The Trustees fully documented all assets and invited bids from interested parties. The Company prepared and submitted a bid; however, LNS Greenland A/S was the highest bidder and was granted the Aappaluttoq Mine Licence by the Greenland government. In September 2018, the Trustee notified the Company that they were to receive a dividend distribution of DKK 3,158,108.20 (CAD $638,254) on the closure of the Estate. The redistribution of the remaining value was on a pro-rata basis determined by debt ownership at the time of the TNGG bankruptcy.
Danes got the mine and we got the shaft
Demand loans bear interest at the rate of 5% per annum. The loans are due to a former director for funds loaned to the Company during the year ended December 31, 2016 and an arm’s length third party for funds loaned to the Company during the year ended December 31, 2019. b) The Company had unconditionally and irrevocably guaranteed repayment to Greenland Ventures of the loan principal, accrued interest and any costs and expenses payable in connection with the term loan to TNGG. As a result of the voluntary bankruptcy and loss of control of TNGG, the term loan was deconsolidated from the Company’s financial statements. Two claims of DKK 361,461 and DKK 11,753,910 (as at June 30, 2020 approximately CAD $2,489,915) respectively had been filed against the Estate by Greenland Ventures relating to the loan guaranteed by True North. Greenland Ventures received dividend distributions of DKK 28,092.93 and DKK 885,425.12 respectively (approximately CAD $184,162) from the Estate in settlement of these claims. The guarantee provides that whenever TNGG does not pay any amount when due under the agreement, then True North shall immediately on demand pay the amount as if it was the principal obligor. In June 2017, Greenland Ventures issued a demand for repayment of principal and interest (DKK 12,165,675 (CAD $2,475,472) as at May 24, 2017) and a provision has been recorded for the amount demanded plus interest that has accrued on the outstanding balance at the rate of 2% per month from May 24, 2017 to June 30, 2020 (DKK 10,624,332 (CAD $2,183,481)). On February 7, 2019, the loan guarantee payable to Greenland Ventures was assigned Leucadia Finance Partners Inc. (“Leucadia”) for the aggregate purchase price of $350,000. Subsequent to the date of the assignment, the Company made loan payments in aggregate of $394,680.
The carrying value of the Company’s cash and cash equivalents, accounts receivable and deposits are representative of their respective fair value at June 30, 2020 and December 31, 2019 due to their short term nature. The fair value of accounts payable and loans payable may be less than the carrying value as a result of the Company’s credit and liquidity risk.
b) Management of financial risk
The Company’s financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk and interest risk:
i) Currency risk The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. During 2017, the guarantee provided by the Company on the loan to TNGG from Greenland Ventures was demanded (note 7(b)) so the Company is exposed to risk due to change in currency exchange rates between Canada and Greenland and certain expenses that were incurred in US dollars.
At June 30, 2020, the Company is exposed to currency risk through the following assets and liabilities denominated in US dollars and Danish krone:
