Awale Resources Limited - Interim / Quarterly Report 2021

AWALÉ RESOURCES LIMITED

Condensed interim consolidated financial statements September 30, 2021, and September 30, 2020

(unaudited)

(expressed in United States dollars)

NOTICE TO READER

The accompanying unaudited condensed interim consolidated financial statements have been prepared by and are the responsibility of the management of Awalé Resources Ltd. Awalé Resources Ltd’s independent auditor has not performed a review of these unaudited condensed interim consolidated financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of condensed interim financial statements by an entity’s auditor.

Awalé Resources Limited Condensed Interim Consolidated Statement of Financial Position

(expressed in US dollars)

(unaudited)

Assets Current Cash and cash equivalents Receivables 5 Prepaid expenses and other current assets Total current assets Non-current Deposit Right of use assets Property, plant and equipment Exploration and evaluation 6 Total Non-current assets TOTAL ASSETS Liabilities Current Accounts payable and accrued liabilities 7 Lease liabilities Total Current liabilities Non-current Loan 10 Total Non-current liabilities Shareholders’ equity Capital stock 8 Reserves 9 Accumulated deficit Non-controlling interest TotalShareholders’equity TOTAL LIABILITIES AND EQUITY	As at 30-Sept-21 As at 31-Dec-20 USD USD 170,077 646,373 5,818 17,738 53,241 96,454
	229,136 760,565
	8,097 9,206 - 2,560 107,382 84,172 11,858,748 10,337,080
	11,974,227 10,433,018

	12,203,363 11,193,583
	827,148 1,320,348 - 4,284
	827,148 1,324,632
	31,444 31,416
	31,444 31,416
	9,779,691 7,373,213 5,998,167 5,457,271 (4,437,812) (2,998,493) 4,725 5,544
	11,344,771 9,837,535

	12,203,363 11,193,583

Should be read in conjunction with the notes to the condensed interim consolidated financial statements

Awalé Resources Limited Condensed Interim Consolidated Statements of Loss and Other Comprehensive Loss

(expressed in US dollars)

Other Income Interest Expenses Share based payments Provision against exploration and evaluation expenditure Salaries and directors’ fees Investor relations Office and regulatory Professional fees Property investigation costs Travel Consulting fees Depreciation Foreignexchange (loss)/gain		For the nine months ended
	9 6 17	30-Sept-21 30-Sept-20 USD USD 20 4
		20 4
		(501,955) (109,576) (422,981) - (199,574) (191,768) (86,437) (34,174) (86,116) (69,296) (68,384) (32,082) (50,000) - - (11,992) - (21,000) (20,825) (30,224) (3,067) (11,248)
Totalexpenses		(1,439,339) (511,360)
Tax Loss after tax Other Comprehensive Income/Loss Items that may be reclassified in future years to the statement of loss Net movement in foreign currency translation reservenet oftax		- -
		(1,439,319) (511,356) (533,437) 186,927
Total comprehensive (loss)/gain		(1,972,756) (324,429)
Weighted average number of common shares outstanding Basic and diluted loss per share		155,472,908 93,268,737
		(0.01) (0.00)

Should be read in conjunction with the notes to the condensed interim consolidated financial statements

Awalé Resources Limited

Consolidated Statements of Changes in Equity

(expressed in US dollars)

(unaudited)

Balance, January 1, 2020 Loss Foreignexchangemovements Totalcomprehensiveloss Transactions with owners in their capacity as owners: Shares to be issued Share issue costs Warrant cost Option cost Movementin non -controllinginterest Balance, September 30, 2020 Loss Foreignexchangemovements Totalcomprehensiveloss Transactions with owners in their capacity as owners: Warrant cost Option cost Movementin non -controllinginterest Balance, December 31, 2020 Balance, January 1, 2021 Loss Foreignexchangemovements Totalcomprehensiveloss Transactions with owners in their capacity as owners: Issue of shares Share issue costs Warrant cost Option cost Movementin non -controllinginterest Balance, September 30, 2021	Share Capital (Note 8) Accumulated Deficit Reserves (Note 9) Non controlling interests TOTAL
	7,432,597 (2,206,363) 2,343,462 3,758 7,573,454 - (511,356) - - (511,356) - - 186,927 - 186,927
	- (511,356) 186,927 - (324,429)
	2,296,662 - - - 2,296,662 (3,258) - - - (3,258) (3,302,159) - 3,302,159 - - - - 109,576 - 109,576 - - - 1,144 1,144
	6,423,842 (2,717,719) 5,942,124 4,902 9,653,149 - (280,774) - - (280,774) - - 313,810 - 313,810
	- (280,774) 313,810 (133,036)
	949,371 - (949,371) - - - - 150,708 - 150,708 - - - 642 642
	7,373,213 (2,998,493) 5,457,271 5,544 9,837,535
	7,373,213 (2,998,493) 5,457,271 5,544 9,837,535 - (1,439,319) - - (1,439,319) - - (533,437) - (533,437)
	- (1,439,319) (533,437) - (1972,756)
	3,206,372 - (162,344) - 3,044,028 (65,172) - - (65,172) (734,722) - 734,722 - - - 501,955 - 501,955 - - - (819) (819)
	9,779,691 (4,437,812) 5,998,167 4,725 11,344,771

