
Directors’ fees
|
|
|
-
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
$
|
31,867
|
|
|
$
|
1,519,311
|
|
|
$
|
2,112,619
|
|
|
$
|
3,099,570
|
|
|
(b)
|
Administrative Services Agreements
|
Effective August 1, 2015, the Company recovers a portion of expenses
from Azucar pursuant to the 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 services agreement between the Company and Almadex.
During the year ended December 31, 2019, the Company received $639,320
(2018 - $542,657; 2017 - $499,798) from Azucar for administrative services fees included in other income and received $320,093
(2018 - $243,260; 2017 - $Nil) from Almadex for administrative services fees included in other income.
At December 31, 2019, included in accounts receivable is $61,873 (2018
- $170,181) due from Azucar and $34,296 (December 31, 2018 - $116,268) due from Almadex in relation to expenses recoveries.
At December 31, 2019, the Company accrued $133,498 (2018 - $37,533)
payable to Almadex for drilling equipment rental services in Mexico.
(c) Other related party transactions
During the year ended December 31, 2019, the Company employed the Chairman’s
daughter for a salary of $48,800 less statutory deductions (2018 - $48,800; 2017 - $43,800) 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
As disclosed in the Company’s press releases dated April 15, 2019
and February 27, 2020, the Company’s Original Concessions (see definition below) are subject to legal proceedings (the “Amparo”).
On April 7, 2015, the Ejido Tecoltemi filed the Amparo against Mexican mining authorities claiming that Mexico’s mineral
title system is unconstitutional because indigenous consultation is not required before the granting of mineral title. Almaden’s
two original mining concessions covering the Ixtaca project (the “Original Concessions”) (Figure 1) are the
subject matter of the Amparo. The Original Concessions cover Almaden’s Ixtaca project and certain endowed lands of the Ejido
(the “Ejido Lands”). The Ejido Lands overlap approximately 330 Ha of the far southeastern corner of the Original
Concessions and are not considered material to Almaden.
On April 15, 2019, the lower court in Puebla State ruled that Mexico’s
mineral title system is unconstitutional. The Original Concessions were ruled to be illegal, but the mineral rights over that land
were ordered to be held for Almaden until such time as indigenous consultation can be completed.
Under Mexican law, any decisions in the Amparo, such as the April 15,
2019 lower court ruling, are granted in a provisional manner and only become final once the decisions are no longer subject to
further appeal. The Superior Court has accepted the appeals of each of the Mexican Congress, Senate, Secretary of Economy and mining
authorities, as well as Almaden as an interested party, against the April 15, 2019 provisional lower court decision in the Amparo,
and these appeals are in the process of being studied for resolution.
Figure 1: Original Concessions. Ixtaca environmental and social
impact areas, and Ejido Lands
Shortly after the Amparo was filed, the lower court ordered the suspension
of Almaden from conducting exploration and exploitation work over those portions of the Original Concessions which overlap with
the Ejido Lands.
Mineral tenure over the Ejido Lands is not material to Almaden. The
Ejido Lands do not overlap the Ixtaca project or its environmental or social area of impact. Almaden has never tried to negotiate
access to the Ejido Lands, never conducted exploration work on the Ejido Lands, and has no interest in conducting any future exploration
or development work over the Ejido Lands. The Ejido Lands are in a different drainage basin than the Ixtaca project and the Company
does not need to travel though the Ejido Lands to access the Ixtaca project.
In the event the provisional lower court Amparo decision becomes final,
this would result in amendments to Mexican mining law and could suggest that all mineral claims granted in Mexico since 2001 are
unconstitutional. In Almaden’s case, the Original Concessions (see Figure 1) would be deemed to be illegal but the mineral
rights over that land would be held for Almaden until such time as indigenous consultation can be completed. However, given that
Almaden has no interest in conducting work on the Ejido Lands, it is unclear over what area indigenous consultation would occur.
We note that none of the communities located within the New Concessions (see Figure 3 below) or within the Ixtaca project’s
area of social impact are party to the Amparo. Moreover, the surface area of the proposed Ixtaca project is covered by private
property.
Claim Reduction Efforts
In 2015, after learning about the Amparo, Almaden commenced a process
to voluntarily cancel approximately 7,000 Ha of its Original Concessions, including the area covering the Ejido Lands, to assure
the Ejido that Almaden would not interfere with the Ejido Lands, and to reduce Almaden’s land holding costs.
Almaden divided the Original Concessions into nine smaller concessions,
which included two smaller mining concessions which overlapped the Ejido Lands (the “Overlapping Concessions”)
(see Figure 2) and then voluntarily cancelled the Overlapping Concessions (see Figure 3 – which shows only the “New
Concessions”). The applicable Mexican mining authorities issued the New Concessions and accepted the abandonment of the
Overlapping Concessions in May and June of 2017 after the issuance of a Court Order.
|
|
|
Figure 2: New and overlapping concessions
|
Figure 3:
New Concessions.
|
|
In June 2017, the Ejido Tecoltemi, the complainant in the Amparo, filed
a legal complaint about the court order leading to the New Concessions, and on February 1, 2018, the court reviewing the complaint
ruled the Ejido’s complaint was founded, and sent the ruling to the court hearing the Amparo.
On December 21, 2018, the General Directorate of Mines issued a resolution
that the New Concessions are left without effect, and the Original Concessions are in full force and effect (the “December
Communication”).
On February 13, 2019, the General Directorate of Mines delivered, to
the court hearing the Amparo, mining certificates stating that the Original Concessions are valid, and the New Concessions are
cancelled.
On June 10, 2019, Almaden’s subsidiary appealed the December Communication,
and subsequent cancellation of the New Concessions. On September 26, 2019, the lower court refused to hear the appeal, but on October
14, 2019, a higher court agreed to hear the appeal.
In communications with the lower court and mineral title certificates
issued by the General Directorate of Mines directly to Almaden on December 16, 2019 (the “December 2019 Certificates”),
the applicable Mexican records currently reflect the position that the Original Concessions (the subject matter of the Amparo)
are active and owned by Almaden (through its Mexican subsidiary) and the New Concessions are left without effect. It should be
noted that the Mexican mining authorities also have indicated in the December 2019 Certificates that their position is subject
to the final resolution of the Amparo.
On January 21, 2020, the Company filed an administrative challenge against
the Mexican mining authorities’ issuance of the December 2019 Certificates, which represented the first time that Almaden
had been directly notified of any changes in its mineral tenure.
Almaden believes that the December Communication from the Mexican mining
authorities is the basis for the recorded change in its mineral tenure. The Company’s Mexican counsel has advised it that
the December Communication has no legal effect as it was only provided to the lower court, was never officially served on the Company
and was not issued by an official possessing the necessary legal authority. While the December Communication is dated December
21, 2018, the Company first became aware of it in May, 2019 through a review of court documents.
Currently, applicable Mexican mining authority records show the Original
Concessions as Almaden’s sole mineral claims to the Ixtaca project. As noted above those claims are subject to the Amparo.
Although the Company is challenging this change to its mineral tenure,
the Original Concessions provide Almaden with the same exploration and mining rights over the Company’s Ixtaca project as
the New Concessions.
Almaden’s two appeals to this change in mineral tenure are based
on Mexican legal advice that it cannot be forced to own mineral rights it has formally dropped. The Mexican legal advice is that
the New Concessions remain in full force and effect. Almaden continues to file taxes and assessment reports on the New Concessions,
which have been accepted by the Mexican mining authorities, and Almaden has not received any notifications from the Mexican mining
authorities regarding unpaid taxes on the Original Concessions. Almaden believes that it has a strong legal basis for its appeals.
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
|
12/31/2019
|
$0.90
|
$0.43
|
12/31/2018
|
1.05
|
0.48
|
12/31/2017
|
1.75
|
0.71
|
12/31/2016
|
1.88
|
0.50
|
12/31/2015
|
1.27
|
0.48
|
Table No. 13
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Year Ended
|
High
|
Low
|
12/31/2019
|
$1.19
|
$0.57
|
12/31/2018
|
1.35
|
0.63
|
12/31/2017
|
2.33
|
0.92
|
12/31/2016
|
2.44
|
0.73
|
12/31/2015
|
1.57
|
0.65
|
Table No. 14 lists the quarterly high and low prices for shares of Almaden
Minerals Ltd. common stock on NYSE American for the two most recent full financial years. Table No. 15 lists the quarterly high
and low prices for shares of Almaden Minerals Ltd. common stock on TSX for the two most recent full financial years.
Table No. 14
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Quarter Ended
|
High
|
Low
|
12/31/2019
|
$0.76
|
$0.43
|
09/30/2019
|
0.82
|
0.58
|
06/30/2019
|
0.68
|
0.43
|
03/31/2019
|
0.90
|
0.56
|
12/31/2018
|
0.69
|
0.48
|
09/30/2018
|
0.75
|
0.56
|
06/30/2018
|
0.87
|
0.70
|
03/31/2018
|
1.05
|
0.78
|
Table No. 15
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Quarter Ended
|
High
|
Low
|
12/31/2019
|
$1.00
|
$0.58
|
09/30/2019
|
1.10
|
0.76
|
06/30/2019
|
0.89
|
0.57
|
03/31/2019
|
1.19
|
0.76
|
12/31/2018
|
0.91
|
0.63
|
09/30/2018
|
0.98
|
0.74
|
06/30/2018
|
1.10
|
0.91
|
03/31/2018
|
1.35
|
1.03
|
Table No.16 lists the high and low prices for shares of Almaden Minerals Ltd. common
stock on NYSE American for the most recent six months. Table No. 17 lists the high and low prices for shares of Almaden Minerals
Ltd. common stock on TSX for the most recent six months.
Table No. 16
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
Month Ended
|
High
|
Low
|
02/29/2020
|
$0.50
|
$0.28
|
01/31/2020
|
0.61
|
0.49
|
12/31/2019
|
0.62
|
0.47
|
11/30/2019
|
0.55
|
0.43
|
10/31/2019
|
0.76
|
0.48
|
09/30/2019
|
0.78
|
0.61
|
Table No. 17
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
Month Ended
|
High
|
Low
|
02/29/2020
|
$0.70
|
$0.38
|
01/31/2020
|
0.79
|
0.64
|
12/31/2019
|
0.79
|
0.63
|
11/30/2019
|
0.70
|
0.58
|
10/31/2019
|
1.00
|
0.60
|
09/30/2019
|
1.03
|
0.82
|
The closing price of the Company’s common stock was $0.28 (US$)
on the NYSE American and $0.38 (C$) on TSX on February 29, 2020.
