A2 Gold Corp. — Interim / Quarterly Report 2021

Feb 25, 2021

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Allegiant Gold Ltd. 1090 Hamilton Street Vancouver, B.C. V6B 2R9 Canada

Condensed Interim Consolidated Financial Statements

Three Month Period Ended December 31, 2020

(Unaudited - Expressed in Canadian Dollars)

NOTICE TO READER

The accompanying unaudited condensed interim consolidated financial statements have been prepared by and are the responsibility of the management. The Company's independent auditor has not performed a review of these interim financial statements.

ALLEGIANT GOLD LTD.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

(Unaudited)

(Expressed in Canadian dollars) (Unaudited)
	December 31,	September 30,
	2020	2020
	($)	($)
ASSETS
Current assets
Cash	1,915,964	2,875,470
Short-term investments (Note 4)	897,521	659,149
Receivables	35,151	24,511
Prepaid expenses	88,364	117,132
Total current assets	2,937,000	3,676,262
Non-current assets
Reclamation bonds (Note 6)	281,172	290,960
Right-of-use asset (Note 5)	95,110	107,034
Exploration and evaluation assets(Note 7)	24,694,306	25,501,610
TOTAL ASSETS	28,007,588	29,575,866
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities (Note 11)	299,127	284,123
Currentportion of lease liability (Note 5)	23,606	23,606
Total current liabilities	322,733	307,729
Non-current liabilities
Asset retirement obligation (Note 9)	219,201	228,573
CEBA loan (Note 8)	60,000	40,000
Lease liability (Note 5)	76,811	87,067
Due to Orea MiningCorp.(Note 11)	-	1,545,714
TOTAL LIABILITIES	678,745	2,209,083
SHAREHOLDERS' EQUITY
Share capital (Note 10)	29,063,313	27,913,934
Subscriptions receivable (Notes 10 and 11)	-	(100,000)
Reserves (Note 10)	4,507,230	5,674,434
Deficit	(6,241,700)	(6,121,585)
	27,328,843	27,366,783
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	28,007,588	29,575,866

Nature of operations and going concern (Note 1) Subsequent events (Note 16) Commitment (Note 14)

On behalf of the Board of Directors:

"Peter Gianulis"	"Shawn Nichols"
Director	Director

The accompanying notes are an integral part of these condensed interim consolidated financial statements

ALLEGIANT GOLD LTD.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

(Expressed in Canadian dollars)

(Unaudited)

(Expressed in Canadian dollars) (Unaudited)
	Three Month	Three Month
	Period Ended	Period Ended
	December 31, 2020	December 31, 2019
	($)	($)
Operating expenses
Administration and office (Note 11)	24,896	36,728
Depreciation (Note 5)	7,272	-
Director fees (Note 11)	32,910	18,000
Investor relations	133,940	3,247
Management fees (Note 11)	88,134	77,404
Option payments received (Note 7)	-	-
Professional fees (Note 11)	104,742	52,072
Share-based payments (Note 10)	66,525	-
Transfer agent and filing fees	26,428	17,734
Travel	10,222	17,264
	(495,069)	(222,449)
Interest income (expense)	(2,530)	2,221
Gain (loss) on short-term investments (Note 4)	(73,155)	(97,859)
Gain on extinguishment of Grid Note (Note 11)	486,211	-
Accretion expense (Note 11)	(13,962)	(50,563)
Foreign exchangegain(loss)	(21,610)	(2,862)
Net loss	(120,115)	(371,512)
Item that may be reclassified to net income (loss)
Exchange differences on translatingforeign operations	(1,181,942)	(316,957)
Comprehensive loss	(1,302,057)	(688,469)
Earnings (loss) per share:
Basic	(0.00)	(0.01)
Diluted	(0.00)	(0.01)
Weighted average common shares outstanding:
Basic	76,557,360	61,843,850
Diluted	76,557,360	61,843,850

The accompanying notes are an integral part of these condensed interim consolidated financial statements

ALLEGIANT GOLD LTD.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

(Unaudited)