Should be read in conjunction with the notes to the condensed interim consolidated financial statements

Awalé Resources Limited Condensed Interim Consolidated Statement of Cash Flows (expressed in US dollars)

(unaudited)

Period ended Cash flow from operating activities Interest received Payments to suppliers and employees Total cash outflows from operating activities 15 Cash flows from investing activities Payments for exploration activities Payments for property, plant and equipment Total cash inflows/(outflows) from investing activities Cash flows from financing activities Proceeds from issue of share capital/shares to be issued Share issue costs Proceeds from loan Lease payments Total cash inflows from financing activities Net increase/(decrease) in cash equivalents Effect of fluctuations in exchange rate Cash at the beginning of the period Cash at the end of the year	30-Sept-21 30-Sept-20 USD USD 20 1 (334,034) (378,076)
	(334,014) (378,075)
	(2,770,697) (1,755,013) (29,870) (17,426)
	(2,800,567) (1,772,439)
	2,699,239 2,445,457 (65,172) (3,258) - 29,445 (4,382) (10,720)
	2,629,685 2,460,924
	(504,896) 310,410 28,600 (78,743) 646,373 1,346,203
	170,077 1,577,870

Should be read in conjunction with the notes to the condensed interim consolidated financial statements

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD) (unaudited)

1. Nature of operations

Awalé Resources Limited (“Awalé” or the “Company”), was incorporated under the Business Corporations Act of British Columbia on June 23, 2015. On April 14, 2016 the Company completed an initial public offering and became a capital pool company as defined in the TSX Venture Exchange (“TSXV”) Policy 2.4.

The entities are involved in mineral exploration in Côte d’Ivoire.

The principal and registered office is 8681 Clay Street, Mission, British Columbia, Canada .

2. Basis of preparation

These condensed interim consolidated financial statements for the three and nine months ended September 30, 2021, and September 30, 2020 (“interim financial statements”) have been prepared in accordance with IAS 34 Interim Financial Reporting. These interim financial statements do not include certain information and disclosures normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) and should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2020, which were prepared in accordance with IFRS as issued by the International Accounting Standards Board.

These interim financial statements of the Company and its subsidiaries for the three and nine months ended September 30, 2021, were approved and authorized for issue by the Board of Directors on November 29, 2021.

Presentation currency

These interim financial statements are presented in United States dollars (US$) this differs to the Parent Company’s functional currency which is Canadian Dollars (C$). Functional currencies of each entity are set out below. Refer Note 3.

3. Significant accounting policies and future accounting changes

The accounting policies set out below have been applied consistently to all years presented in these interim financial statements.

Basis of consolidation and functional currency

These interim financial statements include the accounts of the Company and its subsidiaries (the “Group”):

	Ownership	Country of	Functional
Entity	percentage	incorporation	currency
Awalé Resources Limited (the Company	-	Canada	Canadian Dollar (CAD)
Awalé Resources Limited	100.0%	Guernsey	United States dollar (USD)
Awalé Resources (SARL)	100.0%	Côte d’Ivoire	West African CFA franc (CFA)
Srika Gold Limited	100.0%	Côte d’Ivoire	West African CFA franc (CFA)
Africa New Geological Technologies
Côte d’Ivoire SARL	90.0%	Côte d’Ivoire	West African CFA franc (CFA)
Aforo Resources Côte d’Ivoire	100.0%	Côte d’Ivoire	West African CFA franc (CFA)
Aforo (Ivory Coast) Holdings Limited	100.0%	Australia	Australian Dollar (AUD)
Minera Mariana de Chile Limitada*	100.0%	Chile	Chilean Peso (CLP)
AMG Chile Limitada*	100.0%	Chile	Chilean Peso (CLP)

Entities acquired by the Company effective June 30,2018 for nil value. These are dormant companies that were agreed to be acquired by the Company as part of an agreement with Sandstorm Gold (“Sandstorm”). These companies are currently in the process of being wound down.

