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Washington, D.C. 20549
(Name, Telephone, E-mail and/or Facsimile number and Address of Company
Contact Person)
Securities registered or to be registered
pursuant to Section 12(g) of the Act.
Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.
Indicate the number of outstanding shares of each of the issuer’s classes of capital or
common shares as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark
if the registrant is not required to file report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule
12b-2 of the Exchange Act.
If an emerging growth company that prepares its financial statements in
accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:
If “Other” has been checked in response to the previous question, indicate by check
mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDS DURING THE
PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed
by a court.
Under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"),
Almaden is classified as an "Emerging Growth Company". The Company will continue to be deemed an emerging growth company until
the earliest on the last day of our fiscal year during which (i) annual gross revenue exceeds $1.07 billion or (ii) the Company issues
more than $1.0 billion in non-convertible debt in a three-year period. Almaden will lose its status as an emerging growth company on the
last day of its fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective
registration statement. The Company will also lose its status as an emerging growth company if at any time it is deemed to be a large
accelerated filer.
As an emerging growth company, Almaden is exempt from Section 404(b) of
the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), which requires a public company’s auditor to
attest to, and report on, management’s assessment of its internal controls. The Company is also exempt from Sections 14A(a) and
(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which require
companies to hold shareholder advisory votes on executive compensation and golden parachute compensation.
Almaden has elected to use the extended transition period for complying
with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, that allows the Company to delay the adoption of new
or revised accounting standards that have different effective dates for public and private companies until those standards apply to private
companies. As a result of this election, Almaden’s financial statements may not be comparable to companies that comply with public
company effective dates.
Unless otherwise indicated, all dollar ($) amounts
referred to herein are in Canadian dollars.
The U.S. Securities and
Exchange Commission (the “SEC”) has adopted final rules to amend and modernize the mineral property disclosure requirements
for issuers whose securities are registered with the SEC. These new rules have rescinded the historical property disclosure guidance for
mining registrants included in SEC Industry Guide 7 and replaced them with the disclosure requirements in subpart 1300 of SEC Regulation
S-K (“S-K 1300”). Compliance is required for the first fiscal year beginning on or after January 1, 2021.
As a result of the adoption
of the SEC Mining Modernization Rules, the SEC now recognizes estimates of Mineral Resources categories “Measured Mineral Resources,”
“Indicated Mineral Resources” and “Inferred Mineral Resources” in addition to the Mineral Reserve categories of
“Proven Mineral Reserves” and “Probable Mineral Reserves”.
Statements contained in this Annual Report on
Form 20-F of Almaden Minerals Ltd. (“Almaden” or the “Company”), and the exhibits attached hereto that are not
historical facts are forward-looking statements within the meaning of U.S. and Canadian securities legislation and the U.S. Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties.
Such forward-looking statements include, but are not limited to, statements
regarding the permitting review process for the Ixtaca Project (“Ixtaca” or the “Project”) and the outcome of
legal actions in Mexico that are based on assumptions about: the permitting and legal regimes in Mexico; economic and political conditions;
success of exploration, development and environmental protection and remediation activities; the impact of the recent decision of the
Supreme Court of Justice of Mexico (“SCJN”), the timing of the official notification of that decision to the Company, that
the decision clarifies that the Company’s mineral rights at the Ixtaca project are protected while the mining authorities conduct
any necessary consultations prior to granting formal title, the timing and procedures for any consultation by the Ministry of the Economy
with indigenous communities and the timing and procedures for the Ministry of the Economy to issue mineral titles to Almaden; the Company’s
plans to re-submit a revised environmental permit application (“MIA”) to the Secretaría de Medio Ambiente y Recurso
Naturales’ (“SEMARNAT”); the potential timing of the MIA resubmission; the Company’s intention to complete a
Human Rights Impact Assessment (“HRIA”) and the potential timing thereof; the Company’s belief that Ixtaca will, long
after final closure, make meaningful and enduring positive contributions to surrounding communities and beyond, the Company’s expectation
that the Project would employ over 400 people over an 11-year mine life and would also provide updated infrastructure to the region,
the impact of the Project's proposed dry-stack tailing facilities, the Company’s belief that the Ixtaca deposit can be an economically
robust project that could provide the basis for further investment in the area. These statements relate to analyses and other information
that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning
Mineral Reserve and Mineral Resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve
estimates of the mineralization that will be encountered if a property is developed, and in the case of Mineral Reserves, such statements
reflect the conclusion based on certain assumptions that the mineral deposit can be economically exploited. Any statements that express
or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events
or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is
expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”,
or stating that certain actions, events or results “may”, “could”, “would”, “might” or
“will” (or the negative and grammatical variations of any of these terms and similar expressions) be taken, occur or be achieved)
are not statements of historical fact and may be forward-looking statements. Forward-looking statements and forward-looking information
are based, in part, on assumptions and factors that may change and are subject to a variety of known and unknown risks, uncertainties
and other factors which could cause actual events or results, performance or achievements of the Company to differ materially from those
expressed or implied by the forward-looking statements and forward-looking information. Some of the important risks, uncertainties and
other factors that could affect forward-looking statements and forward-looking information include, but are not limited to, those described
further in the sections entitled “ITEM 3. KEY INFORMATION - Risk Factors”, “ITEM 4. INFORMATION ON THE COMPANY - Business
Overview”, “ITEM 4. INFORMATION ON THE COMPANY – Principal Property Interests” and “ITEM 5. OPERATING AND
FINANCIAL REVIEW AND PROSPECTS” and in the exhibits attached to this Annual Report on Form 20-F. Should one or more of these risks,
uncertainties and other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from
those described in the Company’s forward-looking statements or forward-looking information. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements
and information. The forward-looking statements and forward-looking information are based on beliefs, expectations and opinions of the
Company’s management on the date of this Annual Report on Form 20-F and speak only as of the date hereof and the Company does not
undertake any obligation to publicly update forward-looking statements or forward-looking information contained herein to reflect events
or circumstances after the date hereof, except as required by law. For the reasons set forth above, investors should not place undue
reliance on forward-looking statements.
Forward-looking statements and other information
contained herein concerning the mining industry and the Company’s expectations concerning the mining industry are based on estimates
prepared by the Company using data from publicly available sources as well as from market research and industry analysis and on assumptions
based on data and knowledge of this industry which the Company believes to be reasonable. However, this data is inherently imprecise,
although generally indicative of relative market positions, market shares and performance characteristics. While the Company is not aware
of any misstatements regarding any mining industry data presented herein, the industry involves risks and uncertainties and is subject
to change based on various factors.
Certain historical and forward-looking information
contained in this Annual Report on Form 20-F has been provided by, or derived from information provided by, certain persons other than
the Company. Although the Company does not have any knowledge that would indicate that any such information is untrue or incomplete, the
Company assumes no responsibility for the accuracy and completeness of such information or the failure by such other persons to disclose
events which may have occurred or may affect the completeness or accuracy of such information, but which is unknown to the Company.
Please consult the Company’s public filings
at www.sec.gov for further, more detailed information concerning these matters.
PART I
|
Item 1. |
Identity of Directors, Senior Management and Advisors |
Not applicable
|
Item 2. |
Offer Statistics and Expected Timetable |
Not applicable
The following selected financial data of the Company
for Fiscal 2021, Fiscal 2020, and Fiscal 2019 ended December 31st was derived from the consolidated financial statements of the Company
included elsewhere in this Annual Report on Form 20-F. The selected financial data set forth for Fiscal 2018 and Fiscal 2017 ended December
31st are derived from the Company's audited consolidated financial statements, not included herein. The selected financial data should
be read in conjunction with the consolidated financial statements and other information included immediately following the text of this
Annual Report.
The consolidated financial statements of the Company
have been prepared in accordance and compliance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (“IFRS”).
The basis of preparation is described in Note
2 of the consolidated financial statements.
Table No. 1
Selected Financial Data
International Financial Reporting Standards
(expressed in thousands of Canadian dollars,
except share and per share data)
| |
|
Year |
|
|
Year |
|
|
Year |
|
|
Year |
|
|
Year |
|
| |
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
|
Ended |
|
| |
|
12/31/2021 |
|
|
12/31/2020 |
|
|
12/31/2019 |
|
|
12/31/2018 |
|
|
12/31/2017 |
|
| Revenues |
|
|
$- |
|
|
|
$- |
|
|
|
$- |
|
|
|
$- |
|
|
|
$- |
|
| Other Income (loss) |
|
|
3,552 |
|
|
|
1,702 |
|
|
|
678 |
|
|
|
1,190 |
|
|
|
468 |
|
| Net loss and comprehensive loss |
|
|
(2,668 |
) |
|
|
(3,129 |
) |
|
|
(3,763 |
) |
|
|
(3,512 |
) |
|
|
(5,231 |
) |
| Basic net (loss) income per common share |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.05 |
) |
| Diluted net (loss) income per common share |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.05 |
) |
| Weighted average shares (000) |
|
|
133,843 |
|
|
|
117,264 |
|
|
|
111,727 |
|
|
|
107,584 |
|
|
|
95,873 |
|
| Working capital |
|
|
10,651 |
|
|
|
3,083 |
|
|
|
1,748 |
|
|
|
4,357 |
|
|
|
16,065 |
|
| Exploration and evaluation assets |
|
|
61,432 |
|
|
|
58,606 |
|
|
|
56,973 |
|
|
|
54,678 |
|
|
|
44,804 |
|
| Net assets |
|
|
80,184 |
|
|
|
71,178 |
|
|
|
68,585 |
|
|
|
71,365 |
|
|
|
64,730 |
|
| Total assets |
|
|
87,232 |
|
|
|
76,449 |
|
|
|
74,064 |
|
|
|
73,928 |
|
|
|
66,803 |
|
| Capital stock |
|
|
141,041 |
|
|
|
131,190 |
|
|
|
127,022 |
|
|
|
127,022 |
|
|
|
118,054 |
|
| Dividends declared per share |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian/U.S. Dollar Exchange Rates
In this Annual Report, unless otherwise specified,
all dollar amounts are expressed in Canadian dollars (CDN$).
Table No. 2 sets forth the exchange rate for the
Canadian dollars at the end of the five most recent fiscal periods ended at December 31st, the average rates for the period,
the range of high and low rates and the close for the period. Table No. 3 sets forth the range of high and low rates for each month during
the previous six months. For purposes of this table, the rate of exchange means the noon buying rate in New York City for cable transfers
in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The table sets forth the number of Canadian
Dollars required under that formula to buy one U.S. Dollar. The average rate means the average of the exchange rates on the last day of
each month during the period.
Table No. 2
Canadian Dollar/U.S. Dollar Exchange Rates for
Five Most Recent Financial Years
| |
Average |
High |
Low |
Close |
| Fiscal Year Ended 12/31/2021 |
$1.25 |
$1.29 |
$1.20 |
$1.27 |
| Fiscal Year Ended 12/31/2020 |
1.34 |
1.45 |
1.27 |
1.27 |
| Fiscal Year Ended 12/31/2019 |
1.33 |
1.36 |
1.30 |
1.30 |
| Fiscal Year Ended 12/31/2018 |
1.30 |
1.36 |
1.23 |
1.36 |
| Fiscal Year Ended 12/31/2017 |
1.30 |
1.37 |
1.21 |
1.25 |
Table No. 3
Canadian Dollar/U.S. Dollar Exchange Rates for
Previous Six Months
| |
October
2021 |
November
2021 |
December
2021 |
January
2022 |
February
2022 |
March
2022 |
| High |
$1.27 |
$1.28 |
$1.29 |
$1.28 |
$1.28 |
$1.29 |
| Low |
1.23 |
1.24 |
1.26 |
1.25 |
1.27 |
1.25 |
The exchange rate was CDN$1.28/US$1.00 on April 28, 2022.
Risk Factors
Speculative Nature of Resource Exploration and Development
Resource exploration and development is a speculative
business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the
failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality
to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors
which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity
of milling facilities, mineral markets and processing equipment, and other factors such as government regulations, including regulations
relating to royalties, allowable production, importing and exporting of minerals, and environment protection, the combination of which
factors may result in the Company not receiving an adequate return on investment capital.
Presently, the Company is in the exploration and
development stage and there is no assurance that a commercially viable ore deposit or mining operation will result in any of its properties
or prospects until further work is done and a comprehensive economic evaluation based upon that work is concluded. In recent years the
Company has financed its operations principally through the sale of equity securities. In the past, it has also financed its activities
by entering into joint venture arrangements and through the sale of an inventory of gold. A commercially viable ore deposit and mining
operation is dependent on the establishment of economically recoverable reserves, the ability of the Company to obtain the necessary financing
and permitting to complete development and ultimately upon future profitable production or the realization of proceeds from the disposition
of the properties.
Uncertainty in Commercially Mineable Ore Deposits
There is no certainty that the expenditures to
be made by the Company in the exploration of its properties as described herein will result in discoveries of mineralized material in
commercial quantities. Most exploration projects do not result in the discovery of commercially mineable ore deposits and no assurance
can be given that any particular level of recovery of ore reserves will in fact be realized or that any identified mineral deposit will
ever qualify as a commercially mineable (or viable) ore body which can be legally and economically exploited. Estimates of reserves, mineral
deposits and production costs can also be affected by such factors as environmental permitting regulations and requirements, weather,
environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition,
the grade of ore ultimately mined may differ from that indicated by drilling results. Short term factors relating to ore reserves, such
as the need for orderly development of ore bodies or the processing of new or different grades, may also have an adverse effect on mining
operations and on the results of operations. There can be no assurance that minerals recovered in small-scale tests will be duplicated
in large-scale tests under on-site conditions or in production scale. Material changes in ore reserves, grades, stripping ratios or recovery
rates may affect the economic viability of any project.
History of Net Losses, Lack of Cash Flow and
Assurance of Profitability; Need for Additional Capital
The Company had net losses in a number of years
since its date of incorporation. Due to the nature of the Company’s business, there can be no assurance that the Company will be
profitable. The Company had net losses of $2,668,254 in Fiscal 2021, $3,129,368 in Fiscal 2020, and $3,763,075 in Fiscal 2019.
The Company currently has no revenues from operations
as all of its properties and prospects are in the exploration and development stage. There is no assurance that the Company will receive
revenues from operations at any time in the near future. During Fiscal 2021, 2020 and 2019, the Company earned interest income and other
income from Administrative service fees charged to Azucar Minerals Ltd. (“Azucar”) and Almadex Minerals Ltd. (“Almadex”).
At December 31, 2021, the Company had working
capital of $10,651,264 including cash and cash equivalents of $10,170,376. Management estimates that the current cash position and expected
future cash flows from the exercise of outstanding stock options and warrants and equity financing will be sufficient for the Company
to carry out its anticipated exploration and operating plans for fiscal 2022 that includes further development of the Ixtaca Project.
Although Management believes that the Company’s cash resources are sufficient to meet its working capital and mineral exploration
requirements for fiscal 2022, the Company may require additional capital in order to remain operational in the near future. There is the
possibility that the Company may not receive such necessary funding, particularly during a down economy. Additional funding may not be
available, or if it is available, may not be on favorable terms.
The Company has not paid dividends on its shares
since incorporation and the Company does not anticipate doing so in the foreseeable future.
Uncertainty of Obtaining Additional Funding
Requirements
If the Company’s exploration and development
programs are successful, additional capital will be required for the further development of an economic ore body and to place it in commercial
production. The only material sources of future funds presently available to the Company are the sale of its equity capital, the incurring
of debt, or the offering by the Company of an interest in its properties and prospects to be earned by another party or parties carrying
out further development thereof.
Failure to obtain additional financing on a timely
basis could cause the Company to forfeit its interest in such properties, dilute its interests in the properties and/or reduce or terminate
its operations.
Possible Dilution to Present and Prospective Shareholders
The Company’s plan of operation, in part,
contemplates the financing of the conduct of its business by the issuance, for cash, of equity securities of the Company or incurring
debt, or a combination of the two. Any transaction involving the issuance of previously authorized but unissued shares of common shares,
or securities convertible into common shares, would result in dilution, possibly substantial, to present and prospective holders of common
shares. The Company could also seek joint venture partners or funding sources such as royalties or streaming transactions. These approaches
would dilute the Company’s interest in properties it has acquired.
Material Risk of Dilution Presented by Large
Number of Outstanding Share Purchase Options and Warrants
As of April 28, 2022, there were share purchase options outstanding allowing
the holders of these options to purchase 11,990,000 shares of the Company’s common shares and warrants allowing the holders of these
warrants to purchase 22,168,504 shares of the Company’s common shares. Directors and officers of the Company in the aggregate hold
9,450,000 of these share purchase options and 581,000 of these warrants. An additional 2,540,000 share purchase options are held by employees
and consultants of the Company. Given the fact that as of April 28, 2022 there were 137,221,408 shares of common shares outstanding, the
exercise of all of the existing share purchase options and warrants would result in dilution to the existing shareholders and could depress
the price of the Company’s shares. The exercise of all outstanding share purchase options and warrants would cause the number of
issued and outstanding common shares to rise 25%.
Emerging Growth Company Transition Period
Pursuant to the JOBS Act of 2012 and Section 7(a)2(B)
of the Securities Act, the Company is taking advantage of the extended transition period for Emerging Growth Companies. When an accounting
standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth
company, can adopt the standard for the private company. This may make comparison of the Company’s financial statements with any
other public company which is not either an emerging growth company nor an emerging growth company which has opted
out of using the extended transition period difficult or impossible as different or revised standards may be used.
Volatility of Share Price
Market prices for shares of early stage companies
are often volatile. Factors such as announcements of mineral discoveries, exploration and financial results, and other factors could have
a significant effect on the price of the Company’s shares.
Mineral Prices May Not Support Corporate Profit
The mining industry in general is intensely competitive
and there is no assurance that, even if commercial quantities of mineral resources are developed, a profitable market will exist for the
sale of same. Factors beyond the control of the Company may affect the marketability of any substances discovered. The price of minerals
is volatile over short periods of time and is affected by numerous factors beyond the control of the Company, including international
economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption
patterns, speculative activities and increased production due to improved mining techniques. Material changes in mineral prices may affect
the economic viability of any project.
Laws and regulations
The Company’s exploration activities are
subject to extensive federal, provincial, state and local laws and regulations governing prospecting, development, production, exports,
taxes, labour standards, occupational health and safety, mine safety and other matters in all the jurisdictions in which it operates.
These laws and regulations are subject to change, can become more stringent and compliance can therefore become more costly. These factors
may affect both the Company’s ability to undertake exploration and development activities in respect of future properties in the
manner contemplated, as well as its ability to continue to explore, develop and operate those properties in which it currently has an
interest or in respect of which it has obtained exploration and development rights to date. The Company applies the expertise of its management,
advisors, employees and contractors to ensure compliance with current laws and relies on its land men and legal counsel in both Mexico
and Canada.
Failure to comply with applicable laws and regulations
may result in civil or criminal fines or penalties or enforcement actions, including orders issued by regulatory or judicial authorities
enjoining, curtailing or closing operations or requiring corrective measures, installation of additional equipment or remedial actions,
any of which could result in the Company incurring significant expenditures. The Company may also be required to compensate private parties
suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements. It is also possible that future laws
and regulations, or a more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense,
capital expenditures, restrictions on or suspensions of our operations and delays in the exploration and development of Ixtaca.
On December 21, 2020, the Company announced that
it received notification from the Mexican federal permitting authority, SEMARNAT, that the Company’s initial MIA, a required permit
in order to proceed to construction and operation of the Ixtaca Project, did not receive approval. The Company originally submitted the
MIA in early 2019.
There is no assurance that any future MIA permit
application will be successful. Such an application may be subject to challenge or litigation by third parties, which may delay any decision
in respect of the MIA application or which may inhibit the Company’s ability to proceed with the Ixtaca Project even in the event
of a positive outcome to the MIA application. Under Mexican law, in addition to the MIA permit, a number of additional permits from Federal,
State, and Municipal authorities, including a Change of Use of Land permit, an explosives permit, a water usage permit, and permits relating
to powerline construction and electrical use, among others, will be required in order to proceed to construction and operation of the
Ixtaca Project. Almaden reiterates its commitment to comply with Mexican law.
On February 17, 2022, the Company announced that the SCJN reached a decision
on February 16, 2022 in respect of the Mineral Title Lawsuit involving the Company’s mineral claims (for background see Item 8.
Financial Information, sub-heading “Legal Proceedings”). On April 27, 2022, the Company announced that the SCJN had published
its final decision on this matter.
Almaden has reviewed the final decision of the SCJN. The decision determines
that the Mexican mineral title law is constitutional, but that before issuing Almaden’s mineral titles, the Ministry of the Economy
should have provided for a consultation procedure with relevant indigenous communities. The decision orders the Ministry of the Economy
to declare Almaden’s mineral titles ineffective (“insubsistentes”) and to then issue them to Almaden following
the Ministry’s compliance with its obligation to carry out the necessary procedures to consult with indigenous communities. The
decision discusses the application of international law and jurisprudence to the implementation of consultation by Mexican authorities
with relevant indigenous communities. It also provides some detail to Mexican authorities regarding the procedures required to be followed
by those authorities in the performance of indigenous consultation prior to the grant of mineral claims. Furthermore, the decision clarifies
that the Company’s original claim applications were submitted pursuant to the legal framework in force at the time and as such Almaden’s
mineral rights at the Ixtaca project are safeguarded while the mining authorities comply with conditions and requirements prior to issuing
the mineral titles. As previously disclosed, the Company has no interest in holding mineral claims over the indigenous community’s
land. The decision will take effect at the time of its official notification to the Company which is expected shortly.
Almaden intends to interact with Mexican government officials and local community officials
in order to facilitate to the extent possible the government’s execution of its responsibilities in the issuance of the mineral
titles. At present there is no timeline for the consultation process.
Political, economic and social environment
The Company’s mineral properties may be
adversely affected by political, economic and social uncertainties which could have a material adverse effect on the Company’s results
of operations and financial condition. Areas in which the Company holds or may acquire properties may experience local political unrest
and disruption which could potentially affect the Company’s projects or interests. Changes in leadership, social or political disruption
or unforeseen circumstances affecting political, economic and social structure could adversely affect the Company’s property interests
or restrict its operations. The Company’s mineral exploration and development activities may be affected by changes in government
regulations relating to the mining industry and may include regulations on production, price controls, labour, export controls, income
taxes, expropriation of property, environmental legislation and safety factors.
Any shifts in political attitudes or changes in
laws that may result in, among other things, significant changes to mining laws or any other national legal body of regulations or policies
are beyond the control of the Company and may adversely affect its business. The Company faces the risk that governments may adopt substantially
different policies, which might extend to the expropriation of assets or increased government participation in the mining sector. In addition,
changes in resource development or investment policies, increases in taxation rates, higher mining fees and royalty payments, revocation
or cancellation of mining concession rights or shifts in political attitudes in Mexico may adversely affect the Company’s business.
The Company’s relationship with communities
in which it operates is critical to the development of the Ixtaca Project. Local communities may be influenced by external entities, groups
or organizations opposed to mining activities. In recent years, anti-mining NGO activity in Mexico has increased. These NGOs have taken
such actions as road closures, work stoppages and lawsuits for damages. These actions relate not only to current activities but often
in respect to the mining activities by prior owners of mining properties. Such actions by NGOs may have a material adverse effect on the
Company’s operations at the Ixtaca Project and on its financial position, cash flow and results of operations.
Risks related to International Labour Organization (“ILO”)
Convention 169 Compliance
The Company may, or may in the future, operate
in areas presently or previously inhabited or used by indigenous peoples. As a result, the Company’s operations are subject to national
and international laws, codes, resolutions, conventions, guidelines and other similar rules respecting the rights of indigenous peoples,
including the provisions of ILO Convention 169. ILO Convention 169 mandates, among other things, that governments consult with indigenous
peoples who may be impacted by mining projects prior to granting rights, permits or approvals in respect of such projects. Therefore,
consultation with indigenous communities by Mexican authorities and the Company may be required for the Ixtaca Project.
ILO Convention 169 has been ratified by Mexico.
It is possible however that Mexico may not (i) have implemented procedures to ensure their compliance with ILO Convention 169 or (ii)
have complied with the requirements of ILO Convention 169 despite implementing such procedures.
As noted in Item 8. Financial Information, sub-heading “Legal Proceedings”,
the Mexico’s SCJN has recently determined that before issuing Almaden’s mineral titles, the Ministry of the Economy should
have provided for a consultation procedure with relevant indigenous communities. The decision orders the Ministry of the Economy to declare
Almaden’s mineral titles ineffective and to issue them to Almaden following the Ministry’s compliance with its obligation
to carry out the necessary procedures to consult with indigenous communities. The decision will take effect at the time of its official
notification to the Company.
The standards for local implementation of the obligations assumed by Mexico
under ILO Convention 169 regarding the human right to free, prior, informed consultation of indigenous communities are currently evolving.
The SCJN decision may halt or result in a significant delay in project development notwithstanding the extensive engagement already conducted
by the Company in relevant communities.
Government compliance with ILO Convention 169
can result in delays and significant additional expenses to the Company arising from the consultation process with indigenous peoples
in relation to the Company’s exploration, mining or development projects. Moreover, any actual or perceived past contraventions,
or potential future actual or perceived contraventions, of ILO Convention 169 by Mexico creates a risk that the permits, rights, approvals,
and other governmental authorizations that the Company has relied upon, or may in the future rely upon, to carry out its operations or
plans could be challenged by or on behalf of indigenous peoples.
Such challenges may result in, without limitation,
additional expenses with respect to the Company’s operations, the suspension, revocation or amendment of the Company’s rights
or mining, environmental or export permits, a delay or stoppage of the Company’s development, exploration or mining operations,
the refusal by governmental authorities to grant new permits or approvals required for the Company’s continuing operations until
the settlement of such challenges, or the requirement for the responsible government to undertake the requisite consultation process in
accordance with ILO Convention 169.
As a result of the inherent uncertainty in respect
of such proceedings, the Company is unable to predict what the results of any such challenges would be; however, any ILO Convention 169
proceedings relating to the Company’s operations in Mexico may have a material adverse effect on the business, operations, and financial
condition of the Company.
As a result of social media and other web-based applications, companies
today are at much greater risk of losing control over how they are perceived
Damage to the Company’s reputation can be
the result of the actual or perceived occurrence of any number of events, and could include any negative publicity, whether true or not.
Although the Company places a great emphasis on protecting its image and reputation, it does not ultimately have direct control over how
it is perceived by others. Campaigns aimed at damaging the Company’s reputation can generally be expected to be launched or intensified
during important permitting and legal procedures, such as those in which the Company is currently engaged. Reputation loss may lead to
increased challenges in developing and maintaining community relations, decreased investor confidence and act as an impediment to the
Company’s overall ability to advance its projects, thereby having a material adverse impact on the Company’s business, financial
condition or results of operations.
The Company may be subject to legal proceedings that arise in the
ordinary course of business
Due to the nature of its business, the Company
may be subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. The Company’s
operations are subject to the risk of legal claims by employees, unions, contractors, lenders, suppliers, joint venture partners, shareholders,
governmental agencies or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation.
Plaintiffs may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits
may remain unknown for substantial periods of time. Defense and settlement costs can be substantial, even with respect to claims that
have no merit. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation,
including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges
and juries and the possibility that decisions may be reversed on appeal. The litigation process could, as a result, take away from the
time and effort of the Company’s management and could force the Company to pay substantial legal fees or penalties. There can be
no assurances that the resolutions of any such matters will not have a material adverse effect on the Company’s business, financial
condition and results of operations.
Title to mineral properties
While the Company has investigated title to its mineral properties, this
should not be construed as a guarantee of title. The properties may be subject to prior unregistered agreements or transfers and title
may be affected by undetected defects. Title to Almaden’s mining concessions may also be adversely affected by the Amparo as discussed
in Item 8 under the heading “Legal Proceedings”. There are significant risks that the impact of the decision of the SCJN may
not be known for an extended period of time, and that the Company may lose the ownership of some or all of its mineral claims.
There is a risk that title to the mining concessions,
the surface rights and access rights comprising Ixtaca and the necessary infrastructure, may be deficient or subject to additional disputes.
The procurement or enforcement of such rights, or any dispute with respect to such rights, can be costly and time consuming. In areas
where there are local populations or landowners, it may be necessary, as a practical matter, to negotiate surface access. Even in the
event that the Company has the legal right to access the surface and carry on construction and mining activities, the Company may not
be able to negotiate satisfactory agreements with existing landowners/occupiers for such access, and therefore it may be unable to carry
out activities as planned. In addition, in circumstances where such access is denied, or no agreement can be reached, this could have
a material adverse effect on the Company and the Company may need to rely on the assistance of local officials or the courts in such jurisdictions
or pursue other alternatives, which may suspend, delay or impact mining activities as planned.
There is also a risk that the Company’s
exploration, development and mining authorizations and surface rights may be challenged or impugned by third parties. In addition, there
is a risk that the Company will not be able to renew some or all its licenses in the future. Inability to renew a license could result
in the loss of any project located within that license.
Impact of COVID-19 Pandemic
The Company’s business could be significantly
adversely affected by the effects of a widespread global outbreak of contagious disease, including the recent outbreak of respiratory
illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 and its variants will have on third parties’
ability to meet their obligations with the Company, including due to uncertainties relating to the ultimate geographic spread of the virus,
the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments
of affected countries. In particular, the continued spread of COVID-19 and its variants globally could materially and adversely impact
the Company’s business including without limitation, employee health, limitations on travel, the availability of industry experts
and personnel, restrictions to planned exploration and drill programs, receipt of necessary government approvals, regulatory compliance,
and other factors that will depend on future developments beyond the Company’s control. In addition, a significant outbreak of contagious
diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets
of many countries (including those in which the Company operates), resulting in an economic downturn that could negatively impact the
Company’s operations and ability to raise capital.
Environmental, Climate Change, Health and Safety
Regulation Compliance
The Company’s exploration and development
activities are subject to extensive laws and regulations governing environmental protection and employee health and safety promulgated
by governments and government agencies.
Environmental (inclusive of climate change) and
health and safety laws and regulations are complex and have become more stringent over time. Failure to comply with applicable environmental
and health and safety laws may result in injunctions, damages, suspension or revocation of permits and imposition of penalties. Environmental
regulation is evolving in a manner resulting in stricter standards and the enforcement of, and fines and penalties for, non-compliance
are becoming more stringent.
The Company is also subject to various reclamation-related
conditions. Reclamation requirements are designed to minimize long-term effects of mining exploitation and exploration disturbance by
requiring the operating company to control possible deleterious effluents and to re-establish to some degree pre-disturbance land forms
and vegetation. The Company is subject to such requirements in connection with its activities at Ixtaca. Any significant environmental
issues that may arise, however, could lead to increased reclamation expenditures and could have a material adverse impact on the Company’s
financial resources.
There can also be no assurance that closure estimates
prove to be accurate. The amounts recorded for reclamation costs are estimates unique to a property based on estimates provided by independent
consulting engineers and the Company’s assessment of the anticipated timing of future reclamation and remediation work required
to comply with existing laws and regulations. Actual costs incurred in future periods could differ from amounts estimated. Additionally,
future changes to environmental laws and regulations could affect the extent of reclamation and remediation work required to be performed
by the Company. Any such changes in future costs could materially impact the amounts charged to operations for reclamation and remediation.
Climate change regulations may become more onerous
over time as governments implement policies to further reduce carbon emissions, including the implementation of taxation regimes based
on aggregate carbon emissions. Some of the costs associated with reducing emissions can be offset by increased energy efficiency and technological
innovation. However, the cost of compliance with environmental regulation and changes in environmental regulation has the potential to
result in increased costs of operations, reducing the potential profitability of the Company’s future operations.
Due to increased global attention regarding the
use of cyanide in mining operations, regulations may be imposed restricting or prohibiting the use of cyanide and other hazardous substances
in mineral processing activities. If such legislation were to be adopted in a region in which the Company relies on the use of cyanide,
it would have a significant adverse impact on the Company’s results of operations and financial condition as there are few, if any,
substitutes for cyanide in extracting metals from certain types of ore.
