EX-99.1 2 exh_991.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Interim Financial Statements of

 

 

Almaden Minerals Ltd.

 

For the three and six months ended June 30, 2021

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTICE OF NO AUDITOR REVIEW OF CONDENSED

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

The accompanying unaudited condensed consolidated interim financial statements of Almaden Minerals Ltd (“the Company”) for the three and six months ended June 30, 2021 have been prepared by the management of the Company and approved by the Company’s Audit Committee and the Company’s Board of Directors.

 

Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the consolidated interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

 

The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by CPA Canada for a review of the condensed consolidated interim financial statements by an entity’s auditor.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Almaden Minerals Ltd.

Condensed consolidated interim statements of financial position

(Unaudited - Expressed in Canadian dollars)

 

 

   June 30,
2021		   December 31,
2020		 
    $    $ 
ASSETS          
Current assets          
Cash and cash equivalents (Note 12)   12,381,826    2,534,698 
Gold in trust (Note 8)   864,825    955,781 
Accounts receivable and prepaid expenses (Note 4)   293,334    175,008 
    13,539,985    3,665,487 
           
Non-current assets          
Right-of-use assets (Note 5)   91,074    151,790 
Property, plant and equipment (Note 6)   14,021,732    14,025,665 
Exploration and evaluation assets (Note 7)   60,083,890    58,605,829 
    74,196,696    72,783,284 
TOTAL ASSETS   87,736,681    76,448,771 
           
LIABILITIES          
Current liabilities          
Trade and other payables (Note 10 (a)(c))   458,748    447,551 
Current portion of lease liabilities (Note 5)   104,851    134,950 
    563,599    582,501 
           
Non-current liabilities          
Long-term portion of lease liabilities (Note 5)   -    35,781 
Gold loan payable (Note 8)   2,955,221    2,842,756 
Derivative financial liabilities (Note 8)   311,650    375,417 
Deferred income tax liability   1,434,882    1,434,882 
    4,701,753    4,688,836 
Total liabilities   5,265,352    5,271,337 
           
EQUITY          
Share capital (Note 9)   143,542,559    131,189,978 
Reserves (Note 9)   20,099,242    19,243,992 
Deficit   (81,170,472)   (79,256,536)
Total equity   82,471,329    71,177,434 
TOTAL EQUITY AND LIABILITIES   87,736,681    76,448,771 

 

Subsequent event (Note 16)

 

These condensed consolidated interim financial statements are authorized for issue by the Board of Directors on August 9, 2021.

 

They are signed on the Company’s behalf by:

 

 

 

/s/Duane Poliquin  /s/Elaine Ellingham
Director  Director

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

 

 

 

Almaden Minerals Ltd.

Condensed consolidated interim statements of comprehensive loss

(Unaudited - Expressed in Canadian dollars)

 

 

 

   Three months ended June 30,   Six months ended June 30, 
   2021   2020   2021   2020 
Expenses  $   $   $   $ 
Professional fees (Note 10(a))   204,208    119,343    396,005    279,604 
Salaries and benefits (Note 10(a))   333,082    364,342    660,918    722,001 
Travel and promotion   102,331    7,594    115,637    35,924 
Depreciation (Note 6)   4,119    4,897    8,186    9,649 
Office and license (Note 10(b))   67,002    50,352    91,351    78,492 
Amortization of right-of-use assets (Note 5)   30,358    30,358    60,716    60,716 
Occupancy expenses (Note 5)   11,549    11,312    16,500    22,624 
Interest expense on lease liabilities (Note 5)   2,734    5,743    6,247    12,188 
Interest, accretion and standby fees on gold loan payable (Note 8)   95,416    92,470    189,119    185,509 
Listing and filing fees   20,958    22,697    165,610    164,254 
Insurance   20,881    19,302    40,765    35,021 
Share-based payments (Note 9(c) and 10(a))   60,000    747,200    1,032,500    973,200 
    952,638    1,475,610    2,783,554    2,579,182 
                     
