Aurelius Minerals Inc. — Interim / Quarterly Report 2021

Nov 26, 2021

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AURELIUS MINERALS INC.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2021 AND 2020

(presented in Canadian dollars unless otherwise noted)

(Unaudited)

NOTICE TO READER OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

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 financial statements have not been reviewed by an auditor.

The accompanying unaudited interim consolidated financial statements of Aurelius Minerals Inc. (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 financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

		September 30	December 31
As at		2021	2020
(expressed in Canadian dollars,Unaudited)	Note	$	$
ASSETS
Current
Cash and cash equivalents	5	2,045,416	3,330,376
Receivables	6	948,826	404,456
Prepaid expenses and deposits		154,438	130,518
		3,148,680	3,865,350
Property, plant and equipment	7	1,624,700	1,400,000
Mineral properties	8	1,420,700	1,320,700
Reclamation deposit	9	1,500,000	1,500,000
Deposits	9	‐	117,185
Total Assets		7,694,080	8,203,235
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	10,15	1,151,542	995,818
Current portion of lease liability	11	133,821	73,061
Flow‐throughpremium liability	16	127,221	494,116
		1,412,584	1,562,995
Lease liability	11	398,941	201,565
Reclamation obligation	14	667,000	667,000
Obligation upon Aureus Gold acquisition	4,12	1,305,682	1,393,674
Total Liabilities		3,784,207	3,825,234
Shareholders' equity
Share capital	16	23,075,446	17,805,504
Warrants	16	75,000	154,500
Reserves	16	1,428,952	1,341,996
Deficit		(20,669,525)	(14,923,999)
Total Shareholders’ Equity		3,909,873	4,378,001
Total Liabilities and Shareholders’ Equity		7,694,080	8,203,235

Nature and continuance of operations (Note 1).

Approved and authorized on behalf of the Board of Directors:

“Randy Turner” “Michael Leskovec” Randy Turner, Chairman Michael Leskovec, Director

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

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

		Three Month	Three Month	Nine Month	Nine Month
		Period Ended	Period Ended	Period Ended	Period Ended
		September 30	September 30	September 30	September 30
(expressed in Canadian dollars, Unaudited)		2021	2020	2021	2020
	Note	$	$	$	$
EXPENSES
Exploration	8	1,890,064	932,056	5,295,772	1,507,346
Salaries and fees	15	185,314	190,462	748,039	463,612
Director fees		27,500	27,500	82,500	82,083
Investor relations		48,968	28,318	218,463	62,838
Regulatory and transfer agent fees		2,472	34,680	41,011	53,104
Legal, audit and accounting		7,957	31,338	15,205	35,307
Office and miscellaneous	15	22,932	14,720	42,576	37,595
Rent recovery	11	(19,919)	(16,286)	(54,795)	(48,859)
Travel		28,149	23,696	33,732	54,086
Depreciation	7	56,763	38,436	167,857	106,161
Interest expense on lease liability	11	12,260	3,724	24,029	12,047
Share‐based compensation	16	‐	114,816	‐	375,210
		(2,262,460)	(1,423,460)	(6,614,389)	(2,740,530)
OTHER INCOME (EXPENSES)
Interest income		5,520	2,074	6,808	7,411
Recognition of flow‐through premium
liability	16	190,339	73,712	771,780	73,712
Gain on acquisition obligation settlement	12	25,306	‐	25,306	‐
Foreign currency gain(loss)	12	(29,014)	50,190	7,195	53,881
		192,151	125,976	811,089	135,004
Loss and comprehensive loss for theperiod		(2,070,309)	(1,297,484)	(5,803,300)	(2,605,526)
Basic and diluted lossper common share		(0.06)	(0.07)	(0.18)	(0.15)
Weighted average number of common shares		37,036,079	17,801,247	32,740,123	17,180,809

Share consolidation (Note 3).

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

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Month	Nine Month
	Period Ended	Period Ended
	September 30	September 30
	2021	2020
(expressed in Canadian dollars,Unaudited)	$	$
Cash flows from operating activities
Loss for the period	(5,803,300)	(2,605,526)
Items not involving cash:
Flow‐through premium liability	(771,780)	(73,712)
Share‐based payment	‐	375,210
Gain on acquisition obligation settlement	(25,306)	‐
Unrealized foreign exchange gain	(8,077)	(14,200)
Depreciation	167,857	106,161
Interest expense on lease liability	24,029	12,047
Changes in non‐cash working capital items:
Receivables	(544,370)	(28,220)
Accrued interest receivable	‐	(4,846)
Prepaid expenses	93,265	(124,071)
Accounts payable and accrued liabilities	155,725	608,120
Net cashprovided by (used in)operatingactivities	(6,711,957)	(1,749,037)
Cash flows from financing activities
Issuance of capital stock for cash	6,040,987	5,543,240
Share issuance costs	(355,598)	(376,199)
Exercise of warrants for cash	60	444,512
Repayment of lease liability	(138,532)	(106,931)
Net cashprovided by (used in)financingactivities	5,546,917	5,504,622
Cash flows from investing activities
Deferred acquisition costs	‐	(316,572)
Mineral property acquisition	(100,000)	(752,555)
Property and equipment purchases	(19,920)	(19,667)
Cash assumed upon acquisition of Aureus Gold	‐	1,005,842
Net cashprovided by (used in)investingactivities	(119,920)	(82,952)
Change in cash during the period	(1,284,960)	3,672,633
Cash, beginning of theperiod	3,330,376	459,426
Cash, end of theperiod	2,045,416	4,132,059

Supplemental disclosure with respect to cash flows (Note 17).