While the Company intends to fully comply with
all applicable environmental and health and safety regulations there can be no assurance that the Company has been or will at all times
be in complete compliance with such laws, regulations and permits, or that the costs of complying with current and future environmental
and health and safety laws and permits will not materially and adversely affect the Company’s future business, results of operations
or financial condition.
Uncertainty in Development of a Commercially
Mineable Ore Deposit
The properties and prospects in which the Company
has an interest are not in commercial production. A commercially viable ore deposit is dependent on the establishment of economically
recoverable reserves, the ability of the Company to obtain the necessary financing and permitting to complete development, and ultimately
upon future profitable production or the realization of proceeds from the disposition of the properties.
Uncertainty of Reserves and Mineralization
Estimates
There are numerous uncertainties inherent in estimating
proven and probable reserves and mineralization, including many factors beyond the control of the Company. The estimation of reserves
and mineralization is a subjective process and the accuracy of any such estimates is a function of the quality of available data and of
engineering and geological interpretation and judgment. Results of drilling, metallurgical testing and production and the evaluation of
mine plans subsequent to the date of any estimate may justify revision of such estimates. No assurances can be given that the volume and
grade of reserves recovered and rates of production will not be less than anticipated. Assumptions about prices are subject to greater
uncertainty and metals prices have fluctuated widely in the past. Declines in the market price of base or precious metals also may render
reserves or mineralization containing relatively lower grades of ore uneconomic to exploit. Changes in operating and capital costs and
other factors including, but not limited to, short-term operating factors such as the need for sequential development of ore bodies and
the processing of new or different ore grades, may materially and adversely affect reserves.
Dependence on Key Personnel
The Company depends highly on the business and
technical expertise of its management and key personnel. There is little possibility that this dependence will decrease in the near term.
As the Company’s operations expand, additional general management resources may be required. The Company maintains no “Key
Man” insurance coverage, and the loss or unavailability of any of its key personnel could have a negative effect on the Company’s
ability to operate effectively.
Conflict of Interest
Some of the Company’s directors and officers
are directors and officers of other natural resource or mining-related companies. Duane Poliquin, Morgan Poliquin, Douglas McDonald, and
Korm Trieu also serve as directors and/or officers of Azucar Minerals Ltd. and Almadex Minerals Ltd. Elaine Ellingham also serves as a
director of Alamos Gold Inc., and Omai Gold Mines Corp. Kevin O’Kane also serves on the Board of SolGold Plc, IAMGOLD Corporation
and NorthIsle Copper and Gold Inc. These associations may give rise from time to time to conflicts of interest, as a result of which,
the Company may miss the opportunity to participate in certain transactions.
Foreign Operations
The Company currently has development projects
located in Mexico. The Company’s foreign activities are subject to the risks normally associated with conducting business in foreign
countries, including exchange controls and currency fluctuations, foreign taxation, laws or policies of particular countries, labor practices
and disputes, and uncertain political and economic environments, as well as risks of war and civil disturbances, or other risks that could
cause exploration or development difficulties or stoppages, restrict the movement of funds or result in the deprivation or loss of contract
rights or the taking of property by nationalization or expropriation without fair compensation. Foreign operations could also be adversely
impacted by laws and policies of the U.S. affecting foreign trade, investment and taxation.
Changes to Mexican Mining Taxes
In October 2013, the Mexican Congress approved
a package of tax reforms which included significant changes to the country’s mining royalties and tax structure. These new laws
had an effective date of January 1, 2014. The changes include a 7.5% special mining royalty on earnings before interest, taxes, depreciation
and amortization (“EBITDA”) and an additional 0.5% royalty on gross revenues from precious metal production. The new law also
increases annual taxes on certain inactive exploration concessions by 50% to 100%. These changes may result in increased holding costs
to the Company for its existing mineral concessions. These new taxes and royalties, any future increases to tax and royalty rates, or
any new taxes imposed by the Mexican governmental authorities may materially and adversely affect the potential to define economic reserves
on any Mexican properties and result in the Company’s Mexican properties being less attractive to potential optionees or joint-venture
partners.
Foreign Currency Fluctuations
At the present time, a majority of the Company’s
activities are carried on outside of Canada. Accordingly, it is subject to risks associated with fluctuations of the rate of exchange
between the Canadian dollar and foreign currencies.
The Company is currently not engaged in currency
hedging to offset any risk of exchange rate fluctuation and currently has no plans to engage in currency hedging.
Operating Hazards and Risks Associated with
the Mining Industry
Mining operations generally involve a high degree
of risk, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Hazards such as unusual
or unexpected geological formations and other conditions are involved. Operations in which the Company has a direct or indirect interest
will be subject to all the hazards and risks normally incidental to exploration, development and production of minerals, any of which
could result in work stoppages, damage to or destruction of mines and other producing facilities, damage to or loss of life and property,
environmental damage and possible legal liability for any or all damage or loss. The Company may become subject to liability for cave-ins
and other hazards for which it cannot insure or against which it may elect not to insure where premium costs are disproportionate to the
Company’s perception of the relevant risks. The payment of such insurance premiums and the incurring of such liabilities would reduce
the funds available for exploration activities.
The Ability to Manage Growth
Should the Company be successful in its efforts
to develop its mineral properties or to raise capital for such development or for the development of other mining ventures it will experience
significant growth in operations. If this occurs, management anticipates that additional expansion will be required in order to continue
development. Any expansion of the Company’s business would place further demands on its management, operational capacity and financial
resources. The Company anticipates that it will need to recruit qualified personnel in all areas of its operations. There can be no assurance
that the Company will be effective in retaining its current personnel or attracting and retaining additional qualified personnel, expanding
its operational capacity or otherwise managing growth. The failure to manage growth effectively could have a material adverse effect on
the Company's business, financial condition and results of operations.
Competition
There is competition from other mining exploration
companies with operations similar to those of the Company's. Many of the mining companies with which the Company competes have operations
and financial strength many times greater than that of the Company. Such competitors could outbid the Company for such projects, equipment
or personnel, or produce minerals at a lower cost which would have a negative effect on the Company’s operations and financial condition.
Lack of a Dividend Policy
The Company does not intend to pay cash dividends
in the foreseeable future, as any earnings are expected to be retained for use in developing and expanding its business. However, the
actual amount of dividends which the Company may pay will remain subject to the discretion of the Company’s Board of Directors and
will depend on results of operations, cash requirements and future prospects of the Company and other factors.
ESTMA Risks
The Extractive Sector Transparency Measures Act
(Canada) (“ESTMA”) requires public disclosure of certain payments to governments by companies engaged in the commercial development
of minerals which are publicly listed in Canada. Mandatory annual reporting is required for extractive companies with respect to payments
made to foreign and domestic governments, including aboriginal groups. ESTMA requires reporting on the payments of any taxes, royalties,
fees, production entitlements, bonuses, dividends, infrastructure reporting or structuring payments to avoid reporting. If the Company
becomes subject to an enforcement action or is in violation of ESTMA, this may result in significant penalties or sanctions which may
also have a material adverse effect on the Company’s reputation.
Cybersecurity Risks
As is typical of modern businesses, the Company
is reliant on the continuous and uninterrupted operation of its information technology (“IT”) systems. User access and security
of all Company sites and IT systems can be critical elements to its operations, as is cloud security, security of all of the Company’s
IT systems, and protection against cyber security incidents. Any IT failure pertaining to availability, access or system security could
potentially result in disruption of the activities of the Company and its personnel, and could adversely affect the reputation, operations
or financial performance of the Company.
Potential risks to the Company’s IT systems
could include unauthorized attempts to extract business sensitive, confidential or personal information, denial of access extortion, corruption
of information or disruption of business processes, or by inadvertent or intentional actions by the Company’s employees or vendors.
A cybersecurity incident resulting in a security breach or failure to identify a security threat could disrupt business and could result
in the loss of sensitive, confidential or personal information or other assets, as well as litigation, regulatory enforcement, violation
of privacy or securities laws and regulations, and remediation costs, all of which could materially impact the Company’s business
or reputation.
Foreign Incorporation and Civil Liabilities
The Company was created under amalgamation under
the laws of the Province of British Columbia, Canada. With the exception of Alfredo Phillips, who is a resident of Mexico, and Laurence
Morris, who is a resident of Nicaragua and a citizen of the United Kingdom, all of the Company’s directors and officers are residents
of Canada, and all of the Company’s assets and its subsidiaries are located outside the U.S. Consequently, it may be difficult for
U.S. investors to affect service of process in the U.S. upon those directors and officers who are not residents of the U.S., or to realize
in the U.S. upon judgments of U.S. courts predicated upon civil liabilities under applicable U.S. laws.
The Company could be deemed a passive foreign
investment company which could have negative consequences for U.S. investors.
The Company could be classified as a Passive Foreign
Investment Company (“PFIC”) under the United States tax code. If the Company is a PFIC, then owners of the Company’s
shares who are U.S. taxpayers generally will be required to include distributions or any gain realized upon a disposition or deemed disposition
of shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer timely makes
a qualified electing fund ("QEF") election or a mark-to-market election with respect to the Company’s shares.
|
Item 4. |
Information on the Company |
History and Development of the Company
The head office of the Company is located at 1333
Johnston Street, Suite 210, Vancouver, British Columbia, Canada, V6H 3R9. The address of the registered office of the Company is 1177
West Hastings Street, Suite 1710, Vancouver, British Columbia, Canada, V6E 2L3.
Computershare Investor Services Inc., at its offices
in Vancouver, B.C. and Toronto, Ontario, is the registrar and transfer agent of the Company’s Common Shares.
The contact person is Korm Trieu, Chief Financial
Officer. The telephone number is (604) 689-7644. The fax number is (604) 689-7645. The email address is ktrieu@almadenminerals.com. The
web-site address is www.almadenminerals.com.
The Company was formed by amalgamation under the
laws of the Province of British Columbia of its predecessor companies, Almaden Resources Corporation and Fairfield Minerals Ltd., on February
1, 2002. The Company operates under the Business Corporations Act (British Columbia).
Effective July 31, 2015, the Company effected
a corporate reorganization pursuant to a statutory plan of arrangement (“Plan of Arrangement”) involving the Company’s
then wholly owned subsidiary, Azucar, as described below.
The Company’s common shares began trading
on The Toronto Stock Exchange (“TSX”) under the symbol “AMM” on February 11, 2002 and on the NYSE American (formerly
the NYSE MKT), under the symbol “AAU” on December 19, 2005. Almaden Resources Corporation’s initial public offering
on the Vancouver Stock Exchange was pursuant to a prospectus dated October 10, 1986. The shares of Fairfield Minerals Ltd. began trading
on the Vancouver Stock Exchange on July 18, 1986 and on The Toronto Stock Exchange on May 21, 1990.
There have been no public takeover offers by third
parties in respect of the Company’s shares and the Company has made no public takeover offers in respect of any other company’s
shares.
Organizational Structure
The Company
currently has three wholly-owned (direct or indirect) subsidiaries. These subsidiaries are:
| Subsidiaries |
Jurisdiction |
Nature of operations |
| Puebla Holdings Inc. |
Canada |
Holding company |
| Minera Gorrion, S.A. de C.V. |
Mexico |
Exploration company |
| Molinos de Puebla, S.A. de C.V. |
Mexico |
Holding company |
Business of the Company
The Company is engaged in the business of the
acquisition, exploration and when warranted, development of mineral properties. The Company currently has one material property in Mexico.
The Company's property is at the exploration and development stage. The Company has not generated any revenues from operations.
Corporate Reorganization
The Company entered into an Arrangement Agreement
dated May 11, 2015 involving the spinout, pursuant to a statutory Plan of Arrangement, of Almaden’s early stage exploration projects,
royalty interests and other non-core assets into a new public company called Azucar (formerly Almadex Minerals Limited), which trades
on the TSX Venture Exchange under the symbol “AMZ” and the OTCQX marketplace under the symbol “AXDDF”, pursuant
to which Azucar acquired the following key assets:
|
· |
a 100% interest in the El Cobre copper-gold porphyry exploration project in Mexico and the Willow copper-gold porphyry exploration project
in Nevada, in addition to a portfolio of 20 other exploration projects; |
|
· |
a 2% NSR on the Company’s Tuligtic property in Mexico, which hosts the Company’s Ixtaca gold-silver development project; |
|
· |
a 1.5% NSR on the Caballo Blanco gold deposit in Mexico, a development project operated by Timmins Gold Corp.; |
|
· |
a 2% NSR on the Elk gold deposit in Canada, an advanced exploration project operated by JDL Gold Corp. (formerly Gold Mountain Mining
Corp.); |
|
· |
a portfolio of 21 additional NSRs on exploration projects in Mexico, Canada and the United States identified through the Company’s
past prospect generator activities; |
|
· |
equity holdings in several publicly-listed companies; |
|
· |
1,597 ounces of gold bullion; and |
|
· |
approximately $3 million in cash. |
On July 31, 2015, all conditions to the statutory
Plan of Arrangement regarding the spinout were satisfied or waived and the spinout was effective. Almaden’s shareholders approved
the Plan of Arrangement and exchanged their existing common shares of Almaden for one “new” Almaden common share and 0.6 common
share of Azucar.
The Company entered into an Administrative Services
Agreement with Azucar dated May 15, 2015, as amended by First Amending Agreement dated December 16, 2015 (the “Agreement”).
Under the Agreement, the Company is the sole and exclusive manager of Azucar, and provides Azucar with general management services and
day-to-day operation of Azucar. These services include:
|
· |
Executive personnel and human resources; |
|
· |
Geological technical support; and |
|
· |
Accounting and financial services. |
Azucar compensates the Company 27% (2020 –
60%) of the Company’s actual monthly cost of rent for any shared facilities, and 27% (2020 – 60%) of any shared personnel’s
fees and/or wages. Azucar pays the Company any reasonable fees or costs incurred on behalf of Azucar by the Company which were approved
by Azucar.
Effective May 18, 2018, Azucar effected a corporate
reorganization pursuant to a statutory plan of arrangement involving Azucar’s then wholly owned subsidiary, Almadex. Consequent
upon this corporate reorganization the Company entered into an Administrative Services Agreement with Almadex dated March 29, 2018 (the
“Almadex Agreement”). Under the Almadex Agreement, the Company is the sole and exclusive manager of Almadex, and provides
Almadex with general management services and day-to-day operation of Almadex. These services include:
|
· |
Executive personnel and human resources; |
|
· |
Geological technical support; and |
|
· |
Accounting and financial services. |
Almadex compensates the Company 39% (2020 –
30%) of the Company’s actual monthly cost of rent for any shared facilities, and 39% (2020 – 30%) of any shared personnel’s
fees and/or wages. Almadex pays the Company any reasonable fees or costs incurred on behalf of Almadex by the Company which were approved
by Almadex.
Both the Agreement and the Almadex Agreement (together,
the “Administrative Services Agreements”) have initial 5-year terms, with subsequent automatic 1-year renewals unless terminated
pursuant to the terms permitted under the Administrative Services Agreements. The Administrative Services Agreements include a Change
of Control clause. If either party is subject to a Change of Control during the term of the respective Administrative Services Agreement,
the Administrative Services Agreement shall automatically terminate within 48 hours of the Change of Control unless agreed to in writing
by both parties. The target of the Change of Control shall then pay the other party $2 million as compensation for the unplanned termination
of the Company’s engagement and significant disruption to the other party’s business. “Change of Control” means
the date upon which, without the written concurrence of the target of the Change of Control, any person (as that term is defined in the
Securities Act (British Columbia)) makes and does not withdraw a take-over bid (as that term is defined in the Securities Act
(British Columbia)) or acquires, directly or indirectly, that number of common shares of the target which equals or exceeds twenty
percent (20%) of the then issued common shares of the target.
Available Information
The SEC maintains an internet site that contains
reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov.
You can also find information on our website www.almadenminerals.com. The information contained on our website is not a part of this
annual report.
Business Overview
The Company is engaged in the business of the
acquisition, exploration and when warranted, development of mineral properties. The Company currently has one material property in Mexico.
The Company's property is at the exploration and development stage. The Company has not generated any revenues from operations.
Maintaining
properties
The following is a general statement about government
requirements for holding mineral properties in the jurisdictions where the Company currently holds material mineral property interests.
In Mexico, mining law is a federal matter. The
government requires annual assessment work and expenditures per hectare which increase with the size and age of the claim. Under the tax
reforms effective January 1, 2014, if a concession holder has not conducted exploration or exploitation activities during a two-year period,
the concession holder would have to pay an additional 50% of the taxes payable per hectare if within the last 11 years, and an additional
100% of the taxes payable if after year 12. Land taxes per hectare also have to be paid by January 31 and July 31 each year. Both amounts
are subject to inflation accounting and the inflation adjustment number for each fiscal period is published in the official gazette. Under
the Mexican Constitution and the mining and environmental laws of Mexico, all mining projects are subject to Federal legal control. This
control is exercised from the exploration phase through the closure phase of a mining project. Prior to the initiation of exploration
activities, concession owners are required to file a notice of commencement of exploration activities in conformity with Mexican Official
Norm 120 (NOM-120); prior to initiation of construction activities (and also in some more intrusive exploration activities), mining projects
are required to apply for and obtain an environmental impact authorization and a land use permit from the Mexican Federal environmental
agency SEMARNAT (Secretaria de Medio Ambiente y Recursos Naturales). This requires the presentation of an environmental impact manifest
and a technical study which deals with the impacts, the environmental mitigation, and habitat compensation to the satisfaction of the
authorities having environmental jurisdiction.
Competition
The mineral property exploration and development
business, in general, is intensively competitive and there is not any assurance that even if commercial quantities of ore are discovered,
a ready market will exist for sale of same. Numerous factors beyond the Company’s control may affect the marketability of any substances
discovered. These factors include market fluctuations; the proximity and capacity of natural resource markets and processing equipment;
and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting
of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these
factors may make it difficult for the Company to receive an adequate return on investment.
The Company competes with many companies possessing
greater financial resources and technical facilities for the acquisition of mineral concessions, claims, leases and other mineral interests
as well as for the recruitment and retention of qualified employees.
Seasonality
The Company’s project is in central Mexico.
In Mexico, the climate in the project area is marked by dry, cold winters and a distinct rainy season. The rainy season typically begins
in May or June and continues until late September to October. In most years, roads remain passable and exploration can be done throughout
the rainy season. Seasonal changes do not have a material impact on the Company’s exploration expenditures.
Exploration Program Protocols
General Sample Handling
and Quality Control Program for Exploration Programs
The Company employs a
strict quality control program for samples taken during its exploration programs. For drilling programs, a quality control program is
in place which includes the insertion of blanks, field duplicates and certified standards into the sample stream.
Chain of Custody
Samples of rock and drill
core and cuttings are sealed by the sampler and kept under control of a qualified person until they are shipped to a laboratory.
Sample Handling
Sample handling for drilling
programs is described more fully below. Soil and stream sediment samplers have been trained to industry standard levels of sampling methodology.
In general, the Company sieves stream sediment samples to -20 mesh in the field during preparation. Samplers are required to not wear
any jewellery or clothing or use equipment which may contaminate the sample. All sample locations are geographically located at the time
of sampling using the Global Positioning System. The Company has prepared standardized sample information cards for samplers to record
information concerning the sample location, type and medium. Outcrop, float and dump rock samples are collected by geologists who record
similarly ordered geologic information relating to the sample taken.
Blanks
Blank material, a sample
of crushed and pulverized rock, known to contain very low or non-detectable concentration of gold and silver, is inserted as a pulp into
the sample stream on an interval of every 20 samples. Blanks are intended to detect possible contamination.
Duplicates
During drill programs
the Company routinely includes a field duplicate into the sample stream, spaced at 20 sample intervals. Field duplicate samples are splits
of drill core or reverse circulation cuttings from the sample interval. The resulting two field duplicate samples are submitted with separate
sample numbers “blind” to the assay lab and separately treated as normal samples. The samples are taken randomly with no regard
to rock type, geographic position or degree of alteration or mineralization. These field duplicates are then used to detect the cumulative
uncertainties associated with the entire sampling and analytical process.
Standards
During drill programs
the Company routinely includes a certified standard into the sample stream, spaced at 20 sample intervals. Certified standards are purchased
from CDN Resource Laboratories of Langley, BC and are prepared by this professional third-party lab according to industry standard and
accepted methodologies. Standards are utilized to monitor the accuracy of the laboratory work.
Sample Handling for
Drill Programs
Core Box Preparation
Plastic core boxes are
used for the storage of core. Each box is labelled by the drillers at the drill rig with the drill-hole number, a box number and an arrow
to mark the start of the tray and the down-hole direction. Wooden core blocks, with the meterage in black marker pen, are inserted by
the drillers at the end of each core run (usually 3 m or less). These core run intervals are checked and recorded by the geologist during
mark up (see below). When filled with core the boxes are sealed with a plastic lid by the drillers and transported to the core logging
facility.
Sample and Core Box Markup
Once at the core logging
facility, the core boxes are marked up with the starting and ending meterage, written at the ends of the trays with a marker. The start
and end of each selected sample interval is marked with a red wax pencil mark across the core and sample numbers are written on the edge
of the core box channels at the start and end of each sample interval. Intervals denoting the position in the sample tag sequence of field
duplicate, blank and analytical standards are also marked on the core box. A cut line was marked on the core as a guide for sawing of
half-core samples for assay. The cut line position is marked by fitting the ends of the core together, to align them as they came out
of the hole, and using a ruler to draw a line down the core axis with a red wax pencil. This mark-up is done after the trays are photographed.
Cut line positions are selected by the logging geologist to produce two halves with equal proportions of mineralization. Typically, this
is done by marking the cut line down the long axis of the ellipses described by the intersection of the veins with the core circumference.
Each tray is digitally photographed before core cutting and sampling.
Core Logging
Before cutting and sampling
the core, the following tables of data are entered into the Company drill hole database system:
Geotechnical Logging
1. Core box record sheet:
Beginning and end from/to intervals for each core box.
2. For each core run
(from and to) a record of the core size, meters of core recovered for the interval, RQD (the total length of pieces of core in the interval
that are twice the width of the core divided by the length of the interval, times 100) and hardness (on a scale from 1 to 10, from hardest
to softest).
3. A drilling daily control
sheet showing the progress of the drill rig for each shift.
Geological Logging
1. Geology Log: Intervals
selected by the geologist recording a detailed description of the lithology, texture, alteration, mineral assemblage and intensity and
level of oxidation/weathering. Structural measurements (i.e. the angle of structures to the core axis) are also recorded. The cover sheet
includes details such as surveyed collar co-ordinates, downhole survey data, core size depths, drilling dates and sample number series.
2. Veining and Mineralization:
Estimates of the percent veining and the percentage of different minerals represented in either vein, breccia or disseminated form, i.e.
quartz, carbonates, pyrite etc.
3. Sample Sheet: A record
of the sample intervals, sample numbers and duplicate, blank and analytical standard numbers.
4. Hole Summary: An abbreviated
hole log that summarizes the important features of a drill hole. A summary drill hole trace giving the geologist the opportunity to summarize
the hole and sketch in structural orientations in a form easily transferred to sections. All logs are saved on the server along with the
core photos and other data from each hole.
Sample Interval Selection
All strongly altered
or mineralized intervals of core were sampled. Sampling always began at least 5 samples above the start of mineralization. Sample intervals
were selected using the following criteria.
|
- |
Maximum sample length of 2 m in unmineralized lithologies. |
|
- |
Maximum sample length of 1 m in mineralized lithologies. |
|
- |
Minimum sample length of 50 cm. Geological changes in the core such as major mineralization/alteration intensity
and lithology changes were used as sample breaks. |
|
- |
Core size changes and any zones of core loss were used as sample breaks. |
|
- |
Large discrete veins that might possibly be modeled or mined as separate structures were sampled separately. |
The begin/end marks were
placed so that the entire vein ended up in the sample(s) and the vein is not smeared into samples on either side.
Sampling Procedure
All samples were originally
cut in half using custom-made, gasoline engine-powered diamond core saws. All were recently changed to electric powered saws. Each saw
has sliding trays and customized “core cradles” sized for each core diameter in order to ensure a straight cut down the cut
line and to minimize the loss of friable core during cutting. Areas of very soft rock (e.g. fault gouge), are cut with a machete, using
the side of the core channel to ensure a straight cut. Areas of very broken core (pieces <1 cm) were sampled using spoons. The following
standard sampling procedures were employed:
The right-hand side of
the core (looking down the hole) was always sampled. After cutting, half the core was placed in a new plastic sample bag and half was
placed back in the core box. Between each sample, the core saw and sampling table areas were washed to ensure no contamination between
samples. Field duplicate, blank and analytical standards were added into the sample sequence as they were being cut. After cutting of
samples containing visible gold, a piece of abrasive quartz sandstone was cut to clean the diamond blade. This was done to prevent contamination
of the following sample with gold that may have become smeared onto the blade.
Sample numbers were written
on the outside of the sample bags twice and the tag from the sample book was placed inside the bag with the half core. The bags were sealed
using single-use plastic cable ties.
Sample numbers on the
bags were checked against the numbers on the core box and the sample book.
The core cutting area
is within the core logging shed and the logging geologists regularly checked the precision of the core cutting and sampling. The sealed
plastic sample bags were placed in large plastic twine (rice) sacks (usually between 8 and 10 samples per sack) and sealed using single-use
plastic cable ties. The sacks were weighed and the sack number, sample numbers, sack weight and date written on the outside of the sacks.
Company’s Principal Properties
The Tuligtic Project, which hosts the Company’s
Ixtaca discovery, is the only project material to the Company. The Tuligtic Project property (the “Tuligtic Property” or the
“Property”) is located in Puebla State, Mexico.
PROPERTY, PLANTS AND EQUIPMENT
The
Tuligtic Property/Ixtaca Project – Mexico
Location and Access
The Ixtaca deposit, the epithermal gold-silver
target within the Tuligtic Property, is located 8 km northwest of the town of San Francisco Ixtacamaxtitlán, the county seat of the
municipality of Ixtacamaxtitlán, Puebla State. The Ixtaca Project is accessible by driving 40 km east along Highway 119 from Apizaco,
an industrial center located approximately 50 km north of Puebla City by two-lane Highway, and then north approximately 2 km along a paved
road to the town of Santa Maria. The trip from Apizaco to site can be driven in approximately 1.5 hours. There is also access to the Tuligtic
Property using gravel roads from the northeast via Tezhuitan and Cuyoaco, from the south via Libres and from the northwest via Chignahuapan.
The Xicohtencatl Industrial complex lies 30 km southwest
by paved road from the Ixtaca Project, and houses agricultural, chemical, biomedical and industrial manufacturing facilities and is serviced
by rail. Puebla, the fourth largest city in Mexico has a population in excess of 4 million people, and includes one of the largest Volkswagen
automotive plants outside Germany.
The
Topography on the Tuligtic Property is generally moderate to steep hills with incised stream drainages. Elevation ranges from 2,300
meters (m) above sea level in the south to 2,800 m in the north. Vegetation is dominantly cactus and pines and the general area is also
somewhat cultivated with subsistence vegetables, bean and corn crops. The Ixtaca Zone exploration area has been previously cleared and
logged. The region has a temperate climate with mean monthly temperatures ranging from 16°C in June to 12°C in January. The
area experiences approximately 714 mm of precipitation annually with the majority falling during the rainy season, between June and September.
Annual evapotranspiration is estimated to be 774 mm. Exploration can be conducted year-round within the Tuligtic Property; however, road
building and drilling operations may be impacted by weather to some degree during the rainy season. Electricity is available on the Tuligtic
Property from the national electricity grid that services nearby towns such as Santa Maria and Zacatepec. The surface rights locally are
privately owned and Almaden has negotiated voluntary surface land use agreements with surface landowners within the exploration area prior
to beginning activities. To date Almaden has secured through purchase agreements over 1,139 hectares, from numerous independent owners.
Claims and Title
The Tuligtic Property was staked by Almaden in
2001, following the identification of surficial clay deposits that were interpreted to represent high-level epithermal alteration. The
Property originally consisted of approximately 14,000 hectares (the “Original Concessions”), as shown below:
| Claim
Name |
Claim
Number |
Area
(hectares) |
Valid
Until Date |
| Cerro
Grande |
219469 |
11,202 |
March
5, 2053 |
| Cerro
Grande 2 |
233434 |
3,028 |
February
23, 2059 |
| Total |
|
14,230 |
|
On April 7, 2015, Ejido Tecoltemi, a community
granted communal agrarian lands by the Mexican Government and whose lands (the “Ejido Lands”) overlap a small portion (~330
Ha) of the far southeastern corner of the Original Concessions, initiated legal proceedings (the “Amparo”) in a lower court
in Puebla state against Mexican mining authorities seeking a declaration that Mexico’s mineral title system is unconstitutional
because indigenous consultation is not required before the granting of mineral title.
Shortly after the Amparo was filed, the lower
court ordered the suspension of Almaden from conducting exploration and exploitation work over those portions of the Original Concessions
which overlap with the Ejido Lands. Mineral tenure over the Ejido Lands is not material to Almaden. The Ejido Lands do not overlap the
Ixtaca Project or its environmental or social area of impact. Almaden has never tried to negotiate access to the Ejido Lands, never conducted
exploration work on the Ejido Lands, and has no interest in conducting any future exploration or development work over the Ejido Lands.
On April 15, 2019, the lower court in Puebla State
issued a ruling in the Amparo case, stating that Mexico’s mineral title system is unconstitutional. The Original Concessions were
ruled to be illegal, but the mineral rights over that land were ordered to be held for Almaden until such time as indigenous consultation
can be completed. This ruling was appealed by the Mexican Congress, Senate, Secretary of Economy and mining authorities, as well as Almaden
as an interested party.
On February 17, 2022, the Company announced that the SCJN reached a decision
on February 16, 2022 in respect of the Mineral Title Lawsuit involving the Company’s mineral claims. On April 27, 2022, the Company
announced that the SCJN had published its final decision on this matter.
Almaden has reviewed the final decision of the SCJN. The decision determines
that the Mexican mineral title law is constitutional, but that before issuing Almaden’s mineral titles, the Ministry of the Economy
should have provided for a consultation procedure with relevant indigenous communities. The decision orders the Ministry of the Economy
to declare Almaden’s mineral titles ineffective and to then issue them to Almaden following the Ministry’s compliance with
its obligation to carry out the necessary procedures to consult with indigenous communities. The decision discusses the application of
international law and jurisprudence to the implementation of consultation by Mexican authorities with relevant indigenous communities.
It also provides some detail to Mexican authorities regarding the procedures required to be followed by those authorities in the performance
of indigenous consultation prior to the grant of mineral claims. Furthermore, the decision clarifies that the Company’s original
claim applications were submitted pursuant to the legal framework in force at the time and as such Almaden’s mineral rights at the
Ixtaca project are safeguarded while the mining authorities comply with conditions and requirements prior to issuing the mineral titles.
As previously disclosed, the Company has no interest in holding mineral claims over the indigenous community’s land. The decision
will take effect at the time of its official notification to the Company which is expected shortly.
Almaden intends to interact with Mexican government officials and local
community officials in order to facilitate to the extent possible the government’s execution of its responsibilities in the issuance
of the mineral titles. At present there is no timeline for the consultation process.
