Aton Resources Inc. — Audit Report / Information 2021

Apr 29, 2022

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CONSOLIDATED FINANCIAL STATEMENTS

(Presented in Canadian Dollars)

FOR THE YEAR ENDED DECEMBER 31, 2021 AND 2020

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Aton Resources Inc.

Opinion

We have audited the accompanying consolidated financial statements of Aton Resources Inc. (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2021 and 2020 and the consolidated statements of operations and comprehensive loss, cash flows, and changes in shareholders’ deficiency for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates as at December 31, 2021 the Company has a deficit of $37,966,002 (2020 – $33,340,771) and a working capital deficit of $5,433,572 (2020 - deficit of $2,328,604). As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management’s Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

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We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is Stephen Hawkshaw.

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Vancouver, Canada April 28, 2022

Chartered Professional Accountants

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ATON RESOURCES INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Presented in Canadian Dollars)

As at	December 31, 2021	December 31, 2020
ASSETS Current Cash Receivables Prepayments and advances receivable (Note 6) Equipment and right-of-use asset(Note 4) Mineral exploration concessions(Note 6)	$ 82,266 3,410 259,632 345,308 415,293 1 $ 760,602	$ 32,425 3,730 21,384 57,539 22,251 1 $ 79,791
LIABILITIES AND SHAREHOLDERS' DEFICENCY Current Accounts payable and accrued liabilities (Note 8) Lease liabilities (Note 5) Legal provision (Note 13) Loan payable (Note 9) Shareholders' deficiency Share capital (Note 7) Reserves (Note 7) Deficit	$ 967,929 43,303 71,901 4,695,747 5,778,880 28,132,910 4,814,814 (37,966,002) (5,018,278) $ 760,602	$ 1,935,731 - 71,901 378,511 2,386,143 28,016,561 3,017,858 (33,340,771) (2,306,352) $ 79,791
Nature of business and going concern(Note 1) Commitments and contingencies(Note 13) Subsequent events(Note 15)

Approved and authorized by the Board of Directors on April 28, 2022:

“Anthony Clements” Director “Tonno Vahk” Director

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

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ATON RESOURCES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Presented in Canadian Dollars)

For the year ended December 31	2021	2020
EXPENSES Depreciation (Note 4) Exploration and evaluation expenditures (Notes 6) Finance expense (Note 9) Foreign exchange (gain) loss Investor relations Interest expense Management and consulting fees (Note 8) Office and administration Professional fees Travel Accretion expense (Note 9) Loss for the year Gain on writing-off of debts Loss on writing-off of equipment (Note 4) Loss and comprehensive loss for the year	$ 103,303 1,978,791 470,575 31,417 29,887 2,255 267,544 61,045 126,835 - 1,695,133 (4,766,785) 141,554 - $ (4,625,231)	$ 40,605 781,487 25,965 (62,773) 48,201 1,841 131,250 46,778 253,476 27,429 66,026 (1,360,285) 22,461 (14,058) $ (1,351,882)
Basic and diluted earnings per common share	$ (0.14)	$ (0.04)
Weighted average number of common shares outstanding– basic and diluted	33,700,782	33,298,322

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

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ATON RESOURCES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Presented in Canadian Dollars)

For the year ended December 31	December 31, 2021	December 31, 2020
CASH FROM (USED IN) OPERATING ACTIVITIES Loss for the year Items not affecting cash: Unrealized foreign exchange Depreciation Interest expense (Note 5) Finance expense Accretion expense Gain on writing-off of debts Loss on writing-off of equipment Changes in non-cash working capital items: Receivables Prepayments and advances receivable Accounts payable and accrued liabilities Net cash used in operating activities CASH USED IN INVESTING ACTIVITIES Purchase of equipment Net cash used in investing activities CASH FROM FINANCING ACTIVITIES Subscriptions received in advance Share issuance costs Loan proceeds Lease payments Net cash provided by financing activities Change in cash during the year Cash, beginning of year Cash, end of year	$ (4,625,231) (1,516) 103,303 2,255 470,575 1,695,133 (141,554) - 320 (238,248) (689,313) (3,424,276) (412,228) (412,228) - (20,586) 3,950,000 (43,069) 3,886,345 49,841 32,425 $ 82,266	$ (1,351,882) (752) 40,605 1,841 25,965 66,026 (22,461) 14,058 (2,167) 8,157 807,318 (413,804) - - 160,000 (750) 271,486 (35,952) 394,784 (18,508) 51,445 $ 32,425

Supplemental disclosures with respect to cash flows (Note 12)

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

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ATON RESOURCES INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY (Presented in Canadian Dollars)