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

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

		Share
	Shares	Capital	Warrants	Reserves	Deficit	Total
(expressed in Canadian dollars,Unaudited)	#	$	$	$	$	$
Balance, December 31, 2019	12,631,246	9,966,974	317,500	544,129	(10,439,273)	389,330
Issued for private placements (Note 16b)	10,196,442	5,543,240	‐	‐	‐	5,543,240
Issued for settlement of note payable (Note 13, 16b)	712,812	456,200	‐	‐	‐	456,200
Issued upon warrant exercise (Note 16b)	627,520	515,753	(63,000)	(8,241)	‐	444,512
Issued for minerals properties (Note 16b)	200,000	50,000	‐	‐	‐	50,000
Broker warrants (Note 16b,e)	‐	(441,839)	‐	441,839	‐	‐
Share issuance costs (Note 16b)	‐	(376,199)	‐	‐	‐	(376,199)
Flow‐through premium liability (Note 16b)	‐	(194,813)	‐	‐	‐	(194,813)
Share‐based payment (Note 16d)	‐	‐	‐	375,210	‐	375,210
Reserves transferred on expired options (Note 16d)	‐	‐	‐	(7,264)	7,264	‐
Loss for theperiod	‐	‐	‐	‐	(2,605,526)	(2,605,526)
Balance, September 30, 2020	24,368,020	15,519,316	254,500	1,345,673	(13,037,535)	4,081,954
Balance, December 31, 2020	27,606,861	17,805,504	154,500	1,341,996	(14,923,999)	4,378,001
Issued for private placements (Note 16b)	9,393,503	6,040,987	‐	‐	‐	6,040,987
Issued to settle deferred payments	133,191	54,608	‐	‐	‐	54,608
Issued upon warrant exercise (Note 16b)	100	75	(15)	‐	‐	60
Broker warrants (Note 16b,e)	‐	(148,968)	‐	148,968	‐	‐
Share issuance costs (Note 16b)	‐	(355,598)	‐	‐	‐	(355,598)
Flow‐through premium liability (Note 16b)	‐	(404,885)	‐	‐	‐	(404,885)
Reserves transferred on expired options (Note 16d)	‐	‐	‐	(57,774)	57,774	‐
Reserves transferred on expired warrants (Note 16e)	‐	83,723	(79,485)	(4,238)	‐	‐
Loss for theperiod	‐	‐	‐	‐	(5,803,300)	(5,803,300)
Balance, September 30, 2021	37,133,655	23,075,446	75,000	1,428,952	(20,669,525)	3,909,873

Share consolidation (Note 3).

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

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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1. NATURE AND CONTINUANCE OF OPERATIONS

Aurelius Minerals Inc. was incorporated on April 5, 2007 under the Business Corporations Act, British Columbia. Aurelius Minerals Inc. and its subsidiary (“Aurelius” or the “Company”) are engaged in the exploration of its gold projects. On February 27, 2020, Aurelius completed the acquisition of its wholly owned subsidiary, Aureus Gold Inc. (previously 2672403 Ontario Inc.), which holds the Aureus Gold properties in Nova Scotia, Canada. Aurelius also holds the Mikwam and Lipton gold exploration properties within the northern Abitibi Gold Belt in Ontario, Canada. The Company’s registered and records office is 2500 – 700 West Georgia Street, Vancouver, BC, Canada, V7Y 1B3. The Company also has an office in Toronto at 1900 – 110 Yonge Street, Toronto, ON, Canada, M5C 1T4. The shares of the Company are traded on the TSX Venture Exchange (“TSX‐V”) under the symbol AUL and the OTCQB in the United States (OTCQB: AURQF).

The Company is subject to risks and challenges similar to other companies in a comparable stage of exploration. These risks include, but are not limited to, continuing losses, dependence on key individuals and the ability to secure adequate financing to meet minimum capital required to successfully complete its commitments and continue as a going concern. While the Company has not been adversely affected to date by the coronavirus COVID‐19 global pandemic, other than a delay in the commencement of its 2020 exploration programs at its Nova Scotia properties, it is not possible for the Company to predict the duration or magnitude of the adverse results of COVID‐19 and its effects on Aurelius’ business or financial position at this time. Aurelius continues to assess the impact of COVID‐19 which remains a risk that could have material negative effects on access to capital market financing, the Company’s business and financial position.

The Company’s ability to meet its obligations and maintain its exploration activities is contingent upon successful completion of additional financing arrangements.

These condensed interim consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred ongoing losses. The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future and repay its liabilities arising from normal business operations as they become due. These material uncertainties may cast significant doubt on the entity’s ability to continue as a going concern.

These condensed interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Such adjustments could be material.

2. BASIS OF PRESENTATION

Statement of compliance

These condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with International Accounting Standards (“IAS”) 34, “Interim Financial Reporting”, as issued by the International Accounting Standards Board (“IASB”) and follow the same accounting policies and methods disclosed in Note 3 of the Company’s audited financial statements for the year ended December 31, 2020 unless otherwise indicated.

These condensed interim consolidated financial statements do not include all disclosures required by IFRS for annual consolidated financial statements and accordingly should be read in conjunction with the audited financial

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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statements for the year ended December 31, 2020. The Company’s Board of Directors approved these financial statements on November 26, 2021.

Basis of presentation

These condensed interim consolidated financial statements include the accounts of Aurelius Minerals Inc. and its wholly owned subsidiary, Aureus Gold Inc. from the date of acquisition (Note 4), and all intercompany transactions and balances are eliminated on consolidation.

These financial statements have been prepared on a historical cost basis except for certain financial instruments measured at fair value. All dollar amounts presented are in Canadian dollars unless otherwise specified.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS 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 revenues and expenses during the period. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

Economic recoverability and probability of future economic benefits of exploration and evaluation assets

Management has determined that mineral costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessment of economic recoverability and probability of future economic benefits including geological and metallurgical information, history of conversion of mineral deposits to proven and probable mineral reserves, scoping and feasibility studies, accessible facilities, existing permits and life of mine plan at each reporting period date to determine whether any indication of impairment exists.

