Canada One Mining Corp. — Audit Report / Information 2020

Nov 27, 2020

Canada One Mining Corp. ( An Exploration Stage Company )

Consolidated Financial Statements

July 31, 2020 and 2019

(Expressed in Canadian Dollars)

Head Office

510 – 580 Hornby Street Vancouver, BC, V6C 3B6

Records Office

Suite 2200, HSBC Building 885 West Georgia Street Vancouver, BC, V6C 3E8

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Canada One Mining Corp.

Opinion

We have audited the accompanying consolidated financial statements of Canada One Mining Corp. (the “Company”), which comprise the consolidated statements of financial position as at July 31, 2020 and 2019, and the consolidated statements of net loss and comprehensive loss, changes in shareholders’ deficiency, and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at July 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred a net loss of $276,222 during the year ended July 31, 2020 and, as of that date, the Company has an accumulated deficit of $22,890,264 and a working capital deficiency of $747,516. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“DAVIDSON & COMPANY LLP”

Vancouver, Canada November 27, 2020

Chartered Professional Accountants

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Canada One Mining Corp. (An Exploration Stage Company) Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

As at July 31,

	2020 2019
Assets Current GST receivable Prepaid Exploration and evaluation assets_(Note 4) Reclamation bonds(Note 5) Liabilities Current Bank indebtedness Accounts payable and accrued liabilities Due to related parties(Note 10) Loans payable(Note 7 and 10) Indemnification provision(Note 8) Shareholders’ Deficiency Share capital(Note 9) Share-based payment reserve(Note 9)_ Deficit	$ 16,651 $ 25,332 2,000 -
	18,651 25,332 13,646 13,646 23,000 23,000
	$ 55,297 $ 61,978
	$ 9,319 $ 37 215,750 232,867 402,868 225,575 120,230 107,347 18,000 18,000
	766,167 583,826
	19,923,93719,923,937 2,255,457 2,168,257 (22,890,264)(22,614,042)
	(710,870) (521,848)
	$ 55,297$ 61,978

Nature of operations and going concern (Note 1)

Approved on behalf of the Board:	“Michael Kinley” Michael Kinley Director	“Peter Berdusco”
		Peter Berdusco Director

See accompanying notes to the consolidated financial statements.

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Canada One Mining Corp. (An Exploration Stage Company) Consolidated Statements of Net Loss and Comprehensive Loss

(Expressed in Canadian Dollars) For the years ended July 31,

			2020 2019
Expenses Consulting Forgiveness of accounts receivable Interest expense_(Note 7) Investor communications Management fees (_Note 10) Office and general (Note 10) Other income Professional fees Regulatory fees Share based compensation (Note 10) Write-off of accounts payable (Note 6) Write-off of loan payable (Note 7) Net loss and comprehensive loss for the year Loss per share – basic and diluted Weighted average number of common shares out	standing		$ - $ 41,670 - 12,696 1,595 1,591 4,320 - 156,000 156,000 30,906 27,130 - (1,748) 31,621 37,681 14,580 9,894 87,200 - - (67,000) (50,000) -
			$ (276,222)$ (217,914)
			$ (0.01) $ (0.01)
			22,613,456 22,493,113

See accompanying notes to the consolidated financial statements.

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Canada One Mining Corp. (An Exploration Stage Company)

Consolidated Statements of Changes in Shareholders’ Deficiency

(Expressed in Canadian Dollars)

	Number of shares Share capital Share-based payment reserve Deficit Total shareholders' deficiency
Balance, July 31, 2018 Warrants exercised Net loss for the year Balance, July 31, 2019 Share based compensation Net loss for the year Balance,July 31, 2020	21,542,110 19,763,235 $ 2,168,257 $ (22,396,128) $ (464,636) $ 1,071,346 160,702 - - 160,702 - - - (217,914) (217,914)
	22,613,456 19,923,937 2,168,257 (22,614,042) (521,848) - - 87,200 - 87,200 - - - (276,222) (276,222)
	22,613,456 19,923,937 $ 2,255,457 $ (22,890,264) $ (710,870) $

See accompanying notes to the consolidated financial statements.

