AEX Gold Inc. 2021 Full Year Financial Results and Update

TORONTO, April 29, 2022 - AEX Gold Inc. ("AEX" or the "Company" or the "Corporation") (AIM:AEXG) (TSXV:AEX), the independent mining company with an unrivalled land package of gold and strategic mineral assets covering an area of 4,090 km2 in Southern Greenland, is pleased to present a Corporate Update and 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 11,044m of core drilling over the South and Valley Blocks at Nalunaq. Drilling commenced in Q2 2021 and was finalised in Q4 2021. The program objectives were met by confirming Valley Block as a new, previously unrecognised, 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 Dyke 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 Dyke 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. ("Halyard") 3rd party engineering study completed in 2021 with an intention to move the project towards 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 Dyke 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 turn-around time for drill results at Nalunaq and samples from our 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 towards 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 mineralisation recorded previously.
  • Also subject to these results, the Company intends to further develop its geological understanding of the gold and copper mineralisation hosted at Nanoq through an airborne geophysical survey.
• Strategic Mineral Targets
  • The Company acquired an additional 202km ² of prospective ground in 2021 taking its total land package to 4,090km ² and continues to look to expand its footprint in strategic mineral areas across Southern Greenland.
  • Work programs at Sava have illustrated Iron Ore, Copper, Gold ("IOCG") style signatures across three targets opening up the opportunity to host copper, gold and rare earth mineralisation. These will be followed up with additional surface sampling and scout drilling during 2022.
  • At Nørream, a bulk sample has been taken and shipped for metallurgical test work in the UK.
• AEX Gold Financial Results
  • Cash balance of C$27.3 million at December 31, 2021 (C$61.9 million at December 31, 2020), with no debt, and total working capital of C$25.5 million ($61.4 million at December 31, 2020).

Eldur Olafsson, CEO 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 3rd 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 11,044m 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 Dyke' 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 Dyke 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 km2, 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 cooperation. 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

2021 was a year of consolidation, adjustment and refocus for AEX Gold, as the COVID-19 pandemic continued to wreak havoc globally, and on our 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, and as per the April 2021 announcement, the Corporation redirected its focus on four key elements to continue advancing the Company and de-risking the Nalunaq Project ahead of development: conducting a third-party engineering study to optimize the Project costs and de-risk the Project schedule to enable AEX to re-assess the execution methodology post completion; conducting fully funded '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 our revised goals. Exploration results received so far from the period have delivered ahead of our expectations, with further results expected to be announced shortly. In addition, the macro environment has moved in our direction as the global energy transition gathers pace and recent geo-political 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

51 drillholes for 11,044m were completed during the 2021 field season. This drilling was designed to assess the along strike and down dip extensions of the mineralized Main Vein structure away from the previously explored South, Target and Mountain Blocks mined between 2004 to 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 Dyke 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 Dyke Model.

In parallel to the exploration program, Halyard completed its 3rd 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 Canadian Standards of Disclosure for Mineral Project NI43-101 requirements.

AEX continues to work with SRK Consulting to develop the most robust Mineral Resource estimation technique for Nalunaq possible, incorporating the Dolerite Dyke 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 3rd party engineering study completed in 2021 with a plan to move the project towards a Preliminary Economic Assessment (PEA) or Pre-Feasibility Study to support further development.

Alongside the exploration and technical studies, AEX has continued its 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 advisors, 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 up dip extension of this Block from the Dolerite Dyke Model. This program aims to allow for the continual resource development from the Valley Block. In order to access this up dip 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 towards mine construction.

Vagar Ridge, Nanoq and Tartoq

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

The results for the 84km ² airborne magnetics and radiometrics survey over Tartoq were announced on November 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 license.

The Company will provide further detail 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 license. The results confirmed the presence of three key significant and coherent multi element anomalies potentially indicative of IOCG mineralization with grab sample grades of up to 0.9% copper.

AEX intends to conduct further surface sampling across the license 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 Nørream graphite target and has been shipped to Wardell Armstrong in the United Kingdom for initial metallurgical test work, which is ongoing.

Team

During the year, we further invested in the team. Jaco Crouse was appointed CFO and Director. Mr. Crouse has nearly 20 years' 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 US$3.7 billion.

James Gilbertson has been appointed as Vice President of Exploration and oversees all of the Company's exploration activities. James has been working with AEX as a consultant for the past six years. James 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 specialises in mineral exploration design, planning and management, specifically for lode and epithermal gold deposits, porphyry related, and orthomagmatic deposits. James 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 from the University of Copenhagen. Prior to joining AEX, Jane 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. Warrick has 10 year experience specializing in exploration geology, data analysis, resource estimation and 3D modelling of multi-commodities including many critical minerals. Warrick 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 their hard work and dedication.

Financial results

The Corporation had a cash balance of C$27.3 million at December 31, 2021 (C$61.9 million at December 31, 2020), with no debt, and total working capital of C$25.5 million ($61.4 million at December 31, 2020). Exploration and evaluation expenses during the year were C$14.3 million (2020: C$7.0 million), representing costs of geological work, project engineering and drilling at Nalunaq Project. Capital assets increased by C$13.6 million as we took delivery of 60% of the process plant equipment and surface mobile equipment. The Corporation reported a net loss of C$24.8 million in 2021 (2020: C$12.3 million), 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 C$9.3 million (2020: C$3.3 million), reflecting higher salaries and benefits of a fully on-boarded organization post-AIM 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 following selected financial data is extracted from the Financial Statements for the year ended December 31, 2021.

Financial Performance

		Three months ended December 31,								Years ended December 31,
		2021				2020				2021				2020
		$	C			$	C			$	C			$	C
Exploration and evaluation expenses			6,838,840				2,622,916				14,280,055				7,055,707
General and administrative			2,627,040				1,304,804				9,328,427				3,291,176
Net loss and comprehensive loss			(9,814,256	)			(4,321,051	)			(24,793,004	)			(12,339,112	)
Basic and diluted loss per common share			(0.05	)			(0.03	)			(0.14	)			(0.10	)

Financial Position

		As at December 31, 2021				As at December 31, 2020
		$	C			$	C
Cash on hand			27,324,459				61,874,999
Total assets			27,642,326				65,944,682
Total current liabilities			2,100,084				897,799
Shareholders' equity			39,968,502				64,282,970
Working capital			25,542,242				61,411,208

Outlook

The company is very well placed for the year ahead and investors will have a lot of news to digest as we announce the remaining exploration results for 2021 and our investment plans for 2022. With the rapid development of the energy transition and recent geo-political 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 mega-trends 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 press release has been approved by James Gilbertson CGeol, VP 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.

Enquiries:

AEX Gold Inc.
Eldur Olafsson, Executive Director and CEO
+354 665 2003
eo@aexgold.com

Eddie Wyvill, Investor Relations
+44 (0)7713 126727
ew@aexgold.com

Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)

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

Panmure Gordon (UK) Limited (Joint Broker)

John Prior
Hugh Rich
Dougie Mcleod
+44 (0) 20 7886 2500

SI Capital Limited (Joint Broker)

Nick Emerson
Charlie Stephenson
+44 (0) 1483 413500

Camarco (Financial PR)

Billy Clegg
Emily Hall
Charlie Dingwall
+44 (0) 20 3757 4980

For Company updates:

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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 4,090 km ² , 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

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014, and is disclosed in accordance with the Corporation's obligations under Article 17 of those Regulations. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

AEX Gold Inc.