Claim
Reduction Efforts
After learning of the Amparo in 2015, Almaden
filed applications to reduce the aggregate claim size at Tuligtic by approximately 7,000Ha to those areas still considered prospective
(the “New Concessions”), as shown below, and cancel any of its claims overlapping the Ejido Lands. The applicable Mexican
mining authorities issued the New Concessions and accepted the abandonment of the Original Concessions in May and June of 2017.
| Claim
Name |
Claim
Number |
Area
(hectares) |
Valid
Until Date |
| Cerro
Grande R1 |
245486 |
2,773.00 |
March
5, 2053 |
| Cerro
Grande R3 |
245488 |
824.06 |
March
5, 2053 |
| Cerro
Grande R4 |
245489 |
540.00 |
March
5, 2053 |
| Cerro
Grande R5 |
245490 |
784.97 |
March
5, 2053 |
| Cerro
Grande R6 |
245491 |
937.79 |
March
5, 2053 |
| Cerro
Grande 2 R2 |
245493 |
652.00 |
February
23, 2059 |
| Cerro
Grande 2 R3 |
245494 |
708.00 |
February
23, 2059 |
| Total |
|
7,219.82 |
|
In June 2017, the Ejido Tecoltemi filed a legal
complaint regarding the granting of the New Concessions, and on February 1, 2018, the court reviewing the complaint ruled the Ejido’s
complaint was founded, and this decision was appealed by the Company in the upper (Collegiate) court in October, 2019.
On December 21, 2018, the General Directorate
of Mines issued a resolution, which has never been officially notified to the Company, 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 provided mineral title certificates to Almaden which reflected the position that the Original
Concessions (the subject matter of the Amparo) were active and owned by Almaden (through its Mexican subsidiary) and that the New Concessions
were “left without effect”.
On December 1, 2020, the Company announced that
the upper court denied the appeal filed by the Company in October 2019 objecting to the reinstatement by the Mexican mining authorities
of approximately 7,000 Ha of mineral claims surrounding the Ixtaca Project, which the Company had previously dropped. This court decision
upheld the action of Mexican mining authorities that reinstated the Company’s Original Concessions as the Company’s sole mineral
claims over the Ixtaca Project, and that left the New Concessions the Company was awarded in 2017 as “held without effect”.
However, the decision also stated that the Company had the right to defend the New Concessions through the applicable legal procedures
(which have been initiated through the two Administrative Challenges referred to below).
The Company has initiated two Administrative Challenges against the
Mexican mining authorities for revoking the Company’s lawfully reduced New Concessions. These challenges are based in part on
Mexican legal advice that the Company cannot be forced to own mineral rights that it does not wish to own. These Administrative
Challenges remain in process. Almaden continues to file taxes and assessment reports on the basis of the reduced area defined by the
New Concessions. These taxes have been accepted by the Mexican mining authorities, and Almaden has not received any notifications
from the Mexican mining authorities regarding taxes on the Original Concessions.
Further information on the Amparo is provided
in Item 8 below under the heading “Legal Proceedings”.
The claims owned by Almaden with respect to the
Tuligtic Property are held 100% by Minera Gorrion S.A. de C.V., a subsidiary of Almaden Minerals Ltd. through the holding company, Puebla
Holdings Inc., subject to a 2% NSR in favour of Almadex Minerals Ltd.
To maintain a claim in good standing, the holder is required to meet annual
exploration or exploitation expenditure requirements. Currently, based on the New Concessions, the Tuligtic Property is subject to expenditure
requirements of approximately US$997,000 per year. However, the Company has substantial historic expenditures which have historically
been used to offset the annual requirements.
Geological Setting of the Tuligtic Project
and Ixtaca Zone
The Ixtaca Project is situated within the Trans
Mexican Volcanic Belt (TMVB), a Tertiary to recent intrusive volcanic arc extending approximately east-west across Mexico from coast to
coast and ranging in width from 10 to 300km. The TMVB is the most recent episode of a long lasting magmatic activity which, since the
Jurassic, produced a series of partially overlapping arcs as a result of the eastward subduction of the Farallon plate beneath western
Mexico (Ferrari, 2011). The basement rocks of the eastern half of the TMVB are Precambrian terranes, including biotite orthogneiss and
granulite affected by granitic intrusions, grouped into the Oaxaquia microcontinent (Ferrari et al., 2011; Fuentes-Peralta and Calderon,
2008). These are overlain by the Paleozoic Mixteco terrane, consisting of a metamorphic sequence known as the Acatlan complex and a fan
delta sedimentary sequence known as the Matzitzi formation. Another sedimentary complex is found on top of the Mixteco terrane, represented
by various paleogeographic elements such as the Mesozoic basins of Tlaxiaco, Zongolica, Zapotitlan, and Tampico-Misantla (Fuentes-Peralta
and Calderon, 2008). The subducting plates associated with the TMVB are relatively young, with the Rivera plate dated at 10Ma (million
years) and the Cocos plate at 11 to 17Ma.
.
The stratigraphy of the Tuligtic area can be divided
into two main sequences: a Mesozoic sedimentary rock sequence related to the Zongolica basin and a sequence of late Tertiary igneous extrusive
rocks belonging to the TMVB (Fuentes-Peralta & Calderon, 2008; Tritlla et al., 2004). The sedimentary sequence is locally intruded
by plutonic rocks genetically related to the TMVB. The sedimentary complex at Tuligtic corresponds to the Upper Tamaulipas formation (Reyes-Cortes
1997). This formation, Late Jurassic to Early Cretaceous in age, is regionally described (Reyes-Cortes, 1997) as a sequence of grey-to-white
limestone, slightly argillaceous, containing bands and nodules of black chert. The drilling conducted by Almaden allows for more detailed
characterisation of the Upper Tamaulipas Formation carbonate units in the Tuligtic area. The sequence on the Project consists of clastic
calcareous rocks. The limestone unit variably bedded, generally light grey but locally dark grey to black, with local chert rich sections
graded into what have been named transition units and shale (also black shale). The transition units are brown calcareous siltstones and
grainstones. These rocks are not significant in the succession but mark the transition from limestone to underlying calcareous shale.
Typical of the transition units are coarser grain sizes. The lower calcareous “shale” units exhibit pronounced laminated bedding
and is typically dark grey to black in colour, although there are green coloured beds as well. The shale units appear to have been subjected
to widespread calc-silicate alteration.
Both the shale and transition units have very
limited surface exposure and may be recessive. The entire carbonate package of rocks has been intensely deformed by the Laramide orogeny,
showing complex thrusting and chevron folding in the hinge zones of a series of thrust-related east verging anticlines in the Ixtaca area
(Tritlla et al., 2004; Coller, 2011). The calcareous shale units appear to occupy the cores of the anticlines while the thick bedded limestone
units occupy the cores of major synclines identified in the Ixtaca zone.
The Tamaulipas Formation carbonate rocks are intruded
in the mid-Miocene by a series of magmatic rocks. The compositions are very variable, consisting of hornblende-biotite-bearing tonalites,
quartz-plagioclase-hornblende diorites, and, locally, aphanitic diabase dykes (Carrasco-Nunez et al., 1997). In the central part of the
Tuligtic Property porphyry mineralization is hosted by and associated with a hornblende-biotite-quartz phyric granodiorite body. The contact
between the granodiorite and the limestone is marked by the development of a prograde skarn.
In the Ixtaca deposit epithermal area of the Project,
the limestone basement units are crosscut by intermediate dykes that are often intensely altered. In the vicinity of the Ixtaca zone these
dykes are well mineralized especially at their contacts with limestone country rock. Petrography has shown that epithermal alteration
in the dykes, marked by illite, adularia, quartz and pyrite overprints earlier calc-silicate endoskarn mineralogies (Leitch, 2011). Two
main orientations are identified for dykes in the Ixtaca area; 060 degrees (parallel to the Main Ixtaca and Ixtaca North zones) and 330
degrees (parallel to the Chemalaco Zone).
An erosional unconformity surface has been formed
subsequent to the intrusion of the porphyry mineralization-associated granodiorites. This paleo topographical surface locally approximates
the current topography. Although not well exposed the unconformity is marked by depression localised accumulations of basal conglomerate
comprised of intrusive and sedimentary boulders.
Two styles of alteration and mineralization have
been identified in the area: (1) copper-molybdenum porphyry style alteration and mineralization hosted by diorite and quartz-diorite intrusions;
(2) silver-gold low-sulphidation epithermal quartz-bladed calcite veins hosted primarily by carbonate rocks and spatially associated with
overlying volcanic hosted texturally destructive clay alteration and replacement silicification.
Outcropping porphyry-style alteration and mineralization
is observed in the bottoms of several drainages where the altered intrusive complex is exposed in erosional windows beneath post mineral
unconsolidated ash deposits. Multiple late and post mineral intrusive phases have been identified crossing an early intensely altered
and quartz-veined medium-grained feldspar phyric diorite named the Principal Porphyry. Other intrusive types include late and post mineral
mafic dykes and an inter-mineral feldspar-quartz phyric diorite. Late mineral mafic dykes are fine grained and altered to chlorite with
accessory pyrite. Calc-silicate (garnet-clinopyroxene) altered limestone occurs in proximity to the intrusive contacts and is crosscut
by late quartz-pyrite veins. Early biotite alteration of the principal porphyry consists of biotite-orthoclase flooding of the groundmass.
Quartz veins associated with early alteration have irregular boundaries and are interpreted to be representative of A-style porphyry veins.
These are followed by molybdenite veins which are associated with the same wall rock alteration. Chalcopyrite appears late in the early
alteration sequence. Late alteration is characterized by intense zones of muscovite-illite-pyrite overprinting earlier quartz-K-feldspar-pyrite
± chalcopyrite veining and replacing earlier hydrothermal orthoclase and biotite. Stockwork quartz-pyrite crosscuts the A-style veins
and is associated with muscovite-illite alteration of biotite. The quartz-sericite alteration can be texturally destructive resulting
in white friable quartz veined and pyrite rich rock. Pyrite is observed replacing chalcopyrite and in some instances chalcopyrite remains
only as inclusions within late stage pyrite grains.
Epithermal mineralization on the Tuligtic Property
is considered to have no genetic relationship to the porphyry alteration and mineralization described above. The epithermal system is
well preserved and there is evidence of a paleosurface as steam heated kaolinite and replacement silica alteration occur at higher elevations
where the upper part of the Coyoltepec pyroclastic deposit is preserved.
The Upper Tamaulipas formation carbonates (limestone
and shale units), the dykes that crosscut it and the upper Coyoltepec volcanic subunit (variously referred to as volcanics, tuff or ash)
are the host rocks to the epithermal system at Ixtaca. The epithermal alteration occurs over a roughly 5 by 5 kilometre area and occurs
as intense kaolinite-alunite alteration and silicification in volcanic rocks. This alteration is interpreted to represent the upper portion
of a well preserved epithermal system. The bulk of the mineralisation occurs in the carbonate (limestone and shale) as colloform banded
epithermal vein zones. Unlike many epithermal vein systems in Mexico, the bulk of the veining in the Ixtaca zone has low base metal contents
and gold and silver occur as electrum and other sulphides. SEM work has demonstrated that silver does not occur with galena or tetrahedrite
in any significant way. In the main limestone unit (80% of recoverable metal in the FS) the silver to gold ratio of the mineralisation
is roughly estimated to average ~65:1 while in the shale it is roughly estimated to be slightly higher at ~75:1.
History of Past Work
To the Company’s knowledge, no modern exploration
has been conducted on the Ixtaca Project prior to Almaden’s acquisition of claims during 2001 and there is no record of previous
mining; as such, this is a maiden discovery.
During January 2003, Almaden completed a program
of geologic mapping, rock, stream silt sampling and induced polarization (IP) geophysical surveys at the Tuligtic Property (then known
as the “Santa Maria Prospect”). The exploration identified both a porphyry copper and an epithermal gold target within an
approximately 5 x 5km area of intensely altered rock. At the porphyry copper target, stockwork quartz-pyrite veins associated with minor
copper mineralization overprint earlier potassic alteration within a multi-phase intrusive body. A single north-south oriented IP survey
line identified a greater than 2km long elevated chargeability response coincident with the exposed altered and mineralized intrusive
system. Volcanic rocks exposed 1km to the south of the mineralized intrusive display replacement silicification and sinter indicative
of the upper parts of an epithermal system (the “Ixtaca Zone”). Quartz-calcite veins returning anomalous values in gold and
silver and textural evidence of boiling have been identified within limestone roughly 100m below the sinter. The sinter and overlying
volcanic rocks are anomalous in mercury, arsenic, and antimony.
Additional IP surveys and soil sampling were conducted
in January and February 2005, further defining the porphyry copper target as an area of high chargeability and elevated copper, molybdenum,
silver and gold in soil. A total of eight (8) east-west oriented lines, 3km in length, spaced at intervals of 200m have been completed
over mineralized intrusive rocks intermittently exposed within gullies cutting through the overlying unmineralized ash deposits.
The Tuligtic Property was optioned to Pinnacle
Mines Ltd. in 2006 and the option agreement was terminated in 2007 without completing significant exploration.
The Property was subsequently optioned to Antofagasta
Minerals S.A. (Antofagasta) on March 23, 2009. During 2009 and 2010 Antofagasta, under Almaden operation, carried out IP geophysical surveys
and a diamond drill program targeting the copper porphyry prospect. Three additional IP survey lines were completed, and in conjunction
with the previous nine (9) IP lines, a 2 x 2.5km chargeability high anomaly, open to the west and south, was defined. The 2009 drilling
consisted of 2,973m within seven (7) holes that largely intersected skarn type mineralization.
On February 16, 2010, Almaden announced that Antofagasta
terminated its option to earn an interest in the Property.
In July 2010, Almaden initiated a preliminary
diamond drilling program to test epithermal alteration within the Tuligtic Property, resulting in the discovery of the Ixtaca Zone. The
target was based on exploration data gathered by Almaden since 2001 including high gold and silver in soil and a chargeability and resistivity
high anomaly (derived from an IP geophysical survey conducted by Almaden) topographically beneath Cerro Caolin, a prominent clay and silica
altered hill. This alteration, barren in gold and silver, was interpreted by Almaden to represent the top of an epithermal system which
required drill testing to depth. The first hole, TU-10-001 intersected 302.42 metres of 1.01g/t gold and 48g/t silver and multiple high
grade intervals including 44.35 metres of 2.77g/t gold and 117.7g/t silver.
Present Condition of Project
Geology and Mineral Resources
The veining of Ixtaca epithermal system displays
characteristics representative of low and intermediate sulphidation deposits. These include typical mill feed and gangue mineralogy (electrum
Ag-sulphides, sphalerite, galena, adularia, quartz and carbonates), mineralization dominantly in open space veins (colloform banding,
cavity filling).
At the base of the overlying clay altered volcanics
disseminated gold-silver mineralisation occurs in association with pyrite and minor veining. Locally this mineralisation can be high grade
but largely associated with lower Ag:Au ratios roughly estimated to average 20:1.
To date two main vein orientations have been identified
in the Ixtaca deposit:
|
· |
060 trending sheeted veins hosted by limestone; |
|
· |
330 trending veins hosted by shale; |
The bulk of the resource and over 80% of the mill
feed is hosted by the limestone in the Main Ixtaca and Ixtaca North zones as swarms of sheeted and anastomosing high grade banded epithermal
veins. There is no disseminated mineralisation within the host rock to the vein swarms, which is barren and unaltered limestone. To the
northeast of the limestone hosted mineralisation, the Chemalaco zone, a 330 striking and west dipping vein zone hosted by shale, also
forms part of the deeper resource.
Rock Creek Mill
Almaden entered into an option agreement to acquire
the Rock Creek Mill in October 2015. The Rock Creek Mill is a completed mill that was located outside of Nome, Alaska and which only operated
for several months before its owner suspended its mining operation in 2008. The mill has been kept in excellent condition on care and
maintenance.
The Rock Creek Mill was built to process 7,000
tonnes per day. It includes a three-stage crushing plant, gravity circuit, ball mill, floatation cells and leaching facilities. Also included
in the option agreement are conveyors, metallurgical and chemical fire assay laboratories, a water treatment plant, full electrical circuitry
and generators, and spare parts.
Almaden exercised its right and option under the
option agreement and has purchased the Rock Creek Mill and related assets for a total of US$6,500,000, subject to adjustment under certain
circumstances.
In addition to the cash payments, Almaden also
issued to the optionor 407,997 Almaden common shares valued at $273,358 upon receipt of regulatory approval, which were issued on November
25, 2016.
During the year ended December 31, 2018, Almaden
obtained ownership and title to the mill equipment, which remains located in Nome, Alaska.
The Rock Creek Mill has been incorporated into
the Ixtaca economic studies.
Amended
Preliminary Economic Assessment
On January 22, 2016, Almaden’s independent
consultants prepared a Technical Report titled "Preliminary Economic Assessment of the Ixtaca Project”, which provided further
detail to its December 9, 2015 press release summarizing the results of integrating the optioned Rock Creek Mill and a smaller, higher
grade, payback focused pit on potential mine economics. An amended technical report was completed on April 13, 2016 (the “Amended
PEA”); however the amendments were not material changes and the Report’s data, inputs, interpretation, conclusions and results
all remained unchanged. This report was prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards
for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. These standards differ
from the mining property disclosure rules specified in Subpart 1300 of Regulation S-K under the United States Securities Act of 1933 (“Subpart
1300”) promulgated by the SEC.
The Amended PEA followed the historical PEAs released
in 2014 and 2015 (“Historical PEAs”) which evaluated larger throughput development alternatives. The primary reasons for providing
an update to the Historical PEAs were to show the impact of significantly reduced initial capital cost on project economics and, given
the significant decrease in precious metals prices, to demonstrate the viability of a mine plan which focused on the near surface high
grade limestone hosted portions of the Ixtaca Zone deposit.
This mine plan was a smaller higher grade scenario
than those described in Almaden’s Historical PEA studies. In addition, the Amended PEA incorporated the optioned Rock Creek mill
as well as results from various engineering studies related to the project which had been conducted since the Historical PEAs were completed.
The Amended PEA incorporated:
|
· |
The same resource model as the Historical PEAs; |
|
· |
The Rock Creek Mill, which was optioned by the Company in October 2015, with average throughput of 7,500 tonnes
per day; |
|
· |
A smaller, near surface and payback focussed pit; |
|
· |
A mine production schedule which targets higher grades earlier; |
|
· |
Optimised waste placement and tailings management facilities; |
|
· |
A 2% NSR now held by Almadex Minerals Ltd. |
Pre-Feasibility Study (“PFS”)
Upon completion of the Amended PEA, Almaden began
the work required for a Pre-Feasibility Study on the Ixtaca Project. During 2016, Almaden completed the necessary geotechnical, geomechanical,
and hydrologic field programs, and also optimized site layout through updated waste placement and facilities locations. A new metallurgical
program was also completed on the limestone domain, which represents approximately 82% of the total gold equivalent ounces produced over
the life of the mine in the PFS. This report was also prepared in accordance with NI 43-101, the standards for which differ from the mining
property disclosure rules specified in Subpart 1300 promulgated by the SEC.
The completed PFS is dated May 17, 2017 and included
an updated resource model. The mine production schedule also included the optioned Rock Creek Mill while targeting higher grades earlier,
using smaller, payback focused starter pits.
Feasibility Study (“Study”)
Upon completion of the PFS, Almaden began the
work required for a Feasibility Study on the Ixtaca Project. The Study and resulting mine plan incorporate significant changes from the
PFS including filtered (dry stack) tailings, ore sorting, increased throughput and an improved mine schedule. Collectively the changes
result in a reduced project footprint and improved economics.
Almaden engaged a team of consultants led by Moose
Mountain Technical Services (“MMTS”) to undertake this Study. As of the date of the Study and of the date hereof, the aforementioned
Named Experts or, as applicable, Designated Professionals, to the best of the Company's knowledge, after reasonable inquiry, beneficially
own, directly or indirectly, less than 1% of the Common Shares of the Company or any of the Company’s associates or affiliates,
and none of them have any registered or beneficial ownership, direct or indirect, of property of the Company or any of the Company’s
associates or affiliates.
The completed Study is dated January 24, 2019, and an update to the FS
is dated October 3, 2019. The Study was prepared in accordance with NI 43-101, the standards for which differ from the mining property
disclosure rules specified in Subpart 1300 promulgated by the SEC. A technical report summary which summarises the Study in a manner intended
to be in accordance with Subpart 1300 of Regulation S-K (the “TRS”) has been filed as an exhibit to this Annual Report. The
TRS is a review and summary of the previous technical work carried out up to the date of the Study. No significant technical work has
been conducted subsequent to this Study and all exploration, legal, permitting and other project updates subsequent to the Study are provided
elsewhere in this 20F. The Study was filed as a Feasibility Study under 43-101 standards. However, since Subpart 1300 standards are different
than 43-101 standards, such as a lower range for cost estimates and contingencies, the Study likely would not meet Subpart 1300 requirements
for a Feasibility-level study.
TRS HIGHLIGHTS
(All values shown in this section discussing the
TRS are in $US unless noted otherwise. Base case uses $1275/oz gold and $17/oz silver prices. Gold and silver equivalency calculations
assume 75:1 ratio).
|
· |
Average annual production of 108,500 ounces gold and 7.06 million ounces silver (203,000 gold equivalent ounces, or 15.2 million silver
equivalent ounces) over first 6 years; |
|
· |
After-tax internal rate of return (“IRR”) of 42% and after-tax payback period of 1.9 years; |
|
· |
After-tax net present value (“NPV”) of $310 million at a 5% discount rate; |
|
· |
Initial Capital of $174 million; |
|
· |
Conventional open pit mining with a Proven and Probable Mineral Reserve of 1.39 million ounces of gold and 85.2 million ounces of silver; |
|
· |
Pre-concentration uses ore sorting to produce a total of 48 million tonnes of mill feed averaging 0.77 g/t gold and 47.9 g/t silver (2.03
g/t gold equivalent over first 6 years, 1.41 g/t gold equivalent over life of mine); |
|
· |
Average life-of-mine (“LOM”) annual production of 90,800 ounces gold and 6.14 million ounces silver (173,000 gold equivalent
ounces, or 12.9 million silver equivalent ounces); |
|
· |
Operating cost $716 per gold equivalent ounce, or $9.55 per silver equivalent ounce; |
|
· |
All-in Sustaining Costs (“AISC”), including operating costs, sustaining capital, expansion capital, private and public royalties,
refining and transport of $850 per gold equivalent ounce, or $11.30 per silver equivalent ounce; |
|
· |
Elimination of tailings dam by using filtered tailings significantly reduces the project footprint and water usage |
Capital and Operating Costs
Initial capital cost for the Ixtaca gold-silver
project is $174 million and sustaining capital (including expansion capital) is $111 million over the LOM. The estimated expansion capital
of $64.5 million will be funded from cashflow in Year 4 for the throughput ramp-up in Year 5. Estimated LOM operating costs are $26.8
per tonne mill feed. The following tables summarize the cost components:
Initial Capital Costs ($ millions)
| Mining |
22.2 |
| Process |
80.2 |
| Onsite
Infrastructure |
24.3 |
| Offsite
Infrastructure |
7.5 |
| Indirects,
EPCM, Contingency and Owner’s Costs |
39.9 |
| Total |
174.2 |
Expansion Capital Costs ($ millions)
| Mining |
$1.2 |
| Process |
$56.9 |
| Infrastructure |
$1.5 |
| Indirects,
EPCM, Contingency and Owner’s Costs |
$5.0 |
| Total |
$64.5 |
LOM Average Operating Costs ($)
| Mining costs |
$/tonne
milled |
$15.2 |
| Processing |
$/tonne milled |
$10.5 |
| G&A
|
$/tonne milled |
$1.1 |
| Total |
$/tonne milled |
$26.8 |
Economic Results and Sensitivities
A summary of financial outcomes comparing base
case metal prices to alternative metal price conditions are presented below. The TRS base case prices are derived from current common
peer usage, while the alternate cases consider the project’s economic outcomes at varying prices witnessed at some point over the
three years prior to the Study.
Summary of Ixtaca Economic Sensitivity to Precious Metal Prices
(Base Case is Bold)
| Gold Price ($/oz) |
1125 |
1200 |
1275 |
1350 |
1425 |
| Silver
Price ($/oz) |
14 |
15.5 |
17 |
18.5 |
20 |
| |
| Pre-Tax
NPV 5% ($million) |
229 |
349 |
470 |
591 |
712 |
| Pre-Tax
IRR (%) |
35% |
46% |
57% |
67% |
77% |
| Pre-Tax
Payback (years) |
2.0 |
1.8 |
1.6 |
1.4 |
1.3 |
| |
| After-Tax
NPV 5% ($million) |
151 |
233 |
310 |
388 |
466 |
| After-Tax
IRR (%) |
25% |
34% |
42% |
49% |
57% |
| After-Tax
Payback (years) |
2.6 |
2.1 |
1.9 |
1.7 |
1.5 |
Mineral Resource Estimate
On January 31, 2013 the Company announced a maiden
resource on the Ixtaca Zone, which was followed by a resource update on January 22, 2014 and another on May 17, 2017. Since that time
an additional 104 holes have been completed, and this data is also included in the Mineral Resource Estimate which is summarised in the
table below. The data available for the resource estimation consisted of 649 drill holes assayed for gold and silver. Wireframes constraining
mineralised domains were constructed based on geologic boundaries defined by mineralisation intensity and host rock type. Higher grade
zones occur where there is a greater density of epithermal veining. These higher grade domains have good continuity and are cohesive in
nature.
Of the total drill holes, 558 intersected the
mineralised solids and were used to make the resource estimate. Capping was completed to reduce the effect of outliers within each domain.
Uniform down hole 3-meter composites were produced for each domain and used to produce semivariograms for each variable. Grades were interpolated
into blocks 10 x 10 x 6 meters in dimension by ordinary kriging. Specific gravities were determined for each domain from drill core. Estimated
blocks were classified as either Measured, Indicated or Inferred based on drill hole density and grade continuity.
Table showing the Measured, Indicated and Inferred
Mineral Resource Statement with the Base Case 0.3 g/t AuEq Cut-Off highlighted from the 8 July 2018 Resource Statement. Also shown are
the 0.5, 0.7 and 1.0 g/t AuEq cut-off results. AuEq calculation is based on average prices of $1250/oz gold and $18/oz silver.
Ixtaca Zone Measured, Indicated and Inferred Mineral Resource Statement
| MEASURED
RESOURCE |
| AuEq
Cut-off |
Tonnes > Cut-off |
Grade>Cut-off |
Contained Metal
x 1,000 |
| (g/t) |
(tonnes) |
Au (g/t) |
Ag (g/t) |
AuEq (g/t) |
Au (oz) |
Ag (oz) |
AuEq (oz) |
| 0.30 |
43,380,000 |
0.62 |
36.27 |
1.14 |
862 |
50,590 |
1,591 |
| 0.50 |
32,530,000 |
0.75 |
44.27 |
1.39 |
788 |
46,300 |
1,454 |
| 0.70 |
25,080,000 |
0.88 |
51.71 |
1.63 |
711 |
41,700 |
1,312 |
| 1.00 |
17,870,000 |
1.06 |
61.69 |
1.95 |
608 |
35,440 |
1,118 |
| INDICATED
RESOURCE |
| AuEq
Cut-off |
Tonnes > Cut-off |
Grade>Cut-off |
Contained Metal
x 1,000 |
| (g/t) |
(tonnes) |
Au (g/t) |
Ag (g/t) |
AuEq (g/t) |
Au (oz) |
Ag (oz) |
AuEq (oz) |
| 0.30 |
80,760,000 |
0.44 |
22.67 |
0.77 |
1,145 |
58,870 |
1,994 |
| 0.50 |
48,220,000 |
0.59 |
30.13 |
1.02 |
913 |
46,710 |
1,586 |
| 0.70 |
29,980,000 |
0.74 |
37.79 |
1.29 |
715 |
36,430 |
1,240 |
| 1.00 |
16,730,000 |
0.96 |
47.94 |
1.65 |
516 |
25,790 |
888 |
| INFERRED
RESOURCE |
| AuEq
Cut-off |
Tonnes > Cut-off |
Grade>Cut-off |
Contained Metal
x 1,000 |
| (g/t) |
(tonnes) |
Au (g/t) |
Ag (g/t) |
AuEq (g/t) |
Au (oz) |
Ag (oz) |
AuEq (oz) |
| 0.30 |
40,410,000 |
0.32 |
16.83 |
0.56 |
412 |
21,870 |
726 |
| 0.50 |
16,920,000 |
0.44 |
25.43 |
0.80 |
237 |
13,830 |
436 |
| 0.70 |
7,760,000 |
0.57 |
33.80 |
1.06 |
142 |
8,430 |
264 |
| 1.00 |
3,040,000 |
0.79 |
43.64 |
1.42 |
77 |
4,270 |
139 |
Notes pertaining to Measured, Indicated and Inferred
Mineral Resource Estimates:
|
1. |
Ixtaca Mineral Resources Estimate have an effective date of 8 July 2018. |
|
2. |
Base Case 0.3 g/t AuEq Cut-Off grade is highlighted. Also shown are the 0.5,
0.7 and 1.0 g/t AuEq cut-off results. AuEq calculation based on average prices of $1250/oz gold and $18/oz silver. The Base Case cut-off
grade includes consideration of the open pit mining method, 90% metallurgical recovery, mining costs of $1.82/t, average processing costs
of $11.7, G&A costs of $1.81/t |
|
3. |
Mineral Resources are reported inclusive of those Mineral Resources that have
been converted to Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. |
|
4. |
The estimate of Mineral Resources may be materially affected by environmental,
permitting, legal or other relevant issues. The Mineral Resources have been classified according to the CIM Definition Standards for Mineral
Resources and Mineral Reserves in effect as of the date of 8 July 2018. |
|
5. |
All figures were rounded to reflect the relative accuracy of the estimates
and may result in summation differences. |
Mineral Reserve Estimate
Mineral Reserves in the table below have been
developed by MMTS with an effective date of November 30, 2018, The Mineral Reserves are based on an engineered open pit mine plan.
Mineral Reserves
| |
Tonnes |
Diluted
Average Grades |
Contained
Metal |
| |
(millions) |
Au (g/t) |
Ag (g/t) |
Au - '000
ozs |
Ag - '000
ozs |
| Proven |
31.6 |
0.70 |
43.5 |
714 |
44,273 |
| Probable |
41.4 |
0.51 |
30.7 |
673 |
40,887 |
| TOTAL |
73.1 |
0.59 |
36.3 |
1,387 |
85,159 |
|
· |
Mineral Reserves have an effective date of November 30, 2018. The qualified person responsible for the Mineral Reserves is Jesse Aarsen,
P.Eng of Moose Mountain Technical Services. |
|
· |
The cut-off grade used for ore/waste determination is NSR>=$14/t |
|
· |
All Mineral Reserves in this table are Proven and Probable Mineral Reserves. The Mineral Reserves are not in addition to the Mineral
Resources but are a subset thereof. All Mineral Reserves stated above account for mining loss and dilution. |
|
· |
Associated metallurgical recoveries (gold and silver, respectively) have been estimated as 90% and 90% for limestone, 50% and 90% for
volcanic, 50% and 90% for black shale. |
|
· |
Reserves are based on a US$1,300/oz gold price, US$17/oz silver price and an exchange rate of US$1.00:MXP20.00. |
|
· |
Reserves are converted from resources through the process of pit optimization, pit design, production schedule and supported by a positive
cash flow model. |
|
· |
Rounding as required by reporting guidelines may result in summation differences. |
Legal, political, environmental,
or other risks that could materially affect the potential development of the Mineral Reserves are provided in this Form 20-F under the
heading “Risk Factors”.
Mine Plan
The Ixtaca gold-silver project is planned as a
typical open pit mining operation using contractor mining. Initial production will ramp up to a mill feed rate of 7,650 tonnes per day
followed by an expansion to 15,300 tonnes per day from Year 5 onwards.
An ore control system is planned to provide field
control for the loading equipment to selectively mine ore grade material separately from the waste.
Mining operations will be based on 365 operating
days per year with three 8 hour shifts per day.
Processing
The TRS reflects the Rock Creek process plant
which has been purchased by Almaden. Run of mine ore will be crushed in a three-stage crushing circuit to -9 mm.
