Amaroq Minerals : Annual Report and Financial Statements 2023

Annual Report and Financial Statements 2023

Amaroq Minerals Ltd.

ANNUAL REPORT

AND

FINANCIAL STATEMENTS 2023

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Annual Report and Financial Statements 2023

CONTENTS

CORPORATE INFORMATION	3
STRATEGIC REPORT	6
PRINCIPAL RISKS AND UNCERTAINTIES FACING THE BUSINESS	15
DIRECTORS' REPORT	35
CORPORATE SOCIAL RESPONSIBILITY	43
CORPORATE GOVERNANCE	48
REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE	63
REPORT OF THE CORPORATE GOVERNANCE AND NOMINATION COMMITTEE	65
REPORT OF THE TECHNICAL, SAFETY AND SUSTAINABILITY COMMITTEE	66
REPORT OF THE COMPENSATION COMMITTEE. DIRECTORS' COMPENSATION REPORT	67
REPORT OF THE DISCLOSURE COMMITTEE	79
STATEMENT OF DIRECTORS' RESPONSIBILITIES	80

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Annual Report and Financial Statements 2023

CORPORATE INFORMATION

DIRECTORS:

Graham Stewart, Non-Executive Chairman

Eldur Olafsson, Founder and Chief Executive Officer

Jaco Crouse, Chief Financial Officer

Liane Kelly, Senior Independent Director

Sigurbjorn ('Siggi') Thorkelsson, Non-Executive Director

Line Frederiksen, Non-Executive Director

David Neuhauser, Non-Executive Director

Warwick Morley-Jepson,Non-Executive Director

CORPORATE SECRETARY:

Joan Plant (to 13 October 2023)

Anna Solotova (from 13 October 2023)

HEAD OFFICE, REGISTERED AND	Corporation Number: 1011468-5
RECORDS OFFICE:	Icelandic ID Number: 600122-9910
3400 One First Canadian Place,	CORPORATE WEBSITE:
PO Box 130 Toronto, ON, M5X 1A4,	www.amaroqminerals.com
Canada
ADVISORS
AUDITORS:	NOMINATED ADVISER & BROKER:
BDO Canada LLP	Stifel Nicolaus Europe Limited
1000 De La Gauchetière Street West	150 Cheapside
Suite 200
Montréal, Québec H3B 4W5	London EC2V 6ET
Canada	United Kingdom
JOINT BROKER
Panmure Gordon & Co
One New Change
London, EC4M 9AF
United Kingdom

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	Annual Report and Financial Statements 2023
MARKET-MAKER, Nasdaq Iceland	MARKET-MAKER, Nasdaq Iceland
Fossar Investment Bank	Landsbankinn hf.
Ármúli 3,	Reykjastræti 6,
108 Reykjavik	101 Reykjavik
Iceland	Iceland
SOLICITORS IN ENGLISH LAW:	SOLICITORS IN CANADIAN LAW:
K&L Gates LLP	Bennett Jones LLP
One New Change	3400 One First Canadian Place
London EC4M 9AF	PO Box 130
United Kingdom	Toronto, Ontario M5X 1A4
	Canada
SOLICITORS IN GREENLANDIC LAW:	SOLICITORS IN ICELANDIC LAW:
Nuna Law Firm ApS	LOGOS slf.
Quillilerfik 2, 6.	Efstaleiti 5
Postbox 59	103 Reykjavik
Nuuk 3900	Iceland
Greenland
FINANCIAL PR:	COMPETENT PERSON:
Camarco	SRK Exploration Services Ltd
107 Cheapside	12 St Andrew's Crescent
London	Cardiff
EC2V 6DN	CF10 3DD
United Kingdom	United Kingdom
REGISTRARS:
Computershare Investor Services Inc.	Computershare Investor Services Plc
Toronto, Ontario at 100 University	The Pavilion, Bridgewater Road
Avenue, Toronto, Ontario M5J 2Y1	Bristol
Canada	BS13 8AE
	United Kingdom

DEPOSITARY FOR ICELANDIC

DEPOSITARY RECEIPTS:

Arion Banki hf.

Borgartúni 19

105 Reykjavík Iceland

SUBSIDIARIES:

Nalunaq A/S - c/o Nuna Advokater, Qullilerfik 2, 6. Postboks 59, GL-3900 Nuuk, Greenland. Amaroq ownership interest - 100%. The subsidiary holds the gold mineral resource licences in the Group.

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Annual Report and Financial Statements 2023

Gardaq A/S - c/o Nuna Advokater, Qullilerfik 2, 6. Postboks 59, GL-3900 Nuuk, Greenland. Amaroq ownership interest and voting power - 51%. The subsidiary holds the non-gold strategic mineral resource licences in the Group.

There are no additional reporting requirements for these subsidiaries at present.

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Annual Report and Financial Statements 2023

STRATEGIC REPORT

1. Business model and Strategy

Unless otherwise indicated, all references in this Annual report to "$" refer to Canadian dollars, the same currency that Amaroq Minerals Ltd. Uses in its financial statements.

Amaroq Minerals Ltd. ("Amaroq", the "Corporation" or the "Company") is an independent mining corporation engaged in the identification, acquisition, exploration and development of gold and critical mineral properties in Greenland.

Amaroq's strategy is to leverage its first mover advantage in Greenland, underpinned by the past producing Nalunaq Property, to build a full-cycle gold and critical mineral mining company in Greenland, delivering shareholder value and providing significant upside potential through its land bank of high-impact exploration assets.

Nalunaq A/S, the Corporation's wholly-owned subsidiary has accumulated a significant land package of gold licences in Southern Greenland. The assets are located within the Nanortalik and Tartoq gold belts of Southern Greenland. Nalunaq A/S' main focus is the previously producing Nalunaq Property, which is the Corporation's core asset. The Nalunaq Property has pre-existing infrastructure and development in place, which will allow Amaroq to resume operations at a fraction of the cost and time of a greenfield asset. The Corporation will establish near-term production at relatively low cost at Nalunaq, with cash flows from production expected to self-fund development and exploration across the Corporation's wider portfolio.

Figure 1:Nalunaq Mine Layout

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Annual Report and Financial Statements 2023

Amaroq is restarting the Nalunaq gold mine and building a new processing plant to self-finance the exploration of its large licence holdings in Greenland, unlocking their true mineral potential and delivering significant value to all stakeholders. The Corporation is actively exploring what management believe to be world class gold deposits at Vagar and Nanoq. In addition, through the joint venture with ACAM (the "Joint Venture" or "JV"), the Corporation is exploring for strategic minerals in Sava, Stendalen, Paatusoq and Kobberminebugt.

Figure 2: Amaroq Mineral's development process

Amaroq has initiated a staged program of development at Nalunaq from resource modelling to cashflow generation. As of 31 December 2023, the Company was on Stage 4 in development of Nalunaq.

The Company has commenced a pilot processing programme at Nalunaq focused initially on the Mountain Block, (see further details in Figure 1 Location of high- grade zones at Nalunaq) due to its high-grade nature and proximity to established underground infrastructure. The Company intends to move from this trial program towards full production during 2024 & 2025.

Figure 3: Nalunaq development and path to cashflow

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Annual Report and Financial Statements 2023

Amaroq believes its assets provide an opportunity to develop a balanced, full-cycle portfolio capable of delivering long-term shareholder returns.

The Corporation aims to conduct exploration and mining in an energy efficient and environmentally sensitive manner through the utilisation of cutting-edge technologies, scientific thinking as well as investing in communities and green energy projects.

Amaroq aims to create a Greenlandic legacy - empowering Greenland to become a strategic supplier of gold and critical materials needed to power a greener future. The Corporation promotes Greenlandic values, culture, legislation and practices and brings long-term value to Greenland by investing in and empowering local communities. Management believes this will maximize societal growth and facilitating economic development with gold operations through employment, tax receipts and infrastructure support.

1. Strategic Review of 2023

ACAM Joint Venture

In June 2022, the Corporation set up a joint venture with ACAM LP ("ACAM"), a natural resource focused Limited Partnership, to establish a strategic mineral focused exploration subsidiary to hold certain licences in which the majority of resource is expected to relate to non-gold minerals.

ACAM, through its affiliate company GCAM LP, agreed to invest an initial amount £18 million under a subscription and shareholders' agreement in return for shares in the joint venture subsidiary Gardaq A/S representing 49%, to fund exploration work programs. Under the terms of the agreement, any gold mineralisation discovered by the Joint Venture entity during the course of exploration activities in these licences, will be offered back to the Corporation.

GCAM LP invested an initial amount of $30.1 million (GBP 18 million) under a subscription and shareholders' agreement in return for 490,000 ordinary shares in the subsidiary representing 49% of the issued shares in Gardaq A/S, to solely fund exploration work programs. The Corporation invested six non-gold strategic minerals licences through the transfer of those licences from Nalunaq A/S to Gardaq A/S as well as $7.7 million (GBP 5 million) under the Subscription and Shareholders' Agreement, with such amount to be set-off against corporate overhead costs incurred by Nalunaq A/S as the Joint Venture's project manager.

On April 13, 2023, the Subscription and Shareholders' agreement became effective subject to satisfaction of all conditions for the release of the Subscription and Shareholders' Agreement from escrow. The Corporation retained joint control with Amaroq retaining a 51% equity share in the Joint Venture.

