Exhibit 99.1
Condensed Consolidated Interim Financial Statements of
Almaden Minerals Ltd.
For the three months ended March 31, 2019
(Unaudited)
NOTICE OF NO AUDITOR REVIEW OF CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated interim financial statements of Almaden Minerals Ltd (“the Company”) for the three months ended March 31, 2019 have been prepared by the management of the Company and approved by the Company’s Audit Committee and the Company’s Board of Directors.
Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the consolidated interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.
The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.
The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by CPA Canada for a review of the condensed consolidated interim financial statements by an entity’s auditor.
Almaden Minerals Ltd.
Condensed consolidated interim statements of financial position
(Unaudited - Expressed in Canadian dollars)
| | | | March 31, 2019 | | | | December 31,
2018 | |
| | | | $ | | | | $ | |
| ASSETS | | | | | | | | |
| Current assets | | | | | | | | |
| Cash and cash equivalents (Note 11) | | | 3,359,899 | | | | 5,080,580 | |
| Accounts receivable and prepaid expenses (Note 4) | | | 311,542 | | | | 404,416 | |
| | | | 3,671,441 | | | | 5,484,996 | |
| | | | | | | | | |
| Non-current assets | | | | | | | | |
| Right-of-use assets (Note 5) | | | 364,296 | | | | - | |
| Property, plant and equipment (Note 6) | | | 13,759,527 | | | | 13,764,928 | |
| Exploration and evaluation assets (Note 7) | | | 55,247,334 | | | | 54,678,470 | |
| | | | 69,371,157 | | | | 68,443,398 | |
| TOTAL ASSETS | | | 73,042,598 | | | | 73,928,394 | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| Current liabilities | | | | | | | | |
| Trade and other payables (Note 9(b)) | | | 661,578 | | | | 1,128,407 | |
| Lease liabilities current portion (Note 5) | | | 82,403 | | | | - | |
| | | | 743,981 | | | | 1,128,407 | |
| | | | | | | | | |
| Non-current liabilities | | | | | | | | |
| Lease liabilities long-term portion (Note 5) | | | 292,679 | | | | - | |
| Deferred income tax liability | | | 1,434,882 | | | | 1,434,882 | |
| | | | 1,727,561 | | | | 1,434,882 | |
| Total liabilities | | | 2,471,542 | | | | 2,563,289 | |
| | | | | | | | | |
| EQUITY | | | | | | | | |
| Share capital (Note 8) | | | 127,022,366 | | | | 127,022,366 | |
| Reserves (Note 8) | | | 16,860,582 | | | | 16,706,832 | |
| Deficit | | | (73,311,892 | ) | | | (72,364,093 | ) |
| Total equity | | | 70,571,056 | | | | 71,365,105 | |
| TOTAL EQUITY AND LIABILITIES | | | 73,042,598 | | | | 73,928,394 | |
Commitments (Note 12)
Subsequent events (Note 16)
These condensed consolidated interim financial statements are authorized for issue by the Board of Directors on May 13, 2019.
They are signed on the Company’s behalf by:
| /s/Duane Poliquin | /s/Mark T. Brown |
| Director | Director |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
Almaden Minerals Ltd.
Condensed consolidated interim statements of comprehensive loss
(Unaudited - Expressed in Canadian dollars)
| | | Three months ended March 31, | |
| | | | 2019 | | | | 2018 | |
| Expenses | | $ | | | $ | |
| Professional fees | | | 159,996 | | | | 139,737 | |
| Salaries and benefits (Note 9(b)) | | | 431,653 | | | | 343,450 | |
| Travel and promotion | | | 93,100 | | | | 69,741 | |
| Depreciation (Note 6) | | | 5,985 | | | | 6,867 | |
| Office and license (Note 9(b)) | | | 32,844 | | | | 30,090 | |
| Rent (Note 9(b)) | | | - | | | | 37,102 | |
| Occupancy expenses (Note 5) | | | 11,489 | | | | - | |
| Interest expense on lease liabilities (Note 5) | | | 8,993 | | | | - | |
| Amortization of right-of-use assets (Note 5) | | | 30,358 | | | | - | |
| Stock exchange fees | | | 158,728 | | | | 132,618 | |
| Insurance | | | 17,691 | | | | 14,147 | |
| Transfer agent fees | | | 4,285 | | | | 2,670 | |
| Directors’ fees (Note 9(a)) | | | 70,000 | | | | 70,000 | |
| Share-based payments (Note 8(c) and 9(a)) | | | 153,750 | | | | 312,000 | |
| | | | 1,178,872 | | | | 1,158,422 | |
| | | | | | | | | |
| Other income (loss) | | | | | | | | |
| Interest and other income (Note 9(b)) | | | 239,302 | | | | 143,461 | |
| Foreign exchange gain (loss) | | | (8,229 | ) | | | 132,541 | |
| | | | 231,073 | | | | 276,002 | |
| Total comprehensive loss for the period | | | (947,799 | ) | | | (882,420 | ) |
| | | | | | | | | |
| Basic and diluted net loss per share (Note 10) | | | (0.01 | ) | | | (0.01 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
Almaden Minerals Ltd.