ALLEGIANT GOLD LTD. Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited)
	Three Month	Three Month
	Period Ended	Period Ended
	**December 31, 2020 **	December 31, 2019
	($)	($)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net loss	(120,115)	(371,512)
Adjusted for items not involving cash:
Accretion	13,962	50,563
Depreciation	7,272	-
Interest expense on lease liability	3,975	-
Loss (gain) on short-term investments	73,155	97,859
Loss on extinguishment of Grid Note	(486,211)	-
Share-based payments	66,525	-
Unrealized foreign exchange (gain) loss	(30,902)	1,185
Changes in non-cash working capital:
Prepaid expenses and receivables	18,128	(13,322)
Accountspayable and accrued liabilities	15,004	21,634
	(439,207)	(213,593)
INVESTING ACTIVITIES
Exploration and evaluation expenditures	(695,157)	(18,392)
Reclamation bonds	(3,297)	42,260
Proceeds from sale of short-term investments	39,617	272,913
Interest received	-	2,221
	(658,837)	299,002
FINANCING ACTIVITIES
Common shares issued	125,000	-
Payments on lease liability	(9,382)	-
Proceeds from CEBA loan	20,000	-
	135,618	-
Change in cash	(962,426)	85,409
Effect of exchange rate changes on cash denominated in a foreign currency	2,920	(2,286)
Cash, beginning ofperiod	2,875,470	401,455
Cash, end ofperiod	1,915,964	484,578

Supplemental cash flow information (Note 15)

The accompanying notes are an integral part of these condensed interim consolidated financial statements

ALLEGIANT GOLD LTD.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity

(Expressed in Canadian dollars)

(Unaudited)

	Number of Shares Amount Subscriptions Receivable Options, RSUs and Warrants Accumulated Other Comprehensive Income(Loss) Deficit Shareholders’ Equity Share Capital Reserves
Balance at October 1, 2019 Comprehensive loss Balance at December 31, 2019 Shares issued - RSU exercise (Note 10) Shares issued - private placement (Note 10) Shares issued - warrant exercise (Note 10) Share issuance costs Share-based payments (Note 10) Comprehensive income Balance at September 30, 2020 Shares issued - RSU exercise (Note 10) Shares issued - option exercise (Note 10) Shares issued - debt settlement (Note 10) Share subscriptions received Share-based payments (Note 10) Comprehensive loss	($) ($) ($) ($) ($) ($) 61,843,850 25,147,350 - 3,217,040 1,944,035 (6,249,518) 24,058,907 - - - (316,957) (371,512) (688,469) 61,843,850 25,147,350 3,217,040 1,627,078 (6,621,030) 23,370,438 112,500 11,812 - (11,812) - - - 12,006,992 3,001,748 (100,000) - - - 2,901,748 30,000 12,000 - - - - 12,000 (258,976) - 89,500 - - (169,476) - - - 207,187 - - 207,187 - - - - 545,441 499,445 1,044,886 73,993,342 27,913,934 (100,000) 3,501,915 2,172,519 (6,121,585) 27,366,783 237,500 24,938 - (24,938) - - - 250,000 51,850 - (26,850) - - 25,000 3,201,766 1,072,592 - - - - 1,072,592 - - 100,000 - - - 100,000 - - - 66,525 - - 66,525 - - - - (1,181,942) (120,115) (1,302,057)
Balance at December 31, 2020	77,682,608 29,063,314 - 3,516,652 990,577 (6,241,700) 27,328,843

The accompanying notes are an integral part of these condensed interim consolidated financial statements

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Allegiant Gold Ltd. (the “Company” or “Allegiant”), was incorporated on September 26, 2017 under the laws of the Province of British Columbia, Canada. The Company was a wholly-owned subsidiary of Orea Mining Corp. (“Orea”)(formerly Columbus Gold Corp.), a Toronto Stock Exchange listed company, until January 25, 2018, when it was spun-out of Orea by way of a plan of arrangement (the “Arrangement”) as a separate entity. The Company trades on the TSX Venture Exchange (“TSXV”) under the symbol “AUAU” and on the OTCQX under the symbol “AUXXF”. The Company’s head office and principal address is located at 1090 Hamilton Street, Vancouver, British Columbia, V6B 2R9, Canada.

The Company’s principal business activities are the exploration and evaluation of resource properties located in the United States of America. The Company is in the process of exploring its resource properties, but it has not yet determined whether these properties contain ore reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production or from proceeds of disposition. The Company’s exploration and evaluation activities are not dependent on seasonality and may operate yearround; however, the Company may adjust the level of exploration and evaluation activities to manage its capital structure in light of changes in global economic conditions. To date, the Company has not received any revenue from mining operations and is considered to be in the exploration stage.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

The Company’s continuation as a going concern is dependent upon its ability to raise equity capital or borrowings sufficient to meet current and future obligations. If for any reason, the Company is unable to continue as a going concern, then this could result in adjustments to the amounts and classifications of assets and liabilities in the Company’s financial statements and such adjustments could be material. The above conditions cast significant doubt on the Company’s ability to continue as a going concern.

