Headwater Gold Inc. press release

2021 Full Year Financial Results and Update

2022-04-29

CSE - Canadian National Stock Exchange · Gold · Silver · Arsenic · Antimony · Mercury · Selenium · Molybdenum · Gypsum · Zeolite · Canada · Corporate Finance

TORONTO, ON / ACCESSWIRE / 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 202km2of prospective ground in 2021 taking its total land package to 4,090km2and 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 84km2airborne 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.