Acquisition accounting

The assessment of whether acquisitions are considered business combinations or asset acquisitions requires management judgement, the outcome of which may result in different accounting treatments. Judgement is also required to determine the fair value of the purchase price of the Acquisition (Note 4) based on the probability of making a future payment, in cash or shares, or returning the shares to Sprott Lending which is dependent on future exploration success. Judgement is also required to determine if the potential contingent payment should be classified as equity or a liability. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as a liability is re‐measured at fair value at each reporting date and subsequent changes in fair value of the contingent consideration are expensed to the statement of loss and comprehensive loss.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in material adjustments are as follows:

Decommissioning and rehabilitation provision

Management’s determination of the Company’s decommissioning and rehabilitation provision is based on the reclamation and closure activities it anticipates as being required and its estimate of the probable costs and timing of such activities and measures. Accounting for reclamation obligations requires management to make estimates

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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and judgements of the future costs the Company will incur to complete the reclamation work required to comply with existing laws and regulations at each mining operation and exploration and development property. Actual costs incurred may differ from those amounts estimated. Also, future changes to environmental laws and regulations could increase the extent of reclamation work required to be performed by the Company. Increases in future costs could materially impact the amounts charged to operations for reclamation. The provision represents management’s best estimate of the present value of the future reclamation and remediation obligation. The actual future expenditures may differ from the amounts currently provided.

Valuation of share‐based payments

The Company uses the Black‐Scholes Option Pricing Model for valuation of share‐based payments. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves. The resulting value calculated is not necessarily the value that the holder of the option could receive in an arm’s length transaction, given that there is no market for the options and they are not transferable.

Income taxes

In assessing the probability of realizing income tax assets, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified.

New standards not yet adopted

Certain new accounting standards and interpretations have been issued that are not mandatory for reporting periods ending September 30, 2021 and have not been early adopted by the Company. These standards are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.

3. SHARE CONSOLIDATION

On May 4, 2021, the Company completed a consolidation of the outstanding capital of the Company on the basis of 10 existing common shares for one new consolidated common share. Immediately prior to the consolidation, the Company had 276,069,713 common shares issued and outstanding and immediately after the consolidation, the Company had 27,606,961 post‐consolidated common shares issued and outstanding. All information in these condensed interim consolidated financial statements with respect to prior periods has been restated to be presented on a post share consolidation basis and may vary from the pre‐consolidation balances due to the elimination of fractional shares.

Following the effective date of the share consolidation, each outstanding whole warrant of the Company will evidence the right of the holder thereof to acquire, in accordance with the terms of the warrant, 1/10 of a common share at the adjusted share price being the applicable warrant exercise price multiplied by 10. All outstanding warrant information in these condensed interim consolidated financial statements has been restated to be presented giving effect to this share consolidation impact.

4. ACQUISITION

On February 27, 2020, the Company announced that pursuant to a master transaction agreement (the “Transaction Agreement”) entered into between Aurelius and Sprott Private Resource Lending (Collector) LP, by its General

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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Partner, Sprott Resource Lending Corp. (“Sprott Lending” or “Sprott”), Aurelius had completed the acquisition (the “Acquisition”) of Aureus Gold Inc. (previously 2672403 Ontario Inc.) (“Aureus Gold”), the owner of a 100% interest in the Aureus gold properties including the Aureus Gold Project (other than the Aureus West Project), the Tangier Gold Project and the Forest Hill Gold Project located in Nova Scotia (collectively named, the “Aureus Gold Properties”) for total consideration of up to US$8,200,000 in deferred payments (the “Deferred Payments”). The Deferred Payments are payable in cash or common shares of Aurelius (“Aurelius Shares”) or a combination of cash and Aurelius Shares at the sole option of the Company. Prior to closing Sprott Lending deposited US$750,000 related to the Aureus West property acquisition and payment of certain other expenses and satisfied the outstanding balance of the Reclamation Deposit of $225,000 in July 2020. On May 7, 2020, Aurelius completed the acquisition of the Aureus West property.

Subject to the terms of the Transaction Agreement, Aurelius acquired Aureus Gold in consideration for the Deferred Payments, payable as follows: (a) US$2,500,000 within 90 days after filing a National Instrument 43‐101 – Standard of Disclosure for Mineral Projects (“NI 43‐101”) technical report in respect of all or part of the Aureus Gold Properties that establishes a minimum of 500,000 contained equivalent ounces of gold in the Measured and Indicated Mineral Resource categories (the “Mineral Resources Estimate Report”); and (b) provided that the Deferred Payment in (a) above has become due and payable, US$5,700,000 on the first anniversary of the filing of a NI 43‐101 feasibility study on all or part of the Aureus Gold Properties (the “Feasibility Study”). Aurelius has granted Sprott Lending a first ranking security interest on all assets related to the Aureus Gold Properties until the balance of the Deferred Payments has been satisfied, which was extended to the Aureus West property upon its acquisition.

Aurelius has the right, for a period of three years from the closing of the Acquisition, to extinguish the Deferred Payments for consideration of US$4,000,000 payable in cash or in Aurelius Shares to Sprott Lending, less any prior payments made in cash or Aurelius Shares. Should the Company elect to pay the Deferred Payments in Aurelius Shares in an amount that would result in Sprott holding 20% or more of the issued and outstanding Aurelius Shares, such issuance will be subject to further review of the TSX Venture Exchange and acceptance and will require disinterested shareholder approval.

In the event that the Mineral Resources Estimate Report and/or the Feasibility Study has not been filed by the fifth anniversary of the closing of the Acquisition or Aurelius has otherwise determined in good faith not to proceed with preparing the Mineral Resources Estimate Report and/or Feasibility Study, and provided that a Change of Control has not occurred and is not contemplated, subject to certain conditions, Aurelius will be permitted to transfer the shares of Aureus Gold back to Sprott Lending for no additional consideration and the parties would then have no further obligations under the Transaction Agreement with respect to the Aureus Gold Properties.