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 29, 2020, the shareholders' list for the Company’s
common shares showed 220 registered shareholders, including depositories, and 111,726,719 shares outstanding. 182 of these registered
shareholders are U.S. residents, owning 22,930,795 shares representing 20% of the issued and outstanding shares of common stock.
28 of these registered shareholders are Canadian residents, owning 86,948,055 shares representing 78% of the issued and outstanding
shares of common stock. 10 of these registered shareholders are of other countries, owning 1,847,869 shares representing 2% of
the issued and outstanding shares of common stock.
Table No. 18 lists changes, if any, in issued shares to March 26, 2020:
Table No. 18
Shares Issued to March 26, 2020
|
Number
|
Balance, December 31, 2019
|
111,726,719
|
Balance, March 26, 2020
|
111,726,719
|
Item 10. Additional Information
Flow-Through Common Shares
Flow-through common shares differ from other common shares in one aspect
only, namely the tax benefits connected with qualified mineral exploration expenditures in Canada 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. These tax benefits are available only to shareholders residing in Canada who is subject to Canada Federal Income Tax for
the taxation year in which the credit is being claimed. Shareholders residing in the U.S. and other non-Canadian shareholders receive
no tax benefits through the purchase of 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 2019, Fiscal 2018 or Fiscal 2017. In Fiscal 2011, the Company issued 100,000 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 their office from contracting with the Company.
A director or such director’s firm may act in a professional capacity for the Company and a director or such director’s
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 the director 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
therefor.
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 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 under the BCBCA nor more than 6 months
from its preceding fiscal year end under the policies of the Toronto Stock Exchange) 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 10th day following
such public announcement.
In the case of a special meeting of shareholders (which is not also
an annual meeting), notice to the Company must be made not later than the close of business on the 15th day following
the day on which the first public announcement of the date of the special meeting was made.
The full text of the Amended Advance Notice Policy
is an exhibit to the 2017 20-F Annual Report filed with the Commission on March 29, 2018.
Multiple Voting Policy for Uncontested Elections of Directors
The Board believes that each of its members should carry the confidence
and support of the Company’s shareholders and, accordingly, has adopted, effective May 15, 2017, an Amended Majority Voting
Policy for the election of directors for non-contested meetings. The Amended Majority Voting Policy provides that, in a non-contested
election of directors, voting will be by ballot and, if the number of shares “withheld” for any nominee exceeds the
number of shares voted “for” the nominee, then, notwithstanding that such director is duly elected as a matter of corporate
law, he or she shall, immediately following the date of the final scrutineer’s report on the ballot, tender his or her written
resignation to the Chairman of the Board. A “non-contested election” means an election where the number of nominees
for director is not greater than the number of directors to be elected. Under the Amended Majority Voting Policy, the Board will
consider such offer of resignation and shall make a determination whether or not to accept or reject the resignation no later than
90 days following the date of the applicable shareholders’ meeting and shall accept the resignation absent exceptional circumstances.
The Board will promptly announce its decision via press release. If the Board determines not to accept the resignation, the press
release must fully state the reasons for its decision. No director who is required to tender his or her resignation shall participate
in any meeting of the Board at which the resignation is considered. If a resignation is accepted by the Board, and subject to any
corporate law restrictions, the Board may leave any resulting vacancy unfilled until the Company’s next annual general meeting,
or may appoint a new director to fill the vacancy who the Board considers to merit the confidence of the shareholders, or may call
a special meeting of shareholders at which there will be presented a management nominee or nominees to fill the vacant position
or positions.
The full text of the Amended Multiple Voting Policy
is an exhibit to 2017 20-F Annual Report filed with the Commission on March 29, 2018.
Material Contracts
The following is a summary of each material contract, other than contracts entered
into in the ordinary course of business, to which we or any member of the group is a party, for the two years preceding the date
of this Annual Report on Form 20-F.
1. 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 the fiscal 2018 20-F Annual Report with the Commission of March 15, 2019.
2. Administrative Services Agreement between the Company and Almadex
Minerals Ltd. (“Almadex”) dated March 29, 2018 (the “Agreement”). Under the Agreement, the Company provides
management services to Almadex as the sole and exclusive manager, including the authority to manage the assets, operations, business,
and administrative affairs of Almadex. Almadex compensates the Company 20% of the Company’s actual monthly cost of rent for
any shared facilities, and 20% of any shared personnels’ fees and/or wages. Almadex also pays the Company any reasonable
fees or costs incurred on behalf of Almadex by the Company which were approved by Almadex. The Agreement has an initial 5-year
term, with subsequent automatic 1 year renewals unless terminated pursuant to the terms permitted under the Agreement and includes
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 2018 20-F Annual Report with the Commission on March 15, 2019.
3. 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; of the Amending
Agreement is 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 is filed as an exhibit to the 2018 20-F Annual Report.
4. Gold Loan Agreement dated as of May 14, 2019 between
the Company (the “Borrower”) and Almadex Minerals Ltd. (the “Lender”). Almaden may borrow from Almadex
up to 1,597 ounces of 99.99% purity gold bullion. Upon receiving a drawdown notice, the Lender will sell the requested gold and
send the proceeds in US dollars to the borrower. Interest will be at 10% per year, calculated monthly, either paid quarterly or
accrued to the loan value. The loan, plus any accrued but unpaid interest, is due March 31, 2024, but may be extended to March
31, 2026 upon written notice from Borrower to Lender. Repayment may be in the form of gold or common shares of Almaden, and may
include voluntary prepayment, with the form of repayment selected at the sole discretion of the Lender. A maximum of 11,172,671
common shares of Almaden are issuable for repayment of principal and interest, with any additional amounts due payable in gold.
Mandatory Prepayment of 100 ounces of gold is required on the last business day of each month following the date when Almaden’s
Ixtaca project begins commercial production. The full text of the Gold Loan Agreement is filed as an exhibit to the this 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.
Distributions 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 tax 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 current income their pro rata
share of (i) Subpart F income of the CFC, (ii) the CFC’s earnings from certain investments in U.S. property, (iii) global
intangible low-taxed income (“GILTI), and (iv) base erosion minimum tax amounts for certain 10% U.S. Holders with sufficient
gross receipts that make deductible payments to related foreign parties in tax years after December 31. 2018. The foreign tax credit
described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange
of shares by a U.S. Holder of common shares of the Company which is or was a 10% U.S. Holder at any time during the five-year period
ending with the sale or exchange will be treated as dividend income to the extent of earnings and profits of the Company (accumulated
only while the shares were held by the 10% U.S. Holder and while the Company was a CFC attributable to the shares sold or exchanged.
Certain U.S. corporations that are 10% U.S. Holders may be entitled to a dividend received deduction for the foreign source portion
of dividends received from the Company as discussed above.
If a foreign corporation is both a PFIC and a CFC, the foreign corporation
generally will not be treated as a PFIC with respect to certain 10% U.S. Holders of the CFC. This rule generally will be effective
for taxable years of 10% U.S. Holders beginning after 1997 and for taxable years of foreign company’s ending with or within
such taxable years of 10% U.S. Holders. The PFIC provisions continue to apply in the case of a PFIC that is also a CFC with respect
to the U.S. Holders that are less than 10% shareholders. Because of the complexity of Subpart F, a more detailed review of these
rules is beyond the scope of this discussion.
Information Reporting and Backup Withholding
In general, unless a U.S. Holder belongs to a category of certain exempt
recipients (such as corporations), information reporting requirements will apply to distributions as well as proceeds of sales
from the sale of shares of the Company that are effected through the U.S. office of a broker or the non-U.S. office of a broker
that has certain connections with the United States. Backup withholding may apply to these payments if a U.S. Holder fails to provide
a correct taxpayer identification number or certification of exempt status, fails to report in full dividend and interest income
or, in certain circumstances, fails to comply with applicable certification requirements. Any amounts withheld under the backup
withholding rules will be allowed as a refund or credit against a U.S. Holder’s U.S. federal income tax, provided the U.S.
Holder furnishes the required information to the IRS in a timely manner. Other filing requirements may also apply. U.S. Holders
should consult with their own tax advisors concerning their particular reporting requirements.
U.S. Holder’s should consult with their tax advisors to determine if holding common
shares in the Company will create any other disclosure or reporting requirements for U.S. tax purposes.
Documents on Display
Any of the documents referred to above can be viewed at the registered
office of the Company located at 1177 West Hastings Street, Suite 1710, Vancouver, British Columbia, Canada, V6E 2L3.
This Annual Report and the Company’s recent 6-K filings can be
viewed on the U.S. Securities and Exchange Commission’s EDGAR web-site at www.sec.gov./edgar/searchedgar/companysearch.html.
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Exchange Rate Risk
The Company’s primary mineral exploration properties are located
in Mexico. As a Canadian company, Almaden’s cash balances are kept primarily in Canadian funds, while many exploration and
property expenses are denominated in U.S. dollars or the Mexican peso. Therefore, the Company is exposed to some exchange rate
risk. The Company considers the amount of risk to be manageable and does not currently, nor is likely in the foreseeable future
to, conduct hedging to reduce its exchange rate risk. A 10% change in the U.S. dollar exchange rate relative to the Canadian dollar
would change the Company’s net loss by $159,000. A 10% change in the Mexican peso exchange rate relative to the Canadian
dollar would change the Company’s net loss by $4,000.
Interest Rate Risk
The Company has no derivative financial instruments or other debt bearing
variable interest rate instruments. The Company is exposed to varying interest rates on its cash and cash equivalents. A 1% change
in the interest rate would change the Company’s net loss by $9,000.