Other income (loss)                    
Administrative services fees (Note 10(b))   234,557    379,861    561,603    745,613 
Interest and other income (Note 5 and Note 7(c))   428,925    13,155    435,305    21,017 
Finance fees   -    -    -    (54,577)
Unrealized gain (loss) on derivative financial liabilities (Note 8)   932    (27,994)   54,573    (35,202)
Unrealized gain (loss) on gold in trust (Note 8)   35,645    89,829    (67,061)   135,812 
Unrealized foreign exchange gain (loss) on gold loan payable (Note 8)   46,237    131,636    85,848    (142,250)
Unrealized foreign exchange gain (loss) on gold in trust (Note 8)   (12,109)   (35,607)   (23,895)   44,678 
Realized gain on sale of gold in trust (Note 8)   -    -    -    19,413 
Foreign exchange gain (loss)   (264,623)   14,145    (176,755)   (11,257)
    469,564    565,025    869,618    723,247 
                     
Total comprehensive loss for the period   (483,074)   (910,585)   (1,913,936)   (1,855,935)
                     
Basic and diluted net loss per share (Note 11)   (0.00)   (0.01)   (0.01)   (0.02)

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

 

 

 

Almaden Minerals Ltd.

Condensed consolidated interim statements of cash flows

(Unaudited - Expressed in Canadian dollars)

 

 

 

   Three months ended June 30,   Six months ended June 30, 
   2021   2020   2021   2020 
   $   $   $   $ 
Operating activities                    
Net loss for the period   (483,074)   (910,585)   (1,913,936)   (1,855,935)
Items not affecting cash                    
Depreciation   4,119    4,897    8,186    9,649 
Amortization of right-of-use assets   30,358    30,358    60,716    60,716 
Interest, accretion and standby fees on gold loan payable   95,416    92,470    189,119    185,509 
Unrealized (gain) loss on derivative financial liabilities   (932)   27,994    (54,573)   35,202 
Unrealized (gain) loss on gold in trust   (35,645)   (89,829)   67,061    (135,812)
Realized gain on sale of gold in trust   -    -    -    (19,413)
Unrealized foreign exchange (gain) loss on gold loan payable   (46,237)   (131,636)   (85,848)   142,250 
Unrealized foreign exchange (gain) loss on gold in trust   12,109    35,607    23,895    (44,678)
Share-based payments   60,000    747,200    1,032,500    973,200 
Changes in non-cash working capital components                    
Accounts receivable and prepaid expenses   (114,992)   (54,816)   (118,326)   (62,103)
Trade and other payables   (211,744)   (209,831)   (33,367)   (193,182)
Net cash used in operating activities   (690,622)   (458,171)   (824,573)   (904,597)
Investing activities                    
Property, plant and equipment – purchase   (4,253)   (3,685)   (4,253)   (5,815)
Exploration and evaluation assets – costs   (749,434)   (221,218)   (1,433,497)   (1,019,685)
Net cash used in investing activities   (753,687)   (224,903)   (1,437,750)   (1,025,500)
Financing activities                    
Issuance of shares, net of share issue costs   (82,102)   (22,425)   11,610,581    1,996,224 
Options exercised   -    8,500    564,750    8,500 
Net proceeds on gold in trust   -    -    -    818,360 
Repayment of lease liabilities   (33,330)   (30,320)   (65,880)   (59,114)
Net cash from financing activities   (115,432)   (44,245)   12,109,451    2,763,970 
                     
Change in cash and cash equivalents   (1,559,741)   (727,319)   9,847,128    833,873 
Cash and cash equivalents, beginning of period   13,941,567    2,473,406    2,534,698    912,214 
Cash and cash equivalents, end of period   12,381,826    1,746,087    12,381,826    1,746,087 
Supplemental cash flow information (Note 12)                    

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

 

 

 

 

Almaden Minerals Ltd.