Share capital

	**Number **	Amount	Reserves	Deficit	**Total **
Balance at December 31, 2019 Private placements Share issuance costs, cash Issuance of bonus warrants Loss for the year Balance at December 31, 2020 Shares issued to settle accounts payable Issuance of bonus warrants Loss for the year Balance at December 31, 2021	33,298,321 400,000 - - - 33,698,321 484,785 - - 34,183,106	$ 27,877,897 160,000 (21,336) - - 28,016,561 116,349 - - $ 28,132,910	$ 2,979,195 - - 38,663 - 3,017,858 - 1,796,956 - $ 4,814,814	$ (31,988,889) - - - (1,351,882) (33,340,771) - - (4,625,231) $ (37,966,002)	$ (1,131,797) 160,000 (21,336) 38,663 (1,351,882) (2,306,352) 116,349 1,796,956 (4,625,231) $ (5,018,278)

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

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

1. NATURE OF BUSINESS AND GOING CONCERN

Aton Resources Inc. (the “ Company ”) operates through its wholly owned subsidiary, Aton Mining Inc., which was incorporated under the Business Corporations Act (British Columbia) on May 17, 2006 and whose principal business activities are the exploration and development of mineral properties in the Arab Republic of Egypt (“ ARE ” or “ Egyp t”). The Company’s registered and records office is located at 666 Burrard Street, Suite 1700, Vancouver, BC, V6C 3P6. The Company’s common shares trade on the TSX Venture Exchange (“ TSX-V ”) under the symbol “ AAN ”.

During the year ended December 31, 2020, the Company consolidated its common shares at a ratio of ten preconsolidation common shares to one post-consolidated common share. The number of shares, warrants and options and earnings per share data presented in these consolidated financial statements have all been adjusted retroactively to reflect the impact of this share consolidation.

The business of mining and exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The recoverability of the carrying value of evaluation and exploration and development properties and the Company's continued existence is dependent upon the preservation of its interest in the underlying properties, the discovery of economically recoverable reserves, the achievement of profitable operations, or the ability of the Company to raise alternative financing, if necessary, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. Changes in future conditions could require material write-downs of the carrying values. The Company's exploration assets are located outside of Canada and are subject to the risk of foreign investment, including political uncertainty, increases in taxes and royalties, renegotiation of contracts and currency exchange fluctuations.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements, unregistered claims, other land claims and non-compliance with regulatory and environmental requirements.

Going Concern

The Company is a mineral exploration company focused on acquiring and exploring mineral properties in the ARE. The ability of the Company to realize the costs it has incurred to date on these properties is dependent upon the Company identifying a commercial mineral body, to finance its development costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the property. To date, the Company has not earned any revenues and is considered to be in the exploration stage.

The consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. The Company has incurred losses since its inception and the ability of the Company to continue as a going concern depends upon its ability to raise adequate financing and to develop profitable operations. As at December 31, 2021, the Company has a deficit of $37,966,002 (2020 – $33,340,771) and a working capital deficit of $5,433,572 (2020 - deficit of $2,328,604). This raises significant doubt as to the Company’s ability to continue as a going concern. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

1. NATURE OF BUSINESS AND GOING CONCERN (cont’d…)

Management is actively targeting sources of additional financing through alliances with financial, exploration and mining entities, and other business and financial transactions which would assure continuation of the Company’s operations and exploration programs. In addition, management closely monitors commodity prices of precious metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company if favourable or adverse market conditions occur.

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.

2. BASIS OF PREPARATION

Statement of Compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”).

Basis of Presentation

The consolidated financial statements have been prepared on a historical cost basis except for certain financial assets that are measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for the cash flow information. All dollar amounts presented are in Canadian dollars unless otherwise specified.

These consolidated financial statements incorporate the financial statements of the Company and its wholly controlled subsidiaries. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The consolidated financial statements include the accounts of the Company and its direct wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

The Company’s subsidiaries are as follows:

Name ofSubsidiary	OwnershipInterest	Principal Activity
Aton Mining Inc.	100%	Holding Company
Seventh Cleo Holdings Inc.	100%	Holding Company
Chelsea Holding Inc.	100%	Holding Company
Aton Resources Inc.	100%	Exploration Company
Canex Enterprises Inc.	50%	HoldingCompany

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

2. BASIS OF PREPARATION (cont’d…)

Basis of Presentation (cont’d…)

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 currency of the Company and for all entities within the Company is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.

Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the date of statement of financial position. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in the statement of loss and comprehensive loss.

Use of Estimates and Judgments

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the year. Actual results could differ from these estimates.

Critical Accounting Estimates

The determination of income tax is inherently complex and requires making certain estimates and assumptions about future events. While income tax filings are subject to audits and reassessments, the Company has adequately provided for all income tax obligations. However, changes in facts and circumstances as a result of income tax audits, reassessments, jurisprudence and any new legislation may result in an increase or decrease in our provision for income taxes.