Item 12. Description of Securities Other than Equity Securities
Not Applicable
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not Applicable
Item 14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
Not Applicable
Item 15. Controls and Procedures
Disclosure Controls and Procedures
The Company conducted an evaluation of the effectiveness of the design
and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934,
as amended, or “Exchange Act”) as of December 31, 2019. This evaluation was conducted under the supervision and with
the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer. Based upon
this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31,
2019, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required
to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified by the rules and forms. The Company also concluded that its disclosure controls and procedures
are effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted under
the Exchange Act is accumulated and communicated to its management, including the Company’s Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial
Reporting
The Company’s management is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process designed
by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s
board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with IFRS as issued by IASB.
Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error
or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal
control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management assessed the effectiveness of the Company’s
internal control over financial reporting as of December 31, 2019. In making this assessment, the Company’s management used
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework
(2013) published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment,
management concluded that, as of December 31, 2019, the Company’s internal control over financial reporting was effective.
There were no changes in the Company’s internal control over financial
reporting that occurred during the year ended December 31, 2019 that has materially affected, or that is reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Attestation Report of the Registered Accounting Firm.
This Annual Report on Form 20-F does not include an attestation report
of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities
and Exchange Commission that permit the Company to provide only management’s report in this Form 20-F Annual Report.
Item 16A. Audit Committee Financial Expert
The Company’s Board of Directors has determined that Mr. Mark
T. Brown is the Company's audit committee financial expert. Mr. Brown has extensive business and financial experience. He has served
as a director of a number of other publicly traded companies over the past 20 years, and currently serves as a director of eight
other publicly traded mineral exploration companies. Mr. Brown is independent as defined by Section 803(A) of the NYSE American
Listing Standards.
Item 16B. Code of Ethics
The Company adopted several codes of conduct, including a Code of Business
Ethics, a Code of Business Conduct Ethics for Directors, a Communications Policy and an Audit Committee Charter. These initial
codes were filed with the 20-F Annual Report for the fiscal year ended December 31, 2003 as filed with the U.S. Securities and
Exchange Commission on May 11, 2004. After review, the Company has adopted revised and new codes as follow: Audit Committee Charter,
Nominating and Corporate Governance Committee-Responsibilities and Duties, Compensation Committee-Responsibilities and Duties,
Code of Business Ethics, Code of Business Conduct and Ethics for Directors, Communications Policy, Securities Trading Policy, Whistleblowers
Policy and a Privacy Policy (the “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.
The Company has adopted a Code of
Business Conduct and Ethics for Directors (“Code”), a Code of Business Ethics (“COBE”), a Securities Trading
Policy and a Privacy Policy. Employees and consultants are required as a term of employment or engagement to undertake to abide
by the COBE. Directors are bound to observe the Code adopted by the Board.
All Directors, Officers and Employees
(“Individuals”) sign a Certification (“Certification”) stating they have read the Code of Business Ethics
policy (“Policy”) of the Company and have complied with such Policy in all respects. The Certification further acknowledges
that all members of the Individual’s family, all other persons who live with the Individual and all holding companies and
other related entities of the Individual and all such persons or companies acting on behalf of or at the request of any of the
foregoing also complied with such Policy. The Certification also states that any violation of such Policy may constitute grounds
for immediate suspension or dismissal.
Each director is expected and required by statute to act honestly and
in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably
prudent individual would exercise in comparable circumstances and in accordance with the Business Corporations Act (British
Columbia) and the Company’s Articles.
Item 16C. Principal Accountant Fees and Services
Audit Committee's pre-approval policies and procedures
The Audit Committee nominates and engages the independent auditors to
audit the financial statements, and approves all audit services, audit-related services, tax services and other services provided
by Davidson & Company LLP. Any services provided by Davidson & Company LLP that are not specifically included within the
scope of the audit must be preapproved by the Audit Committee prior to any engagement. The Audit Committee is permitted to approve
certain fees for audit-related services, tax services and other services before the completion of the engagement.
Table No. 19 lists the aggregate fees billed or estimated for each of
the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual
financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings
or engagements for those fiscal years.
Table No. 19
Principal Accountant Fees
|
|
|
|
December 31,
2019
|
December 31,
2018
|
Audit fees
|
$40,000
|
$38,000
|
Audit-related fees
|
20,469
|
2,800
|
Tax fees
|
-
|
-
|
All other fees
|
-
|
-
|
Fiscal 2019 and Fiscal 2018 audit fees relate to the annual audit of
the Company’s consolidated financial statements, effectiveness of the Company’s internal control over financial reporting
and review of the Form 20-F. Audit-related fees relate to accounting advisory services. Tax fees relate to the completion of income
tax returns and tax consulting services. Other fees relate to services other than audit fees, audit-related fees, and tax fees
described above.
Item 16D. Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers
Not applicable.
Item 16F. Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G. Corporate Governance
The Company’s class of common shares is listed on the NYSE American
and the Toronto Stock Exchange. Under the rules of the NYSE American, listed companies are generally required to have a majority
of their Board of Directors be “independent” as defined by the NYSE American Company Guide Rules. Currently, as permitted
under applicable Canadian regulations, the Company’s Board consists of 7 directors, of which 5 are considered to be “independent.”
In the opinion of management, the Company’s corporate governance practices do not differ in any significant way from those
required of U.S. domestic companies listed on the NYSE American.
Item 16H. Mine Safety Disclosure
Not applicable.
PART III
Item 17. Financial Statements
The Company has provided financial statements pursuant to Item 18 of this Form 20-F.
Item 18. Financial Statements
The Company’s consolidated financial statements and notes thereto
are expressed in Canadian Dollars (CDN$) and are prepared in accordance and compliance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
Item 19. Exhibits
A. The financial statements and notes thereto as required under Item
18 are attached hereto and found immediately following the text of this Annual Report.
Audited Financial Statements
Independent registered Public Accounting Firm reports on the consolidated financial statements,
dated March 26, 2020
Consolidated statements of financial position at December 31, 2019 and 2018
Consolidated statements of comprehensive loss for the years ended December 31, 2019, 2018
and 2017
Consolidated statements of changes in equity for the years ended December 31, 2019, 2018
and 2017
Consolidated statements of cash flows for the years ended December 31, 2019, 2018 and 2017
Summary of significant accounting policies and other explanatory information
B. Index to Exhibits
|
|
|
|
1.
|
Certificate of Amalgamation
|
|
|
Amalgamation Agreement
|
|
|
- Incorporated by reference to the Company’s Form 20-F Annual Report for the
year ended December 31, 2001, as filed with the Commission on May 17, 2002.
|
|
1.1
|
Articles
|
|
|
- Incorporated by reference to the Company’s Form 20-F Annual Report for the
year ended December 31, 2005, as filed with the Commission on March 30, 2006.
|
|
|
|
|
2.
|
Instruments defining the rights of holders of equity or debt securities being registered
|
|
|
- Refer to Exhibit No. 1.
|
|
|
|
|
3.
|
Voting trust agreements. The Voting Trust Agreement dated December 17, 2009 between Ernesto Echavarria, as grantor, and Messrs Duane and Morgan Poliquin, as voting trustees.
- Incorporated by reference to the Company’s Form 20-F for the year ended
December 31, 2013 and filed with the Commission on March 31, 2014.
|
|
|
|
|
4.
|
Executive Compensation Contract dated January 29, 2013 with Hawk Mountain Resources Ltd.
|
|
|
- Incorporated by reference to the Company’s Form 20-F for the year ended
December 31, 2012 and filed with the Commission on March 28, 2013.
|
|
4.1
|
Executive Compensation Contract dated January 29, 2013 with Morgan Poliquin
|
|
|
- Incorporated by reference to the Company’s Form 20-F for the year ended
December 31, 2012 and filed with the Commission on March 28, 2013.
|
|
4.2
|
Assignment of Rights Agreement dated March 11, 2013 with Don David Gold Mexico, S.A. de C.V.
- Incorporated by reference to the Company’s Form 20-F for the year ended
December 31, 2013 and filed with the Commission on March 31, 2014.
|
|
|
|
4.3
|
Sale and Purchase Agreement dated June 20, 2013 with Tarsis Resources Ltd.
- Incorporated by reference to the Form 6-K and filed with the Commission on June 20, 2013.
|
|
4.4
|
Amendment Agreement dated November 26, 2013 with Candymin, S.A. de C.V. and Mr. Charlie Warren
- Incorporated by reference to the Company’s Form 20-F for the year ended
December 31, 2013 and filed with the Commission on March 31, 2014.
|
|
4.5
|
Arrangement Agreement dated May 11, 2015 in connection with the Company’s statutory Plan of Arrangement with Almadex and filed with the Commission on March 31, 2016.
|
|
4.6
|
Administrative Services Agreement between the Company and Almadex Minerals Limited dated May 15, 2015 and filed with the Commission on March 31, 2016.
|
|
4.7
|
First Amending Agreement to the May 15, 2015 Administrative Services Agreement between the Company and Almadex Minerals Limited dated December 16, 2015 and filed with the Commission on March 31, 2016.
|
|
4.8
|
Termination Agreement effective December 31, 2015 between the Company and Hawk Mountain Resources Ltd. and filed with the Commission on March 31, 2016.
|
|
4.9
|
Executive Employment Contract between the Company and Duane Poliquin dated effective January 1, 2016 and filed with the Commission on March 31, 2016.
|
|
4.10
|
Deloitte Letter to the Securities and Exchange Commission dated March 29, 2016 and filed with the Commission on March 31, 2016.
|
|
4.11
|
Amending Agreement dated April 1, 2016 to the Executive Compensation Contract with Morgan Poliquin dated January 29, 2013 and filed with the Commission on March 30, 2017.
|
|
4.12
|
Amending Agreement dated April 1, 2016 to the Executive Employment Contract with Duane Poliquin dated January 1, 2016 and filed with the Commission on March 30, 2017.
|
|
4.13
|
Amending agreement to the Executive Compensation Contract with Morgan Poliquin dated January 1, 2019 and filed with the Commission on March 15, 2019.
|
|
4.14
|
Amending agreement to the Executive Compensation Contract with Duane Poliquin dated January 1, 2019 and filed with the Commission on March 15, 2019.
|
|
4.15
|
Administrative Services Agreement between the Company and Almadex Minerals Ltd. (formerly 1154229 B.C. Ltd.) dated March 29, 2018 and filed with the Commission on March 15, 2019.
|
|
4.16
|
Gold Loan Agreement between the Company and Almadex Minerals Ltd. dated effective May 14th, 2019.
