Benz Mining Corp. — Interim / Quarterly Report 2022

Dec 30, 2021

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Condensed Interim Financial Statements For the Three and Six-Month Periods Ended October 31, 2021 (Expressed in Canadian dollars - Unaudited)

NOTICE OF NO AUDITOR REVIEW

The accompanying unaudited condensed interim financial statements of Benz Mining Corp. (the “Company”) have been prepared by and are the responsibility of the Company’s management.

In accordance with National Instrument 51-102, the Company discloses that its independent auditor has not performed a review of these unaudited condensed interim financial statements.

Benz Mining Corp.

Condensed Interim Statements of Operations and Comprehensive Loss (unaudited)

			Three-month	Three-month	periods		Six-month periods	Six-month periods	Six-month periods
			ended October 31,				ended October		31,
	Note		2021		2020		2021		2020
Operating Costs
Exploration and evaluation costs	3	$	4,438,172	$	1,820,748	$	9,215,506	$	2,314,958
Listing and filing fees			18,381		108,551		61,883		145,040
Management & consulting fees	4		219,650		53,097		391,163		340,604
Office and miscellaneous			28,983		7,117		55,103		15,359
Professional fees			31,299		12,194		67,577		33,779
Share-based payments	6		-		1,878,002		1,896		2,155,611
Shareholder information			37,547		7,346		55,901		8,658
Loss from operations			(4,774,032)		(3,887,055)		(9,849,029)		(5,014,009)
Other income
Foreign exchange			14,636		-		(29,382)		-
Interest Income			5,553		4,105		12,824		6,128
Settlement of flow-through share
premium liability	5		1,551,434		-		3,269,066		-
Net loss and comprehensive loss		$	(3,202,409)	$	(3,882,950)	$	(6,596,521)	$	(5,007,881)
Lossper share - basic and diluted		$	(0.03)	$	(0.05)	$	(0.06)	$	(0.07)
Weighted average number of shares
outstanding - basic and diluted			105,506,129		76,094,195		102,494,725		71,613,159

See accompanying notes to the condensed interim financial statements

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Benz Mining Corp.

Condensed Interim Statements of Financial Position (unaudited)

	Note	October 31, 2021	October 31, 2021		April 30, 2021
ASSETS
Current Assets
Cash and cash equivalents		$	13,099,028	$	13,144,767
Sales taxes recoverable			1,167,256	$	376,697
Other receivables			116,184	$	-
Prepaid expenses and deposits			21,448	$	22,757
			14,403,916		13,544,221
Exploration and evaluation assets	3		1,826,667	$	1,555,903
		$	16,230,583	$	15,100,124
LIABILITIES
Current Liabilities
Trade and other payables	4	$	2,127,639	$	1,168,547
Flow-through sharepremium liaibility	5		3,817,306	$	3,359,099
			5,944,945		4,527,646
EQUITY
Common shares	6		24,373,260	$	18,285,495
Equity reserves	6		8,870,686	$	8,648,770
Deficit			(22,958,308)		(16,361,787)
			10,285,638		10,572,478
		$	16,230,583	$	15,100,124

Nature of Operations (Note 1)

These financial statements were authorized for issue by the Board of Directors on December 29, 2021

Approved by the Board of Directors:

(Signed) Evan Cranston ( Signed) Mathew O’Hara Evan Cranston, Chairman of the Board Mathew O’Hara, Director

See accompanying notes to the condensed interim financial statements

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Condensed Interim Statements of Cash Flows (unaudited)

Benz Mining Corp.