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Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD)

(unaudited)

3. Significant accounting policies and future accounting changes (continued)

Foreign currencies

Transactions in foreign currencies are initially recorded by each entity in the Group at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. All differences are taken to the statement of profit or loss and other comprehensive income (“OCI”).

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognized in or profit or loss, respectively).

Subsidiaries

On consolidation, the assets and liabilities of foreign operations are translated into US$ at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation are recognised in OCI. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is reclassified to profit or loss.

Basis of consolidation

The interim financial statements comprise the financial statements of the Company and its subsidiaries. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if, and only if, the Company has all of the following:

• power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

• exposure, or rights, to variable returns from its involvement with the investee; and

• the ability to use its power over the investee to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group assets and liabilities, revenues, expenses and cash flows relating to intra-group transactions are eliminated.

Each Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary

Non-controlling interest

Non-controlling interest represents the minority shareholder’s portion of the profit or loss and net assets of subsidiaries and is presented separately in the statement of financial position and statement of loss and comprehensive loss. Losses within a subsidiary are attributable to the non-controlling interests even if that results in a deficit balance.

Cash and cash equivalents

Cash and cash equivalents consist of cash in bank, petty cash and short-term deposits with a maturity of less than three months.

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD)

(unaudited)

3. Significant accounting policies and future accounting changes (continued)

Property, plant and equipment

Property, plant and equipment are carried at historical cost less any accumulated depreciation and impairment losses.

Depreciation is calculated on following basis over the estimated useful lives of property, plant and equipment: Office equipment, software and licenses Fixtures Motor vehicles

Straight line over 2 -5 years Straight line over 10 years Straight line over 3 years

Exploration and evaluation assets

Recognition and measurement

Exploration and evaluation, including the costs of acquiring licenses and directly attributable general and administrative costs, initially are capitalized as exploration and evaluation. The costs are accumulated by areas of interest pending the determination of technical feasibility and commercial viability. Pre-license costs are expensed when incurred. Preexploration costs are expensed unless it is considered probable that they will generate future economic benefits.

The recoverability of amounts shown for exploration and evaluation is dependent upon the ability of each company to obtain financing to complete the exploration and development of its mineral resource properties, the existence of economically recoverable reserves and future profitable production, or alternatively, upon each company’s ability to recover its costs through a disposition of its mineral resource properties. The amounts shown for exploration and evaluation do not necessarily represent present or future value. Changes in future conditions could require a material change in the amount recorded for exploration and evaluation.

The technical feasibility and commercial viability of extracting a mineral resource from an area of interest is considered to be determinable when proved and/or probable reserves are determined to exist, and the necessary permits have been received to commence production. A review of each area of interest is carried out at least annually. Upon determination of technical feasibility and commercial viability, exploration and evaluation is first tested for impairment and then reclassified to property, plant and equipment and/or intangibles or expensed to the statement of loss and comprehensive loss to the extent of any impairment.

Impairment

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. One or more of the following facts and circumstances indicate that the Group should test exploration and evaluation assets for impairment:

(a) the period for which the Group has the right to explore in the specific area has expired during the period or will expire in the near future and is not expected to be renewed.
(b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned.
(c) exploration for and evaluation of mineral resources in the specific area have not led to the discovery of commercially viable quantities of mineral resources and the Group has decided to discontinue such activities in the specific area.
(d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale.

Where an indicator of impairment exists, a formal estimate of the recoverable amount is made.

