Exploration and Evaluation Assets | 5. EXPLORATION AND EVALUATION ASSETS (All amounts in table are expressed in thousands of Canadian dollars) Canada Greenland Post Creek Property Halcyon Property Quetico Claims Enid Creek Lingman Lake Maniitsoq Property Total Acquisition Balance, December 31, 2019 298 230 42 83 14 42 709 Acquisition costs – cash 5 4 - - - 4 13 Balance, June 30, 2020 303 234 42 83 14 46 722 Exploration Balance, December 31, 2019 1,498 233 39 33 13 36,108 37,924 Administration - - - - - 8 8 Property maintenance 6 5 - - - 17 28 Drilling - - 6 166 - - 172 Geology 10 6 46 83 - 51 196 Geophysics 1 1 21 72 - 3 98 Infrastructure - - - - - - - Write-off - - - (437 ) - - (437 ) 17 12 73 (116 ) - 79 65 Balance, June 30 ,2020 1,515 245 112 (83 ) 13 36,187 37,989 Total, June 30, 2020 1,818 479 154 - 27 36,233 38,711 Canada US Greenland Post Creek Property Halcyon Property Quetico Claims Lingman Lake Section 35 Property Maniitsoq Property Total Acquisition Balance, December 31, 2018 288 222 42 - 8 42 602 Acquisition costs – cash 5 4 - 15 1 - 25 Balance, June 30 2019 293 226 42 15 9 42 627 Exploration Balance, December 31, 2018 1,431 209 22 - - 62,215 63,877 Administration 1 1 - - - 9 11 Corporate social 1 - - - - - 1 Property maintenance - - - - - 17 17 Drilling 24 - 2 3 - 191 220 Environmental, health - - - - - 8 8 Geology 15 7 - - 2 105 129 Geophysics 1 1 4 1 1 27 35 42 9 6 4 3 357 421 Balance, June 30 ,2019 1,473 218 28 4 3 62,572 64,298 Total, June 30, 2019 1,766 444 70 19 12 62,614 64,925 The following is a description of the Company’s exploration and evaluation assets and the related spending commitments: Post Creek On December 23, 2009 and as last amended on March 12, 2013, the Company completed the required consideration and acquired the rights to a mineral claim known as the Post Creek Property located within the Sudbury Mining District of Ontario. Commencing August 1, 2015, the Company is obligated to pay advances on net smelter return royalties (“NSR”) of $10,000 per annum. The total advances paid during the six months period ended June 30, 2020 were $5,000, (June 30, 2019 - $5,000). The total of the advances will be deducted from any payments to be made under the NSR. During the six months period ended June 30, 2020, the Company incurred exploration expenditures totalling $16,927 (June 30, 2019 - $42,108) on the Post Creek Property. Halcyon On December 31, 2015, the Company completed the required consideration of the option agreement and acquired rights to a mineral claim known as the Halcyon Property located within the Sudbury Mining District of Ontario, subject to certain NSR and advance royalty payments. Commencing August 1, 2015, the Company is obligated to pay advances on the NSR of $8,000 per annum. The Company paid $4,000 during the three months period ended June 30, 2020, (June 30, 2019 - $4,000). The total of the advances will be deducted from any payments to be made under the NSR. During the six months period ended June 30, 2020, the Company incurred $12,254 (June 30, 2019 - $12,209) in exploration and license related expenditures on the Halcyon Property. Quetico On April 26, 2018, the Company acquired the right to certain mineral claims known as Quetico located within the Sudbury Mining District of Ontario. The Company incurred total acquisition and exploration related costs of $64,256 during the year ended December 31, 2018. The Company had no minimum required exploration commitment for the years ended December 31, 2019 and 2018 as it is not required to file any geoscience assessment work between the initial recording of a mining claim and the first anniversary date of the mining claim. By the second anniversary of the recording of a claim and by each anniversary thereafter, a minimum of $400 worth of exploration activity per claim unit must be reported to the Provincial Recording Office. The Company could maintain mining claims by filing an Application to Distribute Banked Assessment Work Credits form before any due date. Payments in place of reporting assessment work may also be used to meet yearly assessment work requirements, provided the payments are not used for the first unit of assessment work and consecutively thereafter. Payments cannot be banked to be carried forward for future use. The claims are currently on HOLD SPECIAL CIRCUMSTANCES APPLY status, awaiting approval of an application for a one year exclusion. Once approved, the total annual work requirement for Quetico project after April 26, 2021 is $324,000 should the Company maintain the current size of the claims. During the six months period ended June 30, 2020, the Company incurred exploration expenditures totalling $72,444 (June 30, 2019 - $6,330) on the Quetico Property. Lingman Lake Property During the year ended December 31, 2019, the Company staked certain mineral claims known as Lingman Lake located northwest of Thunder Bay, Ontario. The Company incurred total acquisition and exploration related costs of $27,376. There were