			Three-month	periods ended	periods ended		Six-month periods ended	Six-month periods ended	Six-month periods ended
			October		31,		October		31,
	Note		2021		2020		2021		2020
Cash Flow from Operating Activities
Net loss for the period		$	(3,202,409)	$	(3,882,950)	$	(6,596,521)	$	(5,007,881)
Adjustments for non-cash items:
Share based payments	7		-		1,878,002		1,896		2,155,611
Settlement of flow-through share liability	6		(1,551,434)		-		(3,269,066)		-
Changes in non-cash working capital:									-
Sales taxes recoverable			(830,049)		(90,117)		(790,559)		(110,870)
Other receivables			(116,184)		-		(116,184)		-
Prepaid expenses and deposits			14,570		50,000		1,309		(6,157)
Trade and otherpayables			(423,623)		416,824		959,092		492,849
Net cash flows used in operatingactivities			(6,109,129)		(1,628,241)		(9,810,033)		(2,476,448)
Cash Flow from Investing Activities
Additions to exploration and evaluation assets	3		(160,764)		(150,000)		(160,764)		(225,000)
Net cash flows used in investingactivities			(160,764)		(150,000)		(160,764)		(225,000)
Cash Flow from Financing Activities
Issuance of common shares for cash, net costs	6		9,731,608		13,220,000		9,731,608		16,657,118
Proceeds from exercise of warrants	6		121,000		(474,848)		172,000		-
Proceeds from the exercise of options	6		21,450		1,074,527		21,450		1,074,527
Net cash flowsprovided byfinancingactivities			9,874,058		13,819,679		9,925,058		17,731,645
Net change in cash and cash equivalents			3,604,165		12,041,438		(45,739)		15,030,197
Cash and Cash Equivalents, Beginning of Period			9,494,863		5,339,130		13,144,767		2,350,371
Cash and Cash Equivalents, End of Period		$	13,099,028	$	17,380,568	$	13,099,028	$	17,380,568
Cash and cash equivalents consist of:
Cash		$	13,074,028	$	17,380,568	$	13,074,028	$	17,380,568
Redeemableguaranteed investment certificate("GIC")			25,000		-		25,000		-
Total Cash and Cash Equivalents		$	13,099,028	$	17,380,568	$	13,099,028	$	17,380,568

See accompanying notes to the condensed interim financial statements

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Benz Mining Corp.

Condensed Interim Statements of Changes in Equity (unaudited)

Note	Equity Number Amount Reserves Deficit Total Equity Common Shares
Balance, April 30, 2020 Common shares issued for cash: Private placement 6 Share issuance costs 6 Exercise of options 6 Exercise of warrants 6 Shares issued for exploration and evaluation assets 3 Warrants issued for exploration and evaluation assets 3 Share based payments 6 Expired stock options 6 Net loss for theyear	57,215,118 7,388,166 $ 1,981,393 $ (6,904,204) $ 2,465,355 $ 27,257,142 12,392,147 4,427,853 - 16,820,000 - (963,281) 427,720 - (535,561) 3,502,750 1,154,000 (554,421) - 599,579 3,333,304 651,299 (176,351) - 474,948 2,124,177 461,825 - - 461,825 - - 539,078 - 539,078 - - 2,155,611 - 2,155,611 - - (1,536) 1,536 - - - - (5,007,881) (5,007,881)
Balance, October 31, 2020	93,432,491 21,084,156 $ 8,799,347 $ (11,910,549) $ 17,972,954 $
Balance, April 30, 2021 Common shares issued for cash: Private placement 6 Share issuance costs 6 Premium on flow-through shares 5 Exercise of warrants 6 Exercise of options 6 Shares issued for exploration and evaluation assets 3 Share based payments 6 Net loss for theyear	98,938,756 18,285,495 $ 8,648,770 $ (16,361,787) $ 10,572,478 $ 9,090,909 10,000,000 - 10,000,000 - (592,230) 323,838 (268,392) - (3,727,273) - - (3,727,273) 1,225,000 257,582 (85,582) - 172,000 145,000 39,686 (18,236) - 21,450 174,658 110,000 - - 110,000 - - 1,896 - 1,896 - - - (6,596,521) (6,596,521)
Balance, October 31, 2021	109,574,323 24,373,260 $ 8,870,686 $ (22,958,308) $ 10,285,638 $

See accompanying notes to the condensed interim financial statements

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Benz Mining Corp. Notes to the Condensed Interim Financial Statements (unaudited) Three and Nine-Month periods ended October 31, 2021 and 2020

1. NATURE OF OPERATIONS

Benz Mining Corp. (“Benz” or the “Company”) is involved in the acquisition, exploration and exploitation of mineral properties located in the Americas. The Company’s head and registered offices are located at 927 Poirier Street, Coquitlam, British Columbia, V3J 6C3. The Company’s common shares are traded on the TSX-V Exchange.