The Company has the right to pay the future purchase obligation in cash or shares and accordingly, under IFRS 2 – Share‐Based Payment , management is required to assess the probability of the likelihood of the issuance of shares. Under IAS 32 – Financial Instruments: Presentation , management assessed that the future purchase obligation is a contingent settlement which results in a variable number of issuable common shares of the Company, dependent upon the share price at settlement and is classified as a liability. In addition, the liability contains a derivative feature under IFRS 9 – Financial Instruments as the fair value changes with changes in foreign exchange rates. Based on the probabilities assigned to whether management exercises the Deferred Payments, the early payment option of US$4,000,000 or the right to transfer the Aureus Gold shares back to Sprott Lending, the value of the contingent consideration to acquire Aureus Gold was estimated at US$2,000,000. The United States dollar denominated contingent obligation will be re‐measured at each reporting date and changes in fair value due to changes in foreign exchange rates will be expensed to the statement of loss and comprehensive loss (Note 12).

The purchase price was $3,032,834 comprised of the contingent obligation with a fair value of $2,678,600 and

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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transaction costs of $354,234.

The transaction is accounted for as an asset acquisition and the allocation of the purchase price to the assets acquired and liabilities assumed is based on estimated fair values at the time of acquisition.

5. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
	September 30	December 31
	2021	2020
	$	$
Cash	2,045,416	2,780,376
GIC(fullyredeemable)	‐	550,000
	2,045,416	3,330,376

6. RECEIVABLES

	September 30	December 31
	2021	2020
	$	$
Input sales tax recoverable	948,826	397,536
Interest receivable	‐	6,920
	948,826	404,456

7. PROPERTY, PLANT AND EQUIPMENT

			Office
		Mobile and	furniture		Right of
	Mill	infrastructure	and	Exploration	use
	equipment	equipment	equipment	Equipment	assets	Total
	$	$	$	$	$	$
Cost
Balance – December 31, 2019	‐	‐	13,611	‐	244,117	257,728
Acquisition	952,358	119,273	‐	‐	‐	1,071,631
Additions	‐	12,866	‐	54,219	246,738	313,823
Balance – December 31, 2020	952,358	132,139	13,611	54,219	490,855	1,643,182
Additions	‐	‐	‐	19,920	372,637	392,557
Balance – September 30, 2021	952,358	132,139	13,611	74,139	863,492	2,035,739
Accumulated depreciation
Balance – December 31, 2019	‐	‐	4,064	‐	84,502	88,566
Depreciation	‐	15,968	3,030	790	134,828	154,616
Balance – December 31, 2020	‐	15,968	7,094	790	219,330	243,182
Depreciation	‐	15,657	1,777	8,109	142,314	167,857
Balance – September 30, 2021	‐	31,625	8,871	8,899	361,644	411,039
Net book value
At December 31, 2020	952,358	116,171	6,517	53,429	271,525	1,400,000
At September 30, 2021	952,358	100,514	4,740	65,240	501,848	1,624,700

As at September 30, 2021, the mill is not considered available for use and accordingly is not being depreciated.

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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8. MINERAL PROPERTIES

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.

The Company capitalizes mineral property acquisition costs only, which include the cash consideration, earn‐in or option agreement payments and the fair value of common shares issued for mineral properties. The Company holds interests in two mineral properties located in Ontario, Canada, and the Aureus Gold Properties, including the Aureus East and West, Tangier and Forest Hill properties, in Nova Scotia, Canada. The capitalized acquisition costs are as follows:

	Mikwam	Lipton	Aureus West	Total
	$	$	$	$
Balance – December 31, 2019	257,500	248,685	‐	506,185
Additions	‐	30,000	784,515	814,515
Balance – December 31, 2020	257,500	278,685	784,515	1,320,700
Additions	‐	100,000	‐	100,000
Balance – September 30, 2021	257,500	378,685	784,515	1,420,700

Mikwam

The Company acquired a 100% interest in Mikwam (subject to certain royalty interests and encumbrances) for aggregate cash payments of $25,000 and 400,000 shares with aggregate fair value of $232,500 to ALX Uranium Corp. (“ALX”) over a period of two years. In addition, the Company will pay ALX a 0.5% net smelter returns royalty (“NSR”). The Company has the right, at any time, to acquire the NSR from ALX in consideration of a cash payment of $1,000,000.

Lipton

The Company entered into an option agreement to acquire a 100% interest in a portion of the Lipton Property, subject to a 2% NSR. The Company must pay $1,000,000 over a ten‐year period and issue 50,000 common shares (50,000 issued with an aggregate value of $72,500). The Company has paid $200,000 (initial payment of $10,000 was made August 22, 2016) and the remaining $800,000 is payable in annual cash payments between June 2022 and June 2026. The Company has the option to buy‐back one‐half of the NSR for $2,500,000. The Company incurred costs related to staking additional claims, not subject to an NSR, in the amount of $106,185.

In June 2020, the Company entered into a land access agreement with De Beers Canada Inc. (“De Beers”) which permits De Beers the exclusive right to conduct activities to explore for diamonds on certain of the Lipton claims for one year upon receipt of an initial $20,000 payment to Aurelius, which was received on July 9, 2020. The land access agreement is renewable annually upon receipt of payment of $30,000 from De Beers and has been renewed for 2021.

Aureus East

The Company acquired the Aureus East property from Sprott Lending on February 27, 2020 (Note 4). The Department of Energy and Mines, Nova Scotia holds a 1% NSR on all gold sales. The property is also subject to a 1% NSR held by Metalla Royalty & Streaming Ltd.

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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Aureus West

The Company acquired the Aureus West property from Nycon Resources, Inc. on May 5, 2020 for cash consideration of US$500,000 and 200,000 common shares of the Company with a fair value of $50,000 and incurred transaction costs of $32,915. The Department of Energy and Mines, Nova Scotia holds a 1% NSR on all gold sales. The property is also subject to a 2% NSR held by Nycon Resources, Inc. The Company has the option to buy‐back one‐half of the NSR for US$750,000 and, following exercise of the first buy‐back right, has the option to buy‐back the second half of the NSR for US$1,000,000.

Tangier

The Company acquired the Tangier property from Sprott Lending on February 27, 2020 (Note 4). The Department of Energy and Mines, Nova Scotia holds a 1% NSR on all gold sales. Aurelius holds surface rights to the property subject to an annual payment of $12,000 and a 1% net profits royalty from minerals produced up to a maximum of $1,000,000.

