EX-99.1 2 exh_991.htm EXHIBIT 99.1

Exhibit 99.1

 

 

 

 

 

 

 

Consolidated Financial Statements of

 

Almaden Minerals Ltd.

 

For the years ended December 31, 2022, 2021 and 2020

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

Almaden Minerals Ltd.

December 31, 2022, 2021 and 2020

 

 

Table of contents

 

Report of independent registered public accounting firm     1  
         
Consolidated statements of financial position     2  
         
Consolidated statements of comprehensive loss     3  
         
Consolidated statements of cash flows     4  
         
Consolidated statements of changes in equity     5  
         
Notes to the consolidated financial statements     6-36  

 

 

 

 

 

 

 

 


 

 

 

 

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, 2022 and 2021, and the related consolidated statements of comprehensive loss, cash flows, and changes in equity for the years ended December 31, 2022, 2021and 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years ended December 31, 2022, 2021 and 2020, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 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 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 entity’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement 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 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

We have served as the Company’s auditor since 2015.

 

/s/ DAVIDSON & COMPANY LLP

 

Vancouver, Canada   Chartered Professional Accountants

 

March 24, 2023

 

 

 

 

 

Almaden Minerals Ltd.

Consolidated statements of financial position

(Expressed in Canadian dollars)

 

     

December 31,

2022

      

December 31,

2021

  
      $       $  
ASSETS                
Current assets                
Cash and cash equivalents (Note 13)     6,658,076       10,170,376  
Gold in trust (Note 8)     974,397       915,995  
Accounts receivable and prepaid expenses (Note 4)     259,471       155,638  
      7,891,944       11,242,009  
                 
Non-current assets                
Right-of-use assets (Note 5)     432,319       539,110  
Property, plant and equipment (Note 6)     6,610,871       14,019,532  
Exploration and evaluation assets (Note 7)     63,115,076       61,431,639  
      70,158,266       75,990,281  
TOTAL ASSETS     78,050,210       87,232,290  
                 
LIABILITIES                
Current liabilities                
Trade and other payables (Note 11 (a)(c))     340,509       508,068  
Current portion of lease liabilities (Note 5)     88,295       82,677  
      428,804       590,745  
                 
Non-current liabilities                
Long-term portion of lease liabilities (Note 5)     377,635       465,930  
Gold loan payable (Note 8)     3,929,015       3,227,545  
Warrant liability (Note 9)     102,787       623,290  
Derivative financial liabilities (Note 8)     306,084       391,620  
Deferred income tax liability (Note 14)     3,090,208       1,749,023  
      7,805,729       6,457,408  
Total liabilities     8,234,533       7,048,153  
                 
EQUITY                
Share capital (Note 10)     141,040,654       141,040,654  
Reserves (Note 10)     22,546,373       21,068,273  
Deficit     (93,771,350 )     (81,924,790 )
Total equity     69,815,677       80,184,137  
TOTAL EQUITY AND LIABILITIES     78,050,210       87,232,290  

Nature of operations (Note 1)

Subsequent event (Note 18)

 

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 24, 2023.

They are signed on the Company’s behalf by:

 

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

 

 

 

 

 

Almaden Minerals Ltd.

Consolidated statements of comprehensive loss

(Expressed in Canadian dollars)

 

      Year ended December 31,  
      2022       2021       2020  
Expenses     $       $       $  
Professional fees (Note 11(a))     864,051       772,887       564,145  
Salaries and benefits (Note 11(a))     1,923,952       1,876,911       1,337,010  
Travel and promotion     107,869       200,995       82,013  
Depreciation (Note 6)     14,424       16,638       19,564  
Office and license (Note 11(b))     156,686       218,879       140,137  
Amortization of right-of-use assets (Note 5)     106,791       121,479       121,432  
Occupancy expenses (Note 5)     42,655       40,542       45,248  
Interest expense on lease liabilities (Note 5)     47,379       13,330       21,480  
Interest, accretion and standby fees on gold loan payable (Note 8)     468,308       394,371       371,250  
Listing and filing fees     154,505       187,169       199,327  
Insurance     96,068       89,476       75,568  
Directors’ fees (Note 11(a))     145,000       102,500       70,000  
Share-based payments (Note 10(d) and 11(a))     1,478,100       1,870,800       1,784,500  
      5,605,788       5,905,977       4,831,674  
                         
Other income (loss)                        
Administrative services fees (Note 11(b))     1,376,428       1,382,344       1,404,099  
Interest income     253,869       490,245       40,196  
Finance fees     -       -       (54,577 )
Impairment of property, plant and equipment     (7,441,293 )     -       -  
Unrealized gain (loss) on derivative financial liabilities (Note 8)     110,177       (18,156 )     44,049  
Unrealized gain (loss) on gold in trust (Note 8)     (6,518 )     (35,775 )     199,379  
Unrealized foreign exchange gain (loss) on gold loan payable (Note 8)     (257,803 )     11,535       81,331  
Unrealized foreign exchange gain (loss) on gold in trust (Note 8)     64,920       (4,011 )     (21,017 )
Unrealized gain on warrant liability (Note 9)     520,503       1,747,884       -  
Realized gain on sale of gold in trust (Note 8)     -       -       19,413  
Gain on debt forgiveness     177,200       -       -  
Foreign exchange gain (loss)     302,930       (22,202 )     (10,567 )
      (4,899,587 )     3,551,864       1,702,306  
Loss before income taxes     (10,505,375 )     (2,354,113 )     (3,129,368 )
Deferred income tax expense (Note 14)     (1,341,185 )     (314,141 )     -  
Net loss for the year     (11,846,560 )     (2,668,254 )     (3,129,368 )
                         
Total comprehensive loss for the year     (11,846,560 )     (2,668,254 )     (3,129,368 )
                         
Basic and diluted net loss per share (Note 12)     (0.09 )     (0.02 )     (0.03 )

 