An impairment loss is recognized in the statement of loss and comprehensive loss if the carrying amount of an area of interest exceeds its estimated recoverable amount. The recoverable amount of an area of interest used in the assessment of impairment of exploration and evaluation is the greater of its value in use (“VIU”) and its fair value less costs of disposal (“FVLCTS”). VIU is determined by estimating the present value of the future net cash flows at a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the property. FVLCTS refers to the price that would be received to sell the area of interest in an orderly transaction between market participants. For an area of interest that does not generate largely independent cash flows, the recoverable amount is determined for the cash-

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD)

(unaudited)

3. Significant accounting policies and future accounting changes (continued)

Exploration and evaluation assets (continued)

generating unit to which the area of interest belongs. Impairment losses previously recognized are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount only to the extent that the area of interest’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognized.

Share capital

Share capital is classified as equity. Incremental costs directly attributable to the issue of common shares are recognized as a deduction from equity, net of any tax effects.

Warrants

Proceeds from the issue of common share purchase warrants (“warrants”) treated as equity are recorded as a separate component of equity. Costs incurred on the issue of warrants are netted against proceeds. Warrants issued with common shares are measured at fair value at the date of issue using the Black-Scholes pricing model, which incorporates certain input assumptions including the warrant price, risk-free interest rate, expected warrant life and expected share price volatility. The fair value is included as a component of equity and is transferred from warrants to common shares on exercise

Reserves

Exchange differences relating to the translation of the results and net assets of the Group’s foreign operations from their functional currency to the Group’s presentation currency are recognized directly in other comprehensive income and accumulated in the foreign currency translation reserve. Refer Note 3.

Share-based payments

The Company offers a stock option plan for its officers, directors, employees and consultants. The fair value of stock options for each vesting period is determined using the Black-Scholes option pricing model and is recorded over the vesting period as an increase to stock-based compensation and contributed surplus. A forfeiture rate is estimated on the grant date and is adjusted to reflect the actual number of options that vest. Upon the exercise of stock options, the proceeds received by the Company and the related contributed surplus are recorded as an increase to share capital. In the event that vested stock options expire, previously recognized share-based compensation is not reversed. In the event that stock options are forfeited, previously recognized share-based compensation associated with the unvested portion of the stock options forfeited is reversed.

The fair value of share-based payment transactions to non-employees and other share-based payments including shares issued to acquire exploration and evaluation are based on the fair value of the goods and services received. If the fair value cannot be estimated reliably, the share-based payment transaction is measured at the fair value of the equity instruments granted at the date the Company receives the goods or services.

Loss per share

The Company presents basic and diluted loss per share data for its ordinary shares. Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for any of its own shares held. Diluted loss per share is determined by adjusting the loss attributable to shareholders and the weighted average number of ordinary shares outstanding, adjusted for any of its own shares held, for the effects of all dilutive potential ordinary shares, which comprise outstanding warrants and stock options. As at September 30, 2021 and September 30, 2020, outstanding shares, stock options and warrants are antidilutive.

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD) (unaudited)

3. Significant accounting policies and future accounting changes (continued)

Going concern

These interim financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. As at September 30, 2021 the Company had an ‐ accumulated deficit of $4,437,812 (December 31, 2020 $2,998,493) and has a working capital deficiency of $598,012 as at September 30, 2021 (December 31, 2020 – $564,067). The Company has no current source of revenue. The Company’s continuation as a going concern is dependent on its ability to attain profitable operations and generate funds therefrom and/or raise funds sufficient to meet current and future obligations and exploration expenditure.

The Directors are satisfied that the continued application of the going concern basis of accounting is appropriate after considering the following factors:

Management and the Directors have reviewed the Company’s consolidated cashflow requirements and the forecast shows that the current cash on hand will be insufficient to meet the planned corporate activities, working capital requirements, planned Exploration and Mining activities;
Therefore, in order to continue to operate as a going concern, it is the Board’s intention to raise equity capital, or secure liquidity facilities including support from its larger shareholders, convertible debt arrangements, and/or enter into joint venture agreements with third parties, as required, to progress the Company’s mining projects, pursue its strategic business plans and objectives and enhance the Company’s liquidity and balance sheet strength; and
The Company has no plans to wholly or in part dispose of any of its interests in mineral exploration and development assets, however, does retain the ability to do so if required.

Should the Company be unable to access further equity capital or execute any of other alternate funding arrangements, a material uncertainty exists with regards to the ability of the Company to continue to operate as a going concern and, therefore, whether it will be able to realize its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments that might be necessary should the Company not continue as a going concern.

There can be no assurance that the Company will be able to obtain or access additional funding when required, or that the terms associated with the funding will be acceptable to the Directors. If the Company is unable to obtain such additional funding, it may be required to reduce the scope of its operations, which could adversely affect its business, financial condition and operating results.