AUDITED CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020

Auditor's report

AEX Gold Inc.
Consolidated Statements of Financial Position
As at December 31, 2021 and 2020
(In Canadian Dollars)

						As at December 31,				As at December 31,
		Notes				2021				2020
						$				$
ASSETS
Current assets
Cash							27,324,459				61,874,999
Sales tax receivable							51,250				62,750
Prepaid expenses and others							266,617				371,258
Total current assets							27,642,326				62,309,007
Non-current assets
Deposit on order							9,805				1,711,970
Escrow account for environmental monitoring			5				424,637				460,447
Mineral properties			6				62,244				62,244
Capital assets			7				14,642,652				1,401,014
Total non-current assets							15,139,338				3,635,675
TOTAL ASSETS							42,781,664				65,944,682
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables							2,049,249				831,899
Lease liabilities - current portion			8				50,835				65,900
Total current liabilities							2,100,084				897,799
Non-current liabilities
Lease liabilities			8				713,078				763,913
Total non-current liabilities							713,078				763,913
Total liabilities							2,813,162				1,661,712
Equity
Capital stock			10				88,500,205				88,500,205
Warrants			11				-				-
Contributed surplus							3,300,723				2,925,952
Accumulated other comprehensive loss							(36,772	)			(36,772	)
Deficit							(51,795,654	)			(27,106,415	)
Total equity							39,968,502				64,282,970
TOTAL LIABILITIES AND EQUITY							42,781,664				65,944,682
Subsequent events			22

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

Approved by the Board of Directors

AEX Gold Inc.
Consolidated Statements of Comprehensive Loss
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)

		Notes				2021				2020
						$				$
Expenses
Exploration and evaluation expenses			15				14,280,055				7,055,707
General and administrative			16				9,328,427				3,291,176
Stock-based compensation			12				374,771				1,031,650
Foreign exchange							809,751				1,130,808
Operating loss							24,793,004				12,509,341
Other expenses (income)
Interest income							(143,759	)			(84,214	)
Finance costs			17				39,994				12,831
Other expenses (income)			9				-				(98,846	)
Net loss and comprehensive loss							(24,689,239	)			(12,339,112	)
Weighted average number of common shares outstanding - basic and diluted							177,098,737				119,729,081
Basic and diluted loss per common share			19				(0.14	)			(0.10	)

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

AEX Gold Inc.
Consolidated Statements of Changes in Equity
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)

		Notes				Number of common shares outstanding				Capital stock				Warrants				Contributed surplus				Accumulated other comprehensive loss				Deficit				Total equity
Balance, January 1, 2020							70,946,394				13,883,611				1,459,604				1,535,400				(36,772	)			(14,767,303	)			2,074,540
Net loss and comprehensive loss							-				-				-				-				-				(12,339,112	)			(12,339,112	)
Share issuance under a fundraising			10				94,444,445				74,550,202				-				-				-				-				74,550,202
Share issuance costs			10				-				(6,312,546	)			-				-				-				-				(6,312,546	)
Warrants exercised			11				11,607,898				6,318,938				(1,078,702	)			-				-				-				5,240,236
Warrants expired			11				-				-				(380,902	)			380,902				-				-				-
Options exercised			12				100,000				60,000				-				(22,000	)			-				-				38,000
Stock-based compensation			12				-				-				-				1,031,650				-				-				1,031,650
Balance, December 31, 2020							177,098,737				88,500,205				-				2,925,952				(36,772	)			(27,106,415	)			64,282,970
Balance, January 1, 2021							177,098,737				88,500,205				-				2,925,952				(36,772	)			(27,106,415	)			64,282,970
Net loss and comprehensive loss							-				-				-				-				-				(24,689,239	)			(24,689,239	)
Stock-based compensation			12				-				-				-				374,771				-				-				374,771
Balance, December 31, 2021							177,098,737				88,500,205				-				3,300,723				(36,772	)			(51,795,654	)			39,968,502

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

AEX Gold Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2021 and 2020
(In Canadian Dollars)

		Notes				2021				2020
						$				$
Operating activities
Net loss							(24,689,239	)			(12,339,112	)
Adjustments for:
Depreciation			7				389,953				228,267
Stock-based compensation			12				374,771				1,031,650
Finance costs			17				-				5,959
Other expenses (Income)			9				-				(98,846	)
Payment from cash held in escrow account for environmental monitoring			5				-				(95,102	)
Escrow account for environmental monitoring			9				-				95,102
Foreign exchange							377,674				1,119,240
							(23,546,841	)			(10,052,842	)
Changes in non-cash working capital items:
Sales tax receivable							11,500				(44,958	)
Prepaid expenses and others							104,641				(276,316	)
Trade and other payables							1,141,384				508,094
							1,257,525				186,820
Cash flow used in operating activities							(22,289,316	)			(9,866,022	)
Investing activities
Acquisition of mineral properties			6				-				(20,299	)
Acquisition of capital assets			7				(11,875,926	)			(421,098	)
Deposit on order							-				(1,711,970	)
Cash flow used in investing activities							(11,875,926	)			(2,153,367	)
Financing activities
Shares and warrants issuance			10				-				74,550,202
Share issuance costs			10				-				(6,266,929	)
Principal repayment - lease liabilities			8				(65,900	)			(11,267	)
Exercise of warrants							-				5,240,236
Exercise of stock options							-				38,000
Cash flow from financing activities							(65,900	)			73,550,242
Net change in cash before effects of exchange rate changes on cash							(34,231,142	)			61,530,853
Effects of exchange rate changes on cash							(319,398	)			(1,171,260	)
Net change in cash							(34,550,540	)			60,359,593
Cash, beginning							61,874,999				1,515,406
Cash, ending							27,324,459				61,874,999
Supplemental cash flow information
Deposit on order for acquisition of capital assets							1,702,165				-
Interest received							143,759				84,214
Additions in capital assets included in trade and other payables							53,500				-
Exercise of warrants credited to capital stock							-				1,078,702
Exercise of stock options credited to capital stock							-				22,000

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

AEX Gold Inc.
Consolidated Statements of Financial Position
As at December 31, 2021 and 2020
(In Canadian Dollars)

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

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 have been listed on the TSX Venture Exchange (the "TSX-V") under the AEX ticker and since July 2020, the Corporation's shares have also been listed on the AIM market of the London Stock Exchange ("AIM") under the AEXG ticker (note 10).

These consolidated financial statements ("Financial Statements") were reviewed and authorized for issue by the Board of Directors on April 28, 2022.

1.1 Basis of presentation and consolidation

The Financial Statements include the accounts of the Corporation and those of its subsidiary Nalunaq A/S, a corporation incorporated under the Greenland Public Companies Act , owned 100%.

Control is defined by the authority to direct the financial and operating policies of a business in order to obtain benefits from its activities. The amounts presented in the consolidated financial statements of the subsidiary have been adjusted, if necessary, so that they meet the accounting policies adopted by the Corporation.

Profit or loss or other comprehensive loss of a subsidiary set up, acquired or sold during the year are recorded from the actual date of acquisition or until the effective date of the sale, if any. All intercompany transactions, balances, income and expenses are eliminated on consolidation.

The Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of measurement

The Financial Statements have been prepared on the historical cost basis.

2.2 Functional and presentation currency - Foreign currency transactions

The functional and presentation currency of the Corporation is Canadian dollars ("CAD"). The functional currency of Nalunaq A/S is CAD. The functional currency of Nalunaq A/S is determined using the currency of the primary economic environment in which the entity evolves and using the currency which is more representative of the economic effect of the underlying financings, transactions, events and conditions.

Foreign currency transactions are translated into the functional currency of the underlying entity using appropriate rates of exchange prevailing on the dates of such transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange in effect at the end of each reporting period. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the net profit or loss.

When a foreign operation is sold, such exchange differences are recognized in the statement of comprehensive loss as part of the gain or loss on sale.

2.3 Deposit on order

The deposit on order represents the sum of money disbursed to a supplier to start or continue the fulfillment of a purchase order for capital assets. This deposit will be transferred to capital assets when the asset has been completed and delivered.

2.4 Mineral properties and exploration and evaluation expenses

Mineral properties include rights in mining properties, paid or acquired through a business combination or an acquisition of assets, and costs related to the initial search for mineral deposits with economic potential or to obtain more information about existing mineral deposits.

All costs incurred prior to obtaining the legal rights to undertake exploration and evaluation on an area of interest are expensed as incurred.

Mining rights are recorded at acquisition cost or at its recoverable amount in the case of a devaluation caused by an impairment of value. Mining rights and options to acquire undivided interests in mining rights are depreciated only as these properties are put into commercial production. Proceeds from the sale of mineral properties are applied as a reduction of the related carrying costs and any excess or shortfall is recorded as a gain or loss in the consolidated statement of comprehensive loss.

Exploration and evaluation expenses ("E&E expenses") also typically include costs associated with prospecting, sampling, trenching, drilling and other work involved in searching for ore such as topographical, geological, geochemical and geophysical studies. Generally, expenditures relating to exploration and evaluation activities are expensed as incurred. Capitalization of E&E expenses commences when a mineral resource estimate has been obtained for an area of interest.

E&E expenses include costs related to establishing the technical and commercial viability of extracting a mineral resource identified through exploration or acquired through a business combination or asset acquisition. E&E include the cost of:

• establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable reserve;
• determining the optimal methods of extraction and metallurgical and treatment processes, including the separation process, for Corporation' mining properties;
• studies related to surveying, transportation and infrastructure requirements;
• permitting activities; and
• economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.

When a mine project moves into the development phase, E&E expenses are capitalized to mine development costs. An impairment test is performed before reclassification and any impairment loss is recognized in the consolidated statement of comprehensive loss.