The TRS also incorporates ore sorting, test work
for which has shown the ability to separate barren or low grade limestone host rock encountered within the vein swarm from vein and veined
material (see Almaden news release of July 16th 2018). Product from the secondary crusher will be screened in to coarse (+20mm),
mid-size (12 to 20 mm), and fine (-12mm) fractions. Coarse and mid-size ore will be sorted by an XRT ore sort machine to eject waste rock.
Fine ore will bypass the ore sorting and is sent directly to the mill.
Ore sort waste from Limestone and Black Shale
is below waste/ore cutoff grade and is placed in the waste rock dump. Ore sort ‘waste’ from the Volcanic unit is low grade
ore and will be stockpiled for processing later in the mine life. Ore sorting pre-concentration increases the mill feed gold and silver
grades by 32% and 31% respectively compared to run of mine (ROM) grades. The table below shows ROM grades with ore sort waste removed
from the ROM, and the resulting mill feed.
Ore Sort Mill Feed grade improvement
| |
|
ROM |
Ore
sort |
Mill |
| |
|
Ore |
Waste |
Feed |
| Limestone |
million
tonnes |
51.5 |
18.8 |
32.7 |
| Au g/t |
0.572 |
0.24 |
0.763 |
| Ag g/t |
37.5 |
12.0 |
52.2 |
| Black Shale |
million
tonnes |
12.2 |
6.3 |
5.8 |
| Au g/t |
0.517 |
0.25 |
0.806 |
| Ag g/t |
44.4 |
20.0 |
70.8 |
| Volcanic |
million
tonnes |
9.4 |
- |
9.4 |
| Au g/t |
0.790 |
- |
0.790 |
| Ag g/t |
18.6 |
- |
18.6 |
| TOTAL |
million
tonnes |
73.1 |
25.1 |
48.0 |
| Au g/t |
0.591 |
0.24 |
0.773 |
| Ag g/t |
36.3 |
14.0 |
47.9 |
Crushed ore is transported to the grinding circuit
by an over land conveyor. Grinding to 75 microns is carried out with ball milling in a closed circuit with cyclones. Cyclone underflow
is screened and the screen undersize is treated in semi-batch centrifugal gravity separators to produce a gravity concentrate.
The gravity concentrate will be treated in an
intensive leach unit with gold and silver recovered from electrowinning cells.
The cyclone overflow will be treated in a flotation
unit to produce a flotation concentrate. After regrinding the flotation concentrate leaching will be carried out in 2 stages. CIL leaching
for 24 hours will complete gold extraction, followed by agitated tank leaching to complete silver leaching. A carbon desorption process
will recover gold and silver from the CIL loaded carbon, and a Merrill Crowe process will recover gold and silver from pregnant solution
from the agitated leach circuit.
Cyanide destruction on
leach residue is carried out using the SO2/Air process. Final tailings are thickened and filtered then dry stacked and co-disposed
with mine waste rock.
Average process recoveries from mill feed to final
product over the life of mine are summarized below for each ore type.
Average Life of Mine Process Recoveries from
Mill Feed
| |
Gold |
Silver |
|
| Limestone |
88.5% |
86.8% |
|
| Volcanic |
64.4% |
76.3% |
|
| Black
Shale |
54.5% |
84.7% |
|
Water and Waste Management
One of Almaden’s top priorities at Ixtaca
is water quality and a mine plan that provides a permanent and consistent long-term supply of water for residents. The plan outlined in
the TRS has evolved through the open dialogue between the Company and residents over the past number of years and as part of the Social
Investment Plan consultation (see section below on “Community”).
Rainfall in the Ixtaca vicinity falls primarily
during a relatively short rainy season. With no local water storage facilities, the flash flows of water are currently lost to the communities.
Under the TRS, rainwater will be captured during the rainy season in the water storage reservoir and slowly released during the dry season,
for use by both the mining operation and local residents.
Extensive geochemical studies have evaluated the
potential for acid rock drainage and metal leaching from the waste rock and tailings using globally accepted standardised methods of laboratory
testing and in compliance with Mexican regulations. Most of the waste rock at Ixtaca is limestone, and the studies of both waste rock
and tailings have consistently shown that there is more than enough neutralising potential present in the waste rock to neutralise any
acid generated. Testing to date also indicates low potential for metal leaching. These results along with the excellent access to potential
markets in the growing industrial state of Puebla, indicate the potential for rock waste and tailings from the Ixtaca deposit to be secondary
resources such as aggregate and cement feedstock. These opportunities were examined in 2019 as part of the Company’s commitment
to best sustainable practices.
In consideration of these findings and the hydrologic
conditions at Ixtaca, Almaden and its consultants reviewed Best Available Technology and Best Applicable Practice in the design and planning
of tailings management at Ixtaca, which resulted in selecting a dry-stack tailings facility which would include co-disposal of waste with
filtered tailings, use much less water than traditional slurry facilities, reduce the mine footprint, allow for better dust control, and
enable earlier rehabilitation of the tailings and waste disposal areas.
Community Consultations
Almaden has a long history of engagement with
communities in the region around the Ixtaca Project. Amongst many other initiatives, the Company has trained and employed drillers and
driller helpers from the local area, held ten large-scale community meetings totalling over 4,500 people, taken 500 local adults on tours
of operating mines in Mexico, and held monthly technical meetings on a diverse range of aspects relating to the mining industry and the
Ixtaca Project. At the end of 2021, the Company convened an outdoor end of year gathering in a large open space and is very appreciative
of the ongoing support and optimism from local communities regarding the future of the project and the tremendous value that we can collectively
deliver to the local area through project development.
In 2017, Almaden engaged a third-party consultant
to lead a community consultation and impact assessment at the Ixtaca Project. In Mexico, only the energy industry requires completion
of such an assessment (known in Mexico as a Trámite Evaluación de Impacto Social, or “EVIS”) as part of the permitting
process. The purpose of these studies is to identify the people in the area of influence of a project (“Focus Area”), and
assess the potential positive and negative consequences of project development to assist in the development of mitigation measures and
the formation of social investment plans. To Almaden’s knowledge, this is the first time a formal EVIS has been completed in the
minerals industry in Mexico, and as such reflects the Company’s commitment to best national and international standards in Ixtaca
project development.
The EVIS and subsequent work on the development
of a Social Investment Plan were conducted according to Mexican and international standards such as the Guiding Principles on Business
and Human Rights, the Equator Principles, and the OECD Guidelines for Multinational Enterprises and Due Diligence Guidance for Meaningful
Stakeholder Engagement in the Extractive Sector.
Fieldwork for the EVIS was conducted by an interdisciplinary
group of nine anthropologists, ethnologists and sociologists graduated from various universities, who lived in community homes within
the Ixtaca Focus Area during the study to allow for ethnographic immersion and an appreciation for the local customs and way of life.
This third-party consultation sought voluntary participation from broad, diverse population groups, with specific attention to approximately
one thousand persons in the Focus Area.
This extensive consultation resulted in changes
to some elements of the mine design, including the planned construction of a permanent water reservoir to serve the local area long after
mine closure, and the shift to dry-stack filtered waste management.
In March 2020, the Company
announced that it has partnered with a local community group focused on irrigation development, and together with them coordinated with
the Federal Government water authority (“CONAGUA”), to co-fund a new water reservoir in Zacatepec, a community located close
to the Ixtaca mine development area. Next steps will involve adding new pipelines, tanks, and other structures to enhance the irrigation
potential in support of local agricultural production.
This reservoir is one of the projects identified
which could bring immediate benefits to the local area even prior to Ixtaca development. The Company looks forward to advancing further
elements of the community Social Investment Plan as mine permitting and construction advance.
The Company has now commenced a Human Rights Impact Assessment (“HRIA”)
at the Ixtaca project. The HRIA will be conducted in accordance with best international practice and in observance of the latest developments
in international human rights legislation and precedents. It will seek to predict, identify, characterize, and assess the impacts the
project may have on these matters and will propose strategies which amplify the positive impacts and mitigate or compensate for any negative
ones.
Economic Contributions
The TRS anticipates that approximately 600 direct
jobs will be created during the peak of construction, and 420 jobs will be generated during operations. Assuming base case metal prices,
under this TRS Ixtaca is anticipated to generate approximately US$130 million in Federal taxes, US$50 million in State taxes and US$30
million in Municipal taxes.
Closure and Reclamation
Mine waste areas will be reclaimed and re-vegetated
at the end of mining activity. At closure, all buildings will be removed and remaining facilities, except for the water storage dam (WSD),
will be reclaimed and re-vegetated. The WSD and the availability of this water to the local communities will remain after closure.
Opportunities
Several opportunities excluded from the base case
economics have been identified in the TRS.
|
· |
Results from the ore sorting tests identified several
opportunities to increase the ore sort efficiency and could result in a further increase in mill feed grades. These opportunities will
be investigated with future test work. |
|
· |
Gold extraction recoveries in the minor black shale
unit are currently impeded by the presence of carbonaceous material. Recent test work including carbon pre-flotation and ultra-fine gravity
separation has demonstrated that the carbon can be liberated and removed with a significant improvement in gold recovery. This test work
is ongoing and is expected to improve the black shale gold recovery. |
|
· |
Test work carried out on Ixtaca limestone waste rock
samples concluded that Ixtaca limestone waste rock is suitable for many types of concrete use and other applications such as shotcrete,
subgrade, asphalt aggregate or railroad ballast with little effort and processing. Concrete produced with tests on Ixtaca limestone aggregate
performed very well, achieving the 28-day design compressive strength of 30 MPa already at 7 days, and more than 40 MPa at 28 and 56 days. |
Ixtaca is connected by 60 km of paved
road to the industrial city Apizaco, 120 km of paved road to the state capital of Puebla, and 170 km of paved road to Mexico City.
The sale of limestone ore sort rejects
(a waste product) as an aggregate presents a very significant potential source of revenue to the Project at no additional capital or operating
cost to the Project. There is also potential to sell some of the waste rock as an aggregate.
|
· |
Fine aggregate from crushing and grinding operations
is also expected to perform in a similar way to the coarse aggregate. Chemical analysis of the fine aggregate indicates that it is also
suitable as a raw material for the production of lime cement or Portland cement if properly processed and blended with suitable silica
aluminates. |
Next Engineering and Development Steps
In December 2020, the Company announced that it
received notification from the Mexican federal permitting authority, SEMARNAT, that the Company’s initial MIA, a required permit
in order to proceed to construction and operation of the Ixtaca Project, did not receive approval. The Company originally submitted the
MIA in early 2019.
The reasons cited by SEMARNAT for not approving
the MIA include insufficient technical information regarding the impacts of the Ixtaca Project on the environment, local and regional
area. Although not formally vested with authority on indigenous matters under a specific local body of law, SEMARNAT also expressed its
opinion that indigenous persons are present in the area affected by the Ixtaca Project and indicated that this needs to be addressed in
the context of obligations assumed by Mexico under ILO Convention 169 regarding the human right to free, prior, informed consultation
of indigenous communities.
In December 2020, the Company announced that its initial MIA was not approved
by Mexican authorities. The Company is now preparing a revised MIA permit application which incorporates additional data presently available
to the Company as well as data gathered in further field studies.
Qualified Persons, Sample Preparation, Analyses,
Quality Control and Assurance
The independent qualified person responsible for
the TRS is Jesse Aarsen, P.Eng., of Moose Mountain Technical Services. A copy of the TRS, and Mr. Aarson’s consent, are included
as exhibits to this Annual Report.
The analyses used in the preparation of the mineral
resource statement were carried out at ALS Chemex Laboratories of North Vancouver (“ALS”) using industry standard analytical
techniques. All strongly altered or epithermal-mineralized intervals of core have been sampled. Almaden employs a maximum sample length
of 2 to 3m in unmineralized lithologies, and a maximum sample length of 1m in mineralized lithologies. During the years 2010 and 2011,
Almaden employed a minimum sample length of 20cm. The minimum sample length was increased to 50cm from 2012 onwards to ensure the availability
of sufficient material for replicate analysis. Drill core is half-sawn using industry standard diamond core saws. After cutting, half
the core is placed in a new plastic sample bag and half is placed back in the core box. Sample numbers are written on the outside of the
sample bags and a numbered tag placed inside the bag. Sample bags are sealed using a plastic cable tie. Sample numbers are checked against
the numbers on the core box and the sample book.
ALS sends its own trucks to the Ixtaca Project
to take custody of the samples at the Santa Maria core facility and transports them to its sample preparation facility in Guadalajara
or Zacatecas, Mexico. Prepared sample pulps are then forwarded by ALS personnel to the ALS North Vancouver, British Columbia laboratory,
which is ISO/IEC 17025:2017 and ISO 9001: 2015 certified, for analysis.
For gold, samples are first analysed by fire assay
and atomic absorption spectroscopy (“AAS”). Samples that return values greater than 10 g/t gold using this technique are then
re-analysed by fire assay but with a gravimetric finish. Silver is first analysed by Inductively Coupled Plasma - Atomic Emission Spectroscopy
(“ICP-AES”). Samples that return values greater than 100 g/t silver by ICP-AES are then re analysed by HF-HNO3-HCLO4 digestion
with HCL leach and ICP-AES finish. Of these samples those that return silver values greater than 1,500 g/t are further analysed by fire
assay with a gravimetric finish. Blanks, field duplicates and certified standards were inserted into the sample stream as part of Almaden’s
quality assurance and control program. In addition to the in-house QAQC measures employed by Almaden, Kris Raffle, P.Geo. of APEX Geoscience
Ltd., completed an independent review of blank, field duplicate and certified standard analyses. All QAQC values falling outside
the limits of expected variability were flagged and followed through to ensure completion of appropriate reanalyses. No discrepancies
were noted within the drill hole database, and all QAQC failures were dealt with and handled with appropriate reanalyses.
Current Work
In December 2020, the Company announced that its initial MIA was not approved
by Mexican authorities. The Company is now working towards submitting a revised MIA permit application which incorporates additional data
presently available to the Company as well as data gathered in further field studies.
Upcoming / Outlook
Almaden has access to sufficient funding to conduct its anticipated work
program for the next fiscal year at the Ixtaca Project. The Company intends to proceed with the preparation of a revised MIA application
and completion of the Human Rights Impact Assessment during 2022. In the normal course, MIA permits may take up to one year for review
by SEMARNAT after submission.
|
Item 4A. |
Unresolved Staff Comments |
Not applicable.
|
Item 5. |
Operating and Financial Review and Prospects |
Operating Results
The following discussion and analysis of the results
of operations and the Company’s financial position should be read in conjunction with the consolidated financial statements and
related notes for the years ended December 31, 2021, 2020, and 2019 appearing under Item 18 – Financial Statements and listed under
Item 19 – Exhibits.
The Company’s consolidated financial statements
are stated in Canadian Dollars and have been prepared in accordance and compliance with International Financial Reporting Standards as
issued by the IFRS.
The Company is in the business of exploring its
principal mineral property in Mexico with the aim of developing it to a stage where it can be exploited at a profit or to arrange joint
ventures or other business transactions whereby other companies provide, in whole or in part, funding for development and exploitation.
At that stage, the Company’s operations would, to some extent, be dependent on the world market prices of any minerals mined. The
Company does not have producing properties or operations on its properties.
The Company receives other income from Administrative
Services Agreements with Azucar and Almadex. Under those Agreements, the Company is the sole and exclusive manager of Azucar and Almadex.
Azucar and Almadex compensate the Company 27% (2020 – 60%) and 39% (2020 – 30%), respectively, of the Company’s actual
monthly overhead costs including any shared personnel fees and/or wages. Azucar and Almadex also pay the Company any reasonable fees or
costs incurred on their behalf by the Company which were approved by Azucar or Almadex, respectively. The Administrative Services Agreements
have an initial 5-year term, with subsequent automatic 1-year renewals unless terminated pursuant to the terms permitted under the respective
Agreements. The Administrative Services Agreements include a Change of Control clause. If either party is subject to a Change of Control
during the term of the respective Agreement, that Agreement shall automatically terminate within 48 hours of the Change of Control unless
agreed to in writing by both parties. The target of the Change of Control shall then pay the other party $2 million as compensation for
the unplanned termination of the Company’s engagement and significant disruption to the other party’s business. “Change
of Control” means the date upon which, without the written concurrence of the target of the Change of Control, any person (as that
term is defined in the Securities Act (British Columbia)) makes and does not withdraw a take-over bid (as that term is defined
in the Securities Act (British Columbia)) or acquires, directly or indirectly, that number of common shares of the target which
equals or exceeds twenty percent (20%) of the then issued common shares of the target.
Fiscal 2021 compared to Fiscal 2020
For the year ended December 31, 2021 (“Fiscal
2021”), the Company recorded a comprehensive loss of $2,668,254, or $0.02 per common share, compared to a comprehensive loss of
$3,129,368, or $0.03 per common share, for the year ended December 31, 2020 (“Fiscal 2020”). The decrease of $461,114 was
primarily a result of $1,849,558 increase in other income offset by $1,074,303 increase in operating expenses and $314,141 increase in
deferred income tax expense.
As the Company is at the development stage, it
has no revenue from mining operations. Other income of $3,551,864 (Fiscal 2020 - $1,702,306) during Fiscal 2021 consisted primarily of
administrative services fees earned from Azucar of $412,812 (Fiscal 2020 - $935,872) and from Almadex of $969,532 (Fiscal 2020 - $468,227).
The Company has an administrative services agreement with these two companies whereby overhead and salaries expenses are proportionally
allocated as described above and under the heading “Related Party Transactions” below. Amounts earned from administrative
service fees depends on the business activities of each company. The increase of $1,849,558 in other income (loss) is also due to an increase
in interest and other income of $450,049 earned from higher cash balance from the Fiscal 2021 financing and a refund from value added
taxes in Mexico from prior years. Furthermore in Fiscal 2021, there were no financing fees paid from the gold loan compared to $54,577
in Fiscal 2020.
Operating expenses were $5,905,977 during Fiscal
2021 (Fiscal 2020 - $4,831,674). Certain operating expenses were reported on a gross basis and recovered through other income from the
administrative services agreements with Azucar and Almadex. The increase in operating expenses of $1,074,303 are mainly the result of
an increase of salary and benefits of $539,901 from year-end bonus paid in 2021 by Almadex and recovered through the Administrative Services
fee, an increase in professional fees of $208,742 from operational activities and an increase in share-based payments of $86,300 from
stock option grants during 2021.
Fiscal 2020 compared to Fiscal 2019
For Fiscal 2020, the Company recorded a comprehensive
loss of $3,129,368, or $0.03 per common share, compared to a comprehensive loss of $3,763,075, or $0.03 per common share, for the year
ended December 31, 2019 (“Fiscal 2019”). The decrease of $633,707 was primarily a result of $390,645 increase in operating
expenses offset by a $1,024,352 increase in other income.
As the Company is at the development stage, it
has no revenue from mining operations. Other income of $1,702,306 (Fiscal 2019 - $677,954) during Fiscal 2020 consisted primarily of administrative
services fees earned from Azucar of $935,872 (Fiscal 2019 - $639,320) and from Almadex of $468,227 (Fiscal 2019 - $320,093). The Company
has an administrative services agreement with these two companies whereby overhead and salaries expenses are proportionally allocated
as described above and under the heading “Related Party Transactions” below. The increase of $1,024,352 in other income relates
to an increase in administrative service fees of $444,686 and a reduction in impairment of exploration and evaluation assets of $501,620.
Operating expenses were $4,831,674 during Fiscal
2020 (Fiscal 2019 - $4,441,029). Certain operating expenses were reported on a gross basis and recovered through other income from the
administrative services agreements with Azucar and Almadex. The increase in operating expenses of $390,645 are mainly the result of a
decrease in professional fees of $363,974 and a decrease in travel and promotion of $180,081 which are all related to the work stoppage
during the COVID-19 pandemic, offset by an increase in share-based payments of $851,380 from stock option grants.
Liquidity and Capital Resources
As at December 31, 2021, the Company’s working
capital position was $10,651,264. Management estimates that the current cash position and expected future cash flows from the exercise
of outstanding stock options and warrants and equity financing will be sufficient for the Company to carry out its anticipated exploration
and operating plans for fiscal 2022 that includes further development of the Ixtaca Project.
Management believes that the Company’s cash
resources are sufficient to meet its working capital and mineral exploration requirements for its next fiscal year, but the Company may
decide to raise additional funds through the sale of equity in fiscal 2022 depending upon favorable market conditions.
During fiscal 2019, the Company filed a preliminary
short-form base shelf prospectus in certain jurisdictions of Canada and a corresponding Registration Statement on Form F-10 with the Commission.
A final short-form base shelf prospectus relating to the 2019 preliminary prospectus was never filed and therefore the related Registration
Statement did not become effective under the U.S. Securities Act of 1933. Subsequent to year end 2020, the Company withdrew its prior
Registration Statement on Form F-10 and re-filed a preliminary short-form base shelf prospectus in certain jurisdictions of Canada and
a corresponding Registration Statement on Form F-10 with the Commission. Subsequently, the Company filed a final short-form base shelf
prospectus in certain jurisdictions of Canada and an amendment to its Registration Statement on Form F-10, which is currently effective
under the U.S. Securities Act of 1933.
Under the Registration Statement on Form F-10
and Canadian final short-form base prospectus, the Company
may, from time to time, prior to March 25, 2023, that the prospectus remains valid, offer for sale and issue Securities (defined below).
The Company may issue and sell up to an aggregate total offering price of US$60,000,000. The Securities to be issued under the prospectus
and Registration Statement on Form F-10 may consist of common shares, warrants to purchase common shares, subscription receipts that entitle
the holder to receive, upon satisfaction of certain release conditions and for no additional consideration, common shares or warrants,
or securities comprised of more than one of common shares, warrants and/or subscription receipts offered together as a unit (collectively,
“Securities”).
The Company
may sell the Securities, separately or together, to or through underwriters or dealers, and also may sell Securities to one or more other
purchasers directly or through agents. The Securities may be sold, from time to time in one or more transactions at a fixed price or prices
which may be changed or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated
prices, including in transactions that are deemed to be "at-the-market distributions" as defined in Canadian NI 44-102, including
sales made directly on the TSX, the NYSE American or other existing trading markets for the Securities.
Fiscal 2021
At the end of Fiscal 2021, the Company had working
capital of $10,651,264 including cash and cash equivalents of $10,170,376 compared to working capital of $3,082,986, including cash and
cash equivalents of $2,534,698 at the end of Fiscal 2020. The increase in working capital of $7,568,278 is due to the registered direct
offering closed on March 2021 offset by the cash balances being used for expenditures in exploration and evaluation assets and corporate
affairs.
The Company has long term liabilities of $6,457,408 at the end of Fiscal
2021 compared to $4,688,836 at the end of Fiscal 2020 that relates to deferred income tax liability from the Mexican income tax and Special
Mining Duty associated with the Ixtaca Project of $1,749,023 (Fiscal 2020 - $1,434,882). Other components of long term liabilities relate
to long-term portion of lease liabilities of $465,930 (Fiscal 2020 - $35,781) for office lease, gold loan payable of $3,227,545 (Fiscal
2020 - $2,842,756) entered with Almadex on May 14, 2019, warrant liability of $623,290 (Fiscal 2020 - $Nil) for the warrants issued pursuant
to the registered direct offering on March 18, 2021 and derivative financial liabilities of $391,620 (Fiscal 2020 - $375,417) related
to the gold loan.
Net cash used in operating activities during Fiscal
2021, was $1,613,580 (Fiscal 2020 - $1,253,362), after adjusting for non-cash activities.
Net cash used in investing activities during Fiscal
2021, was $2,795,150 (Fiscal 2020 - $1,757,718) related to expenditures in exploration and evaluation assets while waiting for its development
permits.
Net cash from financing activities during Fiscal
2021, was $12,044,408 (Fiscal 2020 - $4,633,564) as a result of registered direct offer of $11,610,581 (Fiscal 2020 – non-brokered
private placements financing $3,850,209), options exercised of $564,750 (Fiscal 2020 - $158,090), share issue cost on cashless exercise
of options of $Nil (Fiscal 2020 - $40,157), deferred share issue cost of $Nil (Fiscal 2020 - $40,990), warrants exercised of $Nil (Fiscal
2020 - $10,000), net proceeds on gold in trust of $Nil (Fiscal 2020 - $818,360) and repayment of leasing of $130,923 (Fiscal 2020- $121,948).
Management estimates that the current cash position
will be sufficient for the Company to carry out its business for the upcoming year. Longer term, should the Company receive the necessary
permits and authorizations to proceed to construction of the Ixtaca Project, additional funding will need to be secured.
Use of Proceeds From March 2021 Financing
The net proceeds to the Company from the Offering
were approximately US$9,630,500 after deducting the Agent’s Fee of US$669,500 in aggregate, but before deducting the expenses of
the Offering.
The Company intends to use the majority of the
net proceeds of the Offering for preparation and submission of applications for permits required to commence construction of the Ixtaca
Project, additional engineering work, exploration activities, legal and consulting costs, and for general working capital purposes as
follows:
| Items |
Expressed
in millions of dollars |
Budget
USD |
Budget
CAD |
Actual
Use CAD
Mar 18 to
Dec 31, 2021 |
Variance
CAD |
| 1. |
Permitting and related fees and expenses |
2.24 |
2.88 |
(0.77) |
2.11 |
| 2. |
Detailed project engineering and related expenses |
2.67 |
3.42 |
(0.71) |
2.71 |
| 3. |
Exploration drilling |
0.78 |
1.00 |
(0.51) |
0.49 |
| 4. |
Assay costs |
0.47 |
0.60 |
(0.02) |
0.58 |
| 5. |
Geology, mapping, geophysics |
0.16 |
0.21 |
(0.20) |
0.01 |
| 6. |
Mineral leases |
0.12 |
0.15 |
(0.08) |
0.07 |
| 7. |
Marketing, finance, legal, and administration
costs for the next 12 months |
1.48 |
1.90 |
(1.49) |
0.41 |
| 8. |
Public company costs for the next 12 months |
0.23 |
0.29 |
(0.04) |
0.25 |
| 9. |
General working
capital |
1.48 |
1.90 |
(0.41) |
1.49 |
| Total |
|
$ 9.63 |
$ 12.35 |
(4.23) |
8.12 |
The above noted allocation represents the Company’s
intentions with respect to its use of proceeds based on knowledge, planning and expectations of management of the Company as at March
17, 2021, when the Company filed its prospectus supplement to its base shelf prospectus dated February 25,
2021. Actual expenditures from March 18 to December 31, 2021 are reflected and compared to budget. The reason for the large variance
reported above is the short time which has passed since the completion of the offering. There can be no assurances the above objectives
will be completed as circumstances may change and for business reasons, a reallocation of funds may be necessary in order for the Company
to achieve its stated business objectives. See “Risk Factors”.
Fiscal 2020
At the end of Fiscal 2020, the Company had working
capital of $3,082,986 including cash and cash equivalents of $2,534,698 compared to working capital of $1,748,508, including cash and
cash equivalents of $912,214 at the end of Fiscal 2019. The increase in working capital of $1,334,478 is due to the non-brokered private
placement financings closed in March and August 2020 offset by the cash balances being used for expenditures in exploration and evaluation
assets and corporate affairs.
The Company has long term liabilities of $4,688,836
at the end of Fiscal 2020 compared to $4,577,916 at the end of Fiscal 2019 that relates to deferred income tax liability from the Mexican
income tax and Special Mining Duty associated with the Ixtaca Project of $1,434,882 (Fiscal 2019 - $1,434,882). Other components of long
term liabilities relate to long-term portion of lease liabilities of $35,781 (Fiscal 2019 - $170,731) for office lease, gold loan payable
of $2,842,756 (Fiscal 2019 - $2,541,338) entered with Almadex on May 14, 2019 and derivative financial liabilities of $375,417 (Fiscal
2019 - $430,965) related to the gold loan.
On March 27, 2020, and August 6, 2020, the Company
closed non-brokered private placements for gross proceeds of $2,038,573 and of $2,015,000, respectively. With this additional cash, Management
believes that the Company’s cash resources are sufficient to meet its minimum working capital for its next fiscal year as most expenditures
in exploration and evaluation assets are discretionary.
Net cash used in operating activities during Fiscal
2020, was $1,253,362 (Fiscal 2019 - $1,892,325), after adjusting for non-cash activities.
Net cash used in investing activities during Fiscal
2020, was $1,757,718 (Fiscal 2019 - $3,751,770). Significant items include expenditures on exploration and evaluation assets of $1,750,935
(Fiscal 2019 - $3,324,173) while waiting for its development permits.
Net cash from financing activities during Fiscal
2020, was $4,633,564 (Fiscal 2019 - $1,475,729) as a result of net proceeds from non-brokered private placements of $3,850,209 (Fiscal
2019 - $Nil) in 2020, options and warrants exercised of $168,090 (Fiscal 2019 - $Nil), and gold in trust in of $818,360 (Fiscal 2019 -
$1,577,704). Net cash used in financing activities during the Fiscal 2020 was $203,095 (Fiscal 2019 - $101,975) as a result of lease payments
of $121,948 (Fiscal 2019 - $101,975), share issue costs of $40,990 (Fiscal 2019 - $Nil) and share issue costs on cashless exercise of
options $40,157 (Fiscal 2019 - $Nil).
Management estimates that the current cash position
and potential future cash flows will be sufficient for the Company to carry out its business for the upcoming year.
On February 25, 2021, the Company filed a final
short form base shelf prospectus in each of the provinces and territories of Canada, other than Québec (the “Shelf Prospectus”),
and a corresponding amendment to its Registration Statement on Form F-10 with the Commission under the U.S./Canada Multijurisdictional
Disclosure System.
Under the Registration Statement on Form F-10
and Canadian final short-form base prospectus, the Company may, from time to time, during the 25-month
period that the prospectus remains valid, offer for sale and issue Securities (defined below). The Company may issue and sell Securities
up to an aggregate total offering price of US$60,000,000.
The Company
may sell the Securities, separately or together, to or through underwriters or dealers, and also may sell Securities to one or more other
purchasers directly or through agents. The Securities may be sold, from time to time in one or more transactions at a fixed price or prices
which may be changed or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated
prices, including in transactions that are deemed to be "at-the-market distributions" as defined in Canadian NI 44-102, including
sales made directly on the TSX, the NYSE American or other existing trading markets for the Securities.
Fiscal 2019
At the end of Fiscal 2019, the Company had working
capital of $1,748,508 including cash and cash equivalents of $912,214 compared to working capital of $4,356,589 including cash and cash
equivalents of $5,080,580 at the end of Fiscal 2018. The decrease in working capital of $2,608,081 is mainly due to the cash balances
used for expenditures in exploration and evaluation assets and corporate affairs.
The Company has long term liabilities of $4,577,916
at the end of Fiscal 2019 compared to $1,434,882 at the end of Fiscal 2018 that relates to deferred income tax liability from the Mexican
income tax and Special Mining Duty associated with the Ixtaca project. Other components of long-term liabilities relate to long-term portion
of lease liabilities of $170,731, gold loan payable of $2,541,338 and derivative financial liabilities of $430,965.
On May 14, 2019, the Company entered into a secured
gold loan agreement with Almadex which provides access to approximately $3 million, with only minor dilution to shareholders. With this
additional cash, Management believes that the Company’s cash resources are sufficient to meet its minimum working capital for its
next fiscal year.
Net cash used in operating activities during Fiscal
2019, was $1,892,325 (Fiscal 2018 - $1,919,921), after adjusting for non-cash activities.
Net cash used in investing activities during Fiscal
2019, was $3,751,770 (Fiscal 2018 - $18,171,752). Significant items include expenditures on exploration and evaluation assets of $3,324,173
(Fiscal 2018 - $9,674,048) mainly to complete the feasibility study and start its development activities in Mexico.
Net cash from financing activities during Fiscal
2019, was $1,475,729 (Fiscal 2018 - $8,837,719) as a result of net proceeds of gold in trust.
Management estimates that the current cash position
and potential future cash flows will be sufficient for the Company to carry out its business plans for the upcoming year. Management is
sourcing project financing options to advance the Ixtaca project during its development stage.
