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AEX Gold Inc
Symbol AEX
Shares Issued 177,098,737
Close 2022-04-26 C$ 0.72
Market Cap C$ 127,511,091
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AEX Gold spends $14.28M on exploration in 2021

2022-04-29 02:37 ET - News Release

Mr. Eldur Olafsson reports

2021 FULL YEAR FINANCIAL RESULTS AND UPDATE

AEX Gold Inc. has presented a corporate update and provided its 2021 full-year financial results.

Highlights

Nalunaq:

  • The new all-weather 50-person exploration camp was completed within budget and has been winterized and is fully operational.
  • The 2021 exploration program was completed with 11,044 metres of core drilling over the South and Valley blocks at Nalunaq. Drilling commenced in Q2 2021 and was finalized in Q4 2021. The program objectives were met by confirming Valley block as a new, previously unrecognized, resource area within the Nalunaq project, with surface drill results similar in grade to those historically recorded at Mountain, Target and South blocks.
  • Results also supported Nalunaq's geological model -- the dolerite dike model -- as an indicator of high-grade mineralization. This model now predicts a total of five resource growth target areas.
  • In collaboration with SRK Consulting, the company is constantly assessing and updating the resource estimate procedures to incorporate the dolerite dike model and the surface drilling nugget effect historically recorded. This work will allow AEX to incorporate the geological results into the outcomes of the Halyard Inc. third party engineering study completed in 2021, with an intention to move the project toward a prefeasibility study (PFS) to support development.
  • The 2022 exploration program intends to provide further resource development through both infill and strike extension drilling across the Valley block, informed by the dolerite dike model. To facilitate this program, the company will develop a number of drill access roads from the existing mountain surface infrastructure.
  • AEX is also assessing the option to install a dedicated on-site sample preparation laboratory, which would allow for more rapid turnaround time for drill results at Nalunaq and samples from the company's other exploration work.
  • Subject to drill results, the 2022 exploration program will provide AEX with the optionality of investigating an underground bulk sample with an option for toll treatment off-site. This would be used as a development step to increase resource confidence toward mine construction.
  • The company is in the process of updating its environmental impact assessment (EIA) and social impact assessment (SIA), which it expects to complete over the course of the next year.

Vagar Ridge and Nanoq gold targets:

  • Considerable exploration was also conducted on both the Vagar Ridge and Nanoq gold targets, as well as regionally across the company's expanding portfolio. The result of these activities are pending and are expected to be announced shortly.
  • Subject to these results, AEX intends to conduct a program of exploration drilling across Vagar Ridge in order to demonstrate the true extent and depth potential of the orogenic and intrusion-related gold mineralization recorded previously.
  • Also subject to these results, the company intends to further develop its geological understanding of the gold and copper mineralization hosted at Nanoq through an airborne geophysical survey.

Strategic mineral targets:

  • The company acquired an additional 202 square kilometres of prospective ground in 2021, taking its total land package to 4,090 square kilometres, and continues to look to expand its footprint in strategic mineral areas across southern Greenland.
  • Work programs at Sava have illustrated IOCG-style (iron ore, copper, gold) signatures across three targets, opening up the opportunity to host copper, gold and rare earth mineralization. These will be followed up with additional surface sampling and scout drilling during 2022.
  • At Norream, a bulk sample has been taken and shipped for metallurgical testwork in the United Kingdom.

AEX Gold financial results:

  • Cash balance of $27.3-million (Canadian) at Dec. 31, 2021 ($61.9-million (Canadian) at Dec. 31, 2020), with no debt, and total working capital of $25.5-million (Canadian) ($61.4-million (Canadian) at Dec. 31, 2020).

Eldur Olafsson, chief executive officer of AEX Gold, commented:

"Having set out our revised forward plan, following the necessary pause in February, 2021, in the Nalunaq development, as a consequence of COVID-related cost increases, I am pleased to report that the company has successfully achieved all of the revised goals that we set out to achieve in 2021.

