Aton Resources Inc. — Interim / Quarterly Report 2021

Nov 8, 2021

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Presented in Canadian Dollars) (Unaudited)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

NOTICE TO READER

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditor has not performed a review of these interim financial statements in accordance with standards established by the Canadian Institute of Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

ATON RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Presented in Canadian Dollars – Unaudited)

As at	September30, 2021	December 31, 2020
ASSETS
Current
Cash	$419,178	$	32,425
Receivables	1,716		3,730
Prepayments and advances receivable (Note 5)	395,460		21,384
	816,354		57,539
Equipment and right-of-use asset (Note 4)	230,423		22,251
Mineral exploration concessions (Note 5)	1		1
	$1,046,778	$	79,791
LIABILITIES AND SHAREHOLDERS' DEFICENCY
Current
Accounts payable and accrued liabilities (Note 7)	$622,920	$	1,935,731
Legal provision (Note 11)	71,901		71,901
Loan payable (Note 7)	4,099,699		378,511
	4,794,520		2,386,143
Shareholders' deficiency
Share capital (Note 6)	28,132,910		28,016,561
Reserves (Note 6)	3,875,169		3,017,858
Deficit	(35,755,821)		(33,340,771)
	(3,747,742)		(2,306,352)

Commitments and contingencies (Note 11) Subsequent events (Note 12)

Approved and authorized by the Board of Directors on November 08, 2021:

"Anthony Clements" Director "Tonno Vahk" Director

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

ATON RESOURCES INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Presented in Canadian Dollars - Unaudited)

	Three months			Three months		Ninemonths	Nine months
		ended		ended	ended		ended
		September30,		September30,		September30,	September 30,
For the		2021		2020		2021	2020
EXPENSES
Depreciation (Note 4)	$	18,259	$	9,531	$	35,464	$31,074
Exploration and evaluation expenditures (Notes 5)		490,231		160,276		1,001,552	526,290
Finance expense		140,331		7,653		272,444	17,836
Foreign exchange gain		12,940		(29,714)		14,739	11,276
Investor relations		5,016		11,413		20,350	34,497
Interest expense		-		351		-	1,712
Management and consulting fees (Note 7)		63,650		29,063		207,393	89,688
Office and administration		2,846		11,962		49,099	39,088
Professional fees		23,936	92,399		81,737		178,148
Travel		-		-		-	27,429
Accretion expense (Note 7)		400,771		19,995		857,312	45,707
	$	(1,157,980)	$	(312,929)	$	(2,540,090)	$(1,002,745)
Loss for the period
Gain on writing-off of debts		9,965		-		125,040	-
Loss and comprehensive loss for the period	$	(1,148,015)	$	(312,929)	$	(2,415,050)	$(1,002,745)
Basic and diluted earnings per common share	$	(0.03)	$	(0.01)	$	(0.07)	$(0.03)
Weighted average number of common shares
outstanding –basic and diluted		34,183,106		33,298,322		33,650,205	33,298,322

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

ATON RESOURCES INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Presented in Canadian Dollars - Unaudited)

For the ninemonths ended	September30, 2021	September 30, 2020
CASH FROM (USED IN)OPERATING ACTIVITIES
Lossfor the period	$(2,415,050)	$(999,908)
Items not affecting cash:
Unrealized foreign exchange	(1,257)	(3,331)
Depreciation	35,464	31,074
Interest expense	-	1,712
Finance expense	272,444	17,836
Accretion expense	857,312	45,707
Gainon writing-offof debt	(125,040)	-
Changes in non-cash working capital items:
Receivables	2,014	(153)
Prepayments and advances receivable	(374,076)	3,242
Accounts payable and accrued liabilities	(1,071,422)	673,792
Net cash used inoperating activities	(2,819,611)	(230,029)
CASH USED IN INVESTINGACTIVITIES
Purchase of property plant and equipment	(243,636)	-
Net cash used in investing activities	(243,636)	-
CASH FROM FINANCING ACTIVITIES
Subscriptions received in advance		160,000
Loan proceeds	3,450,000	244,760
Lease payments	-	(26,775)
Net cash provided by financing activities	3,450,000	377,985
Change in cash during the period	386,753	(147,956)
Effect of foreign exchange on cash	-	484
Cash, beginning of period	32,425	51,445
Cash, end of period	$419,178	$199,885

Supplemental disclosures with respect to cash flows (Note 10)

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

ATON RESOURCES INC. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY (Presented in Canadian Dollars - unaudited)