Research and Development, Patents and Licenses
The Company conducts no Research and Development
activities, nor is it dependent upon any patents or licenses.
Trend Information
During 2021, prices of precious metals continued
to be quite volatile, with the gold price trading at a low of about US$1685/ounce in March and a high of over US$1,900/ounce by June.
The price of silver was characteristically more volatile, trading at a low of about US$21.50/ounce in September after having traded at
over US$28/ounce earlier in February.
Volatility is against a background of Central
Banks maintain low interest rate policies, and countries around the world accumulating massive debts even during good times and now exacerbated
in the presence of the COVID-19 pandemic. Consumers have accumulated a lot of debt because of low interest rates and the likelihood that
more consumer spending can bail everything out appears low.
It remains very difficult to predict the trajectory
and consequences of the COVID-19 pandemic, but the effects are already drastic. Situations where there is increased risk to the established
financial and social structures are the classic reason for owning gold and silver as preservers of savings and value; nevertheless, even
the values of precious metals and the securities of companies engaged in their exploration, development and production are not immune
to the repercussions that have resulted from the crisis.
Because of difficult financial conditions around the world, mining exploration
has suffered and much resource development has been held up by opposition from anti-development activists, in many cases emanating from
well outside of the communities local to the development projects. Nevertheless, the demand and need for precious and other metals will
continue to grow. The reserves of known deposits are being depleted and the need for replacement will grow. There are fewer advanced projects
in the pipeline, and management anticipates that their value will come to be recognized by both investors and the jurisdictions where
they occur.
Both the scarcity of funding for new discoveries
and the difficulty in developing new resources are likely to limit the supply of metals to a growing and developing global population.
The Company believes that in the long term, metal prices will be constructive for both exploration and development activities. The Company
plans to continue advancing the Ixtaca project with the aim of developing it into one of the more attractive advanced and modern projects
in the world.
Off-balance Sheet Arrangements
The Company has no off-balance sheet arrangements
other than the lease related to its office premises as disclosed below.
Contractual Obligations
The Company is obligated under an operating lease
for its office premises with the following aggregate minimum lease payments effective April 1, 2017 through to March 31, 2022 with an
extension through to March 31, 2027. The Company has government requirements in work and/or taxes to maintain claims held. The decision
to keep or abandon such claims is not contractual but at the discretion of the Company.
The operating lease contains an extension option
exercisable only by the Company which 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.
Table No. 4
Contractual Obligations of the Company
| |
Payments
due by period |
| |
Total |
Less than
1 year |
1 – 3
years |
3 – 5
years |
More than
5 years |
| Operating lease |
$905,566 |
$171,759 |
$338,046 |
$351,238 |
$44,523 |
On January 29, 2013, the Company entered into
contracts with its Chairman and President for an annual remuneration of $240,000 and $265,000 respectively effective January 1, 2013,
for two years, renewable for two additional successive terms of 24 months each. Effective December 31, 2015, the Chairman’s contract
was mutually terminated and effective January 1, 2016, the Company and the Chairman entered into a new contract for an annual remuneration
of $240,000 for two years, renewable for two additional successive terms of 24 months each. The Chairman’s contract and the President’s
contract were amended April 1, 2016 and further amended on January 1, 2019 to make their term indefinite. Effective May 24, 2011, as amended
April 1, 2016, the Company and the Chief Financial Officer (“CFO”) entered into an Employment Agreement for an indefinite
term and, effective September 22, 2014, as amended April 1, 2016, the Company and the Executive Vice-President (formerly Vice President,
Corporate Development) entered into an Employment Agreement for an indefinite term. Effective January 1, 2016, the Chairman’s and
President’s base salaries (“Base Salary”) were $240,000 and $265,000, respectively, and the CFO’s and EVP’s
Base Salaries were $185,000 and $175,000, respectively. Effective January 1, 2017, the Chairman’s, President’s, CFO’s
and EVP’s Base Salaries were $240,000, $305,000, $203,500 and $192,500, respectively. Under the Administrative Services Agreements
between the Company and each of Azucar Minerals Ltd. and Almadex Minerals Ltd. the Company provides management services to Azucar and
Almadex. Azucar compensates the Company 27% (2020 – 60%) of any shared personnel remuneration and office overhead expenses, while
Almadex compensates the Company 39% (2020 – 30%) of any shared personnel remuneration and office overhead expenses. Therefore, Almaden
currently recovers 66% (2020 – 90%) of the contractual compensation amounts for the Chairman, Chief Executive Officer, Chief Financial
Officer and Executive Vice-President.
Contractual obligations of the Company in the
above table exclude future option payments required to maintain the Company’s interest in certain mineral properties.
Significant
accounting judgments and estimates
Significant assumptions about the future and other
sources of judgments and estimates that management has made at the statement of financial position dates, that could result in a material
adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to,
but are not limited to, the following:
Critical
Judgments
|
o |
The analysis of the functional currency for each entity of the Company determined by conducting an analysis
of the consideration factors identified in IAS 21, “The Effect of Changes in Foreign Exchange Rates”. In concluding that the
Canadian dollar is the functional currency of the parent and its subsidiary companies, management considered the currency that mainly
influences the cost of providing goods and services in each jurisdiction in which the Company operates. As no single currency was clearly
dominant, the Company also considered secondary indicators including the currency in which funds from financing activities are denominated
and the currency in which funds are retained. |
Estimates
|
o |
A global pandemic related to COVID-19 was declared in March 2020. The current and expected impacts on global
commerce have been, and are anticipated to be, far-reaching. To date, there has been significant volatility in commodity prices and foreign
exchange rates, restrictions on the conduct of business in many jurisdictions, including travel restrictions, and supply chain disruptions.
There is significant ongoing uncertainty surrounding COVID-19 and the extent and duration of the impact that it may have; |
|
o |
The estimated useful lives of property, plant and equipment which are included in the consolidated statements
of financial position and the related depreciation included in profit or loss; |
|
o |
The recoverability of the value of the exploration and evaluation assets which is recorded in the consolidated
statements of financial position; |
|
o |
The Company uses the Black-Scholes option pricing model to determine the fair value of options, warrants,
and derivative financial liabilities in order to calculate share-based payments expense, 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; |
|
o |
The provision for income taxes which is included in profit or loss and the composition of deferred income
tax liability included in the consolidated statement of financial position and the evaluation of the recoverability of deferred tax assets
based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior
to expiry of those deductions; |
|
o |
The assessment of indications of impairment of each exploration and evaluation asset and property plan and
equipment and related determination of the net realizable value and write-down of those assets where applicable; |
|
o |
The estimated incremental borrowing rate used to calculate the lease liabilities; |
|
o |
The estimated fair value of gold in trust; and |
|
o |
The estimated initial fair value of gold loan payable. |
|
Item 6. |
Directors, Senior Management and Employees |
Table No. 5 lists the directors of the Company
as of April 28, 2022. The directors have served in their respective capacities since their election and/or appointment and will serve
until the next annual general meeting of the Company or until a successor is duly elected, unless the office is vacated in accordance
with the Articles of the Company. All directors are residents and citizens of Canada with the exception of Alfredo Phillips, who is a
resident and citizen of Mexico.
Table No. 5
Directors of the Company
| Name and Jurisdiction of Residence |
Age |
Date First
Elected or Appointed |
| James Duane Poliquin, B.C. Canada |
81 |
February 1, 2002(4) |
| Morgan Poliquin, B.C. Canada |
50 |
February 1, 2002(4) |
| Elaine Ellingham(1)(2)(3) ON, Canada |
63 |
February 27, 2018 |
| Kevin O’Kane(1)(2)(3) B.C. Canada |
62 |
March 31, 2021 |
| Alfredo Phillips(2) CDMX, Mexico |
60 |
March 31, 2021 |
| Ria Fitzgerald(1)(3) B.C. Canada |
43 |
June 29, 2021 |
(1) Member of Audit Committee
(2) Member of Nominating
and Corporate Governance Committee
(3) Member of Compensation
Committee
(4) Date of issue of
the Certificate of Amalgamation
Duane Poliquin was a director of Almaden Resources
Corporation since September 1980 and Morgan Poliquin since June 1999.
Duane Poliquin was a director of Fairfield Minerals
Ltd. since June 1996.
Table No. 6 lists the Executive Officers of the
Company as of April 28, 2022. The Executive Officers serve at the pleasure of the Board of Directors, subject to the terms of executive
compensation agreements hereinafter described. All Executive Officers are residents British Columbia, Canada and citizens of Canada with
the exception of Laurence Morris, who is a resident of Nicaragua and citizen of the United Kingdom.
Table No. 6
Executive Officers of the Company
| Name |
Position |
Age |
Date First
Appointed |
| James Duane Poliquin |
Chairman of the Board |
81 |
February 1, 2002 (1) |
| Morgan Poliquin |
President and Chief Executive Officer |
50 |
March 1, 2007 |
| Korm Trieu |
Chief Financial Officer & Corp. Secretary |
56 |
May 30, 2011 |
| Douglas McDonald |
Executive Vice-President |
53 |
September 22, 2014 |
| Laurence Morris |
Vice-President, Operations & Projects |
68 |
April 30, 2018 |
| John A. Thomas |
Vice-President, Project Development |
74 |
September 9, 2019 |
(1) Date of issue of
the Certificate of Amalgamation
Duane Poliquin was appointed an Officer of Almaden
Resources Corporation in September 1980 and of Fairfield Minerals Ltd. in June 1996.
Duane Poliquin is a registered professional
geological engineer with over 50 years of experience in mineral exploration and he is the founding shareholder of Almaden Resources Corporation.
He gained international experience working with major mining companies where he participated in the discovery of several important mineral
deposits. Mr. Poliquin has held executive positions and directorships with several junior resource companies over his career. He was founder
and President of Westley Mines Ltd. when that company discovered the Santa Fe gold deposit in Nevada. Mr. Poliquin spends virtually all
of his time on the affairs of the Company, Azucar Minerals Ltd. and Almadex Minerals Ltd., of which he also serves as Chairman of the
Board and a director, his principal occupation during the preceding five years.
Morgan Poliquin is a registered professional
geological engineer with over 20 years’ experience in mineral exploration since graduating with a B.A.Sc. degree in geological engineering
from the University of British Columbia (1994). In 1996 he earned a M.Sc. in geology from the University of Auckland, New Zealand studying
geothermal and epithermal deposits in the South Pacific including the Emperor Gold Deposit, Fiji. In 2010, Dr. Poliquin earned his Ph.D.
in Geology from the Camborne School of Mines, University of Exeter. He is President and CEO of the Company and oversees corporate matters
as well as directing the Company’s exploration program. Dr. Poliquin spends virtually all of his time directing the exploration
programs and the affairs of the Company, Azucar Minerals Ltd. and Almadex Minerals Ltd., of which he also serves as President, CEO and
a director, his principal occupation during the preceding five years.
Elaine Ellingham is a professional geoscientist
with over 35 years of experience in the mining industry, her principal occupation during the preceding five years, having held senior
positions in several mining companies. Ms. Ellingham serves as President & CEO of Omai Gold Mines Corp. and is principal of Ellingham
Consulting, providing corporate advisory services to international mining companies and private equity groups. She spent eight years with
the Toronto Stock Exchange serving in various capacities, including four years as the TSX National Leader of Mining & International
Business Development. Ms. Ellingham has also served as interim CEO and Director of Richmont Mines Inc. and Senior Vice President, Investor
Relations at IAMGOLD, in addition to other corporate development experience with Campbell Resources and Rio Algom Limited. She is also
an active director on the Boards of Alamos Gold Inc. and Omai Gold Mines Corp.
Kevin O'Kane is a registered professional
engineer with nearly 40 years of experience in the global mining industry, his principal occupation during the preceding five years. He
has held executive positions with BHP in South America, including Project Director, Vice President of Health, Safety and Environment,
and Asset President. Most recently, Mr. O'Kane held the position of Executive Vice-President and Chief Operating Officer for SSR Mining
Inc. He holds the ESG Competent Boards Certificate and Global Competent Boards Designation (GCB.D), achieved in 2021. He is fluent in
Spanish and brings a wealth of technical, operational and HSCE leadership combined with Latin American knowledge to Almaden's Board. Mr.
O’Kane also serves on the Boards of SolGold Plc, IAMGOLD Corporation and NorthIsle Copper and Gold Inc.
Alfredo Phillips is a seasoned business
executive in Mexican primary industries, his principal occupation during the preceding five years. He is currently the Vice President
of Corporate Affairs and National Director for Mexico at Argonaut Gold Inc. Prior to this position, he served as Head of Governmental
Affairs in Mexico at Arcelor Mittal, the world’s largest steel producer and a similar capacity for Torex Gold for over six years.
Mr. Phillips is past President of the Mining Task Force of the Canadian Chamber of Commerce in Mexico, continues to serve on the Board
of the Chamber, and is founding Chairman of the Guerrero Mining Cluster since 2016. He also serves on the Board of Directors of the Latin
American and Caribbean Council on Renewable Energy (LAC-CORE). Mr. Phillips received a B.Sc. in Actuarial Mathematics from Anahuac University
in Mexico City and a Master's in Public Administration from the Kennedy School of Government at Harvard University.
Ria Fitzgerald is a business development
consultant with twenty years of experience in equity capital markets, mergers and acquisitions, project financing and project development
with global and start-up companies in the mining, infrastructure, and renewable power sectors, her principal occupation during the preceding
five years. She is currently providing corporate advisory services in the mining and renewable power sectors. Ms. Fitzgerald has ten years
of experience as an investment banker focused on the mining industry, where she was involved in over 100 financings raising more than
$7 billion in private and public equity for global mining companies. She has also worked for mining companies in providing strategic analysis
regarding mergers & acquisitions and financings. Ms. Fitzgerald holds a Bachelor of Commerce degree from the University of Saskatchewan,
where she graduated with High Honours and Great Distinction in finance and holds both the Chartered Financial Analyst designation and
the Certificate in ESG Investing from the CFA Institute.
Korm Trieu is a Chartered Professional
Accountant (CPA, CA) and holds a Bachelor of Science degree from the University of British Columbia and has spent over 20 years in corporate
finance, administration and tax services, primarily in the natural resource, financial service and real estate sectors. From 2008-2011,
he served as Vice President Finance for Sprott Resource Lending Corp. where he oversaw the Finance and Administration departments of a
natural resource lending company. Mr. Trieu spends all of his business time on the affairs of the Company along with Azucar Minerals Ltd.
and Almadex Minerals Ltd., of which he is also the Chief Financial Officer and Corporate Secretary, his principal occupation during the
preceding five years.
Douglas McDonald, formerly Vice-President,
Corporate Development, holds a Bachelor of Commerce degree and an M.A. Sc. specializing in mineral economics from the University of
British Columbia and has over 20 years of experience in the resource, foreign trade and resource policy arenas. Prior to joining Almaden,
he worked with an investment dealer where he advised numerous mineral resource companies regarding M&A opportunities and assisted
them in accessing capital markets. He also spent 5 years as a Foreign Service officer with the Canadian government, where he focused on
international trade issues, primarily concerning their impact on the resources industry. Mr. McDonald spends all of his business time
on the affairs of the Company, along with Azucar Minerals Ltd. and Almadex Minerals Ltd., of which he is also a director and the Executive
Vice-President, his principal occupation during the preceding five years.
Laurence Morris is a mining engineer and
geologist with more than 35 years of experience in the metals and mining business, his principal occupation during the preceding five
years. Mr. Morris has broad international experience in construction, operating and planning roles ranging from exploration stage to large
scale operating mines in a variety of commodities and countries. From 2015 to 2017, Mr. Morris was the Mine Manager for First Quantum
Minerals at their US$5.5 billion Cobre Panama project, where he was responsible for transitioning the project from a greenfields site
to an operating mine, including mine planning, mining team assembly and training, setting up operating procedures and technical services.
Prior to this Mr. Morris held several key positions including Vice President of Operations for Minefinders Corporation Ltd. from 2010
to 2013. In that position, he oversaw all aspects of development, mining operations, exploration activities and resource management at
the Dolores mine in Mexico. Prior to joining Minefinders in 2010, Mr. Morris worked in mine management for First Quantum Minerals Ltd.
in Zambia and Mauritania. Mr. Morris holds an Honours Bachelor of Science in Geology from the University of Sheffield. He is a Fellow
of the Institute of Materials, Minerals and Mining (IOM3), a voluntary director of the IOM3’s Minerals Technology Division, and
an active writer on mining and environmental matters. He is a registered project manager and a member of the Association of Project Management.
John A. Thomas is a professional engineer,
who holds a BSc, an MSc and a PhD in chemical engineering from the University of Manchester in the United Kingdom. He also received a
diploma in accounting and finance from the U.K. Association of Certified Accountants. He has over 45 years of experience in the mining
industry, including both base metal and precious metal projects in several countries including Brazil, Venezuela, Costa Rica, Russia,
Kazakhstan, Canada and Zambia, his principal occupation during the preceding five years. His experience covers a wide range of activities
in the mining industry from process development, management of feasibility studies, engineering and management of construction, and operation
of mines. He served as VP Projects for Atlantic Gold for six years during which time he acted as a Qualified Person for the construction
of the Moose River Consolidated Mine.
There are no arrangements or understandings
with major shareholders, customers, suppliers or others pursuant to which any such director or executive officer was selected as a director
or executive officer. Duane Poliquin, Chairman of the Board and Director, is the father of Morgan Poliquin, President, Chief Executive
Officer and Director.
Compensation
For the purposes of this document, “executive
officer” of the Company means an individual who at any time during the year was the Chief Executive Officer (“CEO”),
President, Executive Vice President or Chief Financial Officer (“CFO”) of the Company; any Vice-President in charge of a principal
business unit, division or function; and any individual who performed a policy-making function in respect of the Company.
Set out below are particulars of compensation
paid to the following persons (the “Named Executive Officers” or “NEOs”) for the fiscal year ended December 31,
2021:
1. the CEO;
2. the CFO;
3. each of the three most highly compensated executive
officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the
most recently completed financial year whose total compensation was, individually, more than $150,000 for that financial year; and
4. any individual who would be a NEO under paragraph
(3) but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end
of that financial year.
The Company has no pension, defined contribution,
or deferred compensation plans for its directors, executive officers or employees.
During Fiscal 2021, the Chairman was remunerated
at his base salary of $240,000 per annum, of which he has agreed to defer payment of $96,000 (2019-2020 - $160,000), and the Chief Executive
Officer was remunerated at his base salary of $345,000 per annum. The Chief Executive Officer’s employment contract included terms
for two additional successive terms of 24 months each (the “Extended Term”) ending January 29, 2019. Effective December 31,
2015, a contract with a company in which the Chairman is a shareholder, Hawk Mountain Resources Ltd., was terminated by mutual consent
with the Company and, in lieu thereof, the Chairman entered into a new employment contract directly with the Company. The new employment
contract includes a base salary of $240,000 per annum and has an effective date of January 1, 2016. It has an initial two-year term and
is renewable for two additional successive terms of 24 months each (the “Extended Term”) ending December 31, 2021. On January
1, 2019, both the Chief Executive Officer’s and Chairman’s employment contracts were amended to remove the Extended Term thereby
making their terms indefinite.
During Fiscal 2021, the Chief Financial Officer
(“CFO”) and the Executive Vice-President (“EVP”) were remunerated at their base salary of $241,250 CAD and $233,667
CAD, respectively. Each of the CFO’s and EVP’s employment agreements have indefinite terms.
Under Administrative Services Agreements between
the Company and each of Azucar Minerals Ltd. and Almadex Minerals Ltd., the Company provides management services to Azucar and Almadex.
Azucar compensates the Company 27% (2020 – 60%) of any shared personnel remuneration and office overhead expenses, while Almadex
compensates the Company 39% (2020 – 30%) of any shared personnel remuneration and office overhead expenses. Therefore, Almaden currently
recovers 66% (2020 – 90%) of the contractual compensation amounts for the Chairman, Chief Executive Officer, Chief Financial Officer
and Executive Vice-President.
All non-management Directors are compensated
$30,000 (2020 - $12,000) yearly. The Chair of the Audit Committee and the Chair of the Compensation Committee are compensated an additional
$10,000 (2020 - $5,000) and $5,000 (2020 - $5,000) per year respectively. The Chair of the Nominating and Corporate Governance Committee
is compensated $Nil (2020 - $Nil) yearly. The Compensation Committee also recommended that, with respect to Director stock options, up
to 550,000 options be granted to each non-management Director. Directors are entitled to reimbursement for reasonable travel and other
out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors. The Board of Directors may award
special remuneration to any director undertaking any special services on behalf of the Company other than services ordinarily required
of a director. Other than as indicated in Table No. 7 below, no director received any compensation for their services as a director,
including committee participation and/or special assignments, or will receive compensation on termination.
Total compensation paid by the Company directly
and/or indirectly to all directors and executive officers during Fiscal 2021 was $613,022 (Fiscal 2020 - $236,200) after recovery by
the Company of 66% (2020 - 90%) of executive officer compensation pursuant to the terms of the Administrative Services Agreements between
the Company and each of Azucar and Almadex.
Table No. 7
Summary Compensation Table
| Annual
Compensation |
Long-Term
Compensation Awards |
Total |
| |
|
|
|
|
Restricted |
Options/ |
|
|
|
|
| Name, |
Fiscal |
|
|
Other Annual |
Stock |
SARS |
LTIP |
All Other |
Total |
| Principle Position and |
Year |
Salary |
Bonus |
Compensation* |
Awards |
Granted |
Payouts |
Compensation |
Compensation |
| Jurisdiction of Residence |
|
|
|
|
|
(#) |
|
|
|
| Duane Poliquin |
2021(1)(2) |
$82,000(9) |
Nil |
$155,450 |
Nil |
615,000 |
Nil |
Nil |
$237,450 |
| Chairman of the Board & |
2020(1)(2) |
$24,000(9) |
Nil |
$230,000 |
Nil |
800,000 |
Nil |
Nil |
$254,000 |
| Director, B.C, Canada |
2019(1)(2) |
$96,000(9) |
Nil |
$121,850 |
Nil |
565,000 |
Nil |
Nil |
$217,850 |
| Morgan Poliquin |
2021(1)(2) |
$117,875 |
$35,366 |
$344,950 |
Nil |
1,165,000 |
Nil |
Nil |
$498,191 |
| President, CEO |
2020(1)(2) |
$33,500 |
Nil |
$525,000 |
Nil |
2,075,000 |
Nil |
Nil |
$558,500 |
| & Director, B.C, Canada |
2019(1)(2) |
$134,000 |
Nil |
$263,850 |
Nil |
1,065,000 |
Nil |
Nil |
$397,850 |
| Elaine Ellingham(6) |
2021 |
Nil |
Nil |
$136,500 |
Nil |
450,000 |
Nil |
$40,000(3)(5) |
$176,500 |
| Director, ON, Canada |
2020 |
Nil |
Nil |
$20,000 |
Nil |
100,000 |
Nil |
$12,000(3) |
$32,000 |
| |
2019 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$12,000(3) |
$12,000 |
| Kevin O’Kane(11) |
2021 |
Nil |
Nil |
$167,500 |
Nil |
550,000 |
Nil |
$22,500(3) |
$190,000 |
| Director, B.C, Canada |
|
|
|
|
|
|
|
|
|
| Alfredo Phillips(11) |
2021 |
Nil |
Nil |
$167,500 |
Nil |
550,000 |
Nil |
$22,500(3) |
$190,000 |
| Director, CDMX, Mexico |
|
|
|
|
|
|
|
|
|
| Ria Fitzgerald(11) |
2021 |
Nil |
Nil |
$137,500 |
Nil |
550,000 |
Nil |
$17,500(3)(4) |
$155,000 |
| Director, B.C, Canada |
|
|
|
|
|
|
|
|
|
| Jack McCleary(10) |
2021 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
| Former Director, AB, |
2020 |
Nil |
Nil |
$101,300 |
Nil |
318,000 |
Nil |
$17,0000(3)(5) |
$118,300 |
| Canada |
2019 |
Nil |
Nil |
$39,440 |
Nil |
232,000 |
Nil |
$17,0000(3)(5) |
$56,440 |
| Gerald G. Carlson(10) |
2021 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
| Former Director, B.C, |
2020 |
Nil |
Nil |
$90,200 |
Nil |
272,000 |
Nil |
$12,000(3) |
$102,200 |
| Canada |
2019 |
Nil |
Nil |
$62,600 |
Nil |
240,000 |
Nil |
$12,000(3) |
$74,600 |
| Mark T. Brown(10) |
2021 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
| Former Director, B.C, |
2020 |
Nil |
Nil |
$73,800 |
Nil |
268,000 |
Nil |
$17,000(3)(4) |
$90,800 |
| Canada |
2019 |
Nil |
Nil |
$67,580 |
Nil |
282,000 |
Nil |
$17,000(3)(4) |
$84,580 |
| William J. Worrall(10) |
2021 |
Nil |
Nil |
$12,500 |
Nil |
50,000 |
Nil |
Nil |
$12,500 |
| Former Director, B.C, |
2020 |
Nil |
Nil |
$109,750 |
Nil |
385,000 |
Nil |
$12,000(3) |
$121,750 |
| Canada |
2019 |
Nil |
Nil |
$33,350 |
Nil |
115,000 |
Nil |
$12,000(3) |
$45,350 |
| Korm Trieu |
2021(1)(2) |
$83,042 |
$25,628 |
$170,200 |
Nil |
540,000 |
Nil |
Nil |
$278,870 |
| Chief Financial Officer, |
2020(1)(2) |
$22,500 |
Nil |
$142,000 |
Nil |
605,000 |
Nil |
Nil |
$164,500 |
| B.C, Canada |
2019(1)(2) |
$90,000 |
Nil |
$63,100 |
Nil |
240,000 |
Nil |
Nil |
$153,100 |
| Douglas McDonald |
2021(1)(2) |
$80,983 |
$25,628 |
$157,750 |
Nil |
525,000 |
Nil |
Nil |
$264,361 |
| Executive Vice President |
2020(1)(2) |
$21,200 |
Nil |
$179,250 |
Nil |
625,000 |
Nil |
Nil |
$200,450 |
| B.C, Canada |
2019(1)(2) |
$84,800 |
Nil |
$41,750 |
Nil |
175,000 |
Nil |
Nil |
$126,550 |
| Laurence Morris(7) |
2021 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
| Vice President, Operations |
2020 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$Nil |
| & Projects, Nicaragua |
2019 |
$236,491 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$236,491 |
| John A. Thomas (8) |
2021 |
$60,000 |
Nil |
$102,000 |
Nil |
300,000 |
Nil |
Nil |
$162,000 |
| Vice President, Project |
2020 |
$65,000 |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
$65,000 |
| Development, B.C, Canada |
2019 |
$40,000 |
Nil |
$74,500 |
Nil |
300,000 |
Nil |
Nil |
$114,500 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Other Annual Compensation is the fair value of options granted calculated using the Black-Scholes option
pricing model at grant date. |
|
(1) |
Azucar has compensated the Company, 40% during Fiscal 2019, 60%, during Fiscal 2020, and 27% during Fiscal
2021 of any shared personnel fees and/or wages. The above table reflects only the compensation for each individual paid by Almaden after
recovery of such 40%, 60% or 27% from Azucar. |
|
(2) |
Almadex has compensated the Company, 20% during Fiscal 2019, 30% during Fisca1 2020, and 39% during Fiscal
2021 of any shared personnel’s fees and/or wages. The above table reflects only the compensation for each individual paid by Almaden
after recovery of such 20%, 30% or 39% from Almadex. |
|
(4) |
Audit Committee Chairman’s fees. |
|
(5) |
Compensation Committee Chairman’s fees. |
|
(6) |
Elaine Ellingham commenced as a Director of the Company effective February 27, 2018. |
|
(7) |
Laurence Morris, Vice President, Operations & Projects, is compensated at an annual fee of Nil USD during
2021 and 2020, and $178,330 USD during 2019. |
|
(8) |
John A. Thomas commenced as Vice President, Project Development effective September 9, 2019 and pursuant
to his Independent Contractor Agreement dated July 1, 2019 is compensated at a rate of $5,000 per month. |
|
(9) |
Duane Poliquin has agreed to defer payment to him of $96,000 of his $240,000 gross salary during Fiscal 2021
and 2020 and $64,000 of his $240,000 gross salary during Fiscal 2019. |
|
(10) |
Jack McCleary and Gerald G. Carlson ceased to be Directors on March 31, 2021, Mark T. Brown ceased to be
a Director on June 29, 2021 and Willian J. Worrall ceased to be a Director on July 24, 2021. |
|
(11) |
Kevin O’Kane and Alfredo Phillips commenced as a Director of the Company effective March 31, 2021 and
Ria Fitzgerald commenced as a Director effective June 29, 2021 |
Remuneration on Termination
The Company has the following termination clauses within its executive
employment contracts.
The Company entered into an Executive Employment
Contract dated January 1, 2016, as amended by Amending Agreement dated April 1, 2016 and Second Amending Agreement made January 1, 2019
(the “DP Agreement”) between the Company and Duane Poliquin (the “Executive” under the DP Agreement) which replaced
an expired Executive Compensation Contract dated January 29, 2013 (the “HMR Agreement”) between the Company and Hawk Mountain
Resources Ltd. (“Management Company”), a private company of which Duane Poliquin (the “Executive” under the HMR
Agreement) is a shareholder, which was terminated by mutual agreement on December 31, 2015. The DP Agreement will terminate or may be
terminated for any one of the following reasons:
|
(a) |
voluntarily by the Executive, upon at least three (3) months prior written notice of termination by the Executive
to the Company; or |
|
(b) |
without Cause, upon at least three (3) months prior written notice of termination by the Company to the Executive;
or |
|
(c) |
by the Company for Cause; or |
|
(d) |
upon the death or disability of the Executive; or |
|
(e) |
upon retirement by the Executive. |
Termination by the Executive Voluntarily or
by the Company for Cause
If the Executive shall voluntarily terminate employment
under the DP Agreement or if the employment of the Executive thereunder is terminated by the Company for Cause, then all compensation
and benefits as theretofore provided shall terminate immediately upon the effective date of termination and no special severance compensation
will be paid.
Cause to terminate
the Executive’s employment under the DP Agreement shall mean:
|
(a) |
the repeated and demonstrated failure by the Executive to perform the Executive’s material duties under
the DP Agreement, after demand for substantial performance is delivered by the Company to the Executive that specifically identifies the
manner in which the Company believes the Executive has not substantially performed by the Executive under the DP Agreement; or |
|
(b) |
the willful engagement by the Executive in misconduct which is materially injurious to the Company, monetarily
or otherwise; or |
|
(c) |
any other willful violation by the Executive of the provisions of the DP Agreement; or |
|
(d) |
the Executive is convicted of a criminal offence involving fraud or dishonesty. |
Termination by the Company Without Cause
If the Company shall terminate the Executive’s
employment under the DP Agreement for any reason except for Cause or Disability then, upon the effective date of termination, the Company
shall pay the Executive in one lump sum an amount equal to two (2) times the Executive’s then current Base Salary, less all statutory
withholdings and deductions. All the benefits theretofore provided to the Executive shall be continued as if the Executive was still an
employee of the Company for a period of twelve (12) months from the date of termination or until equal or better benefits are provided
by a new employer, whichever shall first occur.
Termination by Death or Disability
If the Executive dies or becomes disabled before
the Executive’s employment is otherwise terminated, the Company shall pay the Executive or the Executive’s estate, an amount
of compensation equal to six (6) months of the Executive’s then current Base Salary and all the benefits theretofore provided to
the Executive shall be continued, for a period of six (6) months from the date of Death or Disability as if the Executive were still an
employee of the Company. If such termination is due to the Executive’s Death, payment shall be made in one lump sum to the Executive’s
Designate within 60 days of the Executive’s death. If no Executive’s Designate survives the Executive, the entire amount shall
be paid to the Executive’s estate. If such termination is due to the Executive’s Disability, payment shall be made in one
lump sum to the Executive within sixty (60) days of the Executive’s Disability. The compensation provided under this paragraph shall
be in addition to that payable from any insurance coverage providing compensation upon Death or Disability.