2. BASIS OF PREPARATION

Statement of Compliance

These condensed interim financial statements, including comparatives, have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") and the interpretations of the IFRS Interpretations committee. They do not include all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements, and therefore should be read in conjunction with the Company’s audited financial statements for the year ended September 30, 2020, prepared in accordance with IFRS as issued by the IASB

These condensed interim consolidated financial statements were approved by the Board of Directors of the Company on February 24, 2021.

Basis of Measurement

These consolidated financial statements have been prepared on the historical cost basis. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (continued)

Functional and Presentation Currency

The functional currency of the Company is the Canadian dollar, which is also the presentation currency of the consolidated financial statements.

Basis of Consolidation

These consolidated financial statements include the accounts of Allegiant and its wholly-owned subsidiaries as follows:

Entity	Ownership Interest	**Place of Incorporation **
Allegiant Gold Holding Ltd.	100%	British Columbia, Canada
Allegiant Gold(U.S.)Ltd.	100%	Nevada,USA

All inter-company transactions and balances have been eliminated upon consolidation.

Control exists where the parent entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases.

Use of Estimates and Judgements

Significant accounting judgments, estimates and assumptions

The preparation of the Company’s financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

The following areas required a significant degree of estimation and judgment:

Recoverability of exploration and evaluation assets

The application of the Company’s accounting policy for exploration and evaluation expenditures requires judgment to determine whether future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves.

Share-based payments

The fair value of stock options issued are subject to the limitation of the Black-Scholes option pricing model, which incorporates market data and involves uncertainty in estimates used by management in the assumptions. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices, and, as a result, changes in subjective input assumptions can materially affect the fair value estimate.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (continued)

Decommissioning provisions

Restoration costs will be incurred by the Company in connection with certain exploration activities conducted on exploration and evaluation assets. The Company estimates abandonment and reclamation costs based on a combination of publicly available industry benchmarks and internal site-specific information. The ultimate restoration liability is uncertain and can vary in response to many factors including changes to relevant legal requirements, the emergence of new restoration techniques, experience at other sites, or changes in the riskfree discount rate. The expected timing and amount of expenditure can also change in response to changes in laws and regulations or their interpretation. As a result, there could be significant adjustments to the provisions established which would affect future financial results.

Functional currency

The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional currencies are as follows:

Entity	Functional Currency
Allegiant Gold Ltd.	Canadian dollar
Allegiant Gold Holding Ltd. (“AGHL”)	Canadian dollar
Allegiant Gold(U.S.)Ltd.(“AGUS”)	United States dollar

The preparation of the consolidated financial statements in accordance with IFRS requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

Estimates and assumptions used by management where there is risk of material adjustments to assets and liabilities in future accounting periods include the recoverability of the carrying value of exploration and evaluation assets, assumptions used in determination of the fair value of share-based payments, the recoverability and measurement of deferred tax assets, decommissioning obligations, restoration and similar liabilities and contingent liabilities.

3. SIGNIFICANT ACCOUNTING POLICIES

These condensed interim consolidated financial statements have been prepared using the same accounting policies as those used in the Company’s annual financial statements for the year ended September 30, 2020.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

4. SHORT-TERM INVESTMENTS

Carrying Value				Fair Value
September 30,			Unrealized	December 31,
2020	Additions	Dispositions	Gain (Loss)	2020
($)	($)	($)	($)	($)
659,149	351,144	(31,149)	(81,623)	897,521
Carrying Value				Fair Value
September 30,			Unrealized	September 30,
2019	Additions	Dispositions	Gain (Loss)	2020
($)	($)	($)	($)	($)
652,153	1,555,150	(1,447,052)	(101,102)	659,149

5. LEASE

The Company’s right-of-use asset, a storage facility lease in Reno, NV, is included in right of use asset.

	Facility Lease
	($)
Cost:
At September 30, 2019	-
Additions	119,425
At September 30 and December 31, 2020	119,425
Accumulated amortization:
At September 30, 2019	-
Depreciation for the year	(12,391)
At September 30, 2020	(12,391)
Depreciation for the period	(7,272)
At December 31, 2020	(19,663)
Foreign exchange:
At September 30, 2019 and 2020	-
Additions	(4,652)
At December 31, 2020	(4,652)
Carrying amounts:
At September 30, 2020	107,034
At December 31,2020	95,110

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

5. LEASE (continued)

During the three month period ended December 31, 2020, the Company made lease payments of $9,382 (2019 - $Nil). In addition, the Company incurred finance expenses of $3,975 (2019 - $Nil) related to interest on its lease.