Condensed consolidated interim statements of changes in equity

(Unaudited – Expressed in Canadian dollars)

 

   Share capital   Reserves         
   Number of shares   Amount   Share-based payments   Warrants   Total
reserves		   Deficit  

 

Total

 
       $   $   $   $   $   $ 
Balance, January 1, 2020   111,726,719    127,022,366    16,973,984    715,968    17,689,952    (76,127,168)   68,585,150 
Share-based payments   -    -    973,200    -    973,200    -    973,200 
Private placements, net of share issue costs   5,509,658    1,996,224    -    -    -    -    1,996,224 
Shares issued for cash on exercise of stock options   20,000    8,500    -    -    -    -    8,500 
Fair value of cash stock options transferred to share capital   -    2,800    (2,800)   -    (2,800)   -    - 
Total comprehensive loss for the period   -    -    -    -    -    (1,855,935)   (1,855,935)
Balance, June 30, 2020   117,256,377    129,029,890    17,944,384    715,968    18,660,352    (77,983,103)   69,707,139 
Share-based payments   -    -    811,300    -    811,300    -    811,300 
Private placements, net of share issue costs   3,100,000    1,853,985    -    -    -    -    1,853,985 
Shares issued for cash on exercise of stock options   168,000    149,590    -    -    -    -    149,590 
Fair value of cash stock options transferred to share capital   -    49,180    (49,180)   -    (49,180)   -    - 
Shares issued on cashless exercise of stock options   105,877    -    -    -    -    -    - 
Share issue costs on cashless exercise of options   -    (40,157)   -    -    -    -    (40,157)
Share issue costs   -    (40,990)   -    -    -    -    (40,990)
Fair value of cashless stock options transferred to share capital   -    178,480    (178,480)   -    (178,480)   -    - 
Warrants exercised   20,000    10,000    -    -    -    -    10,000 
Total comprehensive loss for the period   -    -    -    -    -    (1,273,433)   (1,273,433)
Balance, December 31, 2020   120,650,254    131,189,978    18,528,024    715,968    19,243,992    (79,256,536)   71,177,434 
Share-based payments   -    -    1,032,500    -    1,032,500    -    1,032,500 
Private placements, net of share issue costs   15,846,154    11,610,581    -    -    -    -    11,610,581 
Shares issued for cash on exercise of stock options   725,000    564,750    -    -    -    -    564,750 
Fair value of cash stock options transferred to share capital   -    177,250    (177,250)   -    (177,250)   -    - 
Total comprehensive loss for the period   -    -    -    -    -    (1,913,936)   (1,913,936)
Balance, June 30, 2021   137,221,408    143,542,559    19,383,274    715,968    20,099,242    (81,170,472)   82,471,329 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.

 

 

Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

 

1.Nature of operations

 

Almaden Minerals Ltd. (the “Company” or “Almaden”) was formed by amalgamation under the laws of the Province of British Columbia, Canada on February 1, 2002. The Company is an exploration stage public company that is engaged directly in the exploration and development of exploration and evaluation properties in Canada and Mexico. The address of the Company’s registered office is Suite 1710 –1177 West Hastings Street, Vancouver, BC, Canada V6E 2L3.

 

The Company is in the business of exploring and developing mineral projects and its principal asset is the Ixtaca precious metals project located on its Tuligtic claim in Mexico. The Company has not yet determined whether this project has economically recoverable mineral reserves. The recoverability of amounts shown for mineral properties is dependent upon the establishment of a sufficient quantity of economically recoverable reserves, the ability of the Company to obtain the necessary financing or participation of joint venture partners to complete development of the properties, and upon future profitable production or proceeds from the disposition of exploration and evaluation assets.

 

2.Basis of presentation

 

(a)       Statement of Compliance with International Financial Reporting Standards (“IFRS”)

 

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance and compliance with International Accounting Standard (“IAS”) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

 

(b)       Basis of preparation

 

These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. This interim financial report does not include all of the information required of a full annual financial report and is intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period. It is therefore recommended that this financial report be read in conjunction with the annual audited consolidated financial statements of the Company for the year ended December 31, 2020. However, this interim financial report provides selected significant disclosures that are required in the annual audited consolidated financial statements under IFRS.

 

Except as described below, these condensed consolidated interim financial statements follow the same accounting policies and methods of application as the annual audited consolidated financial statements for the year ended December 31, 2020.

 

The changes in accounting policies are also expected to be reflected in the Company's consolidated financial statements as at and for the year ending December 31, 2021.

 

Certain amounts in prior years have been reclassified to conform to the current period presentation.