E&E include overhead expenses directly attributable to the related activities.

The Corporation has taken steps to verify the validity of title to mineral properties on which it is conducting exploration activities and is acquiring interests in accordance with industry standards that apply to the current stage of exploration and evaluation of such property. However, these procedures do not guarantee the Corporation' title, as property title may be subject to unregistered prior agreements, aboriginal claims or noncompliance with regulatory requirements.

2.5 Capital assets

Capital assets are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of an asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefit associated with the item will flow to the Corporation and the cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced.

The intangible assets include software with a definite useful life. The assets are capitalized and amortized on a straight-line basis in the consolidated statement of comprehensive loss. The intangible assets are assessed for impairment whenever there is an indication that the intangible assets may be impaired.

Repairs and maintenance costs are charged to the consolidated statement of comprehensive loss during the period in which they are incurred.

Depreciation is calculated to amortize the cost of the capital assets less their residual values over their estimated useful lives using the straight-line method and following periods by major categories:

Field equipment and infrastructure related to exploration and evaluation activities	3 to 10 years
Vehicles and rolling stock	3 to 10 years
Equipment	3 to 10 years
Software	3 to 10 years
Right-of-use assets	Lease term

Depreciation of capital assets, if related to exploration activities, is expensed consistently with the policy for exploration and evaluation expenses. For those which are not related to exploration and evaluation activities, depreciation expense is recognized directly in the consolidated statement of comprehensive loss.

Depreciation of an asset ceases when it is classified as held for sale (or included in a disposal group that is classified as held for sale) or when it is derecognized. Therefore, depreciation does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated.

Residual values, methods of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.

Gains and losses on disposals of capital assets are determined by comparing the proceeds with the carrying amount of the asset and are recorded in the consolidated statement of comprehensive loss.

2.6 Leases

At the commencement date of a lease, a liability is recognized to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset) is also recognized. The interest expense on the lease liability is recognized separately from the depreciation expense on the right-of-use asset.

The lease liability is remeasured upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). This remeasurement is generally recognized as an adjustment to the right-of-use asset. Leases of "low-value" assets and short-term leases (12 months or less) are recognized on a straight-line basis as an expense in the consolidated statement of comprehensive loss.

2.7 Impairment of non-financial assets

Mineral properties and capital assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. Mineral properties and capital assets are reviewed by area of interest. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash flows that are independent from other assets, the Corporations estimates the recoverable amount of the asset group to which the asset belongs.

An asset's recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or asset group is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized immediately in the consolidated statement of comprehensive loss. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal is recognized as a reduction in the impairment charge for the period.

2.8 Environmental monitoring provision

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The Corporation is subject to laws and regulations relating to environmental matters, including land reclamation and discharge of hazardous materials and environmental monitoring. The Corporation may be found to be responsible for damage caused by prior owners and operators of its unproven mineral interests and in relation to interests previously held by the Corporation.

On initial recognition, the estimated net present value of a provision is recorded as a liability and a corresponding amount is added to the capitalized cost of the related non-financial asset or charged to consolidated statement of comprehensive loss if the property has been written off. Discount rates using a pre-tax rate that reflects the time value of money and the risk associated with the liability are used to calculate the net present value. The provision is evaluated at the end of each reporting period for changes in the estimated amount or timing of settlement of the obligation.

2.9 Taxation

Income tax expense represents the sum of tax currently payable and deferred tax.

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are substantively enacted by the date of the consolidated statement of financial position.

Deferred income taxes are provided using the liability method on temporary differences at the date of the statement of financial position between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences, except:

• where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable earnings; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilized except:

• where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable earnings; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred income tax assets is reviewed at each date of the consolidated statement of financial position and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at each date of the consolidated statement of financial position and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the date of the statement of financial position.

Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated statement comprehensive loss.

Deferred income tax assets and deferred income tax liabilities are offset if, and only if, a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend to either settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

2.10 Equity

Capital stock represents the amount received on the issue of shares. Warrants represent the allocation of the amount received for units issued as well as the charge recorded for the broker warrants relating to financing. Options represent the charges related to stock options until they are exercised. Contributed surplus includes charges related to stock options and the warrants that are expired and not yet exercised. Contributed surplus also includes contributions from shareholders. Deficit includes all current and prior period retained profits or losses and share issue expenses.

Share and warrant issue expenses are accounted for in the year in which they are incurred and are recorded as a deduction to equity in the year in which the shares and warrants are issued.

Costs related to shares not yet issued are recorded as deferred share issuance costs. These costs are deferred until the issuance of the shares to which the costs relate to, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.

Proceeds from unit placements are allocated between shares and warrants issued on a pro-rata basis of their value within the unit using the Black-Scholes pricing model.

2.11 Interest income

Interest income from financial assets is accrued, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

2.12 Stock-based compensation

Employees and consultants of the Corporation may receive a portion of their compensation in the form of share-based payment transactions, whereby employees or consultants render services as consideration for equity instruments ("equity-settled transactions").

The costs of equity-settled transactions with employees and others providing similar services are measured by reference to the fair value at the date on which they are granted.

The costs of equity-settled transactions are recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("the vesting date"). The cumulative expense is recognized for equity-settled transactions at each reporting date until the vesting date reflects the Corporation' best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and the corresponding amount is represented in contributed surplus.

No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity-settled award are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional amount is recognized on the same basis as the amount of the original award for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

2.13 Loss per share

The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding options and warrants, in the weighted average number of common shares outstanding during the year, if dilutive. During 2021 and 2020, all the outstanding common share equivalents were anti-dilutive.

2.14 Financial instruments

Financial assets and financial liabilities are recognized when the Corporation becomes a party to the contractual provisions of the financial instrument.

Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial position when there is an unconditional and legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

All financial instruments are required to be measured at fair value on initial recognition. The fair value is based on quoted market prices, unless the financial instruments are not traded in an active market. In this case, the fair value is determined by using valuation techniques like the Black-Scholes option pricing model or other valuation techniques.

2.14.1 Financial assets

Financial assets are derecognized when the contractual rights to receive the cash flows from the financial asset have expired, or when the financial asset and all substantial risks and rewards have been transferred. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires.

Financial assets are initially measured at fair value. If the financial asset is not subsequently accounted for at fair value through profit or loss, then the initial measurement includes transaction costs that are directly attributable to the asset's acquisition or origination. On initial recognition, the Corporation classifies its financial instruments in the following categories depending on the purpose for which the instruments were acquired.

Amortized cost:

Financial assets at amortized cost are non-derivative financial assets with fixed or determinable payments constituted solely of payments of principal and interest that are held within a "held to collect" business model. Financial assets at amortized cost are initially recognized at the amount expected to be received, less, when material, a discount to reduce the financial assets to fair value. Subsequently, financial assets at amortized cost are measured using the effective interest method less a provision for expected losses. The Corporation's cash and escrow account for environmental monitoring are classified within this category.

Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the consolidated statement comprehensive loss.

2.14.2 Financial liabilities

A financial liability is derecognized when extinguished, discharged, terminated, cancelled or expired.

Financial liabilities measured at amortized cost

Trade and other payables and payables to shareholders are initially measured at the amount required to be paid, less, when material, a discount to reduce the payables to fair value. Subsequently, financial liabilities are measured at amortized cost using the effective interest method.

2.14.3 Impairment of financial assets

Amortized cost:

At each reporting date, the Corporation assesses, on a forward?looking basis, the expected credit losses associated with its debt instruments carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The expected loss is the difference between the amortized cost of the financial asset and the present value of the expected future cash flows, discounted using the instrument's original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account. Provisions for expected losses are adjusted upwards or downwards in subsequent periods if the amount of the expected loss increases or decreases.

2.15 Segment disclosures

The Corporation operates in one industry segment, being the acquisition, exploration and evaluation of mineral properties. All of the Corporation' activities are conducted in Greenland.

3. CHANGES IN ACCOUNTING POLICIES

3.1 Accounting standards issued but not yet effective

The Corporation has not yet adopted certain standards, interpretations to existing standards and amendments which have been issued but have an effective date of later than January 1, 2022. Many of these updates are not expected to have any significant impact on the Corporation and are therefore not discussed herein.