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,  
      2022       2021       2020  
    $   $     $
Operating activities                        
Net loss for the year     (11,846,560 )     (2,668,254 )     (3,129,368 )
Items not affecting cash                        
Deferred income tax expense     1,341,185       314,141       -  
Depreciation     14,424       16,638       19,564  
Amortization of right-of-use assets     106,791       121,479       121,432  
Impairment of property, plant and equipment     7,441,293       -       -  
Interest expenses on lease liability     47,379       13,330       21,480  
Interest, accretion and standby fees on gold loan payable     468,308       394,371       371,250  
Unrealized (gain) loss on derivative financial liabilities     (110,177 )     18,156       (44,049 )
Unrealized (gain) loss on gold in trust     6,518       35,775       (199,379 )
Realized gain on sale of gold in trust     -       -       (19,413 )
Unrealized foreign exchange (gain) loss on gold loan payable     257,803       (11,535 )     (81,331 )
Unrealized foreign exchange (gain) loss on gold in trust     (64,920 )     4,011       21,017  
Unrealized gain on warrant liability     (520,503 )     (1,747,884 )     -  
Share-based payments     1,478,100       1,870,800       1,784,500  
Changes in non-cash working capital components                        
Accounts receivable and prepaid expenses     (103,833 )     19,370       (14,291 )
Trade and other payables     (169,206 )     19,352       (83,294 )
Net cash used in operating activities     (1,653,398 )     (1,600,250 )     (1,231,882 )
Investing activities                        
Property, plant and equipment – purchase     (47,056 )     (10,505 )     (6,783 )
Exploration and evaluation assets – costs     (1,681,790 )     (2,784,645 )     (1,750,935 )
Net cash used in investing activities     (1,728,846 )     (2,795,150 )     (1,757,718 )
Financing activities                        
Issuance of shares, net of share issue costs     -       11,610,581       3,850,209  
Options exercised     -       564,750       158,090  
Share issue costs on cashless exercise of options (Note 9(d))     -       -       (40,157 )
Share issue costs (Note 9(b))     -       -       (40,990 )
Warrants exercised     -       -       10,000  
Net proceeds on gold in trust     -       -       818,360  
Repayment of lease liabilities     (130,056 )     (144,253 )     (143,428 )
Net cash from (used in) financing activities     (130,056 )     12,031,078       4,612,084  
                         
Change in cash and cash equivalents     (3,512,300 )     7,635,678       1,622,484  
Cash and cash equivalents, beginning of year     10,170,376       2,534,698       912,214  
Cash and cash equivalents, end of year     6,658,076       10,170,376       2,534,698  

 

Supplemental cash flow information (Note 13)

 

 

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, 2020     111,726,719       127,022,366       16,973,984       715,968       17,689,952       (76,127,168 )     68,585,150  
Share-based payments     -       -       1,784,500       -       1,784,500       -       1,784,500  
Private placements, net of share issue costs     8,609,658       3,850,209       -       -       -       -       3,850,209  
Shares issued for cash on exercise of stock options     188,000       158,090       -       -       -       -       158,090  
Fair value of cash stock options transferred to share capital     -       51,980       (51,980 )     -       (51,980 )     -       -  
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 year     -       -       -       -       -       (3,129,368 )     (3,129,368 )
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     -       -       1,870,800       -       1,870,800       -       1,870,800  
Private placements, net of share issue costs     15,846,154       11,610,581       -       -       -       -       11,610,581  
Warrant liability     -       (2,371,174 )     -       -       -       -       (2,371,174 )
Finders’ warrants issued pursuant to private placement     -       (130,731 )     130,731       -       130,731       -       -  
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 year     -       -       -       -       -       (2,668,254 )     (2,668,254 )
Balance, December 31, 2021     137,221,408       141,040,654       20,352,305       715,968       21,068,273       (81,924,790 )     80,184,137  
Share-based payments     -       -       1,478,100       -       1,478,100       -       1,478,100  
Total comprehensive loss for the year     -       -       -       -       -       (11,846,560 )     (11,846,560 )
Balance, December 31, 2022     137,221,408       141,040,654       21,830,405       715,968       22,546,373       (93,771,350 )     69,815,677  

 

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, 2022, 2021 and 2020
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 property in Mexico. The address of the Company’s registered office is Suite 1710 –1177 West Hastings Street, Vancouver, BC, Canada V6E 2L3.

 

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

 

2. Basis of presentation

  

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

 

These consolidated financial statements have been prepared in accordance and compliance with IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

 

(b)       Basis of preparation

 

These consolidated financial statements have been prepared on a historical cost basis 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, 2022.

 

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

 

(c)       Functional currency

 

The functional and reporting currency of the Company and its subsidiaries is the Canadian dollar.

 

(d)       Significant accounting judgments and estimates

 

The preparation of these consolidated financial statements requires management to make judgements and estimates that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgements and estimates. The consolidated financial statements include judgements and estimates which, by their nature, are uncertain. The impacts of such judgements and estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting

 

 

6


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

2. Basis of presentation (Continued)

  

(d)       Significant accounting judgments and estimates (Continued)

 

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

 

○ 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.

 

Estimates

 

○ The estimated useful lives of property, plant and equipment which are included in the consolidated statements of financial position and the related depreciation included in profit or loss;

 

○ The recoverability of the value of the exploration and evaluation assets which is recorded in the consolidated statements of financial position (Note 3(f));

 

○ 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, warrant liability and the fair value of finders’ warrants and stock options. Certain inputs into the model are estimates that involve considerable judgment or could be affected by significant factors that are out of the Company’s control;

 

○ The provision for income taxes which is included in profit or loss and the composition of deferred income tax liability included in the consolidated statement of financial position and the evaluation of the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions;

 

○ The assessment of indications of impairment of each exploration and evaluation asset and property plant and equipment and related determination of the net realizable value and write-down of those assets where applicable (Note 3(f));

 

○ The estimated incremental borrowing rate used to calculate the lease liabilities; and

 

○ The estimated fair value of gold in trust.