The directors are confident of raising additional capital based on previous experience to continue as a going concern. Despite this there remains a material uncertainty related to the Company’s ability to continue as a going concern and no adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the combined group not continue as a going concern.

Impact of the Coronavirus (COVID-19) outbreak

The COVID-19 outbreak was declared a pandemic by the World Health Organization in March 2020. The Company’s planned corporate and exploration operations have been impacted by the uncertainty created by the global pandemic COVID-19 announced by the World Health Organization on March 11, 2020. Management put on hold its on-site exploration activities in Côte d’Ivoire at the outbreak of the pandemic in order to comply with government directives and ensure the safety and wellbeing of its workforce. The Company remobilized on the ground, in the middle of May 2020, and has recommenced its exploration activities and continues to actively assess and monitor the risks involved in this deployment. Furthermore, the Company has continued to enforce strict COVID-19 protocols to ensure a safe working environment and continues to re-evaluate these on an ongoing basis.

The scale and duration of these developments (including border closures) remain uncertain as at the date of this report however they are expected to have an impact on our exploration activities, cash flow and financial condition. It is not possible to estimate the impact of the outbreak’s near-term and longer effects or Governments’ varying efforts to combat the outbreak and support businesses. This being the case, we do not consider it practicable to provide a quantitative or qualitative estimate of the potential impact of this outbreak on the Group at this time.

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020

(expressed in USD)

(unaudited)

3. Significant accounting policies and future accounting changes (continued)

Accounting Standards and Interpretations issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

Amendments to IAS 1: Classification of Liabilities as Current or Non-current - In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:

What is meant by a right to defer settlement
That a right to defer must exist at the end of the reporting period
That classification is unaffected by the likelihood that an entity will exercise its deferral right
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification

The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be applied retrospectively. The amendments are not expected to have a material impact on the Group.

Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 - In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss.

The amendment is effective for annual reporting periods beginning on or after 1 January 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment. The amendments are not expected to have an impact on the Group.

IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities - As part of its 20182020 annual improvements to IFRS standards process the IASB issued amendment to IFRS 9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received by the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf. An entity applies the amendment to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment. The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier adoption permitted. The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity first applies the amendment.

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. At this stage, it is not expected that these new accounting standards will have a material impact on the amounts reported in the Group’s consolidated financial statements.

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD) (unaudited)

4. Significant accounting judgments, estimates and assumptions

These interim financial statements have been prepared in accordance with Note 2 Basis of Preparation and requires the Company’s management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected.

In March 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. We have seen an impact on our business to date, with some delays in operational activities being experienced as a result of restrictions imposed by governments in dealing with the pandemic. The scale and duration of these developments continue to remain uncertain as at the date of this report creating ongoing uncertainty and as a result certain assumptions and estimates used in the preparation of these interim financial statements are subject to greater volatility than normal.

Estimates

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are as follows:

Impairment of exploration and evaluation - Exploration and evaluation assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable through future exploitation or sale. Such circumstances include the period for which each company has the right to explore in a specific area, actual and planned expenditures, results of exploration, whether an economically-viable operation can be established

and significant negative industry or economic trends. Management judgment is also applied in determining cash generating units, the lowest levels of exploration and evaluation assets grouping, for which there are separately identifiable cash flows, generally on the basis of areas of geological interest. See Note 6.

Share based payments and warrants - The Company uses the Black-Scholes option pricing model in determining sharebased payments and share purchase warrants, which requires a number of assumptions to be made, including the risk-free interest rate, expected life, forfeiture rate and expected share price volatility. Consequently, actual share-based compensation and share purchase warrants may vary from the amounts estimated. See Note 9.

Contractual obligation payable - The Company has assessed the contractual obligation to Sandstorm as being more likely than not to not continue past 5 years. Refer to Note 9 for further details.

