Amaroq Ltd

All right, good morning, everyone, and welcome to Amarok Minerals Q3 2024 results presentation. On this call with me today, you've got Eldar Olafsson, Amarok CEO, and Elit Arnasan, CFO. The presenters will walk through the presentation, and then after the call, we're happy to address any questions you might have. You should be able to submit written questions using the Q&A panel, and you should be able to submit these at any time during the call. So I hope that answers any questions, and I will hand over to Erlef Arnason to open the call.

Thank you, Alfie. Good morning, everybody. It's a pleasure to be with you all here. I will be walking through this relatively short presentation together with Erlef Arnason, our CFO, today. And I'll kind of give you a little bit of background, but then we'll go into the actual quarter and give some feedback to also what is happening going forward with the company. So I'll start here. Actually, on this first picture, what you can see here is our new processing plant that has been built and enclosed and is effectively ready. So I will just go on through here. Right. Just as I started here. So we have now followed our strategy for the past few years. with these four sectors, which is development, mining, exploration, logistics, servicing, and energy. We've now built our first mine. Ninety-eight, nine percent of our focus has been to build the Nalnak mine. So the processing plant, phase one, is ready. It's being tested. The mining is has been ongoing since May, and we've been stockpiling ore, and we've been ramping up development and mining, which we'll go through a little bit later in the presentation. The focus here with this asset is to not only mine and ramp up production, but also grow the resources within Nanomag. And for the past two years, we've been drilling on the surface, and now we're also drilling underground, which opens up a whole new possibility for the company where we can be drilling all year round and expanding the resources and then start building up what we call reserve. So this is a very exciting moment for the company where we're getting into the stage where we always wanted to be. The focus is then to produce gold, generate cash flow, grow the resources, and then we focus on exploration. And we have twofold exploration. In the exploration, we are obviously trying to find world-class deposit, scalable potential deposit that has an impact on demand supply in the world. That's the purpose. And we have twofold. On the one hand, we have the gold, which we own 100%. And they are assets that can be more near-term production assets. And I want to highlight especially Nanog that we drilled this year, but also Vagar and other satellite deposits around Nanog. Now that we've built the plant, we then have the opportunity while we are exploring and developing the next few assets, actually start using that plant and the potential scalability of the plant because we can scale that up. to process more ore and build up more resources. And that has a huge impact on the growth of the company and cash flow generation, immediate cash flow generation and growth of the company. And we have the strategic minerals where we drilled three different sites this year. We are effectively carried there with our great friends and partner, JECA. We're in a partnership or joint venture with them. They put in, in 2022, $30 million Canadian dollars, and we're in our second year of a program there. looking for copper and nickel predominantly. Logistics and servicing. We are in Greenland. We have to take care of all of our logistics and servicing because this industry doesn't exist in Greenland. This has meant that we had to acquire servicing assets such as drill rigs, mining equipment, all of these different things, and manage it, maintain it directly ourselves. And the reason why we have to acquire it is that other service providers, when they come to Greenland, they try to amortize their equipment sometimes over one year or even less. But as we can do that over a much longer period, and therefore we can lower our cost, which we are doing both in development mining and exploration. So what we are effectively doing is we're moving all of these assets that we had to buy to lower our cost into a separate vehicle where we actually start leasing this asset into these two companies. And why are we doing that? Well, there has been a huge demand and a lot of... discussion with other operators of Greenland where they ask, you know, can we also borrow your equipment? Can you also provide something for us? And that's something we see as an opportunity we can do and to actually lower costs for everybody. Last but not least, and we'll go through it in a minute, is energy. We also have to build our own power plant. We have a power plant for approximately 3.5 megawatts in Nalana up to date. We also have to run our equipment. And we measured all of our power, and more importantly, we measured all of the diesel we're using. In the valley of Nalnag, you have a small river, a very simple small-scale hydro, which we have already advanced with a project that we will have a feasibility study on that in Q1 next quarter. And the main purpose there is that by generating about up to a megawatt of electricity from hydro mainly, we can save two million Canadian dollars annually in cost by not purchasing that diesel that is then provided. So you can see with this strategy, what we have done maybe for the first time is that we quantified all of these different aspects. So if we are not owning our own equipment, we need to bring them in. It's very high cost for us, and therefore we rather buy it ourselves, amortize it over a longer period of time, and we rent it directly to us rather than having it rented from someone else who takes too much of a charge. Renewable energy, we're trying to find ways to make the profit of Nanolac higher by reducing the diesel amount that we have to purchase every year. So this all covers on the whole overall strategy for the company. And this all happens because we've unlocked and built the first project. A background of Greenland, and I think this is important because in different markets it's important to understand what Greenland is. Greenland is part of the Nordics. Not only geologically, so you can see Greenland here on the picture, Norway, Sweden and Finland, it follows the same geological features where Greenland has the biggest growth potential. There is growth potential also with new technology and new ways to apply exploration in places, obviously especially in the north of Norway, Sweden and Finland. The legislation It's similar. Most of these legislations in these countries are either built on Danish legislation or similar legislation. So we're working within the same legislative framework. The legislation in Greenland is very clear. It's based on how you operate, how you develop your project through various different environmental impact assessments, social impact assessments, impact benefit agreements, how you get the license, how