Condensed consolidated interim statements of cash flows
(Unaudited - Expressed in Canadian dollars)
| | | Three months ended March 31, | |
| | | | 2019 | | | | 2018 | |
| | $ | | $ |
| Operating activities | | | | | | | | |
| Net loss for the period | | | (947,799 | ) | | | (882,420 | ) |
| Items not affecting cash | | | | | | | | |
| Depreciation | | | 5,985 | | | | 6,867 | |
| Amortization of right-of-use assets | | | 30,358 | | | | - | |
| Share-based payments | | | 153,750 | | | | 312,000 | |
| Changes in non-cash working capital components | | | | | | | | |
| Accounts receivable and prepaid expenses | | | 92,874 | | | | (99,779 | ) |
| Trade and other payables | | | (207,869 | ) | | | 68,697 | |
| Net cash used in operating activities | | | (872,701 | ) | | | (594,635 | ) |
| Investing activities | | | | | | | | |
| Deposit on mill equipment | | | - | | | | (1,551,679 | ) |
| Property, plant and equipment – purchase | | | (584 | ) | | | - | |
| Exploration and evaluation assets – costs | | | (827,824 | ) | | | (1,917,323 | ) |
| Net cash used in investing activities | | | (828,408 | ) | | | (3,469,002 | ) |
| Financing activities | | | | | | | | |
| Repayment of lease liabilities | | | (19,572 | ) | | | - | |
| Net cash used in financing activities | | | (19,572 | ) | | | - | |
| | | | | | | | | |
| Change in cash and cash equivalents | | | (1,720,681 | ) | | | (4,063,637 | ) |
| Cash and cash equivalents, beginning of period | | | 5,080,580 | | | | 16,334,534 | |
| Cash and cash equivalents, end of period | | | 3,359,899 | | | | 12,270,897 | |
| Supplemental cash flow information (Note 11) | | | | | | | | |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
Almaden Minerals Ltd.
Condensed consolidated interim statements of changes in equity
(Unaudited – Expressed in Canadian dollars)
| | | Share capital | | Reserves | | |
| | | | Number of shares | | | | Amount | | | | Share-based payments | | | | Warrants | | | | Total reserves | | | | Deficit | | | | Total | |
| | | | | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | |
| Balance, January 1, 2018 | | | 102,199,625 | | | | 118,054,463 | | | | 14,848,874 | | | | 679,402 | | | | 15,528,276 | | | | (68,852,426 | ) | | | 64,730,313 | |
| Share-based payments | | | - | | | | - | | | | 312,000 | | | | - | | | | 312,000 | | | | - | | | | 312,000 | |
| Total comprehensive loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | (882,420 | ) | | | (882,420 | ) |
| Balance, March 31, 2018 | | | 102,199,625 | | | | 118,054,463 | | | | 15,160,874 | | | | 679,402 | | | | 15,840,276 | | | | (69,734,846 | ) | | | 64,159,893 | |
| Share-based payments | | | - | | | | - | | | | 996,740 | | | | - | | | | 996,740 | | | | - | | | | 996,740 | |
| Private placements, net | | | 9,440,000 | | | | 8,838,441 | | | | - | | | | - | | | | - | | | | - | | | | 8,838,441 | |
| Finders' warrants issued pursuant to private placement | | | - | | | | (36,566 | ) | | | - | | | | 36,566 | | | | 36,566 | | | | - | | | | - | |
| Shares issued for cash on exercise of stock options | | | 23,000 | | | | 16,560 | | | | - | | | | - | | | | - | | | | - | | | | 16,560 | |
| Fair value of cash stock options transferred to share capital | | | - | | | | 6,670 | | | | (6,670 | ) | | | - | | | | (6,670 | ) | | | - | | | | - | |
| Shares issued on cashless exercise of stock options | | | 64,094 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Shares issuance cost on cashless exercise of options | | | - | | | | (17,282 | ) | | | - | | | | - | | | | - | | | | - | | | | (17,282 | ) |
| Fair value of cashless stock options transferred to share capital | | | - | | | | 160,080 | | | | (160,080 | ) | | | - | | | | (160,080 | ) | | | - | | | | - | |
| Total comprehensive loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (2,629,247 | ) | | | (2,629,247 | ) |
| Balance, December 31, 2018 | | | 111,726,719 | | | | 127,022,366 | | | | 15,990,864 | | | | 715,968 | | | | 16,706,832 | | | | (72,364,093 | ) | | | 71,365,105 | |
| Share-based payments | | | - | | | | - | | | | 153,750 | | | | - | | | | 153,750 | | | | - | | | | 153,750 | |
| Total comprehensive loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | (947,799 | ) | | | (947,799 | ) |