5. Receivables

	2021	2020
	$	$
GST Receivable	5,818	3,707
Other receivable	-	14,031
	5,818	17,738

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD)

(unaudited)

6. Exploration and evaluation assets

Jan 1, 2021 Additions	Provision	Foreign exchange movement September 30, 2021
$ $	$	$ $
6,169,457 1,062,272 3,807,613 1,284,479 360,010 83,152	- - (422,981)	(284,095) 6,947,634 (180,978) 4,911,114 (20,181) -
10,337,080 2,429,903	(422,981)	(485,254) 11,858,748

Jan 1, 2020 Additions	Provision	Foreign exchange movement Dec 31, 2020
$ $	$	$ $
5,093,166 705,880 1,536,765 2,063,596 181,989 123,771	- - -	370,411 6,169,457 207,252 3,807,613 54,250 360,010
6,811,920 2,893,247	-	631,913 10,337,080

Bondoukou

The Company’s large flagship district scale exploration project in Côte d’Ivoire, the Bondoukou project, consists of three permits: Bondoukou Est, Bondoukou Nord and Bondoukou Nord Est. These concessions lie along the southwestern extension of the Birimian-age Bole-Nangodi greenstone belt in adjacent Ghana, which is host to a number of orogenictype gold deposits. It is intended that the Company and the Awalé team will advance these exploration assets to multiple gold discoveries.

Odienné

The Odienné licences lie in the north west of Côte d’Ivoire and consist of the granted ‘Odienné East’, and two licences in application; Odienné Ouest (adjacent to the granted Odienné East permit) and Zouan-Hounien (350km to the south). These licences are held under a separate agreement with ANGET with 90% being owned by Aforo (Ivory Coast) Holdings Limited. Odienné contains Awalé’s most advanced asset and first gold discovery at its Empire prospect, as well the recent discovery of new elevated copper values (up to 0.76% Cu*) associated with the high-grade gold mineralization at Charger prospect, just 3km to the North. The Charger discovery has been interpreted by the Company to represent part of an Iron Oxide Copper Gold (“IOCG”)-style system. The Empire Prospect, with this gold discovery and now this newly discovered mineralization style at the Charger Prospect prioritizes the Company’s focus to extend mineralization with the ultimate aim of developing a maiden resource statement and advancing the understanding of the new discovery.

Abengourou

The Abengourou project is located in the Comoe region, close to the city of Abengourou and consists of two granted licenses (Amélékia and Nianda) and one application (Abengourou). All licences are 100% owned by Awalé Resources. The project is located to the north of the interpreted structural extension of the Birimian Sefwi volcanic belt and Sunyani Basin from Ghana. The Amélékia permit area was formerly held by Golden Star Resources who completed initial exploration over the project area.

During the period ended September 30, 2021, the Company recognized a provision against exploration and evaluation expenditure recorded at the Abengourou project to date in order to reflect the focus of the Company’s exploration activities at its remaining projects.

The Group has potential commitments in relation to its Bondoukou, Odienné and Amélékia properties. Refer to Note 14 for details of these commitments.

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020

(expressed in USD)

(unaudited)

7. Accounts Payable and Accrued Liabilities

	2021	2020
	$	$
Trade creditors and accruals	425,083	1,028,999
Employment payables	171,600	141,097
Tax payables	226,338	144,893
Othercreditors	4,127	5,359
	827,148	1,320,348

Trade creditors and accruals are unsecured and are generally on terms of 30 days.

8. Capital stock

The Company is authorized to issue ordinary shares.

	Number of shares	$
January 1, 2020	79,651,712	7,432,597
Issue of shares- private placement	44,417,440	2,296,662
Warrant cost	-	(3,302,159)
Shareissue costs	-	(3,258)
September 30, 2020	124,069,152	6,423,842
Warrant cost	-
Shareissue costs
December 21, 2020	124,069,152	7,373,213

	Number of shares	$
January 1, 2021	124,069,152	7,373,213
Issue of shares- private placement	54,862,933	2,699,239
Issue of shares- annual payment	1,478,747	162,343
Issue of shares- shares for debt	6,374,263	344,790
Warrant cost	-	(734,722)
Share issue costs	-	(65,172)
September 30, 2021	186,785,095	9,779,691

All issued ordinary shares are fully paid and have no par value. The holders of the shares are entitled to receive dividends and are entitled to one vote per share. All shares rank equally with regard to the Company’s residual assets in the event of a wind-up. Included in Capital Stock are shares which are subject to escrow and hold provisions. These escrowed shares will be released periodically over the next three years in line with the relevant agreements. These shares may not be transferred, assigned or otherwise dealt without the consent of the regulatory authorities.