 

 

7


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies

  

(a)       Basis of consolidation

 

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

 

    Jurisdiction Nature of operations
       
  Puebla Holdings Inc. Canada Holding company
  Minera Gorrion, S.A. de C.V. Mexico Exploration company
  Molinos de Puebla, S.A. de C.V. Mexico Holding company

 

Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated in preparing these consolidated financial statements.

 

(b)       Foreign currencies

 

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the transaction dates. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

(c)       Financial instruments

 

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.

 

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 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.

 

 

8


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

  

(c)       Financial instruments (Continued)

 

(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.

 

The Company issues warrants exercisable in a currency other than the Company’s functional currency and as a result, the warrants are derivative financial instruments.

 

Derivative financial instruments are initially recognized at fair value and subsequently measured at fair value with changes in fair value recognized in profit or loss. Transaction costs are recognized in profit or loss as incurred.

 

(d) Cash and cash equivalents

 

Cash equivalents include term deposits and 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)

 

(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.

 

 

9


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

  

(f)       Exploration and evaluation assets (Continued)

 

The Company considers the following facts and circumstances in determining if it should test exploration and evaluation assets for impairment:

 

(i) the period for which the Company has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed;

 

(ii) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;

 

(iii) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and

 

(iv) sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale.

 

An impairment charge may be reversed but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized. General exploration costs in areas of interest in which the Company has not secured rights are expensed as incurred.

 

The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition.

 

The Company recognizes in profit or loss costs recovered on exploration and evaluation assets when amounts received or receivable are in excess of the carrying amount.

 

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to development asset within property, plant and equipment.

 

All capitalized exploration and evaluation expenditures are monitored for indications of impairment.

 

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.

 

 

10


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

 

(g) Impairment of property, plant and equipment

 

Property, plant and equipment are reviewed for impairment at least annually, or if there is any indication that the carrying amount may not be recoverable. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

 

An asset’s recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount by way of recording an impairment charge to profit or loss. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized.

 

(h)       Income taxes

 

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income.

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

 

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

 

 

11


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

  

(h)       Income taxes (Continued)

 

they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

(i)        Share-based payments

 

The Company’s stock option plan allows Company employees, directors, officers and consultants to acquire shares of the Company. The fair value of options granted is recognized as share-based payment expense with a corresponding increase in equity reserves. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

 

Fair value is measured at grant date, and each tranche is recognized using the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option-pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of stock options that are expected to vest. In situations where equity instruments are issued to consultants and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.

 

(j)        Share capital

 

Proceeds from the exercise of stock options and warrants are recorded as share capital in the amount for which the option or warrant enabled the holder to purchase a share in the Company, in addition to the proportionate amount of reserves originally created at the issuance of the stock options or warrants. Share capital issued for non-monetary consideration is valued at the closing market price at the date of issuance. The proceeds from the issuance of units are allocated between common shares and common share purchase warrants based on the residual value method. Under this method, the proceeds are allocated to common shares based on the fair value of a common share at the announcement date of the unit offering and any residual remaining is allocated to common share purchase warrants.

 

Certain of the Company’s warrants are exercisable in a currency other than the functional currency of the Company. As a result, the fair value allocated to the warrant is recorded as a derivative financial liability with residual value being attributed to the equity unit. The fair value of the warrant is determined using the Black-Scholes Option Pricing Model and is marked to market at the end of each period. Upon exercise of the warrant, the fair value of the warrant at the date of exercise is transferred to share capital.

 

 

12


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

 

(k) Reclamation and closure cost obligations

 

Decommissioning and restoration provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

 

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation and discount rates. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows discounted for the market discount rate.

 

Over time, the discounted liability is increased for the changes in the present value based on the current market discount rates and liability risks. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount receivable can be measured reliably.

 

When the Company enters into an option agreement on its exploration and evaluations assets, as part of the option agreement, responsibility for any reclamation and remediation becomes the responsibility of the optionee.

 

  (l) Net loss per share

 

The Company presents the basic and diluted net loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted net loss per share is determined by adjusting the net loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares (Note 12).

 

(m)       Leases

 

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether the right to obtain substantially all of the economic benefits from use of the asset during the term of the arrangement exists, and if the Company has the right to direct the use of the asset. At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative standalone prices.

 

As a lessee, the Company recognizes a right-of-use asset and a lease liability at the commencement date of a lease. The right-of-use asset is initially measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received.

 

 

13


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

  

(m)       Leases (Continued)

 

The right-of-use asset is subsequently depreciated using the straight line method from the commencement date to the earlier of the end of the lease term, or the end of the useful life of the asset. In addition, the right-of-use asset may be reduced due to impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

 

A lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by the interest rate implicit in the lease, or if that rate cannot be readily determined, the incremental borrowing rate. Lease payments included in the measurement of the lease liability are comprised of:

 

·   fixed payments, including in-substance fixed payments, less any lease incentives receivable;

 

·   variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

 

·   amounts expected to be payable under a residual value guarantee;

 

·   exercise prices of purchase options if the Company is reasonably certain to exercise that option; and

 

·   payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

 

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, or if there is a change in the estimate or assessment of the expected amount payable under a residual value guarantee, purchase, extension or termination option. Variable lease payments not included in the initial measurement of the lease liability are charged directly to profit or loss.

 

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases are charged directly to profit or loss on a straight-line basis over the lease term.

 

(n)       Standards issued or amended but not yet effective

 

The Company has not applied the following revised IFRS that has been issued but was not yet effective at December 31, 2022. This accounting standard is not currently expected to have a significant effect on the Company’s accounting policies or financial statements.

 

IAS 1 –Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. These amendments were further revised by the issuance of Non-current Liabilities with Covenants (Amendments to IAS 1) on October 31, 2022 which further narrowed the scope of the amendments. The amendments are effective for annual periods beginning on January 1, 2024.

 

 

14


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

3. Significant accounting policies (Continued)

  

(m)       Standards issued or amended but not yet effective (Continued)

 

Application of this amendment is expected to result in a reclassification of warranty liability and derivative financial liabilities from non-current to current liabilities on the statement of financial position.