Lease liability recognized at December 31, 2020 is as follows:

	Amount
	($)
Lease liability as at September 30, 2020	110,673
Payment of lease liability	(9,382)
Interest expense on lease liability	3,975
Foreign exchange	(4,849)
Lease liability as at December 31, 2020	100,417
Current	23,606
Non-current	76,811

6. RECLAMATION BONDS

The drilling permits for the following properties require refundable reclamation bonds, which are held by the USA Forest Service and the US Bureau of Land Management:

	December 31,	September 30,
	2020	2020
	($)	($)
Browns Canyon	8,084	8,463
Eastside	258,256	266,970
Hughes Canyon	7,041	7,371
RedHills	7,791	8,156
	281,172	290,960

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

7. EXPLORATION AND EVALUATION ASSETS

A summary of exploration and evaluation assets by property for the three month period ended December 31, 2020 is set out below:

	Balance at		Option			Balance at
	September 30,		Payment(s)		Foreign	December 31,
Property	2020	Additions	Received	Impairment	Exchange	2020
	($)	($)	($)	($)	($)	($)
Bolo	3,822,979	-	(354,677)	-	(164,318)	3,303,984
Browns Canyon	738,700	-	-	-	(33,059)	705,641
Eastside	20,125,946	695,157	-	-	(913,977)	19,907,125
West Goldfield	477,594	-	-	-	(21,374)	456,220
Overland Pass	112,300	-	-	-	(5,026)	107,274
White Horse Flats	120,439	-	-	-	(5,390)	115,049
WhiteHorse North	103,652	-	-	-	(4,639)	99,013
	25,501,610	695,157	(354,677)	-	(1,147,783)	24,694,306

A summary of exploration and evaluation assets by property for the year ended September 30, 2020 is set out below:

	Balance at		Option			Balance at
	September 30,		Payment(s)		Foreign	September 30,
Property	2019	Additions	Received	Impairment	Exchange	2020
	($)	($)	($)	($)	($)	($)
Bolo	4,050,740	-	(270,077)	-	42,316	3,822,979
Browns Canyon	696,156	34,912	-	-	7,632	738,700
Clanton Hills	67,118	7,073	(74,614)	-	423	-
Eastside	18,501,403	1,420,522	-	-	204,021	20,125,946
Four Metals(1)	-	-	-	-	-	-
West Goldfield	409,303	63,614	-	-	4,677	477,594
Mogollon(2)	-	65,826	(65,826)	-	-	-
Overland Pass	91,406	19,822	-	-	1,072	112,300
White Horse Flats	99,462	19,822	-	-	1,155	120,439
WhiteHorse North	85,664	16,992	-	-	996	103,652
	24,001,252	1,648,583	(410,517)	-	262,292	25,501,610

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

7. EXPLORATION AND EVALUATION ASSETS (continued)

A summary of the exploration and evaluation assets by cost category is set out below:

	Amount
	($)
Balance at September 30, 2019	24,001,252
Acquisition and land costs	514,004
Asset retirement obligation	225,055
Camp costs	7,594
Drilling	79,918
Geology, trenching and geophysics	415,233
Management and administration	101,579
Option proceeds	(410,517)
Technical studies	266,448
Travel	38,752
Foreignexchange	262,292
Balance at September 30, 2020	25,501,610
Camp costs	1,825
Drilling	322,468
Geology, trenching and geophysics	210,859
Management and administration	36,614
Option proceeds	(354,677)
Technical studies	83,072
Travel	40,319
Foreignexchange	(1,147,783)
Balance at December 31, 2020	24,694,306

Bolo, Nevada

The Company holds a 100% interest in Bolo, subject to underlying royalties. On June 27, 2018, the Company entered into an agreement, as amended on October 24, 2018, December 14, 2018 and March 12, 2019, with New Placer Dome Gold Corp. (“NGLD”), under which NGLD may acquire up to a 50.01% undivided interest in Bolo by issuing common shares of NGLD to the Company, with an aggregate value of $1,310,000 (US$1,000,000) over a three year period, and also incurring certain exploration and evaluation expenditures on Bolo with a minimum aggregate value of $5,240,000 (US$4,000,000) by December 31, 2022. On April 24, 2019, the Company received 1,672,750 common shares of NGLD, representing an initial $334,550 (US$250,000) option payment. On January 29, 2020, the Company received 2,059,219 common shares of NGLD with a fair value of $270,077, representing the first anniversary option payment of US$250,000. On December 16, 2020, the Company received 1,170,483 common shares of NGLD with a fair value of $351,145, representing the second anniversary option payment of US$250,000.