Termination Following Change in Control
For purposes
of the DP Agreement, a Change in Control shall be deemed to have occurred if:
|
(i) |
any person or any person and such person’s associates or affiliates, as such terms are defined in the
Securities Act (British Columbia) (the “Act”), makes a tender, take-over or exchange offer, circulates a proxy to shareholders
or takes other steps to effect a takeover of the control of the Company, whether by way of a reverse take-over, formal bid, causing the
election or appointment of a majority of directors of the Company or otherwise in any manner whatsoever; or |
|
(ii) |
during any period of eighteen (18) consecutive months (not including any period prior to the Effective Date),
individuals who at the beginning of such period constituted the Board of Directors and any new directors, whose appointment by the Board
of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least three quarters (3/4) of
the Board of Directors then still in office who either were directors at the beginning of the period or whose appointment or nomination
for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors; or |
|
(iii) |
the acquisition by any person or by any person and such person’s affiliates or associates, as such terms
are defined in the Act, and whether directly or indirectly, of common shares of the Company at the time held by such person and such person’s
affiliates and associates, totals for the first time, twenty percent (20%) or more of the outstanding common shares of the Company; or |
|
(iv) |
the business or businesses of the Company for which the Executive’s services are principally performed,
are disposed of by the Company pursuant to a partial or complete liquidation, dissolution, consolidation or merger of the Company, or
a sale or transfer of all or a significant portion of the Company’s assets. |
Notwithstanding any other provisions in the DP
Agreement regarding termination, if any of the events described above constituting a Change in Control shall have occurred during the
Term, upon the termination of the Executive’s employment (unless such termination is because of the Executive’s Death or Disability,
by the Company for Cause or by the Executive other than for “Good Reason”, as defined below) the Executive shall be entitled
to and will receive no later than the fifteenth (15th) day following the date of termination a lump sum payment equal to three
(3) times the Executive’s then current Base Salary. In addition, all benefits then applicable to the Executive shall be continued
for a period of eighteen (18) months after the date of termination.
For purposes of the DP Agreement, “Good
Reason” shall mean, without the Executive’s express written consent, any of the following:
|
(i) |
the assignment to the Executive of any duties inconsistent with the status or authority of the Executive’s
office, or the Executive’s removal from such position, or a substantial alteration in the nature or status of the Executive’s
authorities or responsibilities from those in effect immediately prior to the Change in Control; |
|
(ii) |
a reduction by the Company of the Executive’s Base Salary as in effect on the date of the DP Agreement
or as the same may have been increased from time to time, or a failure by the Company to increase the Executive’s Base Salary as
provided for in the DP Agreement or at a rate commensurate with that of other key executives of the Company; |
|
(iii) |
the relocation of the office of the Company where the Executive is employed at the time of the Change in Control
(the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the Company’s requiring
the Executive to be based more than fifty (50) miles away from the CIC Location (except for requiring travel on the Company’s business
to an extent substantially consistent with the Executive’s business travel obligations prior to the Change in Control); |
|
(iv) |
the failure by the Company to continue to provide the Executive with benefits at least as favourable as those
enjoyed by the Executive prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company to provide the Executive with the number of entitled vacation days to which the Executive has
earned on the basis of years of services with the Company; or |
|
(v) |
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform
the DP Agreement or, if the business of the Company for which the Executive’s services are principally performed is sold or transferred,
the purchaser or transferee of such business shall fail to agree to provide the Executive with the same or a comparable position, duties,
remuneration and benefits for the Executive as provided immediately prior to the Change in Control. |
Following a Change in Control during the Term,
the Executive shall be entitled to terminate the Executive’s employment for Good Reason.
In the event the Executive is entitled to a severance
payment under the DP Agreement, then in addition to such severance payment, the Executive shall be entitled to employment search assistance
to secure other comparable employment for the Executive for a period not to exceed one (1) year or until such comparable employment is
found, whichever is the sooner, with fees for such assistance to be paid by the Company.
The Executive’s right to receive the aforementioned
payment and benefits is expressly contingent upon the signing of a waiver and release satisfactory to the Company which releases the Company
and its affiliates from all claims and liabilities arising out of the Executive’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form, substance and timeliness.
The Executive Employment Contract dated January
29, 2013, as amended by Amending Agreement dated April 1, 2016 and Second Amending Agreement made January 1, 2019 (the “MP Agreement”)
between the Company and Morgan Poliquin (the “Executive” under the MP Agreement) will terminate or may be terminated for any
one of the following reasons:
|
(a) |
voluntarily by the Executive, upon at least three (3) months prior written notice of termination by the Executive
to the Company; or |
|
(b) |
without Cause, upon at least three (3) months prior written notice of termination by the Company to the Executive;
or |
|
(c) |
by the Company for Cause; or |
|
(d) |
upon the death or disability of the Executive; or |
|
(e) |
upon retirement by the Executive. |
Termination by the Executive Voluntarily or
by the Company for Cause
If the Executive shall voluntarily terminate employment
under the MP Agreement or if the employment of the Executive is terminated by the Company for Cause, then all compensation and benefits
as theretofore provided shall terminate immediately upon the effective date of termination and no special severance compensation will
be paid.
Cause to terminate
the Executive’s employment shall mean:
|
(a) |
the repeated and demonstrated failure by the Executive to perform the Executive’s material duties under
the MP Agreement, after demand for substantial performance is delivered by the Company to the Executive that specifically identifies the
manner in which the Company believes the Executive has not substantially performed the Executive’s duties under the MP Agreement;
or |
|
(b) |
the willful engagement by the Executive in misconduct which is materially injurious to the Company, monetarily
or otherwise; or |
|
(c) |
any other willful violation by the Executive of the provisions of the MP Agreement; or |
|
(d) |
the Executive is convicted of a criminal offence involving fraud or dishonesty. |
Termination by the Company Without Cause
If the Company shall terminate the Executive’s
employment under the MP Agreement for any reason except for Cause then, upon the effective date of termination, the Company shall pay
the Executive in one lump sum an amount equal to two (2) times the Executive’s then current Base Salary, less all statutory withholdings
and deductions. All the benefits theretofore provided to the Executive shall be continued as if the Executive was still an employee of
the Company for a period of twelve (12) months from the date of termination or until equal or better benefits are provided by a new employer,
whichever shall first occur.
Termination by Death or Disability
If the Executive dies or becomes disabled before
the Executive’s employment is otherwise terminated, the Company shall pay the Executive or the Executive’s estate, an amount
of compensation equal to six (6) months of the Executive’s then current Base Salary and all the benefits theretofore provided to
the Executive shall be continued, for a period of six (6) months from the date of Death or Disability as if the Executive were still an
employee of the Company. If such termination is due to the Executive’s Death, payment shall be made in one lump sum to the Executive’s
Designate within sixty (60) days of the Executive’s death. If no Executive’s Designate survives the Executive, the entire
amount shall be paid to the Executive’s estate. If such termination is due to the Executive’s Disability, payment shall be
made in one lump sum to the Executive within sixty (60) days of the Executive’s Disability. The compensation provided under this
paragraph shall be in addition to that payable from any insurance coverage providing compensation upon Death or Disability.
Termination Following Change in Control
For purposes
of the MP Agreement, a Change in Control shall be deemed to have occurred if:
|
(i) |
any person or any person and such person’s associates or affiliates, as such terms are defined in the
Securities Act (British Columbia) (the “Act”), makes a tender, take-over or exchange offer, circulates a proxy to shareholders
or takes other steps to effect a takeover of the control of the Company, whether by way of a reverse take-over, formal bid, causing the
election or appointment of a majority of directors of the Company or otherwise in any manner whatsoever; or |
|
(ii) |
during any period of eighteen (18) consecutive months (not including any period prior to the Effective Date),
individuals who at the beginning of such period constituted the Board of Directors and any new directors, whose appointment by the Board
of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least three quarters (3/4) of
the Board of Directors then still in office who either were directors at the beginning of the period or whose appointment or nomination
for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors; or |
|
(iii) |
the acquisition by any person or by any person and such person’s affiliates or associates, as such terms
are defined in the Act, and whether directly or indirectly, of common shares of the Company at the time held by such person and such person’s
affiliates and associates, totals for the first time, twenty percent (20%) or more of the outstanding common shares of the Company; or |
|
(iv) |
the business or businesses of the Company for which the Executive’s services are principally performed,
are disposed of by the Company pursuant to a partial or complete liquidation, dissolution, consolidation or merger of the Company, or
a sale or transfer of all or a significant portion of the Company’s assets. |
Notwithstanding any other provisions in the MP
Agreement regarding termination, if any of the events described above constituting a Change in Control shall have occurred during the
Term, upon the termination of the Executive’s employment (unless such termination is because of the Executive’s Death or Disability,
by the Company for Cause or by the Executive other than for “Good Reason”, as defined below) the Executive shall be entitled
to and will receive no later than the fifteenth (15th) day following the date of termination a lump sum severance payment equal
to three (3) times the Executive’s then current Base Salary. In addition, all benefits then applicable to the Executive shall be
continued for a period of eighteen (18) months after the date of termination.
For purposes of the MP Agreement, “Good
Reason” shall mean, without the Executive’s express written consent, any of the following:
|
(i) |
the assignment to the Executive of any duties inconsistent with the status or authority of the Executive’s
office, or the Executive’s removal from such position, or a substantial alteration in the nature or status of the Executive’s
authorities or responsibilities from those in effect immediately prior to the Change in Control; |
|
(ii) |
a reduction by the Company in the Executive’s Base Salary as in effect on the date of the MP Agreement
or as the same may have been increased from time to time, or a failure by the Company to increase the Executive’s Base Salary as
provided for in the MP Agreement or at a rate commensurate with that of other key executives of the Company; |
|
(iii) |
the relocation of the office of the Company where the Executive is employed at the time of the Change in Control
(the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the Company’s requiring
the Executive to be based more than fifty (50) miles away from the CIC Location (except for requiring travel on the Company’s business
to an extent substantially consistent with the Executive’s business travel obligations prior to the Change in Control); |
|
(iv) |
the failure by the Company to continue to provide the Executive with benefits at least as favourable as those
enjoyed by the Executive prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change
in Control, or the failure by the Company to provide the Executive with the number of entitled vacation days to which the Executive has
earned on the basis of years of service with the Company; or |
|
(v) |
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform
the MP Agreement or, if the business of the Company for which the Executive’s services are principally performed is sold or transferred,
the purchaser or transferee of such business shall fail to agree to provide the Executive with the same or a comparable position, duties,
salary and benefits as provided to the Executive by the Company immediately prior to the Change in Control. |
Following a Change in Control during the Term,
the Executive shall be entitled to terminate the Executive’s employment for Good Reason.
In the event the Executive is entitled to a severance
payment under the MP Agreement, then in addition to such severance payment, the Executive shall be entitled to employment search assistance
to secure other comparable employment for a period not to exceed one (1) year or until such comparable employment is found, whichever
is the sooner, with fees for such assistance to be paid by the Company.
The Executive’s right to receive the aforementioned
payment and benefits is expressly contingent upon the signing of a waiver and release satisfactory to the Company which releases the Company
and its affiliates from all claims and liabilities arising out of the Executive’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form, substance and timeliness.
The Employment Agreement dated May 24, 2011 as
amended April 1, 2016 (the “KT Agreement”) between the Company and Korm Trieu (the “Employee” under the KT Agreement)
may be terminated for any one of the following reasons:
|
(a) |
voluntarily by the Employee, upon at least sixty (60) days prior written notice of termination by the Employee
to the Company; or |
|
(b) |
by the Company for cause; or |
|
(c) |
without cause, upon payment of twelve (12) months of the Employee’s then current Base Salary to the
Employee; or |
|
(d) |
upon the physical and/or mental impairment of the Employee. |
Termination by the Employee Voluntarily or
by the Company for Cause
If the Employee shall voluntarily terminate employment
under the KT Agreement or if the employment of the Employee is terminated by the Company for cause, then all compensation and benefits
as theretofore provided shall terminate immediately upon the effective date of termination and no special severance compensation will
be paid.
Cause to terminate
the Employee’s employment shall mean:
|
(a) |
the repeated and demonstrated failure by the Executive to perform the Employee’s material duties under
the KT Agreement, after demand for substantial performance is delivered by the Company to the Employee that specifically identifies the
manner in which the Company believes the Employee has not substantially performed the Employee’s duties under the KT Agreement;
or |
|
(b) |
the willful engagement by the Employee in misconduct which is materially injurious to the Company, monetarily
or otherwise; or |
|
(c) |
any other willful violation by the Employee of the provisions of the KT Agreement; or |
|
(d) |
the Employee is convicted of a criminal offence involving fraud or dishonesty. |
Termination by the Company Without Cause
If the Company elects to terminate the Employee’s
employment for reasons other than cause, the Company shall pay the Employee, in one lump sum or in installments at the Company’s
discretion, a severance payment equal to twelve (12) months of the Employee’s then current Base Salary.
Termination upon the physical and/or mental
impairment of the Employee
If the Company terminates the Employee’s
employment for physical and/or mental impairment, the Company’s financial obligation to the Employee is limited to that which the
Employee would otherwise receive if the Company terminated the Employee’s employment for no reason.
Termination Following Change in Control
For purposes of the KT Agreement, a change in
control shall be deemed to have occurred if:
|
(i) |
any person or any person and such person’s associates or affiliates, as such terms are defined in the
Securities Act (British Columbia) (the “Act”), makes a tender, take-over or exchange offer, circulates a proxy to shareholders
or takes other steps to effect a takeover of the control of the Company, whether by way of a reverse take-over, formal bid, causing the
election or appointment of a majority of directors of the Company or otherwise in any manner whatsoever; or |
|
(ii) |
during any period of eighteen (18) consecutive months (not including any period prior to the Effective Date),
individuals who at the beginning of such period constituted the Board of Directors and any new directors, whose appointment by the Board
of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least three quarters (3/4) of
the Board of Directors then still in office who either were directors at the beginning of the period or whose appointment or nomination
for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors; or |
|
(iii) |
the acquisition by any person or by any person and such person’s affiliates or associates, as such terms
are defined in the Act, and whether directly or indirectly, of common shares of the Company at the time held by such person and such person’s
affiliates and associates, totals for the first time, twenty percent (20%) or more of the outstanding common shares of the Company; or |
|
(iv) |
the business or businesses of the Company for which the Employee’s services are principally performed,
are disposed of by the Company pursuant to a partial or complete liquidation, dissolution, consolidation or merger of the Company, or
a sale or transfer of all or a significant portion of the Company’s assets. |
Notwithstanding any other provisions in the KT
Agreement regarding termination, if any of the events described above constituting a Change in Control shall have occurred during the
course of the KT Agreement, upon the termination of the Employee’s employment (unless such termination is because of the Employee’s
Death or Disability, by the Company for cause or by the Employee other than for “Good Reason”, as defined below) the Employee
shall be entitled to and will receive no later than the fifteenth (15th) day following the date of termination a lump sum severance
payment equal to two (2) times the Employee’s then current Base Salary.
For purposes of the KT Agreement, “Good
Reason” shall mean, without the Employee’s express written consent, any of the following:
|
(i) |
the assignment to the Employee of any duties inconsistent with the status or authority of the Employee’s
office, or the Employee’s removal from such position, or a substantial alteration in the nature or status of the Employee’s
authorities or responsibilities from those in effect immediately prior to the Change in Control; |
|
(ii) |
a reduction by the Company in the Employee’s Base Salary as in effect on the date of the KT Agreement
or as the same may have been increased from time to time, or a failure by the Company to increase the Employee’s Base Salary as
provided for in the KT Agreement or at a rate commensurate with that of other key employees of the Company; |
|
(iii) |
the relocation of the office of the Company where the Employee is employed at the time of the Change in Control
(the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the Company’s requiring
the Employee to be based more than fifty (50) miles away from the CIC Location (except for requiring travel on the Company’s business
to an extent substantially consistent with the Employee’s business travel obligations prior to the Change in Control); |
|
(iv) |
the failure by the Company to continue to provide the Employee with benefits at least as favourable as those
enjoyed by the Employee prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Employee of any material fringe benefit enjoyed by the Employee at the time of the Change in
Control, or the failure by the Company to provide the Employee with the number of entitled vacation days to which the Employee has earned
on the basis of years of service with the Company; or |
|
(v) |
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform
the KT Agreement or, if the business of the Company for which the Employee’s services are principally performed is sold or transferred,
the purchaser or transferee of such business shall fail to agree to provide the Employee with the same or a comparable position, duties,
salary and benefits as provided to the Employee by the Company immediately prior to the Change in Control. |
Following a Change in Control during the course
of the KT Agreement, the Employee shall be entitled to terminate the Employee’s employment for Good Reason.
The Employee’s right to receive the aforementioned
payment and benefits is expressly contingent upon the signing of a waiver and release satisfactory to the Company which releases the Company
and its affiliates from all claims and liabilities arising out of the Employee’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form, substance and timeliness.
|
(4) |
Executive Vice President |
The Employment Agreement dated September 22, 2014
as amended April 1, 2016 (the “DM Agreement”) between the Company and Douglas McDonald (the “Employee” under the
DM Agreement) may be terminated for any one of the following reasons:
|
(a) |
voluntarily by the Employee, upon at least sixty (60) days prior written notice of termination by the Employee
to the Company; or |
|
(b) |
by the Company for cause; or |
|
(c) |
without cause, upon payment of twelve (12) months of the Employee’s then current Base Salary to the
Employee; or |
|
(d) |
upon the physical and/or mental impairment of the Employee. |
Termination by the Employee Voluntarily or
by the Company for Cause
If the Employee shall voluntarily terminate employment
under the DM Agreement or if the employment of the Employee is terminated by the Company for cause, then all compensation and benefits
as theretofore provided shall terminate immediately upon the effective date of termination and no special severance compensation will
be paid.
Cause to terminate
the Employee’s employment shall mean:
|
(a) |
the repeated and demonstrated failure by the Employee to perform the Employee’s material duties under
the DM Agreement, after demand for substantial performance is delivered by the Company to the Employee that specifically identifies the
manner in which the Company believes the Employee has not substantially performed the Employee’s duties under the DM Agreement;
or |
|
(b) |
the willful engagement by the Employee in misconduct which is materially injurious to the Company, monetarily
or otherwise; or |
|
(c) |
any other willful violation by the Employee of the provisions of the DM Agreement; or |
|
(d) |
the Employee is convicted of a criminal offence involving fraud or dishonesty. |
Termination by the Company Without Cause
If the Company elects to terminate the Employee’s
employment for reasons other than cause, the Company shall pay the Employee, in one lump sum or in installments at the Company’s
discretion, a severance payment equal to twelve (12) months of the Employee’s then current Base Salary.
Termination upon the physical and/or mental
impairment of the Employee
If the Company terminates the Employee’s
employment for physical and/or mental impairment, the Company’s financial obligation to the Employee is limited to that which the
Employee would otherwise receive if the Company terminated the Employee’s employment for no reason.
Termination Following Change in Control
For purposes of the DM Agreement, a change in
control shall be deemed to have occurred if:
|
(i) |
any person or any person and such person’s associates or affiliates, as such terms are defined in the
Securities Act (British Columbia) (the “Act”), makes a tender, take-over or exchange offer, circulates a proxy to shareholders
or takes other steps to effect a takeover of the control of the Company, whether by way of a reverse take-over, formal bid, causing the
election or appointment of a majority of directors of the Company or otherwise in any manner whatsoever; or |
|
(ii) |
during any period of eighteen (18) consecutive months (not including any period prior to the Effective Date),
individuals who at the beginning of such period constituted the Board of Directors and any new directors, whose appointment by the Board
of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least three quarters (3/4) of
the Board of Directors then still in office who either were directors at the beginning of the period or whose appointment or nomination
for election was previously so approved, cease for any reason to constitute a majority of the Board of Directors; or |
|
(iii) |
the acquisition by any person or by any person and such person’s affiliates or associates, as such terms
are defined in the Act, and whether directly or indirectly, of common shares of the Company at the time held by such person and such person’s
affiliates and associates, totals for the first time, twenty percent (20%) or more of the outstanding common shares of the Company; or |
|
(iv) |
the business or businesses of the Company for which the Employee’s services are principally performed,
are disposed of by the Company pursuant to a partial or complete liquidation, dissolution, consolidation or merger of the Company, or
a sale or transfer of all or a significant portion of the Company’s assets. |
Notwithstanding any other provisions in the DM
Agreement regarding termination, if any of the events described above constituting a Change in Control shall have occurred during the
course of the DM Agreement, upon the termination of the Employee’s employment (unless such termination is because of the Employee’s
Death or Disability, by the Company for cause or by the Employee other than for “Good Reason”, as defined below) the Employee
shall be entitled to and will receive no later than the fifteenth (15th) day following the date of termination a lump sum severance
payment equal to two (2) times the Employee’s then current Base Salary.
For purposes of the DM Agreement, “Good
Reason” shall mean, without the Employee’s express written consent, any of the following:
|
(i) |
the assignment to the Employee of any duties inconsistent with the status or authority of the Employee’s
office, or the Employee’s removal from such position, or a substantial alteration in the nature or status of the Employee’s
authorities or responsibilities from those in effect immediately prior to the Change in Control; |
|
(ii) |
a reduction by the Company in the Employee’s Base Salary as in effect on the date of the DM Agreement
or as the same may have been increased from time to time, or a failure by the Company to increase the Employee’s Base Salary as
provided for in the DM Agreement or at a rate commensurate with that of other key employees of the Company; |
|
(iii) |
the relocation of the office of the Company where the Employee is employed at the time of the Change in Control
(the “CIC Location”) to a location more than fifty (50) miles away from the CIC Location, or the Company’s requiring
the Employee to be based more than fifty (50) miles away from the CIC Location (except for requiring travel on the Company’s business
to an extent substantially consistent with the Employee’s business travel obligations prior to the Change in Control); |
|
(iv) |
the failure by the Company to continue to provide the Employee with benefits at least as favourable as those
enjoyed by the Employee prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially
reduce any of such benefits or deprive the Employee of any material fringe benefit enjoyed by the Employee at the time of the Change in
Control, or the failure by the Company to provide the Employee with the number of entitled vacation days to which the Employee has earned
on the basis of years of service with the Company; or |
|
(v) |
the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform
the DM Agreement or, if the business of the Company for which the Employee’s services are principally performed is sold or transferred,
the purchaser or transferee of such business shall fail to agree to provide the Employee with the same or a comparable position, duties,
salary and benefits as provided to the Employee by the Company immediately prior to the Change in Control. |
Following a Change in Control during the course
of the DM Agreement, the Employee shall be entitled to terminate the Employee’s employment for Good Reason.
The Employee’s right to receive the aforementioned
payment and benefits is expressly contingent upon the signing of a waiver and release satisfactory to the Company which releases the Company
and its affiliates from all claims and liabilities arising out of the Employee’s employment and termination thereof and including
confidentiality provisions, which waiver and release is satisfactory to the Company with respect to form, substance and timeliness.
|
(5) |
Vice President, Operations & Projects |
The Independent Contractor Agreement dated January
15, 2018 (the “LM Agreement”) between the Company and Laurence Morris (the “Contractor” under the LM Agreement)
may be terminated for any one of the following reasons:
|
a. |
by Contractor, at any time, without cause or reason, upon 90 days written notice to the Company; |
|
b. |
by the Company, for cause, at any time in the event of a failure by Contractor to comply with any of the provisions
of the LM Agreement, including, without limitation, a persistent failure on the part of Contractor to follow the directions of the Board
or CEO or any act of gross negligence or willful misconduct on the part of Contractor, where the Company has communicated such failure
to Contractor and a reasonable opportunity to cure the failure has been provided, or by the Company immediately upon the death or incapacity
of Contractor or upon Contractor no longer being qualified, under applicable corporate or securities laws or stock exchange requirements,
to be the Vice-President Operations & Projects of the Company; |
|
c. |
by Contractor, for cause, at any time in the event of a failure by the Company to comply with any of the provisions
of the LM Agreement, where such failure has been communicated to the Company and a reasonable opportunity to cure the failure has been
provided; or |
|
d. |
by the Company, at any time, without cause or reason, upon 90 days written notice to Contractor; |
and upon any such termination, the Board shall
be at liberty to remove Contractor from any office held by Contractor in the Company or any of its subsidiaries and to make or cause to
be made whatever regulatory or stock exchange filings are required in the circumstances.
Termination Following Change in Control
A Change of Control means the occurrence of any
of the following events:
|
a. |
any Person acquiring fifty percent (50%) or more of the issued and outstanding shares of the Company; or |
|
b. |
any Person acquiring all or substantially all of the assets of the Company, provided that for the purposes
of the applicable section of the LM Agreement, "Person" means a third party that is operating at arm's length from Contractor.
For greater certainty, "Person" shall not include any person, partnership, corporation or other entity with which Contractor is
involved directly or indirectly as principal, agent, shareholder of more than 2% of such entity’s voting securities, officer, employee
or in any other manner whatsoever. |
If a Change of Control occurs and (i) thereafter
the Company terminates Contractor’s engagement under the LM Agreement otherwise than for cause or (ii) Contractor elects to terminate
his engagement under the LM Agreement by notifying the Company of such election in writing within ten (10) calendar days after the occurrence
of a Change of Control, Contractor’s engagement shall immediately terminate and the Company shall provide Contractor with a payment
equivalent to two (2x) times the Contractor’s Annual Fee, payable, at the Company’s discretion, either in one lump sum within
five (5) business days from the effective date of termination of Contractor’s engagement under the LM Agreement or in two or more
equal instalments over the three (3) months period commencing on the effective date of termination of Contractor’s engagement under
the LM Agreement, with the first such instalment payable within five (5) business days from the effective date of termination of Contractor’s
engagement under the LM Agreement, and upon Contractor’s receipt of such lump sum payment or the last instalment payment, the LM
Agreement shall terminate.
|
(6) |
Vice President, Project Development |
The Independent Contractor Agreement dated July
1, 2019 (the “JT Agreement”) between the Company and John A. Thomas (the “Contractor” under the JT Agreement)
may be terminated for any one of the following reasons:
|
a. |
by Contractor, at any time, without cause or reason, upon 30 days written notice to the Company; |
|
b. |
by the Company, for cause, at any time in the event of a failure by Contractor to comply with any of the provisions
of the JT Agreement, including, without limitation, a persistent failure on the part of Contractor to follow the directions of the Board
or CEO or any act of gross negligence or willful misconduct on the part of Contractor, where the Company has communicated such failure
to Contractor and a reasonable opportunity to cure the failure has been provided, or by the Company immediately upon the death or incapacity
of Contractor or upon Contractor no longer being qualified, under applicable corporate or securities laws or stock exchange requirements,
to be the Vice-President, Project Development of the Company; |
|
c. |
by Contractor, for cause, at any time in the event of a failure by the Company to comply with any of the provisions
of the JT Agreement, where such failure has been communicated to the Company and a reasonable opportunity to cure the failure has been
provided; or |
|
d. |
by the Company, at any time, without cause or reason, upon 30 days written notice to Contractor; |
and upon any such termination, the Board shall
be at liberty to remove Contractor from any office held by Contractor in the Company or any of its subsidiaries and to make or cause to
be made whatever regulatory or stock exchange filings are required in the circumstances.
Stock options
Incentive stock options to purchase securities
from the Company are granted to directors, executive officers, employees and consultants of the Company on terms and conditions acceptable
to the regulatory authorities in Canada, notably the Toronto Stock Exchange, and in accordance with the requirements of the applicable
Canadian securities commissions’ requirements and regulations.
The Company has a formal written stock option
plan (“Plan”) which permits the issuance of up to 10% of the Company’s issued share capital from time to time during
the term of the Plan and provides that stock options may be granted from time to time provided that incentive stock options in favor of
any consultant or person providing investor relations services cannot exceed 2% in any 12 month period. No incentive stock option granted
under the Plan is transferable by the optionee other than by will or the laws of descent and distribution, and each incentive stock option
is exercisable during the lifetime of the optionee only by such optionee and by the optionee’s personal representatives in the event
of death for a period ending on the earlier of the expiry date of the option and twelve months after the date of death.
The exercise price of all incentive stock options
granted under the Plan is determined in accordance with Toronto Stock Exchange guidelines and cannot be less than the Market Price on
the date of the grant. Market Price is the volume weighted average trading price of the Company’s shares on the Toronto Stock Exchange
for the five trading days immediately preceding the date of the grant. The maximum term of each incentive stock option is five years.
Options granted to consultants or persons providing Investor Relations Activities (as defined in the Plan) shall vest in stages with no
more than ¼ of such options being exercisable in any three-month period. All options granted during Fiscal 2021, Fiscal 2020 and
Fiscal 2019 vested on the date granted. Under the requirements of the Toronto Stock Exchange, all unallocated options under the Plan must
be approved by the Board of Directors, including a majority of the unrelated directors, and by the shareholders every three years after
the institution of the Plan. Insiders and affiliates of insiders entitled to receive a benefit under the Plan are not entitled to vote
for such approval. The Plan received its triennial approval in Fiscal 2020.
The names and titles of the directors and executive
officers of the Company to whom outstanding stock options have been granted and the number of common shares subject to such options as
of April 28, 2022 are set forth in Table No. 8, as well as the number of options granted to directors, executive officers, employees and
consultants as a group.
Table No. 8
Stock Options Outstanding
| Name |
# Options Outstanding &Exercisable
|
Exercise Price CDN$ |
Expiry Date |
| Duane Poliquin |
500,000 |
0.64 |
06/09/2022 |
| Chairman of the Board & Director |
200,000 |
1.13 |
10/03/2022 |
| |
100,000 |
0.89 |
12/15/2022 |
| |
100,000 |
0.69 |
05/08/2023 |
| |
350,000 |
0.62 |
07/08/2023 |
| |
165,000 |
0.51 |
09/18/2023 |
| Morgan Poliquin |
500,000 |
0.62 |
05/31/2022 |
| President, Director & |
700,000 |
0.64 |
06/09/2022 |
| Chief Executive Officer |
200,000 |
1.13 |
10/03/2022 |
| |
300,000 |
0.89 |
12/15/2022 |
| |
250,000 |
0.97 |
02/09/2023 |
| |
600,000 |
0.62 |
07/08/2023 |
| |
315,000 |
0.51 |
09/18/2023 |
| |
375,000 |
0.38 |
03/07/2027 |
| Alfredo Phillips |
500,000 |
0.68 |
03/31/2023 |
| Director |
50,000 |
0.62 |
07/08/2023 |
| Kevin O’Kane |
500,000 |
0.68 |
03/31/2023 |
| Director |
50,000 |
0.62 |
07/08/2023 |
| Ria Fitzgerald |
550,000 |
0.62 |
07/08/2023 |
| Director |
|
|
|
| Elaine Ellingham |
400,000 |
0.68 |
03/31/2023 |
| Director |
50,000 |
0.62 |
07/08/2023 |
| |
100,000 |
0.38 |
03/07/2027 |
| Korm Trieu |
75,000 |
0.41 |
04/30/2022 |
| Chief Financial Officer & |
150,000 |
0.64 |
06/09/2022 |
| Corporate Secretary |
100,000 |
1.13 |
10/03/2022 |
| |
30,000 |
0.89 |
12/15/2022 |
| |
50,000 |
0.97 |
02/09/2023 |
| |
75,000 |
0.96 |
03/03/2023 |
| |
200,000 |
0.68 |
03/31/2023 |
| |
100,000 |
0.62 |
07/08/2023 |
| |
115,000 |
0.51 |
09/18/2023 |
| |
250,000 |
0.38 |
03/07/2027 |
| Douglas McDonald |
20,000 |
0.64 |
06/09/2022 |
| Executive Vice President |
100,000 |
1.13 |
10/03/2022 |
| |
255,000 |
0.89 |
12/15/2022 |
| |
75,000 |
0.96 |
03/03/2023 |
| |
250,000 |
0.68 |
03/31/2023 |
| |
100,000 |
0.62 |
07/08/2023 |
| |
100,000 |
0.51 |
09/18/2023 |
| |
250,000 |
0.38 |
03/07/2027 |
| John A. Thomas |
50,000 |
0.97 |
02/09/2023 |
| Vice President, Project Development |
100,000 |
0.96 |
03/03/2023 |
| |
150,000 |
0.51 |
09/18/2023 |
| Total Directors/Officers (9 persons) |
9,450,000 |
|
|
| Total Employees/Consultants (12 persons) |
2,540,000 |
|
|
| Total Directors/Officers/Employees/Consultants |
11,990,000 |
|
|
No funds were set aside or accrued by the Company
during Fiscal 2021 to provide pension, retirement or similar benefits for directors or executive officers.