		Share capital
	Number	Amount	Reserves	Deficit	Total
Balance at December 31, 2019Issuance of bonus warrantsLoss for the period	33,298,322--	$27,877,897--	$2,979,19538,663-	$(31,988,889)-(999,908)	$(1,131,797)38,663(999,908)
Balance at September 30, 2020Private PlacementShare-based paymentsLoss for the period	33,298,322400,000--	27,877,897160,000(21,336)-	3,017,858---	(32,988,797)--(351,974)	(1935,879)160,000(21,336)(351,974)
Balance at December 31, 2020Shares issued to settle accounts payableIssuance of bonus warrantsLoss for the period	33,698,322484,785--	28,016,561116,349--	3,017,858-857,311-	(33,340,771)--(2,415,050)	(2,306,352)116,348857,311(2,415,050)
Balance at September 30, 2021	34,183,107	$28,132,910	$3,875,169	$(35,755,821)	$(3,747,742)

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

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 "Egypt"). 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 September 30, 2021, the Company has a deficit of $35,755,821 (December 31, 2020 – $33,340,771) and a working capital deficit of $3,978,166 (December 31, 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.

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 condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. These condensed interim consolidated financial statements are compliant with IAS 34 and do not include all of the information required for full annual financial statements.

Basis of Presentation

The condensed consolidated interim 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.

3. SIGNIFICANT ACCOUNTING POLICIES

The Company's accounting policies are the same as those applied in the Company's annual consolidated financial statements for the year-ended December 31, 2020. These condensed interim consolidated financial statements should be read in conjunction with the Company's most recent annual consolidated financial statements for the year ended December 31, 2020.

4. EQUIPMENT AND RIGHT-OF-USE ASSET

	Field and officeequipment	Vehicles and fieldaccommodations		Right-of-use asset– office lease		Total
Cost
Balance, December 31, 2019 and 2020Additions	$296,0234,266	$	350,556239,369	$	65,122-	$711,701243,636
Balance, September 30, 2021	$300,289	$	589,925	$	65,122	$955,337
Accumulated depreciation
Balance, December 31, 2019Depreciation for the year	$270,5704,264	$	331,6563,780	$	32,56132,561	$634,78740,605
Loss on write-off	14,058		-		-	14,058
Balance, December 31, 2020Depreciation for the period	288,8921,370		335,43634,094		65,122-	689,45035,464
Balance, September 30, 2021	$290,262	$	369,530	$	65,122	$724,914
Carrying amounts
As at December 31, 2020	$7,131	$	15,120	$	-	$22,251
As at September 30, 2021	$10,027	$	220,396	$	-	$230,423

5. 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 II-B exploration period, which will now expire on March 4, 2023.

During the year ended December 31, 2019, the Company received a refund of advances receivable for drilling costs on the Abu Marawat project of $240,491 (US$176,287).

5. MINERAL EXPLORATION CONCESSION (cont'd…)

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.

Cumulative Exploration and Evaluation Expenditures as follows:

	As atDecember31, 2019	Additions	As atDecember31, 2020	Additions	As atSeptember30,2021
Concession access	$163,392	$-	$163,392	$-	$163,392
MappingLabour	6,4293,075,056	-480,329	6,4293,555,385	-471,401	6,4294,026,786
Field costs	2,660,044	29,887	2,689,931	209,304	2,899,235
Camp upgradeMobilization	96,954217,292	--	96,954217,292	--	96,954217,292
DrillingStart-up	4,645,42841,515	--	4,645,42841,515	20,707-	4,666,13541,515
Geologic services	1,616,124	37,420	1,653,544	79,786	1,733,330
GeophysicsAssaying	607,0031,929,776	-19,450	607,0031,949,226	-25,900	607,0031,975,126
Travel	692,245	12,122	704,367	21,015	725,382
	15,587,866	579,208	16,167,074	828,113	16,995,187
Consulting	3,202,840	48,328	3,251,168	55,479	3,306,647
Administration	2,030,132	153,951	2,184,083	117,960	2,302,043
	5,232,972	202,279	5,435,251	173,439	5,608,690
	$20,984,230	$781,487	$21,765,717	$1,001,552	$22,767,269

6. 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 September 30, 2021, the Company had 34,183,106 common shares issued and outstanding.

Share issuances

During the period ended September 30, 2021, the Company issued 484,785 common shares at a price of $0.24 per common share to settle a total of $116,348 in debt owed to directors and employees.

6. SHARE CAPITAL AND RESERVES (cont'd…)

Share issuances (cont'd…)

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.

