Candelaria Mining Corp. — Interim / Quarterly Report 2022

Dec 30, 2021

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Candelaria Mining Corp.

Condensed Interim Consolidated Financial Statements For the six months ended October 31, 2021 and 2020 (amounts expressed in thousands of Canadian dollars, except where indicated)

NOTICE

RE: CONDENSED CONSOLIDATED INTERIM FINANCIALS STATEMENTS (UNAUDITED) FOR THE SIX MONTHS PERIOD ENDED OCTOBER 31, 2021

The second quarter financial statements for the six months ended October 31, 2021 and 2020 have not been reviewed by the auditors of Candelaria Mining Corp.

CANDELARIA MINING CORP.

“Sam Wong” SAM WONG Chief Financial Officer

Candelaria Mining Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts expressed in thousands of Canadian dollars, except where indicated)

	Note	October 31, 2021	April 30, 2021
Assets Current assets Cash and cash equivalents Other receivables andprepaid expenses	4 3,4	$ 5,951 958	$ 756 104
Total current assets Other receivables – non-current Equipment Deposit Deferred charges – Debenture Exploration and evaluation assets	3,4 5	6,909 1,475 396 1,087 5,261 8,843	860 1,839 270 1,087 5,261 8,965
Total assets		$ 23,971	$ 18,282
Liabilities Current liabilities Accounts payable and accrued liabilities Caballo Blanco Acquisition Payable	4 4,5(b)	$ 911 929	$ 1,794 921
Total current liabilities		$ 1,840	$ 2,715
Debenture Caballo Blanco Acquisition Payable – non-current	6 5(b)	1,156 429	990 400
Total liabilities		$ 3,425	$ 4,105
Shareholders’ equity Share capital Reserves Deficit		60,579 10,229 (50,262)	51,807 10,149 (47,779)
		20,546	14,177
Total liabilities and shareholders’ equity		$ 23,971	$ 18,282

Nature of operations and going concern (note 1)

Approved by the Board of Directors
__”Ramon Perez”____Director	___”Matthew Roma”____Director

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

Candelaria Mining Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Amounts expressed in thousands of Canadian dollars, except where indicated )

		Three months ended October 31,	Three months ended October 31,	Six months ended October 31,	Six months ended October 31,
	Notes	2021	2020	2021	2020
Operating expenses Exploration expenses Consulting and professional fees Salary and wages Investors development General and administration Travel Regulatory and filing fees Stock-based compensation	12 9 8	(491) (281) (143) (278) (53) (6) (19) (153)	(110) (135) (54) - (91) - (13) (652)	(614) (543) (143) (278) (213) (6) (19) (562)	(911) (504) (241) - (247) - (23) (681)
Net loss before other (expense) income Other (expenses) income, net Foreign exchange gain Gain on settlement of payables Finance cost	4	(1,424) 36 214 (193)	(1,055) 8 - (399)	(2,378) 1 214 (320)	(2,607) 113 - (586)
Net loss		(1,367)	(1,446)	(2,483)	(3,080)
Other comprehensive gain (loss) (“OCI”) Items that may be reclassified to profit or loss Gain translation of foreign operations		(450)	610	(141)	1,067
Total comprehensive loss Net loss attributable to: Owners of the Company NCI		(1,817) (1,367) -	(836) (1,446) -	(2,624) (2,483) -	(2,013) (3,106) 26
Total net loss		(1,367)	(1,446)	(2,483)	(3,080)
OCI attributable to:
Owners of the Company NCI		(450) -	610 -	(141) -	1,067 -
Total other comprehensivegain		(450)	610	(141)	1,067
Total comprehensive loss attributable to:
Owners of the Company NCI		(1,817) -	(836) -	(2,624) -	(2,039) 26
Total comprehensive loss Loss per share – basic and diluted Weighted average shares outstanding (000’s) – basic and diluted		(1,817) $ (0.01) 137,553	(836) $ (0.01) 126,151	(2,624) $ (0.02) 133,181	(2,013) $ (0.03) 122,105
Total shares issued and outstanding (000’s)		148,541	127,475	148,541	127,475

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

Candelaria Mining Corp. CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ EQUITY

(Amount expressed in thousands of Canadian dollars, except where indicated)

	Shares	Share		RSU	Translation		Total equity		Total
Notes	(‘000)	capital	Reserves	Reserves	reserves	Deficit	for owners	NCI	equity
7 7 7 8	128,829 83 18,759 870 - - -	$ 51,807 66 8,393 313 - - -	$ 11,428 (28) - - 382 - -	$ 422 - - (313) 180 - -	$ (1,701) - - - - (141) -	$ (47,779) - - - - - (2,483)	$ 14,177 38 8,393 - 562 (141) (2,483)	$ - - - - - - -	$ 14,177 38 8,393 - 562 (141) (2,483)
	148,541	$ 60,579	$ 11,782	$ 289	$ (1,842)	$ (50,262)	$ 20,546	$ -	$ 20,546

		Shares
		(‘000)	Share		RSU	Translation		Total equity		Total
	Notes		capital	Reserves	Reserves	Reserves	Deficit	for owners	NCI	equity
Balance as at April 30, 2020 Share issuance, acquisition of Apolo Share issuance, stock options exercised Warrants issuance, Debenture Share for debt Stock based compensation Cumulative translation Net loss for the period	5(a) 7 6,7 7	118,059 7,075 166 - 2,175 - - -	$ 45,102 3,750 44 - 1,087 - - -	$ 4,200 - (19) 6,253 - 320 - -	$ 1,309 - - - - 361 - -	$ (2,572) - - - - - 1,067 -	$ (40,567) (2,003) - - - - - (3,106)	$ 7,472 1,747 25 6,253 1,087 681 1,067 (3,106)	$ 1,737 (1,763) - - - - - 26	$ 9,209 (16) 25 6,253 1,087 681 1,067 (3,080)
As at October 31, 2020		127,475	$ 49,983	$ 10,754	$ 1,670	$ (1,505)	$ (45,676)	$ 15,226	$ -	$ 15,226

