Amarc Resources Ltd 20-F for FY2022
Amarc Resources Ltd (AXREF)
About this 20-F
Amarc Resources Ltd filed this 20-F on August 15, 2022, covering the fiscal year ended March 31, 2022 (FY2022).
Headline figures
Fiscal year ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $363.81K
- compared with net income of $1.36M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to _______________
Commission file number
(Exact name of Registrant as specified in its charter) |
British Columbia,
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Phone:
Facsimile No.: (604) 639-9209
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class: Not applicable | Name of each exchange on which registered: Not applicable |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Common shares with no par value
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
☐ Yes ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
| ☐ | by the International Accounting Standards Board | ☒ | Other
| ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
T A B L E O F C O N T E N T S
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.. |
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS. |
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PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS. |
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| Table of Contents |
GENERAL
In this Annual Report on Form 20-F, all references to “we”, “Amarc” or the “Company” refer to Amarc Resources Ltd.
The Company uses the Canadian Dollar as its reporting currency. All references in this document to “Dollars” or “$” are expressed in Canadian Dollars (“CAD”, “C$”), unless otherwise indicated. See also Item 3 – Key Information for more detailed currency and conversion information.
Except as noted, the information set forth in this Annual Report is as of August 12, 2022 and all information included in this document should only be considered correct as of such date.
Cautionary Note to Investors Concerning Forward-looking Statements
This discussion includes certain statements that may be deemed "forward-looking statements". All such statements, other than statements of historical facts that address exploration plans and plans for enhanced relationships are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Assumptions used by the Company to develop forward-looking statements include the following: Amarc's projects will obtain all required environmental and other permits and all land use and other licenses, studies and exploration of Amarc's projects will continue to be positive, and no geological or technical problems will occur. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, potential environmental issues or liabilities associated with exploration, development and mining activities, exploitation and exploration successes, continuity of mineralization, uncertainties related to the ability to obtain necessary permits, licenses and tenure and delays due to third party opposition, changes in and the effect of government policies regarding mining and natural resource exploration and exploitation, exploration and development of properties located within Aboriginal groups asserted territories may affect or be perceived to affect asserted aboriginal rights and title, which may cause permitting delays or opposition by Aboriginal groups, continued availability of capital and financing, and general economic, market or business conditions, as well as risks relating to the uncertainties with respect to the effects of COVID-19. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. For more information on Amarc Resources Ltd., investors should review Amarc's annual Form 20-F filing with the United States Securities and Exchange Commission at www.sec.gov and its home jurisdiction filings that are available at www.sedar.com. |
GLOSSARY OF TERMS
Certain terms used herein are defined as follows:
Coast Plutonic Complex (“CPC”) | The CPC comprises a chain of overlapping batholiths (large bodies of igneous rock) formed as a result of subduction of oceanic crust beneath the western margin of North America, from approximately Early Jurassic to Early Tertiary time (Schiarizza et al. 1997). |
Epithermal Deposit | Deposits formed when the fluids are directed through a structure where the temperature, pressure and chemical conditions are favourable for the deposition of ore minerals, including native gold. |
Induced Polarization (“IP”) Survey | A geophysical survey used to identify a feature that appears to be different from the typical or background survey results when tested for levels of electro-conductivity; IP detects both chargeable, pyrite-bearing rock and non-conductive rock that has a high content of quartz. |
Mineral Symbols | Au – gold; Ag – silver; Cu – copper; Mo – molybdenum. |
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| Table of Contents |
Net Smelter Return (NSR) Royalty | Monies received for concentrate delivered to a smelter net of metallurgical recovery losses, transportation costs, smelter treatment-refining charges and penalty charges. |
Porphyry Deposit | Mineral deposit characterized by widespread disseminated or veinlet-hosted sulphide mineralization, characterized by large tonnage and moderate to low grade. |
Replacement Deposit | Deposit formed by chemical processes that dissolve a rock and deposit a new assemblage of minerals in its place. |
Vein | A tabular or sheet-like mineral deposit with identifiable walls, often filling a fracture or fissure. |
CURRENCY AND MEASUREMENT
All currency amounts in this Annual Report are stated in Canadian Dollars unless otherwise indicated.
Approximate conversion of metric units into imperial equivalents is as follows:
Metric Units | Multiply by | Imperial Units |
hectares | 2.471 | = acres |
meters | 3.281 | = feet |
kilometers | 3281 | = feet |
kilometers | 0.621 | = miles |
grams | 0.032 | = ounces (troy) |
tonnes | 1.102 | = tons (short) (2,000 lbs) |
grams/tonne | 0.029 | = ounces (troy)/ton |
STATUS AS AN EMERGING GROWTH COMPANY
The Company is an “emerging growth company” as defined in section 3(a) of the Exchange Act, and the Company will continue to qualify as an “emerging growth company” until the earliest to occur of: (a) the last day of the fiscal year during which the Company has total annual gross revenues of US$1.07 billion (as such amount is indexed for inflation every 5 years by the SEC) or more; (b) the last day of the Company's fiscal year following the fifth anniversary of the date of the first sale of common equity securities pursuant to an effective registration statement under the Securities Act; (c) the date on which the Company has, during the previous 3-year period, issued more than US$1 billion in non-convertible debt; or (d) the date on which the Company is deemed to be a “large accelerated filer”, as defined in Exchange Act Rule 12b–2. Therefore, the Company expects to continue to be an emerging growth company for the foreseeable future.
Generally, a registrant that registers any class of its securities under section 12 of the Exchange Act is required to include in the second and all subsequent annual reports filed by it under the Exchange Act, a management report on internal control over financial reporting and, subject to an exemption available to registrants that are neither an “accelerated filer” or a “larger accelerated filer” (as those terms are defined in Exchange Act Rule 12b-2), an auditor attestation report on management's assessment of internal control over financial reporting. However, for so long as the Company continues to qualify as an emerging growth company, the Company will be exempt from the requirement to include an auditor attestation report in its annual reports filed under the Exchange Act, even if it were to qualify as an “accelerated filer” or a “larger accelerated filer”. In addition, auditors of an emerging growth company are exempt from the rules of the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the registrant (auditor discussion and analysis).
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| Table of Contents |
The Company has irrevocably elected to comply with new or revised accounting standards even though it is an emerging growth company.
ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. DIRECTORS AND SENIOR MANAGEMENT
Not applicable.
B. ADVISERS
Not applicable.
C. AUDITORS
Not applicable.
ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3 KEY INFORMATION
A. SELECTED FINANCIAL DATA
The following tables summarize selected financial data for Amarc extracted from the Company's audited financial statements for related fiscal years. The data should be read in conjunction with the Company's audited financial statements included as an exhibit in this Annual Report.
The following table is derived from the financial statements of the Company which have been prepared in accordance with and using accounting policies in full compliance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) effective for each of the Company's fiscal year presented.
The following selected financial data is presented in thousands of Canadian Dollars.
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| Table of Contents |
Statements of Financial Position Data
($ 000’s) |
| 2022 |
|
| 2021 |
|
| 2020 |
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| 2019 |
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| 2018 |
| |||||
Equipment, net |
| $ | – |
|
| $ | – |
|
| $ | – |
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| $ | – |
|
| $ | – |
|
Total assets |
|
| 991 |
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| 1,560 |
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| 529 |
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| 799 |
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| 3,625 |
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Total liabilities |
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| 1,620 |
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| 1,533 |
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| 1,504 |
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| 1,342 |
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| 2,379 |
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Working capital surplus (deficit) |
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| (889 | ) |
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| 418 |
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| (641 | ) |
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| (716 | ) |
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| 1,836 |
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Share capital |
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| 65,229 |
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| 64,745 |
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| 64,342 |
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| 64,042 |
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| 63,884 |
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Reserves |
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| 4,094 |
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| 4,834 |
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| 5,632 |
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| 5,105 |
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| 5,143 |
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Accumulated deficit |
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| (69,952 | ) |
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| (69,588 | ) |
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| (70,949 | ) |
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| (69,690 | ) |
|
| (67,782 | ) |
Net assets (liabilities) |
|
| (628 | ) |
|
| 27 |
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| (975 | ) |
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| (543 | ) |
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| 1,246 |
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Shareholders' equity (deficiency) |
|
| (628 | ) |
|
| 27 |
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|
| (975 | ) |
|
| (543 | ) |
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| 1,246 |
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Statements of Comprehensive Loss Data
($ 000’s, except per share amounts and number of shares) |
| 2022 |
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| 2021 |
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| 2020 |
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| 2019 |
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| 2018 |
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Interest and other income |
| $ | (19 | ) |
| $ | (27 | ) |
| $ | (6 | ) |
| $ | (38 | ) |
| $ | (27 | ) |
General and administrative expenses |
|
| 601 |
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| 631 |
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| 856 |
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| 913 |
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| 1,054 |
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Exploration expenditures, net of METC* |
|
| 5,376 |
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| 1,130 |
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| 664 |
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| 5,390 |
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| 6,686 |
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Contributions pursuant to Option Agreements |
|
| 5,598 |
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| (1,345 | ) |
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| (413 | ) |
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| (4,538 | ) |
|
| (6,197 | ) |
Share-based payments |
|
| 122 |
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| 18 |
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|
| – |
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| – |
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| – |
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Other |
|
| 156 |
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| 167 |
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| 153 |
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| 221 |
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| 556 |
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Gain on sale of mineral property |
|
| – |
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| (1,935 | ) |
|
| – |
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| – |
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| – |
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Flow-through shares premium |
|
| – |
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|
| – |
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|
| – |
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|
| – |
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|
| – |
|
Net income (loss) for the year |
|
| 268 |
|
|
| (1,361 | ) |
|
| (1,254 | ) |
|
| (1,948 | ) |
|
| (2,072 | ) |
Other comprehensive income (loss) |
|
| 715 |
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| 626 |
|
|
| (11 | ) |
|
| 2 |
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| 28 |
|
Total comprehensive income (loss) |
| $ | 983 |
|
| $ | 735 |
|
| $ | (1,265 | ) |
| $ | 1,946 |
|
| $ | 2,044 |
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Basic and diluted net earnings (loss) per share |
| $ | 0.01 |
|
| $ | 0.01 |
|
| $ | (0.01 | ) |
| $ | (0.01 | ) |
| $ | (0.01 | ) |
Weighted average number of common shares outstanding |
|
| 181,479,873 |
|
|
| 178,666,081 |
|
|
| 171,767,287 |
|
|
| 156,826,422 |
|
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| 141,435,020 |
|
________
* “METC” refers to British Columbia Mineral Exploration Tax Credits, which are discussed in Item 5, under the heading “Critical Accounting Policies and Estimates”.
Currency and Exchange Rates
As of the date of this Annual Report, the average rate of exchange of the Canadian Dollar was US$1.00 = Canadian $1.25. Exchange rates published by the Bank of Canada are available on its website, www.bankofcanada.ca, are nominal quotations — not buying or selling rates — and are intended for statistical or analytical purposes.
The following tables set out the exchange rates for the conversion of Canadian Dollars into U.S. Dollars.
|
| For year ended March 31 (Canadian Dollar per U.S. Dollar) |
| |||||||||||||||||
|
| 2022 |
|
| 2021 |
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| 2020 |
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| 2019 |
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| 2018 |
| |||||
End of period |
| $ | 1.2655 |
|
| $ | 1.2575 |
|
| $ | 1.4187 |
|
| $ | 1.3363 |
|
| $ | 1.2894 |
|
Average for the period |
| $ | 1.2536 |
|
| $ | 1.3219 |
|
| $ | 1.3308 |
|
| $ | 1.3118 |
|
| $ | 1.2837 |
|
High for the period |
| $ | 1.2942 |
|
| $ | 1.4217 |
|
| $ | 1.4496 |
|
| $ | 1.3642 |
|
| $ | 1.3743 |
|
Low for the period |
| $ | 1.2040 |
|
| $ | 1.2455 |
|
| $ | 1.2970 |
|
| $ | 1.2552 |
|
| $ | 1.2128 |
|
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Monthly High and Low Exchange Rate (Canadian Dollar per U.S. Dollar) | ||||||||
|
| High |
|
| Low |
| ||
July 2022 (to the date of this Annual Report) |
| $ | 1.3138 |
|
| $ | 1.2824 |
|
June 2022 |
| $ | 1.3035 |
|
| $ | 1.2540 |
|
May 2022 |
| $ | 1.3039 |
|
| $ | 1.2648 |
|
April 2022 |
| $ | 1.2895 |
|
| $ | 1.2451 |
|
March 2022 |
| $ | 1.2867 |
|
| $ | 1.2470 |
|
February 2022 |
| $ | 1.2832 |
|
| $ | 1.2677 |
|
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
An investment in the Company's common shares is highly speculative and subject to a number of risks. Only those persons who can bear the risk of the entire loss of their investment should participate. An investor should carefully consider the risks described below and the other information that the Company furnishes to, or files with, the Securities and Exchange Commission and with Canadian securities regulators before investing in the Company's common shares. The risks described below are not the only ones faced by the Company. Additional risks that management is aware of or that the Company currently believes are immaterial may indeed become important factors that affect the Company's business. If any of the following risks occur, or if others occur, the Company's business, operating results and financial condition could be seriously harmed and the investor may lose all of his investment.
The Company has limited working capital and will require additional capital to advance its projects.
The Company has limited working capital as at the current reporting date. Further exploration on, and development of, the Company's projects will require resources to be delineated and additional funding. The Company currently does not have sufficient funds to fully develop its projects.
There is no assurance that the Company will be successful in obtaining the required financing for these or other purposes, including for general working capital.
The Company has no earnings, has incurred net losses and negative cash flows since inception, and expects to incur losses for the foreseeable future.
The Company does not have any operational history of earnings and has incurred net losses and negative cash flow from its operations since incorporation. Although the Company hopes to eventually generate revenues, significant operating losses are to be anticipated for at least the next several years and possibly longer. To the extent that such expenses do not result in the creation of appropriate revenues, the Company's business may be materially adversely affected. It is not possible to forecast how the business of the Company will develop, and there can be no assurance that the underlying assumed levels of expenses will prove to be accurate.
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The advancement of mineral properties to production will require the commitment of substantial resources to conduct time-consuming exploration and development activities. The Company's operating expenses and capital expenditures may increase in subsequent years as needed consultants, personnel and equipment associated with advancing exploration, development and commercial production of the Company's projects and any other properties the Company may acquire are added. The amounts and timing of expenditures will depend on:
· | the progress of ongoing exploration and development; |
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· | the results of consultants' analyses and recommendations; |
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· | the rate at which operating losses are incurred; |
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· | the execution of any earn-in and joint venture agreements with strategic allies; and |
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· | the acquisition of additional properties and other factors, many of which are beyond the Company's control. |
The Company has no history of mining operations, and does not expect to receive revenues from operations in the foreseeable future.
The Company has no history of mining operations, and there can be no assurance that the Company will generate any revenues or achieve profitability. The Company expects to incur losses unless and until such time as one or more of the Company’s existing projects, or any other properties the Company may acquire, enter into commercial production and generate sufficient revenues to fund its continuing operations, which cannot be assured. The Company does not expect to receive revenues from operations in the foreseeable future, if at all.
The Company is subject to certain risks that are inherent in exploration and mining activities beyond its control.
Resource exploration, development, and operations are highly speculative, characterized by a number of significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate, including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. Few properties that are explored are ultimately developed into producing mines. No deposit that has been shown to be economic has yet been found on the Company's existing projects, and there can be no assurance that the Company will be able to acquire any additional properties or that any additional properties that are acquired will contain sufficient mineralization to warrant further development.
Unusual or unexpected formations, formation pressures, fires, power outages, labour disruptions, flooding, explosions, cave-ins, landslides, environmental hazards, the discharge of toxic chemicals and other hazards, and the inability to obtain suitable or adequate machinery, equipment or labour, are other risks involved in the conduct of exploration programs, and in the development and operation of mines. Such occurrences may delay development of the Company’s properties, delay production, increase production costs or result in liability.
Substantial expenditures are and will be required to establish mineral resources and mineral reserves.
Substantial expenditures are and will be required to establish mineral resources and mineral reserves through drilling, and to develop metallurgical processes to extract the metal from mineral resources. No assurance can be given that the Company will be able to obtain sufficient financing to cover such expenditures when required, or that such financing can be obtained on terms that are acceptable to the Company.
The Company’s ability to obtain financing to fund its exploration activities and, if warranted, development of any of its properties, will be significantly affected by mineral prices.
The ability of the Company to obtain financing to fund its exploration activities and, if warranted, development of any of its properties, will be significantly affected by changes in the market price of the metals for which it explores. Mineral prices are subject to fluctuation. The effect of these factors cannot accurately be predicted. The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of mineral resource are discovered, a profitable market will exist for the sale of the same.
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Factors beyond the control of the Company may affect the marketability of any Cu, Mo, Au, Ag or any other materials discovered. The prices of Cu, Mo, Au, Ag and other minerals are affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, Canadian dollars relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods. In addition, the world supplies of and demands for of Cu, Mo, Au, Ag and other minerals can cause fluctuations in the price of such minerals.
Development of any of the Company’s properties, if warranted, will be subject to financing risks and potential delays.
Inability to obtain financing, technical considerations, delays in obtaining governmental approvals, and other factors could cause delays in developing any of the Company’s properties that may in the future be determined to contain a commercially mineable orebody.
If it is determined that a commercially mineable orebody exists and it can be economically exploited, the Company will require significant additional financing in order to fund the costs of developing the Company’s properties into commercial production, if warranted. The Company may have to seek additional funds through public and private share offerings, arrangements with collaborative parties, or debt financing. There can be no assurance that the Company will be successful in its efforts to raise these required funds, or that it will be able to raise the funds on terms that do not result in high levels of dilution to shareholders.
Before development and production can commence on any of its properties, the Company must obtain regulatory and environmental approvals. There is no assurance that such approvals will be obtained on a timely basis or at all. The cost of compliance with changes in governmental regulations has the potential to reduce the profitability of operations or preclude entirely the economic development of a property.
Mining is one of the most intensely regulated businesses in Canada. The period of time required to obtain environment assessments, consult with aboriginal peoples and other stakeholders as well as governments at the Canadian provincial and federal level can take 10 (ten) years or more. No assurance can be given that permitting of any mine on the Company’s properties will occur.
The Company will rely on third-party consultants and contractors – whose availability cannot be assured - to undertake its mineral exploration activities, as well as any future mine development and mining activities.
The Company will rely on consultants and others for exploration, development, construction and operating expertise. No assurance can be given that such consultants and other contractors will be available when required, or that they can be retained on terms that are acceptable to the Company.
The Company may enter into agreements with Indigenous groups, inclusive of First Nations, in relation to its current and future exploration activities, and any potential future production, which could impact any expected earnings.
Our properties are located within First Nations asserted traditional territories, and the exploration and development of these properties may affect, or be perceived to affect, asserted aboriginal rights and title, which has the potential to manifest permitting delays or opposition by First Nations communities.
The Company is working to establish positive relationships with First Nations. As part of this process the Company may enter into agreements, commensurate with the stage of activity, with First Nations in relation to current and future exploration and any potential future production. This could impact any expected earnings.
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The Company is subject to intense competition.
The mining industry is competitive in all of its phases, including financing, technical resources, personnel and property acquisition. It requires significant capital, technical resources, personnel and operational experience to effectively compete in the mining industry. Because of the high costs associated with exploration, the expertise required to analyze a project's potential and the capital required to develop a mine, larger companies with significant resources may have a competitive advantage over Amarc. Amarc faces strong competition from other mining companies, some with greater financial resources, operational experience and technical capabilities than those that Amarc possesses. As a result of this competition, Amarc may be unable to maintain or acquire financing, personnel, technical resources or attractive mining properties on terms Amarc considers acceptable or at all.
The Company is subject to certain risks that are not insurable.
Hazards such as unusual or unexpected geological formations and other conditions are involved in mineral exploration and development. Amarc may become subject to liability for pollution or hazards against which it cannot insure. The payment of such liabilities could result in increases in Amarc's operating expenses which could, in turn, have a material adverse effect on Amarc's financial position and its results of operations. Although Amarc maintains liability insurance in an amount which it considers adequate, the nature of these risks is such that the liabilities might exceed policy limits, the liabilities and hazards might not be insurable against, or Amarc might elect not to insure itself against such liabilities due to high premium costs or other reasons. In these events, Amarc could incur significant liabilities and costs that could materially increase Amarc's operating expenses.
The Company’s operations are and will be subject to environmental regulations which can significantly increase compliance costs and subject the Company to potential liability.
All of the Company's operations are and will be subject to environmental regulations, which can make operations more expensive or potentially prohibit them altogether. Many of the regulations require the Company to obtain permits for its activities. The Company must update and review its permits from time to time, and is subject to environmental impact analyses and public review processes prior to approval of the additional activities. Amarc may be subject to the risks and liabilities associated with potential pollution of the environment and the disposal of waste products that could occur as a result of its activities.
To the extent the Company is subject to environmental liabilities, the payment of such liabilities or the costs that it may incur to remedy environmental pollution would reduce funds otherwise available to it and could have a material adverse effect on the Company. If the Company is unable to fully remedy an environmental problem, it might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy. The potential exposure may be significant and could have a material adverse effect on the Company.
Changes in government regulations and the presence of unknown environmental hazards on the Company’s mineral properties may result in significant unanticipated delays, as well as significant compliance costs.
Changes to existing environmental legislation, regulations and actions could give rise to additional expense, capital expenditures, restrictions and delays in the activities of the Company, the extent of which cannot be predicted. Regulatory requirements and environmental standards are subject to constant evaluation and may be significantly increased. It is possible that future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have a significant impact on some portion of the Company's business, causing those activities to become economically unattractive at that time.
Trading in the Company’s common shares is subject to volatility.
There can be no assurance that an active trading market in the Company's securities will be established or sustained. The market price for the Company's securities is subject to wide fluctuations. Factors such as announcements of exploration results, as well as market conditions in the industry, may have a significant adverse impact on the market price of the securities of the Company. Shares of the Company are suitable only for those who can afford to lose their entire investment. The stock market has from time to time experienced extreme price and volume fluctuations, which have often been unrelated to the operating performance of particular companies.
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Certain of the Company's directors and officers may be subject to conflicts of interest.
Certain of the Company's directors and officers may serve as directors or officers of other companies or companies providing services to the Company or they may have significant shareholdings in other companies. Situations may arise where these directors and/or officers of the Company may be in competition with the Company. Any conflicts of interest will be subject to and governed by the law applicable to directors' and officers' conflicts of interest. In the event that such a conflict of interest arises at a meeting of the Company's directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with applicable laws, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company.
The Company is unlikely to be in a position to pay dividends for the foreseeable future.
There is no assurance that the Company will pay dividends on its shares in the foreseeable future. The Company will likely require all its funds to further the development of its business.
The Company is vulnerable to changes in the financial markets.
Market conditions and unexpected volatility or illiquidity in financial markets may adversely affect the prospects of the Company and the value of its shares.
The Company will be dependent on the continued services of its senior management team, and its ability to retain other key personnel.
The Company will be dependent on the continued services of its senior management team, and its ability to retain other key personnel. The loss of such key personnel could have a material adverse effect on the Company. There can be no assurance that any of the Company's employees will remain with the Company or that, in the future, the employees will not organize competitive businesses or accept employment with companies competitive with the Company.
Furthermore, as part of the Company's growth strategy, it must continue to hire highly qualified individuals. There can be no assurance that the Company will be able to attract, assimilate or retain qualified personnel in the future, which would adversely affect its business.
Changes in government rules, regulations or agreements, or their application, may negatively affect the Company’s ownership rights, its access to or its ability to advance the exploration and development of its mineral properties.
The government currently has in place or may in the future implement laws, regulations, policies or agreements that may negatively affect the Company’s ownership rights with respect to its mineral properties or its access to the properties. These may restrain or block the Company’s ability to advance the exploration and development of its mineral properties or significantly increase the costs and timeframe to advance the properties.
If the Company raises additional funding through equity financings, then the Company's current shareholders will suffer dilution.
The Company will require additional financing in order to complete full exploration of the Company's mineral properties. Management anticipates that the Company will have to sell additional equity securities including, but not limited to, its common stock, share purchase warrants or some form of convertible security. The effect of additional issuances of equity securities will result in the dilution of existing shareholders' percentage ownership interests.
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The Company believes it is likely a “passive foreign investment company” which may have adverse U.S. federal income tax consequences for U.S. shareholders.
U.S. shareholders should be aware that the Company believes it was classified as a passive foreign investment company (“PFIC”), as defined in Section 1297 of the Internal Revenue Code of 1986, as amended, during one or more previous tax years, and may be a PFIC in the current tax year and possibly in subsequent tax years. If the Company is a PFIC for any tax year during a U.S. shareholder's holding period, then such U.S. shareholder generally will be required to treat any gain realized upon a disposition of common shares, or any so-called “excess distribution” received on its common shares, as ordinary income, and to pay an interest charge on a portion of such gain or distributions, unless the shareholder makes a timely and effective “qualified electing fund” election or a “mark-to-market” election with respect to the common shares. A U.S. shareholder who makes a qualified electing fund election generally must report on a current basis its share of the Company's net capital gain and ordinary earnings for any tax year in which the Company is a PFIC, whether or not the Company distributes any amounts to its shareholders. A U.S. shareholder who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayer's basis therein. This paragraph is qualified in its entirety by the discussion below under the heading “Certain United States Federal Income Tax Considerations.” Each U.S. shareholder should consult its own tax advisor regarding the PFIC rules and the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.
The Company's shareholders could face significant potential equity dilution as a result of grants under the Company’s stock option plan.
Amarc has a stock option plan which allows the management to issue options to its employees and non-employees based on the policies of the Company. If further shares, options, or warrants are issued, they will likely act as an upside damper on the trading range of the Company's shares. As a consequence of the passage of time since the date of their original sale and issuance, none of the Company's shares remain subject to any hold period restrictions in Canada or the United States. The unrestricted resale of outstanding shares from the exercise of dilutive securities may have a depressing effect on the market for the Company's shares.
Penny stock classification could affect the marketability of the Company's common stock and shareholders could find it difficult to sell their stock.
The penny stock rules in the United States require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.
Further, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These additional broker-dealer practices and disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the Company's common shares in the United States, and shareholders may find it more difficult to sell their shares.
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The Company's financial statements have been prepared assuming the Company will continue on a going concern basis, but there can be no assurance that the Company will continue as a going concern.
The Company’s financial statements have been prepared on the basis that it will continue as a going concern. The Company has prioritized the allocation of available financial resources in order to meet key corporate and mineral development expenditure requirements in the near term. The costs required to complete exploration and development of the Company's projects may be well in excess of this amount. Accordingly, unless additional funding is obtained, the going concern assumption may have to change. If Amarc is unable to obtain adequate additional financing, the Company will be required to curtail operations and exploration activities. Furthermore, failure to continue as a going concern would require that Amarc's assets and liabilities be restated on a liquidation basis which could differ significantly from the going concern basis.
The Company may from time to time be subject to litigation.
The Company may in future be subject to legal proceedings. If the Company is unable to resolve these matters favorably it may have a material adverse effect of the Company.
ITEM 4 INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Incorporation
Amarc Resources Ltd. was incorporated on February 2, 1993, pursuant to the Company Act (British Columbia, Canada) (the “BCCA”), as “Patriot Resources Ltd.” and changed its name on January 26, 1994 to “Amarc Resources Ltd.” The BCCA was replaced by the Business Corporations Act (British Columbia) (the “BCA”) in March 2004 and the Company is now governed by the BCA.
Amarc became a public company or “reporting issuer” in the Province of British Columbia (“BC”) on May 30, 1995. The common shares of Amarc were initially listed on the Vancouver Stock Exchange (“VSE”) on August 4, 1995, and continue to trade on the TSX Venture Exchange (“TSX Venture”) under the symbol AHR. The TSX Venture was formerly known as the Canadian Venture Exchange, the successor stock exchange to the VSE.