| Balance, March 31, 2019 | | | 111,726,719 | | | | 127,022,366 | | | | 16,144,614 | | | | 715,968 | | | | 16,860,582 | | | | (73,311,892 | ) | | | 70,571,056 | |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
Almaden Minerals Ltd. (the “Company” or “Almaden”) was formed by amalgamation under the laws of the Province of British Columbia, Canada on February 1, 2002. The Company is an exploration stage public company that is engaged directly in the exploration and development of exploration and evaluation properties in Canada and Mexico. The address of the Company’s registered office is Suite 1710 –1177 West Hastings Street, Vancouver, BC, Canada V6E 2L3.
The Company is in the business of exploring and developing mineral projects and its principal asset is the Ixtaca precious metals project located on its Tuligtic claim in Mexico. The Company has not yet determined whether this project has economically recoverable mineral reserves. The recoverability of amounts shown for mineral properties is dependent upon the establishment of a sufficient quantity of economically recoverable reserves, the ability of the Company to obtain the necessary financing or participation of joint venture partners to complete development of the properties, and upon future profitable production or proceeds from the disposition of exploration and evaluation assets.
(a) Statement of Compliance with International Financial Reporting Standards (“IFRS”)
These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance and compliance with International Accounting Standard(“IAS”) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).
The Company adopted IFRS 16,Leases ("IFRS 16") on January 1, 2019. Changes to significant accounting policies are described in Note 3.
(b) Basis of preparation
These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. This interim financial report does not include all of the information required of a full annual financial report and is intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period. It is therefore recommended that this financial report be read in conjunction with the annual audited consolidated financial statements of the Company for the year ended December 31, 2018. However, this interim financial report provides selected significant disclosures that are required in the annual audited consolidated financial statements under IFRS.
Except as described below, these condensed consolidated interim financial statements follow the same accounting policies and methods of application as the annual audited consolidated financial statements for the year ended December 31, 2018.
The changes in accounting policies are also expected to be reflected in the Company's consolidated financial statements as at and for the year ending December 31, 2019.
Certain amounts in prior years have been reclassified to conform to the current period presentation.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 3. | Significant Accounting Policies |
These condensed consolidated interim financial statements do not include all note disclosures required by IFRS for annual financial statements and, therefore, should be read in conjunction with the annual financial statements for the year ended December 31, 2018. In the opinion of management, all adjustments considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.
New accounting policy adopted during the period
The Company adopted IFRS 16 on January 1, 2019. A number of other new standards are also effective from January 1, 2019; however, were not deemed to have a material impact on the Company's financial statements.
IFRS 16 Leases
In January 2016, the IASB released IFRS 16, which is requires to be applied for years beginning on or after January 1, 2019, and which supersedes IAS 17Leases (“IAS 17”). Effective January 1, 2019, the Company adopted this new accounting standard. The most significant effect of the new standard will be the lessee’s recognition of the initial present value of unavoidable future lease payments as right-of-use (“ROU”) assets and lease liabilities on the statement of financial position, including those for most leases that would currently be accounted for as operating leases. Both leases with durations of 12 months or less and leases for low-value assets may be exempted.