NGLD may acquire an additional 24.99% interest in Bolo by incurring an additional $5,240,000 (US$4,000,000) in certain exploration and evaluation expenditures on Bolo within two years of acquiring the initial 50.01% interest in Bolo. If NGLD does not acquire the additional 24.99% interest, then NGLD will transfer a 0.02% interest in Bolo back to the Company.

Eastside, Nevada

The Company holds a 100% interest in Eastside, subject to underlying royalties.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

7. EXPLORATION AND EVALUATION ASSETS (continued)

Four Metals, Arizona

The Company and MinQuest Ltd. each own a 50% interest in 16 unpatented lode mining claims that, in addition to 24 unpatented lode mining claims that are 100% owned by the Company, comprise the Four Metals project. On April 19, 2018 the Company and MinQuest Ltd. entered into an option agreement with Arizona Standard (US) Corp. (the “Four Metals Optionee”) and Barksdale Metals Corp. (“Barksdale”) granting the Four Metals Optionee an option to acquire a 100% interest in the Four Metals project. The option agreement requires the Four Metals Optionee to pay $294,750 (US$225,000) in staged payments over a fiveyear period. In addition, Barksdale will issue common shares with a total value of $294,750 (US$225,000) in staged issuances over the same five-year period. The cash payments and share issuances are shared equally with MinQuest Ltd. so that the Company will receive 50% of the cash and share payments.

On April 21, 2020, the Company received cash of $17,316 (US$12,500) (2019 – $16,670) and 68,493 (2019 - 33,016) common shares of Barksdale, with a fair value of $15,753 (US$12,500) (2019 - $16,838).

Mogollon, New Mexico

The Company holds a 100% interest in Mogollon, subject to underlying royalties. On June 19, 2018, the Company entered into an agreement with NGLD, granting NGLD an option to acquire a 100% interest in Mogollon by issuing common shares of NGLD with an aggregate value of $1,310,000 (US$1,000,000) over an approximate three-year period. On April 24, 2019, the Company received 1,672,750 shares of NGLD, representing an initial $334,550 (US$250,000) option payment. On January 29, 2020, the Company received 2,059,219 common shares of NGLD representing the first anniversary $270,077 (US$250,000) share option payment.

In May 2020, Mogollon was returned back to Allegiant by NGLD.

On August 21, 2020, the Company entered into an agreement with Summa Silver Corp. (“Summa”) wherein Summa can acquire a 75% interest in the Mogollon silver property in exchange for an initial cash payment of US$50,000 and the issuance of 200,000 common shares of Summa, subsequent cash and share payments valued at US$2,750,000 and by incurring exploration expenditures totalling US$3,000,000 over a period of three years. Summa can further acquire the remaining 25% interest in Mogollon by paying the Company an additional US$3,000,000 in either cash or common shares of Summa.

On August 26, 2020, the Company received a cash payment of $65,826 (US$50,000) and 200,000 common shares of Summa, with a fair value of $424,000.

Clanton Hills, Arizona

The Company holds a 100% interest in Clanton Hills, subject to underlying royalties. On August 31, 2020, the Company entered into an option agreement with Supernova Metals Corp (“Supernova”) granting Supernova an option to acquire a 50.1% interest in the Clanton Hills silver property. To acquire its interest Supernova is required to pay cash, issue shares and incur exploration expenditures as follows:

• On commencement, issue 2,000,000 common shares (received at a value of $580,000)

• On or before March 15, 2021, pay US$150,000 in cash and common shares

• On or before September 15, 2021, pay US$150,000 in cash and common shares

• On or before September 15, 2022, pay US$150,000 in cash and common shares

• On or before September 15, 2023, pay US$100,000 in cash and common shares

• On or before September 15, 2023, incur US$1,500,000 in exploration expenditures

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

7. EXPLORATION AND EVALUATION ASSETS (continued)

Other

The Company has additional exploration and evaluation assets located in the USA, comprised of the following properties: Browns Canyon, Overland Pass, Goldfield West, White Horse Flats, and White Horse North.

8. CEBA LOAN

In May 2020, the Company received a $40,000 loan from the Canada Emergency Business Account (“CEBA”). The terms of the loan are as follows:

• Repayment of 75%, or up to $30,000, of the contribution amount, on or before December 31, 2022, will result in the forgiveness of 25%, or up to $10,000 of the total contribution;

• No scheduled monthly repayments are required until after December 31, 2022;

• If 75% of the contribution amount is not repaid by December 31, 2022, the balance owing will be converted to an additional three (3) year term repayable contribution (with a fixed monthly repayment schedule), beginning January 2023, with no forgivable portion, and it will accrue interest at a rate of 5%;

• The full balance, of the contribution amount must be repaid no later than December 31, 2025.