Since March 2020, several measures have been implemented in Canada and the rest of the world in response to the increased impact from the novel coronavirus (“COVID-19”). While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on business operations cannot be reasonably estimated at this time. The Company anticipates this could have an adverse impact on its business, financial performance, financial position and cash flows in 2021.

2. BASIS OF PRESENTATION

These unaudited condensed interim financial statements (“Financial Statements”) of the Company have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting” following acceptable accounting policies under International Financial Reporting Standards (“IFRS”). As a result, these Financial Statements should be read in conjunction with the Company’s audited financial statements for the year ended April 30, 2021.

These Financial Statements have been prepared on an accruals basis and are based on historical costs, except for certain financial instruments classified as financial instruments at fair value through profit or loss. All amounts are presented in Canadian dollars unless otherwise noted.

Estimates and judgements are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. In preparing the Financial Statements, the judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the audited consolidated financial statements as at and for the year ended April 30, 2021.

Notes to the Financial Statements (continued)

3. EXPLORATION AND EVALUATION ASSETS

The Company has accumulated the following acquisition expenditures during the six-month periods ended October 31, 2021 and 2020:

ended October 31, 2021 and 2020:
		Eastmain	Windy Mountain		Total
		Property	Property
Balance, April 30, 2020	$	330,000	$ -	$	330,000
Acquisition costs – issuance of shares		461,825	-		461,825
Acquisition costs – issuance of warrants		539,078	-		539,078
Acquisition costs – cash		225,000	-		225,000
Balance, October 31, 2020	$	1,555,903	$ -	$	1,555,903
Balance, April 30, 2021	$	1,555,903	$ -	$	1,555,903
Acquisition costs – issuance of shares		110,000	-		110,000
Acquisition costs – cash		150,000	10,764		160,764
Balance, October 31, 2021	$	1,815,903	$ 10,764	$	1,826,667

4. RELATED PARTY TRANSACTIONS AND BALANCES

Related party transactions are measured at the estimated fair values of the services provided or goods received. Related party transactions not disclosed elsewhere in these Financial Statements are as follows:

a) Key Management Compensation

Key management personnel include the members of the Board of Directors and officers of the Company, who have the authority and responsibility for planning, directing, and controlling the activities of the Company. The remuneration of directors and officers for three and six-month periods ended October 31, 2021 and 2020 was as follows:

ods ended October 31, 2021 and 2020	was as follows:	was as follows:
	Three-months ended		Six-months ended
	October 31,	October 31,	October 31,	October 31,
	2021	2020	2021	2020
Salaries, bonuses, fees and
benefits
Management fees to the officers
and directors of the Company	$ 250,123	$ 50,322	$ 479,590	$ 331,762
Share-based payments
Officers and directors of the
Company	-	1,650,801	-	1,838,283
	$250,123	$1,701,123	$479,590	$2,170,045

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Notes to the Financial Statements (continued)

• b) In the normal course of operations, the Company transacts with companies related to its directors or officers. Excluding the amounts referenced in (a) above during the three and sixmonth periods ended October 31, 2021 the Company incurred fees for accounting and administrative services totaling $7,858 and $17,113 and for geological consulting services totaling $122,237 and $124,551 respectively from companies which are related parties to Executive Chairman, Evan Cranston.