Amarc commenced trading on the OTC Bulletin Board (“OTCBB”) in the United States in June 2004 and on the OTCQB in August 2014 (at which time quotation of Amarc’s common shares on the OTCBB was discontinued), in each case under the symbol AXREF.
Offices
The head office of Amarc is located at 14th Floor, 1040 West Georgia Street, Vancouver, BC, Canada V6E 4H1, telephone (604) 684-6365, facsimile (604) 639-9209. The Company's registered office is in care of its attorneys, McMillan LLP, 1500 Royal Centre P.O. Box 11117, 1055 West Georgia Street, Vancouver, BC, Canada V6E 4N7, telephone (604) 689-9111, fax (604) 685-7084.
Company Development
Amarc has been engaged in the acquisition and exploration of mineral properties since its incorporation. The Company is currently actively exploring a number of properties located in BC, Canada. All of the Company's mineral properties are at the exploration stage.
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B. BUSINESS OVERVIEW
The following information is compiled from Company files. The technical work has been completed under the supervision of qualified person(s). The disclosure has been reviewed by Mark Rebagliati, P.Eng., a technical advisor to Amarc who is a qualified person.
Summary
Amarc is focused on advancing its district-scale JOY, IKE and DUKE porphyry Cu±Au±Mo±Ag deposit projects (the “JOY District”, the “IKE District” and the “DUKE District”) in northern, southern and central BC, respectively. Figure 1 shows the location of the Amarc’s three projects in respect to operating and past producing mines, and advanced stage exploration projects held by other operators and focused on porphyry copper deposits. Each of Amarc’s three districts is situated in proximity to industrial infrastructure – including power, highways and rail.
Figure 1
Note: Only the JOY, DUKE and IKE Districts denoted on the map with a “star” are owned by Amarc.
Amarc is the 100% owner and operator of the JOY, IKE and DUKE Districts. The properties consist of mineral claims (and in the case of IKE, also a few small crown grants1), which were acquired through agreements with previous owners or directly from the Government of BC by on-line staking (“Mineral Titles On Line” or “MTO”). To keep mineral claims in good standing, exploration and development work or payment instead of exploration and development must be registered and payment received by MTO before midnight of the good-to-date of the claim. The cost is $5 per hectare in years 1 and 2, $10 per hectare in years 3 and 4, $15 per hectare in years 5 and 6 and $20 per hectare in year 7 and thereafter. Excess work can be banked and applied to subsequent years.
The Company has received from the BC Ministry of Energy of Mines & Low Carbon Innovation all required permits for its proposed exploration activities, which include routine exploration permits for both drilling and Induced Polarization ground geophysical surveys.
____________________
1 Crown Grants are an old form of tenure that are small in area and on which certain mineral rights are granted. An annual rental is paid on the crown grants.
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Amarc works closely with local governments, indigenous groups and other stakeholders in order to advance its mineral projects responsibly, and to do so in a manner that contributes to sustainable community and economic development. The Company pursues early and meaningful engagement to ensure our mineral exploration and development activities are well coordinated and broadly supported, address local priorities and concerns, and optimize opportunities for collaboration. In particular, the Company seeks to establish mutually beneficial partnerships with indigenous groups within whose traditional territories its projects are located, through the provision of jobs, training programs, contract opportunities, capacity funding agreements and sponsorship of community events. All Amarc’s work programs are carefully planned to achieve high levels of environmental and social performance.
The JOY District covers the northern extension of the prolific Kemess porphyry Cu-Au district (the “Kemess District”) in the Toodoggone region of north-central BC. The JOY claims are located approximately 20 km north of the former Kemess South Mine and the government-approved Kemess underground project, held by Centerra Gold. JOY is host to the open-ended PINE porphyry Cu-Au deposit (the “PINE Deposit”) and the promising MEX porphyry Cu-Au deposit target. Work by Amarc has identified significant expansion potential that requires further drill testing at both the PINE Deposit and at MEX. In addition, Amarc’s extensive exploration surveys have identified a pipeline of other large and high potential, porphyry Cu-Au targets.
Amarc has entered into an alliance with Freeport-McMoRan Minerals Properties Canada Inc. (“Freeport”), a wholly owned subsidiary of Freeport-McMoRan Inc., to efficiently advance the JOY District. Under the terms of the agreement Freeport may acquire up to a 70% ownership interest by making staged investments totalling $110 million. Freeport increased its Year 1 contribution in the 2021 JOY exploration program by ~50% – from $4 million to $5.94 million (November 15, 2021 news release) and will continue their earn-in on the JOY District into a second drilling season.
The IKE District is located 33 km northwest of the historical mining community of Gold Bridge near the heartland of BC’s producing porphyry Cu mines. The greater IKE District includes porphyry Cu-Mo-Ag deposit discovery (the “IKE Deposit”), the high potential Greater Empress Cu-Au Project (the “Greater Empress” area) that hosts the Empress Cu-Au-Ag deposit (the “Empress Deposit”) and other significant porphyry Cu-Au-Mo-Ag and Cu-Au-Ag replacement deposit targets, and also a number of promising porphyry Cu and epithermal Au-Ag targets. The IKE District geological setting shares many characteristics with porphyry districts around the globe that host major, and commonly multiple, Cu±Au±Mo±Ag deposits and has the potential to become an important mining camp.
Subject to funding Amarc is planning:
| · | An expanded drill program at the IKE Deposit with the goal of establishing a mineral resource; |
| · | A well-planned core drilling program at the Empress Deposit to expand the mineralization which remains open; and |
| · | An integrated program in the Greater Empress area to drill test high potential drill-ready targets and survey work on other promising targets to bring them also to a drill ready status. |
The DUKE District is located 80 km northeast of Smithers within the broader Babine District, a 40 by 100 km north-northwesterly striking mineralized belt that hosts Noranda Mines’ past producing Bell and Granisle Cu-Au mines. The DUKE District includes both the DUKE porphyry Cu-Mo deposit target discovery and a series of high potential porphyry Cu-Au±Mo±Ag deposit targets generated from the Company’s comprehensive district-scale targeting programs.
Subject to funding, Amarc is planning:
| · | To undertake the drilling required to delineate the geometry and grade distribution of its DUKE discovery in order to inform a mineral resource estimate and related studies; and |
| · | Initial ground surveys on its regional targets taking advantage of extensive logging road networks across the property. These focused surveys would be followed by RC drilling to test prioritized targets for the presence of potential porphyry Cu-Au mineralized systems below cover and, where a deposit target is confirmed, core drilling to determine the extent, grade and geometry of the mineralized system. |
Amarc recently acquired from an arm’s length optionor an additional BC property comprising five mineral claims (Amarc release June 25, 2022). Subsequent to an initial requirement of $100,000, total additional option payments are a further $900,000 at $100,000 per year. The property is subject to a 2% NSR royalty, of which 1.5% is capped at $10 million. Amarc plans an immediate geophysical work program over the five BC mineral claims in order to keep them in good standing.
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JOY District
Location and Infrastructure
The JOY District is located in the Omineca Mining Division, approximately 310 km north of Mackenzie and 265 km north-northeast of Smithers in northern BC. The area of work is centred approximately at 57º 12’ N Latitude and 126º 43’ W Longitude; or UTM Zone 9 (NAD 83) at 6,343,500 m N and 638,500 m E. Figure 2 shows the location of the JOY District and infrastructure within the region.
Figure 2
Property Description
Amarc owns 100% interest in and is the operator of the JOY District. The project comprises the JOY, PINE and Paula properties acquired from other companies (as described below), and the STAKED Claims, staked by Amarc. The various claim groups are shown in Figure 3. There are 122 mineral claims, covering an area of 49,205 hectares (121,588 acres). Of these claims, 117 expire in 2030, and five expire in 2023.
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Figure 3
On November 21, 2017, Amarc acquired 100% interest in the 7,200 hectare JOY property from United Minerals Services Ltd., a private vendor. The JOY property is subject to an underlying NSR royalty from production to a former owner, which is capped at $3.5 million.
On August 29, 2017, Amarc announced that it had concluded option agreements with each of Gold Fields Toodoggone Exploration Corporation (“Gold Fields”) and Cascadero Copper Corporation ("Cascadero"), which at that time held the PINE property in a 51%:49% joint venture that enabled Amarc to purchase 100% of the property. On December 31, 2018, Amarc completed the purchase of Cascadero’s 49% interest in the PINE Property. Further on December 9, 2019, Amarc announced that it had reached an agreement with Gold Fields to amend the option agreement between the parties and purchased outright the remaining 51% of the PINE property from Gold Fields.
Gold Fields retains a 2.5% NPI royalty on mineral claims comprising about 96% of the PINE property and a 1% NSR royalty on the balance of the claims. The NPI royalty can be reduced to 1.25% at any time through the payment to Gold Fields of $2.5 million in cash or shares. The NSR royalty can be reduced to 0.50% through the payment to Gold Fields of $2.5 million in cash or shares.
The PINE property is subject to a 3% underlying NSR royalty payable from production to a former owner and capped at $5 million payable from production.
In November 2019 Amarc entered into a purchase agreement with two prospectors to acquire 100% of a single mineral claim, called the Paula property, located internal to the wider JOY project tenure. The claim is subject to a 1% NSR royalty payable from commercial production that is capped at $0.5 million.
Agreement with Freeport
On May 12, 2021 Amarc announced it entered into an agreement (the "Agreement") with Freeport pursuant to which Freeport may acquire, through a staged two-stage option up to a 70% ownership interest in the mineral claims comprising the JOY District, plus other rights and interests, over up to a 10 year period.
To earn an initial 60% interest, Freeport is required to fund $35 million of work expenditures over a 5-year term. During the first year of the earn-in, a $4 million work program is required in the JOY District. Annual optional earn-in expenditures can be accelerated by Freeport at its discretion. Amarc will be operator during the initial earn-in period. Once Freeport has acquired such 60% interest, Amarc and Freeport will proceed to explore and develop the JOY District through a jointly owned corporation with Freeport assuming project operatorship.
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Upon Freeport earning such 60% interest, it can elect, in its sole discretion, to earn an additional 10% in the mineral claims comprising the JOY District, plus other rights and interests (for a total 70% interest) by sole funding a further $75 million within the following five years.
Once Freeport has finalized its earned ownership interest at either the 60% or 70% level, each party will be responsible for funding its own pro-rata share of project costs on a 60:40 or 70:30 basis.
Project Highlights
The PINE Deposit within the JOY District has seen several phases of historical exploration and drilling. Work by Amarc identified significant expansion potential at both the PINE Deposit and the MEX deposit target that requires drill testing. In addition, Amarc defined seven other large (approximately 1 to 5 km2), high potential porphyry Cu-Au exploration target areas, each of which hosts multiple targets that are either drill-ready, or can rapidly be brought up to a drill ready status by the completion of focused surface surveys. A highly effective targeting strategy was initially achieved by combining and interpreting information from the Company’s exploration surveys and extensive historical datasets. These datasets included results from soil geochemical sample grids, airborne magnetics and IP geophysical surveys, geological and alteration mapping and historical drilling. The large historical soils geochemical database (6,390 samples) was of particular use.
Recent Work
In 2021 Amarc work crews completed a comprehensive exploration program at JOY, which was designed to advance deposit delineation and assess several of the defined important-scale mineral systems (November 15, 2021 news release). This program included the drilling of nine core drill holes (4,300 m) and the relogging of over 60 historical core drill holes mainly from the PINE porphyry copper-gold deposit, along with 42 line-km of IP geophysical survey, 684 grid soil geochemical samples and 179 rock geochemical samples collected during geological traverses over a number of the target areas. In addition, Freeport are to continue their earn-in on the JOY District into a second drilling season in 2022.
PINE Porphyry Cu-Au Deposit
Building on information derived mainly from the team’s relogging of the historical core, Amarc completed in 2021 its first drilling at the PINE Deposit, which comprised three long core holes (up to 701 m in length) (March 7, 2022 news release). These holes intercepted significant mineralization over a strike length of 1,100 m and to a vertical depth of at least 550 m (Table 1), within an expansive 6 km2 hydrothermal mineralizing system as outlined by IP geophysical surveys. Notably, the PINE system has the potential to remain open to expansion for at least 1 km to the southwest, with most of this prospective area concealed under a cover of broadly distributed glacial deposits.
Amarc’s drill holes at the PINE Deposit intercepted some of the highest grade of Cu-Au mineralization over the longest intervals encountered to date. Highlights from 2021 PINE Deposit core drilling include:
| · | 101.90 m of 0.56% CuEQ1 (0.23% Cu, 0.57 g/t Au and 2.4 g/t Ag) |
| · | 29.00 m of 0.46% CuEQ (0.20% Cu, 0.44 g/t Au and 2.1 g/t Ag) |
| · | 66.60 m of 0.40% CuEQ (0.21% Cu, 0.32 g/t Au and 1.5 g/t Ag) |
| · | 244.10 m of 0.35% CuEQ (0.11% Cu, 0.41 g/t Au and 1.2 g/t Ag) |
| · | 135.00 m of 0.44% CuEQ (0.14% Cu, 0.53 g/t Au and 1.2 g/t Ag) |
1. Copper equivalent (CuEQ) calculations do not use 100% recovery but conceptual recoveries based on those from producing and near development BC porphyry Cu deposits of Cu 85%, Au 72% and 67% Ag, and metal prices of Cu US$4.00/lb, Au US$1,800.00/oz Au and Ag US$24.00/oz. Further details are provided below with Table 1.
A majority of the 60+ mainly short and, frequently, widely spaced historical core holes at the PINE Deposit (80% of which extend to <200 m vertical depth) are collared within a restricted 900 x 600 m area. Reinterpretation of historical drill holes and the new holes drilled by Amarc show good potential to expand the PINE Deposit internally (between the widely spaced drill holes), laterally (beyond the footprint of current drilling) and to depth.
Further to the open-ended nature of the PINE Deposit, there is also significant potential for the discovery of other centres of porphyry Cu-Au mineralization within the area of the overall PINE mineralized system. Amarc's hole JP21009, located 500 m northeast of the PINE Deposit, returned 244 m of 0.35% CuEQ (0.11% Cu, 0.41 g/t Au and 1.2 g/t Ag) (see Table 1, note 4 for information on CuEQ), including 135 m of 0.44% CuEQ (0.14% Cu, 0.53 g/t Au and 1.2 g/t Ag), indicating high potential to the northeast. Historical drilling also indicates significant potential to the southwest of the PINE Deposit. For example, the historical hole located furthest away to the southwest but within the current known limits of the PINE system (PIN09-04) returned 105 m at 0.17% CuEQ (0.08% Cu, 0.15 g/t Au and 1.1 g/t Ag).
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District Porphyry Cu-Au Deposit Targets
In addition to the PINE Deposit and its internal, lateral and depth potential for expansion, the JOY District hosts five drill-ready, deposit-scale porphyry Cu-Au targets (including Canyon, Twins and MEX). Together, these assets indicate the potential to form a major cluster of Cu-Au mineralized porphyry systems (March 7, 2022 news release). Furthermore, other Cu-Au target areas in the JOY District will be advanced to drill readiness during the 2022 field season.
Amarc drilled five initial scout exploration core holes (271 m to 404 m in length) in 2021 to test four porphyry Cu-Au deposit targets confirmed by IP, airborne magnetics, geochemical and geological surveys. Three of these JOY District targets had not previously been drill tested.
Like the PINE Deposit, the approximately 5 km2 Canyon porphyry Cu-Au deposit target is largely covered by a veneer of glacial deposits. The Canyon target is defined by a high contrast IP chargeability anomaly, outlining a sizable sulphide system centered on and flanked by magnetic highs. On the eastern and western margins of this target historical drilling returned porphyry-style Cu-Au and high-grade Au intersections, respectively.
A single scout hole (JP21006) collared within the 5 km2 Canyon target area intersected 27 m of porphyry style mineralization grading 0.18% CuEQ (0.06% Cu, 0.21 g/t Au and 0.7 g/t Ag) (see Table 1 below, note 4 for information on CuEQ), indicating a peripheral location to a porphyry Cu-Au system. Hole JP21005, drilled over 1 km to the east did not return significant assays. Systematic drilling of the very extensive Canyon target is planned for 2022.
At the Twins porphyry Cu-Au target, which is also mostly concealed under a thin layer of glacial cover, IP chargeability surveys have outlined a sulphide system that envelopes a number of magnetic highs, that extends over an area of 6 km2 that is open to further expansion to the south and east. The Twins target is centered on an outcrop of moderate to strongly altered monzonite intrusive that locally hosts porphyry-style chalcopyrite-bearing veinlets.
Amarc's scout exploration hole (JP21004), the first ever drilled into the sizable Twins target, successfully discovered porphyry-type Cu-Au mineralization – intercepting 63 m of 0.18% CuEQ (0.09% Cu, 0.15 g/t Au and 0.5 g/t Ag), including 39 m of 0.22% CuEQ (0.11% Cu, 0.19 g/t Au and 0.6 g/t Ag). Systematic drilling of the extensive Twins target is planned for 2022.
At the MEX Cu-Au deposit target, a single hole (JP21002) drilled by Amarc in 2021 intersected anomalous Cu and Au concentrations lateral to and below historical drilling, returning 153 m of 0.17% CuEQ (0.09% Cu, 0.13 g/t Au). At the North MEX target, a single hole (JP21003) was drilled to test a multi-element geochemical anomaly. No significant Cu or Au concentrations were encountered in that hole.
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Table 1: JOY District
2021 Drill Hole Assay Results
Drill Hole ID | Deposit Target | Azim (°) | Dip (°) | EOH (m) | Incl. | From (m) | To (m) | Int.1,2,3 (m) | CuEQ4,5 (%) | Cu (%) | Au (g/t) | Ag6 g/t) |
JP21001 | PINE | 35 | -60 | 302 |
| 34.00 | 80.00 | 46.00 | 0.10 | 0.03 | 0.11 | 2.4 |
|
|
|
|
|
| 104.00 | 155.00 | 51.00 | 0.13 | 0.04 | 0.13 | 3.2 |
|
|
|
|
|
| 239.00 | 266.00 | 27.00 | 0.11 | 0.06 | 0.07 | 0.8 |
JP21002 | MEX | 195 | -60 | 707 |
| 26.00 | 179.00 | 153.00 | 0.17 | 0.09 | 0.13 | 0.7 |
|
|
|
|
| Incl. | 98.00 | 116.00 | 18.00 | 0.24 | 0.16 | 0.13 | 1.0 |
|
|
|
|
| Incl. | 155.00 | 173.00 | 18.00 | 0.26 | 0.12 | 0.25 | 1.2 |
|
|
|
|
|
| 224.00 | 287.00 | 63.00 | 0.12 | 0.06 | 0.10 | 0.6 |
JP21003 | MEX N | 45 | -70 | 404 | No significant assays |
|
|
|
| |||
JP21004 | Twins | 45 | -60 | 302 |
| 89.00 | 152.00 | 63.00 | 0.18 | 0.09 | 0.15 | 0.5 |
|
|
|
|
| Incl. | 98.00 | 137.00 | 39.00 | 0.22 | 0.11 | 0.19 | 0.6 |
JP21005 | Canyon | 30 | -50 | 349 | No significant assays |
|
|
|
| |||
JP21006 | Canyon | 45 | -60 | 271 |
| 85.00 | 112.00 | 27.00 | 0.18 | 0.06 | 0.21 | 0.7 |
|
|
|
|
| Incl. | 97.00 | 112.00 | 15.00 | 0.25 | 0.08 | 0.30 | 0.8 |
JP21007 | PINE | 0 | -85 | 596 |
| 41.00 | 70.00 | 29.00 | 0.46 | 0.20 | 0.44 | 2.1 |
|
|
|
|
|
| 132.80 | 234.70 | 101.90 | 0.56 | 0.23 | 0.57 | 2.4 |
|
|
|
|
|
| 297.15 | 361.05 | 63.90 | 0.26 | 0.14 | 0.21 | 1.1 |
|
|
|
|
| Incl. | 312.00 | 344.00 | 32.00 | 0.32 | 0.16 | 0.27 | 1.3 |
|
|
|
|
|
| 409.25 | 503.00 | 90.75 | 0.24 | 0.14 | 0.15 | 2.3 |
JP21008 | PINE | 180 | -65 | 701 |
| 112.80 | 129.65 | 16.85 | 0.18 | 0.09 | 0.14 | 1.4 |
|
|
|
|
|
| 177.15 | 389.00 | 211.85 | 0.16 | 0.10 | 0.10 | 1.3 |
|
|
|
|
| Incl. | 344.00 | 386.00 | 42.00 | 0.22 | 0.13 | 0.14 | 1.4 |
|
|
|
|
| Incl. | 410.00 | 433.00 | 23.00 | 0.42 | 0.21 | 0.35 | 2.1 |
|
|
|
|
|
| 458.10 | 553.40 | 95.30 | 0.33 | 0.18 | 0.26 | 1.4 |
|
|
|
|
| Incl. | 458.10 | 524.70 | 66.60 | 0.40 | 0.21 | 0.32 | 1.5 |
|
|
|
|
|
| 566.45 | 598.20 | 31.75 | 0.20 | 0.17 | 0.04 | 0.9 |
JP21009 | PINE | 215 | -55 | 700 |
| 26.50 | 270.60 | 244.10 | 0.35 | 0.11 | 0.41 | 1.2 |
|
|
|
|
| Incl. | 37.00 | 52.00 | 15.00 | 0.41 | 0.13 | 0.49 | 1.1 |
|
|
|
|
| and | 73.00 | 268.00 | 195.00 | 0.37 | 0.12 | 0.43 | 1.2 |
|
|
|
|
| and | 97.00 | 232.00 | 135.00 | 0.44 | 0.14 | 0.53 | 1.2 |
|
|
|
|
| and | 151.00 | 190.00 | 39.00 | 0.60 | 0.17 | 0.77 | 1.3 |
|
|
|
|
|
| 367.96 | 400.00 | 32.04 | 0.28 | 0.08 | 0.34 | 1.1 |
|
|
|
|
| Incl. | 367.96 | 388.00 | 20.04 | 0.34 | 0.10 | 0.42 | 1.1 |
Notes to Table 1:
1. | Widths reported are drill widths, such that true thicknesses are unknown. |
2. | All assay intervals represent length-weighted averages. |
3. | Some figures may not sum exactly due to rounding. |
4. | Copper equivalent (CuEQ) calculations use metal prices of: Cu US$4.00/lb, Au US$1,800.00/oz and Ag US$24/oz and conceptual recoveries of: Cu 85%, Au 72% and 67% Ag. Conversion of metals to an equivalent copper grade based on these metal prices is relative to the copper price per unit mass factored by conceptual recoveries for those metals normalized to the conceptualized copper recovery. The metal equivalencies for each metal are added to the copper grade. The general formula for this is: CuEQ% = Cu% + (Au g/t * (Au recovery / Cu recovery) * (Au $ per oz/ 31.1034768) / (Cu $ per lb* 22.04623)) + (Ag g/t * (Ag recovery / Cu recovery) * (Ag $ per oz/ 31.1034768) / (Cu $ per lb* 22.04623)). |
5. | Intervals averaging greater than 0.3% CuEQ in bold; included intercepts are italicized. |
6. | Ag results capped at 40 g/t. |
Quality Control/Quality Assurance (“QA/QC”) Program
Amarc drilled nine core drill holes (4,300 m) in 2021; of these, 30% HQ and 70% NQ size core. All drill core was logged, photographed and cut in half with a diamond saw. A total of 1,459 - 3 m long half core samples were taken from the JOY drill holes and sent to Activation Laboratories Ltd. (Actlabs), Kamloops, Canada facility for preparation and analysis. At Actlabs Kamloops, samples were dried, crushed to 2 mm and 250 g sub-sample pulverized to 105 microns. The sub-sample was analyzed for Au by fire assay fusion of a 30 g sample with an ICP-OES finish and for Cu, Ag and 33 additional elements by 4 acid digestion of a 0.25 sample followed by an ICP-OES finish. At the Actlabs Ancaster Ontario facility, the sub-samples were analyzed for Cu, Au, Ag and 60 additional elements by Aqua Regia digestion of a 0.5 g sample followed by an ICP-MS finish. Both Actlabs facilities are ISO/IEC 17025 accredited. As part of a comprehensive QAQ program, Amarc control samples were inserted in each analytical batch at the following rates: standards one in 20 regular samples, in-line replicates one in 20 regular samples and blanks one in 50 regular samples. The control sample results were then checked to ensure proper QAQC.
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Figure 4 shows the location of the PINE deposit and other targets in the JOY District. The IP survey results outline a cluster of potential mineral systems at Canyon, Twins and other targets.
Figure 4
Figure 5 shows the location of historical and 2021 drill holes overlain on results from IP geophysical surveys indicating the potential size of the sulphide bearing mineral system at the PINE deposit and greater PINE target.
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| Table of Contents |
Figure 5
IKE District
Location and Infrastructure
The IKE District is located in the Clinton and Lillooet Mining Divisions, approximately 35 km northwest of Gold Bridge in west central BC. Figure 6 is shows the location of the IKE District and infrastructure within the region. The centre of work on the IKE Deposit is located at 51º 02’ 32” N Latitude and 123º 22’ 20” W Longitude; or UTM Zone 10 (NAD 83) at 5,654,600 m N and 473,900 m E.
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Figure 6
Property Description
Amarc owns 100% interest and is the operator of the IKE District. The project comprises the adjoining IKE, Galore, Granite properties acquired from other companies (as described below) and the Juno property staked by Amarc and shown in Figure 7. It also shows the location of the IKE and Empress deposits and the Empress East, Buzzer and other targets described under Project Highlights.
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Figure 7
In July 2014, Amarc acquired a 100% interest in the IKE property from Oxford Resources Inc. (“Oxford”, formerly Highpoint Exploration Inc.). At that time Oxford’s ownership interest was converted to a 1% NSR royalty, which can be purchased at any time for $2 million (payable in cash or common shares of Amarc at the company’s sole election).
The IKE property is also subject to a 2% underlying NSR royalty to two underlying owners, whereby Amarc has the right to purchase: (1) one half of the royalty (1%) for $2 million ($1 million of which is payable in cash, Amarc common shares, or any such combination of cash and shares, at Amarc's discretion) at any time prior to commercial production; and (2) the second half of the royalty (1%) also for $2 million ($1 million of which is payable in cash, and the balance in Amarc common shares, or any such combination of cash and shares, at Amarc's discretion) at any time on or before a commercial mine production decision has been made in respect of the IKE property. Amarc has agreed that upon completion of a positive feasibility study it will issue 500,000 common shares to the underlying owners.
In November 2014, Amarc acquired a 100% interest in the adjoining Granite property from Great Quest Fertilizers Ltd. ("Great Quest", previously known as Great Quest Metals Ltd., which is also referred to as “Great Quest” herein). Great Quest holds a 2% NSR royalty on that property which can be purchased for $2 million, on or before commercial production (payable in cash, Amarc common shares, or any such combination of cash and shares, at Amarc’s discretion). In addition, there is an underlying 2.5% NSR royalty on certain mineral claims within the Granite property, which can be purchased at any time for $1.5 million less any amount of royalty already paid.
In January 2017, Amarc acquired a 100% interest in the adjoining Galore property from Galore Resources Inc. ("Galore Resources"), clear of any royalties to Galore Resources. In January 2018, Amarc concluded an agreement with the underlying owners of the Galore property, whereby Amarc acquired all of the underlying owners’ residual interest in and to the Galore property, including five NSR and five NPI royalties.