 

4. Accounts receivable and prepaid expenses

  

Accounts receivable and prepaid expenses consist of the following:

 

      December 31,       December 31,  
      2022       2021  
Accounts receivable (Note 11(b))   $ 198,942     $ 92,005  
Prepaid expenses     60,529       63,633  
    $ 259,471     $ 155,638  

 

At December 31, 2022, the Company has recorded value added taxes of $251,775 (2021 - $308,457) 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.

 

One lease containing an extension option exercisable only by the Company was exercised on November 22, 2021. The lease was therefore extended from March 31, 2022 to March 31, 2027. The Company reassessed this significant event as a lease modification and has estimated that the potential future lease payments under the extended lease term would result in an increase in lease liability by $508,799.

 

The continuity of lease liabilities for the years ended December 31, 2022 and 2021 are as follows:

 

      December 31,
2022		       December 31,
2021		  
Opening balance   $ 548,607     $ 170,731  
Modification by extending the lease term     -       508,799  
Less: lease payments     (130,056 )     (144,253 )
Interest expense     47,379       13,330  
      465,930       548,607  
Less: current portion of lease liabilities     (88,295 )     (82,677 )
Long-term portion of lease liabilities   $ 377,635     $ 465,930  

 

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 December 31, 2022 (December 31, 2021 - $22,452) from this operating sublease was $8,508 and is recorded in interest and other income.

 

 

15


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

5. Right-of-use assets and lease liabilities (Continued)

  

The continuity of ROU assets for the years ended December 31, 2022 and 2021 are as follows:

 

     

December 31,

2022

      

December 31,

2021 

  
Opening balance   $ 539,110     $ 151,790  
Modification by extending the lease term     -       508,799  
Less: amortization of ROU assets     (106,791 )     (121,479 )
    $ 432,319     $ 539,110  

 

During the year ended December 31, 2022, the Company recognized occupancy expenses of $42,655 (2021 - $40,542; 2020 - $45,248) related to short term leases.

 

As at December 31, 2022, the remaining payments for the operating lease are due as follows:

 

      2023       2024       2025       2026       2027       Total  
Office lease   $ 167,374     $ 170,672     $ 173,970     $ 177,268     $ 44,523     $ 733,807  

 

6. Property, plant and equipment

 

      Furniture and fixtures and other       Computer hardware       Computer software       Geological library       Field equipment       Mill equipment       Total  
      $       $       $       $       $       $       $  
Cost                                                        
December 31, 2021     158,219       267,004       198,981       51,760       245,647       13,968,566       14,890,177  
Additions     952       4,536       -       -       -       41,568       47,056  
Impairment of property, plant and equipment     -       -       -       -       -       (7,441,293 )     (7,441,293 )
December 31, 2022     159,171       271,540       198,981       51,760       245,647       6,568,841       7,495,940  
                                                         
Accumulated depreciation                                                        
December 31, 2021     151,390       244,043       189,206       50,779       235,227       -       870,645  
Depreciation     1,813       7,398       2,932       196       2,085       -       14,424  
December 31, 2022     153,203       251,441       192,138       50,975       237,312       -       885,069  
                                                         
Carrying amounts                                                        
December 31, 2021     6,829       22,961       9,775       981       10,420       13,968,566       14,019,532  
December 31, 2022     5,968       20,099       6,843       785       8,335       6,568,841       6,610,871  

 

As at December 31, 2022, the Company recorded an impairment of $7,441,293 on mill equipment to its recoverable amount due to the delay in receiving development permit and the lack of available for use in Mexico.

 

 

16


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
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, 2020     158,219       256,873       198,607       51,760       245,647       13,968,566       14,879,672  
Additions     -       10,131       374       -       -       -       10,505  
December 31, 2021     158,219       267,004       198,981       51,760       245,647       13,968,566       14,890,177  
                                                         
Accumulated depreciation                                                        
December 31, 2020     147,662       238,060       185,130       50,534       232,621       -       854,007  
Depreciation     3,728       5,983       4,076       245       2,606       -       16,638  
December 31, 2021     151,390       244,043       189,206       50,779       235,227       -       870,645  
                                                         
Carrying amounts                                                        
December 31, 2020     10,557       18,813       13,477       1,226       13,026       13,968,566       14,025,665  
December 31, 2021     6,829       22,961       9,775       981       10,420       13,968,566       14,019,532  

 

 

 

 

 

 

 

 

 

 

 

17


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

7. Exploration and evaluation assets

 

      Tuligtic       Other Property       Total  
Exploration and evaluation assets     $       $       $  
Acquisition costs:                        
                         
Opening balance - (December 31, 2021)     11,211,756       1       11,211,757  
Additions     96,965       -       96,965  
Deductions     -       (1 )     (1 )
Closing balance - (December 31, 2022)     11,308,721       -       11,308,721  
Deferred exploration costs:                        
Opening balance - (December 31, 2021)     50,219,882       -       50,219,882  
Costs incurred during the year                        
Professional/technical fees     143,075       -       143,075  
Claim maintenance/lease costs     169,651       -       169,651  
Geochemical, metallurgy     3,929       -       3,929  
Travel and accommodation     155,195       -       155,195  
Geology, geophysics and exploration     307,712       -       307,712  
Supplies and miscellaneous     310,804       -       310,804  
Environmental and permit     640,541       -       640,541  
Value-added tax (Note 4)     251,775               251,775  
Refund - Value-added tax     (396,209 )     -       (396,209 )
Total deferred exploration costs during the year     1,586,473       -       1,586,473  
Closing balance - (December 31, 2022)     51,806,355       -       51,806,355  
Total exploration and evaluation assets     63,115,076       -       63,115,076  

 

 

 

 

 

 

 

 

 

18


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

7. Exploration and evaluation assets (Continued)

 