Amendments to IAS 16 Property, plant and equipment

The IASB has made amendments to IAS 16 Property, plant and equipment , which will be effective for financial years beginning on or after January 1, 2022. Proceeds from selling items before the related item of Property, plant and equipment is available for use should be recognized in profit or loss, together with the costs of producing those items. The Corporation will therefore need to distinguish between the costs associated with producing and selling items before the item of Property, plant and equipment (pre-production revenue) is available for use and the costs associated with making the item of Property, plant and equipment available for its intended use. For the sale of items that are not part of a Corporation's ordinary activities, the amendments will require the Corporation to disclose separately the sales proceeds and related production cost recognized in profit or loss and specify the line items in which such proceeds and costs are included in the consolidated statement of comprehensive loss. These amendments will have an impact on the Corporation's consolidated financial statements.

Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

In February 2021, the IASB issued amendments to IAS 8, which added the definition of Accounting Estimates in IAS 8. The amendments also clarified that the effects of a change in an input or measurement technique are changes in accounting estimates, unless resulting from correction of prior period errors. The Corporation is currently evaluating the impact of these amendments on its consolidated financial statements.

4. CRITICAL ACCOUNTING JUDGMENTS AND ASSUMPTIONS

The preparation of these 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. Critical judgments exercised in applying accounting policies with the most significant effect on the amounts recognized in the Financial Statements are described below.

JUDGMENTS

4.1 Impairment of mineral properties

Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and interpretations in many cases.

Determining whether to test for impairment of mineral properties requires Management's judgment, among others, regarding the following: the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed; substantive expenditure on further exploration and evaluation of mineral resources in a specific area is neither budgeted nor planned; exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; or sufficient data exists to indicate that, although a development in a specific area is likely to proceed, the carrying amount of the mineral properties is unlikely to be recovered in full from successful development or by sale.

When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset must be estimated. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs must be determined. Identifying the cash-generating units requires considerable management judgment. In testing an individual asset or cash-generating unit for impairment and identifying a reversal of impairment losses, Management estimates the recoverable amount of the asset or the cash-generating unit. This requires management to make several assumptions as to future events or circumstances. These assumptions and estimates are subject to change if new information becomes available. Actual results with respect to impairment losses or reversals of impairment losses could differ in such a situation and significant adjustments to the Corporation' assets and earnings may occur during the next period.

4.2 Recognition of deferred income tax assets and the measurement of income tax expense

Periodically, the Corporation evaluates the likelihood of whether some portion of the deferred tax assets will not be realized. Once the evaluation is completed, if the Corporation believes that it is probable that some portion of the deferred tax assets will fail to be realized, the Corporation records only the remaining portion for which it is probable that there will be available future taxable profit against which the temporary differences can be utilized. Assessing the recoverability of deferred income tax assets requires Management to make significant judgment.

To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Corporation to realize the net deferred tax assets recorded at the statement of financial position date could be impacted. Significant judgment is required in determining the income tax recovery as there are transactions and calculations for which the ultimate tax determination is uncertain.

4.3 Determination of functional currency

In accordance with IAS 21 "The Effects of Changes in Foreign Exchange Rates", Management determined that the functional currency of the Corporation and its subsidiary is the Canadian dollar.

ESTIMATES AND ASSUMPTIONS

4.4 Environmental monitoring costs

The provisions for environmental monitoring costs are based on estimated future costs using information available at the financial reporting date. Determining these obligations requires significant estimates and assumptions due to the numerous factors that affect the amount ultimately payable. Such factors include estimates of the scope and cost of restoration activities, legislative amendments, known environmental impacts, the effectiveness of reparation and restoration measures and changes in the discount rate. This uncertainty may lead to differences between the actual expense and the provision. At the date of the consolidated statement of financial position, environmental monitoring costs represent Management's best estimate of the charge that will result when the actual obligation is terminated.

5. ESCROW ACCOUNT FOR ENVIRONMENTAL MONITORING

On behalf of Nalunaq's licence holder, an escrow account has been set up with the holder of the licence as holder of the account and the Government of Greenland as beneficiary. The funds in the escrow account have been provided in favour of the Government of Greenland as security for fulfilling the environmental monitoring expenses following the closure of the Nalunaq mine. This environmental monitoring program was completed in 2020.

		2021				2020
		$				$
Balance beginning			460,447				516,996
Effect of translation			(35,810	)			38,553
Payment for environmental monitoring work			-				(95,102	)
Balance ending			424,637				460,447
Non-current portion - escrow account for environmental monitoring			(424,637	)			(460,447	)
Current portion - escrow account for environmental monitoring			-				-

6. MINERAL PROPERTIES

		As at December 31, 2020				Additions				As at December 31, 2021
		$				$				$
Nalunaq			1				-				1
Tartoq			18,431				-				18,431
Vagar			11,103				-				11,103
Naalagaaffiup Portornga			6,334				-				6,334
Nuna Nutaaq			6,076				-				6,076
Saarloq			7,348				-				7,348
Anoritooq			6,389				-				6,389
Sava (previously called Kangerluarsuk)			6,562				-				6,562
Total mineral properties			62,244				-				62,244

		As at December 31, 2019				Additions				As at December 31, 2020
		$				$				$
Nalunaq			1				-				1
Tartoq			18,431				-				18,431
Vagar			11,103				-				11,103
Naalagaaffiup Portornga			6,334				-				6,334
Nuna Nutaaq			6,076				-				6,076
Saarloq			-				7,348				7,348
Anoritooq			-				6,389				6,389
Sava (previously called Kangerluarsuk)			-				6,562				6,562
Total mineral properties			41,945				20,299				62,244

6.1 Nalunaq

Nalunaq A/S holds the gold exploitation licence number 2003/05 on the Nalunaq property (the "Nalunaq Licence") located in South West Greenland. The licence expires in April 2033 with an extension possible up to 20 years.

6.1.1 Collaboration agreement and project schedule

Cyrus Capital Partners LP was the main creditor of Angel Mining PLC, the parent company of Angel Mining (Gold) A/S. Angel Mining PLC went into administration in February 2013 and as part of the Administrator's restructuring process, FBC Mining (Holdings) Ltd. ("FBC Mining") and Arctic Resources Capital S.à r.l. ("ARC") agreed to enter into a collaboration agreement ("Collaboration Agreement") (signed July 15, 2015) to progress the Nalunaq exploration project. FBC Mining is a 100% subsidiary of FBC Holdings S.à r.l which is managed by Cyrus Capital Partners LP.

In addition, ARC, FBC Mining and AEX Gold Limited (previously known as FBC Mining (Nalunaq) Limited) (a 100% subsidiary of FBC Mining) signed on July 17, 2015 the Nalunaq project schedule ("2015 Project Schedule") which was continued following the signature with Nalunaq A/S on March 31, 2017 of the 2016-2017 Nalunaq Project Schedule ("2016-2017 Project Schedule"), (collectively "Project Schedules").

Finally, the conditions relating to a processing plant located on the Nalunaq Licence ("Processing Plant") and a royalty payment were outlined in the 2015 Project Schedule and formalized in the processing plant and royalty agreement ("Processing Plant and Royalty Agreement") signed on March 31, 2017 and the conditions are as follows:

a) AEX Gold Limited transfers the Processing Plant to Nalunaq A/S under the following conditions:

1. An initial purchase price of US$1;
2. A deferred consideration of US$1,999,999 ("Deferred Consideration") on a pay as you go basis until the Deferred Consideration is paid in full. If only part of the Processing Plant is used, then the Deferred Consideration payable shall be reduced by an amount to be agreed by the parties to reflect the value of the part of the Processing Plant used.
3. The Deferred Consideration may be reduced to the extent that the Processing Plant or any part which is being used requires repairs, is not in good working condition or will not be capable of doing the work for which it was designed.
4. Nalunaq A/S may dispose or otherwise deal with the Processing Plant or any part of it at its own cost. If any disposal proceeds (defined as proceeds received minus costs of dealing with the disposal) are received, that disposal proceeds shall be paid to AEX Gold Limited and such amount shall be deemed to be Deferred Consideration. If there are any disposal proceeds remaining after the Deferred Consideration has been paid in full, the disposal proceeds remaining may be retained by Nalunaq A/S.

b) Nalunaq A/S shall pay to AEX Gold Limited a 1% royalty on Nalunaq A/S' net revenue generated on the Nalunaq Licence (total revenue minus production, transportation and refining costs), provided that in respect to the last completed calendar year, the operating profit per ounce of gold exceeded US$500. The cumulative royalty payments over the life of mine are capped at a maximum of US$1,000,000.