 

 6 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

3.Significant accounting policies

 

These condensed consolidated interim financial statements do not include all note disclosures required by IFRS for annual financial statements and, therefore, should be read in conjunction with the annual financial statements for the year ended December 31, 2020. In the opinion of management, all adjustments considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

 

4.Accounts receivable and prepaid expenses

 

Accounts receivable and prepaid expenses consist of the following:

 

   June 30,   December 31, 
   2021   2020 
Accounts receivable (Note 10(b))  $177,946   $122,967 
Prepaid expenses   115,388    52,041 
   $293,334   $175,008 

 

During the period ended June 30, 2021, the Company has recorded value added taxes of $142,528 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 continuity of lease liabilities is as follows:

 

   June 30,
2021		   December 31,
2020		 
Opening balance  $170,731   $292,679 
Less: lease payments   (72,127)   (143,428)
Interest expense   6,247    21,480 
    104,851    170,731 
Less: current portion of lease liabilities   (104,851)   (134,950)
Long-term portion of lease liabilities  $-   $35,781 

 

 7 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars
5.Right-of-use assets and lease liabilities (Continued)

 

The Company entered into a sublease arrangement with a third party to lease an office unit from May 1, 2021 to March 31, 2022 under the same terms of the Company’s lease. The Company remains beholden to the obligations set out in its lease dated October 31, 2018. The rental income during the period ended June 30, 2021 from this operating sublease was $5,436 and recorded in interest and other income.

 

The continuity of ROU assets is as follow:

 

   June 30,
2021		   December 31,
2020		 
Opening balance  $151,790   $273,222 
Less: amortization of ROU assets   (60,716)   (121,432)
   $91,074   $151,790 

 

During the six months ended June 30, 2021, the Company recognized occupancy expenses of $16,500 related to short term leases.

 

As at June 30, 2021, the remaining payments for the lease are due as follows:

 

   2021   2022   2023   2024   2025   Total 
Office lease  $96,168   $48,084    -    -    -   $144,252 

 

 

6.Property, plant and equipment

 

   Furniture and fixtures and other   Computer hardware   Computer software   Geological library   Field equipment   Mill equipment   Total 
   $   $   $   $   $   $   $ 
Cost                            
December 31, 2020   158,219    256,873    198,607    51,760    245,647    13,968,566    14,879,672 
Additions   -    3,879    374    -    -    -    4,253 
June 30, 2021   158,219    260,752    198,981    51,760    245,647    13,968,566    14,883,925 
                                    
Accumulated depreciation                                   
December 31, 2020   147,662    238,060    185,130    50,534    232,621    -    854,007 
Depreciation   1,864    2,870    2,026    123    1,303    -    8,186 
June 30, 2021   149,526    240,930    187,156    50,657    233,924    -    862,193 
                                    
Carrying amounts                                   
December 31, 2020   10,557    18,813    13,477    1,226    13,026    13,968,566    14,025,665 
June 30, 2021   8,693    19,822    11,825    1,103    11,723    13,968,566    14,021,732 

 

 8 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars
7.Exploration and evaluation assets

 

   Tuligtic   Other Property   Total 
Exploration and evaluation assets  $   $   $ 
Acquisition costs:               
Opening balance - (December 31, 2020)   10,319,510    1    10,319,511 
Additions   867,814    -    867,814 
Closing balance - (June 30, 2021)   11,187,324    1    11,187,325 
Deferred exploration costs:               
Opening balance - (December 31, 2020)   48,286,318    -    48,286,318 
Costs incurred during the period               
Professional/technical fees   99,609    -    99,609 
Claim maintenance/lease costs   80,274    -    80,274 
Geochemical, metallurgy   997    -    997 
Travel and accommodation   101,544    -    101,544 
Geology, geophysics and exploration   128,818    -    128,818 
Supplies and miscellaneous   67,788    -    67,788 
Environmental and permit   409,214    -    409,214 
Value-added tax (Note 4)   142,528    -    142,528 
Refund value-added tax   (420,525)   -    (420,525)
Total deferred exploration costs during the period   610,247    -    610,247 
Closing balance - (June 30, 2021)   48,896,565    -    48,896,565 
Total exploration and evaluation assets   60,083,889    1    60,083,890 

 

The following is a description of the Company’s most significant property interests:

 

(a)Tuligtic

 

In 2001, the Company acquired by staking a 100% interest in the Tuligtic property in Puebla, Mexico. The property contains the Ixtaca Zone.