|
|
|
|
|
5.
|
List of foreign patents – N/A
|
|
|
|
|
6.
|
Calculation of earnings per share – N/A
|
|
|
|
|
7.
|
Explanation of calculation of ratios – N/A
|
|
|
|
|
8.
|
List of subsidiaries
|
|
|
|
|
9.
|
Statement pursuant to the instruction to Item 8.A.4, regarding the financial statement filed in registration
|
|
|
Statements for initial public offerings of securities – N/A
|
|
|
|
|
10.
|
Any notice required by Rule 104 of Regulation BTR – N/A
|
|
|
|
|
11
|
Audit Committee Charter
|
|
11.1
|
Nominating and Corporate Governance Committee-Duties and Responsibility
|
|
11.2
|
Compensation Committee-Responsibilities and Duties
|
|
11.3
|
Code of Business Ethics
|
|
11.4
|
Code of Business Conduct and Ethics for Directors
|
|
11.5
|
Communications Policy
|
|
11.6
|
Securities Trading Policy
|
|
11.7
|
Whistleblower Policy
|
|
11.8
|
Privacy Policy
|
|
|
- Incorporated by reference to the Company’s Form 20-F Annual Report for the year ended
December 31,
2005, as filed with the Commission on March 30, 2006.
|
|
11.9
|
Shareholder Rights Plan dated April 13, 2011, as amended and reconfirmed at the 2017 Annual General Meeting
- Incorporated by reference to the Form 6-K filed with the Commission on April 15, 2011.
|
|
|
|
11.10
|
Amended Advance Notice Policy dated January 28, 2013, as amended May 1, 2015 as filed with the Commission on March 29, 2018.
|
|
11.11
|
Amended Majority Voting Policy – adopted by the Board of Directors on May 7, 2013, as amended effective May 15, 2017 as filed with the Commission on March 29, 2018.
|
|
|
|
|
12.1
|
Certification of CEO Pursuant to Securities Exchange Act, Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
12.2
|
Certification of CFO Pursuant to Securities Exchange Act, Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
13.1
|
Certification of CEO Pursuant to the Sarbanes-Oxley Act, 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
13.2
|
Certification of CFO Pursuant to the Sarbanes-Oxley Act, 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
SIGNATURE
The Registrant hereby certifies that it meets all of the requirements for filing on Form
20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
Almaden Minerals Ltd.
Registrant
Dated: March 26, 2020
|
By /s/Morgan
Poliquin
|
|
Morgan Poliquin, CEO
|
Consolidated Financial Statements of
Almaden Minerals Ltd.
For the years ended December 31, 2019, 2018 and 2017
Almaden Minerals Ltd.
December 31, 2019, 2018 and 2017
Table of contents
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
statements of financial position of Almaden Minerals Ltd. (the “Company”), as of December 31, 2019 and 2018, and the
related consolidated statements of comprehensive loss, cash flows, and changes in equity for the years ended December 31, 2019,
2018, and 2017, and the related notes and schedules (collectively referred to as the “financial statements”). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years ended December 31, 2019, 2018,
and 2017 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures
to assess the risks of material misstatements of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our
audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor
since 2015.
“DAVIDSON & COMPANY LLP”
Vancouver, Canada
|
|
Chartered Professional Accountants
|
March 26, 2020
Almaden Minerals Ltd.
Consolidated statements of financial position
(Expressed in Canadian dollars)
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
|
$
|
|
|
$
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents (Note 12)
|
|
|
912,214
|
|
|
|
5,080,580
|
|
Gold in trust (Note 8)
|
|
|
1,576,366
|
|
|
|
-
|
|
Accounts receivable and prepaid expenses (Note 4)
|
|
|
160,717
|
|
|
|
404,416
|
|
|
|
|
2,649,297
|
|
|
|
5,484,996
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
Right-of-use assets (Note 5)
|
|
|
273,222
|
|
|
|
-
|
|
Property, plant and equipment (Note 6)
|
|
|
14,168,326
|
|
|
|
13,764,928
|
|
Exploration and evaluation assets (Note 7)
|
|
|
56,973,010
|
|
|
|
54,678,470
|
|
|
|
|
71,414,558
|
|
|
|
68,443,398
|
|
TOTAL ASSETS
|
|
|
74,063,855
|
|
|
|
73,928,394
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Trade and other payables (Note 10 (b))
|
|
|
778,841
|
|
|
|
1,128,407
|
|
Current portion of lease liabilities (Note 5)
|
|
|
121,948
|
|
|
|
-
|
|
|
|
|
900,789
|
|
|
|
1,128,407
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
Long-term portion of lease liabilities (Note 5)
|
|
|
170,731
|
|
|
|
-
|
|
Gold loan payable (Note 8)
|
|
|
2,541,338
|
|
|
|
-
|
|
Derivative financial liabilities (Note 8)
|
|
|
430,965
|
|
|
|
-
|
|
Deferred income tax liability (Note 13)
|
|
|
1,434,882
|
|
|
|
1,434,882
|
|
|
|
|
4,577,916
|
|
|
|
1,434,882
|
|
Total liabilities
|
|
|
5,478,705
|
|
|
|
2,563,289
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
Share capital (Note 9)
|
|
|
127,022,366
|
|
|
|
127,022,366
|
|
Reserves (Note 9)
|
|
|
17,689,952
|
|
|
|
16,706,832
|
|
Deficit
|
|
|
(76,127,168
|
)
|
|
|
(72,364,093
|
)
|
Total equity
|
|
|
68,585,150
|
|
|
|
71,365,105
|
|
TOTAL EQUITY AND LIABILITIES
|
|
|
74,063,855
|
|
|
|
73,928,394
|
|
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 26, 2020.
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,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
Expenses
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
Professional fees
|
|
|
691,628
|
|
|
|
602,402
|
|
|
|
567,877
|
|
Salaries and benefits (Note 10(a))
|
|
|
1,614,992
|
|
|
|
1,858,788
|
|
|
|
1,480,745
|
|
Travel and promotion
|
|
|
262,094
|
|
|
|
275,921
|
|
|
|
294,413
|
|
Depreciation (Note 6)
|
|
|
24,199
|
|
|
|
28,277
|
|
|
|
28,274
|
|
Office and license (Note 10(b))
|
|
|
93,252
|
|
|
|
139,545
|
|
|
|
159,024
|
|
Rent (Note 10(b))
|
|
|
-
|
|
|
|
171,873
|
|
|
|
153,339
|
|
Amortization of right-of-use assets (Note 5)
|
|
|
121,432
|
|
|
|
-
|
|
|
|
-
|
|
Occupancy expenses (Note 5)
|
|
|
39,561
|
|
|
|
-
|
|
|
|
-
|
|
Interest expense on lease liabilities (Note 5)
|
|
|
32,305
|
|
|
|
-
|
|
|
|
-
|
|
Arrangement fee on gold loan payable (Note 8)
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
Interest, accretion and standby fees on gold loan payable (Note 8)
|
|
|
216,918
|
|
|
|
-
|
|
|
|
-
|
|
Listing and filing fees
|
|
|
225,432
|
|
|
|
179,247
|
|
|
|
197,994
|
|
Insurance
|
|
|
66,096
|
|
|
|
66,942
|
|
|
|
55,007
|
|
Directors’ fees (Note 10(a))
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
70,000
|
|
Share-based payments (Note 9(d) and 10(a))
|
|
|
933,120
|
|
|
|
1,308,740
|
|
|
|
2,693,070
|
|
|
|
|
4,441,029
|
|
|
|
4,701,735
|
|
|
|
5,699,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative services fees (Note 10(b))
|
|
|
959,413
|
|
|
|
785,917
|
|
|
|
499,798
|
|
Interest income
|
|
|
41,650
|
|
|
|
164,435
|
|
|
|
154,943
|
|
Loss on sale of property, plant and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,760
|
)
|
Finance fees
|
|
|
(204,231
|
)
|
|
|
-
|
|
|
|
-
|
|
Impairment of exploration and evaluation assets (Note 7)
|
|
|
(501,620
|
)
|
|
|
-
|
|
|
|
-
|
|
Unrealized loss on derivative financial liabilities (Note 8)
|
|
|
(66,631
|
)
|
|
|
-
|
|
|
|
-
|
|
Unrealized gain on gold in trust (Note 8)
|
|
|
236,217
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized foreign exchange on gold loan payable (Note 8)
|
|
|
102,104
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized foreign exchange on gold in trust (Note 8)
|
|
|
(73,937
|
)
|
|
|
-
|
|
|
|
-
|
|
Realized gain on sale of gold in trust (Note 8)
|
|
|
200,932
|
|
|
|
-
|
|
|
|
-
|
|
Foreign exchange gain (loss)
|
|
|
(15,943
|
)
|
|
|
239,716
|
|
|
|
(184,533
|
)
|
|
|
|
677,954
|
|
|
|
1,190,068
|
|
|
|
468,448
|
|
Loss before income taxes
|
|
|
(3,763,075
|
)
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
Deferred income tax recovery (Note 13)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss for the year
|
|
|
(3,763,075
|
)
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the year
|
|
|
(3,763,075
|
)
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share (Note 11)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(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,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
|
(3,763,075
|
)
|
|
|
(3,511,667
|
)
|
|
|
(5,231,295
|
)
|
Items not affecting cash
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
24,199
|
|
|
|
28,277
|
|
|
|
28,274
|
|
Impairment of exploration and evaluation assets
|
|
|
501,620
|
|
|
|
-
|
|
|
|
-
|
|
Loss on disposal of property, plant and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
1,760
|
|
Amortization of right-of-use assets
|
|
|
121,432
|
|
|
|
-
|
|
|
|
-
|
|
Arrangement fee on gold loan payable
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
Interest, accretion and standby fees on gold loan payable
|
|
|
216,918
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized loss on derivative financial liabilities
|
|
|
66,631
|
|
|
|
-
|
|
|
|
-
|
|
Unrealized gain on gold in trust
|
|
|
(236,217
|
)
|
|
|
-
|
|
|
|
-
|
|
Realized gain on sale of gold in trust
|
|
|
(200,932
|
)
|
|
|
-
|
|
|
|
-
|
|
Unrealized foreign exchange on gold loan payable
|
|
|
(102,104
|
)
|
|
|
-
|
|
|
|
-
|
|
Unrealized foreign exchange on gold in trust
|
|
|
73,937
|
|
|
|
-
|
|
|
|
-
|
|
Share-based payments
|
|
|
933,120
|
|
|
|
1,308,740
|
|
|
|
2,693,070
|
|
Changes in non-cash working capital components
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable and prepaid expenses
|
|
|
243,699
|
|
|
|
(35,453
|
)
|
|
|
11,935
|
|
Trade and other payables
|
|
|
178,447
|
|
|
|
290,182
|
|
|
|
(178,511
|
)
|
Net cash used in operating activities
|
|
|
(1,892,325
|
)
|
|
|
(1,919,921
|
)
|
|
|
(2,674,767
|
)
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit on mill equipment
|
|
|
-
|
|
|
|
(7,694,900
|
)
|
|
|
(3,642,826
|
)
|
Property, plant and equipment – purchase
|
|
|
(427,597
|
)
|
|
|
(802,804
|
)
|
|
|
(305,074
|
)
|
Exploration and evaluation assets – costs
|
|
|
(3,324,173
|
)
|
|
|
(9,674,048
|
)
|
|
|
(8,860,153
|
)
|
Net cash used in investing activities
|
|
|
(3,751,770
|
)
|
|
|
(18,171,752
|
)
|
|
|
(12,808,053
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of shares, net of share issue costs
|
|
|
-
|
|
|
|
8,838,441
|
|
|
|
19,115,418
|
|
Options exercised
|
|
|
-
|
|
|
|
16,560
|
|
|
|
1,105,290
|
|
Share issuance cost on cashless exercise of options (Note 9(d))
|
|
|
-
|
|
|
|
(17,282
|
)
|
|
|
(203,232
|
)
|
Warrants and finders’ warrants exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
2,029,872
|
|
Net proceeds on gold in trust
|
|
|
1,577,704
|
|
|
|
-
|
|
|
|
-
|
|
Repayment of lease liabilities
|
|
|
(101,975
|
)
|
|
|
-
|
|
|
|
-
|
|
Net cash from financing activities
|
|
|
1,475,729
|
|
|
|
8,837,719
|
|
|
|
22,047,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
(4,168,366
|
)
|
|
|
(11,253,954
|
)
|
|
|
6,564,528
|
|
Cash and cash equivalents, beginning of year
|
|
|
5,080,580
|
|
|
|
16,334,534
|
|
|
|
9,770,006
|
|
Cash and cash equivalents, end of year
|
|
|
912,214
|
|
|
|
5,080,580
|
|
|
|
16,334,534
|
|
Supplemental cash and cash equivalents information (Note 12)
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, 2017
|
|
|
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
|
|
Share-based payments
|
|
|
-
|
|
|
|
-
|
|
|
|
933,120
|
|
|
|
-
|
|
|
|
933,120
|
|
|
|
-
|
|
|
|
933,120
|
|
Fair value of warrants issued for arrangement fee on gold loan payable
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
50,000
|
|
Total comprehensive loss for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,763,075
|
)
|
|
|
(3,763,075
|
)
|
Balance, December 31, 2019
|
|
|
111,726,719
|
|
|
|
127,022,366
|
|
|
|
16,973,984
|
|
|
|
715,968
|
|
|
|
17,689,952
|
|
|
|
(76,127,168
|
)
|
|
|
68,585,150
|
|
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, 2019, 2018 and 2017
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 except for the revaluation of certain financial assets and financial liabilities at fair value through
profit or loss. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash
flow information.
These consolidated financial statements, including comparatives,
have been prepared on the basis of IFRS standards that are effective as at December 31, 2019.
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.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
2.
|
|
Basis of presentation (Continued)
|
|
(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.
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; and
|
|
o
|
The determination that the carrying amount of the Tuligtic Project will be recovered through use
rather than sale (Notes 7 and 13).
|
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,
warrants, and derivative financial liabilities 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;
|
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
2.
|
|
Basis of presentation (Continued)
|
|
(d)
|
Significant accounting judgments and estimates
|
|
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 property
plant and equipment and related determination of the net realizable value and write-down of those assets where applicable (Note
3(f));
|
|
o
|
The estimated incremental borrowing rate used to calculate the lease liabilities;
|
|
o
|
The estimated fair value of gold in trust; and
|
|
o
|
The estimated initial fair value of gold loan payable.
|
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
|
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 and are classified at amortized cost.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
3.
|
|
Significant accounting policies (Continued)
|
|
(c)
|
Financial instruments (continued)
|
Financial liabilities comprise the Company’s trade
and other payables. Financial liabilities are initially recognized on the date they are originated and are derecognized when the
contractual obligations are discharged or cancelled or expire. Trade and other payables and lease obligations are recognized initially
at fair value and subsequent are measured at amortized costs using the effective interest method, when materially different from
the initial amount. Derivative financial liabilities are classified as FVTPL. Fair value is determined based on the present value
of future cash flow, discounted at the market rate of interest.
|
(i)
|
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.
|
(ii)
|
Embedded derivatives
|
Derivatives may be embedded in other financial instruments
(the “host instrument”). Embedded derivatives are treated as separate derivatives when their economic characteristics
and risks are not clearly and closely related to those of the host instrument, the terms of the embedded derivative are the same
as those of a stand-alone derivative, and the combined contract is not held for trading or designated at fair value. These embedded
derivatives are measured at fair value with subsequent changes recognized in profit or loss.
|
(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:
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, 2019, 2018 and 2017
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.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
3.
|
|
Significant accounting policies (Continued)
|
|
(f)
|
Exploration and evaluation assets (Continued)
|
All capitalized exploration and
evaluation expenditures are monitored for indications of impairment.
Where a potential impairment is indicated, assessments
are performed for each area of interest. To the extent that exploration expenditure is not expected to be recovered, it is charged
to 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.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
3.
|
|
Significant accounting policies (Continued)
|
|
(h)
|
Income taxes (Continued)
|
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.
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.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
3.
|
|
Significant accounting policies (Continued)
|
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.
|
(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 11).
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
3.
|
|
Significant accounting policies (Continued)
|
|
(m)
|
Application of new and revised accounting standards effective January 1, 2019
|
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, 2019:
IFRS 16 Leases
Effective January 1, 2019, the Company adopted IFRS
16 which superseded IAS 17. The most significant effect of the new lease standard is the lessee’s recognition of the initial
present value of unavoidable future lease payments as right-of-use (“ROU”) assets and lease liabilities on the statement
of financial position, including those for most leases that would have previously been accounted for as operating leases under
IAS 17. Both leases with durations of 12 months or less and leases for low-value assets may be exempted.
The Company has office leases for its headquarter in
Vancouver, British Columbia. In accordance with the modified retrospective approach, ROU assets of $394,654 and lease liabilities
of $394,654 were recognized upon initial adoption of IFRS 16 on January 1, 2019. As a transitional practical expedient permitted
by IFRS 16 as at January 1, 2019, only contracts that were previously identified as leases applying IAS 17 and IFRIC 4, Determining
Whether an Arrangement Contains a Lease, were assessed as part of the transition to the new standard. Only contracts entered
into (or modified) after January 1, 2019 have been assessed for being, or containing, leases applying the criteria of the new standard.
The application of IFRS 16 requires the Company to make
judgments that affect the valuation of the lease liabilities and the valuation of ROU assets. These include: determining contracts
that are within the scope of IFRS 16; determining the contract term; and determining the interest rate used for the discounting
of future cash flows.
The ROU assets are recognized initially at the value of
lease liabilities at recognition with any prepaid payments, initial direct costs and dismantling costs less any lease incentives
received
The lease term determined by the Company comprises the
non-cancellable period of lease contracts; the period covered by an option to extend the leases, if the Company is reasonably certain
to exercise that option; and the periods covered by an option to terminate the lease, if the Company is reasonably certain not
to exercise that option. The amortization rate of ROU assets is based on the shorter of the useful life of the underlying asset
or the lease term determined. The present value of the lease payment is determined using the discount rate representing the weighted
average incremental borrowing rate the Company could secure. There are no restrictions or covenants imposed by the Company’s
leases.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
4.
|
|
Accounts receivable and prepaid expenses
|
Accounts receivable and prepaid expenses consist of the following:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Accounts receivable (Note 10(b))
|
|
$
|
100,209
|
|
|
$
|
300,700
|
|
Prepaid expenses
|
|
|
60,508
|
|
|
|
103,716
|
|
|
|
$
|
160,717
|
|
|
$
|
404,416
|
|
At December 31, 2019, the Company has recorded value
added taxes of $276,407 (2018 - $444,994) 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.
|
|
Right-of-use assets and lease liabilities
|
The Company has lease agreements for its headquarter
office space in Vancouver, B.C. Upon transition to IFRS 16, the Company recognized $394,654 of ROU assets and $394,654 of lease
liabilities.
The lease liability at January 1, 2019 can be reconciled
to the operating lease obligations as of December 31, 2018 as follows:
Operating lease obligations as of December 31, 2018
|
|
$
|
613,764
|
|
Discounting using the January 1, 2019 incremental borrowing rate (1)
|
|
|
(84,579
|
)
|
Operating lease obligations as of January 1, 2019
|
|
|
529,185
|
|
Less: Non-lease components
|
|
|
(134,531
|
)
|
Lease liabilities recognized as of January 1, 2019
|
|
$
|
394,654
|
|
|
(1)
|
The lease liabilities were discounted using an incremental borrowing rate as at January 1, 2019
of 9.5% per annum.
|
The continuity of lease labilities for the year ended
December 31, 2019 is as follows:
|
|
Lease Liabilities
|
|
January 1, 2019
|
|
$
|
394,654
|
|
Less: lease payments
|
|
|
(134,280
|
)
|
Interest expense
|
|
|
32,305
|
|
|
|
|
292,679
|
|
Less: current portion of lease liabilities
|
|
|
(121,948
|
)
|
Long-term portion of lease liabilities – December 31, 2019
|
|
$
|
170,731
|
|
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
5.
|
|
Right-of-use assets and lease liabilities (Continued)
|
The continuity of ROU assets for the year ended December
31, 2019 is as follows:
|
|
ROU assets
|
|
January 1, 2019
|
|
$
|
394,654
|
|
Less: amortization of ROU assets
|
|
|
(121,432
|
)
|
December 31, 2019
|
|
$
|
273,222
|
|
During the year ended December 31, 2019, the Company
recognized occupancy expenses of $39,561.