In December 2020, the Company received an additional $20,000 loan from CEBA under the same terms as the first loan advance, with the exception that if 50% of the loan is repaid on or before December 31, 2022, then the remaining $10,000 will be forgiven.

9. ASSET RETIREMENT OBLIGATION

	December 31,	September 30,
	2020	2020
	($)	($)
Balance, beginning	228,573	-
Addition	-	225,055
Accretion expense	873	3,518
Foreign exchange	(10,245)	-
Balance,end	219,201	228,573

The Company’s provision for restoration and environmental obligations consists of costs accrued based on the current best estimate of reclamation activities that will be required at the completion of exploration and evaluation activities. The Company’s provision for future site closure and reclamation costs is based on the level of known disturbance at the reporting date, known legal requirements and estimates prepared by management. It is not currently possible to estimate the impact on operating results, if any, of future legislative or regulatory developments.

The Company has calculated the fair value of the asset retirement obligation using a risk-free discount rate of 0.57% and an inflation rate of 1.9%. The estimated total future undiscounted cash flows to settle the asset retirement obligations are $286,499 (US$214,125) and are expected to be incurred over a period of approximately 14 years.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

10. SHARE CAPITAL

Common shares

Authorized - unlimited common shares without par value.

Three Month Period Ended December 31, 2020

On October 21, 2020, the Company issued 3,201,766 common shares with a fair value of $1,072,592 to Orea to settle a loan liability with a face value of $1,604,405. A gain on extinguishment of debt totaling $486,211 was recorded.

On December 21, 2020, the Company issued 250,000 common shares pursuant to the exercise of stock options for gross proceeds of $25,000. Additionally, $26,850 and has been transferred from reserves to share capital.

On December 21, 2020, the Company issued 237,500 common shares pursuant to the exercise of restricted stock units (“RSUs”), and accordingly transferred $24,938 reserves to share capital.

Year Ended September 30, 2020

On June 8, 2020, the Company issued 112,500 common shares pursuant to the exercise of RSUs, and accordingly transferred $11,813 from reserves to share capital.

On July 6, 2020, the Company completed a non-brokered private placement wherein it issued an aggregate of 12,006,992 units at $0.25 per Unit for aggregate proceeds of $3,001,748. Each unit was comprised of a common share and one half of a common share purchase warrant. Each whole share purchase warrant entitles the holder to acquire an additional common share at $0.40 for a period of 18 months from closing. As at September 30, 2020, $100,000 in subscription proceeds had not been received.

The warrants were determined to have a value of $nil. The Company incurred share issuance costs of $169,477 and issued 471,600 finders’ warrants that have the same terms as the Unit warrants. The finders’ warrants were determined to have a value of $89,500.

On September 14, 2020, the Company issued 30,000 common shares pursuant to the exercise of share purchase warrants for gross proceeds of $12,000.

RSUs

The Company has a fixed RSU plan wherein it can issue up to 4,400,000 RSUs to eligible participants. The Board of Directors may from time to time, grant options to directors, officers, employees or consultants.

The continuity of the Company's RSUs is as follows:

The continuity of the Company's RSUs is as follows:
	Number of
	RSUs
Balance, September 30, 2019	-
Granted	3,300,000
Exercised	(112,500)
Balance, September 30, 2020	3,187,500
Exercised	(237,500)
Balance, December 31, 2020	2,950,000

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

10. SHARE CAPITAL (continued)

As at December 31, 2020 there are 2,950,000 RSUs outstanding that expire December 31, 2023.

Options

The Company has a share option plan to issue share options whereby the total share options outstanding may be up to 10% of its issued capital at the time of an applicable option grant. The Board of Directors may from time to time, grant options to directors, officers, employees or consultants. The exercise price of an option is not less than the closing price on the TSXV on the last trading day preceding the grant date.

The continuity of the Company's share options is as follows:

The continuity of the Company's share options is as	follows:
	Number of	Weighted Average
	Options	Exercise Price
		($)
Balance, September 30, 2019	2,685,000	0.41
Granted	550,000	0.38
Expired	(795,000)	0.60
Forfeited	(1,100,000)	0.50
Balance, September 30, 2020	1,340,000	0.22
Exercised	(250,000)	0.10
Balance, December 31, 2020	1,090,000	0.25

A summary of the Company’s options at December 31, 2020 is as follows:

Exercise Price	Options Outstanding Number of Options Outstanding Weighted Average Remaining Contractual Life	Options Exercisable
		Number of Options Exercisable Weighted Average Remaining Contractual Life
($) 0.60 0.10 0.55	(yrs) 140,000 2.08 750,000 3.72 200,000 1.70	(yrs) 140,000 2.08 750,000 3.72 50,000 1.70
0.25	1,090,000 3.14	940,000 3.37