6.1.2 Government of Greenland royalty

The Nalunaq Licence and subsequent Addendums does not have a royalty clause. However, according to the Addendum 3 of the Mineral Resources Act enacted on July 1, 2014, the Greenland Government may set terms on the licensee's payment of royalty or consideration, if the Greenland Government and the licensee agree, since the Nalunaq Licence was granted before July 1, 2014. Nalunaq A/S may have to pay to the Government of Greenland a sales royalty of up to 2.5% of the value of the minerals. Nalunaq A/S may on certain terms offset an amount equal to paid corporate income tax and corporate dividend tax against the sales royalty to be paid.

6.1.3 Exploration commitments and exploitation milestones

After Nalunaq A/S has submitted its statements of expenses for the Nalunaq Licence for the 2017 and 2018 years, the MLSA has approved Nalunaq A/S' transition to the subsequent period (sub period 4) without a rollover of the unspent amount.

The Government of Greenland has been confirmed with Addendum No. 5 dated March 2020 which was signed by the Government of Greenland and therefore became effective on March 13, 2020, to extend the requirement dates to perform the following tasks. No later than December 31, 2022, the licensee shall prepare an environmental impact assessment, make a social impact assessment and perform an impact benefit agreement. The time limit for commencement of exploitation is January 1, 2023.

Failure to satisfy any of the conditions set forth in the addendums to the Nalunaq Licence may result in the MLSA revoking the Nalunaq Licence without further notice.

6.2 Tartoq

6.2.1 Purchase of the Tartoq Licence

Nalunaq A/S signed on July 6, 2016 a sale and purchase agreement, to purchase from Nanoq Resources Ltd. the Tartoq exploration licence number 2015/17 located in Southwest Greenland, for a total consideration of $7,221. The licence originally expired December 31, 2024 with an entitlement to a 5-year extension. The renewal for a period of five years has been confirmed with Addendum No. 3 dated February 2020 which was signed by Nalunaq A/S on February 13, 2020 and became effective on March 13, 2020 when it was signed by the Government of Greenland. In response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by two years, therefore the licence expires December 31, 2026.

6.2.2 Exploration commitments

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. For the exploration licence, Nalunaq A/S was required to complete DKK nil of exploration activities in 2021, adding the non-fulfilled exploration obligation 2020 of DKK 514,901, for a total of DKK 514,901 ($99,702 using the exchange rate as at December 31, 2021) exploration obligation in 2021 which was confirmed by MLSA and postponed to 2022. For the purpose of crediting expenditures against the amounts set forth in the Tartoq Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Tartoq exploration licence for the 2021 year to the MLSA by April 1, 2022.

6.3 Naalagaaffiup Portornga (Land Adjacent to Existing Tartoq Licence)

6.3.1 Purchase of the Naalagaaffiup Portornga Licence

The Corporation acquired the right to conduct exploration activities on approximately 170km ² of land in an area adjacent to the Tartoq Licence. The exploration rights have been granted to the Corporation under a new separate exploration Licence 2018/17 Naalagaaffiup Portornga and the licence had an original expiry date of December 31, 2022 with an entitlement to a 5-year extension. The licence application has been approved and all required documentation was signed by the Corporation on January 16, 2018 and the licence became effective on February 19, 2018 when it was signed by the Greenland authorities. In response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by two years, therefore the licence expires December 31, 2024.

6.3.2 Exploration commitments

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. For the exploration licence, Nalunaq A/S was required to complete DKK nil of exploration activities in 2021, reducing by the total credit from 2020 of DKK 16,400, for a total credit of DKK 16,400 (credit of $3,176 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Naalagaaffiup Portornga Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Naalagaaffiup Portornga exploration licence for the 2021 year to the MLSA by April 1, 2022.

6.4 Vagar

6.4.1 Purchase of the Vagar Licence

Nalunaq A/S entered into a sale and purchase agreement with NunaMinerals A/S, acting through its bankruptcy receiver, on February 6, 2017 to acquire the Vagar exploration licence number 2006/10 ("Vagar Licence") located in Western Greenland, along with all mineral exploration and mining-related data, maps and reports pertaining to the Vagar Licence, studies and reports, for a purchase price of $9,465 (DKK 50,000). Upon the approval of the Greenland authorities received on October 30, 2017, Nalunaq A/S signed the paperwork to complete the licence transfer, which became effective upon the Greenland authorities executing the document on January 18, 2018. The licence originally expired December 31, 2021 with a possible 6-year extension. In response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by two years, therefore the licence expires December 31, 2023.

6.4.2 Exploration commitments

Nalunaq A/S asked in December 2019 for a reduction of the size of the area covered by the licence to 292km ² . This reduction of the size of the area has been confirmed with Addendum No. 9 dated January 2020 which was signed by Nalunaq A/S in January 23, 2020 and became effective on March 13, 2020 when it was signed by the Government of Greenland.

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. For the exploration licence, Nalunaq A/S was required to complete DKK nil of exploration activities in 2021, reducing by the total credit from 2020 of DKK 2,517,299, for a total credit of DKK 2,517,299 (credit of $487,432 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Vagar Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Vagar exploration licence for the 2021 year to the MLSA by April 1, 2022.

6.5 Nuna Nutaaq

6.5.1 Purchase of the Nuna Nutaaq Licence

The Corporation acquired the right to conduct exploration activities on approximately 266km ² of land in an area of Itillersuaq near Narsaq in South Greenland. The exploration rights have been granted to the Corporation under a new separate Exploration Licence 2019/113 Nuna Nutaaq. The licence application has been approved and all required documentation was signed by the Corporation on September 13, 2019 and the licence became effective on September 26, 2019 when it was signed by the Government of Greenland. The licence originally expired December 31, 2023 with an entitlement to a 5-year extension. In response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by two years, therefore the licence expires December 31, 2025.

6.5.2 Exploration commitments

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. For the exploration licence, Nalunaq A/S was required to complete DKK nil of exploration activities in 2021, reducing by the total credit from 2020 of DKK 96,972, for a total credit of DKK 96,972 (credit of $18,777 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Nuna Nutaaq Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Nuna Nutaaq exploration licence for the 2021 year to the MLSA by April 1, 2022.

6.6 Saarloq

6.6.1 Purchase of the Saarloq Licence

The Corporation acquired the right to conduct exploration activities on approximately 818km ² of land in the areas of Quassugaarsuk and Sermeq Kangilleq in South Greenland. The exploration rights have been granted to the Corporation under a new separate Exploration Licence 2020/31, referred to as Saarloq. The licence application has been approved and all required documentation was signed by the Corporation on May 15, 2020 and the licence became effective on May 28, 2020 when it was signed by the Government of Greenland. The licence originally expired December 31, 2024 with an entitlement to a 5-year extension. In response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by two years, therefore the licence expires December 31, 2026.

6.6.2 Exploration commitments

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. For the exploration licence, Nalunaq A/S was required to complete DKK nil of exploration activities in 2021, reducing by the total credit from 2020 of DKK 271,382, for a total credit of DKK 271,382 (credit of $52,549 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Saarloq Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Saarloq exploration licence for the 2021 year to the MLSA by April 1, 2022.

6.7 Anoritooq

6.7.1 Purchase of the Anoritooq Licence

The Corporation acquired the right to conduct exploration activities on approximately 1,710km ² of land in the areas of Anoritooq and Kangerluluk in South Greenland. The exploration rights have been granted to the Corporation under a new separate Exploration Licence 2020/36, referred to as Anoritooq. The licence application has been approved and all required documentation was signed by the Corporation on June 11, 2020 and the licence became effective on June 24, 2020 when it was signed by the Government of Greenland. In October 2020, the Corporation was granted an addendum to the Anoritooq Licence, increasing the size of the licence to 1,889km ² and became effective November 6, 2020 when it was signed by the Government of Greenland. The licence originally expired December 31, 2024 with a possible 5-year extension. In response to the COVID 19 pandemic, the Government of Greenland gave an extension of the licence period for all exploration licences by two years, therefore the licence expires December 31, 2026.

6.7.2 Exploration commitments

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. For the exploration licence, Nalunaq A/S was required to complete DKK nil of exploration activities in 2021, reducing by the total credit from 2020 of DKK 516,903, for a total credit of DKK 516,903 (credit of $100,089 using the exchange rate as at December 31, 2021) so there is no exploration obligation in 2021 which was confirmed by MLSA. For the purpose of crediting expenditures against the amounts set forth in the Anoritooq Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Anoritooq exploration licence for the 2021 year to the MLSA by April 1, 2022.