The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company’s ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management’s assessment of the company’s ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets, and deferred income tax provisions or recoveries could be affected.

Share-based payments are subject to estimation of the value of the award at the date of grant using pricing models such as the Black-Scholes option valuation model. The option valuation model requires the input of highly subjective assumptions including the expected share price volatility. Because the Company’s bonus warrants have characteristics significantly different from those of traded options and because the subjective input assumptions can materially affect the calculated fair value, such value is subject to measurement uncertainty.

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

2. BASIS OF PREPARATION (cont’d…)

Critical Accounting Judgments

The preparation of these consolidated financial statements requires management to make judgments regarding the going concern of the Company, as discussed in Note 1. In addition, management has made judgments regarding the functional currency of the Company and has determined that the functional currency of the Company and its subsidiaries are the Canadian dollar.

Mineral exploration concession related to acquisition costs are initially capitalized as intangible exploration assets with the intent to establish commercially viable reserves. The Company is required to make judgments about the future events and circumstances regarding whether the carrying amount of intangible exploration assets exceeds its recoverable amount.

From time to time, certain claims, suits, and complaints may arise in the ordinary course of operations against the Company which require management to make certain estimates, judgments, and assumptions about the suit. In the opinion of management, any provisions related to such claims, if any, will be accrued when the claims meet the recognition criteria for contingent liabilities. Management is not aware of any material contingent liabilities which require recording in the financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES

Loss per share

The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

Existing stock options and warrants have not been included in the computation of diluted loss per share as to do so would be anti-dilutive.

IFRS 9 – Financial Instruments

IFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 requires financial assets to be classified into three measurement categories: those measured at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (“FVOCI”), and at amortized cost. The determination is made at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument.

Financial assets

Financial assets are classified as either financial assets at affair value through profit or loss, amortized cost, or fair value through other comprehensive income. The Company determines the classification of its financial assets at initial recognition.

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Financial assets (cont’d…)

Fair value through profit or loss – financial assets are classified as fair value through profit or loss if they do not meet the criteria of amortized cost or fair value through other comprehensive income. Changes in fair value are recognized in the consolidated statement of operations.

Amortized cost – financial assets are classified as measured at amortized cost if both of the following criteria are met and the financial assets are not designated as FVTPL: 1) The objective of the Company’s business model for these financial assets is to collect their contractual cash flows; and 2) the assets contractual cash flow represents solely payments of principal and interest.

Fair value through other comprehensive income (“FVOCI”) financial assets are measured at fair value. Interest revenue, impairment gains and losses, and a portion of foreign exchange gains and losses, are recognized in profit and loss on the same basis as for amortized cost assets. Changes in fair value are recognized initially in Other Comprehensive Income (“OCI”). When the asset is derecognized or reclassified, changes in fair value previously recognized in OCI and accumulated in equity are reclassified to profit and loss on a basis that always results in an asset measured at FVOCI having the same effect on profit and loss as if it were measured at amortized cost.

Financial liabilities

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other financial liabilities. Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Fair value changes on financial liabilities classified as FVTPL are recognized in earnings.

Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Impairment of financial assets

The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as the reporting date, with the risk of default as at the date of initial recognition, based on all information available, and reasonable and supportive forward-looking information.

Asset or Liability	IFRS 9
Cash Receivables Accounts payable and accrued liabilities Loan payable Legal provision	FVTPL Amortized cost Amortized cost Amortized cost Amortized cost

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Mineral exploration concessions

Mineral exploration concessions

Mineral exploration concessions include acquired mineral rights for mineral exploration properties held by the Company. The amount of consideration paid (in cash or share value) for mineral rights is capitalized. The amounts shown for mineral exploration concessions represent costs of acquisition, other than transaction costs, incurred to date, less recoveries, and do not necessarily reflect present or future values. These costs will be amortized against revenue from future production or written off if the evaluation and exploration assets are abandoned or sold. Included in the cost of mineral exploration concessions is the cost of any estimated decommissioning liability. The Company has classified mineral exploration concessions as intangible in nature. Depletion of costs capitalized on projects put into commercial production will be recorded using the unit-of-production method based upon reserves.

Ownership in mineral exploration concessions involves certain inherent risks, including geological, metal prices, operating costs, and permitting risks. Many of these risks are outside the Company’s control. The ultimate recoverability of the amounts capitalized for the mineral exploration concessions is dependent upon the delineation of economically recoverable ore reserves, obtaining the necessary financing to complete their development, obtaining the necessary permits to operate a mine, and realizing profitable production or proceeds from the disposition thereof. Management’s estimates of recoverability of the Company’s investment in its mineral exploration concessions have been based on current and expected conditions. However, it is possible that changes could occur which could adversely affect management’s estimates and may result in future write downs of mineral exploration concessions carrying values.