The Company has office leases for its headquarter in Vancouver, British Columbia. In the context of the transition to IFRS 16, ROU assets of $394,654 and lease liabilities of $394,654 were recognized as at January 1, 2019, in accordance with the modified retrospective approach. As a transitional practical expedient permitted by IFRS 16 as at January 1, 2019, only contracts that were previously identified as leases applying IAS 17 andIFRIC 4, Determining Whether an Arrangement Contains a Lease, were assessed as part of the transition to the new standard. Only contracts entered into (or modified) after January 1, 2019 have been assessed for being, or containing, leases applying the criteria of the new standard.
The application of IFRS 16 requires the Company to make judgments that affect the valuation of the lease liabilities and the valuation of ROU assets. These include: determining contracts that are within the scope of IFRS 16; determining the contract term; and determining the interest rate used for the discounting of future cash flows.
The ROU assets are recognized initially at the value of lease liabilities at recognition with any prepaid payments, initial direct costs and dismantling costs less any lease incentives received. Re-measurements will not be applied by the Company subsequently, except for assessment for impairment, where appropriate.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 3. | Significant Accounting Policies(Continued) |
IFRS 16 Leases (Continued)
The lease term determined by the Company comprises the non-cancellable period of lease contracts; the period covered by an option to extend the leases, if the Company is reasonably certain to exercise that option; and the periods covered by an option to terminate the lease, if the Company is reasonably certain not to exercise that option. The amortization rate of ROU assets is based on the lease term determined. The present value of the lease payment is determined using the discount rate representing the weighted average incremental borrowing rate the Company could secure. There are no restrictions or covenants imposed by the Company’s leases.
| 4. | Accounts receivable and prepaid expenses |
Accounts receivable and prepaid expenses consist of the following:
|
| | March 31,
2019 | |
| | December 31,
2018 | |
| Accounts receivable (Note 9(b)) | | $ | 227,153 | | | $ | 300,700 | |
| Prepaid expenses | | | 84,389 | | | | 103,716 | |
| | | $ | 311,542 | | | $ | 404,416 | |
During the period ended March 31, 2019, the Company recorded value added taxes of $51,964 included in exploration and evaluation assets as the value added tax relates to certain projects and is expected to be recovered when the assets are sold (Note 7).
| 5. | Right-of-use assets and lease liabilities |
The Company has lease agreements for its headquarter office space in Vancouver, B.C. Upon transition to IFRS 16, the Company recognized $394,654 of ROU assets and $394,654 of lease liabilities.
The lease liability at January 1, 2019 can be reconciled to the operating lease obligations as of December 31, 2018 as follows:
| Operating lease obligations as of December 31, 2018 | | $ | 613,764 | |
| Discounting using the January 1, 2019 incremental borrowing rate(1) | | | (84,579 | ) |
| Operating lease obligations as of January 1, 2019 | | | 529,185 | |
| Less: Non-lease components | | | (134,531 | ) |
| Lease liabilities recognized as of January 1, 2019 | | $ | 394,654 | |
| | | | | |
| Current portion | | $ | 101,975 | |
| Long-term portion | | | 292,679 | |
| Lease liabilities recognized as of January 1, 2019 | | $ | 394,654 | |
| (1) | The lease liabilities were discounted using an incremental borrowing rate as at January 1, 2019 of 9.5% per annum. |
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 5. | Right-of-use assets and lease liabilities(Continued) |
The continuity of ROU assets for the three months ended March 31, 2019 is as follows:
| | | | ROU assets | |
| January 1, 2019 | | $ | 394,654 | |
| Amortization of ROU assets | | | 30,358 | |
| March 31, 2019 | | $ | 364,296 | |
During the three months ended March 31, 2019, the Company recognized amortization of ROU assets of $30,358, interest expense on lease liabilities of $8,993 and occupancy expenses of $11,489.