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On September 3, 2015, Amarc entered into an agreement (the "Agreement") with Thompson Creek (now a wholly owned subsidiary of Centerra Gold Inc.) pursuant to which Thompson Creek could acquire, through a staged investment process within five years, a 30% ownership interest in mineral claims and crown grants covering the IKE Project. Under the terms of the Agreement, Thompson Creek also received an option, after acquiring its 30% interest, to acquire an additional 20% interest in the IKE District, subject to certain conditions, including the completion of a Feasibility Study. On January 11, 2017, Amarc announced that Thompson Creek relinquished its option having been acquired by Au-focused Centerra Gold. Thompson Creek had a 10% participating interest in the IKE District by investing $6 million in exploration programs undertaken in 2015 and 2016 and elected to exchange its participating interest for a 1% Conversion NSR royalty from mine production, which is capped at a total of $5 million. As a result, Amarc re-acquired 100% interest in the IKE District.
Amarc holds a 100% interest in the IKE District comprising, in total, 170 mineral claims, covering an area of 67,346 hectares (116,416 acres) and which includes 9 crown grants2 (Figure 8). Of the mineral claims, 126 are in good standing until 2029 and 43 expire in 2023.
___________________
2The 9 crown grants cover areas totalling 158.26 hectares (391.07 acres); the annual cost to retain is $197.83.
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| Table of Contents |
Figure 8
Project Highlights
The greater IKE District includes the IKE porphyry Cu-Mo-Ag deposit discovery, the high potential Greater Empress area that hosts the Empress Cu-Au-Ag deposit and significant porphyry Cu-Au-Mo-Ag and Cu-Au-Ag replacement deposit targets, and also a number of promising porphyry Cu and Au-Ag epithermal targets. The IKE District has the potential to develop into an important mining camp.
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IKE Porphyry Cu-Mo-Ag Deposit
The potential of the IKE porphyry deposit was recognized by Amarc during a review of porphyry occurrences located in underexplored mineral belts in BC. Limited historical drilling indicated the presence of a mineral system with characteristics favorable for an economically viable porphyry Cu-Mo-Ag deposit, underlying a significant area of gossanous material. Three historical drill holes, located over approximately 220 m, had intersected long continuous intercepts of chalcopyrite and molybdenite mineralization with encouraging grades, for example: Hole 11-1 returned 186 m of 0.41% CuEQ (0.31% Cu, 0.022% Mo, 1.9 g/t Ag and 0.01 g/t Au), including 58 m of 0.52% CuEQ (0.39% Cu, 0.031% Mo, 1.9 g/t Ag and 0.02 g/t Au) (see Table 2 below, note 4 for information on CuEQ); and Hole 11-2: 120 m of 0.41% CuEQ (0.31% Cu, 0.020% Mo, 3.3 g/t Ag and 0.01 g/t Au) including 32 m of 0.58% CuEQ (0.42 % Cu, 0.028% Mo, 6.3 g/t Ag and 0.02 g/t Au).
There was no follow up exploration until Amarc initiated exploration. Largely co-incident magnetic, IP chargeability geophysics and geochemical talus fines anomalies, together with geological alteration mapping have defined an extensive 9 km2 hydrothermal system, into which Amarc has completed approximately 15,455 m of core drilling in 26 widely-spaced holes. This drilling has confirmed the presence of a substantial body of porphyry Cu-Mo-Ag mineralization with encouraging grades, over an area 1,200 m east-west by 1,000 m north- south, and over a vertical extent of 875 m depth, that remains open to expansion. Table 2 provides five typical drill holes of the 26 completed; each represents intercepts of >0.3% CuEQ, selected to characterize drilling from within the known mineralized porphyry body of the IKE Deposit since 2011. The Cu and Mo concentrations in drill hole IK15013 are in the upper grade range of the typical drill holes.
Table 2: IKE DEPOSIT
Selected Drill Intervals from Amarc’s Drilling
Drill Hole | From (m) | To (m) | Int. (m)1,2,3 | Cu (%) | Au (g/t) | Ag (g/t) | Mo (%) | CuEQ(%)4,5 |
IK14005 | 269.4 | 325.4 | 56.0 | 0.31 | - | 1.6 | 0.064 | 0.55 |
| 339.1 | 426.2 | 87.1 | 0.36 | - | 0.7 | 0.054 | 0.56 |
Incl. | 347.7 | 378.6 | 30.9 | 0.47 | - | 1.2 | 0.052 | 0.67 |
| 437.6 | 554.6 | 117.0 | 0.27 | - | 0.3 | 0.021 | 0.35 |
| 602.9 | 616.1 | 13.2 | 0.29 | - | 0.6 | 0.009 | 0.32 |
IK15010 | 204.0 | 268.0 | 64.0 | 0.30 | - | 2.9 | 0.015 | 0.38 |
| 293.0 | 421.0 | 128.0 | 0.33 | - | 3.1 | 0.022 | 0.43 |
Incl. | 298.5 | 330.0 | 31.5 | 0.43 | - | 4.3 | 0.032 | 0.58 |
| 444.0 | 506.0 | 62.0 | 0.24 | - | 2.3 | 0.020 | 0.32 |
IK15013 | 48.0 | 60.0 | 12.0 | 0.23 | - | 1.7 | 0.017 | 0.31 |
| 75.0 | 99.0 | 24.0 | 0.24 | - | 1.9 | 0.044 | 0.41 |
| 129.0 | 307.7 | 178.7 | 0.32 | - | 2.2 | 0.025 | 0.42 |
| 339.5 | 366.5 | 27.0 | 0.18 | - | 1.2 | 0.030 | 0.30 |
| 372.5 | 693.3 | 320.8 | 0.32 | - | 2.3 | 0.038 | 0.47 |
Incl. | 527.4 | 651.5 | 124.1 | 0.43 | - | 3.3 | 0.063 | 0.68 |
IK16020 | 111.0 | 156.0 | 45.0 | 0.25 | - | 1.7 | 0.015 | 0.31 |
| 314.5 | 381.9 | 67.4 | 0.35 | - | 2.8 | 0.023 | 0.45 |
Incl. | 366.0 | 381.9 | 15.9 | 0.45 | - | 3.5 | 0.044 | 0.64 |
| 395.8 | 456.0 | 60.2 | 0.53 | - | 3.7 | 0.045 | 0.72 |
| 528.0 | 543.0 | 15.0 | 0.16 | - | 1.3 | 0.035 | 0.30 |
| 549.0 | 582.0 | 33.0 | 0.23 | - | 1.6 | 0.110 | 0.64 |
IK18025 | 257.0 | 351.7 | 94.7 | 0.37 | 0.020 | 2.5 | 0.020 | 0.47 |
Incl. | 308.0 | 345.4 | 37.4 | 0.48 | 0.025 | 3.4 | 0.030 | 0.62 |
| 359.0 | 437.0 | 78.0 | 0.44 | 0.019 | 3.0 | 0.037 | 0.61 |
| 461.0 | 482.0 | 21.0 | 0.14 | 0.005 | 1.0 | 0.054 | 0.35 |
| CuEQ% |
| >=0.30 & <0.50 |
|
| >=0.50 |
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| Table of Contents |
Notes for Table 2.
1 | Widths reported are drill widths, such that the thicknesses are unknown. |
2 | All assay intervals represent length-weighted averages. |
3 | Some figures may not sum exactly due to rounding. |
4 | Copper equivalent (CuEQ) calculations use metal prices of: Cu US$3.00/lb, Mo US$12.00/lb, Ag US$18.00/oz and Au US$1,400.00/oz and conceptual recoveries of: Cu 90%, Au 72%, 67% Ag and 82% Mo. Conversion of metals to an equivalent Cu grade based on these metal prices is relative to the Cu price per unit mass factored by predicted recoveries for those metals normalized to the copper recovery. The metal equivalencies for each metal are added to the Cu grade. The general formula for this is: CuEQ % = Cu% + (Au g/t * (Au recovery / Cu recovery) * (Au $ per oz/ 31.1034768) / (Cu $ per lb* 22.04623)) + (Ag g/t * (Ag recovery / Cu recovery) * (Ag $ per oz/ 31.1034768) / (Cu $ per lb* 22.04623)) + (Mo % * (Mo recovery / Cu recovery) * (Mo $ per lb / Cu $ per lb)). |
5 | The estimated metallurgical recoveries are conceptual in nature. There is no guarantee that the metallurgical testing required to determine metal recoveries will be done or, if done, the metallurgical recoveries could be at the level of the conceptual recoveries used to determine the CuEQ. |
In addition:
(-) means not assayed for.
Further details on:
| · | Amarc drilling at IKE can be found in Amarc’s December 9, 2015, October 17, 2016, November 6, 2018 news releases. |
| · | Historical drilling at Empress, Empress East and Buzzer can be found in Amarc’s January 19, 2021 news release. |
Analytical & QAQC: Amarc drill core was logged, photographed and cut in half with a diamond saw. Half core samples from IKE were sent to Activation Laboratories Ltd., Kamloops, Canada facility (17025 accredited), for preparation and analyses. Drill core samples were analyzed for Cu, Mo, Au, Ag and 34 additional elements by 4 acid digestion of a 0.25 g sample followed by an ICP-AES finish. Cu, Mo, Ag, Au and 59 additional elements we also analyzed by Aqua Regia digestion of a 0.5 g sample followed by an ICP-MS finish. Au was also analyzed by fire assay fusion of a 30 g sample followed by ICP-AES finish. Amarc control samples were inserted in each analytical batch at the following rates: standards one in 20 regular samples, duplicates in one in 20 regular samples and blanks one in 50 regular samples. The control sample results were checked for proper QAQC.
Historical Drilling – IKE area: Amarc is not aware of any available and verifiable information on the security, sampling method, sample preparation procedures, analytical methods and analytical laboratories used in nine pre-1981 drill programs. Analytical data from this era was carefully derived from a set of downhole bar charts of Cu and MoS2 hand plotted at 1” = 50’ on cross-sections located in an internal company report, while for three holes Amarc is only aware of composite interval data. The assay results and sample from-to’s of the three 1981 drill holes were key punched by Amarc from an ARIS Assessment Report (accessed from the BC government files) which states Acme Analytical Laboratories, Vancouver, BC assayed the samples. Also as part of its due diligence, Amarc in 2013 selected 8 samples from the remaining half of the 2011 drill core, added three additional QAQC samples and submitted them to Acme for sample preparation, including the preparation of a second set of pulps from coarse reject splits for analysis.
Historical – Empress area: Pre-1981 data are from digital files of a Taseko Property compilation. There are no assay certificates for these holes. There are assay certificates for the 1988-2008 holes.
Like many major porphyry deposits, the IKE deposit formed in a very active, multi-stage hydrothermal system that was extensive and robust. Geological mapping and logging of diamond drill core at IKE indicate the deposit is hosted entirely by multi-phase intrusive rocks. Its overall geological setting is similar to that of many important porphyry belts along the Cordillera in North and South America.
Core observations and initial petrographic studies at IKE indicate that the chalcopyrite and molybdenite mineralization occurs as fine to relatively coarse, mostly discrete grains, mainly as disseminations and less commonly in fractures and veins. Multi-element analyses have returned consistently and unusually low concentrations of metallurgically or environmentally deleterious elements. These characteristics, and the generally low concentrations of pyrite at IKE, suggest excellent potential to produce clean, good-grade Cu and Mo concentrates by standard flotation processing.
Greater Empress Area Au-Rich Porphyry Cu and Replacement-Style Deposit Potential
Having recognized the potential of the IKE Deposit, Amarc consolidated the IKE District tenure. This included an important 35 km2 sub-area of the District located 6 km north of the IKE Deposit, that straddles the contact between volcanic rocks and Coastal Plutonic Complex (“CPC”) for approximately 15 km. This area known as the Greater Empress area is centred on the high grade Empress Cu-Au-Ag Deposit. The Greater Empress area has seen exploration completed by several operators since the 1920’s. Recent compilation and integration of useful historical information from geochemical and geophysical surveys and also drilling, permitted a rapid advancement in the understanding of the potential to expand the Empress Deposit, and throughout the area with the recognition of significant porphyry Cu±Au±Mo-Ag and Cu-Au-Ag replacement deposit targets (January 19, 2021 news release). Potential also exits for auriferous, polymetallic/mesothermal-epithermal deposits.
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| Table of Contents |
Empress Cu-Au-Ag Replacement Deposit
Historical drilling at Empress has indicated a significant body of good grade Cu-Au±Ag mineralization, which remains open to expansion with a modern core drilling program. Table 3 provides selected drill historical intercepts for the Empress Deposit. Mineralization at Empress is considered to have formed by the replacement of previously altered volcanics by a quartz-magnetite-sulphide assemblage, with higher Cu-Au-Ag grades commonly occurring within 100 m in vertical distance above the CPC’s contact, within the overlying volcanics. An initial examination of historical drill core by the Amarc team recognized the nearby, Granite porphyry Cu-Au-Ag-Mo deposit target, which is shallowly concealed by overburden. The Granite porphyry deposit target is considered a probable source of the Empress Deposit replacement fluids. Historical core drill intercepts at Granite include Hole 91-49 which returned 92 m of 0.38% CuEQ (0.22% Cu, 0.23 g/t Au, 0.008% Mo and 0.4 g/t Ag) (see Table 2, note 4 for information on CuEQ). This target has not been delineated and mineralization remains open to expansion. Step-out drilling from the known mineralization is required.
Table 3: EMPRESS DEPOSIT
Selected Drill Intervals from Historical Drilling
Drill Hole | From (m) | To (m) | Int. (m)1,2,3 | Cu (%) | Au (g/t) | Ag (g/t) | Mo (%) | CuEQ (%)4,5 |
76-2 | 51.2 | 114.9 | 63.7 | 0.37 | 0.492 | 0.1 | - | 0.64 |
Incl. | 60.4 | 72.4 | 12.0 | 0.51 | 0.442 | - | - | 0.76 |
Incl. | 103.0 | 114.9 | 11.9 | 0.75 | 0.721 | 0.4 | - | 1.15 |
| 139.6 | 185.3 | 45.7 | 0.42 | 0.350 | 0.6 | - | 0.61 |
Incl. | 139.6 | 157.9 | 18.3 | 0.39 | 0.941 | 1.1 | - | 0.91 |
Incl. | 173.1 | 185.3 | 12.2 | 0.73 | 0.010 | - | - | 0.74 |
| 209.4 | 215.8 | 6.4 | 0.74 | 0.758 | - | - | 1.15 |
76-3 | 5.2 | 17.7 | 12.5 | 0.23 | 0.162 | 1.6 | - | 0.33 |
| 26.8 | 102.9 | 76.1 | 0.92 | 1.418 | 4.7 | - | 1.72 |
Incl. | 26.8 | 37.6 | 10.8 | 0.49 | 4.244 | 2.3 | - | 2.81 |
Incl. | 42.7 | 74.4 | 31.7 | 1.11 | 1.388 | 4.5 | - | 1.89 |
88-2 | 7.3 | 50.3 | 43.0 | 0.36 | 0.326 | 1.3 | 0.005 | 0.57 |
Incl. | 13.4 | 29.9 | 16.5 | 0.62 | 0.579 | 2.3 | 0.002 | 0.95 |
88-7 | 17.7 | 69.5 | 51.8 | 0.47 | 0.457 | 2.4 | 0.002 | 0.74 |
Incl. | 48.4 | 64.6 | 16.2 | 0.98 | 0.741 | 5.7 | 0.001 | 1.43 |
89-2 | 21.6 | 123.7 | 102.1 | 0.36 | 0.361 | 2.7 | 0.001 | 0.58 |
Incl. | 26.5 | 37.0 | 10.5 | 0.31 | 0.754 | 3.2 | 0.003 | 0.75 |
Incl. | 60.6 | 78.9 | 18.3 | 0.72 | 0.573 | 3.8 | 0.001 | 1.06 |
Incl. | 99.1 | 118.0 | 18.9 | 0.49 | 0.470 | 4.2 | 0.001 | 0.78 |
89-8 | 9.1 | 115.5 | 106.4 | 0.35 | 0.359 | 1.5 | 0.003 | 0.56 |
Incl. | 78.0 | 99.6 | 21.6 | 0.69 | 0.913 | 2.8 | 0.003 | 1.21 |
90-17 | 107.6 | 113.4 | 5.8 | 0.55 | 0.446 | 1.6 | 0.010 | 0.84 |
| 143.9 | 200.3 | 56.4 | 1.38 | 1.666 | 4.1 | 0.009 | 2.35 |
90-18 | 22.6 | 29.3 | 6.7 | 0.15 | 0.300 | 0.7 | 0.008 | 0.35 |
| 35.0 | 40.5 | 5.5 | 0.15 | 0.523 | 0.3 | 0.006 | 0.46 |
| 47.9 | 74.4 | 26.5 | 0.47 | 0.683 | 3.2 | 0.010 | 0.90 |
| 79.9 | 92.7 | 12.8 | 0.15 | 0.254 | 0.4 | 0.003 | 0.31 |
| 107.0 | 161.9 | 54.9 | 0.78 | 0.746 | 1.0 | 0.004 | 1.20 |
90-21 | 10.4 | 19.5 | 9.1 | 0.31 | 0.336 | 0.5 | 0.011 | 0.53 |
| 140.5 | 192.9 | 52.4 | 1.10 | 1.209 | 2.5 | 0.004 | 1.79 |
Incl. | 153.3 | 175.3 | 22.0 | 1.58 | 1.671 | 2.6 | 0.006 | 2.52 |
Incl. | 182.6 | 191.1 | 8.5 | 1.92 | 2.735 | 7.8 | 0.006 | 3.48 |
| 198.4 | 218.8 | 20.4 | 0.30 | 0.542 | 1.3 | 0.002 | 0.61 |
90-22 | 143.9 | 190.2 | 46.3 | 1.15 | 1.415 | 4.2 | 0.009 | 1.98 |
90-29 | 94.2 | 110.6 | 16.4 | 0.43 | 0.171 | 1.3 | 0.003 | 0.55 |
| 141.7 | 214.6 | 72.9 | 0.37 | 0.433 | 0.6 | 0.003 | 0.62 |
Incl. | 178.3 | 194.8 | 16.5 | 0.86 | 1.069 | 1.5 | 0.003 | 1.46 |
| CuEQ% |
| >=0.30 & <0.50 |
|
| >=0.50 |
For notes refer to Table 2.
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| Table of Contents |
Greater Empress Area Cu±Au±Mo-Ag Porphyry and Replacement Targets: In addition to the Empress deposit, the 35 km2 Greater Empress area includes seven identified compelling porphyry and replacement-style Cu-Au±Mo±Ag deposit and exploration targets. The deposit targets include, Empress East, Empress Gap, Granite (as discussed above) and Buzzer, and the earlier-stage exploration targets include Empress West. Each are discussed below with selected historical drill results provided in Tables 4 and 5. These targets are either: not fully drill delineated or have been tested only by shallow, widely-spaced historical reconnaissance percussion drilling: and can with focused exploration be brought to a drill ready status.
Empress East Cu-Au-Ag Replacement Deposit Target: Located 1 km east of the Empress Deposit, limited historical core holes drilled at the Empress East deposit target intercepted mineralization similar to that at the Empress deposit in both style and grade. This drilling together with moderate to locally strong IP chargeability responses, magnetic geophysical features, and results from historical Cu and Au soil geochemistry where (>250 ppm Cu and ≥50 ppb Au values closely reflect the first three historical drill samples results at the base of overburden, see IKE Technical Report), indicate there is significant potential with further core drilling to enlarge this body of mineralization. Notably there is a complete absence of drill holes in the southern part of this target, which is at a position that is analogous to shallower, high grade Cu-Au-Ag replacement-style mineralization at the Empress deposit to the west.
Table 4: EMPRESS EAST DEPOSIT TARGET
Selected Drill Intervals from Historical Drilling
Drill Hole | From (m) | To (m) | Int. (m)1,2,3 | Cu(%) | Au (g/t) | Ag (g/t) | Mo (%) | CuEQ (%)4,5 |
91-39 | 9.8 | 37.8 | 28.0 | 0.34 | 0.543 | 1.2 | 0.002 | 0.66 |
| 107.6 | 147.5 | 39.9 | 0.40 | 0.332 | 0.8 | 0.004 | 0.60 |
Incl. | 141.4 | 147.5 | 6.1 | 1.23 | 0.928 | 2.2 | 0.009 | 1.78 |
91-54 | 73.1 | 85.0 | 11.9 | 0.31 | 0.221 | 0.7 | 0.001 | 0.44 |
| 108.2 | 158.2 | 50.0 | 0.46 | 0.304 | 1.0 | 0.002 | 0.64 |
| CuEQ% |
| >=0.30 & <0.50 |
|
| >=0.50 |
For notes refer to Table 2.
Empress Gap Cu-Au-Ag Replacement Deposit Target: Results from limited historical drilling, comprising 11 shallow percussion drill holes and three deeper core holes in the >1 km long Empress Gap zone located between the Empress Deposit and Empress East, suggest a clear opportunity to discover additional Cu-Au-Ag mineralization in proximity to the volcanic-CPC contact. Many of the short percussion holes returned anomalous Cu‐Mo (Au and Ag were not analyzed for), potentially indicative of higher-grade underlying mineralization as at the Empress Deposit. Of the deeper core holes, Cu‐Au mineralization associated with alteration similar to that at Empress is also reported, however only two of these holes reached the volcanic-CPC contact.
Empress Gap is a significantly underexplored target and drill testing of areas close to the CPC-volcanic contact is required.
Buzzer Cu-Au-Ag±Mo Porphyry Deposit Target: The Buzzer deposit target is located in the eastern side of the Greater Empress area inboard of the CPC. Historical drilling at Buzzer has intercepted high-grade Cu-Au-Ag-Mo porphyry mineralization hosted in biotite altered intrusions (Table 5). Whether these mineralized intrusions, are part of a small high-level cupola or a large mineralized intrusive mineralized body below, as indicated by magnetic surveys, cannot be determined from the limited drilling.
The Granite and Buzzer porphyry systems demonstrate that significant porphyry-style mineralization is present in the Greater Empress area, and that further exploration surveys and drilling have the potential to make new porphyry discoveries, both inboard and outboard from the CPC contact.
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Table 5: BUZZER DEPOSIT TARGET
Selected Drill Intervals from Historical Drilling
Drill Hole | From (m) | To (m) | Int. (m)1,2,3 | Cu (%) | Au (g/t)4 | Ag (g/t) | Mo (%) | CuEQ (%)4,5 |
DDH-3† | 21.3 | 120.4 | 99.1 | 0.43 | - | - | 0.042 | 0.58 |
DDH-4† | 14.6 | 113.4 | 98.8 | 0.37 | - | - | 0.037 | 0.50 |
X-1 | 0.0 | 5.9 | 5.9 | 0.15 | 0.237 | 5.8 | 0.013 | 0.36 |
| 9.5 | 42.5 | 33.0 | 0.26 | 0.175 | 3.4 | 0.042 | 0.53 |
Incl. | 24.7 | 40.8 | 16.1 | 0.40 | 0.268 | 5.0 | 0.064 | 0.81 |
X-3 | 0.0 | 44.2 | 44.2 | 0.67 | 0.496 | 5.3 | 0.046 | 1.14 |
Incl. | 10.7 | 38.1 | 27.4 | 0.86 | 0.724 | 6.6 | 0.059 | 1.51 |
GC11-74 | 11.4 | 52.2 | 40.8 | 0.28 | 0.210 | 1.8 | 0.012 | 0.44 |
Incl. | 15.0 | 27.0 | 12.0 | 0.41 | 0.281 | 2.6 | 0.021 | 0.66 |
| CuEQ% |
| >=0.30 & <0.50 |
|
| >=0.50 |
For notes refer to Table 2.
† Assay interval from historically reported composite. Individual assay results are unknown.
Empress West Cu-Au-Ag Exploration Target: This large target, which extends more than 2 km to the west of the Empress deposit along the favorable CPC-volcanic contact, has only been tested by widely-spaced and shallow percussion holes and a few core holes. It exhibits the same geological setting as the Empress Deposit, and the potential to discover additional Cu-Au-Ag mineralization is indicated by the results of the historical drilling when combined with magnetic and IP survey data, and known Cu-Au-Mo anomalies in soils. Modern IP and drilling are required to test a series of defined targets.
District Porphyry and Epithermal Targets
The IKE District hosts several known centres of porphyry Cu mineralization (Rowbottom, Mad Major- OMG) and Au-Ag epithermal mineralization (Battlement, Mewtwo) that exist outside of, but in proximity to and between, the IKE Deposit and Greater Empress areas. Limited exploration by historical operators and/or Amarc indicates that further survey work followed by drilling is warranted at these targets. The Company has the permits in-hand for the potential work program.
Rowbottom Cu-Mo-Au Porphyry Deposit Target: At Rowbottom, porphyry-style mineralization and alteration is intermittently exposed along 550 m of Rowbottom creek, and spatially associated with an extensive 1.3 km by 1.0 km IP chargeability anomaly that remains open for further surveying. Limited historical shallow percussion drilling returned good Cu and Mo grades (Au and Ag were not analysed for), and a single core hole completed by Amarc confirmed the presence of Au and Ag.
Historical drill intercepts include for example: Hole S-64: 49 m of 0.51% CuEQ (0.49% Cu and 0.007% Mo) (see Table 2, note 4 for information on CuEQ) and Hole S-24: 43 m of 0.40% CuEQ (0.28% Cu and 0.032% Mo).
The Amarc core hole intersected significant intervals of porphyry Cu-Mo mineralization hosting elevated Ag and Au values, which are cut by a number of post mineral dykes and returned, for example: RB17001: 66 m of 0.38% CuEQ (0.29% Cu, 0.006% Mo, 0.08 g/t Au and 4.1 g/t Ag) and 21 m of 0.43% CuEQ (0.38% Cu, 0.007% Mo and 4.3 g/t Ag) (December 19, 2017 news release).
An historical soils grid along with both the historical and Amarc IP chargeability anomalies suggest that a larger system could be present, warranting further drilling both laterally and to depth in order to determine the geometry and grade distribution of the Rowbottom deposit target.
Mad Major Cu-Mo Porphyry Target: The Mad Major-OMG target area extends over approximately 23 km2 area of highly anomalous stream sediment geochemistry and gossanous ridges. Amarc’s exploration, and that of historical operators, has defined several large IP chargeability and magnetic geophysical, talus fines and soils geochemical and geological alteration mapping anomalies that remain to be adequately drill tested. Amarc has completed only eight very wide-spaced core holes into the target, and the source of the IP and geochemical anomalies is yet to be determined. Additional survey work and drilling are warranted.
Battlement and Mewtwo Au-Ag Epithermal Targets: Although not the focus of Amarc’s exploration, epithermal potential exists in the IKE District. For example, at both Battlement and Mewtwo reconnaissance stage exploration suggests a geological environment that is permissive for either, or both, a porphyry or epithermal-type deposits. Further exploration is warranted at both targets.
In summary collectively the IKE Deposit, Empress Deposit, Greater Empress area and IKE District target areas as described warrant substantial exploration programs.
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Recent Work
There was no work on the IKE Project in 2021.
DUKE District
Location and Infrastructure
The DUKE District is located in central BC, in the Omineca Mining Division. The centre of the project is approximately 85 km northeast of Smithers, BC, at 55º 14’ 35” N Latitude and 126º 10’ 25” W Longitude; or UTM Zone 9 (NAD 83) at 6,126,000 m N and 681,000 m E. Figure 9 shows location of the DUKE District and the infrastructure in the region.
Figure 9
Property Description
Amarc owns 100% interest and is the operator of the DUKE District. The project consists of 98 claims covering 67,766 ha (167,453 acres) shown in Figure 10. Of the claims, 3 are in good standing until the end of 2027, 38 are in good standing until the end of 2023, and 24 are good to the end of August 2022. Further assessment work will be applied to extend claims to be in good standing to the end of 2022 and beyond.
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Figure 10
Project Highlights
The DUKE District includes both the DUKE porphyry Cu deposit target discovery and a series of high potential porphyry Cu-Au deposit targets generated from the Company’s district-scale targeting program.