Evaluation and exploration expenditures

Evaluation and exploration expenditures, other than those described above, are expensed as incurred until such time as mineral exploration concessions are proven or probable, permits to operate the mineral resource property are received and financing to complete development has been obtained. Following confirmation of mineral reserves, receipt of permits to commence mining operations and obtaining necessary financing, evaluation and exploration expenditures are capitalized as deferred development expenditures and are included within equipment.

Income taxes

Income tax on the profit or loss for the periods presented comprises 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 the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded using the 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 loss; and differences relating to investments in subsidiaries 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 date of statement of financial position.

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.

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Income taxes (cont’d…)

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 and 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.

Provision for environmental rehabilitation

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of mineral properties and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to mining assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as mining assets.

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed each reporting date for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.

Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss for the period. For the years presented, the Company has not recorded any provisions for environmental rehabilitation.

Equipment

Equipment items are carried at cost less accumulated depreciation and accumulated impairment losses. In the year of acquisition, depreciation is recorded at one-half the normal rate. Depreciation is recognized using the declining balance method at the following annual rates:

Field and Office Equipment Declining-Balance 20% Vehicles and Field Accommodations Declining-Balance 30%

Equipment that is withdrawn from use or has no reasonable prospect of being recovered through use or sale, are regularly identified and written off.

The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

Subsequent expenditure relating to an item of equipment is capitalized when it is probable that future economic benefits from the use of the assets will be increased. All other subsequent expenditure is recognized as repairs and maintenance expense.

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ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Impairment

At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Share-based payments

The fair value of all share-based payments granted is recorded, at the measurement date fair value, as an asset or a charge to profit or loss and as a credit to reserves.

The fair value of share-based awards granted to employees and others providing similar services which vest immediately is recorded at the date of grant. The fair value of share-based awards which vest in the future is recognized over the vesting period, as adjusted for the expected level of vesting of the options. The fair value of share-based awards is estimated using the Black-Scholes option pricing model, with estimated volatility based on the historical volatility of the Company’s share price. Share-based awards granted to parties other than employees and those providing similar services are measured at the fair value of the goods and services received on the date of receipt. If the fair value of the goods and services received cannot be reliably measured, their value is estimated using the Black-Scholes option pricing model, with estimated volatility based on the historical volatility of the Company’s share price.

Any consideration received on the exercise of share-based awards together with the related portion of reserves attributed to the exercised share-based awards is credited to share capital. When share-based awards expire unexercised the amounts recorded in reserves with respect to those share-based payments are not reclassified within equity.

Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued.

When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Share capital is reduced by the average per-common-share carrying amount, with the difference between this amount and the consideration paid, added to or deducted from reserves.

16

ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Share capital (cont’d…)

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in a private placement to be the more easily measurable component and the common shares are valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as reserves.

4. EQUIPMENT AND RIGHT-OF-USE ASSET

	Field and office equipment	Vehicles and field accommodations	Right-of-use asset – office lease	Total
Cost Balance, December 31, 2019 and 2020 Additions Balance, December 31, 2021	$ 296,023 170,171 $ 466,194	$ 350,556 242,057 $ 592,613	$ 65,122 84,117 $ 149,239	$ 711,701 496,345 $ 1,208,046
Accumulated depreciation Balance, December 31, 2019 Depreciation for the year Loss on write-off Balance, December 31, 2020 Depreciation for the year Balance, December 31, 2021	$ 270,570 4,264 14,058 288,892 10,235 $ 299,127	$ 331,656 3,780 - 335,436 51,917 $ 387,353	$ 32,561 32,561 - 65,122 41,151 $ 106,273	$ 634,787 40,605 14,058 689,450 103,303 $ 792,753
Carrying amounts As at December 31, 2020 As at December 31,2021	$ 7,131 $ 167,067	$ 15,120 $ 205,260	$ - $ 42,966	$ 22,251 $ 415,293

5. LEASE LIABILITY

Pursuant to the adoption of IFRS 16 (Note 3), the Company has recognized the impact of lease obligations. During the year ended December 31, 2021, through amendments to lease payment schedules, the Company revalued the remaining payments and recognized further additions to lease liabilities and Right-of-Use assets of $84,117 (2020 - $Nil).

The following summarizes the undiscounted minimum lease payments under the lease liabilities as at December 31, 2021:

17

ATON RESOURCES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

5. LEASE LIABILITY (cont’d…)

Fiscal year		Payment
2022 commitments	$	45,580
Amount representing future lease accretion		(2,277)
Lease liabilities as at December 31, 2021	$	43,303

The Company’s lease relates to its office lease in Egypt, which has a term from January 1, 2021 to December 31, 2022.