"Notably, we have made considerable progress at Nalunaq and across the portfolio. Halyard completed a third party engineering study, which is a major part of the technical study that will underpin the development of the Nalunaq project. The last aspect of this study, which is in progress, is the proving up of a M&I resource and underground mine planning, which would enable the company to move into a prefeasibility study (PFS) stage. The 11,044-metre drilling program that AEX conducted last year has been central in helping us further understand the gold mineralization at Nalunaq. As recently announced, this has provided verification of the dolerite dike model's ability to predict the high-grade areas in the Nalunaq Mountain, which previous operators had not recognized but directly correlate with the high-grade zones which they mined.

"Our drill results not only identified a new discovery at Valley block, which returned particularly high grades similar to that encountered in historical mined areas, but also the potential for a further zone along strike of this, named Welcome block. The dolerite dike model also predicts further extensions which have not been identified by previous operators of the asset.

"On the wider exploration front, we acquired more land in 2021, which has increased our total land package to 4,090 square kilometres, mostly focusing on land that has potential for strategic minerals. Strategic minerals are essential for electrification as the world transitions from hydrocarbon energy sources. The results of our exploration program conducted in 2021 have exceeded expectation and lead us to believe that we hold potential resources (of a scale) that could be of global significance. As we further our understanding of the geology of southern Greenland, in a safe OECD mining jurisdiction, through our exploration work, it is proving that this is the new frontier, with genuine indications of world-class deposits of gold and strategic minerals. I look forward to bringing regular updates to the market on the progress of our portfolio.

"We completed construction of our 50-personnel all-weather camp at Nalunaq, which now gives us an operating base to realize the vast potential our continuing exploration activity has begun to reveal. To put this in context, ours is the only mining exploration camp of such a standard and scale currently in Greenland and gives AEX the advantage of being able to advance its projects all year-round.

"Finally, I would like to thank the Greenlandic government for its efficiency and co-operation. It is based upon these foundations that I believe we will not only be able to deliver a truly transformational future for AEX and its shareholders but, more importantly, for the people of Greenland."

Introduction

Two thousand twenty-one was a year of consolidation, adjustment and refocus for AEX Gold, as the COVID-19 pandemic continued to wreak havoc globally and on the company's business. Significantly and as previously communicated, the Nalunaq project was put on hold in February, 2021, due to material unforeseen cost increases associated with the impacts of COVID-19, and, as per the April 2021 announcement, the corporation redirected its focus on four key elements to continue advancing the company and derisking the Nalunaq project ahead of development: conducting a third party engineering study to optimize the project costs and derisk the project schedule to enable AEX to reassess the execution methodology postcompletion; conducting fully financed early works infrastructure and a significant exploration program to expand the Nalunaq resource; continue to advance the EIA and SIA to obtain all permits; and regional exploration targeting both gold and strategic minerals through technical research, sampling and geophysical surveys.

Despite the challenging start to the year, 2021 was a successful year for the company, delivering considerable progress in line with the company's revised goals. Exploration results received so far from the period have delivered ahead of the company's expectations, with further results expected to be announced shortly. In addition, the macro environment has moved in the company's direction as the global energy transition gathers pace and recent geopolitical events have shone a spotlight on the importance and value of large mineral resources located in safe, OECD jurisdictions, with Greenland probably being the final frontier.

Nalunaq

Fifty-one drill holes for 11,044 metres were completed during the 2021 field season. This drilling was designed to assess the along-strike and downdip extensions of the mineralized main vein structure away from the previously explored South, Target and Mountain blocks mined between 2004 and 2013. The program was also designed to assess AEX's geological and structural models, and to test new target areas of the project.

The results announced on April 4, 2022, provided further evidence that the Valley block is a new high-grade zone, unrecognized or developed by previous operators, and corroborating the dolerite dike model. The Valley block is now a key target for initial resource growth at Nalunaq.

The 2021 program also targeted a downdip extension of the South block and identified a potential further high-grade zone, the Welcome block (which would take the total high-grade zones to five), which was predicted by the dolerite dike model.