Porphyry Cu Expansion Potential at the Duke Deposit Target: The porphyry Cu system at the DUKE discovery has seen only limited drilling. Many of the 30 historical shallow and closely-spaced core holes intersected and ended in significant Cu-Mo-Ag-Au mineralization. In the main area of known mineralization, these holes extended to only 124 m vertical depth from surface. Examples of intercepts of three historical drill holes with intervals of >0.3% CuEQ over 80 m, selected to characterize the porphyry mineralization in this main area are provided in Table 6.
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Table 6: DUKE DEPOSIT TARGET
Selected Drill Intervals from Historical and Amarc’s Drilling
Drill Hole | From (m) | To (m) | Int.(m)1,2,3 | Cu% | Au(g/t) | Ag(g/t) | Mo(%) | CuEQ(%)4,5 |
70-027 | 30.5 | 143.3 | 112.8 | 0.29 | 0.060 | 1.1 | 0.012 | 0.38 |
| 73.1 | 85.3 | 12.2 | 0.41 | 0.091 | 1.6 | 0.010 | 0.50 |
70-107 | 21.3 | 164.6 | 143.3 | 0.26 | 0.068 | 1.7 | 0.016 | 0.37 |
Incl. | 115.8 | 131.0 | 15.2 | 0.47 | 0.110 | 2.9 | 0.027 | 0.64 |
71-147 | 28.6 | 115.2 | 86.6 | 0.40 | 0.053 | 2.2 | 0.021 | 0.52 |
Incl. | 34.8 | 74.4 | 39.6 | 0.48 | 0.067 | 2.6 | 0.023 | 0.61 |
DK17002 | 17.0 | 32.0 | 15.0 | 0.44 | 0.126 | 2.1 | 0.019 | 0.59 |
| 40.3 | 142.0 | 101.7 | 0.22 | 0.064 | 1.3 | 0.014 | 0.31 |
| 238.0 | 268.0 | 30.0 | 0.33 | 0.069 | 1.9 | 0.019 | 0.45 |
| 308.5 | 399.0 | 90.5 | 0.21 | 0.043 | 1.1 | 0.025 | 0.34 |
| 450.5 | 523.0 | 72.5 | 0.23 | 0.030 | 1.2 | 0.022 | 0.33 |
Incl. | 486.0 | 495.0 | 9.0 | 0.41 | 0.062 | 2.0 | 0.040 | 0.61 |
DK18005 | 13.5 | 89.9 | 76.4 | 0.23 | 0.042 | 1.1 | 0.012 | 0.30 |
| 98.9 | 246.0 | 147.1 | 0.27 | 0.046 | 1.1 | 0.028 | 0.40 |
Incl. | 125.0 | 137.0 | 12.0 | 0.32 | 0.072 | 1.1 | 0.037 | 0.51 |
Incl. | 212.1 | 231.9 | 19.8 | 0.45 | 0.062 | 2.0 | 0.033 | 0.62 |
| 302.0 | 344.0 | 42.0 | 0.28 | 0.059 | 1.2 | 0.019 | 0.38 |
DK18006 | 98.0 | 416.0 | 318.0 | 0.24 | 0.052 | 1.1 | 0.012 | 0.32 |
Incl. | 206.0 | 296.0 | 90.0 | 0.27 | 0.067 | 1.2 | 0.015 | 0.37 |
Incl. | 338.0 | 416.0 | 78.0 | 0.30 | 0.055 | 1.4 | 0.016 | 0.39 |
and | 347.0 | 405.2 | 58.2 | 0.34 | 0.059 | 1.5 | 0.015 | 0.45 |
| CuEQ% |
| >=0.30 & <0.50 |
|
| >=0.50 |
For notes refer to Table 2.
7 Results of these historical drill holes are from resampling by a previous operator and analyses by Acme.
Further details Amarc drilling at DUKE can be found in Amarc’s June 12, 2018 and December 19, 2017 news releases.
Analytical & QAQC: Amarc drill core was logged, photographed and cut in half with a diamond saw. Half core samples from DUKE were sent to MS Analytical, Langley, Canada facility (17025 accredited), for preparation and analyses. Drill core samples were analyzed for Cu, Mo, Au, Ag and 35 additional elements by Aqua Regia digestion of a 0.5 g sample followed by an ICP-AES/MS finish. Au was also analyzed by fire assay fusion of a 30 g sample followed by AAS finish. Amarc control samples were inserted in each analytical batch at the following rates: standards one in 20 regular samples, in-line replicates one in 20 regular samples and blanks one in 50 regular samples. The control sample results were checked for proper QAQC.
The historical drilling was centered within a restricted part of a robust, 3 km north-south by 1 km east-west historical IP chargeability anomaly, which is thought to have been offset by faulting. When reconstructed, this IP chargeability anomaly has a classic donut shape that was the target of Amarc’s eight core holes completed in 2017 through 2018 (December 19, 2017 and June 12, 2018 news releases).
Seven of the eight core holes drilled over an area measuring approximately 400 m north-south by 600 m east-west successfully intersected porphyry Cu-style mineralization to a vertical depth of 360 m. This mineralization remains open to expansion. Intercept examples for the three Amarc holes in the mineralized area selected to include over 250 m of >0.3% CuEQ mineralization are provided in Table 6.
Notably, a single step-out hole (DK18004) completed by Amarc more than 1 km to the north of the seven other Amarc holes, and within the displaced portion of the IP chargeability anomaly, intersected substantial lengths of moderate to low grade Cu and Mo mineralization, confirming a very extensive lateral dimension to the DUKE porphyry Cu system.
Subject to financing Amarc is currently planning how best to undertake the drilling required to delineate the geometry and grade distribution of its DUKE discovery in order to inform a mineral resource estimate and related studies.
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New Duke District Porphyry Cu-Au Targets: Appreciating the Cu-Au prospectivity of the Babine District and its relatively unexplored nature due to widespread glacial cover (4 m to 18 m thick in the Amarc DUKE discovery drill holes), Amarc has completed a comprehensive compilation of government and historical data over the entire DUKE District. This integrated study provided a new interpretation of the geological, geochemical and geophysical characteristics of the Babine District, identifying 12 previously unrecognized high potential porphyry Cu-Au deposit targets. These target areas were defined, for example, by anomalous Cu-Au-Mo-Ag (and other porphyry indicator elements) till geochemistry, till samples with identified grains of bornite, chalcopyrite and/or favorable biotite feldspar porphyry, compelling up- ice magnetic geophysics features, and indications of structural control along faults emanating from large deep-seated regional structures that likely controlled the emplacement of the prospective intrusions, along with numerous other scientific vectors.
Regionally, Amarc is planning for initial, focused ground surveys taking advantage of extensive logging road networks across the property. These surveys would be followed by RC drilling that would test prioritized targets for the presence of potential porphyry Cu mineralized systems below cover and, where a deposit target is confirmed core drilling to determine the extent, grade and geometry of the mineralized system.
Recent Work
There was no work done on the property in 2021.
C. ORGANIZATIONAL STRUCTURE
The Company has no subsidiaries.
D. PROPERTY, PLANT AND EQUIPMENT
None of the Company’s properties have any material tangible fixed assets located thereon.
ITEM 4A UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS
OVERVIEW
Amarc is a mineral exploration company with a portfolio of active exploration projects located in BC, Canada. The Company's business strategy is the acquisition and exploration of mineral properties. None of the Company's properties have any mineral reserves or have been proven to host mineralized material which can be said to be “ore” or feasibly economic at current metals prices. The Company incurs significant exploration expenditures as it carries out its business strategy. As Amarc is an exploration stage company, it does not have any revenues from its operations to offset its exploration expenditures. Accordingly, the Company's ability to continue exploration of its properties will be contingent upon the availability of additional financing.
Amarc's financial statements are prepared on the basis that it will continue as a going concern. The Company has incurred losses since inception and the ability of the Company to continue as a going concern depends upon its ability to continue to raise adequate financing and to develop profitable operations. Amarc's financial statements do not reflect adjustments, which could be material, to the carrying values of assets and liabilities, which may be required should the Company be unable to continue as a going concern.
The following discussion should be read in conjunction with the audited annual financial statements and the related notes accompanying this Annual Report. The Company prepares its financial statements in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board. The Company includes selected financial data prepared in compliance with IFRS without reconciliation to U.S. GAAP.
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Critical Accounting Policies and Estimates
The Company's accounting policies are presented in note 2 of the accompanying audited annual financial statements.
The preparation of financial statements in accordance with IFRS requires management to select accounting policies and make estimates, judgments and assumptions. Such estimates, judgments and assumptions may have a significant impact on the financial statements. These include but are not limited to:
· | estimate of the accrual of the British Columbia Mineral Exploration Tax Credits (“METC”); |
|
|
· | the determination of categories of financial assets and financial liabilities; and |
|
|
· | the carrying value and recoverability of the Company's marketable securities. |
Actual amounts could differ from the estimates used and, accordingly, affect the results of operation.
British Columbia Mineral Exploration Tax Credits (“METC”)
When the Company is entitled to receive METC and other government grants, this government assistance is recognized as a cost recovery within exploration expense when there is reasonable assurance of recovery.
Judgements are involved in determining which expenditures qualify for the METC, and there may be disagreement between the Company and taxation authorities on the applicability of specific items.
Financial assets and financial liabilities
Financial assets and liabilities are recognized when the Company becomes party to the contracts that give rise to them. The Company determines the classification of its financial assets and liabilities at initial recognition and, where allowed and appropriate, re-evaluates such classification at each financial year end. The Company does not have any derivative financial instruments.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Marketable securities
The Company's investments in marketable securities are classified as available-for-sale (“AFS”) financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on AFS monetary items, are recognized in other comprehensive income or loss. When an investment is derecognized, the cumulative gain or loss in the investment revaluation reserve is transferred to profit or loss.
The fair value of AFS monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the exchange rate prevailing at the end of the reporting period. Changes in the fair value of AFS equity investments are recognized directly in equity.
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A. RESULTS OF OPERATIONS
Year Ended March 31, 2022 (“2022”) Versus Year Ended March 31, 2021 (“2021”)
The Company recorded a net loss of $267,804 during 2022 compared to a net income of $1,361,000 during 2021. The swing from net income position in 2021 into net loss position in 2022 was mainly due to increased exploration and evaluation expenses and a decrease in general and administration expenses.
($ 000’s) | 2022 | 2021 | Discussion |
Exploration and evaluation, net of recoveries | 222 | 576 | Exploration activity during the 2022 fiscal period was focused on the JOY District. |
Administration | 601 | 631 | Administration expenses decreased during the 2022 period due to the effort of senior management in reducing overhead costs. |
Interest expense on loans payable to director | 100 | 111 | Interest incurred on loans provided by a director. |
Amortization of finance charges | 56 | 57 |
|
Equity settled share-based compensation | 122 | 18 |
|
Year Ended March 31, 2021 (“2021”) Versus Year Ended March 31, 2020 (“2020”)
The Company recorded a net income of $1,361,000 during 2021 compared to a net income of $1,254,000 during 2020. This swing from a net loss position in 2020 into a net income position in 2021 is mainly due to the non-recurring event related to the gain on disposition of the Newton property in the third quarter of fiscal 2021, together with the decrease in general and administration expenses.
($ 000’s) | 2021 | 2020 | Discussion |
Exploration and evaluation, net of METC | 576 | 664 | Field exploration activities during the 2021 fiscal period were focused on both Amarc owned and also various projects which Amarc operated on behalf of third parties, these field activities commenced late in the second quarter of fiscal 2021. |
Administration | 631 | 856 | Administration expenses decreased during the 2021 period due to further efforts by senior management to reduce overhead costs. |
Interest expense on loans payable to director | 111 | 106 | Interest incurred on loans provided by a director. |
Amortization of finance charges | 57 | 109 | The amount relates to a loan bonus through the issuance of share purchase warrants to a director. Relates to a loan provided by the director in November 2014. |
Equity settled share-based compensation | 18 | 42 | The $18,000 equity settled share-based compensation represents the fiscal 2021 amortization of the share-based compensation related to the 2,000,000 share-purchased options granted in October 2019 fully vested on April 3, 2021. The fiscal 2021 amortization amount is calculated based on graded-vesting method. |
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Year Ended March 31, 2020 (“2020”) Versus Year Ended March 31, 2019 (“2019”)
The Company recorded a net income of $1,254,000 during 2020 compared to a net loss of $1,946,000 during 2019. The decrease in net loss was mainly due to a decrease in both exploration and evaluation expenses, net of METC, and general and administration expenses.
($ 000’s) | 2020 | 2019 | Discussion |
Exploration and evaluation, net of METC | 664 | 5,390 | Exploration activity during the 2020 and 2019 periods was focused on the IKE, DUKE and JOY Districts. Exploration activity during the 2020 period was lower due to decreased exploration activity as discussed in this Annual Report. |
Administration | 856 | 914 | Administration expenses decreased during the 2020 period due to decreased administration activities in support of the Company’s JOY, IKE and DUKE Districts. |
Interest expense on loans payable to director | 106 | 90 | Interest incurred on loans provided by a director. Interest expense increased during the 2020 period due to new addition of loan advance. |
Amortization of finance charges | 109 | 130 | The amount relates to a loan bonus through the issuance of share purchase warrants to a director. Relates to loan provided by the director in November 2014. |
Equity settled share-based compensation | 42 | - | During fiscal 2020, there were 500,000 share-purchased options granted in October 2019 vested. |
B. LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Historically, the Company's sole source of funding has been provided from the issuance of equity securities for cash, primarily through private placements to sophisticated investors and institutions, and from director loans. The Company's access to financing is always uncertain. There can be no assurance of continued access to significant equity funding to finance the Company's ongoing business.
At March 31, 2022, the Company had a cash balance of approximately $371,000 and working capital deficiency of approximately $172,000. The Company plans its cash spending based on availability of funds.
Further advancement and development of the Company’s mineral property interests will require additional funding from a combination of the Company’s shareholders, existing or potential new optionees and joint venture parties, and debt financing. As the Company is currently in the exploration stage, it does not have any revenues from operations. Therefore, the Company relies on funding from its optionees for its continuing financial liquidity and the Company relies on the equity market and debt financing as sources of funding. The Company continues to focus on preserving its cash resources while maintaining its operational activities.
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The Company does not have any material capital lease obligations, purchase obligations or any other long-term obligations.
Capital Resources
The Company has no lines of credit or other sources of financing which have been arranged or utilized.
The Company has no “Purchase Obligations” defined as any agreement to purchase goods or services that is enforceable and legally binding on the Company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
Requirement of Financing
Historically, Amarc's sole source of funding has been provided from the sale of equity securities for cash, primarily through private placements to sophisticated investors and institutions. Like all exploration stage companies, Amarc will need to raise additional financing to meet its business objectives.
The Company presently does not have any material commitments for capital expenditures and accordingly, can remain fairly flexible in directing its exploration activities to the availability of funds.
Financial Instruments
Amarc keeps its financial instruments primarily denominated in Canadian Dollars with a very small amount held in U.S. Dollars. The Company does not engage in any hedging operations with respect to currency or in-situ minerals. Funds which are excess to Amarc's current needs are invested in short-term near-cash investments.
Amarc does not have any material, legally enforceable obligations requiring it to make capital expenditures and accordingly, can remain relatively flexible in gearing its activities to the availability of funds.
C. RESEARCH EXPENDITURES
Amarc does not carry out any research or development activities. Please refer to Item 5.A and Item 5.B above for a discussion of the exploration expenditures that the Company has incurred in connection with the exploration of the Company's mineral properties.
D. TREND INFORMATION
As a natural resource exploration company, Amarc's activities reflect the traditional cyclical nature of metal prices. Consequently, Amarc's business is primarily an “event-driven” business based on exploration results.
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Average annual prices for copper, molybdenum, gold and silver are shown in the table below:
Average metal price (US$) | ||||
Calendar year | Copper | Molybdenum | Gold | Silver |
2015 | 2.50/lb | 6.73/lb | 1,160/oz | 15.69/oz |
2016 | 2.21/lb | 6.56/lb | 1,251/oz | 17.14/oz |
2017 | 2.88/lb | 7.26 /lb | 1,275/oz | 17.01/oz |
2018 | 2.96/lb | 11.94/lb | 1,269/oz | 15.71/oz |
2019 | 2.72/lb | 11.36/lb | 1,393/oz | 16.21/oz |
2020 | 2.80/lb | 8.68/lb | 1,769/oz | 20.54/oz |
2021 | 4.27/lb | 15.94/lb | 1,799/oz | 25.14/oz |
2022 (to the date of this Annual Report) | 4.47/lb | 19.00/lb | 1,831/oz | 23.19/oz |
E. OFF-BALANCE SHEET ARRANGEMENTS
Amarc has no off-balance sheet arrangements.
F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The following table lists the contractual obligations of the Company as at March 31, 2022:
| Payment due by period | ||||
Type of Contractual Obligation | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years |
Debt Obligations (gross amount) | $ 1,000,000 | $ – | $ – | $ 1,000,000 | $ – |
Capital (Finance) Lease Obligations | – | – | – | – | – |
Operating Lease Obligations (Office Lease) | $ 10,438 | $ 10,438 | – | – | – |
Purchase Obligations | – | – | – | – | – |
Other Long-term Liabilities Reflected on the Company's Balance Sheet under IFRS | – | – | – | – | – |
Total | $ 1,010,438 | $ 10,438 | $ – | $ 1,000,000 | $ – |
The Company has no capital (finance) lease obligations, no operating lease obligations, no purchase obligations, or other long-term liabilities.
G. SAFE HARBOR
The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act applies to forward-looking information provided pursuant to Item 5.E and Item 5.F above.
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ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
Name | Year born | Position | Director or Officer Since |
T. Barry Coughlan | 1945 | Director | February 2009 |
Scott D. Cousens | 1964 | Director | September 1995 |
Robert A. Dickinson | 1948 | Chairman of the Board and Director | April 1993 |
Diane Nicolson | 1965 | President, Chief Executive Officer and Director | January 2008 |
Thomas Wilson(2) | 1945 | Chief Financial Officer | February 2022 |
Roy Greig | 1988 | Vice President Exploration | January 2022 |
Trevor Thomas | 1967 | Secretary | February 2008 |
| (1) | To the best of the Company's knowledge, none of such persons has any family relationship with any other and none were elected as a director or appointed as an officer as a result of an arrangement or understanding with a major shareholder, customer, supplier, or any other party. |
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| (2) | In February 2022, Thomas Wilson was appointed as interim CFO of the Company. |
The following is biographical information on each of the persons listed above:
Barry Coughlan – Director
Mr. Coughlan is a self-employed businessman and financier, and senior executive with extensive international experience in capital markets who has been involved in the financing of publicly traded companies for over 30 years. During this period Mr. Coughlan has been involved in the financing of over 30 private companies, which subsequently listed on both international and North American financial markets. His principal occupation is President and Director of TBC Ventures Ltd., a private investment company.
Mr. Coughlan is, or was within the past five years, an officer and/or a director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | February 2009 | Present |
Northcliff Resources Ltd. | Director | June 2011 | Present |
Rathdowney Resources Ltd. | Director | March 2011 | Present |
Quadro Resources Ltd. | President and Director | June 1986 | Present |
Mineral Mountain Resources Ltd. | Director | December 2014 | Present |
Vatic Ventures Corp. | Director | January 2011 | August 2020 |
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Scott Cousens – Director
Scott Cousens focused on the development of relationships within the international investment community for over 25 years as Director Capital Finance for Hunter Dickinson Inc. Substantial financings and subsequent corporate success has established strong ties with North American, European and Middle Eastern investors. He was the Founder and Chairman of Fortius Sport & Health.
Mr. Cousens is, or was within the past five years, an officer and/or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | September 1995 | Present |
Heatherdale Resources Ltd. | Chairman and Director | November 2009 | June 2017 |
Northcliff Resources Ltd. | Director | May 2012 | Present |
Quartz Mountain Resources Ltd. | Chairman and Director | November 2012 | June 2017 |
Robert Dickinson, B.Sc., M.Sc. – Chairman of the Board and Director
Robert Dickinson is an economic geologist who serves as a member of management of several mineral exploration companies, primarily those for whom Hunter Dickinson Services Inc. provides services. He holds a Bachelor of Science degree (Hons. Geology) and a Master of Science degree (Business Administration - Finance) from the University of BC. Mr. Dickinson has been active in mineral exploration for over 45 years and was inducted into the Canadian Mining Hall of Fame in 2012. He is a director of Hunter Dickinson Services Inc. He is also President and Director of United Mineral Services Ltd., a private resource company.
Mr. Dickinson is, or was within the past five years, an officer and/or director of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | April 1993 | Present |
Chairman | April 2004 | Present | |
Heatherdale Resources Ltd. | Director | November 2009 | Present |
Northcliff Resources Ltd. | Director | June 2011 | Present |
Northern Dynasty Minerals Ltd. | Director | June 1994 | Present |
Chairman | April 2004 | Present | |
Quartz Mountain Resources Ltd. | Director | December 2011 | February 2019 |
Taseko Mines Limited | Director | January 1991 | Present |
Diane Nicolson, PhD – President, Chief Executive Officer and Director
Diane Nicolson has a B.Sc. degree in geology from the University of London, a PhD in economic geology from the University of Wales and 20 years international experience in the exploration and mining industry. She has worked for both major and junior mining companies, including Rio Tinto, Minera Antamina, Noranda and Cambior. Over the past 10 years, she has been involved primarily with business development and new project assessment and acquisitions, with a particular focus on Latin America where she was based for 13 years.
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Dr. Nicolson joined Hunter Dickinson in 2007 as a member of the global business development team and is responsible for management, strategic planning and new project development for Amarc Resources Ltd.
Dr. Nicolson is, or was within the past five years, an officer of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Director | June 2017 | Present |
President | November 2014 | Present | |
Chief Executive Officer | February 2019 | Present | |
Mirasol Resources Ltd. | Director | March 2019 | Present |
Cordoba Minerals Corp. | Director | August 2022 | Present |
Thomas Wilson – Chief Financial Officer
Thomas Wilson is a Chartered Public Accountant (CPA-CA) with over 43 years of senior financial experience in areas of financial planning and management including corporate governance and securities compliance for both public and private companies. Within the junior mining sector, he has been the CFO for numerous private and public companies. Mr. Wilson is a graduate of PwC Canada.
Mr. Wilson is, or was within the past five years, an officer of the following public companies:
Company | Positions Held | From | To |
Mineral Mountain Resources Ltd. | Chief Financial Officer | January 2022 | Present |
Quadro Resources Ltd. | Chief Financial Officer | January 2006 | Present |
Vatic Ventures Corp. | Chief Financial Officer | January 2011 | August 2020 |
Roy Greig, P.Geo – Vice President Exploration
Roy Greig is a professional geoscientist with an extensive background in mineral exploration spanning a wide variety of mineral deposits globally, with particular expertise in porphyry copper systems. As Vice President Exploration, he is responsible for planning and directing field programs for the Company's three district-scale porphyry copper-gold projects in British Columbia.
Dr. Greig is, or was within the past five years, an officer of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Vice President Exploration | January 2022 | Present |
Trevor Thomas, LLB – Secretary
Trevor Thomas has practiced in the areas of corporate commercial, corporate finance, securities and mining law since 1995, both in private practice environment as well as in-house positions and is currently in-house legal counsel for Hunter Dickinson Services Inc. Prior to joining Hunter Dickinson Services Inc., he served as in-house legal counsel with Placer Dome Inc.
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Mr. Thomas is, or was within the past five years, an officer of the following public companies:
Company | Positions Held | From | To |
Amarc Resources Ltd. | Secretary | February 2008 | Present |
Northern Dynasty Minerals Ltd. | Secretary | February 2008 | Present |
Heatherdale Resources Ltd. | Secretary | June 2013 | Present |
Mineral Mountain Resources Ltd. | Director | September 2016 | Present |
Northcliff Resources Ltd. | Secretary | June 2011 | Present |
Quadro Resources Ltd. | Director | July 2017 | Present |
Quartz Mountain Resources Ltd. | Secretary | June 2013 | Present |
Rathdowney Resources Ltd. | Secretary | March 2011 | Present |
Taseko Mines Limited | Secretary | July 2008 | Present |
B. COMPENSATION
During the Company's financial year ended March 31, 2022, the aggregate cash compensation paid or payable by the Company to its directors and senior officers was $197,332.
Diane Nicolson, President and Chief Executive Officer; Thomas Wilson, interim Chief Financial Officer; Jeannine Webb, Former Chief Financial Officer; Sebastian Tang, Former Chief Financial Officer; and Michael Lee, Former Chief Financial Officer, are each a Named Executive Officer (“NEO”) of the Company for the purposes of the following disclosure.
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The compensation paid to the NEOs during the Company's most recently completed financial year of March 31, 2022 is as set out below and expressed in Canadian Dollars:
Name and principal position | Year | Salary ($) | Share-based awards ($) | Option-based awards ($) | Non-equity incentive plan compensation ($) | Pension value ($) | All other compen-sation ($) | Total compen-sation ($) | |
Annual incent-ive plans | Long-term incent-ive plans | ||||||||
Diane Nicolson President and Chief Executive Officer, Director | 2022 | 195,144 | Nil | 18,000 | Nil | Nil | Nil | Nil | 213,144 |
2021 | 187,332 | Nil | Nil | Nil | Nil | Nil | Nil | 187,332 | |
2020 | 195,000 | Nil | Nil | Nil | Nil | Nil | Nil | 195,000 | |
Thomas Wilson Chief Financial Officer (1) (2) | 2022 | 4,500 | Nil | Nil | Nil | Nil | Nil | Nil | 4,500 |
2021 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
2020 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
Sebastian Tang Chief Financial Officer (1) (4) | 2022 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
2021 | 16,000 | Nil | Nil | Nil | Nil | Nil | Nil | 16,000 | |
2020 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
Michael Lee Chief Financial Officer (1) | 2022 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
2021 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
2020 | 22,000 | Nil | Nil | Nil | Nil | Nil | Nil | 22,000 | |
Jeannine Webb Chief Financial Officer (1) (3) | 2022 | 22,500 | Nil | Nil | Nil | Nil | Nil | Nil | 22,500 |
2021 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
2020 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
Roy Greig Vice President Exploration | 2022 | 42,500 | Nil | 108,000 | Nil | Nil | Nil | Nil | 150,500 |
2021 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
2020 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
Notes:
| (1) | Mr. Wilson, Ms. Webb, Mr. Tang, and Mr. Lee did not serve the Company on a substantially full-time basis. |
| (2) | Ms. Webb was replaced as CFO in February 2022 by Mr. Wilson. |
| (3) | Mr. Tang was replaced as CFO in October 2021 by Ms. Webb. |
| (4) | Mr. Lee was replaced as CFO in July 2020 by Mr. Tang. |
Pension Plan Benefits
The Company has no pension or deferred compensation plans for its directors, officers or employees.
Termination and Change of Control Benefits
There are no compensatory plan(s) or arrangement(s), with respect to the Named Executive Officer resulting from the resignation, retirement or any other termination of employment of the officer's employment or from a change of the Named Executive Officer's responsibilities following a change in control.
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Director Compensation
The compensation provided to the directors, excluding a director who is already set out in disclosure for a NEO for the Company's most recently completed financial year of March 31, 2022 is as set out below:
Name | Fees earned ($) | Share-based awards ($) | Option-based awards ($) | Non-equity incentive plan compensation ($) | Pension value ($) | All other compensation ($) | Total ($) |
Diane Nicolson | 195,144 | Nil | 18,000 | Nil | Nil | Nil | 213,144 |
Barry Coughlan | Nil | Nil | 30,000 | Nil | Nil | Nil | 30,000 |
Scott Cousens | Nil | Nil | 30,000 | Nil | Nil | Nil | 30,000 |
Robert Dickinson (1) | Nil | Nil | Nil | Nil | Nil | Nil | Nil |
Notes:
(1) | Pursuant to the Corporate Services Agreement with Hunter Dickinson Services Inc., compensation for Mr. Dickinson is allocated to the Company on the basis of estimated time spent in respect of the Company's business. |
C. BOARD PRACTICES
All of the Company's directors were elected at the annual general meeting of shareholders held on March 29, 2022. All directors have a term of office expiring at the next annual general meeting of the Company's shareholders. All officers have a term of office lasting until their removal or replacement by the board of directors (the “Board”).