Lease liabilities		December 31,		December 31,
		2021		2020
Opening balance	$	-	$	34,111
IFRS transition		84,117		-
Interest expense		2,255		1,841
Lease payments		(43,069)		(35,952)
		43,303		-
Current portionof leaseliabilities		(43,303)		-
Leaseliabilities	$	-		-

6. MINERAL EXPLORATION CONCESSION

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties, and, to the best of its knowledge, title to all of its properties, are properly registered and in good standing. Each mineral concession is considered to be a separate cash generating unit (“CGU”).

Through the Company’s wholly owned subsidiary, Aton Mining Inc., the Company holds the Abu Marawat exploration concession in Egypt.

The Abu Marawat Concession Agreement is defined by multiple phases of exploration with a required minimum exploration obligation for each phase of exploration. Phase I has a duration of one year, Phase II-A, is for a duration of two years and Phase II-B has a duration of two years. An additional six months may be applied with the approval of EMRA at the end of the last phase of exploration.

The Abu Marawat Concession has met the minimum financial obligation for all three phases and the Company is required to provide a 2% training fee on the total exploration expenditure for the fiscal year.

For the Abu Marawat Concession, on April 23, 2020 EMRA granted the Company a further extension to the Phase IIB exploration period, which will now expire on March 4, 2023.

During the year ended December 31, 2020, the Company relinquished 25% of the Abu Marawat concession area, as is required by the existing concession agreement. The areas relinquished are sterile ground and have no impact on the Company’s identified exploration targets or financial statements.

18

ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

6. MINERAL EXPLORATION CONCESSION (cont’d…)

During the year ended December 31, 2021, the Company had advanced a deposit of $253,560 (US$200,000) on the Abu Marawat project (2020 - $Nil).

Cumulative Exploration and Evaluation Expenditures as at December 31, 2021 as follows:

		As at			As	at December				As at
		December				31, 2020			December 31,
		31, 2019		Additions				Additions		2021
Concession access	$	163,392	$	-	$	163,392	$	-	$	163,392
Mapping		6,429		-		6,429		-		6,429
Labour		3,075,056		480,329		3,555,385		692,225		4,247,610
Field costs		2,660,044		29,887		2,689,931		455,471		3,145,402
Camp upgrade		96,954		-		96,954		-		96,954
Mobilization		217,292		-		217,292		-		217,292
Drilling		4,645,428		-		4,645,428		396,293		5,041,721
Start-up		41,515		-		41,515		-		41,515
Geologic services		1,616,124		37,420		1,653,544		147,138		1,800,682
Geophysics		607,003		-		607,003		15,414		622,417
Assaying		1,929,776		19,450		1,949,226		77,508		2,026,734
Travel		692,245		12,122		704,367		31,497		735,864
		15,587,866		579,208		16,167,074		1,815,546		17,982,620
Consulting		3,202,840		48,328		3,251,168		73,887		3,325,055
Administration		2,030,132		153,951		2,184,083		89,358		2,273,441
		5,232,972		202,279		5,435,251		163,245		5,598,496
	$	20,984,230	$	781,487	$	21,765,717	$	1,978,791	$	23,744,508

7. SHARE CAPITAL AND RESERVES

Authorized share capital

The Company’s authorized share capital consists of an unlimited number of common shares without par value.

Issued share capital

As at December 31, 2021, the Company had 34,183,106 common shares issued and outstanding.

Share issuances

During the year ended December 31, 2021, the Company issued 484,785 common shares at a fair value of $0.24 per common share to settle a total of $116,349 in debt owed to directors and employees.

During the year ended December 31, 2020, the Company completed a non-brokered private placement by issuing 400,000 units at a price of $0.40 per unit for gross proceeds of $160,000, less share issuance costs of $21,336. Each unit consisted of one common share and one half of one share purchase warrant exercisable at $0.80 for three years.

19

ATON RESOURCES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

7. SHARE CAPITAL AND RESERVES (cont’d…)

Stock options and warrants

Stock option and warrant transactions are summarized as follows:

	Options Number ofShares Weighted Average ExercisePrice	Warrants
		Number of Shares Weighted Average ExercisePrice
Balance, December 31, 2019 Granted Balance, December 31, 2020 Cancelled/Expired Granted Balance, December 31, 2021, outstanding and exercisable	2,677,500 $ 0.61 - -	13,466,355 $ 0.71 800,000 0.58
	2,677,500 0.61 (838,500) 0.70 - -	14,266,355 0.70 (7,826,500) 0.78 17,490,957 0.22
	1,839,000 $ 0.56	23,930,812 $ 0.33

Stock options outstanding

The following incentive stock options were outstanding as at December 31, 2021:

						Weighted average
	Number	Number	Exercise			contractual life
	outstanding	exercisable		price	Expiry date	(years)
Stock Options	780,000	780,000	$	0.65	March 27, 2022	0.24(1)
	1,059,000	1,059,000		0.50	July 10, 2023	1.52
	1,839,000	1,839,000

(1) Subsequent to the year ended December 31, 2021, 780,000 options expired.