Forest Hill

The Company acquired a 100% interest in mineral rights to the Forest Hill property on February 27, 2020 (Note 4). The Nova Scotia Department of Energy and Mines owns a 1% NSR on all gold sales. A previous Optionor holds a sliding scale royalty on portions of the property. All other marketable commodities within an area of interest are subject to a 1.75% NSR .

The Company incurred exploration expenditures as follows:

			Aureus	Aureus		Forest
	Mikwam	Lipton	East	West	Tangier	Hill	Total
	$	$	$	$	$	$	$
Land management	1,500	1,125	5,708	‐	14,949	‐	23,282
Site admin/maintenance	‐	‐	617,194	88,677	18,515	5,366	729,752
Geology	143,447	‐	198,429	75,767	16,399	14,924	448,966
Sampling and analysis	‐	‐	30,100	61,540	‐	‐	91,640
Drilling	‐	‐	141,356	92,350	‐	‐	233,706
Recoveries	‐	(20,000)	‐	‐	‐	‐	(20,000)
Nine months ended
September 30, 2020	144,947	(18,875)	992,787	318,334	49,863	20,290	1,507,346
Land management	3,188	4,938	6,353	13,600	19,305	13,964	61,348
Site admin/maintenance	8,482	‐	1,160,043	40,661	46,548	17,805	1,273,539
Geology	‐	‐	813,678	48,050	93,974	79,501	1,035,203
Geophysics	‐	‐	24,201	18,151	41,142	37,512	121,006
Sampling and analysis	‐	‐	292,477	95,543	16,278	13,478	417,776
Drilling	‐	‐	2,419,278	‐	‐	‐	2,419,278
Recoveries andgrants	‐	‐	(6,476)	(4,857)	(11,008)	(10,037)	(32,378)
Nine months ended
September 30, 2021	11,670	4,938	4,709,554	211,148	206,239	152,223	5,295,772

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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9. DEPOSITS

Reclamation Deposit

The Company assumed reclamation security payments to the Department of Energy and Mines of Nova Scotia related to the Aureus Gold property acquisition (Note 4). The reclamation security deposit totals $1,500,000 as at September 30, 2021.

Deposits

The Company assumed deposits of $117,185 with Nova Scotia Power upon the acquisition of the Aureus Gold properties (Note 4). The deposits were refunded during the quarter ended September 30, 2021.

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	September 30	December 31
	2021	2020
	$	$
Trade payables	801,394	631,045
Accrued liabilities	350,148	364,773
	1,151,542	995,818

11. LEASE LIABILITY

	September 30	December 31
	2021	2020
	$	$
Current portion of lease liability	73,061	119,467
Additions	121,219	29,768
Transfer from long‐term lease liability	54,044	57,943
Lease payments during the period	(138,532)	(150,795)
Interest expense on lease liability	24,029	16,678
	133,821	73,061
Non‐current lease liability	201,565	42,540
Additions	251,420	216,968
Transfer to current lease liability	(54,044)	(57,943)
	398,941	201,565

As at September 30, 2021, the Company is required to pay $186,373 (December 31, 2020 – $87,964) in undiscounted lease payments within the next twelve months and $300,095 (December 31, 2020 – $103,881) over the remaining term of the leases for a total of $486,468 (December 31, 2020 – $191,845).

During the three and nine month period ended September 30, 2021, the Company renewed its Toronto office lease and recorded a rent recovery of $19,919 (2020 – $16,286) and $54,795 (2020 – $48,859) for receipts related to the sub lease arrangement not included in lease liabilities, in the statement of loss and comprehensive loss.

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020

(expressed in Canadian dollars, unless otherwise noted)

12. OBLIGATION UPON ACQUSITION OF AUREUS GOLD

	$
Opening – January 1, 2020	‐
Additions (Note 4)	2,678,600
Settlement upon Sprott’s participation right	(1,183,426)
Effect of foreign currencychanges	(101,500)
Balance – December 31, 2020	1,393,674
Settlement upon Sprott’s participation right	(82,716)
Effect of foreign currencychanges	(5,276)
Balance – September 30, 2021	1,305,682

On July 19, 2021, the Company issued 133,191 common shares to Sprott Lending at a price of $0.41 per common share in consideration of a reduction of the First Deferred Payment under the Transaction Agreement (Note 4). $82,716 (US$64,891), being the value of the participation right exercise, was credited towards the First Deferred Payment and reduced the acquisition obligation. The difference between the issue price of the common shares and the fair value of the shares, being the closing price per share on that date of issue, resulted in a $25,306 gain on acquisition obligation settlement.

On November 30, 2020, in connection with a private placement, the Company issued 1,091,640 common shares to Sprott Lending at a price of $0.85 per common share, in connection with the exercise of its participation right to maintain its percentage shareholding of Aurelius under the Transaction Agreement (Note 4). $930,963 (US$715,685), being the value of the participation right exercise, was credited towards the First Deferred Payment and reduced the acquisition obligation.

On October 1, 2020, the Company issued of 312,500 common shares to Sprott Lending at a price of $0.80 per common share in consideration of a reduction of the First Deferred Payment under the Transaction Agreement (Note 4). $252,463 (US$189,950), being the value of the participation right exercise, was credited towards the First Deferred Payment and reduced the acquisition obligation. The difference between the issue price of the common shares and the fair value of the shares, being the closing price per share on that date of issue, resulted in a $31,250 loss on acquisition obligation settlement.

13. CONVERTIBLE NOTE PAYABLE

On December 19, 2019, the Company issued a non‐interest bearing unsecured convertible promissory note of the Company to Sprott in the principal amount of $456,200. The Note was convertible at the option of Sprott into common shares of the Company at $0.50 per share (subsequently amended to $0.64 per share). The note was due February 28, 2020 if the acquisition (Note 4) did not close by then and accordingly, due to the short‐term nature of the note, the principal amount of the note approximated its fair value and the equity conversion feature was considered insignificant.

On February 27, 2020, pursuant to the terms of the Note, Aurelius converted the outstanding $456,200 under the convertible note into 712,812 common shares of the Company at a conversion price of $0.64 per common share, concurrent with the closing of the acquisition (Note 4).