you operate. This is all then verified by various markets around the world who are now investors in Greenland. That can be the Australian market, the New York Stock Exchange, London Stock Exchange, and Toronto Stock Exchange. So make no mistake, this is one of, if not the best, jurisdictions to operate within, and that has been verified by all of these different markets and the legislation that the Nordic works in. And you can see that the interests by the U.S., obviously with the new president and the previous, well, the Biden administration in Greenland, as well as the European Union, of course, most importantly, Denmark is supplying a lot of investment and support to Greenland. To put this into perspective, Greenland has now, they are now building three airports at the same time in the country. Me, myself, I'm from Iceland. And I don't think we have built an airport for, well, a size of place for ever since probably 50, 60 years ago. It gives you an idea of airports, large hydropower opportunities. So the infrastructure and scale in Greenland is coming to a part to the Greenland, to the Nordic region. And exploration spend is going up, more and more operator. So it's gone up 350% since we started. Yes, this is on the... This is just starting in terms of a country. However, I would say we are the first metal mine. There is another mine called Lumina, who is a north-south mine, which we call an industrial miner, so these two mines. But in Finland and Sweden combined, they only have five operating gold mines. So the scale here is also quite dramatic, and it's interesting how the Nordics have this kind of a potential to grow very rapidly. Last but not least, I would say that in Greenland, where you have different to other jurisdictions, is that this exposure of the resources. So we can see the backdrop. We can see what we are drilling into. And that makes the time and the risk of developing this asset more favorable than many other locations. Make no mistakes. It's not easy to build resources. It's very challenging. There's a lot of different risks, et cetera, et cetera. We had to experience that and we've learned that. And therefore, as I would tell you as well, there are only a handful, I would argue, we are the only Arctic mine that is built in the Nordics and I think Europe. There is, I think, one other in Canada being built. But there are very few companies building mines currently today. So that is also an IP. I would also argue that our exploration team, has now done five different sites in gold and copper nickel during this season and the previous season. And we are one, if not the most active and strongest exploration team in Europe to date. This is very exciting for us when we're going into the next chapter of the company. So back to what we achieved in this quarter. We continue to progress nanoline mine into development, meaning we've been mining, and the process plant construction is effectively ready to start receiving ore. The first gold production is imminent, and as you saw this morning, if you have managed to look into your inbox or had time in your market, we signed an off-take agreement with Oromet and Metalore. They will buy all of the gold at market from Amarok, and then the gold bars will be that we sell. We will effectively sell a brick out of the plant, and then these bars will be refined in Switzerland. So this agreement is a good testament to our team, Ellert and his finance team, and the site team of understanding how we actually, which I won't go in detail due to security matters, but we will effectively have a very smooth transition from delivering the gold and then sell it once it has gone through the, from site all the way to Switzerland. The company also has a stronger balance sheet. The current convertible loan notes were converted this quarter. We have completed all of our expiration season. To put this into perspective, when we start our expiration season, we do this usually around mid-June. And we then are working as long as up to maybe mid-October. So the whole focus of the team is to drill, drill, drill, finish the program, get everything on time, on budget. And as a testament to the team, they did this ahead of schedule. We did more drilling than we anticipated on the lower budget. Our costs in Greenland are still higher than in Canada and Norway, but they are coming rapidly down. And then we see that with more ownership of what we do, because time is money in Greenland, the lower the cost is. And our aim is in the next few years is to get to the same cost center as we would have in Nordics or in Arctic Canada. The site QP, QP is a qualified person. He visited the site. He needs to basically – it's an individual who will then do a measured resource estimate. So currently our measured resource estimate is 320,000 ounces at 28 gram per ton. This individual was on site. He's done the work, being on site, checked all of the – all of the procedures of how we do our work and then he has been modeling the resource and then once the results will come in from our drilling both on surface and underground as well as the results from last year we will then be ready to update our measured resource estimate in Q1 next year. That means how much larger hopefully, is the reason from where it is today at the time when we will update, which has a direct impact on the MPV of the company. I'm going to move over to Ellert now, if you can kindly run us through these slides.

Yeah, thank you. Good morning, everyone. So the main change to note in our balance sheet and cash flow this quarter is due to continued ramp up and progress in construction of the process plant. This can be seen both on the balance sheet and cash flow side, with capital assets increasing by roughly 32 million Canadian. Also worth mentioning is that we increased our environmental escrow account in July by an additional 1 million Canadian, bringing that total up to 6.9. So if you just go to the next one, thank you. On the liquidity side, Cash balance is at 26 million at the end of the quarter. In the quarter, we drew on our construction loan facilities for an amount of 25 million Canadian to finalize phase one of the process plant construction. Aside from that, we have an undrawn cost overrun facility of 13 million Canadian, and the overrun facility nets up against trade payables for short-term liquidity of roughly 26 million Canadian at the end of the quarter. Due to continuing exploration activities and associated costs in our Gartac-JV partnership, where we have a 51% stake, our position there decreases by 4.8 million. And against that, our receivable balance towards Gartac increased. And just as a reminder, this receivable balance represents... allocated overhead and general administration costs to manage the exploration work programs, and the day-to-day activities of the joint venture. And this balance will, in the end, be converted to shares in GARDAC. And the GARDAC cash balance at the end of the quarter was $8 million Canadian for continued exploration activities in that JV. All right.