Stock warrants outstanding

As at December 31, 2021, share purchase warrants were outstanding as follows:

		Number	Exercise	Exercise
	Number	exercisable		price	Expiry date
Share Purchase Warrants	4,065,162	4,065,162	$	0.50	February 13, 2023
	2,174,693	2,174,693		0.80	May 28, 2023
	200,000	200,000		0.80	October 30, 2023
	1,600,000	1,600,000		0.25	February 5, 2022(1)
	4,255,319	4,255,319		0.235	March 16, 2022(1)
	8,510,638	8,510,638		0.235	March 31, 2022(2)
	3,125,000	3,125,000		0.16	October 27, 2022
	23,930,812	23,930,812

(1) Subsequent to the year ended December 31, 2021, these warrants expired.

(2) Subsequent to the year ended December 31, 2021, these warrants were exercised (Note 15).

20

ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

7. SHARE CAPITAL AND RESERVES (cont’d…)

Share-based payments

The Company has a stock option plan under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. The fair value of stock options is determined by the Black-Scholes Option Pricing Model with assumptions for risk-free interest rates, dividend yields, volatility factors of the expected market price of the Company’s shares, forfeiture rate, and expected life of the options. Under the plan the exercise price of each option equals the market price of the Company’s stock, less applicable discount, as calculated on the date of grant.

8. RELATED PARTY TRANSACTIONS

The following entities are classified as related parties due to the following:

Related party	Relationship
Mark Campbell	Former Director, President and CEO
Bill Koutsouras	Former Director and Interim CEO
David Laing	Former Director
Anthony Clements	Director
Assem Soliman	Director
Tonno Vahk	Director and Interim CEO
Stella Chen	CFO
Red Fern Consulting Ltd.	CFO is an employee
Bennett Liu	Former CFO
Ou Moonrider (“Moonrider”)	Significant shareholder

a) Key management personnel compensation

The remuneration of directors and management including the current and former CEO and CFO were as follows:

		For the year ended	December	31
		2021		2020
Short-term employee benefits – management compensation	$	187,423	$	185,000
Short-term employee benefits–directors’fees		56,653		70,000
	$	244,076	$	255,000

The balances due to the Company’s current and former directors and officer included in accounts payables and accrued liabilities were $30,851 (2020 – $197,953). These amounts are unsecured, non-interest bearing and payable on demand. During the year ended December 31, 2021, the Company issued 427,082 common shares to settle a total of $102,500 in debt owed to directors and a former director.

21

ATON RESOURCES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021

(Presented in Canadian Dollars)

9. LOAN PAYABLE

		For the year ended	December	31
		2021		2020
Balance – beginning of year	$	378,511	$	54,951
Advances of loans		3,950,000		271,486
Interest accrued – finance expense		470,575		25,965
Transaction costs		(1,796,956)		(38,663)
Accretion		1,695,133		66,026
Unrealized foreign exchange		(1,516)		(1,254)
	$	4,695,747	$	378,511

During the year ended December 31, 2021:

• a) The Company borrowed an unsecured short-term loan of $50,000 from Moonrider with a maturity date of August 24, 2021, a significant shareholder of the Company. The principal balance of loan payable bears an interest of 3% per annum. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $1,479.

• b) The Company entered into a bridge loan facility (the “Third Facility”) with Moonrider, a significant shareholder of the Company for $400,000. Pursuant to the Third Facility, the Company borrowed $400,000 from Moonrider at an interest rate of 12% per annum with a maturity date of August 4, 2021, then 20% per annum after maturity. In connection with the Third Facility, Moonrider was issued bonus warrants in February 2021 entitling it to acquire 1,600,000 common shares of the Company at a price of $0.25 per share. These bonus warrants had a fair value of $239,294 using risk-free interest rate of 0.24%, expected life of 1 year, dividend of 0% and volatility of 156.55%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $56,460.

• c) The Company entered into a bridge loan facility (the “Fourth Facility”) with Moonrider, a significant shareholder of the Company for $1,000,000. Pursuant to the Fourth Facility, the Company borrowed $1,000,000 from Moonrider at an interest rate of 12% per annum with a maturity date of September 15, 2021, then 20% per annum after maturity. In connection with the Fourth Facility, Moonrider was issued bonus warrants in March 2021 entitling it to acquire 4,255,319 common shares of the Company at a price of $0.235 per share. These bonus warrants had a fair value of $485,533 using risk-free interest rate of 0.24%, expected life of 1 year, dividend of 0% and volatility of 130.19%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $119,123.