General
The TSX and
the applicable Canadian securities law and regulation require that the Company comply with National Instrument 58-101 (Disclosure of
Corporate Governance Practices) or any replacement of that instrument. The Company is also, under applicable Canadian securities law
and regulation, required to comply with National Policy 58-201 (Corporate Governance Guidelines). National Instrument 58-101 and
National Policy 58-201 (for convenience referred to in the aggregate as the “guidelines”) deal with matters such as the constitution
and independence of corporate boards, their functions, the effectiveness and education of the board members and other matters. The Company’s
statement as to compliance with the guidelines and its approach to corporate governance is set forth below.
Corporate Governance
The Company’s Board and management are committed
to the highest standards of corporate governance. The Company’s corporate governance practices are in accordance with the guidelines.
The Company is also cognizant of and compliant with various corporate governance requirements in Canada and is in compliance with applicable
U.S. requirements.
The Company’s prime objective in directing
and managing its business and affairs is to enhance shareholder value. The Company views effective corporate governance as a means of
improving corporate performance and accordingly of benefit to the Company and all shareholders.
The Company also believes that director and management
honesty and integrity are essential factors in ensuring good and effective corporate governance. To that end the Company’s directors
have adopted various codes and policies for the Company, its directors, officers, employees and consultants. The codes and policies adopted
to date are as follows: Audit Committee Charter, Nominating and Corporate Governance Committee-Responsibilities and Duties, Compensation
Committee-Responsibilities and Duties, Code of Business Ethics, Code of Business Conduct and Ethics for Directors, Communications Policy,
Securities Trading Policy, Whistleblowers Policy and Privacy Policy (the “Codes”). The Codes may be viewed on the Company’s
website at www.almadenminerals.com. The Codes may also be viewed as filed on EDGAR as an exhibit to the 2005 Annual Report on Form 20-F
filed with the Commission on March 30, 2006. Any amendments to the Codes or waivers of the provision of any Codes will be posted on the
Company’s website within 5 business days of such amendment or waiver.
Executive Officer Position Descriptions
Chairman of the Board (‘Chairman’)
Responsibilities:
|
- |
Leads the Board of Directors of the Company and also takes a hands-on role in the Company’s day-to-day
management. |
|
- |
Helps the CEO to oversee all the operational aspects involved in running the Company, including project selection
and planning. |
|
- |
Takes overall responsibility for the Company’s direction and growth, seeking to generate significant
financial gains for the shareholders. |
|
- |
Oversees relationships with the communities and stakeholders in the areas where the Company operates, with
the intent of ensuring the Company’s activities are of benefit to all. |
Chief Executive Officer (‘CEO’)
Reports to:
The Board of Directors of the Company (the “Board”)
Function:
Provides overall leadership and vision in developing,
in concert with the Board, the strategic direction of the Company and in developing the tactics and business plans necessary to increase
shareholder value.
Manages the overall business to ensure strategic
and business plans are effectively implemented, the results are monitored and reported to the Board and financial and operational objectives
are attained.
Authorities, Duties and Responsibilities:
|
1. |
Provides effective leadership to the management and the employees of the Company and establishes an effective
means of control and co-ordination for all operations and activities. |
|
2. |
Fosters a corporate culture that promotes ethical practices, integrity and a positive work climate enabling
the Company to attract, retain and motivate a diverse group of quality employees. |
|
3. |
Keeps the Board fully informed on the Company`s operational and financial affairs. |
|
4. |
Develops and maintains a sound, effective organization structure and plans for capable management succession,
progressive employee training and development programs and reports to the Board on these matters. |
|
5. |
Ensures that effective communications and appropriate relationships are maintained with the shareholders of
the Company and other stakeholders. |
|
6. |
Develops capital expenditure plans for approval by the Board. |
|
7. |
Turns any strategic plan as may be developed by the Board into a detailed operating plan. |
|
1. |
Develops and recommends to the Board strategic plans to ensure the Company`s profitable growth and overall
success. This includes updating and making changes as required and involving the Board in the early stages of developing strategy. |
|
2. |
Identifies in conjunction with the other senior officers and appropriate directors of the Company the key
risks with respect to the Company and its businesses and reviews such risks and strategies for managing them with the Board. |
|
3. |
Ensures that the assets of the Company are adequately safeguarded and maintained. |
|
(c) |
Exploration and Development |
Responsible for managing the day to
day activities and operating management of the Company and as such shall be responsible for the design, operation and improvement of the
systems that create the Company`s exploration and development opportunities. The CEO accordingly shall have the primary responsibility:
|
- |
To direct and oversee all operational activities of the Company including exploration, development, mining
and other such functions. |
|
- |
To initiate solutions to the key business challenges of the Company. |
|
- |
To participate in sourcing and negotiating financial arrangements for the further expansion and development
of the Company including joint ventures, mergers, acquisitions, debt and equity financing. |
|
- |
Represent and speak for the Company with shareholders, potential investors and other members of the industry. |
Oversees the quality and timeliness
of financial reporting. Reports to the Board in conjunction with the CFO on the fairness and adequacy of the financial reporting of the
Company to its shareholders.
Chief Financial Officer (‘CFO’)
Reports to:
The CEO of the Company
Responsibilities:
|
- |
Developing, analyzing and reviewing financial data. |
|
- |
Reporting on financial performance. |
|
- |
Monitoring expenditures and costs. |
|
- |
Assisting the CEO in preparing budgets and in the communicating to the analyst and shareholder, community
and securities regulators, the financial performance of the Company. |
|
- |
Fulfilling the reporting requirements of the securities regulators, stock exchanges and shareholders. |
|
- |
Monitoring filing of tax returns and payment of taxes. |
The CFO shall assist the CEO in establishing effective
means of control and co-ordination of the operations and activities of the Company and identifying, in conjunction with the CEO, the key
risks with respect to the Company and its business and reviewing with the CEO the strategies for managing such risks and ensuring that
the assets of the Company are adequately safeguarded and maintained.
The CFO, in conjunction with the CEO, shall design
or supervise the design of and implement, maintain and periodically evaluate the effectiveness of internal controls to provide reasonable
assurances that the financial statements of the Company are fairly presented in accordance with generally accepted financial standards
and principles and that disclosure controls are in place to provide reasonable assurance that material information relating to the financial
performance of the Company and any deficiencies are made known to the Audit Committee.
Executive Vice President (formerly Vice
President, Corporate Development)
Reports to:
The CEO of the Company
Responsibilities:
The Executive Vice President is responsible for:
|
- |
Developing and managing relationships with current and prospective business partners, investment bankers,
institutional investors, financial analysts and the media; |
|
- |
Preparing and presenting comprehensive reviews and analysis regarding the business to senior management and
to the Board; |
|
- |
Coordinating execution of key strategic initiatives such as activities relating to business and project financing,
permitting and litigation; |
|
- |
Ensuring appropriate corporate disclosure of non technical matters, aside from matters which would normally
fall under the purview of the CFO; |
|
- |
Working with the CEO in preparing and presenting to investors, the executive team and the Board; |
|
- |
Conducting technical and financial analysis to determine the impact of growth opportunities on various metrics
and to establish an execution plan as needed. |
The Executive Vice President shall work with the
CEO in establishing and managing relationships with key stakeholders, identifying and analysing key strategic business opportunities,
as well as the development, communication and implementation of corporate strategies related to executing the business plan of the Company.
Vice President, Operations & Projects
Reports to:
The CEO of the Company
Responsibilities:
The Vice President, Operations & Projects
is responsible for:
|
- |
Planning and managing the operations of the Ixtaca Project; |
|
- |
Developing and overseeing the implementation of all required project execution systems and procedures including
project controls, procurement of contracts, engineering construction, quality assurance and quality control; |
|
- |
Ensuring the project objectives, scope and plan are well defined and understood by the project team and stakeholders; |
|
- |
Ensuring the compliance with health, safety, environmental and community regulations and corporate standards; |
|
- |
Developing and recommending production strategies, together with capital budget and operating budget requirements
to optimize short and long-range production capabilities while minimizing exposure to economic and environmental risk; |
|
- |
Overseeing all site activities, site services, construction, pre-commissioning and commissioning; |
|
- |
Assisting the CEO in preparing and presenting to investors, the executive team and the Board; |
The Vice President, Operations & Projects
shall assist the CEO in establishing and managing relationships with key stakeholders. The Vice President, Operations & Projects shall
also conduct technical and financial analysis to determine the impact of growth opportunities on various metrics and to establish an execution
plan as needed.
Vice President, Project Development
Reports to:
The CEO of the Company
Responsibilities:
The Vice President, Project Development is responsible
for:
|
- |
Planning and managing the construction of the Ixtaca Project; |
|
- |
Developing and overseeing the implementation of all required Project execution systems and procedures including
Project controls, procurement of contracts, engineering construction, quality assurance and quality control; |
|
- |
Ensuring the Project objectives, scope and plan are well defined and understood by the Project team and stakeholders; |
|
- |
Ensuring the compliance with health, safety, environmental and community regulations and corporate standards; |
|
- |
Developing and recommending production strategies, together with capital budget and operating budget requirements
to optimize short and long-range production capabilities while minimizing exposure to economic and environmental risk; |
|
- |
Overseeing all site activities, site services, construction, pre-commissioning and commissioning; |
|
- |
Assisting the CEO in preparing and presenting to investors, the executive team and the Board; |
The Vice President, Project Development shall
assist the CEO in establishing and managing relationships with key stakeholders. The Vice President, Project Development shall also conduct
technical and financial analysis to determine the impact of growth opportunities on various metrics and to establish an execution plan
as needed.
Mandate of the Board
The mandate of the Board is to supervise the management
of the business and affairs of the Company and to act with a view to the best interests of the Company. In fulfilling its mandate, the
Board, among other matters, is responsible for:
|
(a) |
adopting a strategic planning process and approving, on at least an annual basis, a strategic plan, taking
into account the risk and opportunities of the Company’s business; |
|
(b) |
identifying the principal risks of the Company’s business and implementing appropriate systems to manage
such risks; |
|
(c) |
satisfying itself, to the extent reasonably feasible, of the integrity of the CEO and other executive officers
(if any) and ensuring that all such officers create a culture of integrity throughout the Company and developing programs of succession
planning (including appointing, training and monitoring senior management); |
|
(d) |
creating the Company’s internal control and management information systems and creating appropriate
policies for matters including communications, securities trading, privacy, audit, whistleblowing and codes of ethical conduct; |
|
(e) |
managing its affairs including selecting its Chair, nomination of candidates for election to the Board, constituting
committees of the Board and determining director compensation; and |
|
(f) |
engaging any necessary internal and/or external advisors. |
In the Fiscal year ended December 31, 2021 there
were five (5) meetings of the Board. The frequency of meetings as well as the nature of agenda items change, depending upon the state
of the Company’s affairs and in light of opportunities or risks which the Company is subject to. Table No. 9 indicates the number
of meetings attended by each director.
Table No. 9
Meetings Attended
| Director |
Attended |
Meetings |
| Duane Poliquin |
5 |
5 |
| Morgan Poliquin |
5 |
5 |
| Elaine Ellingham |
5 |
5 |
| Alfredo Phillips |
3 |
3 |
| Kevin O’Kane |
3 |
3 |
| Ria Fitzgerald |
2 |
2 |
All Directors attended all board meetings held
after they were appointed to the Board
The Chairman is the chair of meetings of the Board
of directors and is not an independent director. Meetings of the independent members of the Board may be held periodically as convened
by the independent Board members. In Fiscal 2021, five (5) meetings of the independent Board members were convened.
In carrying out its mandate, the Board and each
committee of the Board, relies primarily on management and its employees to provide it with regular detailed reports on the operations
of the Company and its financial position. Certain members of management are also on the Board and provide the Board with direct access
to information concerning their areas of responsibility. Management personnel are also regularly asked to attend Board meetings to provide
information, answer questions and receive the direction of the Board. The reports and information provided to the Board enable them to
monitor and manage the risks associated with the Company’s operations and its compliance with legal and safety requirements, environmental
issues and the financial position and liquidity of the Company.
The Board discharges its responsibilities directly
and through committees. At regularly scheduled meetings, members of the Board and management discuss the broad range of matters and issues
relevant to the Company’s business interests and the Board is responsible for the approval of the Company’s Strategic Plan.
In addition, the Board receives reports from management on the Company’s operational and financial performance. Between scheduled
meetings, matters requiring Board authorization are effected by means of signed Consent Resolutions.
Board Assessment
The Nomination and Corporate Governance Committee
reports to the Board periodically on the evaluation of the Board’s performance and that of the individual directors. The Performance
of the Chief Executive Officer is evaluated by the Compensation Committee.
Composition of the Board
The guidelines
recommend that a board of directors be constituted with a majority of individuals who qualify as “independent” directors.
In deciding whether a particular director is independent,
the Board examined the factual circumstances of each director and considered them in the context of many factors, including the definitions
in the guidelines and the requirements and policies of NYSE American Company Guide Rules. The current Board is composed of six members.
The Board has determined that a majority of directors, namely 4 directors, are independent - Elaine Ellingham, Kevin O’Kane, Alfredo
Phillips and Ria Fitzgerald. Two directors – Duane Poliquin and Morgan Poliquin – are not independent because, in addition
to their being the Chairman and Chief Executive Officer/President of the Company, respectively, they each have Executive Employment Contracts
with the Company and, therefore, they each have a material relationship with the Company. The basis for determination of independence
is under Canadian Securities Administrators’ National Instrument NI 52-110 - Audit Committees (“NI 52-110”) and
NYSE American Exchange Company Guide Rules.
The Company does not have a controlling or significant
shareholder. The Board believes that the membership of the Board fairly reflects the investment in the Company by minority shareholders.
The Board considers
its size and composition to be appropriate and effective for carrying out its responsibilities. However, the Board may consider adding
an additional director if a suitable candidate can be found who may bring additional experience or knowledge to the Board.
Board Committees
The Board currently has three committees - the
Audit Committee, the Nomination and Corporate Governance Committee and the Compensation Committee. Each member of each committee is an
independent director. Each committee is responsible for determining its own rules of procedure and may, from time to time, develop written
descriptions for the responsibilities of the chair of such committee. No written position descriptions have yet been developed.
Mandates of each of the committees and the Codes
undergo review periodically (in some cases mandated as annually) to bring them into line with changing Canadian and U.S. securities and
corporate governance requirements and to reflect amendments that may be considered appropriate to make them more effective. Any revisions
to the mandates and Codes will be available on the Company’s website at www.almadenminerals.com.
Audit Committee
The full text
of the initial Audit Committee Charter is an exhibit to the 2003 Annual Report on Form 20-F filed with the Commission on May 11, 2004.
After review, the Charter was altered to more properly define the functions of the Audit Committee. The revised Audit Committee Charter
is an exhibit to the 2005 Annual Report on Form 20-F filed with the Commission on March 30, 2006.
The members
of the Audit Committee are Elaine Ellingham, Kevin O’Kane and Ria Fitzgerald, all of whom are independent (on the basis determined
as set forth above) and “financially literate” within the meaning of NI 52-110, in that each of them has the ability to read
and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements.
The members of the Audit Committee have the respective education and experience set out below that is relevant to the performance of such
member’s responsibilities as an Audit Committee member:
Elaine Ellingham has an MBA and
has over 25 years of financial and management experience for public companies and for private equity groups. She held responsibilities
for financial due diligence on issuers and applicants during her tenure at the TSX. She has served on audit committees for TSX and TSXV
companies for over 12 years.
Kevin O'Kane is a registered
professional engineer with nearly 40 years of experience in the global mining industry. He has held executive positions with BHP in South
America, including Project Director, Vice President of Health, Safety and Environment, and Asset President. Most recently, Mr. O'Kane
held the position of Executive Vice-President and Chief Operating Officer for SSR Mining Inc. He holds the ESG Competent Boards Certificate
and Global Competent Boards Designation (GCB.D), achieved in 2021. He is fluent in Spanish and brings a wealth of technical, operational
and HSCE leadership combined with Latin American knowledge to Almaden's Board. Mr. O’Kane also serves on the Boards of SolGold Plc
IAMGOLD Corporation and NorthIsle Copper and Gold Inc.
Ria Fitzgerald holds a Bachelor
of Commerce degree and the Chartered Financial Analyst designation. She has over 20 years of financial, investment and capital markets
experience, primarily in the mining sector.
The Audit
Committee met four (4) times during Fiscal 2021.
Nominating
and Corporate Governance Committee
The members
of the Nominating and Corporate Governance Committee are Elaine Ellingham, Kevin O’Kane, and Alfredo Phillips. The Nominating and
Corporate Governance Committee met four (4) times during Fiscal 2021. The full text of the initial Corporate Governance Charter is an
exhibit to the 2003 Annual Report on Form 20-F filed with the Commission on May 11, 2004. After review, the Responsibilities and Duties
of the Nominating and Corporate Governance Committee were altered to more properly define the functions of the Nominating and Corporate
Committee. The revised Responsibilities and Duties is an exhibit to the 2005 Annual Report on Form 20-F filed with the Commission on March
30, 2006.
Compensation
Committee
The members
of the Compensation Committee are Elaine Ellingham, Kevin O’Kane, and Ria Fitzgerald. The Compensation Committee met four (4) times
during Fiscal 2021 with Elaine Ellingham attending all four (4) meetings. Kevin O’Kane and Ria Fitzgerald attended two (2) of two
(2) available meetings while they were on the Compensation Committee. The Responsibilities and Duties of the Compensation Committee is
an exhibit to the 2005 Annual Report on Form 20-F filed with the Commission on March 30, 2006.
Orientation
and Continuing Education
The Nomination
and Corporate Governance Committee is responsible for recommending to the Board an orientation and education program for new directors.
Director
Term Limits and other Mechanisms of Board Renewal
The Company
has not adopted term limits or other mechanisms for Board renewal. The Company does not consider it is yet appropriate to force any term
limits or other mechanisms of Board renewal at this time.
Policies
Regarding the Representation of Women on the Board
There are
currently two women on the Company’s Board representing 33.3% of the Board. The Company plans to adopt a written policy with respect
to the identification and nomination of women directors (the “Diversity Policy”). The Diversity Policy will require that the
Board consider diversity on the Board from a number of aspects, including but not limited to gender, age, ethnicity and cultural diversity.
In addition, when assessing and identifying potential new members to join the Board or the Company’s executive team, the Board will
consider the current level of diversity on the Board and the executive team. As the Diversity Policy has not yet been adopted, the Company
is not yet able to measure its effectiveness.
Consideration
of the Representation of Women in the Director Identification and Selection Process
Pursuant to
the Diversity Policy, the Board will consider and evaluate the representation of women on the Board when identifying and nominating candidates
for election and re-election to the Board. The Company will focus its search for new directors purely based on the qualification of potential
candidates, regardless of their gender, age, ethnicity or culture.
Consideration
Given to the Representation of Women in Executive Officer Appointments
Pursuant to
the Diversity Policy, the Board will consider and evaluate the representation of women in the Company’s executive officer positions
when identifying and nominating candidates for appointment as executive officers. The Company will focus its search for new executive
officers purely based on the qualification of potential candidates, regardless of their gender, age, ethnicity or culture.
The Company’s
Targets Regarding the Representation of Women on the Board and in Executive Officer Positions
The Company
has not established a target for the representation of women on the Board or in executive officer positions of the Company by a specific
date. The Company does not think it is appropriate to set targets because the Company focuses its search for new directors and executive
officers purely based on the qualification of potential candidates, regardless of their gender, age, ethnicity or culture.
Number
of Women on the Board and in Executive Officer Positions
As at the
date of this Form Annual Report on Form 20-F, two of the Company’s directors (representing 33.3% of the Company’s six directors)
are and none of the Company’s executive officers are women.
Decisions
Requiring Board Approval
In addition
to those matters which must by law be approved by the Board, management is also required to seek Board approval for any major acquisition,
disposition or expenditure. Management is also required to consult with the Board before entering into any venture which is outside of
the Company’s existing line of business.
Changes in
officers are to be approved by the Board including changes in officers of the Company’s principal operating subsidiaries.
In certain circumstances it may be appropriate
for an individual director to engage an outside advisor at the expense of the Company. The engagement of the outside advisor would be
subject to the approval of the Nomination and Corporate Governance Committee.
Communications and Investor Relations
The Company
has adopted a Communications Policy, the purpose and aim of which is as follows:
|
(a) |
Controls the communications between the Company and its external stakeholders; |
|
(b) |
Complies with its continuous and timely disclosure obligations; |
|
(c) |
Avoids selective disclosure of Company information; |
|
(d) |
Protects and prevents the improper use or disclosure of material information and confidential information; |
|
(e) |
Educates the Company’s personnel on the appropriate use and disclosure of material information and confidential
information; |
|
(f) |
Fosters and facilitates compliance with applicable laws; and |
|
(g) |
Creates formal Disclosure Officers to help achieve the above objectives. |
In accordance
with the Communications Policy of the Company, designated Disclosure Officers receive and respond to shareholder enquiries. Shareholder
enquiries and concerns are dealt with promptly by Disclosure Officers of the Company.
Ethical
Business Conduct
The Company
has adopted a Code of Business Conduct and Ethics for Directors (“Code”), a Code of Business Ethics (“COBE”),
a Securities Trading Policy and a Privacy Policy. Employees and consultants are required as a term of employment or engagement to undertake
to abide by the COBE. Directors are bound to observe the Code adopted by the Board.
All Directors,
Officers and Employees (“Individuals”) sign a Certification (“Certification”) stating they have read the Code
of Business Ethics policy (“Policy”) of the Company and have complied with such Policy in all respects. The Certification
further acknowledges that all members of the Individual’s family, all other persons who live with the Individual and all holding
companies and other related entities of the Individual and all such persons or companies acting on behalf of or at the request of any
of the foregoing also complied with such Policy. The Certification also states that any violation of such Policy may constitute grounds
for immediate suspension or dismissal.
Each director is expected and required by statute
to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that
a reasonably prudent individual would exercise in comparable circumstances and in accordance with the Business Corporations Act
(British Columbia) and the Company’s Articles.
Employees
As of December 31, 2021 and continued through
to April 28, 2022, the Company operated with eight people in Canada, of which five are administrative personnel and three are exploration
personnel. There are no full-time employees in the U.S. or Mexico. None of the Company’s employees are covered by a collective bargaining
agreement.
Share Ownership
Table No. 10 lists, as of April 28, 2022, directors
and executive officers who beneficially own the Company's voting securities (Common Shares) and the amount of the Company’s voting
securities owned by the directors and executive officers as a group.
Table No. 10
Shareholdings of Directors and Executive Officers
| Title of |
|
Amounts and Nature of |
Percent of |
| Class |
Name of Beneficial Owner |
Beneficial Ownership |
Class* |
| Common |
Duane Poliquin |
5,163,636(1)(10) |
3.71% |
| Common |
Morgan Poliquin |
5,001,893(2)(10) |
3.56% |
| Common |
Elaine Ellingham |
676,300(3) |
0.49% |
| Common |
Kevin O’Kane |
550,000(4) |
0.40% |
| Common |
Alfredo Phillips |
550,000(5) |
0.40% |
| Common |
Ria Fitzgerald |
550,000(6) |
0.40% |
| Common |
Korm Trieu |
1,253,144(7) |
0.91% |
| Common |
Doug McDonald |
1,274,401(8) |
0.92% |
| Common |
John A. Thomas |
300,000(9) |
0.22% |
| |
Total Directors/Officers as group |
15,319,374 |
11.00% |
|
(1) |
Of these shares 1,415,000 represent currently exercisable
stock options. 540,500 represent currently exercisable warrants. |
|
(2) |
Of these shares 3,240,000 represent currently exercisable
stock options. 83,600 of these shares are held indirectly through Kohima Pacific Gold Corp., a company owned by Mr. Poliquin. |
|
(3) |
Of these shares 550,000 represent currently exercisable
stock options, 12,500 represent currently exercisable warrants. 44,400 of these shares are held indirectly through Edward Kammermayer,
the husband of Mrs. Ellingham. |
|
(4) |
Of these shares 550,000 represent currently exercisable
stock options. |
|
(5) |
Of these shares 550,000 represent currently exercisable stock options. |
|
(6) |
Of these shares 550,000 represent currently exercisable
stock options. |
|
(7) |
Of these shares 1,145,000 represent currently exercisable stock options. 7,500
of these shares are held indirectly by Mr. Trieu’s wife. 28,000 of these shares represent currently exercisable warrants. |
|
(8) |
Of these shares, 1,150,000 represent currently exercisable stock options. 7,500
of these shares are held indirectly by Shari Investments, an entity controlled by Mr. McDonald. |
|
(9) |
Of these shares 300,000 represent currently exercisable stock options. |
|
(10) |
Pursuant to a Voting Trust Agreement (Exhibit 3 to this Annual Report on Form
20-F), Duane Poliquin and Morgan Poliquin (the “Trustees”) jointly hold voting power over any of the Company’s common
shares legally and beneficially owned by Mr. Ernesto Echavarria, a resident of Mexico. On August 10, 2015, Mr. Echavarria, who is not
an executive officer or director of the Company, made a filing with the System for Electronic Disclosure by Insiders (“SEDI”),
Canada’s on-line, browser-based service for the filing and viewing of insider reports as required by various provincial securities
rules and regulations, disclosing that his ownership of Almaden common shares had fallen below the 10% threshold for such reporting. Based
on such filing, Mr. Echavarria holds less than 10% of the Company’s common shares. |
*Based on 137,221,408
shares outstanding as of April 28, 2022 and stock options and warrants exercisable within 60 days held by each beneficial owner.
|
Item 7. |
Major Shareholders and Related Party Transactions |
The Company is a publicly owned Canadian company,
the shares of which are owned by residents of the U.S., residents of Canada and other foreign residents. To the extent known by the directors
and executive officers of the Company, the Company is not directly or indirectly owned or controlled by another company. Table No. 11
lists, as of April 28, 2022, the only persons or companies beneficially owning more than 5% of the Company’s voting securities (Common
Shares).
Table No. 11
Shareholdings of Beneficial Owners
| Title of |
|
Amounts and Nature of |
Percent of |
| Class |
Name of Beneficial Owner |
Beneficial Ownership |
Class* |
| Common |
Duane Poliquin |
5,163,636(1)(3) |
3.71% |
| Common |
Morgan Poliquin |
5,001,893(2)(3) |
3.56% |
|
(1) |
Of these shares 1,415,000 represent currently exercisable
stock options. 540,500 represent currently exercisable warrants. |
|
(2) |
Of these shares 3,240,000 represent currently exercisable
stock options. 83,600 of these shares are held indirectly through Kohima Pacific Gold Corp., a company owned by Mr. Poliquin. |
|
(3) |
Pursuant to a Voting Trust Agreement (Exhibit 3 to this Annual Report on Form
20-F), Duane Poliquin and Morgan Poliquin (the “Trustees”) jointly hold voting power over any of the Company’s common
shares legally and beneficially owned by Mr. Ernesto Echavarria, a resident of Mexico. On August 10, 2015, Mr. Echavarria, who is not
an executive officer or director of the Company, made a filing with SEDI, Canada’s on-line, browser-based service for the filing
and viewing of insider reports as required by various provincial securities rules and regulations, disclosing that his ownership of Almaden
common shares had fallen below the 10% threshold for such reporting. Based on such filing, Mr. Echavarria hold less than 10% of the Company’s
common shares. |
*Based on 137,221,408
shares outstanding as of April 28, 2022 and stock options and warrants exercisable within 60 days held by each beneficial owner.
Related party transactions
Certain officers and directors of the Company
are also officers or directors of companies with which the Company has agreements and may not be considered at arm's-length to such agreements.
However, any agreement or any agreement to be negotiated between the Company and such other companies has been or will be approved by
directors of the Company, in accordance with the common law and the provisions of the Business Corporations Act (British Columbia).
|
(a) |
Compensation of key management personnel |
Key management includes members
of the Board, the Chairman, the President and Chief Executive Officer, the Chief Financial Officer, the Executive Vice President, the
Vice President, Operations & Projects, and the Vice President, Project Development. The aggregate compensation paid or payable to
key management for services is as follows, after recovery of 27% (2020 – 60%, 2019 – 40%) of executive officer compensation
from Azucar and 39% (2020 – 30%, 2019 – 20%) of executive officer compensation from Almadex:
| |
|
March 31,
2022 |
|
|
December 31,
2021 |
|
|
December 31,
2020 |
|
|
December 31,
2019 |
|
| Professional fees |
|
$ |
15,000 |
|
|
$ |
60,000 |
|
|
$ |
65,000 |
|
|
$ |
276,491 |
|
| Salaries and benefits |
|
|
108,863 |
|
|
|
450,522 |
|
|
|
101,200 |
|
|
|
404,800 |
|
| Share-based payments |
|
|
302,250 |
|
|
|
1,551,850 |
|
|
|
1,471,300 |
|
|
|
768,020 |
|
| Directors’ fees |
|
|
36,250 |
|
|
|
102,500 |
|
|
|
70,000 |
|
|
|
70,000 |
|
| |
|
$ |
462,363 |
|
|
|
2,164,872 |
|
|
$ |
1,707,500 |
|
|
$ |
1,519,311 |
|
|
(b) |
Administrative Services Agreements |
The Company recovers a portion of 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 expenses
from Almadex pursuant to an Administrative Services Agreement dated March 29, 2018 between the Company and Almadex.
During the year ended December 31, 2021, the Company
received $412,812 (2020 - $935,872; 2019 - $639,320) from Azucar for administrative services fees included in other income and received
$969,532 (2020 - $468,227; 2019 - $320,093) from Almadex for administrative services fees included in other income.
At December 31, 2021, included in accounts receivable
is $15,063 (2020 - $81,623) due from Azucar and $69,298 (2020 - $40,678) due from Almadex in relation to expenses recoveries.
At December 31, 2021, the Company accrued $72,130
(2020 - $37,689) payable to Almadex for exploration and drilling services in Mexico.
|
(c) |
Other related party transactions |
During the year ended December 31, 2021, the Company
employed the Chairman’s daughter for a salary of $41,300 less statutory deductions (2020 - $41,300; 2019 - $41,300) for marketing
and administrative services provided to the Company.
Other than as disclosed above, there have been
no transactions or proposed transactions, which have materially affected or will materially affect the Company in which any director,
executive officer, or beneficial holder of more than 10% of the outstanding common shares, or any of their respective relatives, spouses,
associates or affiliates has had or will have any direct or material indirect interest. As stated above, management believes the transactions
referenced above were on terms at least as favorable to the Company as the Company could have obtained from unaffiliated parties.
|
Item 8. |
Financial Information |
The financial statements as required under Item
8 are attached hereto and found immediately following the text of this Annual Report.