6.8 Sava (previously called Kangerluarsuk)

6.8.1 Purchase of the Sava Licence

The Corporation acquired the right to conduct exploration activities on approximately 335km ² of land in the area of Eqaluit Iluat in South Greenland. The exploration rights have been granted to the Corporation under a new separate Exploration Licence 2021/02, referred to as Sava. The licence application has been approved and all required documentation was signed by the Corporation on October 13, 2020 and the licence became effective on November 6, 2020 when it was signed by the Government of Greenland. The licence originally expired December 31, 2025 with a possible 5-year extension. In response to the COVID 19 pandemic, the Government of Greenland gave in December 2020, an extension of the licence period for all exploration licences by one year, therefore the licence expires December 31, 2026.

6.8.2 Exploration commitments

In response to the COVID 19 pandemic, the Government of Greenland set the exploration obligation for years 2020 and 2021 to DKK nil which also means that the transferred non-fulfilled exploration obligation will be postponed by two years. The exploration commitments for this new exploration licence are DKK nil ($nil using the exchange rate as at December 31, 2021) in 2021. For the purpose of crediting expenditures against the amounts set forth in the Sava Licence, actual expenditures are multiplied by a factor of between 1.5 and 3, depending upon the type of expenditures made. If these obligations are not met, certain measures may be taken by the licence holder to rectify the situation, including reducing the area of the licence proportionately to the spending shortfall or rolling over the exploration commitment to the next period subject to approval from the MLSA. Nalunaq A/S submitted its statements of expenses for the Sava exploration licence for the 2020 and 2021 years to the MLSA by April 1, 2022.

6.9 Genex

On October 16, 2017, Nalunaq A/S was awarded a prospecting licence number 2017/45 covering West Greenland, in this context defined as areas south of 78ºN and west of 44ºW. It is valid for a term of five years until December 31, 2021. This licence has expired and Nalunaq A/S is in the process of applying for a replacement licence with the Government of Greenland. Nalunaq A/S is not obligated to spend exploration expenses regarding this licence area during this period.

On September 26, 2019, Nalunaq A/S was granted a prospecting licence number 2019/146 covering East Greenland, in this context defined as areas south of 75ºN and east of 44ºW. It is valid for a term of five years until December 31, 2023. Nalunaq A/S is not obligated to spend exploration expenses regarding this licence area during this period.

7. CAPITAL ASSETS

		Field equipment and infrastructure				Vehicles and rolling stock				Equipment (including software)				Right-of-use assets (note 8)				Total
		$				$				$				$				$
2020
Opening net book value			271,977				86,656				8,470				-				367,103
Additions			-				245,734				175,364				841,080				1,262,178
Depreciation			(125,774	)			(75,525	)			(6,782	)			(20,186	)			(228,267	)
Closing net book value			146,203				256,865				177,052				820,894				1,401,014
As at December 31, 2020
Cost			387,323				533,800				185,878				841,080				1,948,081
Accumulated depreciation			(241,120	)			(276,935	)			(8,826	)			(20,186	)			(547,067	)
Closing net book value			146,203				256,865				177,052				820,894				1,401,014

		Field equipment and infrastruc-ture				Vehicles and rolling stock				Equipment (including software)				Construc-tion In Progress				Right-of-use assets (note 8)				Total
		$				$				$				$				$				$
2021
Opening net book value			146,203				256,865				177,052				-				820,894				1,401,014
Additions			1,983,718				4,195,205				-				7,452,668				-				13,631,591
Depreciation			(140,807	)			(147,361	)			(21,041	)			-				(80,744	)			(389,953	)
Closing net book value			1,989,114				4,304,709				156,011				7,452,668				740,150				14,642,652
As at December 31, 2021
Cost			2,371,041				4,729,005				185,878				7,452,668				841,080				15,579,672
Accumulated depreciation			(381,927	)			(424,296	)			(29,867	)			-				(100,930	)			(937,020	)
Closing net book value			1,989,114				4,304,709				156,011				7,452,668				740,150				14,642,652

Depreciation of capital assets 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 $299,771 ($206,153 - 2020) was expensed as exploration and evaluation expenses in 2021.

As at December 31, 2021, the Corporation had capital asset purchase commitments, net of deposits on order, of $nil ($8,796,288 as at December 31, 2020). These commitments related to purchases of equipment, infrastructure and vehicles.

As of December 31, 2021, the amount of $7,452,668 of construction in progress is related to equipment and infrastructure received or in storage and which will be installed at the appropriate time.

8. LEASE LIABILITIES

		As at December 31, 2021				As at December 31, 2020
		$				$
Balance beginning			829,813				-
Additions			-				841,080
Principal repayment			(65,900	)			(11,267	)
Balance ending			763,913				829,813
Non-current portion - lease liabilities			(713,078	)			(763,913	)
Current portion - lease liabilities			50,835				65,900

The Corporation has presently only one lease for its office. In October 2020, the Corporation started the lease for five years and five months including five free rent months during this period. The monthly rent is $8,825 until March 2024 and $9,070 for the balance of the lease. The Corporation has the option to renew the lease for an additional five-year period at $9,070 monthly rent indexed annually to the increase of the consumer price index of the previous year for the Montreal area.

A right-of-use asset of $841,080 and an equivalent long term lease liability was recorded as of October 1, 2020, with a 5% incremental borrowing rate and considering that the renewal option would be exercised. Depreciation of right-of-use assets is being recorded in general and administrative expenses in the consolidated statement of comprehensive loss, under depreciation. Depreciation of $80,744 ($20,186 in 2020) was expensed as general and administration expenses in 2021.

9. ENVIRONMENTAL MONITORING PROVISION

		2021				2020
		$				$
Balance beginning			-				174,864
Effect of foreign exchange translation			-				13,125
Payment from cash held in escrow account for environmental monitoring			-				(95,102	)
Accretion expense			-				5,959
Change in estimates			-				(98,846	)
Balance ending			-				-
Non-current portion - environmental monitoring provision			-				-
Current portion - environmental monitoring provision			-				-

In September 2020, a final payment to settle the environmental monitoring obligations attached to the Nalunaq Licence was completed and no further payments are expected to be made regarding this obligation.

10. SHARE CAPITAL

10.1 Share Capital

The Corporation is authorized to issue an unlimited number of common voting shares and an unlimited number of preferred shares issuable in series, all without par value.

10.2 AIM Admission

During the quarter ended September 30, 2020, the Corporation completed the admission of its entire issued share capital to trading on the AIM market of the London Stock Exchange and trading commenced on AIM on July 31, 2020 ("Admission") under the ticker AEXG.

10.3 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 per share for subscription made in Canadian dollars and GBP 0.45 per share for subscriptions made in British pounds sterling, for gross proceeds to the Corporation of $74,550,202 (the "Fundraising").

The Corporation incurred total issuance costs of $6,312,546 in relation to this process.

Certain officers and directors of the Corporation purchased an aggregate of 1,177,581 common shares for $906,737 (note 20). The officers and directors of the Corporation subscribed to the Fundraising under the same terms and conditions as set forth for all subscribers.

11. WARRANTS

11.1 Warrants

Changes in the Corporation's warrants are as follow:

		2021												2020
		Number of warrants				Carrying Value				Weighted average exercise price								Number of warrants				Carrying Value				Weighted average exercise price
						$				$												$				$
Balance, beginning			-				-				-								13,157,895				1,137,816				0.45
Exercised			-				-				-								(11,272,271	)			(974,758	)			0.45
Expired			-				-				-								(1,885,624	)			(163,058	)			0.45
Balance, end			-				-				-								-				-				-

In 2020, the Corporation 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. The remaining Warrants amounting to 1,885,624 expired.

11.2 Agent warrants

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

		2021												2020
		Number of warrants				Carrying Value				Weighted average exercise price				Number of warrants				Carrying Value				Weighted average exercise price
						$				$								$				$
Balance, beginning			-				-				-				1,067,739				321,788				0.49
Exercised			-				-				-				(335,627	)			(103,944	)			0.50
Expired			-				-				-				(732,112	)			(217,844	)			0.49
Balance, end			-				-				-				-				-				-

12. STOCK OPTIONS

An incentive stock option plan (the "Plan") was approved initially in 2017 and renewed by shareholders on June 9, 2021. 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 to 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.

On June 9, 2021, the Corporation granted the CFO with 900,000 stock options exercisable at an exercise price of $0.59, with an expiry date of December 31, 2027. 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 $360,000 for an estimated fair value of $0.40 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 75.85% expected volatility, 1.07% risk-free interest rate and 6.6 years options expected life. The expected life and expected volatility were estimated by benchmarking comparable companies to the Corporation.