US$50.9M Debt Financing (the "Financing")

On March 28, 2023, the Corporation signed non-binding term sheets for a US$49.5

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Annual Report and Financial Statements 2023

million Senior Secured Financing package which was updated on August 11, 2023, to US$50.9 million consisting of:

1. US$18.5 million Bank Revolving Credit Facilities ("Bank RCF") provided by Landsbankinn hf. and Fossar Investment Bank, with a two-year term and priced at SOFR plus 950bps. Interest is capitalized and payable at the end of the term;
2. US$22.4 million in convertible notes with ECAM LP (US$16 million), JLE Property Ltd. (US$4 million) and Livermore Partners LLC (US$2.4 million) with a four-year term and a fixed interest rate of 5%. The convertible notes have a US$3.5M Commitment Fee payable after the Bank RCF has been repaid. The conversion price of $0.90 per common share is the closing Canadian market price of the shares on the closing day of the Financing;
3. a US$10 million Revolving Cost Overrun Facility from JLE Property Ltd. on the same terms as the Bank RCF.

The Financing, together with existing capital, is expected to enable the transition to initial production of gold doré on site at Nalunaq, ahead of full-scale production. The Corporation closed the Financing on September 1, 2023.

Nasdaq Main Market Listing in Iceland

Subsequent to the approval by the Financial Supervisory Authority of the Central Bank of Iceland (the"FSA") and satisfaction of all Nasdaq Main Market requirements the Corporation transferred all depository receipts from the Nasdaq First North Growth Market to the Nasdaq Main Market with the first day of trading on September 21, 2023.

Landsbankinn hf. Corporate Finance acted as project manager, listing agent and advisor on the admission. Fossar Investment Bank advised the Corporation on the potential effects of the admission on the Amaroq stock.

Subsequent Event - February 23, 2024 GBP 44 million Fundraising

On February 13, 2024, the Company announced the successful completion of its oversubscribed fundraising which resulted in a total of 62,724,758 new common shares conditionally placed with new and existing institutional investors at a placing price of 74 pence ($1.25, ISK 127 at the closing exchange rate on 9 February 2024). The placing price represented a 5.7% premium to the closing share price on 9 February 2024 on AIM. The fundraising consisted of:

1. A placing of new common shares with new and existing institutional investors at the placing price (the "UK Placing"). Stifel Nicolaus Europe Limited acted as the sole bookrunner and broker on the UK Placing.
2. A placing of new depository receipts representing new common shares with new and existing investors at the placing price (the "Icelandic Placing"). Landsbankinn hf. and Fossar Investment Bank hf. acted as joint bookrunners on the Icelandic Placing and Landsbankinn hf. acted as underwriter.
3. A private placement of new common shares by certain existing institutional investors and a director of the Company at the placing price (the "Canadian Subscription"). Amaroq director, Sigurbjorn Thorkelsson, participated in the

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Annual Report and Financial Statements 2023

Canadian Subscription for an aggregate of 2,700,000 common shares for gross proceeds of £2.0 million (equivalent to approx. $3.4 million or ISK 343 million) via Klettar LP (in which he is a sole beneficiary).

As a result of the subscription, net proceeds of approximately GBP 44 million ($75 million) was raised, exceeding the initial targeted amount of GBP 30 million. The issued shares were credited as fully paid and rank pari passu in all respects with the existing common shares of the Company. Following the admission of the subscribed shares, Amaroq's total issued share capital consists of 326,455,446 common shares.

The proceeds of the fund will be used to further advance exploration at the Company's Vagar and Nanoq licences and to fund an additional capital injection into the Joint Venture, as well as to accelerate mining and development of the Nalunaq gold project. The Fundraising closed on February 23, 2024.

Gold Exploration Projects

Nalunaq

• Assay results from the 2023 drilling at the Mountain Block extension were announced on 11 October 2023. These were the highest-grade drilling intersects the Corporation has ever produced and confirmed the extension of the high-grade zone as well as the existence of a secondary mineralized vein 75m above the Main Vein.
• Underground samples taken from the Target Block were aimed at corroborating previously unreported historical channel samples that suggested the continuation of the Target Block into extension areas. Results confirmed the high grade ore of the Target Block extended into previously unmined areas with grades of up to 48.3g/t Au over 1m and a potential strike extent of ~775m.

Nanoq

• ALS Goldspot Discoveries Ltd completed a review of the 2022 detailed geophysics over the target area and the proposed 25km structure connecting Nanoq to Jokum's Shear. This work further expanded the gold target zone and defined multiple parallel zones, significantly increasing the project's mineral potential. These results were reported on 19 December 2023.

Vagar Ridge

• Over the last year the Corporation progressed the construction of a robust geological and mineralization model to inform future exploration at Vagar Ridge as well as designing future exploration targets.

Strategic Minerals Projects (Amaroq 51%)

Sava Copper Belt (Sava/North Sava)

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