| 6. | Property, plant and equipment |
| | | | Furniture and fixtures and other | | | | Computer hardware | | | | Computer software | | | | Geological library | | | | Field equipment | | | | Mill equipment | | | | Total | |
| | | $ | | $ | | $ | | $ | | $ | | $ | | $ |
| Cost | | | | | | | | | | | | | | |
| December 31, 2018 | | | 158,219 | | | | 248,896 | | | | 196,767 | | | | 51,760 | | | | 245,647 | | | | 13,673,883 | | | | 14,575,172 | |
| Additions | | | - | | | | - | | | | 584 | | | | - | | | | - | | | | - | | | | 584 | |
| March 31, 2019 | | | 158,219 | | | | 248,896 | | | | 197,351 | | | | 51,760 | | | | 245,647 | | | | 13,673,883 | | | | 14,575,756 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2018 | | | 138,928 | | | | 223,878 | | | | 172,300 | | | | 49,845 | | | | 225,293 | | | | - | | | | 810,244 | |
| Depreciation | | | 1,153 | | | | 1,876 | | | | 1,842 | | | | 96 | | | | 1,018 | | | | - | | | | 5,985 | |
| March 31, 2019 | | | 140,081 | | | | 225,754 | | | | 174,142 | | | | 49,941 | | | | 226,311 | | | | - | | | | 816,229 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Carrying amounts | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2018 | | | 19,291 | | | | 25,018 | | | | 24,467 | | | | 1,915 | | | | 20,354 | | | | 13,673,883 | | | | 13,764,928 | |
| March 31, 2019 | | | 18,138 | | | | 23,142 | | | | 23,209 | | | | 1,819 | | | | 19,336 | | | | 13,673,883 | | | | 13,759,527 | |
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 7. | Exploration and evaluation assets |
| | | | Tuligtic | | | | Other Property | | | | Total | |
| Exploration and evaluation assets | | | $ | | | | $ | | | | $ | |
| Acquisition costs: | | | | | | | | | | | | |
| Opening balance - (December 31, 2018) | | | 9,159,951 | | | | 1 | | | | 9,159,952 | |
| Additions | | | 24,133 | | | | - | | | | 24,133 | |
| Closing balance - (March 31, 2019) | | | 9,184,084 | | | | 1 | | | | 9,184,085 | |
Deferred exploration costs: | | | | | | | | | | | | |
| Opening balance - (December 31, 2018) | | | 45,518,518 | | | | - | | | | 45,518,518 | |
| Costs incurred during the period | | | | | | | | | | | | |
| Drilling and related costs | | | 59,353 | | | | - | | | | 59,353 | |
| Professional/technical fees | | | 17,440 | | | | - | | | | 17,440 | |
| Claim maintenance/lease costs | | | 83,348 | | | | - | | | | 83,348 | |
| Geochemical, metallurgy | | | 29,679 | | | | - | | | | 29,679 | |
| Technical studies | | | 129,006 | | | | - | | | | 129,006 | |
| Travel and accommodation | | | 104,136 | | | | - | | | | 104,136 | |
| Geology, geophysics and exploration | | | 37,022 | | | | - | | | | 37,022 | |
| Supplies and misc. | | | 10,951 | | | | - | | | | 10,951 | |
| Environmental | | | 21,832 | | | | - | | | | 21,832 | |
| Value-added tax (Note 4) | | | 51,964 | | | | - | | | | 51,964 | |
| Total deferred exploration costs during the period | | | 544,731 | | | | - | | | | 544,731 | |
| Closing balance - (March 31, 2019) | | | 46,063,249 | | | | - | | | | 46,063,249 | |
| Total exploration and evaluation assets | | | 55,247,333 | | | | 1 | | | | 55,247,334 | |
The following is a description of the Company’s most significant property interests and related spending commitments:
In 2001, the Company acquired by staking a 100% interest in the Tuligtic property in Puebla, Mexico. The property contains the Ixtaca Zone.
The Company holds a 40% carried interest in the Logan property located in the Yukon Territory, Canada. The project is carried at a nominal value of $1.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 8. | Share capital and reserves |
| (a) | Authorized share capital |
At March 31, 2019, the authorized share capital comprised an unlimited number of common shares. The common shares do not have a par value. All issued shares are fully paid.
The continuity of warrants for the three months ended March 31, 2019 is as follows:
Expiry date | | | Exercise
price | | | | December 31,
2018 | | |
| Issued | | | | Exercised | | | | Expired | | | | March 31,
2019 | |
| June 1, 2019 | | $ | 2.00 | | | | 295,734 | | | | - | | | | - | | | | - | | | | 295,734 | |
| August 7, 2019 | | $ | 2.00 | | | | 1,259,704 | | | | - | | | | - | | | | - | | | | 1,259,704 | |
| August 7, 2019 | | $ | 1.35 | | | | 10,411 | | | | - | | | | - | | | | - | | | | 10,411 | |
| June 1, 2020 | | $ | 2.45 | | | | 4,928,900 | | | | - | | | | - | | | | - | | | | 4,928,900 | |
| June 7, 2020 | | $ | 1.35 | | | | 192,450 | | | | - | | | | - | | | | - | | | | 192,450 | |
| June 7, 2022 | | $ | 1.35 | | | | 4,720,000 | | | | - | | | | - | | | | - | | | | 4,720,000 | |
| Warrants outstanding and exercisable | | | | | | | 11,407,199 | | | | - | | | | - | | | | - | | | | 11,407,199 | |
| Weighted average exercise price | | | | | | $ | 1.91 | | | | - | | | | - | | | | - | | | $ | 1.91 | |
| (c) | Share purchase option compensation plan |
The Company’s stock option plan permits the issuance of options up to a maximum of 10% of the Company’s issued share capital. Stock options issued to any consultant or person providing investor relations services cannot exceed 2% of the issued and outstanding common shares in any twelve month period. At March 31, 2019, the Company had reserved 1,522,672 stock options that may be granted. The exercise price of any option cannot be less than the volume weighted average trading price of the shares for the five trading days immediately preceding the date of the grant.