On July 5, 2021, the Corporation granted to an employee 100,000 stock options exercisable at an exercise price of $0.50, with an expiry date of July 5, 2026. The stock options vest in three equal annual tranches from the grant date. Those options were granted at an exercise price equal to the closing market value of the shares the previous day of the grant. Total stock-based compensation costs amount to $29,000 for an estimated fair value of $0.29 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 71.40% expected volatility, 1.01% risk-free interest rate and 5 years options expected life. The expected life and expected volatility were estimated by benchmarking comparable companies to the Corporation.

On September 13, 2021, the Corporation granted to an employee 100,000 stock options exercisable at an exercise price of $0.50, with an expiry date of September 13, 2026. The stock options vest in three equal annual tranches from the grant date. Those options were granted at an exercise price equal to the closing market value of the shares the previous day of the grant. Total stock-based compensation costs amount to $29,000 for an estimated fair value of $0.29 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 69.49% expected volatility, 0.86% risk-free interest rate and 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:

		2021								2020
		Number of options				Weighted average exercise price				Number of options				Weighted average exercise price
						$								$
Balance, beginning			7,745,000				0.51				5,650,000				0.43
Granted			1,100,000				0.57				2,195,000				0.70
Expired			(1,910,000	)			0.52				-				-
Exercised			-				-				(100,000	)			0.38
Balance, end			6,935,000				0.51				7,745,000				0.51
Balance, end exercisable			6,801,666				0.51				7,745,000				0.51

Stock options outstanding and exercisable as at December 31, 2021 are as follows:

	Number of options outstanding				Number of options exercisable				Exercise price			Expiry date
									$
		1,160,000				1,160,000				0.50		July 13, 2022
		1,360,000				1,360,000				0.45		August 22, 2023
		1,820,000				1,820,000				0.38		December 31, 2025
		100,000				33,333				0.50		July 5, 2026
		100,000				33,333				0.50		September 13, 2026
		1,495,000				1,495,000				0.70		December 31, 2026
		900,000				900,000				0.59		December 31, 2027
		6,935,000				6,801,666

13. CAPITAL MANAGEMENT

The capital of the Corporation consists of the items included in equity and balances thereof and changes therein are depicted in the consolidated statement of changes in equity.

The Corporation' objectives are to safeguard the Corporation' ability to continue as a going concern in order to pursue its acquisition, exploration and evaluation activities and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Corporation manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. As the Corporation does not have cash flow from operations, to maintain or adjust the capital structure, the Corporation may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash. In order to maximize ongoing development efforts and to continue operations, the Corporation does not pay out dividends.

The Corporation is not subject to externally imposed restrictions on capital.

14. EMPLOYEE REMUNERATION

Salaries

		2021				2020
		$				$
Salaries			5,343,482				1,154,302
Director's fees			628,652				252,083
Benefits			878,580				218,740
			6,850,714				1,625,125
Less : salaries and benefits presented in E&E expenses			(3,569,124	)			(1,024,094	)
Salaries disclosed in general and administrative expenses			3,281,590				601,031

15. EXPLORATION AND EVALUATION EXPENSES

2021		Nalunaq				Vagar				Tartoq				Naalagaaffiup Portornga				Nuna Nutaaq				Saarloq				Anoritooq				Sava (previously called Kangerluarsuk)				Genex				Total
		$				$				$				$				$				$				$				$				$				$
Geochemistry			-				227,764				80,631				-				-				-				-				292,883				-				601,278
Geology			2,332,281				427,903				19,413				1,105				113,309				6,620				57,905				219,458				11,039				3,189,033
Lodging and on-site support			479,921				-				248				-				-				-				-				-				-				480,169
Underground works			118,017				-				-				-				-				-				-				-				-				118,017
Drilling			3,647,452				-				130				-				-				-				-				-				-				3,647,582
Analysis			120,548				1,250				-				-				469				-				-				-				-				122,267
Transport			35,324				-				957				-				-				-				-				-				-				36,281
Supplies and equipment			1,998				-				-				-				-				-				-				-				-				1,998
Helicopter Charter			181,069				124,843				-				-				128,328				-				11,772				295,147				33,302				774,461
Logistic support			1,009,553				-				-				-				-				-				-				-				-				1,009,553
Insurance			41,197				-				-				-				-				-				-				-				-				41,197
Project Engineering costs			3,753,320				20,461				-				-				21,039				-				1,927				-				5,461				3,802,208
Government fees			137,453				8,419				8,419				-				-				-				-				-				1,949				156,240
Depreciation			299,771				-				-				-				-				-				-				-				-				299,771
Exploration and evaluation expenses			12,157,904				810,640				109,798				1,105				263,145				6,620				71,604				807,488				51,751				14,280,055

2020		Nalunaq				Vagar				Tartoq				Naalagaaffiup Portornga				Nuna Nutaaq				Saarloq				Anoritooq				Sava (previously called Kangerluarsuk)				Genex				Total
		$				$				$				$				$				$				$				$				$				$
Geology			1,968,010				158,392				11,426				14,110				18,630				32,549				55,760				9,937				-				2,268,814
Lodging and on-site support			278,440				7,088				-				-				-				-				-				-				-				285,528
Underground works			75,396				-				-				-				-				-				-				-				-				75,396
Drilling			186,955				-				-				-				-				-				-				-				-				186,955
Safety and environment			21,402				-				-				-				-				-				-				-				-				21,402
Analysis			259,188				263				-				-				-				-				-				-				-				259,451
Transport			638,533				519				-				-				104				156				259				-				-				639,571
Helicopter Charter			4,922				40,451				-				-				30,115				-				6,789				-				-				82,277
Logistic support			339,200				19,652				19,652				19,652				19,652				-				-				-				-				417,808
Insurance			37,990				-				-				-				-				-				-				-				-				37,990
Maintenance infrastructure			2,434,862				14,116				-				-				2,823				4,235				7,058				-				-				2,463,094
Government fees			87,224				8,468				14,615				-				-				-				-				-				961				111,268
Depreciation			206,153				-				-				-				-				-				-				-				-				206,153
Exploration and evaluation expenses			6,538,275				248,949				45,693				33,762				71,324				36,940				69,866				9,937				961				7,055,707

16. GENERAL AND ADMINISTRATIVE

		2021				2020
		$				$
Salaries and benefits			2,652,938				348,948
Management and consulting fees			-				633,220
Director's fees			628,652				252,083
Professional fees			2,382,916				1,077,541
Marketing and investor relations			791,722				466,465
Insurance			571,364				218,355
Travel and other expenses			1,884,189				140,135
Regulatory fees			326,464				132,315
Depreciation			90,182				22,114
General and administrative			9,328,427				3,291,176

17. FINANCE COSTS

		2021				2020
		$				$
Accretion expense - environmental monitoring provision			-				5,959
Financing fees lease			39,994				6,872
Finance costs			39,994				12,831

18. INCOME TAXES

Tax expense differs from the amount computed by applying the combined Canadian Statutory and Greenlandic income tax rates, applicable to the Corporation, to the loss before income taxes due to the following:

		2021				2020
		$				$
Net loss before income taxes			(24,689,239	)			(12,339,112	)
Income tax rates			26.5	%			26.5	%
Income tax recovery			(6,542,648	)			(3,269,865	)
Increase (decrease) attributable to:
Non deductible expenses			104,109				274,878
Difference in statutory tax rate			265,772				111,110
Changes in unrecognized deferred tax assets			6,172,767				2,883,877
Tax recovery			-				-

The analysis of the Corporation's deferred tax assets and liabilities as at December 31, 2021 and 2020 is as follows:

		2021				2020
		$				$
Deferred tax assets (liabilities):
Capital assets			(437,033	)			(25,949	)
Non-capital losses			437,033				25,949
			-				-

The Corporation records deferred income tax assets to the extent that it is probable that sufficient taxable income will be realized during the carry-forward period to utilize these net future tax assets.

The significant components of deductible temporary differences and unused tax losses for which the benefits have not been recorded on the consolidated statement of financial position as at December 31, 2021 are as follows:

Greenland		As at December 31, 2021
		$
Non-capital losses carry forwards			36,398,528

As the Corporation is a mineral licence holder, the non-capital losses in Greenland have no expiration date.

18. INCOME TAXES (CONT'D)

Canada		As at December 31, 2021
		$
Non-capital losses carry forwards expiring in 2038			965,032
Non-capital losses carry forwards expiring in 2039			1,272,338
Non-capital losses carry forwards expiring in 2040			1,210,346
Non-capital losses carry forwards expiring in 2041			5,622,490
Non-capital losses carry forwards expiring in 2042			8,302,287

19. NET LOSS PER SHARE

The calculation of basic and diluted net loss per share for the year ended December 31, 2021, was based on the net loss attributable to shareholders of $24,689,239 ($12,339,112 for the year ended December 31, 2020) and the weighted average number of common shares outstanding for the year ended December 31, 2021 of 177,098,737 (119,729,081 for the year ended December 31, 2020). As a result of the net loss for the years ended December 31, 2021 and 2020, all potentially dilutive common shares are deemed to be antidilutive and thus diluted net loss per share is equal to the basic net loss per share for these periods.