Warrants

The continuity of the Company's warrants is as follows:

The continuity of the Company's warrants is as follows:
	Number of	Weighted Average
	Options	Exercise Price
		($)
Balance, September 30, 2019	7,267,604	0.98
Issued	6,475,096	0.40
Exercised	(30,000)	0.40
Expired	(7,267,604)	0.98
Balance, September 30 and December 31, 2020	6,445,096	0.40

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

10. SHARE CAPITAL (continued)

A summary of the Company’s warrants at December 31, 2020 is as follows:

	Weighted		Weighted
Number	Average Exercise		Average Remaining
of Warrants	Price	Expiry Date	Contractual Life
	($)		(yrs)
2,710,896	0.40	December 11, 2021	0.95
2,872,200	0.40	December 25, 2021	0.98
862,000	0.40	January 6, 2022	1.02
6,445,096	0.40		0.97

Reserves

RSUs, Share options and warrants

The RSUs, share options and warrants reserve records items recognized as share-based payments expense until such time that the RSUs, stock options or warrants are exercised, at which time the corresponding amount will be transferred to share capital.

Accumulated other comprehensive income (loss)

The accumulated other comprehensive income (loss) reserve records unrealized exchange differences arising on translation of foreign operations that have a functional currency other than the Company’s reporting currency.

11. RELATED PARTY TRANSACTIONS

As at September 30, 2020, the Company had a principal balance of $1,604,405 (September 30, 2019 - $1,604,405) owing to Orea (the “Grid Note”) originally due on March 1, 2019. On March 5, 2019, the Company issued 1,000,000 common shares valued at $190,000 in exchange for extending the due date to December 31, 2020.

As the Grid Note was initially a non-current liability, the Company discounted the Grid Note with a 20% annual discount rate, resulting in a discount of $213,639 allocated to the reserves account. Upon issuing the Extension Shares, the Grid Note was recognized as a new financial liability and the fair value of the Extension Shares was expensed. The Company discounted newly issued Grid Note with a 15% annual discount rate, resulting in a discount of $383,665 allocated to the reserves account. In October 2020, the Company issued 3,201,766 common shares to settle the balance of the Grid Note and recorded a gain extinguishment of Grid Note of $486,211. A continuity table of the Grid Note is as follows:

	($)
Balance, September 30, 2019	1,331,465
Accretion forthe year	214,069
Balance, September 30, 2020	1,545,714
Accretion for the period	13,089
Shareissuance toretire debt	(1,558,803)
Balance, December 31, 2020	-

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

11. RELATED PARTY TRANSACTIONS (continued)

The Company has previously engaged the services of Cordilleran Exploration LLC (“Cordex”) to generate, evaluate, and explore mineral properties on behalf of the Company, primarily in Nevada. The agreement expired on June 30, 2019. Cordex maintains net smelter return (“NSR”) royalties on existing properties. The principal of Cordex is a director of the Company.

As stated in Note 7, the Company entered into an agreement granting Supernova an option to acquire a 50.1% interest in the Clanton Hills silver property. Supernova is a publicly listed corporation trading on the TSXV that shares an officer in common with the Company.

The following is a summary of related party transactions for the three month periods ended December 31, 2020 and 2019:

	December 31,	December 31,
	2020	2019
	($)	($)
Office rent and administration services paid or accrued to Orea, a
company that shares directors in common	4,500	17,281
Management fees paid or accrued to a corporation controlled by the
former Chairman of the Company	9,000	32,500
Management and administration fees paid or accrued to the CEO of the
Company	94,039	36,000
Professional fees paid to a corporation controlled by the CFO of the
Company	48,000	15,000
Directors fees paid or accrued	27,000	18,000
Share-based compensation in the form of vested stock options and RSUs
issued to directors and officers of the Company	43,206	-
Exploration and evaluation expenditures paid or accrued to a director of
the Company	24,305	19,108
	250,050	137,889

The following summarizes advances and amounts payable to related parties:

	**December 31, **	September 30,
	2020	2020
	($)	($)
Due to Orea - Grid Note	-	(1,545,714)
Due to Orea, included in accounts payable	-	(3,225)
Prepaid travel advances to the former Chairman of the Company	3,994	5,000
Subscription receivable from an officer of the Company	25,000	100,000
Amounts due to directors, included in accounts payable	(13,020)	(42,064)
	15,974	(1,486,003)

12. SEGMENTED INFORMATION

The Company has one reportable business segment, being mineral exploration and evaluation. All of the Company’s long-term assets are located in the USA.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

13. FINANCIAL RISK AND CAPITAL MANAGEMENT

Financial risk

The Company’s financial instruments are exposed to certain financial risks. The risk exposures and the impact on the Company's financial instruments at December 31, 2020 are summarized below. The Board of Directors periodically reviews with management the principal risks affecting the Company and the systems that have been put in place to manage these risks.