Stock options and warrants

Stock option and warrant transactions are summarized as follows:

		Options		Warrants
			Weighted			Weighted
	Number		Average	Number of	Average
	of Shares		Exercise Price	Shares		Exercise Price
Balance, December 31, 2019	2,677,500	$	0.61	13,466,355	$	0.71
Granted	-		-	800,000		0.58
Balance, December 31, 2020	2,677,500	$	0.61	14,266,355	$	0.70
Cancelled/Expired	(838,500)		0.70	(600,000)		0.50
Granted	-		-	14,365,957		0.24
Balance, September 30, 2021, outstanding and
exercisable	1,839,000	$	0.56	28,032,312	$	0.47

Stock options outstanding

The following incentive stock options were outstanding as at September 30, 2021:

	Numberoutstanding	Numberexercisable	Exerciseprice	Expiry date	Weighted averagecontractual life(years)
Stock Options	780,0001,059,0001,839,000	780,0001,059,0001,839,000	0.650.50	March 27, 2022July 10, 2023	0.491.78

6. SHARE CAPITAL AND RESERVES (cont'd…)

Stock warrants outstanding

As at September 30, 2021, share purchase warrants were outstanding as follows:

	Number	Numberexercisable	Exerciseprice	Expiry date
Share Purchase Warrants	7,072,500	7,072,500	0.80	December 9, 2021
	154,0004,065,162	154,0004,065,162	0.750.50	December 9, 2021February 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
	4,255,319	4,255,319	0.235	March 16, 2022
	8,510,638	8,510,638	0.235	March 31, 2022
	28,032,312	28,032,312

During the period ended September 30, 2021, there were no stock options granted. Total share-based payments recognized in the statement of loss and comprehensive loss for the period ended September 30, 2021 was $Nil (2020 – $Nil) for incentive options vested.

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.

The following weighted average assumptions were used for the valuation of stock options:

	September30, 2021	December 31, 2020
Risk-free interest rate	-	-
Expected life of options	-	-
Annualized volatility	-	-
Dividend rate	-	-

7. RELATED PARTY TRANSACTIONS

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

Related party	Relationship
Bill Koutsouras	Former DirectorandFormerInterim CEO
Anthony Clements	Director
David Laing	Director
Tonno Vahk	Directorand Interim CEO
Kouts Capital	Consulting company for Bill Koutsouras
StellaChen	CFO
Red Fern Consulting Ltd.	CFO is an employee
Ou Moonrider("Moonrider")	Significant shareholder

a) Key management personnel compensation

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

	For the periodended September30
		2021		2020
Short-term employee benefits –management compensationShort-term employee benefits –directors' fees	$	36,00041,653	$	138,75055,000
	$	77,653	$	193,750

b) Related party balances and transactions

The balances due to the Company's current directors and officer included in accounts payables and accrued liabilities were $1,083 (December 31, 2020 – $197,953). These amounts are unsecured, non-interest bearing and payable on demand.

During the period ended September 30, 2021:

• a) The Company borrowed an unsecured short-term loan of $50,000 from Moonrider, a significant shareholder of the Company. The principal balance of loan payable bears an interest of 10% per annum.
• 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. 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 $156,151 using risk-free interest rate of 0.24%, expected life of 1 year, dividend of 0% and volatility of 94.11%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance.

7. RELATED PARTY TRANSACTIONS (cont'd…)

• b) Related party balances and transactions (cont'd…)
  • 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. 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 $141,367 using risk-free interest rate of 0.24%, expected life of 1 year, dividend of 0% and volatility of 35.36%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance.
  • 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. 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 $1,559,793 using risk-free interest rate of 0.23%, expected life of 1 year, dividend of 0% and volatility of 71.44%, which is accreted over 12 months. The bonus warrants are exercisable for a period of 12 months from issuance.

During the year ended December 31, 2020:

• a) The Company borrowed an unsecured short-term loan of US$40,000 ($53,486) from Moonrider. The principal balance of loan payable bears an interest of 3% per annum. As at December 31, 2020, the Company accrued interest expense of $519.
• b) The Company borrowed an additional $77,000 from its Second Facility. 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.
• c) The Company borrowed an additional $141,000 from its Second Facility. 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.

8. 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:

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd…)

• 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 September 30, 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 9.

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.

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.

8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd…)

Market risk (cont'd)

b) Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash, accounts receivable 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 $22,620 and $20,323, 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.

9. 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.

10. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

For the period ended September30	2021	2020
Shares issuance in settlement of debt	$116,349	$-

11. 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 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 September 30, 2021, as the Company did not consider an unfavorable outcome in any material respects in these legal proceedings and litigations to be probable.

12. SUBSEQUENT EVENTS

Subsequent to September 30, 2021, the Company

• a) 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. 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. The bonus warrants are exercisable for a period of 12 months from issuance.
• b) The Company appointed Tonno Vahk, director of the Company as its interim CEO following the resignation of Bill Koutsouras as interim CEO of the Company.