 

(b)Other Property

 

The Company holds a 40% carried interest in the Logan property located in the Yukon Territory, Canada. The project is carried at a nominal value of $1.

 

(c)Other

 

Expenditures incurred by the Company in Mexico are subject to Mexican Value added tax (“VAT”). The VAT is included in exploration and evaluation assets as incurred. Under Mexican law VAT paid can be used in the future to offset amounts resulting from VAT charge on sales. Under certain circumstances and subject to approval from tax authorities as Company can also apply for early refund of VAT prior to generating sales. During 2021, the Company received a VAT recovery of $420,525 and other income of $423,492 related to the VAT refund from prior years are recorded in interest and other income.

 

 9 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

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.

 

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.

 

 10 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - 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 period ended June 30, 2021 decreased by $54,573 based on the following assumptions used in the Black-Scholes option-pricing model: expected life of 2.75 years, risk-free interest rate of 0.33% and expected volatility of 12.92%.

 

The continuity of gold loan payable and derivative financial liabilities are as follows:

 

   June 30,
2021		  

December 31,

2020

 
Gold loan payable – opening balance  $2,842,756   $2,541,338 
Less derivative financial liabilities on initial recognition   -    - 
Accrued interest expense   130,854    261,151 
Accrued standby fees   4,264    9,536 
Accretion expense   54,001    100,563 
Expenses   -    - 
Foreign exchange difference   (76,654)   (69,832)
Gold loan payable  $2,955,221   $2,842,756 
           
Derivative financial liabilities – opening balance  $375,417   $430,965 
Change in fair value through profit & loss   (54,573)   (44,049)
Foreign exchange difference   (9,194)   (11,499)
Derivative financial liabilities  $311,650   $375,417 

 

As at June 30, 2021, Almaden has 397 ounces of gold bullion on its account at a fair value of $864,825.

 

The continuity of gold in trust are as follows:

 

   June 30, 2021   December 31, 2020 
   Ounces   $   Ounces   $ 
Gold in trust, opening balance   397    955,781    797    1,576,366 
Sale of gold in trust   -    -    (400)   (818,360)
Gain on sale   -    -         19,413 
Change in fair value through profit & loss   -    (67,061)        199,379 
Foreign exchange difference   -    (23,895)        (21,017)
    397    864,825    397    955,781 

 

 11 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

9.Share capital and reserves

 

(a)Authorized share capital

 

At June 30, 2021, 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.

 

On March 18, 2021, the Company closed a registered direct offering private placement for the purchase and sale of 15,846,154 common shares and common share warrants to purchase up to 7,923,077 common shares at a combined purchase price of US$0.65 per unit for aggregate gross proceeds of US$10.3 million (CAD$12,838,950). The common share warrants will be immediately exercisable, have an exercise price of US$0.80 per share and will expire three years from the date of issuance. Share issue costs included a finder’s fee of $834,532 in cash. In connection with the registered direct offering, the Company also incurred $393,837 in share issue costs. These amounts were recorded as a reduction to share capital. The proceeds of the registered direct offering were allocated entirely to share capital.

 

(b)Warrants

 

The continuity of warrants for the six months period ended June 30, 2021 is as follows:

 

   Exercise   December 31,               June 30, 
Expiry date  price   2020   Issued   Exercised   Expired   2021 
June 7, 2022   $1.35    4,720,000    -    -    -    4,720,000 
March 27, 2023   $0.50    5,489,658    -    -    -    5,489,658 
August 6, 2023   $0.90    3,100,000    -    -    -    3,100,000 
March 18, 2024   USD$0.80    -    7,923,077    -    -    7,923,077 
May 14, 2024   $1.50    500,000    -    -    -    500,000 
Warrants outstanding and exercisable        13,809,658    7,923,077    -    -    21,732,735 
Weighted average exercise price        $0.92    $1.00    -    -    $0.95 

 

(c)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 June 30, 2021, the Company had reserved 1,967,141 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 six months ended June 30, 2021 vested on the grant date.

 

The Company’s stock option plan permits the option holder to exercise cashless by surrendering a portion of the underlying option shares to pay for the exercise price and the corresponding.