14. RECLAMATION OBLIGATION

The Company’s estimates of future decommissioning and restoration for reclamation and closure costs for its Aureus East property are based on reclamation standards that meet Canadian regulatory requirements. Elements

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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of uncertainty in estimating these amounts include potential changes in regulatory requirements, reclamation plans and cost estimates, discount rates and timing of expected expenditures.

The undiscounted amount of estimated cash flows required to settle the decommissioning and reclamation costs is estimated at $667,000. The Company has considered the first milestone of three years to settle the early payment option pursuant to the Acquisition of Aureus East property and accordingly accretion is nominal due to the low and offsetting inflation and risk‐free interest rates. The Company has recorded the undiscounted amount of estimated reclamation costs and will re‐evaluate the estimated timing and value of outflows annually.

15. RELATED PARTY TRANSACTIONS

Key Management Personnel

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of executive and non‐executive members of the Company’s Board of Directors and corporate officers. The remuneration of directors and key executives is determined by the Board of Directors having regard to the performance of individuals and market trends.

Compensation paid or payable to key management personnel for services rendered are as follows:

	Three month	Three month	Nine month	Nine month
	period ended	period ended	period ended	period ended
	September 30	September 30	September 30	September 30
	2021	2020	2021	2020
	$	$	$	$
Salaries and fees(1)	248,250	252,750	768,334	647,833
Severance(2)	‐	‐	150,000	‐
Short‐term employment benefits	1,500	1,500	4,500	4,500
Share‐basedpayment	‐	41,039	‐	266,654
	249,750	295,289	922,834	918,987

(1) A portion of salaries for key management has been recorded in Exploration expenses.

(2) Included in Salaries and fees in the consolidated statements of loss and comprehensive loss.

The Company has related parties which consist of companies with directors and officers in common. Effective February 1, 2019, the Company entered into an agreement, to sublease a portion of its Toronto office space, with Maritime Resources Corp. (“Maritime”), a corporation with common directors and officers. Maritime was also invoiced for reimbursement of direct third‐party purchases of certain office administration services.

	Three month	Three month	Nine month	Nine month
	period ended	period ended	period ended	period ended
	September 30	September 30	September 30	September 30
	2021	2020	2021	2020
	$	$	$	$
Rent expense (recovery)	(19,919)	(16,286)	(54,795)	(48,859)
Office and other expense(recovery)	(1,431)	(1,431)	(4,293)	(4,113)
	(21,350)	(17,717)	(59,088)	(52,972)

Included in accounts payable and accrued liabilities at September 30, 2021 is $239,365 (December 31, 2020 – $213,368) due to officers and directors, including the CEO and VP Exploration for expenses and fees of $47,282, and $192,083 for directors’ fees.

‐ 10 ‐

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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16. SHARE CAPITAL AND RESERVES

• a) Authorized share capital

The authorized share capital of the Company is an unlimited number of common shares without par value. All issued shares are fully paid.

During the nine month period ended September 30, 2021, the Company issued:

• 133,191 common shares at a fair value of $54,608 to Sprott Lending upon private placements, in connection with the exercise of Sprott’s participation right to maintain its percentage shareholding of Aurelius under the Transaction Agreement and was credited towards the First Deferred Payment and reduced the Obligation upon acquisition of Aureus Gold on the consolidated statements of financial position (Note 12), on July 19, 2021.

• 9,393,503 common shares comprised of 3,995,041 common shares of the Company at a price of $0.60 per common share and 5,398,462 flow‐through common shares at a price of $0.675 per flow‐through common share totaling aggregate gross proceeds of $6,040,987, during May 2021.

The Company paid cash finders’ fees of $237,466, being a commission of 7.0% of the gross proceeds in connection with certain subscriptions under the Offering and issued an aggregate of 371,392 compensation warrants, fair valued at $148,968, equal to 7.0% of the common shares and flow‐through common shares issued in connection with certain of those subscriptions. Each compensation warrant entitles the holder to acquire one common share at a price of $0.60 per common share and expire 18 months following the date of issue. Dundee Goodman Merchant Partners, a division of Goodman & Company, Investment Counsel Inc. (“Dundee”), a related party, entered into a finders’ fee agreements with the Company in respect of the Offering. The Company will pay Dundee $166,158, being a commission of 7% of the gross proceeds in connection with certain subscriptions under the Offering, and issue approximately 258,344 compensation warrants, equal to 7% of the Common Shares and Flow‐ Through Shares issued in connection with those subscriptions. Total other cash transaction costs were $112,309.

The subscription agreement for the flow‐through common shares requires Aurelius to incur $3,643,962 of qualifying Canadian Exploration Expenses (“CEE”) and renounce the CEE to the flow‐through shares shareholders with an effective date of December 31, 2021. At the time of issuance, the excess price per unit of the flow‐through common shares over the fair value price per common share resulted in a flow‐through premium liability of $404,885 and reduced share capital by the same amount. Pursuant to incurring eligible flow‐through expenditures, the flow‐ through premium liability was reduced by $277,664 and was recognized into income during the nine month period ended September 30, 2021.

• 100 common shares upon the exercise of warrants.

• b) Issued share capital

During the year ended December 31, 2020, the Company issued:

• 697,520 common shares upon the exercise of warrants. Cash proceeds of $486,512 were received and the fair value of the exercised warrants of $85,241 was transferred from warrants and reserves to share capital.

• 1,764,700 flow‐through common shares at a of $0.85 per flow‐through common share for aggregate gross proceeds of $1,499,995. Cash transaction costs related to the offering were $35,215 for regulatory and legal fees.

The subscription agreement for the flow‐through common shares requires Aurelius to incur $1,499,995 of qualifying CEE and renounce the CEE to the flow‐through shares shareholders with an effective date of December 31, 2020.