There were no arrangements, standard or otherwise, pursuant to which directors were compensated by Amarc or its subsidiaries for their services in their capacity as directors, or for committee participation, involvement in special assignments or for services as consultants or experts during the most recently completed financial year.
General
The Board believes that good corporate governance improves corporate performance and benefits all shareholders. The Canadian Securities Administrators (the “CSA”) have adopted National Policy 58-201 Corporate Governance Guidelines, which provides non-prescriptive guidelines on corporate governance practices for reporting issuers such as the Company. In addition, the CSA have implemented National Instrument NI 58-101 Disclosure of Corporate Governance Practices, which prescribes certain disclosure by the Company of its corporate governance practices. This section sets out the Company's approach to corporate governance and addresses the Company's compliance with NI 58-101.
1. Board of Directors
Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A “material relationship” is a relationship which could, in the view of the Company's board of directors, be reasonably expected to interfere with the exercise of a director's independent judgment.
The Board facilitates its independent supervision over management in a number of ways including: by holding regular meetings without the presence of management; by retaining independent consultants; and by reviewing corporate developments with larger shareholders, analysts and potential industry joint venture parties, where it deems necessary.
Messrs. Coughlan and Cousens are independent. Mr. Dickinson and Dr. Nicolson are not independent. The Company is taking steps to ensure that the duties generally performed by independent directors are being performed by the current directors. The Board members have extensive experience as directors of public companies and are sensitive to the related corporate governance and financial reporting obligations associated with such positions. Thus, the Board members are well versed in the obligations of directors and the expectations of independence from management.
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2. Other Directorships
The section entitled Item 6 – Directors, Senior Management and Employees in this Annual Report gives details of other reporting issuers of which each director is a director or officer.
3. Orientation and Continuing Education
The Company has traditionally retained experienced mining people as directors and hence the orientation needed is minimized. When new directors are appointed, they are acquainted with the Company's mineral project and the expectations of directors. Board meetings generally include presentations by the Company's senior management and project staff in order to give the directors full insight into the Company's operations.
4. Ethical Business Conduct
The Board has adopted an ethics policy which is available on the Company's website, www.amarcresources.com. The Board also understands that the fiduciary duties placed on individual directors by the Company's governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director's participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.
5. Nomination of Directors
The Board considers its size each year when it considers the number of directors required, taking into account the number required to carry out the Board's duties effectively and to maintain a diversity of views and experience.
The Board does not have a nominating committee, and these functions are currently performed by the Board as a whole. However, if there is a change in the number of directors required by the Company, this policy will be reviewed.
6. Compensation
The Board determines the compensation for independent directors and executives.
7. Other Board Committees
The Board has no compensation or other committees, other than the audit committee.
8. Assessments
The Board monitors the adequacy of information given to directors, communication between the Board and management and the strategic direction and processes of the Board and its audit committee.
Audit Committee
The Audit Committee's Charter
The audit committee has adopted a charter that sets out its mandate and responsibilities. A copy of the audit committee charter is available at the Company's website, www.amarcresources.com.
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Composition of the Audit Committee
As of the date of this document, the members of the audit committee were Scott Cousens (Chairman), Barry Coughlan and Diane Nicolson. All members are financially literate. Messrs. Cousens and Coughlan are independent.
Relevant Education and Experience
As a result of their education and experience, each member of the audit committee has familiarity with, an understanding of, or experience in:
· | the accounting principles used by the Company to prepare its financial statements, and the ability to assess the general application of those principles in connection with estimates, accruals and reserves; |
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· | reviewing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, and |
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· | an understanding of internal controls and procedures for financial reporting. |
Audit Committee Oversight
The audit committee has not made any recommendations to the Board to nominate or compensate any external auditor that was not adopted by the Board.
The Company's auditor De Visser Gray LLP has not provided any material non-audit services during the most recently completed fiscal year.
Pre-Approval Policies and Procedures
The Company has procedures for the review and pre-approval of any services performed by its auditors. The procedures require that all proposed engagements of its auditors for audit and non-audit services be submitted to the audit committee for approval prior to the beginning of any such services. The audit committee considers such requests, and, if acceptable to a majority of the audit committee members, pre-approves such audit and non-audit services by a resolution authorizing management to engage the Company's auditors for such audit and non-audit services, with set maximum dollar amounts for each itemized service. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered “prohibited services” as contemplated by the regulations of the US Securities and Exchange Commission, and whether the services requested and the fees related to such services could impair the independence of the auditors.
Exemptions From Certain Canadian Audit Committee Requirements
Pursuant to section 6.1 of National Instrument 52-110 – Audit Committees (“NI 52-110”), as adopted by the Canadian Securities Administrators (including the BC and Alberta Securities Commissions which have jurisdiction over the Company, the “CSA”), the Company is exempt from the requirements of Parts 3 and 5 of NI 52-110 for the current year, by virtue of the Company being a “venture issuer” (as defined in NI 52-110).
Part 3 of NI 52-110 prescribes certain requirements for the composition of audit committees of non-exempt companies that are reporting issuers under Canadian provincial securities legislation. Part 3 of NI 52-110 requires, among other things that an audit committee be comprised of at least three directors, each of whom, is, subject to certain exceptions, independent and financially literate in accordance with the standards set forth in NI 52-110.
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Part 5 of NI 52-110 requires an annual information form that is filed by a non-exempt reporting issuer under National Instrument 51-102 – Continuous Disclosure Obligations, as adopted the CSA, to include certain disclosure about the issuer's audit committee, including, among other things: the text of the audit committee's charter; the name of each audit committee member and whether or not the member is independent and financially literate; whether a recommendation of the audit committee to nominate or compensate an external auditor was not adopted by the issuer's board of directors, and the reasons for the board's decision; a description of any policies and procedures adopted by the audit committee for the engagement of non-audit services; and disclosure of the fees billed by the issuer's external auditor in each of the last two fiscal years for audit, tax and other services.
D. EMPLOYEES
At March 31, 2022, Amarc had the following employees:
| March 31, 2022 | March 31, 2021 | March 31, 2020 |
Full-time salaried | - | – | – |
Hourly | 6 | 2 | 2 |
Amarc's administrative and exploration functions are primarily administered through Hunter Dickinson Services Inc. (See Item 7 - Major Shareholders and Related Party Transactions).
E. SHARE OWNERSHIP
Security Holdings of Directors and Senior Management
As at March 31, 2022, the directors and officers of Amarc, and their respective affiliates, directly and indirectly, own or control as a group an aggregate of 36,577,495 common shares (19.60%), or 45,327,495 (24.29%) on a diluted basis.
As at March 31, 2022, the Company's directors and senior management beneficially own the following number of the Company's common shares and share purchase options:
Name of Insider | Securities Beneficially Owned or Controlled (1) | As a % of the outstanding common shares |
Barry Coughlan (3) | 336,000 common shares 250,000 share purchase options | 0.18% |
Scott D. Cousens (3) | 398,300 common shares 250,000 share purchase options | 0.21% |
Robert A. Dickinson (2) | 34,155,195 common shares 5,000,000 share purchase warrants | 18.30% |
Diane Nicolson (3) | 1,518,000 common shares 2,150,000 share purchase options | 0.81% |
Thomas Wilson | Nil common shares | Nil |
Trevor Thomas | 130,000 common shares 200,000 share purchase options | 0.07% |
Roy Greig | 40,000 common shares 900,000 share purchase options | 0.02% |
Total | 36,577,495 common shares 5,000,000 purchase warrants 3,750,000 share purchase options | 24.29% |
Notes:
(1) | The information as to the number of Common Shares beneficially owned or controlled is not within the knowledge of management of the Company and has been furnished by the respective nominees as filed on SEDI. Each nominee has held the same or a similar principal occupation with the organization indicated or a predecessor thereof for the last five years. |
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(2) | Certain of these common shares are beneficially owned through private companies controlled by Mr. Dickinson, and a Registered Retirement Saving Plan (RRSP) owned by Mr. Dickinson. |
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(3) | Member of the audit committee. |
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Share Option Plan
As of the date of this document, there were 5,480,000 options outstanding pursuant to the Company's share option plan (the “Plan”), described below, and an aggregate of 13,180,289 common shares remained available for issuance pursuant to the Plan, described below.
Share Incentive Plan
In order to provide incentive to directors, officers, employees, management and others who provide services to the Company to act in the best interests of the Company, the Company has adopted a Share Incentive Plan (the “Plan”). The Plan is required to comply with the policies of the TSX Venture.
The Plan is dated for reference September 15, 2010, as amended July 19, 2011 and November 25, 2011, which is a "rolling" plan. Under the Plan, options totaling a maximum of 10% of the Common Shares outstanding from time to time are available for grant.
To comply with TSXV policies covering "rolling" option plans, continued grants under the Plan must be approved annually by the shareholders of the Company. The Plan was last approved by shareholders of the Company at the annual general meeting held on March 29, 2022.
Subject to certain restrictions described below, the Plan is based on the maximum number of eligible shares equaling a rolling percentage of up to 10% of the Company's outstanding common shares, calculated from time to time. Pursuant to the Plan, if outstanding options are exercised, or expire, or the number of issued and outstanding common shares of the Company increases, the number of options available to grant under the Plan increases proportionately. At the date of approval of the New Plan, all outstanding options were rolled into and deemed to be granted under the New Plan.
Material Terms of the Plan
The following is a summary of the material terms of the Plan:
(a) | Persons who are Service Providers to the Company or its affiliates, or who are providing services to the Company or its affiliates, are eligible to receive grants of options under the Plan; |
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(b) | Options granted under the Plan are non-assignable and non-transferable and are issuable for a period of up to 10 years and the exercise price must be paid in full upon exercise of options; |
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(c) | For options granted to Service Providers, the Company must ensure that the proposed Optionee is a bona fide Service Provider of the Company or its affiliates; |
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(d) | An Option granted to any Service Provider will expire 90 days (or such other time, not to exceed one year, as shall be determined by the Board as at the date of grant or agreed to by the Board and the Optionee at any time prior to expiry of the Option), after the date the Optionee ceases to be employed by or provide services to the Company, but only to the extent that such Option was vested at the date the Optionee ceased to be so employed by or to provide services to the Company; |
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(e) | If an Optionee dies, any vested option held by him or her at the date of death will become exercisable by the Optionee's lawful personal representatives, heirs or executors until the earlier of one year after the date of death of such Optionee and the date of expiration of the term otherwise applicable to such option; |
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(f) | In the case of an Optionee being dismissed from employment or service for cause, such Optionee's options, whether or not vested at the date of dismissal, will immediately terminate without right to exercise same; |
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(g) | The exercise price of each option will be set by the Board on the effective date of the option and will not be less than the Discounted Market Price (as defined in Policy 1.1 of the Policies); |
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(h) | Vesting of options shall be at the discretion of the Board, and will generally be subject to: (i) the Service Provider remaining employed by or continuing to provide services to the Company or its affiliates, as well as, at the discretion of the Board, achieving certain milestones which may be defined by the Board from time to time or receiving a satisfactory performance review by the Company or its affiliates during the vesting period; or (ii) the Service Provider remaining as a Director of the Company or its affiliates during the vesting period; and |
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(i) | in the event of a change of control occurring, all options subject to vesting provisions shall be deemed to have immediately vested, subject to the TSXV approval. |
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(j) | The Board reserves the right in its absolute discretion to amend, suspend, terminate or discontinue the Plan with respect to all Plan shares in respect of options which have not yet been granted under the Plan; and |
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(k) | The Board may, without shareholder approval: |
| (i) | amend the Plan to correct typographical, grammatical or clerical errors; |
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| (ii) | change the vesting provisions of an option granted under the Plan, subject to prior written approval of the TSXV, if applicable; |
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| (iii) | change the termination provision of an option granted under the Plan if it does not entail an extension beyond the original expiry date of such option; |
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| (iv) | make such amendments to the Plan as are necessary or desirable to reflect changes to securities laws applicable to the Company; |
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| (v) | make such amendments as may otherwise be permitted by the TSXV Policies; |
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| (vi) | if the Company becomes listed or quoted on a stock exchange or stock market senior to the TSXV, make such amendments as may be required by the policies of such senior stock exchange or stock market; and |
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| (vii) | amend the Plan to reduce the benefits that may be granted to Service Providers. |
Restrictions of the Plan
The Plan is subject to the following restrictions, which restrictions are included as part of the material terms of the Plan:
(a) | The Company must not grant an option to any one director, employee, consultant, or consultant company (the "Service Provider") in any 12 month period that exceeds 5% of the outstanding shares, unless the Company has obtained approval by a majority of the votes cast by the shareholders of the Company eligible to vote at a shareholders' meeting, excluding votes attaching to shares beneficially owned by Insiders and their Associates (defined below) ("Disinterested Shareholder Approval"); |
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(b) | The aggregate number of options granted to all employees conducting Investor Relations Activities in any 12 month period must not exceed 2% of the outstanding shares calculated at the date of the grant, without the prior consent of the TSXV; |
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(c) | The Company must not grant an option to any one consultant in any 12 month period that exceeds 2% of the outstanding shares calculated at the date of the grant of the option; |
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(d) | The Company is required to obtain Disinterested Shareholder Approval prior to any of the following actions becoming effective: |
| (i) | The Plan, together with all of the Company’s previous Share Compensation Arrangements (as defined in the Plan), could result at any time in: |
| · | The aggregate number of Common Shares reserved for issuance under Options granted to Insiders exceeding 10% of the Outstanding Shares in the event that this Plan is amended to reserve for issuance more than 10% of the Outstanding Shares; |
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| · | the number of optioned shares issued to Insiders in any 12 month period must not exceed 10% of the outstanding shares (in the event that the Plan is amended to reserve for issuance more than 10% of the outstanding shares) unless the Company has obtained Disinterested Shareholder Approval to do so; and |
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| · | the issuance to any one Optionee, within a 12-month period, of a number of Common Shares exceeding 5% of the Outstanding Shares; or |
| (ii) | Any reduction in the exercise price of an option previously granted to an Insider. |
ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
Major Shareholders
To the best of Amarc's knowledge, other than as noted below, no person, corporation or other entity beneficially owns, directly or indirectly, or controls more than 5% of the common shares of Amarc, the only class of securities with voting rights.
Shareholder | Securities Beneficially Owned or Controlled | As a % of the outstanding common shares |
Sun Valley Gold Master Fund Ltd | 14,615,384 | 7.83% |
Robert A. Dickinson | 34,155,195 | 18.30% |
For these purposes, “beneficial ownership” means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security.
As of the date of this document, Amarc had authorized unlimited common shares without par value, of which 186,602,894 were issued and outstanding. Amarc's authorized share structure also includes a class of preferred shares without par value and without a maximum number. The preferred shares may be issued in series on such terms as determined by the Company's directors in accordance with the class rights and restrictions. No series of preferred shares has been designated by the board of directors, and no preferred shares are outstanding.
All of the common shares have the same voting rights.
Geographic Breakdown of Shareholders
As of the date of this Annual Report, Amarc's register of shareholders indicates that Amarc's common shares are held as follows:
Location | Number of registered shareholders of record | Number of shares | Percentage of total shares |
Canada | 28 | 167,109,126 | 89.55% |
United States | 8 | 17,955,306 | 9.62% |
Other | 1 | 1,538,462 | 0.83% |
TOTALS | 37 | 186,602,894 | 100.00% |
Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing house was located.
Amarc's securities are recorded on the books of its transfer agent, Computershare Investor Services Inc., located at 510 Burrard Street, Vancouver, BC, Canada (604) 661-9400 in registered form. However, the majority of such shares are registered in the name of intermediaries such as brokerage houses and clearing houses (on behalf of their respective brokerage clients). Amarc does not have knowledge or access to the identities of the beneficial owners of such shares registered through intermediaries.
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Control
Amarc is not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person, severally or jointly, other than as noted above under Major Shareholders. There are no arrangements known to Amarc which, at a subsequent date, may result in a change in control of Amarc.
Insider Reports Under the Securities Acts of British Columbia and Alberta
Since the Company is a reporting issuer under the Securities Acts of BC and Alberta, certain “insiders” of the Company (including its directors, certain executive officers, and persons who directly or indirectly beneficially own, control or direct more than 10% of its common shares) are generally required to file insider reports of changes in their ownership of Amarc's common shares five days following the trade under National Instrument 55-104 – Insider Reporting Requirements and Exemptions, as adopted by the CSA. Copies of such reports are available for public inspection at the offices of the BC Securities Commission, 9th Floor, 701 West Georgia Street, Vancouver, BC V7Y 1L2, (604) 899-6500 or at the BC Securities Commission web site, www.bcsc.bc.ca. In BC, all insider reports must be filed electronically five days following the date of the trade at www.sedi.ca. The public is able to access these reports at www.sedi.ca.
B. RELATED PARTY TRANSACTIONS
Except as disclosed below, or otherwise disclosed in this Annual Report on Form 20-F, Amarc has not, since April 1, 2012, and does not at this time propose to:
(1) enter into any transactions which are material to Amarc or a related party or any transactions unusual in their nature or conditions involving goods, services or tangible or intangible assets to which Amarc or any of its former subsidiaries was a party;
(2) make any loans or guarantees for the benefit of any of the following persons:
(a) enterprises directly or indirectly through one or more intermediaries, controlling or controlled by or under common control with Amarc;
(b) associates of Amarc (unconsolidated enterprises in which Amarc has significant influence or which has significant influence over Amarc) including shareholders beneficially owning 10% or more of the outstanding shares of Amarc;
(c) individuals owning, directly or indirectly, shares of Amarc that gives them significant influence over Amarc and close members of such individuals families;
(d) key management personnel (persons having authority in responsibility for planning, directing and controlling the activities of Amarc including directors and senior management and close members of such directors and senior management); or
(e) enterprises in which a substantial voting interest is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.
Hunter Dickinson Services Inc. (“HDSI”)
Hunter Dickinson Inc. (“HDI”) and its wholly-owned subsidiary Hunter Dickinson Services Inc. (“HDSI”) are private companies established by a group of mining professionals. HDSI provides contract services for a number of mineral exploration and development companies, and also to companies that are outside of the mining and mineral development space. Amarc is one of the publicly-listed companies for which HDSI provides a variety of contract services.
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The Company has one director in common with HDSI, namely Robert Dickinson. Also, the Company’s President, Chief Executive Officer and Director, and Corporate Secretary are employees of HDSI and work for the Company under an employee secondment arrangement between the Company and HDSI.
HDSI provides technical, geological, corporate communications, regulatory compliance, and administrative and management services to the Company, on an as-needed and as-requested basis from the Company.
HDSI also incurs third party costs on behalf of the Company. Such third party costs include, for example, directors and officers insurance, travel, conferences, and technology services.
As a result of this relationship, the Company has ready access to a range of diverse and specialized expertise on a regular basis, without having to engage or hire full-time experts. The Company benefits from the economies of scale created by HDSI which itself serves several clients. The Company is also able to eliminate many of its fixed costs, including rent, technology, and other infrastructure which would otherwise be incurred for maintaining its corporate offices.
The Company procures services from HDSI pursuant to an agreement dated July 2, 2010. Services from HDSI are provided on a non-exclusive basis as required and as requested by the Company. The Company is not obligated to acquire any minimum amount of services from HDSI. The fees for services from HDSI are determined based on a charge-out rate for each employee performing the service and for the time spent by the employee. Such charge-out rates are agreed and set annually in advance. These time charges consist substantially of salaries, office rent, utilities, office supplies and administration, warehouse space, and insurance.
Third party costs are billed at cost, without markup.
There are no ongoing contractual or other commitments resulting from the Company's transactions with HDSI, other than the payment for services already rendered and billed. The agreement may be terminated upon 60 days' notice by either the Company or HDSI.
The disclosure for the transactions with HDSI has been included in note 10 of the accompanying financial statements of the Company.
Director’s Loan
In November 2014, the Company announced that it has entered into a $1 million unsecured Loan Agreement (the “Loan”), with a non-arm's length director and officer of the Company (the “Lender”) at an interest rate of prime plus 2% per annum and with a maturity date of November 2015. In connection with the Loan, Amarc issued to the Lender a loan bonus of 2,500,000 previously unissued common shares in its capital with a fair value of $187,500. The Company and the Lender have agreed to two extension terms for the Loan to May 2016 for 7% fixed interest rate and to November 2016 for 9% fixed interest rate, respectively.
In December 2016, the Loan was extended for an additional three years on customary terms and conditions, and the principal sum was increased to $1,500,000 by way of an additional advance of $500,000.
In September 2017, $500,000 of the Loan was repaid to the Lender, leaving a balance outstanding of $1,000,000.
In September 2015, the Company announced that it has entered into an additional $500,000 unsecured Loan Agreement with the Lender at a rate of 7% per annum and with a maturity date of September 2017. Amarc issued a loan bonus in the form of 5,555,555 warrants, each entitling the holder to acquire one common share of Amarc for 2 years at a price of $0.09 per share. In September 2017, this loan was fully repaid.
In December 2019, the Company entered into a loan extension and amendment agreement (the “Loan”) with a director and significant shareholder of the Company (the “Lender”), pursuant to which a previous loan agreement with a maturity date of November 26, 2019 was extended for five years or earlier pending the achievement of certain financing milestones. The Loan has a principal sum of $1,000,000, is unsecured and bears interest at a rate of 10% per annum.
Pursuant to the Loan, the Company issued to the Lender a loan bonus comprising of 16,000,000 common share purchase warrants (the “Warrants”) with an expiry of five years and an exercise price of $0.05 per share.
The Company entered into a Second Loan Amendment Agreement dated May 25, 2022, pursuant to which it has agreed to a $100,000 increase to an existing $1 million loan (the “Loan”) with the Lender. The Loan is unsecured, will bear interest at a rate of 10% per annum and is repayable on or before the earlier of November 26, 2024, the occurrence of a default or on achievement of financing milestones.
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In connection with this Loan, Amarc will issue to the Lender a loan bonus in the form of 1,176,470 warrants (the "Bonus Warrants"), each entitling the holder to acquire one common share of Amarc until November 26, 2024 at a price of $0.085 per share. The Bonus Warrants will be subject to a four month hold period commencing from the date of issuance thereof. The Loan and Bonus Warrants are subject to acceptance by the TSX Venture Exchange.
The Loan proceeds are being used to pay the initial option requirement of $100,000 for a five BC mineral claims group option dated May 16, 2022, from an arm’s length optionor. Total additional option payments are a further $900,000 at $100,000 per year, payable on or before May 31 of each year (total option payments are $1,000,000). The property is subject to a 2% NSR royalty, of which 1.5% is capped at $10 million.
On June 15, a separate 6-month facility 12% interest was included in the Loan Amendment, which can be accessed by the Company upon the determination of the Company’s entitlement to near-term receipt of METC.
Refer to note 8 and 16 of the accompanying financial statements of Amarc for additional monetary disclosures about the abovementioned loans.
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8 FINANCIAL INFORMATION
A. FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
Item 18 of this Form 20-F contains Amarc's audited annual financial statements as at and for the years ended March 31, 2022, 2021 and 2020. These financial statements have been prepared in accordance with IFRS, as issued by the IASB.
Legal Proceedings
Amarc is not involved in any legal, arbitration or governmental proceedings and, to Amarc's knowledge, no material legal, arbitration or governmental proceedings involving Amarc are pending or contemplated against Amarc.
Dividend Policy
The Company has not paid any dividends on its outstanding common shares since its incorporation and does not anticipate that it will do so in the foreseeable future. All funds of Amarc are being retained for exploration of its projects.
B. SIGNIFICANT CHANGES
There have been no significant changes to Amarc’s affairs as disclosed in the accompanying financial statements, except as disclosed in this Annual Report on Form 20-F.
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ITEM 9 THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS
Trading Markets
Amarc's common shares have been listed in Canada on the TSX Venture (and its predecessors) since August 1995, under the symbol AHR.
The Company's common shares were traded in the U.S. on the OTCBB from June 2004 until August 2014, and have been traded on the OTCQB since August 2014, in each case under the symbol AXREF.
The following tables set forth for the periods indicated the price history of the Company's common shares on the TSX Venture and on the OTCQB.
| TSX Venture Exchange | OTCBB/OTCQB | ||
Fiscal Year Ended March 31, | High (Cdn$) | Low (Cdn$) | High (US$) | Low (US$) |
2022 | 0.145 | 0.085 | 0.12 | 0.07 |
2021 | 0.13 | 0.03 | 0.09 | 0.02 |
2020 | 0.08 | 0.02 | 0.06 | 0.02 |
2019 | 0.14 | 0.04 | 0.11 | 0.03 |
2018 | 0.26 | 0.12 | 0.21 | 0.09 |
2017 | 0.16 | 0.06 | 0.12 | 0.04 |
2016 | 0.17 | 0.04 | 0.14 | 0.02 |
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| TSX Venture Exchange | OTCQB | ||
Fiscal Quarter | High (Cdn$) | Low (Cdn$) | High (US$) | Low (US$) |
Q4 2022 | 0.14 | 0.10 | 0.11 | 0.08 |
Q3 2022 | 0.14 | 0.10 | 0.11 | 0.08 |
Q2 2022 | 0.14 | 0.10 | 0.11 | 0.09 |
Q1 2022 | 0.14 | 0.11 | 0.16 | 0.09 |
Q4 2021 | 0.13 | 0.05 | 0.09 | 0.04 |
Q3 2021 | 0.08 | 0.05 | 0.06 | 0.04 |
Q2 2021 | 0.08 | 0.04 | 0.07 | 0.02 |
Q1 2021 | 0.04 | 0.03 | 0.03 | 0.02 |
Q4 2020 | 0.08 | 0.02 | 0.06 | 0.02 |
Q3 2020 | 0.06 | 0.03 | 0.04 | 0.02 |
Q2 2020 | 0.06 | 0.04 | 0.05 | 0.03 |
Q1 2020 | 0.07 | 0.04 | 0.05 | 0.03 |
Q4 2019 | 0.07 | 0.07 | 0.05 | 0.05 |
Q3 2019 | 0.10 | 0.04 | 0.07 | 0.04 |
Q2 2019 | 0.10 | 0.06 | 0.07 | 0.04 |
Q1 2019 | 0.14 | 0.08 | 0.11 | 0.07 |
Q4 2018 | 0.17 | 0.12 | 0.14 | 0.09 |
Q3 2018 | 0.20 | 0.14 | 0.15 | 0.11 |
Q2 2018 | 0.26 | 0.17 | 0.21 | 0.13 |
Q1 2018 | 0.21 | 0.14 | 0.15 | 0.11 |
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| TSX Venture Exchange | OTCQB | ||
Month | High (Cdn$) | Low (Cdn$) | High (US$) | Low (US$) |
July 2022 (to the date of this Annual Report) | 0.12 | 0.09 | 0.09 | 0.07 |
June 2022 | 0.12 | 0.10 | 0.09 | 0.08 |
May 2022 | 0.11 | 0.09 | 0.09 | 0.07 |
April 2022 | 0.12 | 0.11 | 0.10 | 0.08 |
March 2022 | 0.14 | 0.11 | 0.11 | 0.08 |
February 2022 | 0.13 | 0.10 | 0.11 | 0.08 |
January 2022 | 0.13 | 0.11 | 0.10 | 0.08 |
B. PLAN OF DISTRIBUTION
Not applicable.
C. MARKETS
The shares of Amarc traded in Canada on the TSX Venture (formerly the Canadian Venture Exchange and successor to the Vancouver Stock Exchange) since August 1995 under the trading symbol AHR. Amarc's shares were traded on the OTCBB from June 2004 until August 2014, and have been traded on the OTCQB since August 2014, in each case under the symbol AXREF.