As at December 31, 2019, the remaining payments for
operating lease are due as follows:
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
Total
|
|
Office lease
|
|
$
|
191,512
|
|
|
$
|
192,336
|
|
|
$
|
48,084
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
431,932
|
|
6.
|
|
Property, plant and equipment
|
|
|
Furniture and fixtures and other
|
|
|
Computer hardware
|
|
|
Computer software
|
|
|
Geological library
|
|
|
Field equipment
|
|
|
Mill equipment
|
|
|
Total
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
158,219
|
|
|
|
248,896
|
|
|
|
196,767
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
13,673,883
|
|
|
|
14,575,172
|
|
Additions
|
|
|
-
|
|
|
|
2,450
|
|
|
|
584
|
|
|
|
-
|
|
|
|
-
|
|
|
|
424,563
|
|
|
|
427,597
|
|
December 31, 2019
|
|
|
158,219
|
|
|
|
251,346
|
|
|
|
197,351
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
14,098,446
|
|
|
|
15,002,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
138,928
|
|
|
|
223,878
|
|
|
|
172,300
|
|
|
|
49,845
|
|
|
|
225,293
|
|
|
|
-
|
|
|
|
810,244
|
|
Depreciation
|
|
|
4,613
|
|
|
|
7,719
|
|
|
|
7,413
|
|
|
|
383
|
|
|
|
4,071
|
|
|
|
-
|
|
|
|
24,199
|
|
December 31, 2019
|
|
|
143,541
|
|
|
|
231,597
|
|
|
|
179,713
|
|
|
|
50,228
|
|
|
|
229,364
|
|
|
|
-
|
|
|
|
834,443
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
19,291
|
|
|
|
25,018
|
|
|
|
24,467
|
|
|
|
1,915
|
|
|
|
20,354
|
|
|
|
13,673,883
|
|
|
|
13,764,928
|
|
December 31, 2019
|
|
|
14,678
|
|
|
|
19,749
|
|
|
|
17,638
|
|
|
|
1,532
|
|
|
|
16,283
|
|
|
|
14,098,446
|
|
|
|
14,168,326
|
|
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
6.
|
|
Property, plant and equipment (Continued)
|
|
|
Furniture and fixtures and other
|
|
|
Computer hardware
|
|
|
Computer software
|
|
|
Geological library
|
|
|
Field equipment
|
|
|
Mill equipment
|
|
|
Total
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
264,133
|
|
|
|
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
|
|
|
268,259
|
|
|
|
248,896
|
|
|
|
196,767
|
|
|
|
51,760
|
|
|
|
245,647
|
|
|
|
13,673,883
|
|
|
|
14,685,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
244,524
|
|
|
|
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
|
|
|
248,968
|
|
|
|
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 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 USD$250,000 ($326,000)
to extend the mill storage in Alaska, USA until October 31, 2019. An additional extension to October 31, 2020 was granted by paying
a further USD$250,000 ($324,700) of which was accrued in accounts payable at December 31, 2019. The Company paid the extension
fee of USD$50,000 ($64,940) on January 31, 2020 with the remaining due on June 30, 2020.
During the year ended December 31, 2019, an additional
mill mobilization payment of USD$75,000 ($99,863) (2018 - USD$352,200 ($463,777)) were made and recorded in mill equipment under
property, plant and equipment.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
7.
|
|
Exploration and evaluation assets
|
|
|
Tuligtic
|
|
|
Other Property
|
|
|
Total
|
|
Exploration and evaluation assets
|
|
$
|
|
|
$
|
|
|
$
|
|
Acquisition costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance - (December 31, 2018)
|
|
|
9,159,951
|
|
|
|
1
|
|
|
|
9,159,952
|
|
Additions
|
|
|
300,323
|
|
|
|
-
|
|
|
|
300,323
|
|
Closing balance - (December 31, 2019)
|
|
|
9,460,274
|
|
|
|
1
|
|
|
|
9,460,275
|
|
Deferred exploration costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance - (December 31, 2018)
|
|
|
45,518,518
|
|
|
|
-
|
|
|
|
45,518,518
|
|
Costs incurred during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
Drilling and related costs
|
|
|
9,948
|
|
|
|
-
|
|
|
|
9,948
|
|
Professional/technical fees
|
|
|
74,921
|
|
|
|
-
|
|
|
|
74,921
|
|
Claim maintenance/lease costs
|
|
|
165,420
|
|
|
|
-
|
|
|
|
165,420
|
|
Geochemical, metallurgy
|
|
|
150,881
|
|
|
|
-
|
|
|
|
150,881
|
|
Technical studies
|
|
|
807,270
|
|
|
|
-
|
|
|
|
807,270
|
|
Travel and accommodation
|
|
|
470,815
|
|
|
|
-
|
|
|
|
470,815
|
|
Geology, geophysics and exploration
|
|
|
233,067
|
|
|
|
-
|
|
|
|
233,067
|
|
Supplies and miscellaneous
|
|
|
112,492
|
|
|
|
-
|
|
|
|
112,492
|
|
Environmental and permit
|
|
|
262,538
|
|
|
|
-
|
|
|
|
262,538
|
|
Value-added tax (Note 4)
|
|
|
276,407
|
|
|
|
|
|
|
|
276,407
|
|
Refund - Value-added tax
|
|
|
(67,922
|
)
|
|
|
-
|
|
|
|
(67,922
|
)
|
Impairment of deferred exploration costs
|
|
|
(501,620
|
)
|
|
|
-
|
|
|
|
(501,620
|
)
|
Total deferred exploration costs during the year
|
|
|
1,994,217
|
|
|
|
-
|
|
|
|
1,994,217
|
|
Closing balance - (December 31, 2019)
|
|
|
47,512,735
|
|
|
|
-
|
|
|
|
47,512,735
|
|
Total exploration and evaluation assets
|
|
|
56,973,009
|
|
|
|
1
|
|
|
|
56,973,010
|
|
Impairment of deferred exploration costs relates to
mineral concession taxes paid on portions of certain mineral concessions dropped on the Tuligtic property.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
7.
|
|
Exploration and evaluation assets (Continued)
|
|
|
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 year
|
|
|
|
|
|
|
|
|
|
|
|
|
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 miscellaneous
|
|
|
168,725
|
|
|
|
-
|
|
|
|
168,725
|
|
Environmental and permit
|
|
|
161,671
|
|
|
|
-
|
|
|
|
161,671
|
|
Value-added tax (Note 4)
|
|
|
444,994
|
|
|
|
-
|
|
|
|
444,994
|
|
Total deferred exploration costs during the year
|
|
|
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
|
|
Title to exploration and evaluation
assets involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential
for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral claims. The Company has
investigated title to all of its exploration and evaluation assets and, to the best of its knowledge, title to all of its interests
are in good standing.
The following is a description of
the Company’s most significant property interests:
In 2001, the Company acquired by staking a 100% interest
in the Tuligtic property in Puebla, Mexico. The property contains the Ixtaca Zone.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
7.
|
|
Exploration and evaluation assets (Continued)
|
In 2015, legal proceedings against the Mexican mining
authorities regarding certain mining concessions held by the Company were initiated by the Ejido Tecoltemi. These mining concessions
covered approximately 14,000 Ha, including the Company’s project in the Ixtaca Zone and certain endowed lands of the Ejido
(the “Ejido Land”), which comprise approximately 330 Ha (the “Original Concessions”).
In 2015, Almaden commenced a process to voluntarily cancel
approximately 7,000 Ha of its Original Concessions, including the area covering the Ejido Lands. Almaden divided the Original Concessions
into nine smaller concessions, which included two smaller mining concessions which overlapped the Ejido Lands (the “Overlapping
Concessions”) and then voluntarily cancelled the Overlapping Concessions. The applicable Mexican mining authorities issued
the New Concessions and accepted the abandonment of the Overlapping Concessions in May and June of 2017 after the issuance of a
Court Order.
In 2017, the Ejido Tecoltemi filed a legal complaint about
the court order leading to the New Concessions. On February 1, 2018, the court reviewing the complaint ruled the Ejido’s
complaint was founded, and sent the ruling to the court hearing the Amparo. On December 21, 2018, the General Directorate of Mines
issued a resolution that the New Concessions are left without effect, and the Original Concessions are in full force and effect.
On February 13, 2019, the General Directorate of Mines delivered, to the court hearing the Amparo, mining certificates stating
that the Original Concessions are valid, and the New Concessions are cancelled. On December 16, 2019 the General Directorate of
Mines issued mineral title certificates directly to Almaden that the Original Concessions are active and owned by Minera Gorrión
and the New Concessions are left without effect. Currently, applicable Mexican mining authority records show the Original Concessions
as Almaden’s sole mineral claims to the Ixtaca Project.
On January 21, 2020, Almaden filed an administrative challenge
against the Mexican mining authorities’ issuance of the December 2019 Certificates. Almaden’s appeals to this change
in mineral tenure are based on Mexican legal advice that the New Concessions remain in full force and effect. Almaden continues
to file taxes and assessment reports on the New Concessions, which have been accepted by the Mexican mining authorities, and Almaden
has not received any notifications from the Mexican mining authorities regarding unpaid taxes on the Original Concessions.
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.
8.
|
|
Gold loan payable and gold in trust
|
The Company has entered into a secured gold loan agreement
(“Gold Loan”) with Almadex Minerals Ltd. (“Almadex” or the “Lender”) pursuant to which Almadex
has agreed to loan up to 1,597 ounces of gold bullion to the Company. The approximate value of this gold as at May 14, 2019 was
USD$2,072,060 or $2,790,858.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
8.
|
|
Gold loan payable and gold in trust (Continued)
|
Under the terms of the Gold Loan, the Company will be
entitled to draw-down the gold in minimum 400 ounce tranches. At any given time, the amount of gold ounces drawn multiplied by
the London Bullion Market Association (“LBMA”) AM gold price in US dollars, plus any accrued interest or unpaid fees,
shall constitute the Loan Value.