      Tuligtic       Other Property       Total  
Exploration and evaluation assets     $       $       $  
Acquisition costs:                        
Opening balance - (December 31, 2020)     10,319,510       1       10,319,511  
Additions     892,246       -       892,246  
Closing balance - (December 31, 2021)     11,211,756       1       11,211,757  
Deferred exploration costs:                        
Opening balance - (December 31, 2020)     48,286,318       -       48,286,318  
Costs incurred during the year                        
Drilling and related costs     178,070       -       178,070  
Professional/technical fees     276,305       -       276,305  
Claim maintenance/lease costs     159,942       -       159,942  
Geochemical, metallurgy     22,639       -       22,639  
Travel and accommodation     256,641       -       256,641  
Geology, geophysics and exploration     299,960       -       299,960  
Supplies and miscellaneous     196,508       -       196,508  
Environmental and permit     741,436       -       741,436  
Value-added tax (Note 4)     308,457               308,457  
Refund - Value-added tax     (506,394 )     -       (506,394 )
Total deferred exploration costs during the year     1,933,564       -       1,933,564  
Closing balance - (December 31, 2021)     50,219,882       -       50,219,882  
Total exploration and evaluation assets     61,431,638       1       61,431,639  

 

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:

 

(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.

 

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

 

19


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

7. Exploration and evaluation assets (Continued)

 

(a) Tuligtic (continued)

 

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.

 

(b) Other Property

 

On May 26, 2022, the Company transferred the 40% carried interest in the Logan property located in the Yukon Territory, Canada to Almadex Minerals Ltd. (“Almadex”) for a consideration of $1 equal to its carrying value. No gain or loss was recognized in the Statement of Loss and Comprehensive Loss.

 

(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 charged on sales. Under certain circumstances and subject to approval from tax authorities, A Company can also apply for an early refund of VAT prior to generating sales. During 2022, the Company received a VAT recovery of $396,209 (December 2021 - $506,394) and other income of $139,313 (December - $446,184) related to a VAT refund from prior years which is recorded in interest and other income.

 

20


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
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 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.

 

21


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
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, 2022 decreased by $110,177 (December 31, 2021 increased by $18,156) based on the following assumptions used in the Black-Scholes option-pricing model: expected life of 1.25 years, risk-free interest rate of 4.00% and expected volatility of 11.57% (December 31, 2021, expected life of 2.25 years, risk-free interest rate of 1.23% and expected volatility of 15.63%).

 

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

 

      December 31,
2022		       December 31,
2021		  
Gold loan payable – opening balance   $ 3,227,545     $ 2,842,756  
Accrued interest expense     314,024       271,093  
Accrued standby fees     9,416       8,743  
Accretion expense     144,868       114,535  
Foreign exchange difference     233,162       (9,582 )
Gold loan payable   $ 3,929,015     $ 3,227,545  
                 
Derivative financial liabilities – opening balance   $ 391,620     $ 375,417  
Change in fair value through profit & loss     (110,177 )     18,156  
Foreign exchange difference     24,641       (1,953 )
Derivative financial liabilities   $ 306,084     $ 391,620  

 

As at December 31, 2022, Almaden has 397 ounces (397 ounces at December 31, 2021) of gold bullion on its account at a fair value of $974,397 ($915,995 at December 31, 2021).

 

On January 22, 2020, the Company received $818,360 on the sale of 400 ounces of gold in trust and has recorded a gain on sale of gold in trust of $19,413.

 

The continuity of gold in trust are as follows:

 

      December 31, 2022       December 31, 2021  
      Ounces     $       Ounces       $  
Gold in trust, opening balance     397       915,995       397       955,781  
Sale of gold in trust     -       -       -       -  
Gain on sale     -       -       -       -  
Change in fair value through profit & loss     -       (6,518 )     -       (35,775 )
Foreign exchange difference     -       64,920       -       (4,011 )
      397       974,397       397       915,995  

 

22


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

9. Warrant liability

 

In connection with the registered direct offering private placement completed during the year ended December 31, 2021, the Company issued a total of 7,923,077 warrants exercisable at US$0.80 per share. The fair value of these warrants on issuance was $2,371,174, valued using the Black-Scholes option-pricing model with the following assumptions:

 

Risk-free interest rate     0.53 %
Expected life of warrants     3.00 years  
Expected annualized volatility     72.42 %
Dividend     Nil  
Forfeiture rate     0 %

 

The fair value is recorded as a derivative financial liability as these warrants are exercisable in US dollars, differing from the Company’s functional currency. The change in fair value resulted in an unrealized gain of $520,503 (December 31, 2021 - $1,747,884) and is recognized in the consolidated statements of loss and comprehensive loss for the year ended December 31, 2022. The fair value warrants were re-valued at period end using the Black-Scholes option-pricing model with the following assumptions:

 

    December 31, 2022   December 31, 2021
Risk-free interest rate     3.99 %     0.95 %
Expected life of warrants     1.21 years       2.21 years  
Expected annualized volatility     69.83 %     78.39 %
Dividend     Nil       Nil  
Forfeiture rate     0 %     0 %

 

10. Share capital and reserves

 

(a) Authorized share capital

 

At December 31, 2022, 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 2022, 2021 and 2020

 

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, and finders’ warrants to purchase up to 435,769 common shares at a price of US$0.80 per common share until March 18, 2024. The fair value of the finders’ warrants was $130,731. 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 $10,467,776 to share capital and $2,371,174 to warrants.

 

Share issue costs of $40,990 was recorded for fees paid related to the Short Form Base Shelf Prospectus filed on February 25, 2021.

 

23


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

10. Share capital and reserves (Continued)

 

(b) Details of private placements and other issues of common shares in 2022, 2021 and 2020 (Continued)

 

On August 6, 2020, the Company closed a non-brokered private placement by the issuance of 3,100,000 units at a price of $0.65 per unit for gross proceeds of $2,015,000. Each unit consists of one common share and 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 $0.90 per share until August 6, 2023. Share issue costs included a finder’s fee of $52,341 in cash. In connection with the private placement, the Company also incurred $108,674 in 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 March 27, 2020, the Company closed a non-brokered private placement by the issuance of 5,509,658 units at a price of $0.37 per unit for gross proceeds of $2,038,573. Each unit consists of one common share and 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 $0.50 per share until March 27, 2023. In connection with the private placement, the Company also incurred $42,349 in 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.