D. SELLING SHAREHOLDERS
Not applicable.
E. DILUTION
Not applicable.
F. EXPENSES OF THE ISSUE
Not applicable.
ITEM 10 ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
Amarc's original corporate constituting documents comprised of the Memorandum and Articles of Association were registered with the BC Registrar of Companies under Corporation No. 436691. A copy of the Company's original Articles of Association was filed as an exhibit with Amarc's initial registration statement on Form 20-F.
In March 2004, the Company Act (BC) (the “BCCA”) was replaced by the Business Corporations Act (BC) (the “BCA”). All companies incorporated under the BCCA were required to complete a transition application to the BCA by March 29, 2006. The directors of the Company authorized the Company to file a transition application with the Registrar of Companies and to comply with the BCA.
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The Company subsequently filed a Notice of Articles with the Registrar of Companies on October 2, 2004. The Notice of Articles and the Articles constitute the constating documents of the Company, and have superseded the Memorandum and Articles of Association. The Articles of a company, among other things, set out rules for the conduct of its business and affairs; they are no longer required to be filed with the Registrar of Companies, but are required to be kept as part of the company's corporate records.
On October 22, 2004, the Company filed a Notice of Alteration with the Registrar of Companies to remove the former limitation on its authorized share capital of 100,000,000 common shares without par value. As a result, the Company's authorized share capital now consists of an unlimited number of common shares without par value. The Registrar of Companies issued a Notice of Articles dated October 22, 2004 to reflect this change.
Under the BCA, every “pre-existing company' remained subject to certain “Pre-existing Company Provisions” contained in the BCCA unless such provisions were removed with the approval of the shareholders. In order to take full advantage of the flexibility offered by the BCA, the shareholders adopted a special resolution on October 12, 2005 authorizing the removal of the Pre-existing Company Provisions and the adoption by the Company of a new form of Articles that incorporates provisions permitted under the BCA. On January 31, 2006, the Company filed a Notice of Alteration with the Registrar of Companies to remove the Pre-Existing Company Provisions, and the Registrar of Companies issued a Notice of Articles to reflect this change.
As discussed in more detail below, on August 17, 2007, the Company filed a Notice of Alteration with the Registrar of Companies to create a new class of Preferred Shares, and the Registrar of Companies issued a Notice of Articles to reflect this change.
Effective September 19, 2013 the Company’s Articles were amended to include advance notice provisions relating to the nomination and the election of directors of the Company.
Set out below is a discussion of the principal changes effected by the adoption of the new Articles by the Company under the BCA, which took effect on January 31, 2006.
Borrowing Powers
Under the original Articles of Association, the Company could borrow money, issue bonds, debentures and other debt obligations and mortgage, charge, or give security on the undertaking, or on the whole or any part of the property and assets, of the Company (both present and future). Under the BCA, companies are also permitted, without restriction (other than general corporate governance principles), to guarantee repayment of money by any other person or the performance of any obligation of any other person. This change reflected the modernization of corporate legislation to effectively respond to increasingly complex financial transactions that companies may enter into in the course of their business. As a result, the Company's Articles now provide that the Company may guarantee the repayment of money by any other person or the performance of any obligation of any other person.
Share Certificates
Under the original Articles of Association, a shareholder was entitled to a share certificate representing the number of shares of the Company held. Under the BCA, a shareholder is entitled to a share certificate representing the number of shares of the Company held or a written acknowledgement of the shareholder's right to obtain such a share certificate. As a result, the Articles now provide for this additional right. The addition of the ability to issue a written acknowledgement is very useful for public companies such as the Company, since it permits flexibility in corporate and securities transmissions.
On September 15, 2010, the shareholders of the Company approved an amendment to the Articles that enabled the Company to use uncertificated electronic shares and to use an electronic record keeping system.
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Indemnity Provisions
Under the BCCA, the Company could only indemnify directors where it obtained prior court approval, except in certain limited circumstances. The original Articles of Association provided for the Company to indemnify directors, subject to the provisions of the BCCA. Under the BCA, the Company is permitted (and is, in some circumstances, required) to indemnify a past or present director or officer of the Company or an associated corporation without obtaining prior court approval in respect of an “eligible proceeding”. An “eligible proceeding” includes any legal proceeding relating to the activities of the individual as a director or officer of the Company. However, under the BCA, the Company is prohibited from paying an indemnity if:
(a) | the party did not act honestly and in good faith with a view to the best interests of the Company; |
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(b) | the proceeding was not a civil proceeding and the party did not have reasonable grounds for believing that his or her conduct was lawful; and |
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(c) | the proceeding is brought against the party by the Company or an associated corporation. |
As a result, the Articles require the Company to indemnify directors, officers and other persons, subject to the limits imposed under the BCA.
Alternate Directors
The original Articles of Association permitted a director to appoint another director as his alternate. The Company's Articles now permit a director to appoint anyone as his alternate, as long as that person is qualified to act as a director.
Amendment of Articles and Notice of Articles
The Articles provide that the general authority required to amend all provisions of the Company's Articles and the Notice of Articles, other than as set out in the BCA as specifically requiring a special resolution, can be effected as an ordinary or by directors' resolution. The Company's Articles provide that the Company may amend provisions of the Articles and Notice of Articles relating to certain aspects of its Shares and authorized share structure by ordinary resolution. A share consolidation or a share split and name change of the Company can only be done by a resolution of the directors. The default provision under the BCA is a special resolution where the Articles are silent as to the type of resolution required.
The Articles also provide that the attachment, variation and deletion of special rights and restrictions to any class of shares may be authorized by ordinary resolution. If the amendment prejudices or interferes with the rights or special rights attached to any class of issued shares, by the provisions of the BCA, the consent of the holders of that class of shares by a “special separate resolution” is required.
All special resolutions of the Company must be adopted by a majority of two-thirds of votes cast; the Company's original Article of Association required special resolutions to be adopted by a majority of three-quarters of the votes cast.
Shareholders' Meetings
In addition to reflecting the present notice and other provisions of the BCA relating to shareholders' meetings, the Articles provide that shareholders' meetings may be held at such place as is determined by the directors.
The Articles permit the giving of notice to shareholders, directors and officers by fax or e-mail in addition to regular mail or personal delivery.
Officers
Under the original Articles of Association, the Company was required to have at least a President and Secretary as officers, and separate individuals were required to hold those positions. In addition, the Chairman and President were required to be directors. However, under the BCA, those requirements no longer exist, and as a result, the Articles do not provide for such restrictions.
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Disclosure of Interest of Directors
The Articles refer to the provisions of the BCA relating to the disclosure of interest by directors, which superseded more the cumbersome and outdated provisions contained under the BCCA.
Creation of Preferred Shares
Under the original Articles of Association, the creation of a new class of shares required the approval of the shareholders of the Company by a special resolution adopted by a majority of three-quarters of votes cast. In contrast, the Articles now provide that the creation of a new class of shares requires the approval of the shareholders of the Company by an ordinary resolution.
On September 26, 2006, the shareholders adopted an ordinary resolution authorizing the creation of a new class of Preferred Shares without par value and without a maximum authorized number, issuable in series, on such terms as may be determined by the Company's directors for each such series. On August 17, 2007, the Company filed a Notice of Alteration with the Registrar of Companies to create the new class of Preferred Shares, and the Registrar of Companies issued a Notice of Articles to reflect this change.
As a result, the authorized share structure of the Company now includes, in addition to a class of common shares without par value and without a maximum number, a class of Preferred Shares without par value and without a maximum number. The Preferred Shares may be issued in series on such terms as determined by the Company's directors in accordance with the class rights and restrictions.
The special rights and restrictions attaching to the Preferred Shares are set forth in Article 26 of the Articles, and effectively provide the directors with wide latitude to create a series of Preferred Shares which may be convertible into Common Shares, and have attached to them rights that rank ahead of Common Shares in respect of entitlement to assets and dividends.
C. MATERIAL CONTRACTS
Amarc's only material contract as of the date of this Annual Report is:
Corporate Services Agreement between Amarc and Hunter Dickinson Services Inc. dated July 2, 2010. See Item 7.B and Exhibit 4.1.
Other agreements are in the normal course of business.
D. EXCHANGE CONTROLS
Amarc is incorporated pursuant to the laws of the Province of British Columbia, Canada. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of Common Shares, other than withholding tax requirements. Any such remittances to United States residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. See “Taxation”, below.
There is no limitation imposed by Canadian law or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote Common Shares of the Company. However, the Investment Canada Act (Canada) (the “Investment Act”) has rules regarding certain acquisitions of shares by non-Canadians, along with other requirements under that legislation.
The following discussion summarizes the principal features of the Investment Act for a non-Canadian who proposes to acquire Common Shares of the Company. The discussion is general only; it is not a substitute for independent legal advice from an investor's own adviser; and, except where expressly noted, it does not anticipate statutory or regulatory amendments.
The Investment Act is a federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts and joint ventures. Investments by non-Canadians to acquire control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Act. If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Act, the Investment Act generally prohibits implementation of the investment unless, after review, the Minister of Innovation, Science and Economic Development (the “Minister”) (or the Minister of Canadian Heritage for investments in a Canadian business engaged in any of the activities of a “cultural business”), is satisfied that the investment is likely to be of net benefit to Canada.
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A non-Canadian would acquire control of the Company for the purposes of the Investment Act through the acquisition of Common Shares if the non-Canadian acquired a majority of the Common Shares of the Company.
Further, the acquisition of less than a majority but one-third or more of the Common Shares of the Company would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer through the ownership of Common Shares.
To determine whether an investment is reviewable under the Investment Act it is necessary to consider certain matters, including whether the investor is a state-owned enterprise; whether the investor is a “WTO investor” (i.e., controlled by persons who are citizens of countries that are members of the World Trade Organization (“WTO”)), and, if so, whether the WTO investor is party to certain free trade agreements; the enterprise value of the assets of the Canadian business being acquired; and whether the Canadian business being acquired is a cultural business.
An acquisition of control of a Canadian business by a non-Canadian that falls below the thresholds for review under the Investment Act does not require the filing of an application for review. However, even where an investment falls below the thresholds, it must still be notified by way of a short form to the Investment Review Division of the Department of Innovation, Science and Economic Development Canada (or the Department of Canadian Heritage for cultural cases). Notifications may be submitted by the investor any time before or up to 30 days after implementation of the investment.
In 2009, amendments were enacted to the Investment Act concerning investments that may be considered injurious to national security. If the Minister has reasonable grounds to believe that an investment by a non-Canadian “could be injurious to national security,” the Minister may send the non-Canadian a notice indicating that an order for review of the investment may be made. The review of an investment on the grounds of national security may occur whether or not an investment is otherwise subject to review on the basis of net benefit to Canada or otherwise subject to notification under the Investment Canada Act.
Certain transactions, except those to which the national security provisions of the Investment Act may apply, relating to Common Shares of the Company are exempt from the Investment Act, including
(a) acquisition of Common Shares of the Company by a person in the ordinary course of that person's business as a trader or dealer in securities,
(b) acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act, if the investment is subject to approval under certain other legislation, and
(c) acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of Common Shares, remained unchanged.
E. TAXATION
Certain Canadian Federal Income Tax Information for United States Residents
The following summarizes the principal Canadian federal income tax considerations generally applicable to the holding and disposition of common shares of the Company by a holder (a) who, for the purposes of the Income Tax Act (Canada) the (“Tax Act”) and at all relevant times, is not resident in Canada or deemed to be resident in Canada, deals at arm's length and is not affiliated with the Company, holds the common shares as capital property and does not use or hold the common shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) who, for the purposes of the Canada-United States Income Tax Convention (the “Treaty”) and at all relevant times, is a resident of the United States, has never been a resident of Canada, has not held or used (and does not hold or use) common shares in connection with a permanent establishment or fixed base in Canada, and who qualifies for the full benefits of the Treaty. The Canada Revenue Agency has introduced special forms to be used in order to substantiate eligibility for Treaty benefits, and affected holders should consult with their own advisers with respect to these forms and all relevant compliance matters.
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Holders who meet all such criteria in clauses (a) and (b) above are referred to herein as a “U.S. Holder” or “U.S. Holders”, and this summary only addresses such U.S. Holders. The summary does not deal with special situations, such as particular circumstances of traders or dealers, limited liability companies, tax-exempt entities, insurers, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), entities considered fiscally transparent under applicable law, or otherwise.
This summary is based on the current provisions of the Tax Act and the regulations thereunder, all proposed amendments to the Tax Act and regulations publicly announced by the Minister of Finance (Canada) to the date hereof, the current provisions of the Treaty and our understanding of the current administrative practices of the Canada Revenue Agency. It has been assumed that all currently proposed amendments to the Tax Act and regulations will be enacted as proposed and that there will be no other relevant change in any governing law, the Treaty or administrative policy, although no assurance can be given in these respects. This summary does not take into account provincial, U.S. or other foreign income tax considerations, which may differ significantly from those discussed herein.
This summary is not exhaustive of all possible Canadian income tax consequences. It is not intended as legal or tax advice to any particular U.S. Holder and should not be so construed. The tax consequences to a U.S. Holder will depend on that U.S. Holder's particular circumstances. Accordingly, all U.S. Holders or prospective U.S. Holders should consult their own tax advisers with respect to the tax consequences applicable to them having regard to their own particular circumstances. The discussion below is qualified accordingly.
Dividend
Dividends paid or deemed to be paid or credited by the Company to a U.S. Holder are subject to Canadian withholding tax. Under the Treaty, the rate of withholding tax on dividends paid to a U.S. Holder is generally limited to 15% of the gross dividend (or 5% in the case of a U.S. Holder that is a corporate shareholder owning at least 10% of the Company's voting shares), provided the U.S. Holder can establish entitlement to the benefits of the Treaty.
Disposition
A U.S. Holder is generally not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of a common share in the open market, unless the share is “taxable Canadian property” to the holder thereof and the U.S. Holder is not entitled to relief under the Treaty.
Provided that the Company's common shares are listed on a “designated stock exchange” for purposes of the Tax Act (which currently includes the TSX Venture) at the time of disposition, a common share will generally not constitute taxable Canadian property to a U.S. Holder unless, at any time during the 60 month period ending at the time of disposition, (i) the U.S. Holder, persons with whom the U.S. Holder did not deal at arm's length for purposes of the Tax Act, partnerships in which the U.S. Holder or such persons holds a membership interest directly or indirectly, (or the U.S. Holder together with any such foregoing persons) or partnerships, owned 25% or more of the issued shares of any class or series of the Company AND (ii) more than 50% of the fair market value of the share was derived directly or indirectly from certain types of assets, including real or immoveable property situated in Canada, Canadian resource properties or timber resource properties, and options, interests or rights in respect of any of the foregoing. Common shares may also be deemed to be taxable Canadian property under the Tax Act in certain specific circumstances. A U.S. Holder holding Common shares as taxable Canadian property should consult with the U.S. Holder's own tax advisers in advance of any disposition of Common shares or deemed disposition under the Tax Act in order to determine whether any relief from tax under the Tax Act may be available by virtue of the Treaty, and any related compliance procedures.
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Certain United States Federal Income Tax Considerations
The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from the acquisition, ownership and disposition of our common shares.
This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder as a result of the acquisition, ownership and disposition of our common stock. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular U.S. Holder. In addition, this summary does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. Medicare contribution, U.S. state and local, or non-U.S. tax consequences of the acquisition, ownership or disposition of our common stock. Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each U.S. Holder should consult its own tax advisor regarding all U.S. federal, U.S. state and local and non-U.S. tax consequences of the acquisition, ownership and disposition of our common stock.
No opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership or disposition of our common shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, or contrary to, any position taken in this summary. In addition, because the authorities upon whom this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.
Scope of this Summary
Authorities
This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date hereof. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis, which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the term “U.S. Holder” means a beneficial owner of common shares that is for U.S. federal income tax purposes:
| · | an individual who is a citizen or resident of the U.S.; |
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| · | a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia; |
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| · | an estate whose income is subject to U.S. federal income taxation regardless of its source; or |
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| · | a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. |
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Non-U.S. Holders
For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder. This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership, and disposition of common shares. Accordingly, a non-U.S. Holder should consult its own tax adviser regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of common shares.
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
This summary does not address the U.S. federal income tax considerations of the acquisition, ownership or disposition of our common shares by U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following: (a) tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) broker-dealers, dealers, or traders in securities or currencies that elect to apply a “mark-to-market” accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that own our common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquire our common shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold our common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) are required to accelerate the recognition of any item of gross income with respect to Common Shares as a result of such income being recognized on an applicable financial statement; and (i) U.S. Holders that own directly, indirectly, or by attribution, 10% or more, by voting power, of the outstanding stock of the Company. This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Income Tax Act (Canada); (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold our common shares in connection with carrying on a business in Canada; (d) persons whose common shares in our Company constitutes “taxable Canadian property” under the Income Tax Act (Canada); or (e) persons that have a permanent establishment in Canada for purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential application and operation of any income tax treaties) relating to the acquisition, ownership or disposition of our common shares.
If an entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax purposes holds our common shares, the U.S. federal income tax consequences to such partnership and the partners (or other owners) of such partnership of the acquisition, ownership or disposition of our common shares generally will depend on the activities of the partnership and the status of such partners (or other owners). This summary does not address the U.S. federal income tax considerations for any such partner or partnership (or other “pass-through” entity or its owners). Owners of entities and arrangements that are classified as partnerships (or other “pass-through” entities) for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership or disposition of our common shares.
Passive Foreign Investment Company Rules
If the Company were to constitute a “passive foreign investment company” under the meaning of Section 1297 of the Code (a “PFIC”, as defined below) for any year during a U.S. Holder's holding period, then certain potentially adverse rules will affect the U.S. federal income tax consequences to a U.S. Holder resulting from the acquisition, ownership and disposition of common shares. The Company believes that it was classified as a PFIC during the tax year ended March 31, 2018, and may be a PFIC in future tax years. The determination of whether any corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document. Accordingly, there can be no assurance that the IRS will not challenge any determination made by the Company (or any subsidiary of the Company) concerning its PFIC status. Each U.S. Holder should consult its own tax advisor regarding the PFIC status of the Company and any subsidiary of the Company.
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In addition, in any year in which the Company is classified as a PFIC, such holder would be required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require. In addition to penalties, a failure to satisfy such reporting requirements may result in an extension of the time period during which the IRS can assess a tax. U.S. Holders should consult their own tax advisors regarding the requirements of filing such information returns under these rules, including the requirement to file an IRS Form 8621.
PFIC Status of the Company
The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company is passive income (the “income test”) or (b) 50% or more of the value of the Company's assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets (the “asset test”). “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from investments and from incidental or outside operations or sources, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.
Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a foreign corporation's commodities are stock in trade or inventory, depreciable property used in a trade or business, or supplies regularly used or consumed in a trade or business and certain other requirements are satisfied.
For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation. In addition, for purposes of the PFIC income test and asset test described above, and assuming certain other requirements are met, “passive income” does not include certain interest, dividends, rents, or royalties that are received or accrued by the Company from certain “related persons” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.
Under certain attribution rules, if the Company is a PFIC, U.S. Holders will generally be deemed to own their proportionate share of the Company's direct or indirect equity interest in any company that is also a PFIC (a ''Subsidiary PFIC''), and will be subject to U.S. federal income tax on their proportionate share of (a) any “excess distributions,” as described below, on the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of the stock of a Subsidiary PFIC by the Company or another Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S. federal income tax on any indirect gain realized on the stock of a Subsidiary PFIC on the sale or disposition of common shares. Accordingly, U.S. Holders should be aware that they could be subject to tax even if no distributions are received and no redemptions or other dispositions of common shares are made.
Tax Consequences if the Company is a PFIC
If the Company is a PFIC for any tax year during which a U.S. Holder owns our common shares, special rules may increase such U.S. Holder’s U.S. federal income tax liability with respect to the ownership and disposition of such common shares. If the Company meets the income test or the asset test for any tax year during which a U.S. Holder owns our common shares, the Company will be treated as a PFIC with respect to such U.S. Holder for that tax year and for all subsequent tax years, regardless of whether the Company meets the income test or the asset test for such subsequent tax years, unless the U.S. Holder elects to recognize any unrealized gain in such common shares or makes a timely and effective QEF Election or, if applicable, Mark-to-Market Election.
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Under the default PFIC rules:
| · | any gain realized on the sale or other disposition (including dispositions and certain other events that would not otherwise be treated as taxable events) of our common shares (including an indirect disposition of the stock of any Subsidiary PFIC) and any “excess distribution” (defined as a distribution to the extent it, together with all other distributions received in the relevant tax year, exceeds 125% of the average annual distribution received during the preceding three years) received on our common shares or with respect to the stock of a Subsidiary PFIC will be allocated rateably to each day of such U.S. Holder’s holding period for our common shares; |
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| · | the amount allocated to the current tax year and any year prior to the first year in which the Company was a PFIC will be taxed as ordinary income in the current year; |
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| · | the amount allocated to each of the other tax years (the “Prior PFIC Years”) will be subject to tax at the highest ordinary income tax rate in effect for the applicable class of taxpayer for that year; |
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| · | an interest charge will be imposed with respect to the resulting tax attributable to each Prior PFIC Year, which interest charge is not deductible by non-corporate U.S. Holders; and |
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| · | any loss realized on the disposition of our common shares generally will not be recognized. |
A U.S. Holder that makes a timely and effective “mark-to-market” election under Section 1296 of the Code (a “Mark-to-Market Election”) or a timely and effective election to treat the Company and each Subsidiary PFIC as a “qualified electing fund” (a “QEF”) under Section 1295 of the Code (a “QEF Election”) may generally mitigate or avoid the PFIC consequences described above with respect to our common shares.
If a U.S. Holder makes a timely and effective QEF Election, the U.S. Holder must include currently in gross income each year its pro rata share of the Company’s ordinary income and net capital gains, regardless of whether such income and gains are actually distributed. Thus, a U.S. Holder could have a tax liability with respect to such ordinary income or gains without a corresponding receipt of cash from the Company. If the Company is a QEF with respect to a U.S. Holder, the U.S. Holder’s basis in our common shares will be increased to reflect the amount of the taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of basis in our common shares and will not be taxed again as a distribution to a U.S. Holder. Taxable gains on the disposition of our common shares by a U.S. Holder that has made a timely and effective QEF Election are generally capital gains. A U.S. Holder must make a QEF Election for the Company and each Subsidiary PFIC if it wishes to have this treatment. To make a QEF Election, a U.S. Holder will need to have an annual information statement from the Company setting forth the ordinary income and net capital gains for the year. U.S. Holders should be aware that there can be no assurance that the Company will satisfy the recordkeeping requirements that apply to a QEF or that the Company will supply U.S. Holders with information such U.S. Holders require to report under the QEF rules in the event that the Company is a PFIC for any tax year.
In general, a U.S. Holder must make a QEF Election on or before the due date for filing its income tax return for the first year to which the QEF Election applies. Under applicable Treasury Regulations, a U.S. Holder will be permitted to make retroactive elections in particular circumstances, including if it had a reasonable belief that the Company was not a PFIC and filed a protective election. If a U.S. Holder owns PFIC stock indirectly through another PFIC, separate QEF Elections must be made for the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC for the QEF rules to apply to both PFICs. Each U.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timely and effective QEF Election for the Company and any Subsidiary PFIC.
A Mark-to-Market Election may be made with respect to stock in a PFIC if such stock is “regularly traded” on a “qualified exchange or other market” (within the meaning of the Code and the applicable Treasury Regulations). A class of stock that is traded on one or more qualified exchanges or other markets is considered to be “regularly traded” for any calendar year during which such class of stock is traded in other than de minimus quantities on at least 15 days during each calendar quarter. If our common shares are considered to be “regularly traded” within this meaning, then a U.S. Holder generally will be eligible to make a Mark-to-Market Election with respect to our common shares but not with respect to a Subsidiary PFIC.
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A U.S. Holder that makes a timely and effective Mark-to-Market Election with respect to our common stock generally will be required to recognize as ordinary income in each tax year in which the Company is a PFIC an amount equal to the excess, if any, of the fair market value of such stock as of the close of such taxable year over the U.S. Holder’s adjusted tax basis in such stock as of the close of such taxable year. A U.S. Holder’s adjusted tax basis in our common shares generally will be increased by the amount of ordinary income recognized with respect to such stock. If the U.S. Holder’s adjusted tax basis in our common shares as of the close of a tax year exceeds the fair market value of such stock as of the close of such taxable year, the U.S. Holder generally will recognize an ordinary loss, but only to the extent of net mark-to-market income recognized with respect to such stock for all prior taxable years. A U.S. Holder’s adjusted tax basis in our common shares generally will be decreased by the amount of ordinary loss recognized with respect to such stock. Any gain recognized upon a disposition of our common shares generally will be treated as ordinary income, and any loss recognized upon a disposition generally will be treated as ordinary loss to the extent of the net mark-to-market income recognized for all prior taxable years. Any loss recognized in excess thereof will be taxed as a capital loss. Capital losses are subject to significant limitations under the Code. Each U.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timely and effective Mark-to-Market Election with respect to our common shares.
Foreign Tax Credit
A U.S. Holder that pays (whether directly or through withholding) Canadian income tax in connection with the ownership or disposition of our common shares may be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all creditable foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.
Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” Generally, dividends paid by a non-U.S. corporation should be treated as foreign source for this purpose, and gains recognized on the sale of securities of a non-U.S. corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to our common shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.
Special rules apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution, including a constructive distribution, from a PFIC. Subject to such special rules, non-U.S. taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult its own tax advisor regarding their application to the U.S. Holder.
Receipt of Foreign Currency
The amount of any distribution or proceeds paid in Canadian dollars to a U.S. Holder in connection with the ownership, sale or other taxable disposition of our common shares, will be included in the gross income of a U.S. Holder as translated into U.S. dollars calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the payment, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in Canadian dollars and engages in a subsequent conversion or other disposition of the Canadian dollars may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of Canadian dollars.
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Information Reporting; Backup Withholding
Under U.S. federal income tax law, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a non-U.S. corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of “specified foreign financial assets” includes not only financial accounts maintained in non-U.S. financial institutions, but also, if held for investment and not in an account maintained by certain financial institutions, any stock or security issued by a non-U.S. person, any financial instrument or contract that has an issuer or counterparty other than a U.S. person and any interest in a non-U.S. entity. A U.S. Holder may be subject to these reporting requirements unless such U.S. Holder’s shares of our common shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns on IRS Form 8938 for specified foreign financial assets, filing obligations relating to the PFIC rules including possible reporting on IRS Form 8621, and any other applicable reporting requirements.
Payments made within the U.S. or by a U.S. payor or U.S. middleman of (a) distributions on our common shares, and (b) proceeds arising from the sale or other taxable disposition of our common shares generally will be subject to information reporting. In addition, backup withholding, currently at a rate of 24%, may apply to such payments if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (“TIN”) (generally on Form W-9), (b) furnishes an incorrect U.S. TIN, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. TIN and that the IRS has not notified such U.S. Holder that it is subject to backup withholding. Certain exempt persons generally are excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding rules are allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. The information reporting and backup withholding rules may apply even if, under the Canada-U.S. Tax Convention, payments are exempt from dividend withholding tax or otherwise eligible for a reduced withholding rate.
The discussion of reporting requirements set forth above is not intended to constitute an exhaustive description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP OR DISPOSITION OF OUR COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENT BY EXPERTS
Not applicable.
H. DOCUMENTS ON DISPLAY
Exhibits attached to this Form 20-F are also available for viewing on EDGAR, or at the offices of Amarc, Suite 1400 – 1040 West Georgia Street, Vancouver, BC V6E 4H1 or on request of Amarc at 604-684-6365, attention: Corporate Secretary. Copies of Amarc's financial statements and other continuous disclosure documents required under the BC Securities Act are available for viewing on the internet at www.sedar.com.