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Canada One Mining Corp. (An Exploration Stage Company) Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars) For the years ended July 31,

	2020 2019
Operating Activities Net loss for the year Items not involving cash: Loan interest Forgiveness of accounts receivable Share based compensation Write-off of accounts payable Write-off of loan payable Change in non-cash working capital items: GST receivable Due to related parties Accounts payable and accrued liabilities Prepaid Cash used in operating activities Investing Activities Expenditures on exploration and evaluation Cash used in investing activities Financing Activities Loan proceeds Proceeds from warrants exercised Cash provided by financing activities Change in cash Cash (bank indebtedness), beginning of the year **Bank indebtedness, end of the year **	$ (276,222) $ (217,914) 1,595 1,591 - 12,696 87,200 - - (67,000) (50,000) - 8,681 10,917 177,293 30,426 (10,463) 34,135 (2,000) -
	(63,916) (195,149)
	(6,654) (1,819)
	(6,654) (1,819)
	61,288 32,747 - 160,702
	61,288 193,449
	(9,282) (3,519) (37) 3,482
	$ (9,319) $ (37)

Supplemental cash flow information (Note 11)

See accompanying notes to the consolidated financial statements.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

1. Nature of Operations and Going Concern

Canada One Mining Corp. (the “Company”) is an exploration stage company incorporated under the laws of British Columbia and its shares trade on the TSX Venture Exchange (“TSX-V”) under the symbol “CONE” (formerly “URA”). The Company’s registered office is located at Suite 510 – 580 Hornby Street, Vancouver, British Columbia, Canada, V6C 3B6.

The Company is focused on the exploration of its resource properties in British Columbia and has not yet determined whether its exploration and evaluation assets contain mineral reserves that are economically recoverable.

These consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business.

The recovery of amounts shown as acquisition costs of exploration and evaluation assets and the related deferred exploration costs for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development, and upon future profitable operations from the properties or proceeds from the disposition thereof.

The Company’s ability to continue as a going concern is dependent on the Company being able to satisfy its liabilities as they become due and to obtain the necessary financing to complete the exploration and development of its exploration and evaluation asset interests, the attainment of profitable mining operations and/or the receipt of proceeds from the disposition of its exploration and evaluation asset interests.

These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary, should the Company be unable to continue as a going concern.

The Company reported a net loss and comprehensive loss of $276,222 (2019 - $217,914) for the year ended July 31, 2020, has an accumulated deficit of $22,890,264 at July 31, 2020 (2019 - $22,614,042) and a working capital deficiency of $747,516 at July 31, 2020 (2019 - $558,494). The Company has no meaningful sources of generating cash, in either the short- or long-term, other than accessing the capital markets for the placement of its equity securities. The Company is dependent on the capital markets to provide funding for future activities and outlays, and these markets can be highly variable and volatile over a multi-year cycle. A deterioration of those capital markets could have a material adverse effect on the Company’s prospects for success or even for survival. Management is actively engaged in the review and due diligence on opportunities of merit in the mining sector and is seeking to raise the necessary capital to meet its funding requirements. There can be no assurance that management’s plan will be successful. These uncertainties cast significant doubt upon the Company’s ability to continue as a going concern.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

2. Significant Accounting Policies

a) Basis of Presentation

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

The policies applied in these consolidated financial statements are presented below and are based on IFRS issued and effective as of July 31, 2020.

These consolidated financial statements have been prepared under the historical cost basis, except for financial instruments classified as available-for-sale and fair value through profit or loss. These consolidated financial statements have been prepared under the accrual basis of accounting, except for cash flow information.

The Board of Directors approved the consolidated financial statements on November 27, 2020.

b) Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Anglo-Canadian Minerals, Corp. (incorporated in Nevada, USA) and Anglo-Canadian Gold Corp. (incorporated in British Columbia). Both subsidiaries are holding corporations. All intercompany transactions and balances have been eliminated.

c)

Foreign Currency Transactions

The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for each entity within the Company. The functional currency for all entities within the Company is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21 The Effects of Changes in Foreign Exchange Rates .

Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the rate of exchange at the consolidated statement of financial position date while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transaction. Exchange gains and losses arising on translation are reflected in profit or loss for the year.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

2. Significant Accounting Policies (continued)

d) Estimates and Judgments

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting year, that could result in a material adjustment of the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

• i) The carrying value and the recoverability of exploration and evaluation assets, which are included in the consolidated statements of financial position.

• ii) The inputs in the Black-Scholes option pricing model to value stock options and agent warrants.

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

• i) Economic recoverability and probability of future benefits of exploration and evaluation costs.

Management has determined that exploration, evaluation and related costs incurred that were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits, including geologic and other technical information, history of conversion of mineral deposits with similar characteristics to its own properties to proven and probable mineral reserves, scoping and feasibility studies, accessible facilities and existing permits.