In parallel to the exploration program, Halyard completed its third party engineering study, focusing on the Nalunaq development cost, including the process plant, mobile equipment, surface infrastructure, permanent camp, and associated logistics and engineering. The study concluded that the advanced engineering of the overall project is now to feasibility study level based on the requirements of National Instrument 43-101, Canadian Standards of Disclosure for Mineral Projects.

AEX continues to work with SRK Consulting to develop the most robust mineral resource estimation technique for Nalunaq possible, incorporating the dolerite dike model as well as the high-grade variability from core sampling (the nugget effect), to better reflect the full resource potential at the Valley block and the rest of the Nalunaq project. This work will allow AEX to incorporate the geological results into the outcomes of the Halyard third party engineering study completed in 2021, with a plan to move the project toward a preliminary economic assessment (PEA) or prefeasibility study to support further development.

Alongside the exploration and technical studies, AEX has continued its environmental, social and governance (ESG) mandate on the project, with the company working to update its environmental impact assessment (EIA) and social impact assessment (SIA) over the course of 2022, in line with the terms of its exploitation licence.

AEX, in conjunction with its technical advisers, has developed a further exploration plan for Nalunaq for 2022. This will involve both the infill drilling of the Valley block as well as the drilling of the updip extension of this block from the dolerite dike model. This program aims to allow for the continual resource development from the Valley block. In order to access this updip portion, AEX will first construct two new drilling access roads from the existing mountain surface infrastructure.

AEX is also assessing the option to commission a dedicated on-site sample preparation facility to allow the company to better manage its sample steam and ensure a timely return of assay results to facilitate rapid action following exploration results.

It is the aim of this 2022 program, subject to the drill results, to provide the company with the optionality to assess the viability of taking an underground bulk sample from a new mine development in the Valley block. This bulk sample, which would potential be toll treated off-site, would facilitate increase confidence in the resource as the project moves toward mine construction.

Vagar Ridge, Nanoq and Tartoq

A significant exploration program was also conducted across AEX's gold portfolio in 2021, chiefly at the company's highly prospective Vagar Ridge asset, but also at the Nanoq gold/copper licence and the company's other exciting regional gold targets. This program included airborne geophysics, surface hyperspectral imagery, structural mapping and surface rock chip sampling.

The results for the 84-square-kilometre airborne magnetics and radiometrics survey over Tartoq were announced on Nov. 23, 2021, and successfully identified and refined prospective structures for hosting of economic mineralization. AEX continues to await results and interpretations from the rest of its gold portfolio, and it is the company's intension to announce these results to the market as soon as they are available.

Dependent upon these results, AEX intends to implement a new core drilling program at Vagar Ridge to test and demonstrate the full potential in terms of scale and depth potential of both orogenic and intrusion-related gold mineralization across the target.

Further and again dependent upon results, AEX intends to target prospective targets and increase its geological knowledge across the mineral system at Nanoq through implementing a high-resolution geophysical survey across the licence.

The company will provide further details on its 2022 exploration plans in due course.

Strategic mineral targets

AEX conducted exploration on it strategic minerals targets during 2021, most notably at the Sava target, where initial assessments suggest the potential for IOCG mineralization. The 2021 exploration season completed remote sensing, airborne geophysics, geological mapping, rock chip and ionic geochemistry studies, and hyperspectral imagery across the Sava licence. The results confirmed the presence of three key significant and coherent multielement anomalies potentially indicative of IOCG mineralization, with grab sample grades of up to 0.9 per cent copper.

AEX intends to conduct further surface sampling across the licence and a short scout drilling program into these target areas of Sava during 2022, in order to provide further geological evidence of the extent of the mineralizing system at surface and at depth.

Finally, a bulk sample was successfully taken from the Norream graphite target and has been shipped to Wardell Armstrong in the United Kingdom for initial metallurgical testwork, which is continuing.

Team

During the year, the company further invested in the team. Jaco Crouse was appointed chief financial officer and a director. Mr. Crouse has nearly 20 years of experience in financial management, mine financial planning, business optimization and strategy development. Prior to joining AEX, Mr. Crouse held the position of CFO of Detour Gold Corp., where he facilitated the successful financial and operational turnaround and sale of the corporation to Kirkland Lake Gold for $3.7-billion (U.S.).