 

 12 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars
9.Share capital and reserves (Continued)

 

(c)Share purchase option compensation plan (Continued)

 

withholding taxes, if applicable.

 

The continuity of stock options for the six months period ended June 30, 2021 is as follows:

 

Expiry date  Exercise
price		   December 31,
2020		   Granted   Exercised   Expired   June 30,
2021		 
February 7, 2021   $1.11    300,000    -    -    (300,000)   - 
February 7, 2021   $0.84    425,000    -    (375,000)   (50,000)   - 
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    -    (275,000)   (282,000)   - 
July 7, 2021   $0.80    1,612,000    -    (75,000)   (50,000)   1,487,000 
August 13, 2021   $1.01    150,000    -    -    -    150,000 
September 16, 2021   $0.90    1,155,000    -    -    (115,000)   1,040,000 
December 12, 2021   $1.00    200,000    -    -    -    200,000 
March 4, 2022   $0.47    1,125,000    -    -    -    1,125,000 
April 30, 2022   $0.41    100,000    -    -    -    100,000 
April 30, 2022   $0.58    220,000    -    -    -    220,000 
May 31, 2022   $0.62    700,000    -    -    -    700,000 
June 9, 2022   $0.64    2,180,000    -    -    (150,000)   2,030,000 
October 3, 2022   $1.13    1,346,000    -    -    (368,000)   978,000 
December 15, 2022   $0.89    972,000    -    -    (72,000)   900,000 
February 9, 2023   $0.97    -    450,000    -    (50,000)   400,000 
March 3, 2023   $0.96    -    325,000    -    (75,000)   250,000 
March 31, 2023   $0.68    -    1,975,000    -    -    1,975,000 
May 8, 2023   $0.69    -    100,000    -    -    100,000 
May 28, 2023   $0.65    -    100,000    -    -    100,000 
Options outstanding and exercisable        11,542,000    2,950,000    (725,000)   (2,012,000)   11,755,000 
Weighted average exercise price        $0.80    $0.75    $0.78    $0.96    $0.76 

 

Total share-based payments expenses as a result of options granted and vested during the period ended June 30, 2021 was $1,032,500 (2020 - $973,200).

 

The fair value of the options granted during the period ended June 30, 2021 was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

 

Risk-free interest rate   0.23%
Expected life   2.00 years
Expected volatility   85.56%
Expected dividend yield   Nil
Weighted average fair value per option   $0.35

 

 13 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - 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. (Azucar) and Almadex Minerals Ltd. (Note 10 (b)) is as follows:

 

   Three months ended June 30,   Six months ended June 30, 
   2021   2020   2021   2020 
                 
Professional fees  $15,000   $15,000   $30,000   $35,000 
Salaries and benefits (1)   104,200    25,300    130,250    50,600 
Share-based payments   30,000    584,000    882,500    779,000 
   $149,200   $624,300   $1,042,750   $864,600 

 

(1)Effective May 1, 2019, the Chairman has deferred payment of his salary of $8,000 per month. The Company owes $208,000 to the Chairman as at June 30, 2021 (December 31, 2020 - $160,000), which is recorded in accounts payable.

 

(b)Administrative Services Agreements

 

The Company recovers a portion of rent, office and license expenses from Azucar pursuant to an Administrative Services Agreement dated May 15, 2015 and First Amending Agreement dated December 16, 2015 between the Company and Azucar.

 

The Company also recovers a portion of rent, office and license expenses from Almadex pursuant to an Administrative Services Agreement dated March 29, 2018 between the Company and Almadex.

 

During the three months ended June 30, 2021, the Company received $117,075 (2020 - $253,241) from Azucar for administrative services fees included in other income and received $117,482 (2020 - $126,620) from Almadex for administrative services fees included in other income.

 

During the six months ended June 30, 2021, the Company received $280,598 (2020 - $496,881) from Azucar for administrative services fees included in other income and received $281,005 (2020 - $248,732) from Almadex for administrative services fees included in other income.

 

At June 30, 2021, included in accounts receivable is $87,948 (December 31, 2020 - $81,623) due from Azucar and $86,189 (December 31, 2020 - $40,678) due from Almadex in relation to expenses recoveries.