• c) As at October 31, 2021, the following amounts remain payable to related parties, and are included in trade and other payables:

included in trade and other payables:
	October 31, 2021	April 30, 2021
Management fees	$ 64,557	$ 187,989
Geological services	4,659	-
	$69,216	$187,989

5. FLOW-THROUGH SHARE LIABILITY

The following is a continuity schedule of the liability portion of the flow-through share issuances.

Balance, April 30, 2020	$ -
Liability incurred on flow-through shares issued (October 2020)	4,828,571
Settlement of flow-through liabilityupon incurringexploration expenditures	(1,469,472)
Balance, April 30, 2021	$ 3,359,099
Liability incurred on flow-through shares issued (August 2021)	3,727,273
Settlement of flow-through liabilityupon incurringexploration expenditures	(3,269,066)
Balance, October 31, 2021	$ 3,817,306

6. SHARE CAPITAL

• a) Authorized: Unlimited common shares, without par value Unlimited preferred shares, without par value

b) Issued: During the six-month period ended October 31, 2021

On August 31, 2021, the Company announced the completion of a non-brokered private placement of 9,090,909 common shares issued on a flow-through basis (the "FT shares") at a price of $1.10 per share for gross proceeds of up to $10,000,000. The Company incurred share issuance costs of $268,392 in the form of finders’ fees and professional fees in addition to issuing compensation warrants valued at $323,838.

On October 22, 2021 the Company issued 174,658 common shares pursuant to the terms of the Eastmain option agreement (see Note 3) with a value of $110,000.

During the six-month period ended October 31, 2021, the Company issued 1,225,000 shares on the exercise of warrants for proceeds of $172,000. The fair value of these warrants, totaling $85,582, was transferred to share capital from reserves.

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Notes to the Financial Statements (continued)

During the six-month period ended October 31, 2021, the Company issued 145,000 shares on the exercise of options for proceeds of $21,450. The fair value of these options, totaling $18,236, was transferred to share capital from reserves.

Escrow Shares

As at October 31, 2021 and 2020, an amount of 222,857 common shares are held in escrow subject to an escrow agreement with Tusk Exploration Ltd. These shares continue to be held due to unmet contractual obligations.

c) Issued: During the six-month period ended October 31, 2020

In May 2020, the Company issued 2,000,000 common shares pursuant to the terms of the Eastmain option agreement with a value of $360,000. In October 2020, a further 124,177 shares with a value of $101,825 were issued pursuant to the terms of the agreement.

In June 2020, the Company closed a non-brokered flow-through private placement of 12,000,000 flow through units at a price of $0.30 per unit, for gross proceeds of $3,600,000. Each flow-through unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder to purchase one non-flow through common share at a price of $0.17 per share until June 1, 2023. The Company incurred share issuance costs of $162,882 in the form of finders’ fees and professional fees in addition to issuing compensation units valued at $427,720.

In October 2020, the Company closed a non-brokered flow-through private placement of 14,857,142 flow through units at a price of $0.875 and 400,000 hard dollar units at $0.55 per unit, for aggregate gross proceeds of $13,219,999. Each flow-through unit and hard dollar unit consists of one common share of the Company and one-half common share purchase warrant. Each whole warrant entitles the holder to purchase one non-flow through common share at a price of $1.00 per share until October 29, 2022. The Company incurred share issuance costs of $535,561 in the form of finders’ fees.

During the six months ended October 31, 2020, the Company issued 3,502,750 shares on the exercise of options for $599,579. The fair value of these options totaling $554,421 was transferred to share capital from reserves.

During the six months ended October 31, 2020, the Company issued 3,333,304 shares on the exercise of warrants for $474,948. The fair value of these warrants totaling $176,351 was transferred to share capital from reserves.