Credit risk

The credit risk exposure on cash is limited to its carrying amount at the date of the statements of financial position. Cash is held as cash deposits with creditworthy banks in Canada and the USA, and risk is assessed as low.

The credit risk exposure on reclamation bonds is limited to its carrying amount at the date of the statements of financial position. Reclamation bonds are held by the USA Forest Service and the US Bureau of Land Management, and risk is assessed as low.

The credit risk exposure on receivables is limited to its carrying amount at the date of the statements of financial position. Receivables are due primarily from the Canada Revenue Agency for GST/HST refunds.

Liquidity risk

Liquidity risk arises from the Company’s general and capital financing needs. The Company manages liquidity risk by attempting to maintain sufficient cash balances. Liquidity requirements are managed based on expected cash flows to ensure that there is sufficient capital in order to meet short term obligations. As at December 31, 2020, the Company had working capital of $2,614,267 (September 30, 2020 – $3,368,533) so liquidity risk is assessed as low.

Market risks

• (i) Foreign currency risk

The Company’s presentation currency is the Canadian dollar, however the functional currency of AGUS is the US dollar. The Company is exposed to the currency risk related to the fluctuation of foreign exchange rates in its US subsidiary. The Company also has certain assets and liabilities denoted in US dollars. A significant change in the currency exchange rates between the Canadian dollar relative to the US dollar could have an effect on the Company’s results of operations, financial position and/or cash flows. The Company has not hedged its exposure to currency fluctuations.

• (ii) Commodity price risk

The Company’s ability to raise capital to fund exploration or development activities is subject to risks associated with fluctuations in the market price of gold. The Company closely monitors commodity prices to determine the appropriate course of action to be taken.

• (iii) Interest rate risk

The Company does not have any variable interest-bearing debt and is therefore not exposed to interest rate risk.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

13. FINANCIAL RISK AND CAPITAL MANAGEMENT (continued)

Sensitivity analysis

A 10% change in interest rates does not have a significant effect on the Company’s profit or loss.

The Company has certain assets and liabilities in US Dollars, a currency other than the functional currency of Company. The Company estimates that a +/-10% change in the value of the Canadian dollar relative to the US dollar does not have a significant effect on the Company’s profit or loss.

The Company considers the components of equity as being capital. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. As the Company is in the exploration stage, its principal source of funds is from equity financings and debt from Orea.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, enter into joint venture property arrangements, acquire or dispose of assets or adjust the amount of cash and investments.

Fair value

The fair value of the Company’s financial instruments, including cash, short-term investments, receivables and accounts payable, approximates their carrying value due to the immediate or short-term maturity of these financial instruments. These items are measured at amortized cost.

The fair value of the reclamation bonds approximates their fair value based on current interest rates and high liquidity.

The fair value of the short-term investments is measured using level 1 of the fair value hierarchy.

IFRS 9, Financial Instruments: Disclosure establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows:

• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The Company has determined the estimated fair values of its financial instruments based upon appropriate valuation methodologies.

14. COMMITMENT

The Company entered into a lease agreement on May 1, 2020 for the rental of storage space in Reno, Nevada with a term that expires on April 30, 2022 with an option to renew the lease for a further term of 2 years expiring on April 30, 2024. The remaining rent payable under the lease is $49,080 (US$38,400) up until the lease expires.

ALLEGIANT GOLD LTD. Notes to the Condensed Interim Consolidated Financial Statements Three Month Period Ended December 31, 2020 (Unaudited - Expressed in Canadian Dollars)

15. SUPPLEMENTAL CASH FLOW INFORMATION

The Company’s non-cash investing and financing transactions are as follows:

	December 31,	December 31,
	2020	2019
	($)	($)
Amount transferred from reserves to share capital in connection with
exercise of 237,500 RSUs.	24,937	-
Amount transferred from reserves to share capital in connection with
exercise of 250,000 stock options.	26,850	-
Received short-term investments as an option payment for the Bolo
property.	354,677	-
Issued common shares to Orea to settle Grid Note.	1,072,592	-
	1,479,056	-

16. SUBSEQUENT EVENTS

Subsequent to December 31, 2020, the Company received $25,000 in share subscriptions owing from the CEO of the Company.