 

Under the Administrative Services Agreements, the Company is the sole and exclusive manager of Azucar and Almadex that provides general management services, office space, executive personnel, human resources, geological technical support, accounting and financial services at cost with no mark-up or additional direct charge. The three companies are considered related parties though common directors and officers.

 

 14 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

10.Related party transactions and balances (Continued)

 

(c)Other related party transactions

 

At June 30, 2021, the Company accrued $18,271 (December 31, 2020 - $37,689) payable to Almadex for exploration and drilling services in Mexico.

 

During the three and six months ended June 30, 2021, the Company employed the Chairman’s daughter for a salary of $10,325 and $20,650 less statutory deductions (2020 - $10,325 and $20,650) for marketing and administrative services provided to the Company.

 

11.Net loss per share

 

Basic and diluted net loss per share

 

The calculation of basic net loss per share for the three months ended June 30, 2021 was based on the loss attributable to common shareholders of $483,074 (2020 - $910,585) and a weighted average number of common shares outstanding of 137,221,408 (2020 - 117,238,135).

 

The calculation of basic net loss per share for the six months ended June 30, 2021 was based on the loss attributable to common shareholders of $1,913,936 (2020 - $1,855,935) and a weighted average number of common shares outstanding of 130,408,382 (2020 - 114,633,791).

 

The calculation of diluted net loss per share for the three and six months ended June 30, 2021 and 2020 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:

 

   Three months ended June 30, 
Investing and financing activities  2021   2020 
           
Fair value of cash stock options transferred to share capital on exercise of options   177,250    2,800 
           

 

As at June 30, 2021, $92,602 of exploration and evaluation asset costs are included in trade and other payables (December 31, 2020 - $48,038).

 

Supplemental information regarding the split between cash and cash equivalents is as follows:

 

   June 30,
2021		   December 31,
2020		 
         
Cash  $1,341,186   $1,234,698 
Term Deposits   11,040,640    1,300,000 
   $12,381,826   $2,534,698 

 

 15 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

13.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.

 

(a)Currency risk

 

The Company’s property interests in Mexico make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s financial position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian dollar, the US dollar and the Mexican peso. The Company does not invest in foreign currency contracts to mitigate the risks.

 

As at June 30, 2021, 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  $7,718,712   $245,385 
Gold in trust   864,825    - 
Total assets  $8,583,537   $245,385 
           
Trade and other payables  $68,676   $62,592 
Gold loan payable   2,955,221    - 
Derivatives financial liabilities   311,650    - 
Total liabilities  $3,335,547   $62,592 
           
Net assets  $5,247,990   $182,793 

 

A 10% change in the US dollar exchange rate relative to the Canadian dollar would change the Company’s net loss by $520,000.

 

A 10% change in the Mexican peso relative to the Canadian dollar would change the Company’s net loss by $20,000.

 

(b)Credit risk

 

The Company’s cash and cash equivalents are held in large financial institutions, located in both Canada and Mexico. Cash equivalents mature at less than ninety days during the twelve months following the statement of financial position date. The Company’s accounts receivable consist of amounts due from related parties which were subsequently collected.

 

 16 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars
13.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 June 30, 2021, the Company’s maximum exposure to credit risk is the carrying value of its cash and cash equivalents, and accounts receivable.

 

(c)Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure.

 

Trade and other payables are due within twelve months of the statement of financial position date.

 

(d)Interest rate risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to varying interest rates on cash and cash equivalents. The Company has no debt bearing variable interest rate.

 

A 1% change in the interest rate would change the Company’s net loss by $124,000.

 

(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

 

 17 
Almaden Minerals Ltd.
Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2021
Unaudited - Expressed in Canadian dollars

13.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   -    311,650    -    311,650 

 

14.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.

 

15.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:

 

   June 30,
2021		   December 31,
2020		 
Canada  $141,549   $205,898 
United States   13,968,566    13,968,566 
Mexico   60,086,581    58,608,820 
   $74,196,696   $72,783,284 

 

16.Subsequent event

 

On July 8, 2021, the Company granted directors, officers and contractors an aggregate of 2,470,000 stock options in accordance with the terms of the Company’s stock option plan, which is exercisable into one common share at an exercise price of $0.62 per share until July 8, 2023.

 

 

 

 

18