The maturity date for the Gold Loan is March 31, 2024,
and can be extended by two years at the discretion of the Company (the “Term”). Repayment of the Loan Value shall be
made either through delivery of that amount of gold drawn, or through the issuance of common shares of the Company (“Shares”),
according to the Lender’s discretion. Mandatory prepayment shall be required in the event that the Company’s Ixtaca
gold-silver project located in Puebla State, Mexico (the “Ixtaca Project”) enters into commercial production during
the Term, requiring the Company to deliver 100 gold ounces per month to the Lender. In addition, the Company has the right to pre-pay
the Loan Value at any time without penalty, in either gold bullion or Shares as chosen by the Lender, and the Lender has the right
to convert the Loan Value into Shares at any time during the Term. The conversion rate is equal to 95% of the 5 trading day volume
weighted average price of the Share on the Toronto Stock Exchange or an equivalent.
The interest rate of the Gold Loan is 10% of the Loan
Value per annum, calculated monthly, paid in arrears. Interest payments can either be accrued to the Loan Value, or paid by the
Company in cash or gold bullion. A standby fee of 1% per annum, accrued quarterly, will be applied to any undrawn amount on the
Gold Loan.
In addition, the Company has issued Almadex 500,000 transferable
share purchase warrants (“Warrants”), with an exercise price of $1.50 per Share and expiry date of May 14, 2024 as
an arrangement fee to cover the administrative costs of setting up the credit facility. These warrants were valued at $50,000 using
the Black-Scholes option-pricing model with the following assumptions: expected life of five years, risk-free interest rate of
1.54%, expected dividend yield of 0% and expected volatility of 44.25%.
Security for the loan is certain equipment related to
the Rock Creek Mill, which is not required for the Ixtaca Project. The Gold Loan includes industry standard provisions in the event
of default, material breach and change of control.
The Gold Loan was recorded at fair value at inception
and is subsequently measured at amortized cost using the effective interest method, recognizing interest expense on an effective
yield basis.
The Company has determined that the Gold Loan contains
multiple derivatives which are embedded in the US dollar denominated debt instrument. As the convertible Gold Loan is denominated
in US dollars and is convertible into common shares based upon a variable Canadian dollar conversion rate, the fixed for fixed
criteria is not met. As such, the conversion option cannot be classified as an equity instrument and is deemed to have no value.
The embedded derivative from indexation of the loan principal portion to the movement in the price of gold is classified as a derivate
financial liability and is marked to market at each period end using the Black-Scholes option-pricing model.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
8.
|
|
Gold loan payable and gold in trust (Continued)
|
At inception, the following assumptions were used: expected
life of five years, risk-free interest rate of 1.57% and expected volatility of 11.06%. The fair value of the embedded derivative
for the year ended December 31, 2019 increased by $66,631 based on the following assumptions used in the Black-Scholes option-pricing
model: expected life of 4.25 years, risk-free interest rate of 1.65% and expected volatility of 12.50%.
|
|
|
|
Gold loan payable, May 14, 2019
|
|
$
|
2,790,858
|
|
Less derivative financial liabilities on initial recognition
|
|
|
(378,324
|
)
|
Accrued interest expense
|
|
|
39,760
|
|
Accrued standby fees
|
|
|
13,527
|
|
Accretion expense
|
|
|
158,495
|
|
Expenses
|
|
|
5,136
|
|
Foreign exchange difference
|
|
|
(88,114
|
)
|
Gold loan payable, December 31, 2019
|
|
$
|
2,541,338
|
|
|
|
|
|
|
Derivative financial liabilities, May 14, 2019
|
|
$
|
378,324
|
|
Change in fair value through profit & loss
|
|
|
66,631
|
|
Foreign exchange difference
|
|
|
(13,990
|
)
|
Derivative financial liabilities, December 31, 2019
|
|
$
|
430,965
|
|
As at December 31, 2019, Almaden has 797 ounces of gold
bullion on its account at a fair value of $1,576,366.
On September 27, 2019, the Company received $800,000 on
the sale of 400 ounces of gold in trust and has recorded a gain on sale of gold in trust of $112,704.
On November 21, 2019, the Company received $777,704 on
the sale of 400 ounces of gold in trust and has recorded a gain on sale of gold in trust of $88,228.
|
|
Ounces
|
|
|
|
|
Gold in trust, May 14, 2019
|
|
|
1,597
|
|
|
$
|
2,790,858
|
|
Sale of gold in trust
|
|
|
(800
|
)
|
|
|
(1,577,704
|
)
|
Gain on sale
|
|
|
-
|
|
|
|
200,932
|
|
Change in fair value through profit & loss
|
|
|
-
|
|
|
|
236,217
|
|
Foreign exchange difference
|
|
|
-
|
|
|
|
(73,937
|
)
|
Gold in trust, December 31, 2019
|
|
|
797
|
|
|
$
|
1,576,366
|
|
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
Share capital and reserves
|
|
(a)
|
Authorized share capital
|
At December 31, 2019, 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 placements and other issues of common shares in 2019, 2018
and 2017
|
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, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
Share capital and reserves (Continued)
|
The continuity of warrants for the years ended December
31, 2019, 2018 and 2017 are as follows:
|
|
Exercise
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Expiry date
|
|
price
|
|
|
2018
|
|
|
Issued
|
|
|
Exercised
|
|
|
Expired
|
|
|
2019
|
|
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
|
|
May 14, 2024
|
|
$
|
1.50
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
500,000
|
|
Warrants outstanding and exercisable
|
|
|
|
|
|
|
11,407,199
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
(1,565,849
|
)
|
|
|
10,341,350
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.91
|
|
|
$
|
1.50
|
|
|
|
-
|
|
|
$
|
2.00
|
|
|
$
|
1.88
|
|
The weighted average remaining life of warrants outstanding
at December 31, 2019 was 1.53 years (2018 – 2.14 years).
|
|
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).
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
Share capital and reserves (Continued)
|
|
|
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
|
|
The weighted average remaining life of warrants outstanding
at December 31, 2017 was 1.95 years (2016 – 1.34 years).
The weighted average fair value of finders’ warrants
granted during the years ended December 31, 2019, 2018 and 2017 calculated using the Black-Scholes option-pricing 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
|
500,000
|
|
May 14, 2019
|
|
$ 0.10
|
|
1.54%
|
|
5
|
|
44.25%
|
|
$Nil
|
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
|
|
(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, 2019, the Company had reserved 1,165,672 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, 2019, 2018 and 2017 vested
on the grant date.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
Share capital and reserves (Continued)
|
|
(d)
|
Share purchase option compensation plan (continued)
|
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, 2019, 2018 and 2017 are as follows:
Expiry date
|
|
Exercise
price
|
|
|
December 31,
2018
|
|
|
Granted
|
|
|
Exercised
|
|
|
Expired
|
|
|
December 31,
2019
|
|
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
|
|
|
|
1,095,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
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
|
|
February 7, 2021
|
|
$
|
0.84
|
|
|
|
-
|
|
|
|
425,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
425,000
|
|
March 29, 2021
|
|
$
|
1.08
|
|
|
|
400,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400,000
|
|
March 29, 2021
|
|
$
|
0.90
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
May 6, 2021
|
|
$
|
0.69
|
|
|
|
-
|
|
|
|
557,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
557,000
|
|
July 7, 2021
|
|
$
|
0.80
|
|
|
|
-
|
|
|
|
1,612,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,612,000
|
|
August 13, 2021
|
|
$
|
1.01
|
|
|
|
-
|
|
|
|
150,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
150,000
|
|
September 16, 2021
|
|
$
|
0.90
|
|
|
|
-
|
|
|
|
1,160,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,160,000
|
|
December 12, 2021
|
|
$
|
1.00
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
200,000
|
|
Options outstanding and exercisable
|
|
|
|
|
|
|
9,707,000
|
|
|
|
4,004,000
|
|
|
|
-
|
|
|
|
(3,704,000
|
)
|
|
|
10,007,000
|
|
Weighted average exercise price
|
|
|
|
|
|
$
|
1.19
|
|
|
$
|
0.83
|
|
|
|
-
|
|
|
$
|
1.38
|
|
|
$
|
0.97
|
|
The weighted average remaining life of stock options
outstanding at December 31, 2019 was 1.02 years (2018 – 1.24 years).
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
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, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
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, 2019, 2018 and 2017
Expressed in Canadian dollars
9.
|
|
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).
The weighted average fair value of options granted during
the years ended December 31, 2019, 2018 and 2017, calculated using the Black-Scholes option-pricing 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
|
1,160,000
|
|
September 16, 2019
|
|
$0.29
|
|
1.60%
|
|
2
|
|
50.73%
|
|
$Nil
|
150,000
|
|
August 13, 2019
|
|
$0.28
|
|
1.35%
|
|
2
|
|
50.20%
|
|
$Nil
|
1,612,000
|
|
July 4, 2019
|
|
$0.19
|
|
1.58%
|
|
2
|
|
45.82%
|
|
$Nil
|
557,000
|
|
May 6, 2019
|
|
$0.17
|
|
1.59%
|
|
2
|
|
45.42%
|
|
$Nil
|
100,000
|
|
March 1, 2019
|
|
$0.22
|
|
1.68%
|
|
2
|
|
50.79%
|
|
$Nil
|
425,000
|
|
January 3, 2019
|
|
$0.31
|
|
1.91%
|
|
2
|
|
50.28%
|
|
$Nil
|
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
|
Total share-based payments expenses as a result of options
granted and vested during the year ended December 31, 2019 was $933,120 (2018 - $1,308,740; 2017
- $2,693,070).
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
10.
|
|
Related party transactions and balances
|
|
(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, Corporate
Development, the Vice President Operations & Projects, and the Vice President, Project Development. The net aggregate compensation
paid or payable to key management for services after recovery from Azucar Minerals Ltd. and Almadex Minerals Ltd. (Note 10 (b))
is as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits
|
|
$
|
681,291
|
|
|
$
|
952,079
|
|
|
$
|
813,400
|
|
Share-based payments
|
|
|
768,020
|
|
|
|
1,090,540
|
|
|
|
2,216,170
|
|
Directors’ fees
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
70,000
|
|
|
|
$
|
1,519,311
|
|
|
$
|
2,112,619
|
|
|
$
|
3,099,570
|
|
|
(b)
|
Administrative Services Agreements
|
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 an administrative services agreement between the Company and Almadex.