On July 9, 2020, the Company announced it had closed a non-brokered private placement of 44,417,440 Units at a price of $0.052 (C$0.07) cents per Unit, raising gross proceeds of $2,296,662 (C$3,109,222). Each Unit consists of one common share of the Company and one share purchase warrant entitling the holder to acquire one additional common share at a price of $0.10 (C$0.14) cents until expiry on July 8, 2023. Refer Note 9 (a) for further details.

On April 27, 2021, the Company closed the first tranche of the private placement announced on March 31, 2021, The first tranche comprised 17,207,200 units at a price of $0.05 (C$0.06) for gross proceeds of $839,591 (C$1,032,430). Each Unit consisted of one common share and one-half share purchase warrant; each whole share purchase warrant will be exercisable at a price of $0.10 (C$0.12).

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD) (unaudited)

8. Capital stock (continued)

On April 29,2021, the Company settled its annual payment obligation with Sandstorm, with 1,478,747 number of shares being issued.

On May 13, 2021, the Company announced it had completed the second tranche of its non-brokered private placement for 37,655,733 units at a price of $0.05 (C$0.06) per unit raising gross proceeds of $1,859,648 (C$2,259,344). The units consist of one common share and one-half share purchase warrant each whole warrant entitling the holder to acquire one additional common share at a price of $0.10 (C$0.12) per share until expiry on May 13, 2023 to purchase a common share of the Company until expiry 24 months from issuance. In connection with the financing the Company paid an aggregate $65,172 in fees and issued an aggregate 1,345,504 finders warrants to eligible finders for a cost of $30,851 which was recorded against equity for the nine months ended September 30, 2021. The finders' warrants are subject to the same terms and conditions as the unit warrants.

Pursuant to the Memorandum of Understanding (MoU”) with Geodrill Limited (TSX: GEO “Geodrill”) as announced April 12, 2021 the Company has issued the following shares in settlement of drilling services:

May 26, 2021, 2,732,964 shares totalling $119,117.
June 30, 2021, 2,223,016 shares totalling$143,745.
July 30, 2021, 1,121,270 shares totalling $65,232; and
September 20, 2021, 297,013 shares totalling $16,696.

9. Reserves

				Other
	Option	Warrant		Reserve	TOTAL
	Reserve	Reserve	FCTR
	$	$	$	$	$
January 1, 2020	353,476	1,191,323	(307,568)	1,106,231	2,343,462
Shares to be issued	-	-	-	-	615,114
Shares issued
Share based payment	109,576	-	-	-	109,576
Warrant cost	-	3,302,159		-	3,302,159
Foreignexchange difference	-	-	186,927	-	186,927
September 30, 2020	463,052	4,493,482	(120,641)	1,106,231	5,942,124
Share based payment	150,708		-	-	150,708
Warrant cost	-	(949,371)	-	-	(949,371)
Foreignexchange difference	-	-	313,810	-	313,810
December 31, 2020	613,760	3,544,111	193,169	1,106,231	5,457,271
Shares to be issued	-	-	-	-	-
Warrant cost	-	734,722	-	-	734,722
Option cost	501,955	-	-	-	501,955
Shares issued	-	-	-	(162,344)	(162,344)
Foreign exchange difference	-	-	(533,437)	-	(533,437)
September 30, 2021	1,115,715	4,278,833	(340,268)	943,887	5,998,167

Awalé Resources Limited Notes to Condensed Interim Consolidated Financial Statements for the three and nine months ended September 30, 2021 and September 30, 2020 (expressed in USD)

(unaudited)

9. Reserves

(a) Warrants

A summary of the Company’s warrants is presented below:

		Number of	Weighted average
		warrants	exercise price
			$
Balance January 1, 2020	(i) & (ii)	5,847,222	0.32
Issued	(iii)	44,417,440	0.10
Balance September 30, 2020		50,264,662	0.12
Expired	(ii)	(200,000)	0.20
Balance December 31, 2020		50,064,662	0.12
Issued		28,776,973	0.10
Balance September 30, 2021		78,841,635	0.12

(i) On December 13, 2019, the company issued 5,647,222 warrants, at a price of $0.32 with an expiry date of December 12, 2021, in connection with the private placement completed on December 13,2019. The Company has the right to accelerate early conversion of the warrants as long as the closing price of the Company’s shares equals or exceeds C$0.40 per common share for 20 consecutive trading days up to expiry December 12, 2021.