no exploration related costs incurred during the six months period ended June 30, 2020. Loveland (Enid Creek) Property On September 25, 2019, the Company entered into earn in agreement to acquire a 100% interest, subject to a 1% NSR, in certain claims known as the Loveland Nickel (Enid Creek) Property located in Timmins, Ontario. Consideration is as follows: (All amounts in table are expressed in thousands of Canadian dollars) Acquisition costs Exploration expenditures Within 5 days of TSXV approval (received on October 24, 2019) $25 cash (paid) and 300,000 post-consolidated - On or before September 25, 2020 $100 cash Aggregate of at least $500 On or before September 25, 2021 $200 cash Aggregate of at least an additional $1,000 On or before September 25, 2022 $300 cash Aggregate of at least an additional $1,000 On or before September 25, 2023 $400 cash Aggregate of at least an additional $1,000 On or before September 25, 2024 $500 cash Aggregate of at least an additional $1,000 In the event that the Company is unable to fund sufficient exploration expenditures, the Company may pay the required balance in cash by the relevant date. The Company may also, prior to the 5 th As of June 30, 2020, the Company incurred an aggregate exploration and acquisition expenditures of $436,897. Based on the results of the exploration program completed in April 2020, the management elected not to proceed with further exploration on the property and terminated the agreement. Accordingly, all acquisition and exploration related costs were written off as at June 30, 2020, totalling $436,897. Section 35 Property On January 4, 2016, the Company entered into a 10-year Metallic Minerals Lease (the “Lease”) with the Michigan Department of Natural Resources for an area covering approximately 320 acres. The terms of the Lease required annual rental fees. At the end of 2019 year, management of the Company made a decision to relinquish the mineral lease. As a result, all cumulative exploration related costs of $11,393 were written-off as at December 31, 2019. The Company applied and received approval for refund of a $13,016 (US $10,000) reclamation deposit held by the Department of Natural Resources in Michigan. Maniitsoq The Company has been granted certain exploration licenses, by the Bureau of Minerals and Petroleum (“BMP”) of Greenland for exclusive exploration rights of an area comprising the Maniitsoq Property, located near Ininngui, Greenland. The Property is subject to a 2.5% NSR. The Company can reduce the NSR to 1% by paying $2,000,000 on or before 60 days from the decision to commence commercial production. At the expiration of the first license period, the Company may apply for a second license period (years 6-10), and the Company may apply for a further 3-year license for years 11 to 13. Thereafter, the Company may apply for additional 3-year licenses for years 14 to 16, 17 to 19 and 20 to 22. The Company will be required to pay additional license fees and will be obligated to incur minimum eligible exploration expenses for such years. The Company may terminate the licenses at any time, however any unfulfilled obligations according to the licenses will remain in force, regardless of the termination. Future required minimum exploration expenditures will be adjusted each year on the basis of the change to the Danish Consumer Price Index. During the six months period ended June 30, 2020, the Company spent in aggregate of $83,191 (June 30, 2019 - $357,187) in exploration and license related expenditures on the Maniitsoq Property, which is comprised of the Sulussugut, Ininngui and Carbonatite Licenses. Further details on the licenses and related expenditures are outlined below. IFRS 6 requires management to assess the exploration and evaluation assets for impairment. Accordingly, management believed that facts and circumstances existed at December 31, 2019 to suggest that the carrying amount of the Maniitsoq Property exceeds its recoverable amount. As a result, management determined the Maniitsoq Property should be impaired by $26,499,159 and its recoverable amount at December 31, 2019 was $36,149,667. The valuation was based on historical drilling results and management’s future exploration plans on the Maniitsoq Property. The Company intends to plan and budget for further exploration on the Maniitsoq Property in the future. Further details on the licenses comprising the Maniitsoq Property and related expenditures are outlined below: Sulussugut License (2011/54) (All references to amounts in Danish Kroners, “DKK”) Effective August 15, 2011, the Company was granted an exploration license (the “Sulussugut License”) by the BMP of Greenland for exclusive exploration rights of an area located near Sulussugut, Greenland. The Company paid a license fee of $5,742 (DKK 31,400) upon granting of the Sulussugut License. The application for another 5-year term on the Sulussugut License was submitted to the Greenland Mineral Licence & Safety Authority which