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Notes to the Financial Statements (continued)

d) Share purchase warrants and compensation warrants

A summary of changes in share purchase warrants is as follows:

	Underlying	Weighted Average
	Shares	Exercise Price
Balance, April 30, 2020	27,773,024	$ 0.12
Issued	23,628,571	0.43
Exercised	(3,333,304)	0.12
Balance, October 31, 2020	48,068,291	$ 0.27
Balance, April 30, 2021	46,609,776	$ 0.28
Issued	909,090	0.65
Exercised	(1,225,000)	0.14
Balance, October 31, 2021	46,293,866	$ 0.29

Pursuant to the August 2021 private placement of 9,090,909 flow-through shares, the Company paid finders’ fees consisting of a cash payment in the aggregate amount of $268,392 and the issue of 909,090 compensation warrants with a fair value of $328,838. Each compensation warrant is exercisable at a price of $0.65 until August 31, 2023 and entitles the holder to purchase one common share of the Company.

In May 2020, the Company also issued 4,000,000 warrants pursuant to the terms of the Eastmain option agreement (see Note 3).

In June, 2020, the Company issued 12,000,000 warrants through the financing described in the section (c) above. Each warrant entitles the holder to acquire one additional share at the price of $0.17 until June 1, 2023.

In October 2020, the Company issued 15,257,142 half warrants through the financing described in the previous section. Each whole warrant entitles the holder to acquire one additional share at the price of $1.00 until October 29, 2022.

The warrants issued during the six-month period ended October 2020 were valued using the Black-Scholes pricing model, with a gross amount of $6,628,003 included in reserves based on the relative fair values of the shares and warrants issued. The following assumptions were used for the Black-Scholes valuation of the warrants granted:

	October 31, 2021	October 31, 2020
Weighted average assumptions:
Risk-free interest rate	0.43%	0.26-0.34%
Expected dividend yield	$0.00	$0.00
Expected option life (years)	2	2-3
Expected stock price volatility	118%	118-127%
Weighted average fair value at measurement date	$0.36	$0.13-0.40

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Notes to the Financial Statements (continued)

Warrants outstanding as at October 31, 2021 and April 30, 2021, are:

Exercise Price Expiry Date per Share	Outstanding and Exercisable
	October 31, 2021 April 30, 2021
October 29, 2022 $1.00 April 27, 2023 $0.12 June 1, 2023 $0.17 August 31,2023 $0.65	7,628,571 7,628,571 26,910,750 27,635,750 10,845 ,455 11,345,455 909,090 -
	46,293,866 46,609,776

`

e) Compensation Units

No compensation units were issued during the three or six-month periods ended October 31, 2021.

A summary of changes in compensation units is as follows:

2021. A summary of changes in compensation	units is as follows:
	Underlying Shares	Weighted Average Exercise
		Price
Balance, April 30, 2020	2,115,652	$ 0.076
Issued	1,440,000	0.17
Balance, October 31, 2020 and 2021	3,555,652	$ 0.11

Pursuant to the June 2020 private placement of 12,000,000 flow-through units, the Company paid finders’ fees consisting of a cash payment in the aggregate amount of $144,000 and 1,440,000 compensation units with a fair value of $427,720. Each compensation unit is exercisable at a price of $0.17 until June 1, 2023 and entitles the holder to purchase one unit (comprised of one share and one warrant). Each warrant received upon the exercise of a compensation unit entitles the holder to purchase one share at price of $0.17 per warrant until June 1, 2023.

The following assumptions were used for the Black-Scholes valuation of the warrants granted:

	October 31, 2020
Weighted average assumptions:
Risk-free interest rate	0.34%
Expected dividend yield	$0.00
Expected option life (years)	3
Expected stock price volatility	118%
Weighted average fair value at measurement date	$0.15

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Notes to the Financial Statements (continued)

f) Stock options

A summary of changes in stock options is as follows:

Stock options A summary of changes in stock options is as follows:
	Underlying	Weighted Average
	Shares	Exercise Price
Stock options outstanding, April 30, 2020	5,720,598	$0.16
Granted	5,300,000	$0.53
Exercised	(3,502,750)	$0.17
Cancelled	(12,885)	$3.00
Stock options outstanding, October 31, 2020	7,504,963	$0.41
Stock options exercisable, October 31, 2020	7,465,901	$0.41
Stock options outstanding, April 30, 2021	7,457,213	$0.41
Granted	-	-
Exercised	(145,000)	$0.15
Cancelled	-	-
Stock options outstanding, October 31, 2021	7,312,213	$0.42
Stock options exercisable, October 31, 2021	7,312,213	$0.42

In May 2020, Benz cancelled an aggregate of 12,885 stock options previously held by a consultant.