• d) The Company entered into a bridge loan facility (the “Fifth Facility”) with Moonrider, a significant shareholder of the Company for $2,000,000. Pursuant to the Fifth Facility, the Company borrowed $2,000,000 from Moonrider at an interest rate of 12% per annum with a maturity date of September 30, 2021, then 20% per annum after maturity. In connection with the Fifth Facility, Moonrider was issued bonus warrants in March 2021 entitling it to acquire 8,510,638 common shares of the Company at a price of $0.235 per share. These bonus warrants had a fair value of $922,083 using risk-free interest rate of 0.23%, expected life of 1 year, dividend of 0% and volatility of 122.69%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $221,151.

22

ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

9. LOAN PAYABLE (cont’d…)

During the year ended December 31, 2021:

• e) The Company entered into a bridge loan facility (the “Sixth Facility”) with Moonrider, a significant shareholder of the Company for $500,000. Pursuant to the Sixth Facility, the Company borrowed $500,000 from Moonrider at an interest rate of 12% per annum with a maturity date of April 26, 2022, then 20% per annum after maturity. In connection with the Sixth Facility, Moonrider was issued bonus warrants in October 2021 entitling it to acquire 3,125,000 common shares of the Company at a price of $0.16 per share. These bonus warrants had a fair value of $150,046 using risk-free interest rate of 0.98%, expected life of 1 year, dividend of 0% and volatility of 76.16%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the Company accrued interest expense of $10,849.

During the year ended December 31, 2020:

• a) The Company borrowed an unsecured short-term loan of US$40,000 ($53,486) from Moonrider with a maturity date of August 24, 2021. The principal balance of loan payable bears an interest of 3% per annum. As at December 31, 2021, the Company accrued interest expense of US$1,613 ($1,979).

• b) The Company borrowed an additional $77,000 with a maturity date of December 31, 2020, from its Second Facility. The loan charges an interest rate of 12% per annum before maturity, then 20% per annum after maturity. In connection with the Second Facility, Moonrider was issued bonus warrants entitling it to acquire 154,000 common shares at a price of $0.50 per share. These bonus warrants had a fair value of $8,198 using risk-free interest rate of 0.26%, expected life of 1 year and volatility of 85.18%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $20,136.

• c) The Company entered into a bridge loan facility (the “Second Facility”) with Moonrider, a significant shareholder of the Company for $141,000. Pursuant to the Second Facility, the Company borrowed $141,000 from Moonrider at an interest rate of 12% per annum with a maturity date of December 31, 2020, then 20% per annum after maturity. In connection with the Second Facility, Moonrider was issued bonus warrants entitling it to acquire 282,000 common shares of the Company at a price of $0.50 per share. These bonus warrants had a fair value of $30,465 using risk-free interest rate of 1.30%, expected life of 1 year and volatility of 87.27%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $40,678.

• d) On December 17, 2019, the Company borrowed $82,000 from Moonrider at an interest rate of 10% per annum with a maturity date of December 31, 2020, then 20% per annum after maturity. Moonrider was issued bonus warrants entitling it to acquire 164,000 common shares of the Company at a price of $0.50 per share. These bonus warrants had a fair value of $28,008 using risk-free interest rate of 1.71%, expected life of 1 year and volatility of 155.56%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance. As at December 31, 2021, the loan was in default and the Company accrued interest expense of $24,937.

23

ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial assets and liabilities are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quotes 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).

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

The carrying values of cash, receivables, legal provision and trade and other payables approximate their fair values due to the short-term nature of these instruments. The amortized cost of the loan approximates its fair value due to the nature of the instrument.

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

The Company is exposed to varying degrees to a variety of financial instrument related risks:

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.

The Company’s cash (excluding nominal petty cash) are all held at large Canadian or International financial institutions in interest bearing accounts. The Company has no investment in asset-backed commercial paper.

The Company’s receivables consist mainly of goods and services tax receivables due from the government of Canada. As at December 31, 2021, the Company’s exposure to credit risk is minimal.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

The Company manages liquidity risk through its capital management as outlined further on Note 10.

Accounts payable and accrued liabilities, legal provision and loan payable are due within one year. The Company’s approach to managing liquidity risk is to try to have sufficient liquidity to meet liabilities when due. To maintain liquidity, the Company is currently investigating financing opportunities. While the Company has been successful in obtaining its required funding in the past, there is no assurance that future financings will be available.

24

ATON RESOURCES INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

10. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

a) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. A 1% change in interest rates on cash deposits would have a nominal effect on net loss.

b) Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash, receivables and accounts payable and accrued liabilities that are denominated in US Dollars (USD).

c) Price risk

The Company is exposed to price risk with respect to commodity and equity prices. 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. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of gold, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

Sensitivity Analysis

Based on management’s knowledge and experience of the financial markets, the Company believes the following movements are “reasonably possible”.

The Company has cash and accounts payable and accrued liabilities denominated in USD and the Egyptian Pound (EGP) and are exposed to risk from changes in the USD and EGP. A 10% depreciation or appreciation of the CAD against the USD and EGP would result in an increase/decrease of $65,342 and $12,152, respectively.