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

• i) Valuation of share-based compensation

The Company uses the Black-Scholes option pricing model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rates and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity settled benefits.

e) Exploration and Evaluation Assets

Upon acquiring the legal right to explore a property, costs related to the acquisition, exploration and development of exploration and evaluation assets are capitalized by property until the commencement of commercial production. If commercially profitable ore reserves are developed, capitalized costs of the related exploration and evaluation assets are reclassified as mining assets and amortized using the unit-of-production method. If, after management review, it is determined that capitalized acquisition, exploration and development costs are not recoverable over the estimated economic life of the exploration and evaluation assets, or the exploration and evaluation assets are abandoned, or management deems there to be an impairment in value, the exploration and evaluation assets are written down to their net realizable value.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

2. Significant Accounting Policies (continued)

e) Exploration and Evaluation Assets (continued)

Any option payments received by the Company from third parties or tax credits refunded to the Company are credited to the capitalized cost of the exploration and evaluation assets. If payments received exceed the capitalized cost of the exploration and evaluation assets, the excess is recognized as income in the year received. The amounts shown for exploration and evaluation assets do not necessarily represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof.

f) Impairment

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

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

g) Share Capital

Share capital issued for non-monetary consideration is recorded at fair market value pursuant to the agreement to issue shares as determined by the Board of Directors of the Company based on the trading price of the shares on the TSX-V.

h) Provision for Environmental Rehabilitation

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

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

2. Significant Accounting Policies (continued)

h) Provision for Environmental Rehabilitation (continued)

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to exploration and evaluation assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates. Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit or loss for the period.

i)

Flow-Through Shares

Canadian income tax legislation permits an enterprise to issue securities referred to as flow-through shares, whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures. The Company accounts for flow-through shares whereby the premium paid for the flow-through shares in excess of the market value of the shares without flowthrough features at the time of issue is credited to other liabilities. The flow-through premium is reversed into profit or loss as the qualifying Canadian exploration expenditures are made.

j)

Share Issue Costs

Costs directly identifiable with the raising of capital will be charged against the related share capital. Costs related to shares not yet issued are recorded as deferred financing costs, which will be deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related share capital or charged to operations if the shares are not issued.

k)

Share-Based Payments

The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options granted to employees is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. The amount is recognized as an expense with a corresponding increase to share-based payment reserves. Consideration paid for the shares on the exercise of stock options is credited to share capital and the related share-based payment in the share-based payment reserve is transferred to share capital.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment using the Black-Scholes option pricing model. Otherwise, share-based payments to non-employees are measured at the fair value of the goods or services received.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

2. Significant Accounting Policies (continued)

l) Income Taxes

Income tax expense is comprised of current and deferred income taxes. Current income tax and deferred income tax are recognized in profit or loss, except to the extent that they relate to items recognized directly in equity or equity investments.

Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and losses carried forward. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period in which the change is enacted or substantively enacted. The amount of deferred income tax assets is limited to the amount of the benefit that is probable of being realized.

m) Loss per Share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method for calculating diluted loss per share. Under this method, the dilutive effect on loss per share is calculated presuming the proceeds of exercise of outstanding options, warrants and similar instruments would be used to repurchase common shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.

n) Financial Instruments

(i) Financial assets

All financial assets are measured at fair value on initial recognition. Measurement in subsequent periods depends on the financial assets’ classification, as described below:

Fair value through profit or loss (“FVTPL”): Financial instruments designated at FVTPL are initially recognized and subsequently measured at fair value with changes in those fair values charged immediately to net earnings. Financial instruments under this classification include cash.

Amortized cost: Financial instruments designated at amortized cost are initially recognized at fair value, net of directly attributable transaction costs, and are subsequently measured at amortized cost using the effective interest method. Financial instruments under this classification include reclamation bonds.

Fair value through other comprehensive income (“FVOCI”): Financial instruments designated at FVOCI are initially recognized at fair value, net of directly attributable transaction costs, and are subsequently measured at fair value with changes in fair value recognized in other comprehensive income, net of tax.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

2. Significant Accounting Policies (continued)

n) Financial Instruments (continued)

(ii) Financial liabilities

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or amortized cost. Financial liabilities classified as amortized cost financial liabilities are initially recognized at fair value less directly attributable transaction costs. The Company’s cash indebtedness, accounts payable and accrued liabilities, due to related parties and loans payable are classified at amortized cost. The Company does not currently have any FVTPL financial liabilities.