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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At the time of issuance, the excess price per unit of the flow‐through common shares over the fair value price per common share resulted in a $0.30 per share premium, and the Company recorded a flow‐through premium liability of $529,410 and reduced share capital by the same amount. Pursuant to incurring eligible flow‐through expenditures, the flow‐through premium liability was reduced to $nil and $494,166 was recognized into income during the nine month period ended September 30, 2021.

• 1,404,140 common shares at a fair value of $1,209,144 to Sprott Lending upon private placements, in connection with the exercise of Sprott’s participation right to maintain its percentage shareholding of Aurelius under the Transaction Agreement and was credited towards the First Deferred Payment and reduced the Obligation upon acquisition of Aureus Gold on the consolidated statements of financial position (Note 12).

• 4,513,000 common share units at a price of $0.50 per common share unit and 3,896,254 flow‐through units at a price of $0.55 per flow‐through unit for aggregate gross proceeds of $4,399,440, on July 15, 2020. Each common share unit consists of one common share of the Company and one‐half of one common share purchase warrant, with each whole common share unit warrant entitling the holder thereof to acquire one common share at a price of $0.70 per common share for a period of twenty‐four (24) months following the closing of the non‐brokered private placement. Each flow‐through unit consists of one flow‐through share of the Company and one‐half of one common share purchase warrant, with each whole flow‐through unit warrant entitling the holder thereof to acquire one common share at a price of $0.80 per common share until the warrant expiry on July 15, 2022.

Dundee, Sprott Capital Partners LP and Laurentian Bank Securities Inc. (together, the “Finders”) entered into finders’ fee agreements with the Company in respect of the non‐brokered private placement. The Company paid the Finders and certain other firms an aggregate of $291,213, being a commission of 7% of the gross proceeds in connection with certain subscriptions under the private placement, and issued an aggregate of 556,822 compensation warrants, equal to 7% of the common share units and flow‐through units issued in connection with those subscriptions with a fair value of $441,839. Each compensation warrant entitles the holder to acquire one common share unit at a price of $0.70 until the warrant expiry date. Total other transaction costs were $84,985.

The subscription agreement for the flow‐through shares required Aurelius to incur $2,142,940 of qualifying CEE and renounce the CEE to the flow‐through shares shareholders with an effective date of December 31, 2020. At the time of issuance, the excess price per unit of the flow‐through shares over the fair value price per share of the non flow‐through shares resulted in a flow‐through premium liability of $194,813 and reduced share capital by the same amount. Pursuant to incurring eligible flow‐through expenditures during the year ended December 31, 2020, the flow‐through premium liability was reduced $nil.

• 200,000 common shares of the Company to Nycon Resources, Inc., with a fair value of $50,000, upon acquisition of the Aureus West Project in Nova Scotia on May 5, 2020 (Note 8).

• 2,500,000 common shares on February 27, 2020 at a price of $0.64 per common share pursuant to the closing of the acquisition of Aureus Gold Inc. (Note 4). 712,812 common shares were issued to settle the $456,200 non‐ interest bearing convertible promissory note advanced to Aurelius by Sprott on an unsecured basis on December 19, 2019 and Sprott Lending subscribed for 1,787,187 common shares on a private placement basis at a price of $0.64 per common share for gross proceeds of $1,143,800 (Note 12).

‐ 12 ‐

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020

(expressed in Canadian dollars, unless otherwise noted)

Flow‐through premium liability	$
Balance – December 31, 2019	‐
Flow‐through premium liability	724,223
Settlement of flow‐throughpremium to income	(230,107)
Balance – December 31, 2020	494,116
Flow‐through premium liability	404,885
Settlement of flow‐throughpremium to income	(771,780)
Balance – September 30, 2021	127,221

c) Stock options

The Company, in accordance with its shareholder approved stock option plan, is authorized to grant options to directors, officers, employees and/or consultants, to acquire up to 10% of the issued and outstanding common shares. The exercise price of each option equals the market price of the Company’s stock as calculated on the date of grant. Options can be granted for a maximum term of ten years and vest immediately upon grant.

As at September 30, 2021, the Company had outstanding stock options, enabling the holders to acquire further common shares as follows:

common shares as follows:
Number of Shares	Exercise Price	Expiry Date
260,000	$ 1.20	July 5, 2022
71,520	$ 0.80	March 5, 2023
400,000	$ 0.60	January 23, 2024
569,040	$ 0.60	May 8, 2025
82,500	$ 1.00	September 9, 2025
50,000	$ 1.00	September 23, 2025
1,433,060

A summary of the Company’s stock options follows:

	Nine months ended	Nine months ended		Year ended
	September 30, 2021		December 31,2020
		Weighted		Weighted
		Average		Average
	Options	Exercise	Options	Exercise
	Outstanding	Price	Outstanding	Price
	#	$	#	$
Balance, beginning of period	1,551,060	0.70	869,180	0.80
Granted	‐	‐	704,040	0.70
Expired/cancelled	(118,000)	0.64	(22,160)	0.90
Balance, end ofperiod	1,433,060	0.76	1,551,060	0.70
Options exercisable, end ofperiod	1,433,060	0.76	1,551,060	0.70

Subsequent to September 30, 2021, 1,252,500 stock options were granted to directors, officers, employees and consultants.

• d) Options – Share‐based compensation

During the nine month period ended September 30, 2021, 118,000 stock options were cancelled or expired resulting in the reversal of $57,774 from reserves to deficit. During the year ended December 31, 2020, 22,160 stock options

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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were cancelled or expired resulting in a reversal of $10,941 from reserves to deficit. The weighted‐average assumptions used for the Black‐Scholes valuation of stock options granted during the year ended December 31, 2020 were risk‐free interest rate of 0.38%; expected life of options of 5 years; dividend rate of 0%; and annualized volatility of 156.84%.

e) Warrants

As at September 30, 2021, the Company had outstanding share purchase warrants, enabling the holders to acquire further shares as follows:

Number of Warrants	Exercise Price	Expiry Date
300,000	$ 0.60	October 30, 2021
2,813,322	$ 0.70	July 15, 2022
1,948,124	$ 0.80	July 15, 2022
315,393	$ 0.60	November 4, 2022
56,000	$ 0.60	November 14, 2022
3,728,043	$ 1.60	December 21, 2022
298,242(1)	$ 0.80	December 21, 2022
9,459,124

• (1) Each agent warrant is exercisable to acquire one unit at a price of $0.80 per unit for a period of five years, for a common share and a common share warrant.