was effective on April 11, 2016, with December 31, 2017 being the seventh year. During the year ended December 31, 2016, the Company paid a license fee of $7,982 (DKK 40,400) which provides for renewal of the Sulussugut License until 2020. To December 31, 2015, under the terms of a preliminary license, the Company completed the exploration requirements of an estimated minimum of DKK 83,809,340 (approximately $15,808,386) between the years ended December 31, 2011 to 2015 by incurring $26,115,831 on the Sulussugut License. The accumulated exploration credits held at the end to December 31, 2015, of DKK 100,303,710 (approximately $19,067,735) were carried forward until 2019. Under the terms of the second license period, there was no required minimum exploration expenditures for the year ended December 31, 2018. As of December 31, 2019, the Company has spent $55,960,762 on exploration costs for the Sulussugut License. The Company had minimum required exploration commitment of DKK 44,755,600 approximately $8,905,514 for the year ended December 31, 2019 and available credits of DKK 326,111,805 (approximately $66,950,764) at the end of December 31, 2018. During the year ended December 31, 2019, the Company had approved exploration expenditures of DKK 1,724,248 (approximately $343,125) which results in a total cumulative surplus credit of DKK 283,080,453 (approximately $56,333,010). The credits may be carried forward until December 31, 2021. The Company has no exploration commitment for 2020 year. During the year ended December 31, 2019, the Company spent a total of $228,925 (December 31, 2018 - $10,794,837) in exploration and license related expenditures on the Sulussugut License. During the six months period ended June 30, 2020, the Company spent a total of $66,139 in exploration and license related expenditures, (June 30, 2019 - $197,476). Ininngui License (2012/28) Effective March 4, 2012, the Company was granted an exploration license (the “Ininngui License”) by the BMP of Greenland for exclusive exploration rights of an area located near Ininngui, Greenland. The Company paid a license fee of $5,755 (DKK 32,200) upon granting of the Ininngui License. The Ininngui License was valid for an initial 5 years until December 31, 2016, with December 31, 2012 being the first year. The license was extended for a further 5 years, until December 31, 2021, with December 31, 2017 being the first year. The Ininngui License is contiguous with the Sulussugut License. Should the Company not incur the minimum exploration expenditures on the license in any one year from years 2-5, the Company may pay 50% of the difference in cash to BMP as full compensation for that year. This procedure may not be used for more than 2 consecutive calendar years and as at December 31, 2019, the Company has not used the procedure for the license. The Company had minimum required exploration commitment of DKK 5,510,400 for the year ended December 31, 2019. As of December 31, 2019, the Company has spent $5,158,454 on exploration costs for the Ininngui License and exceeded the minimum requirement with a total cumulative surplus credits of DKK 30,281,852 (approximately $6,026,089). The credits may be carried forward until December 31, 2021. The Company has no exploration commitment for 2020 year. During the six months period ended June 30, 2020, the Company spent a total of $13,491 in exploration and license related expenditures, (June 30, 2019 - $37,230). Carbonatite License (2018/21) Effective May 4, 2018, the Company was granted an exploration license (the “Carbonatite License”) by the BMP of Greenland for exclusive exploration rights of an area located near Maniitsoq in West Greenland. The Company paid a license fee of $6,523 (DKK 31,000) upon granting of the Carbonatite License. The Carbonatite License is valid for 5 years until December 31, 2022, with December 31, 2019 being the second year. The Company had a minimum required exploration obligation of DKK 267,320, approximately $53,192 for the year ended December 31, 2019. As of December 31, 2019, the Company has spent $1,486,940 on exploration costs for the Carbonatite License. To December 31, 2019, the Company’s expenditures exceeded the minimum requirement and the Company has a total surplus credit of DKK 10,496,522 (approximately $2,088,808). The credit from 2018 may be carried forward until December 31, 2022 and the credit from 2019 may be carried forward until December 31, 2023. The Company has no exploration commitment for 2020 year. During the six months period ended June 30, 2020, the Company spent a total of $3,561 in exploration and license related expenditures, (June 30, 2019 - $122,484). Ikertoq License During the year ended December 31, 2018, the Company was granted an exploration license, (the “Ikertoq License”) by the BMP of Greenland and spent total of $132,679 in exploration and license related expenditures. The license was later relinquished and the costs were expensed as at December 31, 2018. |