Legal Proceedings
The Company’s Ixtaca Project Original Concessions
(see definition below) have been the subject of legal proceedings (the “Amparo”). On April 7, 2015, the Ejido Tecoltemi filed
the Amparo against Mexican mining authorities claiming that Mexico’s mineral title system is unconstitutional because indigenous
consultation is not required before the granting of mineral title. Almaden’s two original mining concessions covering the Ixtaca
Project (the “Original Concessions”) (Figure 1 below) are the subject matter of the Amparo. The Original Concessions cover
Almaden’s Ixtaca Project and certain endowed lands of the Ejido (the “Ejido Lands”). The Ejido Lands overlap approximately
330 Ha of the far southeastern corner of the Original Concessions and are not considered material to Almaden.
Figure 1:
Original Concessions. Ixtaca environmental and social impact areas, and Ejido Lands
Shortly after the Amparo was filed in April 2015,
the lower court in Puebla State ordered the suspension of Almaden from conducting exploration and exploitation work over those portions
of the Original Concessions which overlap with the Ejido Lands.
Mineral tenure over the Ejido Lands is not material
to Almaden. The Ejido Lands do not overlap the Ixtaca Project or its environmental or social area of impact. Almaden has never tried to
negotiate access to the Ejido Lands, never conducted exploration work on the Ejido Lands, and has no interest in conducting any future
exploration or development work over the Ejido Lands. The Ejido Lands are in a different drainage basin than the Ixtaca Project and the
Company does not need to travel though the Ejido Lands to access the Ixtaca Project.
On February 17, 2022, the Company announced that the SCJN reached a decision
on February 16, 2022 in respect of the Mineral Title Lawsuit involving the Company’s mineral claims. On April 27, 2022, the Company
announced that the SCJN had published its final decision on this matter.
Almaden has reviewed the final decision of the SCJN. The decision determines
that the Mexican mineral title law is constitutional, but that before issuing Almaden’s mineral titles, the Ministry of the Economy
should have provided for a consultation procedure with relevant indigenous communities. The decision orders the Ministry of the Economy
to declare Almaden’s mineral titles ineffective and to issue them to Almaden following the Ministry’s compliance with its
obligation to carry out the necessary procedures to consult with indigenous communities. The decision discusses the application of international
law and jurisprudence to the implementation of consultation by Mexican authorities with relevant indigenous communities. It also provides
some detail to Mexican authorities regarding the procedures required to be followed by those authorities in the performance of indigenous
consultation prior to the grant of mineral claims. Furthermore, the decision clarifies that the Company’s original claim applications
were submitted pursuant to the legal framework in force at the time and as such Almaden’s mineral rights at the Ixtaca project are
safeguarded while the mining authorities comply with conditions and requirements prior to issuing the mineral titles. As previously disclosed,
the Company has no interest in holding mineral claims over the indigenous community’s land. The decision will take effect at the
time of its official notification to the Company which is expected shortly.
Almaden intends to interact with Mexican government officials and local
community officials in order to facilitate to the extent possible the government’s execution of its responsibilities in the issuance
of the mineral titles. At present there is no timeline for the consultation process.
The standards for local implementation of the obligations assumed by Mexico
under ILO Convention 169 regarding the human right to free, prior, informed consultation of indigenous communities are currently evolving.
The Amparo ruling may halt or result in a significant delay in project development notwithstanding the extensive local engagement already
conducted by the Company.
Claim
Reduction Efforts
In 2015, after learning about the Amparo, Almaden
commenced a process to voluntarily cancel approximately 7,000 Ha of its Original Concessions, including the area covering the Ejido Lands,
to assure the Ejido that Almaden would not interfere with the Ejido Lands, and to reduce Almaden’s land holding costs.
Almaden divided the Original Concessions into
nine smaller concessions, which included two smaller mining concessions which overlapped the Ejido Lands (the “Overlapping Concessions”)
(see Figure 2 below) and then voluntarily cancelled the Overlapping Concessions (see Figure 3 below – which shows only the “New
Concessions”). The applicable Mexican mining authorities issued the New Concessions and accepted the abandonment of the Overlapping
Concessions in May and June of 2017 after the issuance of a Court Order.
 |
 |
| Figure
2: New and overlapping concessions |
Figure 3: New Concessions. |
In June 2017, the Ejido Tecoltemi, the complainant
in the Amparo, filed a legal complaint about the Court Order leading to the New Concessions, and on February 1, 2018, the court reviewing
the complaint ruled the Ejido’s complaint was founded, and sent the ruling to the court hearing the Amparo.
On December 21, 2018, the General Directorate
of Mines issued a resolution that the New Concessions are left without effect, and the Original Concessions are in full force and effect
(the “December Communication”).
On February 13, 2019, the General Directorate
of Mines delivered, to the court hearing the Amparo, mining certificates stating that the Original Concessions are valid, and the New
Concessions are cancelled.
On June 10, 2019, Almaden’s subsidiary appealed
the December Communication, and subsequent cancellation of the New Concessions. On September 26, 2019, the lower court refused to hear
the appeal, but on October 14, 2019, a higher court agreed to hear the appeal.
On December 1, 2020, the higher court denied the
Company’s October 14, 2019 appeal, which objected to the reinstatement by the Mexican mining authorities of the Company’s
Original Concessions. This court decision upheld the action of Mexican mining authorities that reinstated the Original Concessions as
the Company’s sole mineral claims over the Ixtaca Project, and left the New Concessions the Company was awarded in 2017 as held
without effect. However, the decision also stated that the Company had the right to defend the New Concessions through the applicable
legal procedures (such as the Administrative Challenge referred to below).
In communications with the lower court and mineral
title certificates issued by the General Directorate of Mines directly to Almaden on December 16, 2019 (the “December 2019
Certificates”), the applicable Mexican records reflected the position that the Original Concessions (the subject matter of the Amparo)
are active and owned by Almaden (through its Mexican subsidiary) and the New Concessions are left without effect. It should be noted that
the Mexican mining authorities also have indicated in the December 2019 Certificates that their position is subject to the final resolution
of the Amparo.
On January 21, 2020, the Company filed an administrative
challenge against the Mexican mining authorities’ issuance of the December 2019 Certificates, which represented the first time that
Almaden had been directly notified of any changes in its mineral tenure.
Almaden believes that the December Communication
from the Mexican mining authorities is the basis for the recorded change in its mineral tenure. The Company’s Mexican counsel has
advised that the December Communication should have no legal effect as it was only provided to the lower court, was never officially served
on the Company and was not issued by an official possessing the necessary legal authority. While the December Communication is dated December
21, 2018, the Company first became aware of it in May 2019 through a review of court documents.
Currently, applicable Mexican mining authority records show the Original
Concessions as Almaden’s sole mineral claims to the Ixtaca Project. As noted above those claims are subject to the Amparo and the
decision of the SCJN announced by the Company on April 27, 2022.
Almaden continues to file taxes and assessment
reports on the basis of the reduced area defined by the New Concessions. These taxes have been accepted by the Mexican mining authorities,
and Almaden has not received any notifications from the Mexican mining authorities regarding taxes on the Original Concessions.
Dividends
The Company has not declared any dividends since
inception and does not anticipate that it will do so in the foreseeable future. The present policy of the Company is to retain future
earnings for use in its operations and the expansion of its business.
Significant Changes
There have been no significant changes of financial
condition since the most recent audited financial statements included within this Annual Report on Form 20-F.
|
Item 9. |
Offer and Listing of Securities |
The Company's common shares trade on TSX in Toronto,
Ontario, Canada having the symbol "AMM,” and on the NYSE American (formerly the NYSE MKT) in New York, New York, U.S.A. having
the symbol “AAU” and CUSIP #020283107.
The Company’s common shares commenced trading
on February 11, 2002 on TSX and December 19, 2005 on the American Stock Exchange, now the NYSE American.
Table No. 12 lists the high and low prices for
the shares of Almaden Minerals Ltd. common shares on NYSE American for the preceding five years. Table No. 13 lists the high and low prices
for shares of Almaden Minerals Ltd. common shares on TSX for the preceding five years.
Table No. 12
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
| Year Ended |
High |
Low |
| 12/31/2021 |
$1.20 |
$0.27 |
| 12/31/2020 |
1.24 |
0.21 |
| 12/31/2019 |
0.90 |
0.43 |
| 12/31/2018 |
1.05 |
0.48 |
| 12/31/2017 |
1.75 |
0.71 |
Table No. 13
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
| Year Ended |
High |
Low |
| 12/31/2021 |
$1.52 |
$0.36 |
| 12/31/2020 |
1.60 |
0.31 |
| 12/31/2019 |
1.19 |
0.57 |
| 12/31/2018 |
1.35 |
0.63 |
| 12/31/2017 |
2.33 |
0.92 |
Table No. 14 lists the quarterly high and low
prices for shares of Almaden Minerals Ltd. common shares on NYSE American for the two most recent full financial years. Table No. 15 lists
the quarterly high and low prices for shares of Almaden Minerals Ltd. common shares on TSX for the two most recent full financial years.
Table No. 14
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
| Quarter Ended |
High |
Low |
| 03/31/2022 |
$0.49 |
$0.27 |
| 12/31/2021 |
0.44 |
0.27 |
| 09/30/2021 |
0.51 |
0.36 |
| 06/30/2021 |
0.60 |
0.46 |
| 03/31/2021 |
1.20 |
0.48 |
| 12/31/2020 |
1.24 |
0.45 |
| 09/30/2020 |
1.09 |
0.47 |
| 06/30/2020 |
0.59 |
0.26 |
Table No. 15
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
| Quarter Ended |
High |
Low |
| 03/31/2022 |
$0.62 |
$0.34 |
| 12/31/2021 |
0.55 |
0.36 |
| 09/30/2021 |
0.67 |
0.47 |
| 06/30/2021 |
0.74 |
0.58 |
| 03/31/2021 |
1.52 |
0.61 |
| 12/31/2020 |
1.60 |
0.59 |
| 09/30/2020 |
1.43 |
0.64 |
| 06/30/2020 |
0.77 |
0.38 |
Table No.16 lists the high and
low prices for shares of Almaden Minerals Ltd. common shares on NYSE American for the most recent six months. Table No. 17 lists the high
and low prices for shares of Almaden Minerals Ltd. common shares on TSX for the most recent six months.
Table No. 16
Almaden Minerals Ltd.
Stock Trading Activity
NYSE American
(expressed in US$)
| Month Ended |
High |
Low |
| 03/31/2022 |
$0.49 |
$0.28 |
| 02/28/2022 |
0.39 |
0.27 |
| 01/31/2022 |
0.32 |
0.27 |
| 12/31/2021 |
0.35 |
0.27 |
| 11/30/2021 |
0.44 |
0.32 |
| 10/31/2021 |
0.41 |
0.37 |
Table No. 17
Almaden Minerals Ltd.
Stock Trading Activity
The Toronto Stock Exchange
(expressed in C$)
| Month Ended |
High |
Low |
| 03/31/2022 |
$0.62 |
$0.38 |
| 02/28/2022 |
0.49 |
0.34 |
| 01/31/2022 |
0.40 |
0.34 |
| 12/31/2021 |
0.44 |
0.36 |
| 11/30/2021 |
0.55 |
0.40 |
| 10/31/2021 |
0.51 |
0.45 |
The closing price of the Company’s common
shares was $0.36 (US$) on the NYSE American and $0.45 (C$) on TSX on March 31, 2022.
In recent years, securities markets in Canada
and the U.S. have experienced a high level of price and volume volatility, and the market price of many resource companies, particularly
those considered speculative exploration companies, have experienced wide fluctuations in price which have not necessarily been related
to operating performance or underlying asset values on prospects of such companies. Exploration for gold and other minerals is considered
high risk and highly speculative in the resource industry and the trading market for precious and base metal exploration companies is
characteristically volatile, with wide fluctuations of price and volume only in part related to progress of exploration. There can be
no assurance that continual fluctuations in the Company’s share price and volume will not occur.
The Company's common shares are issued in registered
form and the following information is from the Company’s registrar and transfer agent, Computershare Investor Services Inc. located
in Vancouver, British Columbia and Toronto, Ontario, Canada.
On February 28, 2022, the shareholders' list for
the Company’s common shares showed 213 registered shareholders, including depositories, and 137,221,408 shares outstanding. 178
of these registered shareholders are U.S. residents, owning 38,497,549 shares representing 28% of the issued and outstanding common shares.
24 of these registered shareholders are Canadian residents, owning 93,878,480 shares representing 68% of the issued and outstanding common
shares. 11 of these registered shareholders are of other countries, owning 4,845,379 shares representing 4% of the issued and outstanding
common shares.
Table No. 18 lists changes, if any, in issued shares to April 28, 2022:
Table No. 18
Shares Issued to April 28, 2022
| |
|
Number |
|
| Balance, December 31, 2021 |
|
|
137,221,408 |
|
| Balance, April 28, 2022 |
|
|
137,221,408 |
|
|
Item 10. |
Additional Information |
Flow-Through Common Shares
Flow-through common shares differ from other common
shares in one aspect only, namely the tax benefits connected with qualified mineral exploration expenditures in Canada associated with
the funds raised through the sale of flow through shares flow-through to the shareholder rather than the Company; all other rights of
the shareholder remain unchanged. Companies must specifically identify the expenditures associated with the funds raised through the sale
of flow-through shares. These tax benefits are available only to shareholders residing in Canada who are subject to Canadian Federal Income
Tax for the taxation year in which the credit is being claimed. Shareholders residing in the U.S. and other non-Canadian shareholders
receive no tax benefits through the purchase of flow-through shares.
The Company’s common shares are not normally
flow-through shares but the Company has issued flow-through shares pursuant to private placements of the Company’s common shares.
There were no flow-through shares issued in Fiscal 2021, Fiscal 2020 or Fiscal 2019. In Fiscal 2011, the Company issued 100,000 flow-through
shares.
Memorandum and Articles
At the Annual and Special General meeting of the
Company held on May 18, 2005, shareholders passed appropriate resolutions to complete the transition procedures in accordance with the
Business Corporations Act (British Columbia), (the “BCBCA”), to increase the number of common shares which the Company
is authorized to issue to an unlimited number of common shares and to cancel the Company’s Articles and adopt new Articles to take
advantage of provisions of the BCBCA. The BCBCA was adopted in British Columbia on March 29, 2004 replacing the Company Act (the
“Former Act”). The BCBCA requires the provisions formerly required in the Memorandum to be in the Articles. The BCBCA eliminates
the requirement for a Memorandum.
The revised Articles are an exhibit to the 2005
Annual Report on Form 20-F filed with the Commission on March 30, 2006, and replaced the Memorandum and Articles as filed with the Commission
on May 17, 2002.
Articles
The Company was formed through the amalgamation
of Fairfield Minerals Ltd. and Almaden Resources Corporation effective December 31, 2001 under the Company Act of British Columbia
(the “Company Act”). On March 29, 2004, British Columbia adopted the BCBCA to replace the Company Act. Companies registered
under the Company Act are required to transition to the BCBCA. At the Annual and Special General meeting of the Company held on May 18,
2005, shareholders passed appropriate resolutions to complete the transition procedures to cancel the Company’s Articles and adopt
new Articles, which includes an increase of the number of common shares which the Company is authorized to issue to an unlimited number
of common shares. The Company’s new Articles became effective in June 2005 (the “Articles”).
The Articles contain no restrictions on the business
the Company may carry on.
Under the Articles, if a director has a disclosable
interest in a contract or transaction, such director is liable to account to the Company for any profits that accrue to the director as
a result of the contract or transaction unless disclosure is made thereof and the contract or transaction is approved in accordance with
the provisions of the BCBCA and a director is not entitled to vote on any director’s resolution to approve that contract or transaction
unless all of the directors have a disclosable interest in that contract or transaction, in which case all of those directors may vote
on such resolution.
A director may hold any office or place of profit
with the Company in conjunction with the office of director, and no director shall be disqualified by their office from contracting with
the Company. A director or such director’s firm may act in a professional capacity for the Company and a director or such director’s
firm shall be entitled to remuneration for professional services. A director may become a director or other officer or employee of, or
otherwise interested in, any company or firm in which the Company may be interested as a shareholder or otherwise. The director shall
not be accountable to the Company for any remuneration or other benefits received by the director from such other company or firm unless
the Company in general meeting directs otherwise.
Under the Articles the directors must manage or
supervise the management of the business and affairs of the Company and have the authority to exercise all such powers which are not required
to be exercised by the shareholders, or as governed by the BCBCA. Under the Articles the directors may, by resolution, create and appoint
one or more committees consisting of such member or members of their body as they think fit and may delegate to any such committee such
powers of the Board as the Board may designate or prescribe.
The Articles provide that the quorum necessary
for the transaction of the business of the directors may be fixed by the directors and if not so fixed shall be a majority of the directors.
The continuing directors may, notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number
fixed pursuant to the Articles as the necessary quorum of directors, act only for the purpose of increasing the number of directors to
that number, or of summoning a general meeting of the Company, but for no other purpose.
The Articles provide that the directors may, on
behalf of the Company:
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Borrow money in a manner and amount, on any security, from any source and upon any terms and conditions; |
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Issue bonds, debentures, and other debt obligations either outright or as security for any liability or obligation
of the Company or any other person; |
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· |
Guarantee the repayment of money by any other person or the performance of any obligation of any other person;
and |
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Mortgage, charge, or give other security, on the whole or any part of the property or assets of the Company,
both present and future. |
There are no age limit requirements pertaining
to the retirement or non-retirement of directors.
A director need not be a shareholder of the Company.
The Articles provide for the mandatory indemnification
of Directors, Officers, former officers and directors, alternate directors, as well as their respective heirs and personal or other legal
representatives, or any other person, to the greatest extent permitted by the BCBCA. The indemnification includes the mandatory payment
of expenses and, in furtherance thereof, the Company is party to indemnification agreements with such individuals. The directors may cause
the Company to purchase and maintain insurance for the benefit of eligible parties.
The rights, preferences and restrictions attaching
to each class of the Company’s shares are as follows:
Common Shares
The authorized share structure of the Company
consists of an unlimited number of common shares without par value. All the common shares of the Company are of the same class and, once
issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common shares are entitled to one vote for
each share held of record on all matters to be acted upon by the shareholders. Holders of common shares are entitled to receive such dividends
as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefor.
Upon liquidation, dissolution or winding up of
the Company, holders of common shares are entitled to receive pro rata the assets of the Company, if any, remaining after payments of
all debts and liabilities. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights
and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.
The Directors may by resolution make any changes
in the authorized share structure as may be permitted under Section 54 of the BCBCA, and may by resolution make or authorize the making
of any alterations to the Articles and the Notice of Articles as may be required by such changes.
The Company may by ordinary resolution, create
or vary special rights and restrictions as provided in Section 58 of the BCBCA. No alteration will be valid as to any part of the issued
shares of any class unless the holders of all the issued shares of that class consent to the alteration in writing or consent by special
separate resolution.
An annual general meeting shall be held once every
calendar year at such time (not being more than 15 months after holding the last preceding annual meeting under the BCBCA nor more than
6 months from its preceding fiscal year end under the policies of the Toronto Stock Exchange) and place as may be determined by the Directors.
The Directors may, as they see fit, convene an extraordinary general meeting. An extraordinary general meeting, if requisitioned in accordance
with the BCBCA, shall be convened by the Directors or, if not convened by the Directors, may be convened by the requisitionists as provided
in the BCBCA.
There are no limitations upon the rights to own
securities.
There are no provisions in the Articles that would
have the effect of delaying, deferring, or preventing a change in control of the Company.
There is no special ownership threshold above
which an ownership position must be disclosed. However, any ownership level above 10% must be disclosed by news release and notices filed
in accordance with Canadian Securities Laws and by notices to the Toronto Stock Exchange.
A copy of the Company’s new Articles is
an exhibit to the 2005 Annual Report on Form 20-F filed with the Commission on March 30, 2006.
Shareholder Rights Plan
On April 13, 2011, the Company’s Board of
Directors adopted a Shareholder Rights Plan Agreement (the “Rights Plan”) between the Company and Computershare Investor Services
Inc. (“Computershare”) as Rights Agent. The Rights Plan was subsequently approved by the shareholders of the Company at the
Annual General and Special Meeting held June 28, 2011, reconfirmed by the shareholders of the Company at the 2014 Annual General Meeting,
amended and reconfirmed at the 2017 Annual General Meeting and reconfirmed at the 2020 Annual General Meeting. The primary objective of
the Rights Plan is to ensure, to the extent possible, that all shareholders of the Company are treated fairly in connection with any take-over
bid for the Company by (a) providing shareholders with adequate time to properly assess a take-over bid without undue pressure and (b)
providing the Board with more time to fully consider an unsolicited take-over bid, and, if applicable, to explore other alternatives to
maximize shareholder value.
The full text of the Rights
Plan was filed under cover of Form 6-K with the Commission on April 15, 2011 and is also available on SEDAR and the Company’s website.
Advance Notice Policy
On January 28, 2013 the Company’s Board
of Directors approved and adopted an Advance Notice Policy, as amended on May 1, 2015 (the “Policy”) which, among other things,
includes a provision that requires advance notice to the Company in circumstances where nominations of persons for election to the Board
of Directors are made by shareholders of the Company other than pursuant to: (i) a requisition of a meeting made pursuant to the provisions
of the BCBCA: or (ii) a shareholder proposal made pursuant to the provisions of the BCBCA.
The Policy, among other things, fixes a deadline
by which holders of record of common shares of the Company must submit director nominations to the Company prior to any annual or special
meeting of shareholders and set forth the information that a shareholder must include in the notice to the Company for the notice to be
in proper written form.
In the case of an annual meeting of shareholders,
notice to the Company must be made not less than 30 nor more than 65 days prior to the date of the annual meeting; provided, however,
that in the event the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement
of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following
such public announcement.
In the case of a special meeting of shareholders
(which is not also an annual meeting), notice to the Company must be made not later than the close of business on the 15th
day following the day on which the first public announcement of the date of the special meeting was made.
The full text of the Amended
Advance Notice Policy is an exhibit to the 2017 Annual Report on Form 20-F filed with the Commission on March 29, 2018.
Multiple Voting Policy for Uncontested Elections
of Directors
The Board believes that each of its members should
carry the confidence and support of the Company’s shareholders and, accordingly, has adopted, effective May 15, 2017, an Amended
Majority Voting Policy for the election of directors for non-contested meetings. The Amended Majority Voting Policy provides that, in
a non-contested election of directors, voting will be by ballot and, if the number of shares “withheld” for any nominee exceeds
the number of shares voted “for” the nominee, then, notwithstanding that such director is duly elected as a matter of corporate
law, he or she shall, immediately following the date of the final scrutineer’s report on the ballot, tender his or her written resignation
to the Chairman of the Board. A “non-contested election” means an election where the number of nominees for director is not
greater than the number of directors to be elected. Under the Amended Majority Voting Policy, the Board will consider such offer of resignation
and shall make a determination whether or not to accept or reject the resignation no later than 90 days following the date of the applicable
shareholders’ meeting and shall accept the resignation absent exceptional circumstances. The Board will promptly announce its decision
via press release. If the Board determines not to accept the resignation, the press release must fully state the reasons for its decision.
No director who is required to tender his or her resignation shall participate in any meeting of the Board at which the resignation is
considered. If a resignation is accepted by the Board, and subject to any corporate law restrictions, the Board may leave any resulting
vacancy unfilled until the Company’s next annual general meeting, or may appoint a new director to fill the vacancy who the Board
considers to merit the confidence of the shareholders, or may call a special meeting of shareholders at which there will be presented
a management nominee or nominees to fill the vacant position or positions.
The full text of the Amended
Multiple Voting Policy is an exhibit to 2017 Annual Report on Form 20-F filed with the Commission on March 29, 2018.
Material Contracts
The following is a summary of
each material contract, other than contracts entered into in the ordinary course of business, to which we or any member of the group is
a party, for the two years preceding the date of this Annual Report on Form 20-F.
1. Gold Loan Agreement dated
as of May 14, 2019 between the Company (the “Borrower”) and Almadex Minerals Ltd. (the “Lender”). Almaden may
borrow from Almadex up to 1,597 ounces of 99.99% purity gold bullion. Upon receiving a drawdown notice, the Lender will sell the requested
gold and send the proceeds in US dollars to the Borrower. Interest will be at 10% per year, calculated monthly, either paid quarterly
or accrued to the loan value. The loan, plus any accrued but unpaid interest, is due March 31, 2024, but may be extended to March 31,
2026 upon written notice from Borrower to Lender. Repayment may be in the form of gold or common shares of Almaden, and may include voluntary
prepayment, with the form of repayment selected at the sole discretion of the Lender. A maximum of 11,172,671 common shares of Almaden
are issuable for repayment of principal and interest, with any additional amounts due payable in gold. Mandatory Prepayment of 100 ounces
of gold is required on the last business day of each month following the date when Almaden’s Ixtaca Project begins commercial production.
The full text of the Gold Loan Agreement is filed as an exhibit to the 2020 Annual Report on Form 20- F filed with the Commission on March
26, 2021.
Exchange controls
Except as discussed above, the
Company is not aware of any Canadian federal or provincial laws, decrees or regulations that restrict the export or import of capital,
including foreign exchange controls, or that affect the remittance of interest, dividends or other payments to non-Canadian holders of
the Company's common shares. There are no limitations under the laws of Canada or in the organizing documents of the Company on the right
of non-Canadians to hold or vote securities of the Company, except that the Investment Canada Act (Canada) may require that, if
specified thresholds are exceeded, a "non-Canadian" not acquire "control" of the Company without prior review and approval
by the Minister of Innovation, Science and Economic Development. The acquisition of one third or more of the voting shares of the Company
would give rise to a rebuttable presumption of the acquisition of control, and the acquisition of more than fifty percent of the voting
shares of the Company would be deemed to be an acquisition of control. In addition, the Investment Canada Act (Canada) provides
the Canadian government with broad discretionary powers in relation to national security to review and potentially prohibit, condition
or require the divestiture of, any investment in the Company by a non-Canadian, including non-control level investments. "Non-Canadian"
generally means an individual who is neither a Canadian citizen nor a permanent resident of Canada within the meaning of the Immigration
and Refugee Protection Act (Canada) who has been ordinarily resident in Canada for not more than one year after the time at which
he or she first became eligible to apply for Canadian citizenship, or any entity that is not controlled or beneficially owned by Canadians.
Taxation
The following summary of the material Canadian
federal income tax consequences generally applicable in respect of the common shares reflects the Company’s opinion. The tax consequences
to any particular holder of common shares will vary according to the status of that holder as an individual, trust, company or member
of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally,
according to that holder’s particular circumstances. This summary is applicable only to holders who are resident in the U.S., have
never been resident in Canada, deal at arm’s length with the Company, hold their common shares as capital property and who will
not use or hold the common shares in carrying on business in Canada. Special rules, which are not discussed in this summary, may apply
to a U.S. holder that is an issuer that carries on business in Canada and elsewhere.
This summary is based upon the provisions of the
Income Tax Act of Canada and the regulations thereunder (collectively, the “Canadian Tax Act" or “ITA”) and the
Canada-United States Tax Convention (the “Convention”) as at the date of the Registration Statement and the current administrative
practices of Canada Revenue Agency. This summary does not take into account Provincial income tax consequences.
Each holder should consult his own tax advisor
with respect to the income tax consequences applicable to him in his own particular circumstances.
Certain Canadian Federal Income Tax Consequences
The discussion under this heading summarizes the
principal Canadian federal income tax consequences of acquiring, holding and disposing of common shares of the Company for a shareholder
of the Company who is not a resident of Canada but is a resident of the U.S. and who will acquire and hold common shares of the Company
as capital property for the purposes of the Canadian Tax Act. This summary does not apply to a shareholder who carries on business in
Canada through a “permanent establishment” situated in Canada or performs independent personal services in Canada through
a fixed base in Canada if the shareholder’s holding in the Company is effectively connected with such permanent establishment or
fixed base. This summary is based on the provisions of the Canadian Tax Act and the regulations thereunder and on an understanding of
the administrative practices of Canada Revenue Agency, and takes into account all specific proposals to amend the Canadian Tax Act or
regulations made by the Minister of Finance of Canada as of the date hereof. It has been assumed that there will be no other relevant
amendment of any governing law although no assurance can be given in this respect. This discussion is general only and is not a substitute
for independent advice from a shareholder’s own Canadian and U.S. tax advisors.
The provisions of the Canadian Tax Act are subject
to income tax treaties to which Canada is a party, including the Convention.
Dividends on Common Shares and Other Income
Under the Canadian Tax Act, a non-resident of
Canada is generally subject to Canadian withholding tax at the rate of 25 percent on dividends paid or deemed to have been paid to him
or her by a company resident in Canada. The Company is responsible for withholding of tax at the source. The Convention limits the rate
to 15 percent if the shareholder is a resident of the U.S. and the dividends are beneficially owned by and paid to such shareholder, and
to 5 percent if the shareholder is also a company that beneficially owns at least 10 percent of the voting stock of the payor company.
The amount of a stock dividend (for tax purposes)
would generally be equal to the amount by which the paid up or stated capital of the Company had increased by reason of the payment of
such dividend. The Company will furnish additional tax information to shareholders in the event of such a dividend. Interest paid or deemed
to be paid on the Company’s debt securities held by non-Canadian residents may also be subject to Canadian withholding tax, depending
upon the terms and provisions of such securities and any applicable tax treaty. The Convention generally eliminates Canadian tax on interest
paid or deemed to be paid by the Company to U.S. residents. The Convention generally exempts from Canadian income tax dividends paid to
a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to
administer a pension, retirement or employee benefit fund or plan, if the organization is a resident of the U.S. and is exempt from income
tax under the laws of the U.S.
Dispositions of Common Shares
Under the Canadian Tax Act, a taxpayer’s
capital gain or capital loss from a disposition of a common shares of the Company is the amount, if any, by which his or her proceeds
of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses
of disposition. The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical
properties. There are special transitional rules to apply capital losses against capital gains that arose in different periods. The amount
by which a shareholder’s capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder
in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.
Under the Canadian Tax Act, a non-resident of
Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of "taxable
Canadian property." Common shares of the Company will constitute taxable Canadian property of a shareholder at a particular time if
the shareholder used the shares in carrying on business in Canada, or if at any time in the five years immediately preceding the disposition
25% or more of the issued shares of any class or series in the capital stock of the Company belonged to one or more persons in a group
comprising the shareholder and persons with whom the shareholder and persons with whom the shareholder did not deal at arm’s length
and in certain other circumstances.
The Convention relieves U.S. residents from liability
for Canadian tax on capital gains derived on a disposition of shares unless
(a) the value of the shares is derived principally
from “real property” in Canada, including the right to explore for or exploit natural resources and rights to amounts computed
by reference to production,
(b) the shareholder was resident in Canada for
120 months during any period of 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition
and the shares were owned by him when he or she ceased to be resident in Canada, or
(c) the shares formed part of the business property
of a “permanent establishment” that the holder has or had in Canada within the 12 months preceding the disposition.
Certain U.S. Federal Income Tax Consequences
The following is a discussion of material U.S.
federal income tax consequences generally applicable to a U.S. Holder (as defined below) of shares of the Company. This discussion does
not cover any state, local or foreign tax consequences.
The following discussion is based upon the sections
of the Internal Revenue Code of 1986, as amended (“the Code”), Treasury Regulations, published Internal Revenue Service (“IRS”)
rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be
materially and adversely changed, possibly on a retroactive basis, at any time. In addition, the discussion does not consider the potential
effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive
basis, at any time. The following discussion is for general information only. It is not intended to be, nor should it be construed to
be, legal or tax advice to any U.S. Holder or prospective holder and not an opinion or representation with respect to the U.S. Federal
income tax consequences to any U.S. Holder or prospective holder is made. The following summary was not written and is not intended to
be used, and cannot be used, by any person for the avoidance of any penalties with respect to taxes that may be imposed on such person.
U.S. Holders and prospective holders of shares of the Company are urged to consult their own tax advisors about the federal, state, local,
and foreign tax consequences of purchasing, owning and disposing of common shares of the Company.
U.S. Holders
As used herein, a U.S. Holder includes a holder
of shares of the Company who is a citizen or resident of the U.S. (as defined under Treasury Regulation Section 301.7701(b) or any applicable
income tax convention), a company (or an entity which has