(iii) Impairment of financial assets

An entity is required to recognize expected credit losses when financial instruments are initially recognized and to update the amount of expected credit losses recognized at each reporting date to reflect changes in the credit risk of the financial instruments.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods, if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized.

o) Valuation of Equity Units Issued in Private Placements

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the most easily measured component based on fair value and then the residual value, if any, to the less easily measurable component.

The fair value of common shares issued in a private placement are determined to be the more easily measurable component and are valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded in reserves.

p) Change in Accounting Standards

The following new accounting standards and interpretations have been adopted during the period:

IFRS 16 Leases specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17 Leases. The standard is applicable to annual periods beginning on or after January 1, 2019.

The application of this standard did not have any impact on the Company’s existing accounting policies or financial statement presentation.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

3. Risk Management and Financial Instruments

The carrying values of the Company’s cash, reclamation bonds, accounts payable and accrued liabilities, loans payable and due to related parties approximate their fair value due to their shortterm nature.

The Company’s risk exposure and the impact on the Company’s financial instruments are summarized below.

Credit Risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations.

The Company’s credit risk is primarily attributable to its holdings of cash and reclamation bonds. The carrying amounts of these financial assets represent the maximum credit exposure. The Company manages credit risk by placing its cash with major financial institutions in conservative cash-based liquid investments. Reclamation bonds are held with state or provincial government authorities. The Company monitors its exposure to credit risk on an ongoing basis.

Liquidity Risk

Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is forecasting cash used in operations and anticipating investing and financing activities.

Accounts payable have maturities of 90 days or less and are subject to normal trade terms. Loans payable are due on demand.

Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. The risks to which the Company is exposed are:

i) Interest rate risk

The Company is not exposed to significant interest rate risk.

ii) Foreign currency risk

The Company’s functional currency is the Canadian dollar. Consequently, fluctuations of the Canadian dollar in relation to other currencies impact the fair value of financial assets and liabilities and operating results. The Company does not manage currency risks through hedging or other currency management tools.

iii) Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk. The Company is not exposed to significant other price risk.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

3. Risk Management and Financial Instruments

Fair value

Financial instruments that are measured at fair value using inputs, which are classified within a hierarchy that prioritizes their significance. The three levels of the fair value hierarchy are:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and Level 3 - Inputs that are not based on observable market data.

Cash (cash indebtedness) is measured using level 1 of the fair value hierarchy.

Given that they will mature shortly, the fair value of accounts payable and accrued liabilities and loans payable approximate their carrying value.

4. Exploration and Evaluation Assets

Expenditures incurred on exploration and evaluation assets are as follows:

Balance, July 31, 2018, 2019 and 2020	Zeus
	$ 13,646

Title to Exploration and Evaluation Assets

Although the Company has taken steps to verify the title to exploration and evaluation assets in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements or transfers and title may be affected by undetected defects.

Canadian Exploration and Evaluation Assets

Zeus, British Columbia

The Company has a 100% interest in the Zeus claims located near Lillooet, British Columbia. The claims are subject to a 2% Net Smelter Return (“NSR”), which may be purchased for $500,000 per 1% NSR.

Environmental

The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including provisions relating to property reclamation, discharge of hazardous material and other matters. The Company may also be held liable should environmental problems be discovered that were caused by former owners and operators of its properties and properties in which it has previously had an interest. The Company conducts its mineral exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any existing environmental problems related to any of its current or former properties that may result in material liability to the Company.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

4. Exploration and Evaluation Assets (continued)

Environmental legislation is becoming increasingly stringent and costs and expenses of regulatory compliance are increasing. The impact of new and future environmental legislation on the Company’s operations may cause additional expenses and restrictions.

If the restrictions adversely affect the scope of exploration and development on the exploration and evaluation assets interests, the potential for production on the property may be diminished or negated.

5. Reclamation Bonds

The Company has posted security deposits of $23,000 (July 31, 2019 - $23,000) with the British Columbia government to cover potential reclamation costs for certain properties in British Columbia. These deposits earn interest at a nominal rate.

6. Accounts Payable and Accrued Liabilities

During the year ended July 31, 2019, the Company wrote off outstanding debt of $67,000 pursuant to settlement agreements entered into with arm’s length vendors.

7. Loans Payable

At July 31, 2020, the following loans were outstanding:

• i) a total of $1,452 (2019 - $1,452) of previously accrued interest remains owing on a $39,305 loan, the principal of which has been repaid.

• ii) a total of $24,743 (2019 - $23,148) remains owing on a loan bearing interest at a rate of 8% per annum.

