AEX Gold Inc. Reports Second Quarter Financial Results

TORONTO, August 27, 2020 - AEX Gold Inc. (AIM:AEXG)(TSXV:AEX), an independent gold company with a portfolio of gold licences in Greenland, announces its unaudited condensed interim consolidated financial statements ("Financial Statements") for the quarter ended June 30, 2020. All figures are in Canadian dollars unless otherwise noted.

The Financial Statements and the accompanying Management Discussion and Analysis are available on the Corporation's website at www.aexgold.com and will be filed under the Corporation's SEDAR profile at www.sedar.com later today.

Financial Highlights

• The Corporation reported a net loss of $3.4 million in H1 2020 (H1 2019: $1.1 million), driven by increased exploration and evaluation activities and corporate activity during the period, as well as non-cash stock based compensation.
• Exploration and evaluation expenses during the period were $1.5 million (H1 2019: $0.6 million), driven by increased activity on the Nalunaq Property and its regional exploration portfolio.
• General and administrative expenses during the period were $0.9 million (H1 2020: $0.5 million), with the increase a result of higher management, consulting and professional fees as the Corporation moves towards development at Nalunaq and ahead of its AIM listing.
• During the period, 11,387,626 warrants were exercised, each entitling the holder to receive one common share of the Corporation, at an exercise price per warrant between $0.45 and $0.50, with the Corporation receiving gross proceeds of $5.1 million.
• The Corporation granted 2,195,000 options to its directors, officers and consultants, based on an estimated fair value of $0.47 per option, representing a total non-cash cost of $1.0 million in the period.
• The Corporation had a cash balance of $4.4 million at June 30, 2020 ($1.5 million at December 31, 2019), with no debt, and total working capital of $3.0 million ($1.2 million at December 31, 2019).
• Post-period end, the Corporation completed an equity placing raising gross proceeds of $72.7 million (£42.5 million).

Selected Financial Information

The following selected financial data is extracted from the Financial Statements for the six months ended June 30, 2020.

Financial Results

Financial Position

Corporate and Operational Highlights

• A business readiness program was initiated internally during the period as the Corporation increases its overall readiness for transitioning towards project execution, including human resources, recruiting, environmental and social impact assessment scoping, organizational structuring, project and cost control, and accounting.
• In June 2020, the Greenlandic COVID Commission approved AEX's mobilization plan and on August 15, 2020 the Corporation successfully and safely mobilized its expatriate and local Greenlandic workforce on site at the Nalunaq Property ahead of the commencement of the 2020 summer work program.
• During the period, the Corporation was granted two new Mineral Exploration Licences in South Greenland, namely Saarloq and Anoritooq, covering an area totalling 2,528km², taking the Corporations full license area to 3,356km². The Corporation intends to conduct exploration activities over these new licence areas, as well as it's wider regional portfolio, as part of the 2020 summer work program announced on August 24, 2020.

Post Period-End

• On July 27, 2020, the Corporation appointed Sigurbjorn ("Siggi") Thorkelsson as an independent non-executive director of the Corporation and Chair of the Audit and Risk Committee. Mr. Thorkelsson brings a wealth of experience in the financial markets, having worked at major financial institutions throughout his career.
• On July 31, 2020, the Corporation completed its AIM Admission in addition to its existing TSX-V listing, with the issue of 94,444,445 common shares at a price of GBP 0.45 (C$0.77) per share.
• The Corporation has progressed a number of discussions with non-equity financing providers, as detailed at the time of the fundraise in July 2020. The Board believes a modest non-equity facility offers an attractive opportunity to access additional capital to expand value creation activities across its portfolio without the dilution or costs of further equity. The Corporation is committed to securing the most attractive source of funding, and will provide an update on these discussions once a committed facility is secured.

Eldur Olafsson, CEO of AEX, commented:

"I'm pleased to announce our H1 2020 financial results, which demonstrate the significant increase in activity across our portfolio as our business transitions towards development.

"Following the successful $72.7 million fundraise and AIM listing in July 2020, the Company is in a very strong position and we are now funded for our planned work program at Nalunaq, where we are progressing well with the exploration and pre-development work on the asset. In addition to this, we are undergoing additional exploration work across our wider portfolio in Southern Greenland where we believe there is significant upside for investors in what is a materially undeveloped region.

"We look forward to providing updates to the market on these exciting workstreams in due course."

"As stated at the time of the fundraise, we are looking to secure additional non-equity funding in the form of a modest working capital facility, vendor financing or similar, to accelerate exploration activities across our material portfolio of gold assets in South Greenland. Whilst we will look to execute on this facility as soon as possible, we are in a very strong position post-fundraise and will take time to ensure that any facility we enter into offers the best terms to our company and shareholders, and look forward to updating the market at the appropriate time."

Enquiries:

AEX Gold Inc.