During the year ended December 31, 2019, the Company
received $639,320 (2018 - $542,657; 2017 - $499,798) from Azucar for administrative services fees included in other income and
received $320,093 (2018 – $243,260; 2017 - $Nil) from Almadex for administrative services fees included in other income.
At December 31, 2019, included in accounts receivable
is $61,873 (2018 - $170,181) due from Azucar and $34,296 (2018 - $116,268) due from Almadex in relation to expenses recoveries.
At December 31, 2019, the Company accrued $133,498 (2018
- $37,533) payable to Almadex for drilling equipment rental services in Mexico.
|
(c)
|
Other related party transactions
|
During the year ended December 31, 2019, the Company
employed the Chairman’s daughter for a salary of $48,800 less statutory deductions (2018 - $48,800; 2017 - $43,800) for marketing
and administrative services provided to the Company.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
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, 2019 was based on the loss attributable to common shareholders of $3,763,075 (2018 - $3,511,667; 2017 -
$5,231,295) and a weighted average number of common shares outstanding of 111,726,719 (2018 - 107,584,263; 2017 - 95,873,417).
The calculation of diluted net
loss per share for the year ended December 31, 2019, 2018 and 2017 did not include the effect of stock options and warrants, as
they were considered to be anti-dilutive.
12.
|
|
Supplemental cash flow information
|
Supplemental information regarding
non-cash transactions is as follows:
Investing and financing activities
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets expenditures included in trade and other payables
|
|
$
|
166,154
|
|
|
$
|
694,167
|
|
|
$
|
493,943
|
|
Right-of-use assets
|
|
|
(394,654
|
)
|
|
|
-
|
|
|
|
-
|
|
Gold in trust
|
|
|
(2,790,858
|
)
|
|
|
-
|
|
|
|
-
|
|
Gold loan payable
|
|
|
2,412,534
|
|
|
|
-
|
|
|
|
-
|
|
Derivative financial liabilities
|
|
|
378,324
|
|
|
|
-
|
|
|
|
-
|
|
Lease liabilities
|
|
|
394,654
|
|
|
|
-
|
|
|
|
-
|
|
Fair value of finders’ warrants
|
|
|
-
|
|
|
|
36,566
|
|
|
|
180,691
|
|
Fair value of finders’ warrants transferred to share capital on exercise of finders’ warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
12,797
|
|
Fair value of cash stock options transferred to share capital on exercise of options
|
|
|
-
|
|
|
|
6,670
|
|
|
|
496,859
|
|
Fair value of cashless stock options transferred to share capital on exercise of options
|
|
|
-
|
|
|
|
160,080
|
|
|
|
387,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
12.
|
|
Supplemental cash flow information (Continued)
|
Supplemental information regarding
the split between cash and cash equivalents is as follows:
|
|
December 31,
2019
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
912,214
|
|
|
$
|
2,580,580
|
|
Term Deposits
|
|
|
-
|
|
|
|
2,500,000
|
|
|
|
$
|
912,214
|
|
|
$
|
5,080,580
|
|
|
(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, 2019
|
|
|
December 31,
2018
|
|
|
December 31, 2017
|
|
Loss before income taxes
|
|
$
|
(3,763,075
|
)
|
|
$
|
(3,511,667
|
)
|
|
$
|
(5,231,295
|
)
|
Statutory rate
|
|
|
27.00
|
%
|
|
|
27.00
|
%
|
|
|
26.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected income tax
|
|
|
(1,016,030
|
)
|
|
|
(948,150
|
)
|
|
|
(1,360,137
|
)
|
Effect of different tax rates in foreign jurisdictions
|
|
|
(23,478
|
)
|
|
|
(38,010
|
)
|
|
|
9,728
|
|
Non-deductible share-based payments
|
|
|
251,942
|
|
|
|
353,360
|
|
|
|
700,198
|
|
Other permanent items
|
|
|
10,121
|
|
|
|
2,766
|
|
|
|
3,360
|
|
Change in deferred tax assets not recognized
|
|
|
50,106
|
|
|
|
151,738
|
|
|
|
1,921,226
|
|
Impact of change in tax rates
|
|
|
-
|
|
|
|
-
|
|
|
|
(348,020
|
)
|
Share issuance costs
|
|
|
(2,638
|
)
|
|
|
(172,294
|
)
|
|
|
(399,602
|
)
|
True-ups and other
|
|
|
729,977
|
|
|
|
650,590
|
|
|
|
(526,753
|
)
|
Deferred income tax (recovery) expenses
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
(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, 2019, 2018 and 2017
Expressed in Canadian dollars
13.
|
|
Income Taxes (Continued)
|
The significant components of deferred income tax assets
(liabilities) are as follows:
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Non-capital losses
|
|
$
|
4,132,896
|
|
|
$
|
4,282,555
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Exploration and evaluation assets
|
|
|
(5,567,778
|
)
|
|
|
(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, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
Non-capital loss carry forwards
|
|
$
|
20,101,127
|
|
|
$
|
18,758,080
|
|
Capital loss carry forwards
|
|
|
23,352,906
|
|
|
|
24,538,993
|
|
Exploration and evaluation assets
|
|
|
8,188,922
|
|
|
|
8,221,842
|
|
Share issue costs
|
|
|
1,035,649
|
|
|
|
1,554,264
|
|
Property, plant and equipment
|
|
|
493,445
|
|
|
|
483,609
|
|
Donations
|
|
|
10,000
|
|
|
|
-
|
|
Investment tax credit
|
|
|
239,849
|
|
|
|
239,849
|
|
|
|
$
|
53,421,898
|
|
|
$
|
53,796,637
|
|
At December 31, 2019, the Company had operating loss
carry forwards available for tax purposes in Canada of $19,498,082 (2018 - $17,858,501) which expire between 2032 and 2039 and
in Mexico of $14,383,103 (2018 - $15,173,872) which expire between 2022 and 2029.
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
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.
Except for derivative financial liabilities, the Company
does not carry any financial instruments at FVTPL.
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, 2019, 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
|
|
$
|
151,844
|
|
|
$
|
97,257
|
|
Gold in trust
|
|
|
1,576,366
|
|
|
|
-
|
|
Total assets
|
|
$
|
1,728,210
|
|
|
$
|
97,257
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
$
|
341,170
|
|
|
$
|
141,692
|
|
Gold loan payable
|
|
|
2,541,338
|
|
|
|
-
|
|
Derivatives financial liabilities
|
|
|
430,965
|
|
|
|
-
|
|
Total liabilities
|
|
$
|
3,313,473
|
|
|
$
|
141,692
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
$
|
(1,585,263
|
)
|
|
$
|
(44,435
|
)
|
A 10% change in the US dollar
exchange rate relative to the Canadian dollar would change the Company’s net loss by $159,000.
A 10% change in the Mexican peso relative to the Canadian
dollar would change the Company’s net loss by $4,000.
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, 2019, 2018 and 2017
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, 2019, 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 debt bearing variable interest rate.
A 1% change in the interest rate would change the Company’s
net loss by $9,000.
|
(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.
|
(f)
|
Classification of financial instruments
|
IFRS 13 establishes a fair value hierarchy that prioritizes
the inputs to valuation techniques used to measure fair value as follows:
Level 1 – quoted prices (unadjusted) in active
markets for identical assets or liabilities;
Level 2 – inputs other than quoted prices included
in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
14.
|
|
Financial instruments (Continued)
|
|
(f)
|
Classification of financial instruments (Continued)
|
Level 3 – inputs for the asset or liability that
are not based on observable market data (unobservable inputs).
The following table sets forth the Company’s financial
assets and liabilities measured at fair value by level within the fair value hierarchy.
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
Derivative financial liabilities
|
|
|
-
|
|
|
|
430,965
|
|
|
|
-
|
|
|
|
430,965
|
|
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,
2019
|
|
|
December 31, 2018
|
|
Canada
|
|
$
|
339,364
|
|
|
$
|
86,372
|
|
United States
|
|
|
14,098,446
|
|
|
|
13,673,883
|
|
Mexico
|
|
|
56,976,748
|
|
|
|
54,683,143
|
|
|
|
$
|
71,414,558
|
|
|
$
|
68,443,398
|
|
Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2019, 2018 and 2017
Expressed in Canadian dollars
|
(a)
|
On January 30, 2020 and February 14, 2020, the Company entered into two amended option
agreements to secure land holdings on the Tuligtic project. The Company has the option to acquire a 100% ownership of two
land holdings for total cash payments of USD$675,000 and $4,000,000 Mexico pesos (MXN) payable over two years respectively.
Payments are not refundable upon termination of the option agreement.
|
|
(b)
|
On March 4, 2020, the Company granted certain employees, officers, directors and consultants an
aggregate of 1,130,000 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 $0.47 per share until March 4, 2022.
|
|
(c)
|
On March 10, 2020, the Company announced a proposed non-brokered private placement of 4,900,000
common shares units at a price of $0.41 per unit for gross proceeds of $2,009,000. Each unit would consist of one common share
and one non-transferable common stock warrant. Each warrant will entitle the holder to purchase one common share of the Company
at a price of $0.65 per share for 3 years following the closing of the placement. Subsequently, on March 19, 2020, the Company
announced a re-pricing of the proposed non-brokered private placement to amend terms of the offering as follows:
|
|
•
|
The purchase price of the Units of the Offering has been reduced from $0.41 to $0.37 per Unit.
|
|
•
|
The exercise price of each share purchase Warrant has been reduced from $0.65 to $0.50.
|
|
•
|
The size of the Offering has been increased from up to 4,900,000 Units to up to 5,400,000 Units,
which may be increased.
|
All other material terms of the previously announced
Offering remain the same. Closing of the placement is anticipated to be on or about March 27, 2020 and is subject to market conditions
and receipt of applicable regulatory approvals.
|
(d)
|
In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This
contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected
workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the
Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business
or ability to raise funds.
|
37
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