• iii) a total of $nil (2019 - $50,000) remains owing on a non-interest bearing loan which was repayable in February 2016. Pursuant to the terms of the agreement, the lender had the right to convert the $50,000 loan amount into common shares of the Company at $1.00 per share. During the year ended July 31, 2020, the loan was written off pursuant to the statute of limitations.

• iv) a total of $61,288 relating to additional loan proceeds were received during the year ended July 31, 2020 which were unsecured, non-interest bearing and due on demand. As of July 31, 2020, a total of $84,035 (2019 - $32,747) was still owing, the balances of which were unsecured, noninterest bearing and due on demand.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

8. Indemnification provision

The Company raised capital through the issuance of flow-through shares in 2014, which provided indemnity to the shareholders for additional taxes payable if the Company was unable to, or failed to, expend and renounce the qualifying expenditures as agreed, without limiting the recourse of the subscriber. The Company was not able to spend approximately $17,067 of the flow-through funds raised. Accordingly, the Company is exposed to costs for the indemnification of the shareholders. The Company estimated the potential shareholder indemnification liability in the amount of $18,000 (2019 - $18,000) as at July 31, 2020. To estimate the potential indemnification liability, management used a combined tax rate of 45.8% on unspent flow-through funds raised. The accrued amounts are subject to measurement uncertainty due to the tax filing positions of the subscribers, their tax rates and the amount of personal taxes that may be payable and the interpretation of the indemnity agreements, which will not be known until potentially affected subscribers are reassessed for their tax positions by the Canada Revenue Agency and these amounts become known to the Company.

9. Share Capital

Authorized

The Company has an unlimited number of common shares without par value authorized for issuance.

Shares Issued

During the year ended July 31, 2020, the Company had no share activity.

During the year ended July 31, 2019, the Company issued 1,071,346 common shares pursuant to the exercise of warrants for gross proceeds of $160,702.

Stock Options

As at July 31, 2020, the Company has a stock option plan (the “Plan") allowing for the reservation of common shares issuable under the Plan to a maximum of 20% of the issued and outstanding common shares of the Company. The vesting of each option grant is determined by the Board of Directors, consistent with TSX-V rules.

When an employee is terminated or resigns, the date of expiry of the options held is generally revised to expire ninety days after the final day of employment. Similarly, options granted to a consultant expire ninety days after the contract ends and final services have been rendered.

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

9. Share Capital (continued)

Stock Options (continued)

The following table provides information about outstanding and exercisable stock options as at July 31, 2020:

Expiry Exercise Date Price	Balance 31-Jul-18	Exercisable 31-Jul-18	Expired/ Balance Expired/ Granted Forfeited 31-Jul-19 Granted Forfeited	Balance Exercisable 31-Jul-20 31-Jul- 20
August 20, 2018 $ 0.50 July 29, 2025 $ 0.05 Totals	10,000 -	10,000 -	- (10,000) - - - - - - 2,260,000 -	- - 2,260,000 2,260,000
	10,000	10,000	- (10,000) - 2,260,000 -	2,260,000 2,260,000
Weighted Average Exercise Price	$0.50	$0.50	$0.00 $0.50 - $0.05 -	$0.05 $0.05

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

9. Share Capital (continued)

Options (continued)

During the year ended July 31, 2020, the Company granted 2,260,000 stock options to officers, directors and consultants of the Company, exercisable at a price of $0.05 per share, expiring on July 29, 2025. The estimated fair value of these options was $87,200 or $0.039 per option.

The fair value of options granted was calculated using the Black-Scholes Model for total sharebased payment expense of $87,200 (2019 - $Nil) based on the following weighted average assumptions:

	Year Ended	Year Ended
	July 31, 2020	July 31, 2019
Risk-free interest rate	0.32%	-
Expected life of options	5.00 years	-
Annualized volatility	192.32%	-
Dividend yield	0%	-
Fair value per option	$0.039	-

Warrants

The following summarizes the transactions and number of outstanding and exercisable share purchase warrants, including finder’s warrants.