Capital Management

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. In the management of capital, the Company considers components of shareholders’ deficiency. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash and investments.

In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the year.

25

ATON RESOURCES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

11. SEGMENTED INFORMATION

The Company operates in one reportable segment, being the exploration and evaluation of mineral properties. All of the Company’s equipment and mineral exploration concessions are located in Egypt.

12. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

For the year ended December 31,		2021		2020
Shares issuance in settlement of debt	$	116,349	$	-
Share issuance costs accrued through payables	$	-	$	20,586
Recognition of lease liability and right of use asset	$	84,117	$	-
Issuance of bonus warrants on loans payable	$	1,796,956	$	38,663

13. COMMITMENTS AND CONTINGENCIES

A former director and CEO of the Company commenced litigation against the Company alleging wrongful dismissal and claiming damages of US$500,000 for severance and unpaid wages of $236,798 plus interest and costs related. The Company is defending the cases and believes they are without merit. No liability other than unpaid fees for services amounting to $253,386 has been recorded in relation to these legal proceedings.

Former employees of the Company commenced litigation against the Company in Egypt alleging wrongful dismissal and claiming damages up to $71,901 and a former vender of the Company claiming fees and compensation of US$14,596. During the year ended December 31, 2019, the Company won its case but then had this overturned by the appellate court. Aton has filed an appeal in the Court of Cassation to overturn this appeal ruling. However, as the appellate court judgment is enforceable while it is adjudicated by the Court of Cassation, the Company has previously recorded a legal provision of $71,901 for contingent lawsuit expense.

In the ordinary course of business, the Company is from time to time involved in legal proceedings and litigation. Various legal claims were brought against the Company during the year. Unless recognized as a provision, management considers these claims to be unjustified and the probability that they will require settlement at the Company’s expense to be remote.

The Company did not accrue any loss contingencies in this respect as of December 31, 2021, as the Company did not consider an unfavorable outcome in any material respects in these legal proceedings and litigations to be probable.

26

ATON RESOURCES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

14. INCOME TAX

A reconciliation of income taxes at statutory rates is as follows:

	2021 2020
Loss for the year before income tax	$ (4,625,231) $ (1,351,882)
Expected income tax (recovery) Changes in statutory, foreign tax, foreign exchange rates and other Permanent differences Share issuance costs Adjusted to prior years provision versus statutory tax returns Change in deferred rate Change in unrecognized deductible temporary differences Total income tax(recovery)	$ (1,249,000) $ (365,000) 131,000 43,000 458,000 7,000 (13,000) - (6,000) (11,000) - 115,000 679,000 211,000 $- $-

	2021	2020	Expiry Dates
Share issuance costs	$ 33,000	$ 36,000	2020 - 2045
Non-capital losses	10,634,000	9,763,000	2020 - 2041
Allowable capital losses	23,000	23,000	No expiry date
Explorationand evaluationassets	24,955,000	22,976,000	No expiry date

15. SUBSEQUENT EVENTS

Subsequent to December 31, 2021, the Company

• a) Entered into a bridge loan facility (the “Seventh Facility”) with Moonrider, a significant shareholder of the Company for $500,000. Pursuant to the Seventh Facility, the Company borrowed $500,000 from Moonrider at an interest rate of 12% per annum with a maturity date of July 4, 2022, then 20% per annum after maturity. In connection with the Seventh Facility, Moonrider was issued bonus warrants in January 2022 entitling it to acquire 2,941,176 common shares of the Company at a price of $0.19 per share. The bonus warrants are exercisable for a period of 12 months from issuance.

• b) Entered into a bridge loan facility (the “Eighth Facility”) with Moonrider, a significant shareholder of the Company for $500,000. Pursuant to the Eighth Facility, the Company borrowed $500,000 from Moonrider at an interest rate of 12% per annum with a maturity date of July 26, 2022, then 20% per annum after maturity. In connection with the Eigth Facility, Moonrider was issued bonus warrants in January 2022 entitling it to acquire 2,173,913 common shares of the Company at a price of $0.23 per share. The bonus warrants are exercisable for a period of 12 months from issuance.

• c) Ordered a direction to pay with Ou Moonrider, a significant shareholder of the Company. The Company issued 8,510,638 common shares pursuant to the exercise of warrants for aggregate consideration of $2,000,000. The Warrant Exercise payment has been applied towards bridge loans and interest payable from Ou Moonrider.

27

ATON RESOURCES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021 (Presented in Canadian Dollars)

15. SUBSEQUENT EVENTS (cont’d…)

• d) Closed a non-brokered private placement by issuing 13,333,333 common shares priced at $0.15 per share for gross proceeds of $2,000,000, less share issuance costs of $10,750.

28