George Fowlie, Director and CFO
1-416-587-9801
gf@aexgold.com

Eldur Olafsson, Director and CEO
+354 665 2003
eo@aexgold.com

Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)

Callum Stewart
Simon Mensley
Ashton Clanfield
+44 (0) 20 7710 7600

Camarco (Financial PR)

Gordon Poole
Nick Hennis
+44 (0) 20 3757 4980

AEX Gold Inc.:
Unaudited Condensed Interim Consolidated Financial Statements for the Six Months Ended June 30, 2020
Consolidated Statements of Financial Position
(Unaudited, in Canadian Dollars)

Consolidated Statements of Cash Flows
(Unaudited, in Canadian Dollars)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

Condensed Notes to the interim Consolidated Financial Statements
Six months ended June 30, 2020 and 2019
(Unaudited, in Canadian Dollars)

1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN

AEX Gold Inc. (the "Corporation") was incorporated on February 22, 2017 under the Canada Business Corporations Act. The Corporation's head office is situated at 3400, One First Canadian Place, P.O. Box 130, Toronto, Ontario, M5X 1A4, Canada. The Corporation operates in one industry segment, being the acquisition, exploration and development of mineral properties. It owns interests in properties located in Greenland. The Corporation's financial year ends on December 31. Since July 2017, the Corporation's shares are listed on the TSX Venture Exchange (the "TSX-V") under the AEX ticker and since July 2020, the Corporation's shares are also listed on the AIM market of the London Stock Exchange ("AIM") under the AEXG ticker (note 9).

These unaudited condensed interim consolidated financial statements for the six months ended June 30, 2020 ("Financial Statements") were approved by the Board of Directors on August 26, 2020.

1.1 Basis of presentation

The Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") including International Accounting Standard ("IAS") 34, Interim Financial Reporting. The Financial Statements have been prepared under the historical cost convention.

The Financial Statements should be read in conjunction with the annual financial statements for the year ended December 31, 2019 which have been prepared in accordance with IFRS as issued by the IASB. The accounting policies, methods of computation and presentation applied in these Financial Statements are consistent with those of the previous financial year ended December 31, 2019.

1.2 Going concern

The Financial Statements were prepared using IFRS applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, senior management of the Corporation ("Management") takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. Management is aware in making its assessment of material uncertainties related to events and conditions that lend a significant doubt upon the Corporation' ability to continue as a going concern and accordingly, the appropriateness of the use of IFRS applicable to a going concern, as described in the following paragraph. The Financial Statements do not reflect the adjustment to the carrying values of assets and liabilities, expenses and financial position classifications that would be necessary if the going concern assumption would not be appropriate. These adjustments could be material.

The Corporation recorded a loss of $3,408,569 for the six months ended June 30, 2020 and has an accumulated deficit of $18,175,872 as at June 30, 2020. In addition to ongoing working capital requirements, the Corporation must secure sufficient funding to meet its other obligations, existing commitments for the exploration and evaluation programs and pay general and administration costs. As at June 30, 2020, the Corporation had working capital of $2,978,497. These conditions indicate the existence of material uncertainties that may cast a significant doubt regarding the Corporation' ability to continue as a going concern.

The Corporation' ability to continue as a going concern is dependent upon its ability to raise additional financing to further explore its mineral properties. The completion of the fundraising in July 2020 discussed in subsequent events (note 9), contributed to such financing. While Management has secured financing in the past, there can be no assurance it will be able to do so in the future or that these sources of funding or initiatives will be available for the Corporation or that they will be available on terms which are acceptable to the Corporation. If Management is unable to obtain new funding, the Corporation may be unable to continue its operations, and amounts realized for assets might be less than amounts reflected in these Financial Statements and this could have a significant impact on the financial position of the Corporation, its financial performance and its cash flows.

The measurement of certain assets and liabilities is dependent on future events; therefore the preparation of these Financial Statements requires the use of estimates, which may vary from actual results. The success of the Corporation' exploration and evaluation activities is influenced by significant financial risks, legal and political risks, commodity prices, and the ability of the Corporation to discover economically recoverable reserves.

During the first half of 2020, an outbreak of a new strain of coronavirus (COVID-19) resulted in a major global health crisis which continues to have impacts on the global economy and the financial markets at the date of completion of the Financial Statements. These events may cause significant changes on the Corporation's ability to complete planned exploration and evaluation activities in the future, meet its other obligations and existing commitments for the exploration and evaluation programs or our ability to obtain debt and equity financing. Following these events, the Corporation has taken and will continue to take action to minimize the impact of the COVID-19 pandemic. However, it is impossible to ultimately determine the financial implications of these events.

2. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS

The preparation of the Financial Statements requires Management to make judgments and form assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and reported amounts of expenses during the reporting period. On an ongoing basis, Management evaluates its judgments in relation to assets, liabilities and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments. Actual outcomes may differ from these estimates under different assumptions and conditions.