Expiry Exercise Date Price	Balance 31-Jul-18	Exercised	Balance Balance 31-Jul-19 Expired 31-Jul-20
July 4, 2022 $ 0.15 July 4, 2022 $ 0.15 Totals	15,152,553 40,000	(1,071,346) -	14,081,207 - 14,081,207 40,000 - 40,000
	15,192,553	(1,071,346)	14,121,207 - 14,121,207
Weighted Average Exercise Price	$0.15	$0.15	$0.15 - $0.15

• warrants were extended from July 4, 2020 to July 4, 2022

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

10. Related Party Transactions and Key Management Compensation

Key management compensation includes all fees paid or accrued to officers and/or directors described in this note. Except as disclosed elsewhere in these financial statements, related party transactions incurred during the year ended July 31, 2020 were as follows:

Management fees totaling $120,000 (2019 - $120,000), and office and general expenses of $30,000 (2019 - $30,000) were accrued to a company owned by the CEO, who is also a director of the Company. As of July 31, 2020, the balance owing to the CEO was $278,037 (July 31, 2019 – $139,904).

Management fees totaling $36,000 (2019 - $36,000) were accrued to a company owned by the CFO, who is also a director of the Company. As of July 31, 2020, the balance owing to the CFO was $112,500 (July 31, 2019 - $75,600).

During the year ended July 31, 2020, the Company received advances of $2,260 (2019 – $Nil) from a company owned by the CEO. As of July 31, 2020, the advances balance owing to the company owned by the CEO was $12,331 (July 31, 2019 – $10,071) and is included in due to related parties.

During the year ended July 31, 2020, the Company received advances of $10,000 (2019 – $Nil) from the CFO. As of July 31, 2020, the loan outstanding owing to the CFO was $10,000 (July 31, 2019 – $Nil) and is included in due to related parties.

As at July 31, 2020, total amounts due to related parties was $402,868 (July 31, 2019 - $225,575). Amounts due to related parties are unsecured, non-interest bearing and are due on demand.

During the year ended July 31, 2020, the Company issued 1,250,000 (2019 – Nil) stock options to the directors of the Company with a fair value of $48,230 (2019 - $Nil).

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

11. Supplemental Cash Flow Information

Non-Cash Investing and Financing Activities: Accounts payable for exploration and evaluation asset costs	July 31, 2020 July 31, 2019
	$ 40,666 $ 47,320

12. Capital Management

The Company’s objectives when managing capital are to ensure that there are adequate resources to sustain operations and to continue as a going concern, to maintain adequate levels of funding to support acquisition and exploration of mineral projects, to maintain investor and market confidence, and to provide returns to shareholders. Funds are primarily secured through equity capital raised by way of private placements.

Exploration involves a high degree of risk and substantial uncertainties about the ultimate ability of the Company to achieve positive cash flow from operations. Management primarily funds the Company’s exploration by issuing share capital rather than using other capital sources that require fixed repayments of principal or interest.

The Company considers the items included in share capital to be capital and it manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. Management evaluates capital requirements and considers the availability of capital, investor sentiment and the market in general on an on-going basis.

The Company is not subject to any externally imposed capital requirements. There were no changes in the Company’s approach to capital management during the year ended July 31, 2020.

13. Segmented Disclosure

The Company operates in one operating segment, mineral exploration. All of the Company’s assets are located in Canada.

14. Income taxes

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

		2020		2019
Loss for the year	$	(276,222)	$	(217,914)
Expected income tax (recovery)	$	(75,000)	$	(59,000)
Change in statutory, foreign exchange rates and other		29,000		369,000
Permanent difference		24,000		-
Change in unrecognized deductible temporary differences		22,000		(310,000)
Total income taxexpense (recovery)	$	-	$	-

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Canada One Mining Corp. (An Exploration Stage Company) Notes to the Consolidated Financial Statements For the years ended July 31, 2020 and 2019 (Expressed in Canadian Dollars)

14. Income taxes (continued)

The significant components of the Company’s deferred tax assets that have not been included on the consolidated statement of financial position are as follows:

		2020		2019
Deferred Tax Assets
Exploration and evaluation assets	$	310,000	$	604,000
Property and equipment		37,000		37,000
Investment tax credit		-		10,000
Non-capital losses available for future periods		2,719,000		2,403,000
Unrecognized deferred tax assets	$	3,066,000	$	3,054,000

The significant components of the Company’s temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial statement are as follows:

			Expiry Date			Expiry Date
		2020	Range		2019	Range
Temporary Differences
Exploration and evaluation assets	$	1,149,000	No expiry date	$	2,210,000	No expiry date
Property and equipment	$	-	-	$	10,000	2032
Share issuance costs	$	138,000	No expiry date	$	137,000	No expiry date
Investment tax credit	$	1,000	2041	$	2,000	2040 to 2041
Non-capital losses availablefor future periods	$	10,700,000	2026 to2040	$	9,530,000	2026 to2039

Tax attributes are subject to review, and potential adjustment, by tax authorities.

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