James Gilbertson has been appointed as vice-president of exploration and oversees all of the company's exploration activities. Mr. Gilbertson has been working with AEX as a consultant for the past six years. He has over 20 years of experience in mineral exploration and resource development, with 17 years as a principal exploration geologist and, until recently, as managing director of SRK Exploration. He specializes in mineral exploration design, planning and management, specifically for lode and epithermal gold deposits, porphyry-related and orthomagmatic deposits. Mr. Gilbertson is a chartered geologist and competent person (CP) with the Geological Society London.

In addition, the exploration team has been further bolstered by a number of additional appointments:

  • Jane Lund Plesner, a Greenlander, a newly qualified geologist with a bachelor's degree from the University of Aarhus and a master's degree from the University of Copenhagen. Prior to joining AEX, Ms. Plesner was a multibeam operator at the Greenland Institute of Natural Resources;
  • Jascha Wille, a Danish national, graduated from Durham University in 2015, with an MSci in geology, and has worked previously in open-pit production in Greenland and in exploration across Canada and Sweden;

And finally, AEX is soon to welcome Warrick Fuchsloch from AfriTin Mining. Mr. Fuchsloch has 10 years of experience specializing in exploration geology, data analysis, resource estimation and 3-D modelling of multicommodities, including many critical minerals. Mr. Fuchsloch holds specific experience of being within a team that has taken an early-stage project through exploration and into pilot processing.

The board would like to thank the entire AEX Gold team for its hard work and dedication.

Financial results

The corporation had a cash balance of $27.3-million (Canadian) at Dec. 31, 2021 ($61.9-million (Canadian) at Dec. 31, 2020), with no debt, and total working capital of $25.5-million (Canadian) ($61.4-million (Canadian) at Dec. 31, 2020). Exploration and evaluation expenses during the year were $14.3-million (Canadian) (2020 -- $7.0-million (Canadian)), representing costs of geological work, project engineering and drilling at the Nalunaq project. Capital assets increased by $13.6-million (Canadian) as the company took delivery of 60 per cent of the process plant equipment and surface mobile equipment. The corporation reported a net loss of $24.8-million (Canadian) in 2021 (2020 -- $12.3-million (Canadian)), driven by exploration and evaluation activities and corporate activity during the period, as well as non-cash foreign exchange loss. General and administrative expenses during the year were $9.3-million (Canadian) (2020 -- $3.3-million (Canadian)), reflecting higher salaries and benefits of a fully on boarded organization post-AIM (Alternative Investment Market) listing, travel expenses related to the 2021 Nalunaq project work program, as well as the establishment of a larger investor relations function and the retention of communications services.

The selected financial data in the attached table are extracted from the financial statements for the year ended Dec. 31, 2021.

Outlook

The company is very well placed for the year ahead, and investors will have a lot of news to digest as the company announces the remaining exploration results for 2021 and its investment plans for 2022. With the rapid development of the energy transition and recent geopolitical events, Greenland is emerging as one of the final frontiers in safe OECD jurisdictions with the mineral resource potential to play a vital role in these megatrends in the decades ahead. With the largest ice-free land package of assets, AEX is very well placed to benefit from this and, as such, the board looks to the future with confidence.

Qualified person statement

The technical information presented in this news release has been approved by James Gilbertson, CGeol, vice-president of exploration for AEX Gold and a chartered geologist with the Geological Society of London, and, as such, a qualified person as defined by NI 43-101.

About AEX Gold Inc.

AEX's principal business objectives are the identification, acquisition, exploration and development of gold properties in Greenland. The corporation's principal asset is a 100-per-cent interest in the Nalunaq project, an advanced-exploration-stage property with an exploitation licence, including the previously operating Nalunaq gold mine. The corporation has a portfolio of gold assets covering 4,090 square kilometres, the largest portfolio of gold assets in southern Greenland, covering the two known gold belts in the region. AEX is incorporated under the Canada Business Corporations Act and wholly owns Nalunaq A/S, incorporated under the Greenland Public Companies Act .

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