20. RELATED PARTY TRANSACTIONS AND KEY MANAGEMENT COMPENSATION

The Corporation's key management are the members of the board of directors, the President and Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Vice President Exploration and the Corporate Secretary. Key management compensation is as follows:

		2021				2020
		$				$
Short-term benefits
Management and consulting fees			-				633,220
Professional fees			64,162				-
Salaries and benefits			1,639,334				292,562
Salaries and benefits included in the E&E expenses			71,349				72,170
Professional fees included in the E&E expenses			-				261,292
Director's fees			628,652				252,083
Long-term benefits
Stock-based compensation (note 12)			365,909				916,500
Total compensation			2,769,406				2,427,827

The compensation for Joan Plant (Corporate Secretary) was charged through FBC BA for $nil for 2021 ($161,925 for 2020).

In addition to the amounts listed above in the compensation to key management, following are the related party transactions, in the normal course of operations:

• A firm in which Georgia Quenby (director until June 9, 2021) is a partner charged legal professional fees for $9,934 ($168,309 in 2020);
• A company controlled by Martin Ménard (Chief Operating Officer from July 9, 2019 to June 30, 2021) charged engineering professional fees of $12,240 for his staff ($765,235 in 2020). Martin Ménard is the son of Robert Ménard, director until April 27, 2021;
• Nicolas and Catherine Ménard and Samuel Martel, engineering consultants (the son, the daughter and the son-in-law of Robert Ménard, director until April 27, 2021 and the brother, the sister and brother-in-law of Martin Ménard, Chief Operating Officer until June 30, 2021) were paid $324,799 ($464,896 in 2020);
• As at December 31, 2021, the balance due to those related parties listed above and in the compensation to key management amounted to $173,254 ($150,829 as at December 31, 2020).

Following are the related party transactions, outside of the normal course of operations:

• Directors and officers of the Corporation participated in the July 31, 2020 fundraising for $906,737 ($nil in 2021). The directors and officers subscribed to the fundraising in 2020 under the same terms and conditions set forth to all subscribers.
• Key management are subject to employment agreements which provide for payments on termination, without cause or following a change of control, providing for payments up to one base salary.

The compensation of directors is as follows:

		2021												2020
		Short-term benefits (a)				Stock-based compensation				Total compensation								Short-term benefits (a)				Stock-based compensation				Total compensation
		$				$				$								$				$				$
Eldur Olafsson			471,815				-				471,815								406,265				211,500				617,765
George Fowlie (1)			79,919				-				79,919								270,888				117,500				388,388
Jaco Crouse			334,757				360,000				694,757								-				-				-
Graham Stewart			195,228				-				195,228								110,000				188,000				298,000
Georgia Quenby (2)			43,788				-				43,788								55,833				47,000				102,833
Sigurbjorn Thorkelsson			94,478				-				94,478								41,250				-				41,250
Robert M?nard (3)			30,417				-				30,417								45,000				47,000				92,000
Liane Kelly			29,913				-				29,913								-				-				-
Line Frederiksen			47,962				-				47,962								-				-				-
David Neuhauser			47,962				-				47,962								-				-				-
Warwick Morley-Jepson			138,904				-				138,904								-				-				-
Total compensation			1,515,143				360,000				1,875,143								929,236				611,000				1,540,236

^{(a) Short-term benefits comprise salary, director fees as applicable, annual bonus and pension.}

^{(1) George Fowlie ceased to be Director 26th August 2021}

^{(2) Georgia Quenby ceased to be Non-Executive Director 9th June 2021}

^{(3) Robert Ménard ceased to be Non-Executive Director 27 April 2021}

The directors participated in the July 31, 2020 fundraising for $836,596 ($nil in 2021). The director participation was as follows:

		2021				2020
		Number of new shares				Number of new shares
Eldur Olafsson			-				222,222
George Fowlie			-				100,000
Graham Stewart			-				222,222
Georgia Quenby			-				-
Sigurbjorn Thorkelsson			-				444,444
Robert Ménard			-				97,600
Total			-				1,086,488

21. FINANCIAL INSTRUMENTS

The Corporation is exposed to various financial risks resulting from both its operations and its investment activities. The Management manages financial risks. The Corporation does not enter into financial instruments agreements, including derivative financial instruments, for speculative purposes. The Corporation's main financial risks exposure and its financial policies are described below.

21.1 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Corporation's cash and escrow account for environmental monitoring are exposed to credit risk. Management believes the credit risk on cash and escrow account for environmental monitoring is small because the counterparties are chartered Canadian and Greenlandic banks.

21.2 Liquidity risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities. The Corporation seeks to ensure that it has sufficient capital to meet short-term financial obligations after taking into account its exploration and operating obligations and cash on hand. The Corporation anticipates seeking additional financing in order to fund general and administrative costs and exploration and evaluation costs. The Corporation's options to enhance liquidity include the issuance of new equity instruments or debt.

The following table summarizes the carrying amounts and contractual maturities of financial liabilities:

		As at December 31, 2021												As at December 31, 2020
		Trade and other payables				Lease liabilities				Trade and other payables								Lease liabilities
		$				$				$								$
Within 1 year			2,049,249				88,245				831,899								105,894
1 to 5 years			-				431,910				-								411,320
5 to 10 years			-				435,343				-								544,178
Total			2,049,249				955,498				831,899								1,061,392

21.3 Currency risk

As at December 31, 2021 and 2020, a portion of the Corporation's transactions are denominated in DKK, Euros, US$ and British Pounds (GBP) to the extent such currencies are different from the relevant group entities' functional currency.

The Corporation had the following balances in currencies:

As at December 31, 2021		In DKK				In Euros				In US$				In GBP
Cash			2,145,132				526,043				5,314,298				882
Escrow account for environmental monitoring			2,193,001				-				-				-
Trade and other payables			(3,740,924	)			(20,987	)			(44,301	)			(36,563	)
			597,209				505,056				5,269,997				(35,681	)
Exchange rate			0.1936				1.4401				1.2697				1.7155
Equivalent to CAD			115,620				727,331				6,691,315				(61,211	)

Based on the above net exposures as at December 31, 2021, and assuming that all other variables remain constant, a 10% appreciation or depreciation of the Canadian dollar against the DKK, Euro, US$ and GBP by 10% would decrease/increase profit or loss by $747,306.

As at December 31, 2020		In DKK				In Euros				In US$				In GBP
Cash			324,536				3,178,405				6,658,837				2,142
Escrow account for environmental monitoring			2,193,001				-				-				-
Trade and other payables			(977,053	)			-				(2,214	)			(40,603	)
			1,540,484				3,178,405				6,656,623				(38,461	)
Exchange rate			0.2100				1.5625				1.2741				1.7390
Equivalent to CAD			323,502				4,966,258				8,481,203				(66,884	)

Based on the above net exposures as at December 31, 2020, and assuming that all other variables remain constant, a 10% appreciation or depreciation of the Canadian dollar against the DKK, Euro, US$ and GBP by 10% would decrease/increase profit or loss by $1,370,409.

21.4 Fair value risk

Fair value estimates are made at the consolidated statement of financial position date, based on relevant market information and other information about financial instruments. As at December 31 2021, the Corporation' financial instruments are cash, escrow account for environmental monitoring, trade and other payables and lease liabilities. For all the financial instruments, the amounts reflected in the consolidated statement of financial position are carrying amounts and approximate their fair values due to their short-term nature.

22. SUBSEQUENT EVENTS

On January 17, 2022, the Corporation granted to its directors, officers, employees and consultant 4,100,000 stock options exercisable at an exercise price of $0.60, with an expiry date of January 17, 2027. The stock options vested 100% at the grant date. Those options were granted at an exercise price equal to the closing market value of the shares the previous day of the grant. Total stock-based compensation costs amount to $1,435,000 for an estimated fair value of $0.35 per option. The fair value of the options granted was estimated using the Black-Scholes model with no expected dividend yield, 69.38% expected volatility, 1.51% risk-free interest rate and 5 years options expected life. The expected life and expected volatility were estimated by benchmarking comparable companies to the Corporation.

SOURCE: AEX Gold Inc.