The maximum term of all options is five years. The Board of Directors determines the term of the option (to a maximum of five years) and the time during which any option may vest. Options granted to consultants or persons providing investor relations services shall vest in stages with no more than 25% of such option being exercisable in any three month period. All options granted during the three months ended March 31, 2019 vested on the grant date.
The Company’s stock option plan permits the option holder to exercise cashless by surrendering a portion of the underlying option shares to pay for the exercise price and the corresponding withholding taxes, if applicable.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 8. | Share capital and reserves(Continued) |
| (c) | Share purchase option compensation plan(Continued) |
The continuity of stock options for the three months ended March 31, 2019 is as follows:
Expiry date | | | Exercise price | | | | December 31, 2018 | | | | Granted | | | | Exercised | | | | Expired | | | | March 31, 2019 | |
| January 2, 2019 | | $ | 1.04 | | | | 375,000 | | | | - | | | | - | | | | (375,000 | ) | | | - | |
| March 17, 2019 | | $ | 1.35 | | | | 207,000 | | | | - | | | | - | | | | (207,000 | ) | | | - | |
| May 4, 2019 | | $ | 1.99 | | | | 175,000 | | | | - | | | | - | | | | - | | | | 175,000 | |
| May 19, 2019 | | $ | 1.84 | | | | 75,000 | | | | - | | | | - | | | | - | | | | 75,000 | |
| June 12, 2019 | | $ | 1.89 | | | | 75,000 | | | | - | | | | - | | | | - | | | | 75,000 | |
| July 2, 2019 | | $ | 1.32 | | | | 150,000 | | | | - | | | | - | | | | - | | | | 150,000 | |
| July 2, 2019 | | $ | 1.19 | | | | 60,000 | | | | - | | | | - | | | | - | | | | 60,000 | |
| July 2, 2019 | | $ | 1.34 | | | | 1,427,000 | | | | - | | | | - | | | | - | | | | 1,427,000 | |
| September 19, 2019 | | $ | 1.40 | | | | 1,160,000 | | | | - | | | | - | | | | - | | | | 1,160,000 | |
| April 10, 2020 | | $ | 1.03 | | | | 90,000 | | | | - | | | | - | | | | - | | | | 90,000 | |
| April 30, 2020 | | $ | 1.53 | | | | 500,000 | | | | - | | | | - | | | | - | | | | 500,000 | |
| April 30, 2020 | | $ | 1.14 | | | | 100,000 | | | | - | | | | - | | | | - | | | | 100,000 | |
| April 30, 2020 | | $ | 1.04 | | | | 100,000 | | | | - | | | | - | | | | - | | | | 100,000 | |
| June 8, 2020 | | $ | 0.98 | | | | 2,180,000 | | | | - | | | | - | | | | - | | | | 2,180,000 | |
| September 30, 2020 | | $ | 1.25 | | | | 1,095,000 | | | | - | | | | - | | | | - | | | | 1,095,000 | |
| September 30, 2020 | | $ | 0.83 | | | | 106,000 | | | | - | | | | - | | | | - | | | | 106,000 | |
| September 30, 2020 | | $ | 0.79 | | | | 170,000 | | | | - | | | | - | | | | - | | | | 170,000 | |
| December 13, 2020 | | $ | 0.86 | | | | 762,000 | | | | - | | | | - | | | | - | | | | 762,000 | |
| February 7, 2021 | | $ | 1.11 | | | | 300,000 | | | | - | | | | - | | | | - | | | | 300,000 | |
| February 7, 2021 | | $ | 0.84 | | | | - | | | | 425,000 | | | | - | | | | - | | | | 425,000 | |
| March 29, 2021 | | $ | 1.08 | | | | 400,000 | | | | - | | | | - | | | | - | | | | 400,000 | |
| March 29, 2021 | | $ | 0.90 | | | | - | | | | 100,000 | | | | - | | | | - | | | | 100,000 | |
| December 12, 2021 | | $ | 1.00 | | | | 200,000 | | | | - | | | | - | | | | - | | | | 200,000 | |
| Options outstanding and exercisable | | | | | | | 9,707,000 | | | | 525,000 | | | | - | | | | (582,000 | ) | | | 9,650,000 | |
| Weighted average exercise price | | | | | | $ | 1.19 | | | $ | 0.85 | | | | - | | | $ | 1.15 | | | $ | 1.17 | |
Total share-based payment as a result of options granted and vested during the period ended March 31, 2019 was $153,750 (2018 - $312,000).