In preparing the Financial Statements, the significant judgements made by Management in applying the Corporation accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Corporation's audited annual financial statements for the year ended December 31, 2019. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

3. MINERAL PROPERTIES

4. PROPERTY AND EQUIPMENT

Depreciation of property and equipment related to exploration and evaluation properties is being recorded in exploration and evaluation expenses in the consolidated statement of comprehensive loss, under depreciation. Depreciation of $114,317 was expensed as exploration and evaluation expenses during the six months ended June 30, 2020.

5. WARRANTS

5.1 Warrants

Changes in the Corporation's warrants are as follow:

The Corporation has accelerated the expiry of certain common share purchase warrants ("Warrants"), bearing an expiration date of June 28, 2022. The certificate evidencing the Warrants ("Warrant Certificate") provided for acceleration in certain circumstances, which were met during the period. From the period February 6, 2020 to March 5, 2020, the daily volume weighted average price of the Corporation's common shares on the TSX-V was equal to or greater than $0.50, thus satisfying the acceleration requirements under the Warrants. Accordingly, Warrant holders were provided with notification that any Warrants that were not exercised before April 20, 2020, being the 30^th trading day following the occurrence of the acceleration event, would expire and be cancelled. Certain Warrant holders exercised 11,272,271 Warrants, each entitling the holder to receive one common share of the Corporation, at an exercise price per warrant of $0.45, representing gross proceeds of $5,072,522.

5.2 Agent warrants

Changes in the Corporation's agent and finders warrants are as follow:

Agent and finders warrants outstanding and exercisable as at June 30, 2020 are as follows:

6. STOCK OPTIONS

An incentive stock option plan (the "Plan") was approved initially in 2017 and renewed by shareholders on June 17, 2020. The Plan is a "rolling" plan whereby a maximum of 10% of the issued shares at the time of the grant are reserved for issue under the Plan to executive officers and directors, employees and consultants. The Board of directors attributes the stock options and the exercise price of the options shall not be less than the closing price on the last trading day preceding the grant date. The options have a maximum term of ten years. Options granted pursuant to the Plan shall vest and become exercisable at such time or times as may be determined by the Board, except options granted to consultants providing investor relations activities shall vest in stages over a 12 month period with a maximum of one-quarter of the options vesting in any three-month period. The Corporation has no legal or constructive obligation to repurchase or settle the options in cash.

On June 17, 2020, the Corporation granted to its directors, officers and consultants 2,195,000 stock options exercisable at an exercise price of $0.70, with an expiry date of December 31, 2026. The stock options vested 100% at the grant date. Those options were granted at an exercise price equal the closing market value of the shares the previous day of the grant. Total stock-based compensation costs amount to $1,031,650 for an estimated fair value of $0.47 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 76.41% expected volatility, 0.41% risk-free interest rate and 6.5 years options expected life. The expected life and expected volatility were estimated by benchmarking comparable companies to the Corporation.

Changes in stock options are as follow:

Stock options outstanding and exercisable as at June 30, 2020 are as follows:

7. EXPLORATION AND EVALUATION EXPENSES

8. GENERAL AND ADMINISTRATION

9. SUBSEQUENT EVENTS

AIM listing

As of June 30, 2020, the Corporation was considering an additional listing on the AIM market of the London Stock Exchange, alongside its current listing on the TSX-V. As at June 30, 2020, the Corporation had incurred deferred share issuance costs of $1,221,138 as part of this process.

The admission of its entire issued share capital to trading on the AIM market occurred and dealings commenced on AIM on July 31, 2020 ("Admission") under the ticker AEXG.

Completion of the fundraising

On July 31, 2020, the Corporation completed the fundraising by issuing 94,444,445 common shares at a price of $0.77 (GBP 0.45) per share, for gross proceeds to the Corporation of $72,722,223 (GBP 42,500,000) ("Fundraising").

Stifel Nicolaus Europe Limited ("Stifel") acted as nominated adviser, broker and bookrunner to the Corporation in connection with the Fundraising and Admission. Cormark Securities Inc. and Paradigm Capital Inc. acted as co-managers in connection with the Fundraising (the "Agents").

Further Information:

About AEX

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% interest in the Nalunaq Project, an advanced exploration stage property with an exploitation license including the previously operating Nalunaq gold mine. The Corporation has a portfolio of gold assets covering 3,356km², 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.

Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the Corporation's current expectations regarding future events and the future growth of the Corporation's business. In this press release there is forward-looking information based on a number of assumptions and subject to a number of risks and uncertainties, many of which are beyond the Corporation's control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to the factors discussed under "Risk Factors" in the Final Prospectus available under the Corporation's profile on SEDAR at www.sedar.com. Any forward-looking information included in this press release is based only on information currently available to the Corporation and speaks only as of the date on which it is made. Except as required by applicable securities laws, the Corporation assumes no obligation to update or revise any forward-looking information to reflect new circumstances or events. No securities regulatory authority has either approved or disapproved of the contents of this press release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Inside Information

This announcement contains inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 ("MAR").

SOURCE: AEX Gold Inc.