 

(c) Warrants

 

The continuity of warrants for the years ended December 31, 2022, 2021 and 2020 are as follows:

 

      Exercise       December 31,                   December 31,  
Expiry date     price       2021       Issued       Exercised       Expired       2022
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  
March 18, 2024   USD$ 0.80       435,769       -       -       -       435,769  
May 14, 2024   $ 1.50       500,000       -       -       -       500,000  
Warrants outstanding and exercisable             22,168,504       -       -       (4,720,000 )     17,448,504  
Weighted average exercise price           $ 0.95       -       -     $ 1.35     $ 0.88  

 

The weighted average remaining life of warrants outstanding at December 31, 2022 was 0.80 years (2021 – 1.51 years).

 

24


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

10. Share capital and reserves (Continued)

 

(c) Warrants (Continued)

 

      Exercise       December 31,                   December 31,  
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  
March 18, 2024   USD$ 0.80       -       435,769                       435,769  
May 14, 2024   $ 1.50       500,000       -       -       -       500,000  
Warrants outstanding and exercisable             13,809,658       8,358,846       -       -       22,168,504  
Weighted average exercise price           $ 0.92     $ 1.00       -       -     $ 0.95  

 

The weighted average remaining life of warrants outstanding at December 31, 2021 was 1.51 years (2020 – 2.08 years).

 

      Exercise       December 31,                   December 31,  
Expiry date     price       2019       Issued       Exercised       Expired       2020  
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  
March 27, 2023   $ 0.50       -       5,509,658       (20,000 )     -       5,489,658  
August 6, 2023   $ 0.90       -       3,100,000       -       -       3,100,000  
May 14, 2024   $ 1.50       500,000       -       -       -       500,000  
Warrants outstanding and exercisable             10,341,350       8,609,658       (20,000 )     (5,121,350 )     13,809,658  
Weighted average exercise price           $ 1.88     $ 0.64     $ 0.50     $ 2.41     $ 0.92  

 

The weighted average remaining life of warrants outstanding at December 31, 2020 was 2.08 years (2019 – 1.53 years).

 

The weighted average fair value of finders’ warrants granted during the years ended December 31, 2022, 2021 and 2020 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
  435,769       March 18, 2021     $ 0.30       0.53 %     3       72.42 %   $Nil

 

25


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

10. Share capital and reserves (Continued)

 

(d) Share purchase option compensation plan

  

The Company’s stock option plan permits the issuance of options up to a maximum of 10% of the Company’s issued share capital. Stock options issued to any consultant or person providing investor relations services cannot exceed 2% of the issued and outstanding common shares in any twelve month period. At December 31, 2022, the Company had reserved 1,192,141 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 years ended December 31, 2022, 2021 and 2020 vested on the grant date.

 

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

 

The continuity of stock options for the years ended December 31, 2022, 2021 and 2020 are as follows:

 

Expiry date    

Exercise

price

       December 31,
2021		       Granted       Exercised       Expired       December 31,
2022		  
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       600,000       -       -       (600,000 )     -  
June 9, 2022   $ 0.64       1,980,000       -       -       (1,980,000 )     -  
October 3, 2022   $ 1.13       860,000       -       -       (860,000 )     -  
December 15, 2022   $ 0.89       900,000       -       -       (900,000 )     -  
February 9, 2023   $ 0.97       350,000       -       -       -       350,000  
March 3, 2023   $ 0.96       250,000       -       -       -       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  
July 8, 2023   $ 0.62       2,470,000       -       -       (50,000 )     2,420,000  
September 18, 2023   $ 0.51       960,000       -       -       -       960,000  
March 7, 2027   $ 0.38       -       1,125,000       -       -       1,125,000  
June 10, 2027   $ 0.33       -       3,640,000       -       -       3,640,000  
October 4, 2027   $ 0.30       -       755,000       -       -       755,000  
December 16, 2027   $ 0.33       -       855,000       -       -       855,000  
Options outstanding and exercisable             11,990,000       6,375,000       -       (5,835,000 )     12,530,000  
Weighted average exercise price           $ 0.68     $ 0.34       -     $ 0.71     $ 0.49  

  

26


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

10. Share capital and reserves (Continued)

 

(d) Share purchase option compensation plan (Continued)

 

The weighted average remaining life of stock options outstanding at December 31, 2022 was 2.53 years (2021 – 0.98 years).

 

Expiry date    

Exercise

price

       December 31,
  2020		       Granted       Exercised       Expired       December 31,
  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 )     (1,537,000 )     -  
August 13, 2021   $ 1.01       150,000       -       -       (150,000 )     -  
September 16, 2021   $ 0.90       1,155,000       -       -       (1,155,000 )     -  
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       -       -       (100,000 )     600,000  
June 9, 2022   $ 0.64       2,180,000       -       -       (200,000 )     1,980,000  
October 3, 2022   $ 1.13       1,346,000       -       -       (486,000 )     860,000  
December 15, 2022   $ 0.89       972,000       -       -       (72,000 )     900,000  
February 9, 2023   $ 0.97       -       450,000       -       (100,000 )     350,000  
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  
July 8, 2023   $ 0.62       -       2,470,000       -       -       2,470,000  
September 18, 2023   $ 0.51       -       960,000       -       -       960,000  
Options outstanding and exercisable             11,542,000       6,380,000       (725,000 )     (5,207,000 )     11,990,000  
Weighted average exercise price           $ 0.80     $ 0.67     $ 0.78     $ 0.90     $ 0.68  

 

The weighted average remaining life of stock options outstanding at December 31, 2021 was 0.98 years (2020 – 1.08 years).