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 8. | Share capital and reserves(Continued) |
| (c) | Share purchase option compensation plan(Continued) |
The fair value of the options granted during the period ended March 31, 2019 was estimated on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:
| Risk-free interest rate | | | 1.87 | % |
| Expected life (years) | | | 2.00 | |
| Expected volatility | | | 50.38 | % |
| Expected dividend yield | | | Nil | |
| Weighted average fair value per option | | $ | 0.29 | |
| | | | | |
| 9. | Related party transactions and balances |
| (a) | Compensation of key management personnel |
Key management includes members of the Board, the President and Chief Executive Officer, the Chief Financial Officer, Vice President Operations & Projects, and the Vice President, Corporate Development. The net aggregate compensation paid or payable to key management for services after recovery from Azucar Minerals Ltd. (“Azucar”) and Almadex Minerals Ltd. (“Almadex”) (Note 9 (b)) is as follows:
| | Three months ended March 31, | |
| | | | 2019 | | | | 2018 | |
| Salaries and benefits | | $ | 183,957 | | | $ | 177,100 | |
| Share-based payments | | | 116,250 | | | | 312,000 | |
| Directors’ fees | | | 70,000 | | | | 70,000 | |
| | | $ | 370,207 | | | $ | 559,100 | |
| (b) | Administrative Services Agreement |
Effective August 1, 2015, the Company recovers a portion of expenses from Azucar pursuant to an administrative services agreement between the Company and Azucar.
Effective May 18, 2018, the Company also recovers a portion of expenses from Almadex pursuant to the administrative service agreements between the Company and Almadex.
During the three months ended March 31, 2019, the Company received $151,914 (2018 - $111,482) from Azucar for administrative services fees included in other income and received $76,522 (2018 - $Nil) from Almadex for administrative services fees included in other income.
At March 31, 2019, included in accounts receivable is $137,046 (December 31, 2018 - $170,181) due from Azucar and $83,751 (December 31, 2018 - $116,268) due from Almadex in relation to expense recoveries.
At March 31, 2018, the Company accrued $18,093 (December 31, 2018 - $37,533) payable to Almadex for drilling equipment rental services in Mexico.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 9. | Related party transactions and balances(Continued) |
| (c) | Other related party transactions |
During the three months ended March 31, 2019, the Company employed the Chairman’s daughter for a salary of $10,325 less statutory deductions (2018 - $10,325) for marketing and administrative services provided to the Company.
Basic and diluted net loss per share
The calculation of basic net loss per share for the three months ended March 31, 2019 was based on the loss attributable to common shareholders of $947,799 (2018 - $882,420) and a weighted average number of common shares outstanding of 111,726,719 (2018 – 102,199,625).
The calculation of diluted net loss per share for the period ended March 31, 2019 and 2018 did not include the effect of stock options and warrants as they are anti-dilutive.
| 11. | Supplemental cash flow information |
Supplemental information regarding non-cash transactions is as follows:
| | Three months ended March 31, | |
| Investing and financing activities | | | 2019 | | | | 2018 | |
| Right-of-use assets | | | (394,654 | ) | | | - | |
| Lease liabilities | | | 394,654 | | | | - | |
As at March 31, 2019, $435,207 of exploration and evaluation asset costs are included in trade and other payables (December 31, 2018 - $694,167).
Supplemental information regarding the split between cash and cash equivalents is as follows:
| | | | March 31, 2019 | | | | December 31,
2018 | |
| Cash | | $ | 2,059,899 | | | $ | 2,580,580 | |
| Term Deposits | | | 1,300,000 | | | | 2,500,000 | |
| | | $ | 3,359,899 | | | $ | 5,080,580 | |
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
The Company has entered into operating leases for office premises effective April 1, 2017 through to March 31, 2022.