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I. SUBSIDIARY INFORMATION
Not applicable.
ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A. RISK RELATED TO COVID-19
The current outbreak of COVID-19, and any future emergence and spread of similar pathogens, could have a material adverse effect on global and local economic and business conditions, which may adversely impact Amarc’s business and results of operations and the operations of contractors and service providers. The extent to which the COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning its severity and the actions taken to contain the virus or treat its impact, among others. The adverse effects on the economy, the stock market and Amarc’s share price could adversely impact its ability to raise capital, with the result that our ability to pursue development of the JOY, IKE and DUKE Districts could be adversely impacted, both through delays and through increased costs. Any of these developments, and others, could have a material adverse effect on the Company’s business and results of operation and could delay its plans for development of its districts.
B. TRANSACTION RISK AND CURRENCY RISK MANAGEMENT
Amarc's operations do not employ financial instruments or derivatives which are market sensitive and Amarc does not have financial market risks that it deems to be material.
C. EXCHANGE RATE SENSITIVITY
Amarc's administrative operations are in Canada. The Company typically holds most of its funds in Canadian Dollars and typically acquires foreign currency on an as-needed basis and, hence, it is not significantly affected by exchange rate risk. The Company does, however, from time to time, invest in U.S. Dollars denominated short-term investments. The Company is exposed to foreign currency exchange risk on such investments. However, such U.S. Dollars denominated investments have been minor and the foreign exchange risk has been immaterial.
The Company currently does not engage in foreign currency hedging.
D. INTEREST RATE RISK AND EQUITY PRICE RISK
Amarc's liabilities consist of routine accounts payable, balance due to a related party, and a loan payable to a director of the Company. The loans bear fixed interest rates. Based on these factors, interest rate change risk for the Company is nominal. For more details on the loan, refer to Note 8 of the accompanying audited annual financial statements for the year ended March 31, 2022.
Some of the Company's marketable securities are subject to equity price risk as they relate to shares held in publicly-traded companies. Given the small value of the Company's marketable securities, equity price risk for the Company is nominal.
E. COMMODITY PRICE RISK
While the value of Amarc's resource properties can always be said to relate to the price of copper and gold metals and the outlook for same, Amarc does not have any operating mines and hence does not have any hedging or other commodity-based operational risks respecting its business activities.
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ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15 CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
At the end of the period covered by this annual report on Form 20-F, an evaluation was carried out with the participation of the Company's management, including the President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a – 15(e) and 15d –15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the President and CEO and the CFO have concluded that as of the end of the period covered by this annual report on Form 20-F, the Company's disclosure controls and procedures were effective in providing reasonable assurance that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) material information required to be disclosed in the Company's reports filed under the Exchange Act was accumulated and communicated to the Company's management, including the President and CEO and the CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company's management, including the President and CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with IFRS. The Company's internal control over financial reporting includes those policies and procedures that:
| · | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
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| · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and |
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| · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. |
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With the participation of the President and CEO and CFO, management conducted an evaluation of the design and operation of the Company's internal control over financial reporting as of March 31, 2022, based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management concluded in its report that the Company's internal control over financial reporting was effective as of March 31, 2022.
This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules that permit the Company to provide only management's report in this Annual Report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the period covered by this Annual Report on Form 20-F, no changes occurred in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
LIMITATIONS OF CONTROLS AND PROCEDURES
The Company's management, including its President and CEO and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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ITEM 16 [RESERVED]
ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT
The members of the audit committee are Scott Cousens (Chairman), Barry Coughlan and Diane Nicolson. The board of directors has determined that Mr. Coughlan qualifies as a “financial expert” under the rules of the Securities and Exchange Commission, based on his education and experience. Mr. Coughlan is independent, as the term is defined in section 803 of the NYSE American Company Guide.
Each audit committee member is able to read and understand fundamental financial statements.
ITEM 16B CODE OF ETHICS
The Company's board of directors has adopted a Code of Ethics governing directors, officers, employees and contractors. The Code of Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
(a) | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
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(b) | full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, securities regulators and in other public communications made by the Company; |
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(c) | compliance with applicable laws, rules and regulations; |
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(d) | the prompt internal reporting of violations of the Code of Ethics to an appropriate person or persons identified in the Code; and |
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(e) | accountability for adherence to the Code of Ethics. |
The board of directors monitors compliance with the Code of Ethics by ensuring that all Company personnel have read and understood the Code of Ethics, and by charging management with bringing to the attention of the board of directors any issues that arise with respect to the Code of Ethics.
The Company's Code of Ethics was filed as Exhibit 11.1 of the Company's Form 20-F filed on October 7, 2008. The Company's Code of Ethics can be viewed at the Company's website (www.amarcresources.com). The Company will also provide a copy of the Code of Ethics to any person without charge, upon request. Requests can be sent by mail to: 14th floor, 1040 West Georgia Street, Vancouver, BC V6E 4H1 or on request of the Company at 604-684-6365, attention: Investor Relations Department.
During the most recently completed fiscal year, the Company has neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including any implicit waiver) form any provision of its Code of Ethics.
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ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table discloses the aggregate fees billed for each of the last two fiscal years for professional services rendered by the Company's audit firm, De Visser Gray LLP for various services.
Services: |
| Year ended March 31, 2022 | Year ended March 31, 2022 |
Audit Fees | Includes fees necessary to perform the annual audit and quarterly reviews of the Company's financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits. | $20,000 | $20,000 |
Audit-related Fees | Includes services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation. | Nil | Nil |
Tax Fees | Includes fees for all tax services other than those included in “Audit Fees” and “Audit-related Fees”. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities. | Nil | Nil |
All Other Fees | Includes all other non-audit services. | Nil | Nil |
Total |
| $20,000 | $20,000 |
From time to time, management of the Company recommends to and requests approval from the audit committee for non-audit services to be provided by the Company's auditors. The audit committee routinely considers such requests at committee meetings, and if acceptable to a majority of the audit committee members, pre-approves such non-audit services by a resolution authorizing management to engage the Company's auditors for such non-audit services, with set maximum dollar amounts for each itemized service. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered “prohibited services” as contemplated by the SEC, and whether the services requested and the fees related to such services could impair the independence of the auditors. No material non-audit services were provided by the Company's auditors during the years presented in the above table.
ITEM 16D EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
In the year ended March 31, 2022, the Company did not purchase any of its issued and outstanding Common Shares pursuant to any repurchase program or otherwise.
ITEM 16F CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
| 73 |
| Table of Contents |
ITEM 16G CORPORATE GOVERNANCE
Not applicable.
ITEM 16H MINE SAFETY DISCLOSURE
Not applicable.
ITEM 17 FINANCIAL STATEMENTS
Not applicable. See Item 18 – Financial Statements
ITEM 18 FINANCIAL STATEMENTS
The following are incorporated herein:
| · | Report of the Company's independent registered public accountants, De Visser Gray LLP, dated July 29, 2022; |
|
|
|
| · | Statements of financial position as at March 31, 2022 and March 31, 2021; |
| 74 |
| Table of Contents |
| · | Statements of loss for the years ended March 31, 2022, March 31, 2021, and March 31, 2020; |
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|
| · | Statements of other comprehensive loss (income) for the years ended March 31, 2022, March 31, 2021, and March 31, 2020; |
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| · | Statements of cash flows for the years ended March 31, 2022, March 31, 2021, and March 31, 2020; |
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| · | Statements of changes in equity for the years ended March 31, 2022, March 31, 2021, and March 31, 2020; and |
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| · | Notes to annual financial statements. |
| 75 |
| Table of Contents |
AMARC RESOURCES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
MARCH 31, 2022, 2021 and 2020
(Expressed in Canadian Dollars)
| 76 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Amarc Resources Ltd.,
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Amarc Resources Ltd. (‘the Company’), which comprise the consolidated statements of financial position as at March 31, 2022 and 2021 and the consolidated statements of loss, comprehensive income (loss), changes in (deficiency) equity and cash flows for each of the years in the three year period ended March 31, 2022, and a summary of significant accounting policies and other explanatory information (collectively referred to as the ‘consolidated financial statements’). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2022 and 2021 and its financial performance and its cash flows for each of the years in the three year period ended March 31, 2022, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Without modifying our opinion, we draw attention to Note 1 in the consolidated financial statements which indicates that the Company has no current source of revenue, has incurred losses from inception and is dependent upon its ability to secure new sources of financing. These conditions, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty that casts significant doubt as to the Company's ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
This issue also constitutes, from our perspective, a critical audit matter that was communicated to the audit committee and that: (i) relates to accounts or disclosures that are material to the consolidated financial statements; and (ii) involved, on our part, especially challenging, subjective, or complex judgements. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating this critical audit matter, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The principal considerations for our determination that the going concern uncertainty was a critical audit matter were: (i) that the formal reporting of such uncertainty involves a significant disclosure, the absence of which could constitute a material misstatement to a financial statement reader and, (ii) that, at the same time, it involves on our part the use of a high level of subjective judgement as we are required to consider the possible impact of future events that cannot currently be known and which in all likelihood will not be directly linked to any particular current or future financial results and reporting, or the lack thereof.
Addressing this matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures also included, among others, (i) obtaining and evaluating management’s assessment of the Company’s ability to remain a going concern; (ii) determining based on all other evidence available to us whether management’s assessment appeared to be fair and reasonable in the circumstances and, (iii) considering whether the resultant disclosure of these matters herein was consistent with the foregoing, in the context of the Company’s overall business activities, objectives and financial history.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (‘PCAOB’) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
| 77 |
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We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement, whether due to fraud or error. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
A critical audit matter was communicated above under ‘Going Concern’.
PCAOB ID - 0
CHARTERED PROFESSIONAL ACCOUNTANTS
July 29, 2022
We have served as the Company’s auditor since 1995.
| 78 |
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Amarc Resources Ltd. |
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Consolidated Statements of Financial Position |
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(Expressed in Canadian Dollars) |
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| March 31, |
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| 2022 |
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| 2021 |
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| Note |
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| ($) |
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ASSETS |
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Current assets |
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Cash |
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| 3 |
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Amounts receivable and other assets |
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| 6 |
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Marketable securities |
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| 4 |
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Non-current assets |
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Restricted cash |
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| 5 |
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Right-of-use asset |
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| 13 |
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Total assets |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities |
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Accounts payable and accrued liabilities |
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| 8 |
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Balances due to related parties |
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| 11 |
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Lease liability |
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| 13 |
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Non-current liabilities |
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Director's loan |
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| 9 |
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Lease liability |
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| 13 |
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Total liabilities |
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Shareholders' equity |
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Share capital |
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| 10 |
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Reserves |
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| 10 |
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Accumulated deficit |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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Total liabilities and shareholders' equity |
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Nature and continuance of operations (note 1) |
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Events after the reporting period (note 16) |
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The accompanying notes are an integral part of these consolidated financial statements. |
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/s/ Robert A. Dickinson |
| /s/ Scott D. Cousens |
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Robert A. Dickinson |
| Scott D. Cousens |
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Director |
| Director |
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| 79 |
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Amarc Resources Ltd. |
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Consolidated Statements of Loss |
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(Expressed in Canadian Dollars, except for weighted average number of common shares) |
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| Years ended March 31, |
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| Note |
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| 2022 |
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| 2021 |
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| 2020 |
| ||||
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| ($) |
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| ($) |
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| ($) |
| ||||
Expenses |
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Exploration and evaluation |
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| 7(b) |
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Assays and analysis |
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Drilling |
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| – |
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Environmental |
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| – |
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| – |
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Equipment rental |
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| – |
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Freight |
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| – |
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| – |
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Geological, including geophysical |
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Graphics |
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| – |
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| – |
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Helicopter and fuel |
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Property acquisition and assessments costs |
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Site activities |
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Socioeconomic |
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Technical data |
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| – |
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Travel and accommodation |
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Administration |
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Legal, accounting and audit |
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Office and administration |
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| 12(b) |
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Rent |
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| – |
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| – |
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Shareholder communication |
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Travel and accommodation |
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Trust and regulatory |
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Equity-settled share-based compensation |
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Cost recoveries |
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| 7(b) |
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| ( | ) |
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| ( | ) |
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| ( | ) | |
Property option proceeds |
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| 7(d) |
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| – |
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| ( | ) |
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| – |
| |
Gain on sale of mineral property |
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| 7(d) |
|
| – |
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| ( | ) |
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| – |
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Loss (income) before other items |
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| ( | ) |
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Other items |
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Finance income |
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| ( | ) |
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| ( | ) |
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| ( | ) |
Interest expense – director's loans |
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| 9 |
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Accretion expense - office lease |
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| – |
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| – |
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Other fee income |
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| 7(b) |
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| ( | ) |
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| – |
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| – |
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Amortization of Right-of-use asset |
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| – |
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| – |
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Transaction cost – director's loan |
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| 9 |
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Foreign exchange loss |
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Net (income) loss |
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Other comprehensive loss: |
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Items that will not be reclassified subsequently to loss: |
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Change in value of marketable securities |
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Other comprehensive (income) loss |
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Basic and diluted (income) loss per share |
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Weighted average number of common |
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shares outstanding |
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The accompanying notes are an integral part of these consolidated financial statements.
| 80 |
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Amarc Resources Ltd. |
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| |||
Consolidated Statements of Comprehensive Loss |
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(Expressed in Canadian Dollars) |
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| Years ended March 31, |
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| 2022 |
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| 2021 |
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| 2020 |
| |||
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Net income (loss) |
| $ | ( | ) |
| $ |
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| $ | ( | ) | |
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Other comprehensive income (loss): |
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Items that will not be reclassified subsequently to profit and loss: |
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Revaluation of marketable securities |
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| ( | ) |
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| ( | ) |
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| ( | ) |
Total other comprehensive income (loss) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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Comprehensive income (loss) |
| $ | ( | ) |
| $ |
|
| $ | ( | ) | |
The accompanying notes are an integral part of these consolidated financial statements.
| 81 |
| Table of Contents |
Amarc Resources Ltd. |
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| |||||||||||||||
Consolidated Statements of Changes in (Deficiency) Equity |
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(Expressed in Canadian Dollars, except for share information) |
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| Share capital |
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| Reserves |
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| Number of Shares |
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| Amount |
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| Share-based payments reserve |
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| Investment revaluation reserve |
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| Share warrants reserve |
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| Deficit |
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| Total |
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| |||||||
Balance at April 1, 2019 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
Net loss for the year |
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| – |
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| – |
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| – |
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| – |
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|
| – |
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| ( | ) |
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| ( | ) |
Other comprehensive (loss) for the year |
|
| – |
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| – |
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| – |
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| ( | ) |
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| – |
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| – |
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| ( | ) |
Total comprehensive loss |
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| – |
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| – |
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| ( | ) |
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| – |
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| ( | ) |
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| ( | ) |
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Issuance of share purchase warrants |
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| – |
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| – |
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| – |
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| – |
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| – |
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|
| ||
Issuance of common shares pursuant to property agreements |
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|
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| – |
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| – |
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| – |
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| – |
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|
| |||
Equity-settled share-based compensation |
|
| – |
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|
| – |
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|
|
|
|
| – |
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| – |
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|
| – |
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|
|
| ||
Gain on disposition of equity investments at FVTOCI |
|
| – |
|
|
| – |
|
|
| – |
|
|
|
|
|
| – |
|
|
| ( | ) |
|
| – |
| |
Balance at March 31, 2020 |
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|
|
| $ |
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| $ |
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| $ |
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| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||
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|
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Balance at April 1, 2020 |
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| ( | ) |
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| ( | ) | |||||
Net loss for the year |
|
| – |
|
|
| – |
|
|
| – |
|
|
| – |
|
|
| – |
|
|
|
|
|
|
| ||
Other comprehensive loss for the year |
|
| – |
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| – |
|
|
| – |
|
|
| ( | ) |
Total comprehensive loss |
|
| – |
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| – |
|
|
|
|
|
|
| ||
Equity-settled share-based compensation |
|
| – |
|
|
| – |
|
|
|
|
|
| – |
|
|
| – |
|
|
| – |
|
|
|
| ||
Shares issued through exercise of warrants |
|
|
|
|
|
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| – |
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 1, 2021 |
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) |
|
|
| |||||
Net income for the year |
|
| – |
|
|
| – |
|
|
| – |
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| ( | ) |
Other comprehensive loss for the year |
|
| – |
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| – |
|
|
| – |
|
|
| ( | ) |
Total comprehensive loss |
|
| – |
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| – |
|
|
| ( | ) |
|
| ( | ) |
Shares issued through exercise of warrants |
|
|
|
|
|
|
|
| – |
|
|
| – |
|
|
| ( | ) |
|
| – |
|
|
|
| |||
Equity-settled share-based compensation |
|
| – |
|
|
| – |
|
|
|
|
|
| – |
|
|
| – |
|
|
| – |
|
|
|
| ||
Balance at March 31, 2022 |
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
| 82 |
| Table of Contents |
Amarc Resources Ltd.
Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
|
|
|
| Years ended March 31, |
| |||||||||||
|
| Note |
|
| 2022 |
|
| 2021 |
|
| 2020 |
| ||||
|
|
|
| ($) |
|
| ($) |
|
| ($) |
| |||||
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) for the year |
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | ||
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Amortization of right-of-use asset |
|
| 13 |
|
|
|
|
|
| – |
|
|
| – |
| |
Equity-settled share-based compensation |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Finance income |
|
|
|
|
|
| – |
|
|
| – |
|
|
| ( | ) |
Non-cash property payments |
|
|
|
|
|
| – |
|
|
| – |
|
|
|
| |
Gain on sale of mineral property |
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| – |
|
Office lease accretion per IFRS 16 |
|
| 13 |
|
|
|
|
|
| – |
|
|
| – |
| |
Office base rent recorded as lease reduction per IFRS 16 |
|
| 13 |
|
|
| ( | ) |
|
| – |
|
|
| – |
|
Interest expense – director's loans |
|
| 9 |
|
|
|
|
|
|
|
|
|
| |||
Transaction cost – director's loan |
|
| 9 |
|
|
|
|
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|
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|
| |||
|
|
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|
|
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|
Changes in working capital items |
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|
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|
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|
|
|
|
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|
|
Amounts receivable and other assets |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||
Restricted cash |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Accounts payable and accrued liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Advanced contributions received |
|
| 6 |
|
|
| – |
|
|
| – |
|
|
| ( | ) |
Balances due to related parties |
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| ||
Net cash used in operating activities |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
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|
|
Investing activities |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from disposition of marketable securities |
|
|
|
|
|
| – |
|
|
| – |
|
|
|
| |
Proceeds from disposition of mineral properties |
|
|
|
|
|
| – |
|
|
|
|
|
| – |
| |
Interest received |
|
|
|
|
|
| – |
|
|
| – |
|
|
|
| |
Net cash provided by investing activities |
|
|
|
|
|
| – |
|
|
|
|
|
|
| ||
|
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|
Financing activities |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common shares pursuant to exercise of share purchase warrants |
|
| 9(c) |
|
|
|
|
|
|
|
| – |
| |||
Interest paid on director's loans |
|
|
|
|
|
| – |
|
|
| – |
|
|
| ( | ) |
Proceeds from director's loan |
|
|
|
|
|
| – |
|
|
| – |
|
|
|
| |
Repayment of director's loans |
|
|
|
|
|
| – |
|
|
| ( | ) |
|
| ( | ) |
Net cash (used in) financing activities |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) | ||
Cash, beginning balance |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Cash, ending balance |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
The accompanying notes are an integral part of these consolidated financial statements.
| 83 |
| Table of Contents |
1. | NATURE AND CONTINUANCE OF OPERATIONS |
Amarc Resources Ltd. (“Amarc” or the “Company”) is a company incorporated under the laws of the Province of British Columbia (“BC”). Its principal business activity is the acquisition and exploration of mineral properties. The Company’s mineral property interests are located in BC. The address of the Company’s corporate office is 14th Floor, 1040 West Georgia Street, Vancouver, BC, Canada V6E 4H1.
The Company is in the process of exploring its mineral property interests and has not yet determined whether its mineral property interests contain economically recoverable mineral reserves. The Company’s continuing operations are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to continue the exploration and development of its mineral property interests and to obtain the permits necessary to mine, and the future profitable production from its mineral property interest or proceeds from the disposition of its mineral property interests.
These consolidated financial statements as at and for the year ended March 31, 2022 (the “Financial Statements”) have been prepared on a going concern basis, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. As at March 31, 2022, the Company had cash of $
The Company will need to seek additional financing to meet its exploration and development objectives. The Company has a reasonable expectation that additional funds will be available when necessary to meet ongoing exploration and development costs. However, there can be no assurance that the Company will continue to be able to obtain additional financial resources or will achieve profitability or positive cash flows. If the Company is unable to obtain adequate additional financing, the Company will be required to re-evaluate its planned expenditures until additional funding can be raised through financing activities. These factors indicate the existence of a material uncertainty that casts significant doubt about the Company’s ability to continue as a going concern.
These Financial Statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.
The current outbreak of COVID-19, and any future emergence and spread of similar pathogens, could have a material adverse effect on global and local economic and business conditions, which may adversely impact Amarc’s business and results of operations and the operations of contractors and service providers. The extent to which the COVID-19 impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning its severity and the actions taken to contain the virus or treat its impact, among others. The adverse effects on the economy, the stock market and Amarc’s share price could adversely impact its ability to raise capital, with the result that our ability to pursue development of the JOY, IKE and DUKE Districts could be adversely impacted, both through delays and through increased costs. Any of these developments, and others, could have a material adverse effect on the Company’s business and results of operation and could delay its plans for development of its districts.
2. | SIGNIFICANT ACCOUNTING POLICIES |
The principal accounting policies applied in the preparation of these Financial Statements are described below. These policies have been consistently applied for all years presented, unless otherwise stated.
(a) | Statement of compliance |
These Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”), effective for the Company’s reporting year ended March 31, 2022.
| 84 |
| Table of Contents |
The Board of Directors of the Company authorized these Financial Statements for issuance on July 29, 2022.
(b) | Basis of presentation and consolidation |
These Financial Statements have been prepared on a historical cost basis, except for certain financial instruments classified as fair value through other comprehensive income, which are reported at fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting, except for cash flow information.
These Financial Statements include the financial statements of the Company and its wholly-owned subsidiary, 1130346 B.C. Ltd. (the “Subco”), incorporated under the laws of BC. The Subco was incorporated for the purposes of entering into an option agreement related to the JOY District. On March 30, 2021, Subco was dissolved, did not have any assets, liabilities, income or expenses, and all intercompany balances and transactions had been eliminated on consolidation.
Certain comparative amounts have been reclassified to conform to the presentation adopted in the current period.
(c) | Significant accounting estimates and judgements |
The preparation of the Financial Statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
The impacts of such estimates are pervasive throughout the Financial Statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Specific areas where significant estimates or judgments exist are:
| · | assessment of the Company’s ability to continue as a going concern; |
|
|
|
| · | the determination of categories of financial assets and financial liabilities; and |
|
|
|
| · | the carrying value and recoverability of the Company’s marketable securities. |
(d) | Foreign currency |
The functional and presentational currency of the Company is the Canadian Dollar (“CAD”).
Transactions in currencies other than the functional currency of the Company are recorded at the rates of exchange prevailing on the dates of transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates of exchange prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Gains and losses arising on translation are included in profit or loss for the year.
(e) | Financial instruments |
A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not measured at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to its acquisition. The directly attributable transaction costs of a financial asset classified at FVTPL are expensed in the period in which they are incurred.
| 85 |
| Table of Contents |
Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both the following conditions and is not designated as at FVTPL:
| · | it is held within a business model whose objective is to hold assets to collect contractual cash flows; and, |
|
|
|
| · | its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
These financial assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment losses are recognized in profit or loss. Any gain or loss on the derecognition of the financial asset is recognized in profit or loss.
Financial assets measured at fair value through other comprehensive income
A debt investment is measured at fair value through other comprehensive income (“FVTOCI”) if it meets both the following conditions and is not designated as at FVTPL:
| · | it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and, |
|
|
|
| · | its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
On the initial recognition of an equity instrument that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (“OCI”). This election is made on an investment-by-investment basis.
Debt investments measured at FVTOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses, and impairment are recognized in profit or loss. Other net gains and losses are measured in OCI. On de-recognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments measured at FVTOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.
Financial assets measured at fair value through profit or loss
All financial assets not classified as measured at amortized cost or measured at FVTOCI, as described above, are measured at FVTPL; this includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or measured at FVTOCI as FVTPL if doing so eliminates, or significantly reduces, an accounting mismatch that would otherwise arise.
These financial assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
Financial liabilities | Classification |
Accounts payable and accrued liabilities | |
Balance due to related parties | |
|
|
Financial assets |
Classification |
Cash | |
Marketable securities | |
Restricted cash | |
Amounts receivable and other assets |
| 86 |
| Table of Contents |
(f) | Exploration and evaluation expenditures |
Exploration and evaluation costs are costs incurred to discover mineral resources, and to assess the technical feasibility and commercial viability of the mineral resources found.
Exploration and evaluation expenditures include:
| · | costs associated with the acquisition of licences; |
|
|
|
| · | costs associated with the acquisition of exploration and evaluation assets, including mineral properties; and, |
|
|
|
| · | costs associated with exploration and evaluation activities. |
Exploration and evaluation costs are generally expensed as incurred until the technical feasibility and commercial viability of extracting a mineral resource has been determined and a positive decision to proceed to development has been made. However, if management concludes that future economic benefits are more likely than not to be realized, the costs of property, plant and equipment for use in the exploration and evaluation of mineral resources are capitalized.
Costs incurred before the Company has obtained the legal rights to explore an area are expensed. Costs incurred after the technical feasibility and commercial viability of extracting a mineral resource has been determined and a positive decision to proceed to development has been made are considered development costs and are capitalized.
Costs applicable to established mineral property interests where no further work is planned by the Company may, for presentation purposes only, be carried at nominal amounts.
(g) | Equipment |
Equipment is carried at cost, less accumulated depreciation and accumulated impairment losses.
The cost of equipment consists of the purchase price, any costs directly attributable to bringing the asset to the location and the condition necessary for its intended use, and an initial estimate of the costs of dismantling and removing the asset and restoring the site on which it is located.
Depreciation is provided at rates calculated to expense the cost of the equipment, less its estimated residual value, using the declining balance method at various rates ranging from
An item of equipment is derecognized upon disposal or when no material future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.
Where an item of equipment consists of major components with different useful lives, the components are accounted for as separate items of equipment. Expenditures incurred to replace a component of an item of equipment that is account for separately, including major inspection and overhaul expenditures, are capitalized.
As at March 31, 2022, all equipment had been fully depreciated. The Company did not purchase any equipment during the year ended March 31, 2022.
(h) | Share capital |
Common shares of the Company are classified as equity. Transaction costs directly attributable to the issuance of common shares and share purchase options are recognized as a deduction from equity, net of any tax effects.
When the Company issues common shares for consideration other than cash, the transaction is measured at fair value based on the quoted market price of the Company’s common shares on the date of issuance.
| 87 |
| Table of Contents |
(i) | Loss per share |
Loss per share is computed by dividing the losses attributable to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is determined by adjusting the losses attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares, such as options granted to employees. The dilutive effect of options assumes that the proceeds to be received on the exercise of share purchase options are applied to repurchase common shares at the average market price for the reporting period. Share purchase options are included in the calculation of dilutive earnings per share only to the extent that the market price of the common shares exceeds the exercise price of the share purchase options. The effect of anti-dilutive factors is not considered when computed diluted loss per share.
(j) | Equity-settled share-based payments |
The share purchase option plan allows employees and consultants of the Company to acquire shares of the Company. The fair value of share purchase options granted is recognized as an employee or consultant expense with a corresponding increase in the share-based payments reserve in equity. An individual is classified as an employee when the individual is an employee for legal and tax purposes (direct employee) or provides services similar to those performed by a direct employee.