 

27


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

10. Share capital and reserves (Continued)

 

(d) Share purchase option compensation plan (Continued)

 

Expiry date    

Exercise

price

       December 31,
  2019		       Granted       Exercised       Expired       December 31,
  2020		  
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       -       (25,000 )     (1,070,000 )     -  
September 30, 2020   $ 0.83       106,000       -       (106,000 )(i)     -       -  
September 30, 2020   $ 0.79       170,000       -       (150,000 )(i)     (20,000 )     -  
December 13, 2020   $ 0.86       762,000       -       (635,000 )(i)     (127,000 )     -  
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       -       -       (5,000 )     1,155,000  
December 12, 2021   $ 1.00       200,000       -       -       -       200,000  
March 4, 2022   $ 0.47       -       1,130,000       (5,000 )     -       1,125,000  
April 30, 2022   $ 0.41       -       115,000       (15,000 )     -       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       -       -       2,180,000  
October 3, 2022   $ 1.13       -       1,346,000       -       -       1,346,000  
December 15, 2022   $ 0.89       -       972,000       -       -       972,000  
Options outstanding and exercisable             10,007,000       6,663,000       (936,000  )     (4,192,000 )     11,542,000  
Weighted average exercise price           $ 0.97     $ 0.74     $ 0.85     $ 1.12     $ 0.80  

 

 

(i) In accordance with the Company’s stock option plan, options holders exercised 100,000, 68,000 and 580,000 stock options on a cashless basis at an exercise price of $0.79, $0.83 and $0.86 respectively. The total number of shares issued in connection with the cashless exercise of options was 105,877.

 

The weighted average remaining life of stock options outstanding at December 31, 2020 was 1.08 years (2019 – 1.02 years).

 

28


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

10. Share capital and reserves (Continued)

 

(d) Share purchase option compensation plan (Continued)

 

The fair value of options granted during the years ended December 31, 2022, 2021 and 2020, calculated using the Black-Scholes option-pricing model at grant date, are as follows:

 

  Number of options       Date of grant       Fair value per share       Risk free interest rate       Expected life
  (in years)		       Expected volatility     Expected dividends
  855,000       December 16, 2022     $ 0.19       3.07 %     5       66.04 %   $Nil
  755,000       October 4, 2022     $ 0.22       3.42 %     5       82.02 %   $Nil
  3,640,000       June 10, 2022     $ 0.22       3.38 %     5       82.61 %   $Nil
  1,125,000       March 7, 2022     $ 0.31       1.65 %     5       85.37 %   $Nil
  960,000       September 17, 2021     $ 0.23       0.45 %     2       82.96 %   $Nil
  2,470,000       July 8, 2021     $ 0.25       0.45 %     2       84.98 %   $Nil
  100,000       May 28, 2021     $ 0.30       0.32 %     2       86.03 %   $Nil
  100,000       May 7, 2021     $ 0.30       0.33 %     2       86.33 %   $Nil
  1,975,000       March 31, 2021     $ 0.31       0.22 %     2       85.85 %   $Nil
  325,000       March 2, 2021     $ 0.43       0.26 %     2       85.48 %   $Nil
  450,000       February 9, 2021     $ 0.49       0.19 %     2       84.04 %   $Nil
  972,000       December 15, 2020     $ 0.35       0.25 %     2       76.39 %   $Nil
  1,346,000       October 1, 2020     $ 0.35       0.24 %     2       65.81 %   $Nil
  2,180,000       June 9, 2020     $ 0.25       0.28 %     2       62.07 %   $Nil
  700,000       May 1, 2020     $ 0.20       0.30 %     2       61.30 %   $Nil
  220,000       April 29, 2020     $ 0.22       0.32 %     2       61.31 %   $Nil
  115,000       April 13, 2020     $ 0.12       0.33 %     2       60.60 %   $Nil
  1,130,000       March 4, 2020     $ 0.20       0.92 %     2       55.66 %   $Nil

 

Total share-based payments expenses as a result of options granted and vested during the year ended December 31, 2022 was $1,478,100 (2021 - $1,870,800; 2020 - $1,784,500).

 

11. 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 Executive Vice President, 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 (Note 11 (b)) is as follows:

 

     

December 31,

2022

      

December 31,

2021

      

December 31,

2020

  
             
Professional fees   $ 60,000     $ 60,000     $ 65,000  
Salaries and benefits (1)     484,435 (2)     450,522       101,200  
Share-based payments     1,212,300       1,551,850       1,471,300  
Directors’ fees     145,000       102,500       70,000  
    $ 1,901,735     $ 2,164,872     $ 1,707,500  

 

29


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

11. Related party transactions and balances (Continued)

 

(a) Compensation of key management personnel (Continued)

 

(1) As at December 31, 2021, the Company owed $256,000 to the Chair as a result of the Chair deferring his salary from May 1, 2019 to December 31, 2021. On September 1, 2022, the Chair agreed to forfeit $177,200 of the unpaid balance of the deferred salary and recorded as a gain on debt forgiveness on the statement of comprehensive loss. The new amount owed of $78,800 was paid on December 15, 2022.

 

(2) As at December 31, 2022, the Company accrued cash bonuses to related parties of $104,263 that is included in trade and other payables.

 

(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 year ended December 31, 2022, the Company received $185,068 (2021 - $ 412,812; 2020 - $935,872) from Azucar for administrative services fees included in other income and received $1,191,360 (2021 - $969,532; 2020 - $468,227) from Almadex for administrative services fees included in other income.

 

At December 31, 2022, included in accounts receivable is $64,006 (2021 - $15,063) due from Azucar and $117,044 (2021 - $69,298) due from Almadex in relation to expense 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 officers.

 

(c) Other related party transactions

 

At December 31, 2022, the Company accrued $80,727 (2021 - $72,130) payable to Almadex for exploration and drilling services in Mexico.

 

During the year ended December 31, 2022, the Company employed the Chairman’s daughter for a salary of $48,800 less statutory deductions (2021 - $41,300; 2020 - $41,300) for marketing and administrative services provided to the Company.