As at March 31, 2019, the remaining payments for the operating leases are due as follows:
| | | | 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | 2023 | | | | Total | |
| Office leases | | $ | 134,779 | | | $ | 191,512 | | | $ | 192,336 | | | $ | 48,084 | | | | - | | | $ | 566,711 | |
The fair values of the Company’s cash and cash equivalents, accounts receivable and trade and other payables approximate their carrying values because of the short-term nature of these instruments.
The Company does not carry any financial instruments at fair value.
The Company is exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest rate risk and commodity and equity price risk.
The Company’s property interests in Mexico make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company’s financial position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian dollar, the US dollar and Mexican peso. The Company does not invest in foreign currency contracts to mitigate the risks.
As at March 31, 2019, the Company is exposed to foreign exchange risk through the following monetary assets and liabilities denominated in currencies other than the functional currency of the applicable subsidiary:
| All amounts in Canadian dollars | | | US dollar | | | | Mexican peso | |
| Cash and cash equivalents | | $ | 1,047,603 | | | $ | 214,541 | |
| Total assets | | $ | 1,047,603 | | | $ | 214,541 | |
| | | | | | | | | |
| Trade and other payables | | $ | 452,236 | | | $ | 1,589 | |
| Total liabilities | | $ | 452,236 | | | $ | 1,589 | |
| | | | | | | | | |
| Net assets | | $ | 595,367 | | | $ | 212,952 | |
A 10% change in the US dollar exchange rate relative to the Canadian dollar would change the Company’s net loss by $60,000.
A 10% change in the Mexican peso relative to the Canadian dollar would change the Company’s net loss by $21,000.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
| 13. | Financial instruments(Continued) |
The Company’s cash and cash equivalents are held in large financial institutions, located in both Canada and Mexico. Cash equivalents mature at less than ninety days during the twelve months following the statement of financial position date. The Company’s excise tax included in accounts receivables and prepaid expenses consists primarily of sales tax due from the federal government of Canada.
To mitigate exposure to credit risk on cash and cash equivalents, the Company has established policies to limit the concentration of credit risk with any given banking institution where the funds are held, to ensure counterparties demonstrate minimum acceptable credit risk worthiness and ensure liquidity of available funds.
As at March 31, 2019, the Company’s maximum exposure to credit risk is the carrying value of its cash and cash equivalents, and accounts receivable.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure.
Trade and other payables are due within twelve months of the statement of financial position date.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to varying interest rates on cash and cash equivalents. The Company has no interest bearing debt.
A 1% change in the interest rate would change the Company’s net loss by $34,000.
| (e) | Commodity and equity price risk |
The ability of the Company to explore its exploration and evaluation assets and the future profitability of the Company are directly related to the market price of gold and other precious metals. The Company monitors gold prices to determine the appropriate course of action to be taken by the Company. Equity price risk is defined as the potential adverse impact on the Company’s performance due to movements in individual equity prices or general movements in the level of the stock market.
Almaden Minerals Ltd. |
| Notes to the condensed consolidated interim financial statements |
| For the three months ended March 31, 2019 |
| Unaudited - Expressed in Canadian dollars |
The Company considers its capital to consist of components of equity. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration of its exploration and evaluation assets and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares and, acquire or dispose of assets.
In order to maximize ongoing exploration efforts, the Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with short term maturities, selected with regards to the expected timing of expenditures from continuing operations.
The Company expects its current capital resources will be sufficient to carry its exploration plans and operations for the foreseeable future. There were no changes to the Company’s approach to the management of capital during the period.
The Company operates in one reportable operating segment, being the acquisition and exploration of mineral resource properties.
The Company’s non-current assets are located in the following geographic locations:
| | | | March 31, 2019 | | | | December 31, 2018 | |
| Canada | | $ | 445,500 | | | $ | 86,372 | |
| United States | | | 13,673,883 | | | | 13,673,883 | |
| Mexico | | | 55,251,774 | | | | 54,683,143 | |
| | | $ | 69,371,157 | | | $ | 68,443,398 | |
On May 6, 2019, the Company granted to directors, an officer and a consultant, pursuant to its stock option plan, 557,000 stock options at an exercise price of $0.69 per share expiring on May 6, 2021.
18