Share purchase warrant transactions were as follows:

	Nine month period ended	Nine month period ended		Year ended
	September 30, 2021		December 31,2020
		Weighted		Weighted
		Average		Average
	Warrants	Exercise	Warrants	Exercise
	Outstanding	Price	Outstanding	Price
	#	$	#	$
Balance, beginning of period	9,636,631	1.06	7,139,705	1.20
Granted	371,393	0.60	4,761,446	0.70
Exercised	(100)	0.60	(697,520)	0.70
Expired	(548,800)	0.60	(1,567,000)	0.90
Balance, end ofperiod	9,459,124	1.06	9,636,631	1.06

Subsequent to September 30, 2021, 300,000 warrants expired unexercised.

17. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Significant non‐cash transactions during the nine month period ended September 30, 2021, include:

• a) Issuing 133,191 common shares with a fair value of $54,608, reducing the Obligation upon acquisition of Aureus Gold.

• b) Issuing 371,393 broker warrants with a fair value of $148,968 as finders’ compensation in relation to the May 2021 private placement.

• c) Recognition of an additional right of use asset of $372,639 and corresponding lease liabilities during the period.

• d) Recording an gain on the partial settled in the future contingent liability upon acquisition of Aureus Gold of $25,306 and corresponding foreign currency gain of $5,275 upon conversion as at and for the nine month

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

periods ended September 30, 2021 foreign exchange rates.

Significant non‐cash transactions during the nine month period ended September 30, 2020 include:

• a) Issuing 5,568,220 broker warrants with a fair value of $441,839 as finders’ compensation in relation to the July 2020 private placement.

• b) Recognition of a flow‐through premium liability of $194,813 and corresponding recognition into income pursuant to incurring eligible flow‐through expenditures.

• c) Issuing 2,000,000 common shares with a fair value of $50,000 upon acquisition of the Aureus West mineral property.

• d) Issuing 7,128,125 common shares at a conversion price of $0.064 per common share to settle its $452,200 convertible Note on February 27, 2020.

• e) Recognition of an additional right of use asset of $84,732 and corresponding lease liabilities during the period.

• f) Acquisition costs of $16,210 included in accounts payable and accrued liabilities.

• g) Recognizing a future contingent liability upon the acquisition of Aureus Gold of $2,678,600, in cash or shares, and recording an increase in the liability and corresponding foreign currency loss of $14,200 upon conversion as at and for the nine month periods ended September 30, 2020 foreign exchange rates.

• h) Allocating $1,049,868 to property, plant and equipment upon acquisition of Aureus Gold.

During the three and nine month periods ended September 30, 2021, the Company received interest of $5,520 (2020 – $nil) and $13,728 (2020 – $3,047), respectively, relating to the Company’s GICs and the return of the Nova Scotia Hydro deposits. There were no cash inflows or outflows relating to income taxes.

18. SEGMENTED INFORMATION

The Company operates in one reportable operating segment, being the acquisition, exploration, and evaluation of mineral properties in Canada.

19. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The Company’s financial instruments consist of cash and cash equivalents, receivables, deposits, accounts payable and accrued liabilities, lease liability and acquisition obligation. Cash and cash equivalents is measured at fair value based on Level 1 of the fair value hierarchy. The fair values of receivables, deposits, accounts payable and accrued liabilities approximate their book carrying values because of the short‐term nature of these instruments. The carrying value of the lease liability approximates its fair value as it bears interest that approximates market rates. The contingent obligation is measured based on Level 3 inputs and changes in its fair value are recorded in the

‐ 15 ‐

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

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statement of loss and comprehensive loss.

The Company is exposed to a variety of financial risks by virtue of its activities, including credit risk, interest rate risk and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on financial performance. Risk management is carried out by management under the direction and guidance of the Board of Directors. Management is responsible for establishing controls and procedures to ensure that financial risks are mitigated to acceptable levels.

Credit risk ‐ Credit risk is the risk of a financial loss to the Company if a counter‐party to a financial instrument fails to meet its contractual obligation. The Company’s receivables consist primarily of tax receivables due from federal and provincial government agencies. The Company has no customers or trade receivables at September 30, 2021. The Company does not have a significant concentration of credit risk with any single counter‐party. The Company’s cash and cash equivalents is invested in short‐term interest bearing accounts at major Canadian chartered banks. Because of these circumstances, the Company does not believe it has a material exposure to credit risk.

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. Financial assets and liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company is not exposed to significant interest rate risk.

Liquidity risk ‐ Liquidity risk is the risk that the Company will not be able to meet its obligations as they become due. The Company’s ability to continue as a going concern is dependent on management’s ability to raise required funding through future equity issuances, asset sales or a combination thereof. The Company is exposed to liquidity risk.

The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. As at September 30, 2021, the Company had cash and cash equivalents totalling $2,045,416 (December 31, 2020 – $3,330,376) to settle current liabilities of $1,412,584 (December 31, 2020 – $1,562,995). Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

As at September 30, 2021, the Company’s accounts payable and accrued liabilities have contractual maturities of less than 60 days and are subject to normal trade terms.

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, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

20. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. The Company defines capital that it manages as equity, consisting of common shares, stock options and warrants.

The Company is dependent upon external financings to fund activities. In order to carry out any exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the three and nine month periods ended September 30, 2021 and 2020 (expressed in Canadian dollars, unless otherwise noted)

needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it believes there is sufficient geologic or economic potential and if it has adequate financial resources to do so. There were no changes in the Company’s capital management strategy during the nine month period ended September 30, 2021 compared to the previous year. The Company is not subject to externally imposed capital requirements.

As at September 30, 2021, the Company is obligated to incur $1,144,984 of qualifying flow‐through expenditures prior to December 31, 2022.

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