 

30


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

12. Net loss per share

 

Basic and diluted net loss per share

 

The calculation of basic net loss per share for the year ended December 31, 2022 was based on the loss attributable to common shareholders of $11,846,560 (2021 - $2,668,254; 2020 - $3,129,368) and a weighted average number of common shares outstanding of 137,221,408 (2021 – 133,842,894; 2020 - 117,264,220).

 

The calculation of diluted net loss per share for the year ended December 31, 2022, 2021 and 2020 did not include the effect of stock options and warrants, as they were considered to be anti-dilutive.

 

13. Supplemental cash flow information

 

Supplemental information regarding non-cash transactions is as follows:

 

Investing and financing activities     December 31,
2022		       December 31,
  2021		       December 31,
  2020		  
             
Exploration and evaluation assets expenditures included in trade and other payables   $ 90,850     $ 89,203     $ 48,038  
Right-of-use assets
    -       (508,799 )     -  
Warrant liability
    -       2,371,174       -  
Fair value of finders’ warrants
    -       130,731       -  
Lease liabilities
    -       508,799       -  
Fair value of cash stock options transferred to share capital on exercise of options
    -       177,250       51,980  
Fair value of cashless stock options transferred to share capital on exercise of options
    -       -       178,480  
                         

 

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

 

      December 31,
  2022		       December 31,
  2021		  
         
Cash   $ 1,542,956     $ 2,133,076  
Term Deposits     5,115,120       8,037,300  
    $ 6,658,076     $ 10,170,376  

 

31


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

14. Income Taxes

 

(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,

2022

       December 31,
  2021		      

December 31,

2020

  
Loss before income taxes   $ (10,505,375 )   $ (2,354,113 )   $ (3,129,368 )
Statutory rate     27.00 %     27.00 %     27.00 %
                         
Expected income tax     (2,836,451 )     (635,611 )     (844,929 )
Effect of different tax rates in foreign jurisdictions     (83,891 )     5,281       27,574  
Non-deductible share-based payments     399,087       505,116       481,815  
Other permanent items     1,838,169       (620,413 )     1,937  
Change in deferred tax assets not recognized     2,471,723       733,447       300,505  
Share issuance costs     -       (331,660 )     (80,711 )
True-ups and other     (447,452 )     657,981       113,809  
Deferred income tax (recovery) expense   $ 1,341,185     $ 314,141     $ -  

 

(b) The Company’s deferred income tax liability relates to the Mexican income tax and Special Mining Duty (“SMD”) associated with the Tuligtic project.

 

The significant components of deferred income tax assets (liabilities) are as follows:

 

      December 31, 2022       December 31, 2021  
         
Deferred tax assets                
Non-capital losses   $ 2,477,570     $ 3,818,755  
                 
Deferred tax liabilities                
Exploration and evaluation assets     (5,567,778 )     (5,567,778 )
                 
Net deferred tax liabilities   $ (3,090,208 )   $ (1,749,023 )

 

(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, 2022       December 31, 2021  
         
Non-capital loss carry forwards   $ 25,487,951     $ 23,308,252  
Capital loss carry forwards     24,538,993       24,538,993  
Exploration and evaluation assets     8,188,922       8,188,922  
Share issue costs     858,548       1,293,588  
Property, plant and equipment     7,782,024       372,155  
Donations     32,960       32,960  
Investment tax credit     223,873       223,873  
    $ 67,113,271     $ 57,958,743  

 

32


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

14. Income Taxes (Continued)

 

At December 31, 2022, the Company had operating loss carry forwards available for tax purposes in Canada of $25,487,951 (2021 - $23,308,252) which expire between 2032 and 2042.

 

15. 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 warrant liability and 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 December 31, 2022, 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   $ 3,657,387     $ 415,481  
Accounts receivable and prepaid expenses     10,732       1,471  
Gold in trust     974,397       -  
Total assets   $ 4,642,516     $ 416,952  
                 
Trade and other payables   $ 31,433     $ 96,850  
Gold loan payable     3,929,015       -  
Derivative financial liabilities     306,084       -  
Total liabilities   $ 4,266,532     $ 96,850  
                 
Net assets   $ 375,984     $ 320,102  

 

A 10% change in the US dollar exchange rate relative to the Canadian dollar would change the Company’s net loss by $38,000.

 

33


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

15. Financial instruments (Continued)

 

(a) Currency risk (Continued)

 

A 10% change in the Mexican peso relative to the Canadian dollar would change the Company’s net loss by $32,000.

 

(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 are subsequently collected.

 

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, 2022, 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. Liquidity risk is considered low as the Company has sufficient cash and cash equivalent to meet its current liabilities.

 

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 $67,000.

 

(e) Commodity and equity price risk

 

The ability of the Company to explore its exploration and evaluation assets and the future profitability of the Company are directly related to the market price of gold and other precious metals. The Company monitors gold prices to determine the appropriate course of action to be taken by the Company. Equity price risk is defined as the potential adverse impact on the Company’s performance due to movements in individual equity prices or general movements in the level of the stock market.

 

34


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

15. Financial instruments (Continued)

 

(e) Commodity and equity price risk (Continued)

 

A 1% change in the commodity price would change the Company’s net loss by $10,000.

 

(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

 

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     -       306,084       -       306,084  
Warrant liability     -       102,787       -       102,787  

 

16. 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 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.

 

35


Almaden Minerals Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2022, 2021 and 2020
Expressed in Canadian dollars

 

16. Management of capital (Continued)

 

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. The Company has no externally imposed capital requirements.

 

17. 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,
  2022		      

December 31,

2021

  
Canada   $ 472,435     $ 587,684  
United States     6,568,840       13,968,566  
Mexico     63,116,991       61,434,031  
    $ 70,158,266     $ 75,990,281  

 

18. Subsequent event

 

On February 13, 2023, the Company granted officers and a director an aggregate of 600,000 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 $0.30 per share until February 14, 2028.

 

 

 

 

36