In June 2020, the Company granted 1,400,000 stock options to eligible parties, exercisable at a price of $0.21 per share for a period of five years.

In October 2020, the Company granted 3,900,000 stock options to eligible parties, exercisable at a price of $0.64 per share for a period of three years.

During the six months ended October 31, 2021, 145,000 (2020 - 3,502,750) stock options were exercised for proceeds of $21,450 (2020 - $599,579).

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Notes to the Financial Statements (continued)

During the three and six-month periods ended October 31, 2021, the Company recorded sharebased payments of $Nil and $1,896 respectively (2020 - $1,878,002 and $2,155,611). The fair value of stock options was estimated using the Black-Scholes Option Pricing Model with the following assumptions:

following assumptions:
	October 31, 2021	October 31, 2020
Weighted average assumptions:
Risk-free interest rate	-	0.27-0.43%
Expected dividend yield	-	$0.00
Expected option life (years)	-	3-5
Expected stock price volatility	-	117-132%
Weighted average fair value at measurement date	-	$0.18-0.69

A summary of stock options outstanding as at October 31, 2021, is as follows:

			Weighted
			Average
Number of	Number of		Remaining
Stock Options	Stock Options	Exercise	Contractual	Intrinsic
Outstanding	Exercisable	Price	Life(inyears)	Value	Expiry Date
9,713	9,713	$3.00	3.22	$0.00	January 18, 2025
137,500	137,500	$0.265	5.84	$0.37	August 31, 2027
70,000	70,000	$0.076	3.34	$0.55	March 3, 2025
2,100,000	2,100,000	$0.12	3.49	$0.51	April 27, 2025
1,095,000	1,095,000	$0.21	3.59	$0.42	June 1, 2025
3,900,000	3,900,000	$0.64	1.92	$0.00	October 2,2023
7,312,213	7,312,213		2.73

7. CAPITAL MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its properties and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company includes the components of shareholders’ equity.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or adjust the amount of cash and cash equivalents. Management reviews the capital structure on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

The Company is not subject to externally imposed capital requirements. There were no changes to the Company’s capital management during the six-month period ended October 31, 2021.

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Notes to the Financial Statements (continued)

8. FINANCIAL INSTRUMENTS AND RISK

The Company’s financial instruments consist of cash and cash equivalents, and trade and other payables. The fair value of the financial instruments approximates their carrying values, unless otherwise noted.

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

a) Credit risk

The Company’s credit risk is mainly attributable to its liquid financial assets: cash and cash equivalents. The Company deposits cash with high credit quality financial institutions and credit risk is considered to be minimal. The Company’s maximum exposure to credit risk is $13,099,028 which is the carrying value of the Company’s cash and cash equivalents at October 31, 2021.

b) Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at October 31, 2021, the Company had available a cash and cash equivalents balance of $13,099,028 (April 30, 2021 - $13,144,767) to settle current liabilities of $5,944,945 (April 30, 2021 - $4,527,646).

c) Foreign exchange risk

Foreign exchange risk is the risk that the Company’s financial instruments will fluctuate in value as a result of movements in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities held by the Company are not denominated in Canadian dollars. As at July 31, 2021, the Company is exposed to currency risk as some transactions and balances are denominated in Australian dollars. As at October 31, 2021, a 10% change of the Canadian dollar relative to the Australian dollar would have net financial impact of approximately $49,766 (April 30, 2021 - $147,000). The Company does not use derivative instruments to hedge exposure to foreign exchange rate risk.

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