For employees, fair value is measured at the grant date and each tranche is recognized on a straight-line basis over the period during which the share purchase options vest. The fair value of the share purchase options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the share purchase options were granted. At the end of each financial reporting period, the amount recognized as an expense is adjusted to reflect the actual number of share purchase options that are expected to vest.
Share-based payment transactions with non-employees are measured at the fair value of the goods and services received. However, if the fair value cannot be estimated reliably, the share-based payment transaction is measured at the fair value of the equity instrument granted at the date the entity obtains the goods or the counterparty renders the service.
(k) | Income taxes |
Income tax on the profit or loss for the years presented comprises of current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
The following temporary differences are not provided for:
| · | goodwill not deductible for tax purposes; |
|
|
|
| · | the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and |
|
|
|
| · | differences relating to investments in subsidiaries, associates, and joint ventures to the extent that they will probably not reverse in the foreseeable future. |
The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date applicable to the period of expected realization or settlement.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.
| 88 |
| Table of Contents |
Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities, when they relate to income taxes levied by the same taxation authority, and the Company intends to settle its current tax assets and liabilities on a net basis.
Flow-through Shares
The Company will, from time-to-time, issue flow-through common shares to finance a portion of its exploration programs. Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors. On issuance, the Company bifurcates the flow-through share into i) a flow-through share premium, equal to the estimated premium, if any, investors pay for the flow-through feature, which is recognized as a liability, and ii) share capital. Upon expenses being incurred, the Company derecognizes this liability and recognizes this premium as other income, offsetting any expense associated with the Company’s expenditure of the flow-through proceeds.
(l) | Restoration, rehabilitation and environmental obligations |
An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration or development of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, along with a corresponding liability at the time the obligation to incur such costs arises. The timing of the actual rehabilitation expenditure is dependent on a number of factors such as the life and nature of the project or asset, the conditions imposed by the relevant permits, and, when applicable, the jurisdiction in which the project or asset is located.
(m) | Operating segments |
(n) | Government assistance |
When the Company is entitled to receive the BC Mineral Exploration Tax Credit (“BCMETC”) and other government grants, this government assistance is recognized as a cost recovery when there is reasonable assurance of recovery. Any amounts accrued or received typically remain subject to review and revision by government authorities. It is not possible to predict the occurrence or outcome of such actions in advance.
(o) | Adoption of IFRS 16, Leases (“IFRS 16”) |
In January 2016, the IASB issued IFRS 16, replacing IAS 17 - Leases. IFRS 16 provides a single lessee accounting model and requires the lessee to recognize assets and liabilities for all leases on its statement of financial position, providing the reader with greater transparency of an entity’s lease obligations.
The Company elected to use the modified retrospective transition approach, which provides lessees a method for recording existing leases at adoption with no restatement of prior period financial information. Under this approach, a lease liability was recognized at January 1, 2019 in respect of leases previously classified as operating leases, measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at transition. The associated right-of-use assets were measured at amounts equal to the respective lease liabilities, subject to certain adjustments allowed under IFRS 16.
All leases are accounted for by recognizing a right-of-use asset and a lease liability except for:
| · | Leases of low value assets; and |
|
|
|
| · | Leases with a duration of twelve months or less. |
| 89 |
| Table of Contents |
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by the interest rate implicit in the lease, or if that rate cannot be readily determined, the Company’s incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
| · | Amounts expected to be payable under any residual value guarantee; |
|
|
|
| · | The exercise price of any purchase option granted if it is reasonable certain to assess that option; |
|
|
|
| · | Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised. |
|
|
|
| · | Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for: |
|
|
|
| · | Lease payments made at or before commencement of the lease; |
|
|
|
| · | Initial direct costs incurred; and |
|
|
|
| · | The amount of any provision recognized where the Company is contractually required to dismantle, remove or restore the leased asset. |
Lease liabilities, on initial measurement, increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made.
Right-of-use assets are amortized on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if this is judged to be shorter than the lease term.
When the Company revises its estimate of the term of any lease, it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases, an equivalent adjustment is made to the carrying value.
3. | CASH |
The Company’s cash is invested in business and savings accounts, which are available on demand by the Company.
4. | MARKETABLE SECURITIES |
As at March 31, 2022, the fair value of its current holdings was $
As at March 31, 2022, the Company held the following marketable securities:
Company |
| Shares/Warrants Held |
|
| Cost |
|
| Fair Value |
|
| Fair Value Increase (Decrease) |
| ||||
|
| (#) |
|
| ($) |
|
| ($) |
|
| ($) |
| ||||
Carlyle Commodities Corp - Shares |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Carlyle Commodities Corp - Warrants |
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
Other |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
| ( | ) | |||
| 90 |
| Table of Contents |
5. | RESTRICTED CASH |
Restricted cash represents amounts held in support of exploration permits. The amounts are refundable subject to the consent of regulatory authorities upon completion of any required reclamation work on the related projects.
6. | AMOUNTS RECEIVABLE AND OTHER ASSETS |
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
|
| ($) |
|
| ($) |
| ||
Sales tax refundable |
|
|
|
|
|
| ||
Contribution receivable (note 7(b)) |
|
|
|
|
|
| ||
Prepaid Insurance and expense |
|
|
|
|
|
| ||
Total |
|
|
|
|
|
| ||
7. | EXPLORATION AND EVALUATION EXPENSES AND COST RECOVERIES |
Below is a summary of the Company’s major exploration property interests, together with the material property transactions relating to the three year period ended March 31, 2022.
(a) | IKE District |
The IKE Property claims carry a Net Smelter Return (“NSR”) royalty obligation of
The Granite Property claims are subject to a
The entire project is subject to a 1% NSR royalty from mine production capped at a total of $
(b) | JOY District |
The JOY District, located in north-central BC, comprises the JOY and PINE Properties, and also the “Staked Claims” acquired directly by the Company. In November 2016, the Company entered into a purchase agreement with a private company wholly-owned by one of its directors to purchase
In addition, the Company concluded agreements with each of Gold Fields Toodoggone Exploration Corporation (“GFTEC”) and Cascadero Copper Corporation (“Cascadero”) in mid-2017 pursuant to which the Company can purchase
In October 2018, Amarc acquired a
In November 2019 Amarc entered into a purchase agreement with two prospectors to acquire
In December 2019, the Company amended the GFTEC Agreement to purchase GFTEC’s
| 91 |
| Table of Contents |
The PINE Property is subject to a 3% underlying NSR royalty payable to a former owner. The Company has reached an agreement with the former owner to cap the 3% NSR royalty at $5 million payable from production for consideration totaling $
JOY District Agreement with Freeport
On May 11, 2021, the Company and Freeport-McMoRan Mineral Properties Canada Inc. (“Freeport”), a wholly-owned subsidiary of Freeport-McMoRan Inc. (NYSE:FCX) entered into a Mineral Property Earn-in Agreement (the “Agreement”) whereby Freeport may acquire up to a
Under the terms of the Agreement, Freeport has a two-stage option to earn up to a 70% ownership interest in the mineral claims comprising the JOY District, plus other rights and interests, over a 10 year period.
To earn an initial
These optional earn-in expenditures can be accelerated by Freeport at its discretion. Amarc will be operator during the initial earn-in period. Once Freeport has acquired such 60% interest, Amarc and Freeport will proceed to operate the JOY District through a jointly owned corporation with Freeport assuming project operatorship.
Once Freeport has finalized its earned ownership interest at either the 60% or
During the year ended March 31, 2022, the Company incurred eligible and recoverable project costs of $
During the year ended March 31, 2022, the Company also earned a fee of $
(c) | DUKE District |
The DUKE District is located in central BC. In November 2016, the Company entered into a purchase agreement with a private company wholly-owned by one of its directors (note 11(c)) to purchase a
(d) | Other property transactions |
During the comparative year, Amarc operated programs on two exploration properties owned by a related party, Jake and Mack (the “Operated Properties”), for the claim optionee on a cost recovery basis (note 11(c)).
| 92 |
| Table of Contents |
During the comparative year, Amarc received a non-refundable payment of US$
Included in cost recoveries are BCMETC refunds totaling $
On December 16, 2020 (the “Closing Date”), the Company closed the sale of its Newton property (“Newton”) located in south-central British Columbia (“BC”) to Isaac Mining Corp.(“IMC”), an arms- length private company and a wholly-owned subsidiary of Carlyle Commodities Corp. (“Carlyle”) (CSE:CCC, FSE:1OZ, OTC:DLRYF).
8. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
|
| ($) |
|
| ($) |
| ||
Accounts payable |
|
|
|
|
|
| ||
Accrued liabilities |
|
|
|
|
|
| ||
Total |
|
|
|
|
|
| ||
| 93 |
| Table of Contents |
9. | DIRECTOR’S LOAN |
|
| Year ended |
|
| Year ended |
| ||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
|
| ($) |
|
| ($) |
| ||
Opening balance |
|
|
|
|
|
| ||
Principal repayment |
|
| – |
|
|
| ( | ) |
Amortization of transaction costs |
|
|
|
|
|
| ||
Closing balance |
|
|
|
|
|
| ||
|
| Year ended |
|
| Year ended |
| ||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
|
| ($) |
|
| ($) |
| ||
Non-current portion |
|
|
|
|
|
| ||
Total |
|
|
|
|
|
| ||
Finance expenses |
| For the year ended March 31, |
| |||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
|
| ($) |
|
| ($) |
|
| ($) |
| |||
Interest on loan |
|
|
|
|
|
|
|
|
| |||
Amortization of transaction costs |
|
|
|
|
|
|
|
|
| |||
Total |
|
|
|
|
|
|
|
|
| |||
In December 2019, the Company entered into a loan extension and amendment agreement (the “Loan”) with a director and significant shareholder of the Company (the “Lender”), pursuant to which a previous loan agreement with a maturity date of November 26, 2019 was extended for five years or earlier pending the achievement of certain financing milestones. The Loan has a principal sum of $
Pursuant to the Loan, the Company issued to the Lender a loan bonus comprising of
10. | SHARE CAPITAL AND RESERVES |
|
|
(a) | Authorized and outstanding share capital |
The Company’s authorized share capital consists of an unlimited number of common shares without par value (“Common Shares”) and an unlimited number of preferred shares. All issued Common Shares are fully paid. No preferred shares have been issued.
On August 20, 2020,
On October 2, 2020,
Approximately $
On December 2, 2021,
As at March 31, 2022, the amount of flow-through proceeds remaining to be expended is approximately $
| 94 |
| Table of Contents |
As at March 31, 2022, there were
(b) | Share purchase options |
On March 9, 2022, the Company granted
The following summarizes changes in the Company’s share purchase options (the “Options”):
March 31, |
|
| March 31, |
| ||||||||||||
2022 |
|
| 2021 |
| ||||||||||||
|
| Weighted Average Exercise Price |
|
| Number of Options |
|
| Weighted Average Exercise Price |
|
| Number of Options |
| ||||
Outstanding – beginning balance |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Grant |
|
|
|
|
|
|
|
| - |
|
|
| - |
| ||
Outstanding – ending balance |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| 95 |
| Table of Contents |
The following summarizes information on the options outstanding and exercisable as at March 31, 2022:
|
|
| Options Outstanding |
|
| Options Exercisable |
| |||||||||||||
|
|
|
|
| Weighted Average Remaining Contractual |
|
| Number of |
|
| Weighted Average Remaining Contractual |
|
| Number of |
| |||||
Exercise price |
|
| Expiry date |
| Life (years) |
|
| Options |
|
| Life (years) | Options |
| |||||||
|
|
| 04-Oct-24 |
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
| 09-Mar-25 |
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
| 09-Mar-27 |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
(c) | Share purchase warrants |
The following common share purchase warrants were outstanding at March 31, 2022 and 2021:
|
| Exercise |
|
| March 31, |
|
| March 31, |
| |||
|
| Price |
|
| 2022 |
|
| 2021 |
| |||
Issued pursuant to the Loan (note 9) |
|
|
|
|
|
|
|
|
| |||
Exercised |
|
|
|
|
|
| ( | ) |
|
| ( | ) |
Total |
|
|
|
|
|
|
|
|
|
| ||
(i) | 2019 loan bonus warrants |
In December 2019,
11. | RELATED PARTY TRANSACTIONS |
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
Balances due to related parties |
| ($) |
|
| ($) |
| ||
Bookskipper Accounting & Tax Services |
|
| – |
|
|
|
| |
Hunter Dickinson Services Inc. |
|
|
|
|
|
| ||
Robert Dickinson (interest payable) |
|
|
|
|
|
| ||
United Mineral Services Ltd. |
|
|
|
|
|
| ||
Thomas Wilson (CFO fees) |
|
|
|
|
| – |
| |
Total |
|
|
|
|
|
| ||
(a) | Transactions with key management personnel |
Key management personnel (“KMP”) are those persons that have the authority and responsibility for planning, directing, and controlling the activities of the Company, directly and indirectly, and by definition include all the directors of the Company.
Note 9 includes the details of a director’s loan. Note 7(b) and 7(c) includes the details of the acquisition of mineral property interests from a private entity wholly-owned by one of the directors of the Company.
During the year ended March 31, 2022 and 2021, the Company’s President, Chief Executive Officer and Director; and Corporate Secretary provided services to the Company under a service agreement with Hunter Dickinson Services Inc. (note 11(b)).
During the year ended March 31, 2022, the Company incurred fees totaling $
During the year ended March 31, 2022, the Company recorded share-based compensation expense of $
| 96 |
| Table of Contents |
(b) | Hunter Dickinson Services Inc. |
Hunter Dickinson Inc. (“HDI”) and its wholly-owned subsidiary Hunter Dickinson Services Inc. (“HDSI”) are private companies established by a group of mining professionals. HDSI provides contract services for a number of mineral exploration and development companies, and also to companies that are outside of the mining and mineral development space. Amarc acquires services from a number of related and arms-length contractors, and it is at Amarc’s discretion that HDSI provides certain contract services.
The Company has one director in common with HDSI, namely Robert Dickinson. Also, the Company’s President, Chief Executive Officer and Director, and Corporate Secretary are employees of HDSI and are contracted to work for the Company under an employee secondment agreement between the Company and HDSI.
Pursuant to an agreement dated July 2, 2010, HDSI provides certain cost effective technical, geological, corporate communications, regulatory compliance, and administrative and management services to the Company, on a non-exclusive basis as needed and as requested by the Company. As a result of this relationship, the Company has ready access to a range of diverse and specialized expertise on a regular basis, without having to engage or hire full-time employees or experts. The Company benefits from the economies of scale created by HDSI which itself serves several clients both within and external to the exploration and mining sector.
The Company is not obligated to acquire any minimum amount of services from HDSI. The monetary amount of the services received from HDSI in a given period of time is a function of annually set and agreed charge-out rates for and the time spent by each HDSI employee engaged by the Company.
HDSI also incurs third-party costs on behalf of the Company. Such third-party costs include, for example, capital market advisory services, communication services and office supplies. Third-party costs are billed at cost, without markup.
There are no ongoing contractual or other commitments resulting from the Company’s transactions with HDSI, other than the payment for services already rendered and billed. The agreement may be terminated upon 60 days’ notice by either the Company or HDSI.
The following is a summary of transactions with HDSI that occurred during the reporting period:
|
| Years ended March 31, |
| |||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
(rounded to the nearest thousand CAD) |
| ($) |
|
| ($) |
|
| ($) |
| |||
Services received from HDSI and as requested by the Company |
|
|
|
|
|
|
|
|
| |||
Information technology – infrastructure and support services |
|
|
|
|
|
|
|
|
| |||
Office rent |
|
|
|
|
| – |
|
|
| – |
| |
Reimbursement, at cost, of third-party expenses |
|
|
|
|
|
|
|
|
|
|
|
|
incurred by HDSI on behalf of the Company |
|
|
|
|
|
|
|
|
| |||
Total |
|
|
|
|
|
|
|
|
| |||
| 97 |
| Table of Contents |
(c) | United Mineral Services Ltd. |
United Mineral Services Ltd. (“UMS”) is a private company wholly-owned by one of the directors of the Company. UMS is engaged in the acquisition and exploration of mineral property interests. The following is a summary of transactions with UMS that occurred during the reporting period:
Transactions with UMS |
| Years ended March 31, |
| |||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
(rounded to the nearest thousand CAD) |
| ($) |
|
| ($) |
|
| ($) |
| |||
Services received from UMS and as requested by the Company |
|
| – |
|
|
| – |
|
|
|
| |
Interest and finance charges |
|
| – |
|
|
| – |
|
|
|
| |
Exploration expenses and related |
|
|
|
|
|
|
|
|
|
|
|
|
reimbursement, incurred by the Company |
|
|
|
|
|
|
|
|
|
|
|
|
on behalf of UMS |
|
|
|
|
|
|
|
|
| |||
Total |
|
|
|
|
|
|
|
|
| |||
Refer also to note 9.
12. | SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED STATEMENTS OF LOSS |
|
|
(a) | Employees’ salaries and benefits |
The employees’ salaries and benefits included in exploration and evaluation expenses and administration expenses are as follows:
|
| Years ended March 31, |
| |||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
Employee salaries and benefits |
| ($) |
|
| ($) |
|
| ($) |
| |||
Exploration and evaluation expenses |
|
|
|
|
|
|
|
|
| |||
Administration expenses |
|
|
|
|
|
|
|
|
| |||
Total |
|
|
|
|
|
|
|
|
| |||
| (1) | rounded to the nearest thousand dollar |
| (2) | includes salaries and benefits included in office and administration expenses (note 12(b)) and other salaries and benefits expenses classified as administration expenses |
(b) | Office and administration expenses |
Office and administration expenses include the following:
|
| Years ended March 31, |
| |||||||||
|
| 2022 |
|
| 2021 |
|
| 2020 |
| |||
|
| ($) |
|
| ($) |
|
| ($) |
| |||
Salaries and Benefits |
|
|
|
|
|
|
|
|
| |||
Data processing and retention |
|
|
|
|
|
|
|
|
| |||
Insurance |
|
|
|
|
|
|
|
|
| |||
Other office expenses |
|
|
|
|
|
|
|
|
| |||
Total |
|
|
|
|
|
|
|
|
| |||
(1) rounded to the nearest thousand dollar
13. | OFFICE LEASE – RIGHT OF USE ASSET AND LEASE LIABILITY |
The Company subleases corporate offices in Vancouver, BC from HDSI under a lease agreement dated May 1, 2021, and the lease expires on April 29, 2026. Refer to Note 2 (o) for details regarding the 2019 adoption of IFRS 16.
Right-of-use asset
A summary of the changes in the right-of-use asset for the year ended March 31, 2022 and 2021 is as follows:
|
| 2022 |
| |
|
| ($) |
| |
Balance at March 31, 2021 |
|
| – |
|
Addition |
|
|
| |
Amortization |
|
| ( | ) |
Total |
|
|
| |
Lease liability
On May 1, 2021, the Company entered into lease agreement which resulted in the lease liability of $
| 98 |
| Table of Contents |
A summary of changes in the lease liability during the year ended March 31, 2022 and 2021 are as follows:
|
| 2022 |
| |
Lease Liability |
| ($) |
| |
Balance at March 31, 2021 |
|
| – |
|
Addition |
|
|
| |
Lease payment - base rent portion |
|
| ( | ) |
Lease Liability - accretion expense |
|
|
| |
Balance at March 31, 2022 |
|
|
| |
Current Portion |
|
|
| |
Long-term Portion |
|
|
| |
The following is a schedule of the Company’s future lease payments (base rent portion) under lease obligations:
|
| 2022 |
| |
Future lease payments (base rent portion only) |
| ($) |
| |
Fiscal 2023 (April 1, 2022 to March 31, 2023) |
|
|
| |
Fiscal 2024 (April 1, 2023 to March 31, 2024) |
|
|
| |
Fiscal 2025 (April 1, 2024 to March 31, 2025) |
|
|
| |
Fiscal 2026 (April 1, 2025 to March 31, 2026) |
|
|
| |
Fiscal 2027 (April 1, 2026 to April 29, 2026) |
|
|
| |
Total undiscounted lease payments |
|
|
| |
Less: imputed interest |
|
| ( | ) |
Lease liability as at March 31, 2022 |
|
|
| |
14. | INCOME TAXES |
|
|
(a) | Provision for current tax |
No provision has been made for current income taxes as the Company has no taxable income.
(b) | Provision for deferred tax |
As future taxable profits of the Company are uncertain, no deferred tax asset has been recognized.
At March 31, 2022, the Company has unused non-capital loss carry forwards of approximately $11,00,000 (March 31, 2021 - $
At March 31, 2022, the Company has resource tax pools of approximately $
(c) | Reconciliation of effective tax rate |
|
| March 31, 2022 |
|
| March 31, 2020 |
| ||
Income (loss) for the year |
| $ |
|
| $ |
| ||
Total income tax expense |
|
| – |
|
|
| – |
|
Loss excluding income tax |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Income tax expense (recovery) using the Company’s tax rate |
|
| ( | ) |
|
|
| |
Non-deductible expenses and other |
|
|
|
|
| ( | ) | |
Temporary difference booked to reserve |
|
| ( | ) |
|
|
| |
Deferred income tax assets not recognized |
|
|
|
|
|
| ||
|
| $ | – |
|
| $ | – |
|
The Company’s statutory tax rate was
| 99 |
| Table of Contents |
(d) | Deductible temporary differences |
At March 31, 2022, the Company had the following deductible temporary differences for which no deferred tax asset was recognized:
Expiry |
| Tax losses (capital) |
|
| Tax losses (non-capital) |
|
| Resources pools |
|
| Other |
| ||||
Within one year |
| $ | – |
|
| $ | – |
|
| $ | – |
|
| $ | – |
|
One to five years |
|
| – |
|
|
| – |
|
|
| – |
|
|
| – |
|
After five years |
|
| – |
|
|
|
|
|
| – |
|
|
|
| ||
No expiry date |
|
|
|
|
| – |
|
|
|
|
|
|
| |||
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
15. | FINANCIAL RISK MANAGEMENT |
|
|
(a) | Capital management objectives |
The Company’s primary objectives when managing capital are to safeguard the Company’s ability to continue as a going concern so that it can continue to provide returns for shareholders, and to have sufficient liquidity available to fund ongoing expenditures and suitable business opportunities as they arise.
The Company considers the components of shareholders’ equity as well as its cash as capital. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue equity, sell assets, or return capital to shareholders as well as issue or repay debt.
The Company’s investment policy is to invest its cash in highly liquid, short-term, interest-bearing investments having maturity dates of three months or less from the date of acquisition, which are readily convertible into known amounts of cash.
The Company is not subject to any imposed equity requirements.
There were no changes to the Company’s approach to capital management during the year ended March 31, 2022.
(b) | Carrying amounts and fair values of financial instruments |
The Company’s marketable securities are carried at fair value based on quoted prices in active markets.
As at March 31, 2022 and 2021, the carrying values of the Company’s financial assets and financial liabilities approximate their fair values.
(c) | Financial instrument risk exposure and risk management |
The Company is exposed in varying degrees to a variety of financial instrument-related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented treasury policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:
Credit risk
Credit risk is the risk of potential loss to the Company if a counterparty to a financial instrument fair to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets, including cash, and amounts receivable and other assets. The carrying values of these financial assets represent the Company’s maximum exposure to credit risk.
The Company limits the exposure to credit risk by only investing its cash in high-credit quality financial institutions in business and savings accounts, which are available on demand by the Company for its programs.
| 100 |
| Table of Contents |
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Company ensures that there is sufficient cash in order to meet its short-term business requirements after taking into account the Company’s holdings of cash.
The Company has sufficient cash to meet its commitments associated with its financial liabilities in the near term, other than the amounts payable to related parties.
Interest rate risk
The Company is subject to interest rate risk with respect to its investments in cash. The Company’s policy is to invest cash at variable rates of interest and cash reserves are to be maintained in cash in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates when cash matures impact interest income earned.
As at March 31, 2022 and 2021, the Company’s exposure to interest rate risk was nominal.
Price risk
Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company is subject to price risk in respect of its investments in marketable securities.
As at March 31, 2022 and 2021, the Company’s exposure to price risk was not significant in relation to these Financial Statements.
16. | EVENTS AFTER THE REPORTING PERIOD |
The Company entered into a Second Loan Amendment Agreement dated May 25, 2022, pursuant to which it has agreed to a $
The Loan proceeds are being used to pay the initial option requirement of $
On June 15, a separate 6-month facility
On July 8, 2022, the Company announced that it had engaged Kin Communications Inc. (“Kin”) to assist with its investor relations activities. Under the terms of the Investor Relations Agreement with Kin, Kin has agreed to assist Amarc with investor relations, including communicating with and marketing to potential investors, shareholders and media contacts for a period of twelve months and on a month-to-month basis thereafter. In consideration for the services, the Company has agreed to pay Kin $
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ITEM 19 EXHIBITS
The following Exhibits have been filed with the Company's Annual Report on Form 20-F in previous years:
Exhibit Number |
| Description of Exhibit |
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1.1 |
| Articles of Amarc Resources Ltd., as amended (1) |
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4.1 |
| Amended Share Option Plan of Amarc Resources Ltd. dated for reference September 21, 2004, as amended. (2) |
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4.1 |
| Corporate Services Agreement between Amarc Resources Ltd. and Hunter Dickinson Services Inc. dated June 1, 2008 as superseded by the Services Agreement dated July 2, 2010. (2) |
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11.1 |
| Code of Ethics (2) |
(1) | Incorporated by reference to the Company's Annual Report on Form 20-F for the year ended March 31, 2010, filed with the Securities and Exchange Commission on September 30, 2010. |
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(2) | Incorporated by reference to the Company's Annual Report on Form 20-F for the year ended March 31, 2008, filed with the Securities and Exchange Commission on October 7, 2008. |
The following exhibits are included with this Annual Report on Form 20-F:
Exhibit Number |
| Description of Exhibit |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
AMARC RESOURCES LTD.
/s/ Thomas Wilson
Chief Financial Officer
DATED: August 12, 2022
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EXHIBIT 12.1
SARBANES-OXLEY CEO CERTIFICATION
I, Diane S. Nicolson, Chief Executive Officer of Amarc Resources Ltd., certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Amarc Resources Ltd.; | |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; | |
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| 4. | The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: | |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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| (b)
| Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and |
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| 5. | The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): | |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
Date: August 12, 2022
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| /s/ Diane S. Nicolson |
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| By: | Diane S. Nicolson |
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| Title: | Chief Executive Officer |
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EXHIBIT 12.2
SARBANES-OXLEY CEO CERTIFICATION
I, Thomas Wilson, Chief Financial Officer of Amarc Resources Ltd., certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Amarc Resources Ltd.; | |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report; | |
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| 4. | The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have: | |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and |
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| 5. | The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions): | |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting. |
| Date: | August 12, 2022 |
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| /s/ Thomas Wilson |
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| By: | Thomas Wilson |
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| Title: | Chief Financial Officer |
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EXHIBIT 13.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Diane S. Nicolson, Chief Executive Officer of Amarc Resources Ltd. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(i) the Annual Report on Form 20-F of the Company for the fiscal year ended March 31, 2022 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 12, 2022
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| /s/ Diane S. Nicolson |
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| By: | Diane S. Nicolson |
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| Title: | Chief Executive Officer |
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This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 20-F. A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies this Annual Report on Form 20-F pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
EXHIBIT 13.2
CERTIFICATION OF
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas Wilson, Chief Financial Officer of Amarc Resources Ltd. (the “Company”), hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(i) the Annual Report on Form 20-F of the Company for the fiscal year ended March 31, 2022 (the “Annual Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii) the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 12, 2022
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| /s/ Thomas Wilson |
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| By: | Thomas Wilson |
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| Title: | Chief Financial Officer |
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This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Company’s Annual Report on Form 20-F. A signed original of this statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies this Annual Report on Form 20-F pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.