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

Candelaria Mining Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS of CASH FLOWS

(Amount expressed in thousands of Canadian dollars, except where indicated)

			Three months ended October 31,				Six months ended October 31,
	Note		2021		2020		2021		2020
Cash used from operating activities Net loss for the period Items not affecting cash Unrealized foreign exchange Stock based compensation Gain on settlement of payables Finance cost – debenture Change in non-cash operating working capital Accounts receivable and prepaid expenses Accountspayable and accruals	8 4		$ (1,367) (58) 153 (214) 128 (396) (844)		$ (1,446) 103 652 - 332 (267) 178		$ (2,483) (5) 562 (214) 252 (484) (615)		$ (3,080) (15) 681 - 454 (265) 548
Total cash used from operating activities			(2,598)		(448)		(2,987)		(1,677)
Cash flow from(used in) investing activities
Expenditure – purchase of equipment Transaction cost – acquisition of Apolo			- -		- -		(125) -		- (16)
Total cash flow from investing activities			-		-		(125)		(16)
Cash flow from(used in) financing activities
Proceeds from private placement Proceeds from drawing of Debenture Payment of interest of Debenture Proceeds from stock options exercised	7 6 7		8,393 - (62) -		- - - -		8,393 - (121) 38		- 2,040 (10) 25
Total cash flow from financing activities			8,331		-		8,310		2,055
Increase (decrease) in cash and cash equivalents Foreign exchange impact on cash and cash equivalents Cash and cash equivalents – beginning ofyear			5,733 17 206		(448) (8) 860		5,198 2 756		362 7 35
Cash and cash equivalents – end ofperiod			5,956		404		5,956		404
Cash Short term investment			$ 5,9	56 -	$ 40	4 -	$ 5,95	6 -	$ 404 -
Cash and cash equivalents – end ofperiod			$5,956		$404		$5,956		$ 404

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

1 Nature of Operations and Going Concern

Candelaria Mining Corp. (the “Company”) is a British Columbia public company listed on the TSX Venture Exchange (“TSXV”) under the trading symbol “CAND”. The Company also trades under the symbol “CDELF” on OTC Pink. The Company was incorporated under the Business Corporations Act of British Columbia on January 23, 2012. The Company’s registered and records office is located at Suite 1200, 750 West Pender Street, Vancouver, BC, Canada, V6C 2T8. The address of the Company’s head office is 1201 - 1166 Alberni Street, Vancouver, BC V6E 3Z3.

On May 11, 2016, the Company signed an agreement to acquire the Caballo Blanco Gold Project (“Caballo Blanco”) in Veracruz from Molimentales Del Noroeste, SA de CV, a subsidiary of Alio Gold Inc. (“Alio”), formerly Timmins Gold Corp. (Note 6(b)).

On December 5, 2018, the Company announced that it has agreed to issue 7,075,472 of the Company’s common shares to the shareholder of Minera Apolo S.A. de C.V. (“Apolo”) to acquire the remaining 40% of the shares of Apolo. The transaction was closed on July 31, 2020 upon exchange approval.

Going Concern

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of operations. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future which is at least, but not limited to, twelve months from the end of the reporting year. Management is aware in making its assessment of material uncertainties relating to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern, as explained in the following paragraph.

The Company has not yet generated income or cashflow from operations. As at October 31, 2021, the Company had cash and cash equivalents of $5,956, a working capital of $5,069 and an accumulated deficit of $50,262 (April 30, 2021 - $47,779). For the six months ended October 31, 2021, the Company incurred a net loss of $2,483 (October 31, 2020 – loss of $3,080) and negative cashflows from operations of $2,987 (2020 - $1,677). The Company will require additional financing, through various means including but not limited to equity financings, to continue with its exploration and development programs and to meet its future obligations and administrative expenses. There is no assurance that the Company will be successful in raising the additional required funds.

The above noted conditions indicate the existence of material uncertainties that cast significant doubt about the Company’s ability to continue as a going concern. These condensed interim consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, to the reported expenses and to the financial position classifications that would be necessary if the going concern assumption was inappropriate. These adjustments could be material.

COVID-19

Candelaria has been impacted by the outbreak of the COVID-19 pandemic. The Company has taken a number of measures to safeguard the health of its employees and their local communities while continuing to operate safely and responsibly. All of the Company’s assets’ work areas have reduced exploration activities, which will be in effect until the resumption of normal activities is deemed safe and appropriate. The Company acted in compliance with Mexican government-ordered restrictions. The gradual resumption towards full exploration activities occurred during the year ended April 30, 2021 and complied with the recommendations of Mexican governments and public health officials, with full attention to the health and safety of returning employees, contractors, and suppliers.

2 Basis of Presentation

Statement of compliance

These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). Accordingly, certain disclosures included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB have been condensed or omitted and these unaudited condensed consolidated interim financial statements should be read in conjunction with the

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For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Company’s audited consolidated financial statements for the year ended April 30, 2021. The financial statements have been prepared on an accrual basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The financial statements are presented in Canadian dollars.

The Company’s interim results are not necessarily indicative of its results for a full year.

These unaudited condensed consolidated interim financial statements were approved by the Board of Directors on December 30, 2021.

Use of estimates and judgements

The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions 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. Such estimates primarily relate to share-based transaction valuations, fair values of financial instruments and the recoverability of deferred income tax assets and exploration and evaluation assets. Actual results could differ from those estimates. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in Note 1 relating to going concern.

Acquisition of mineral property interests

The Company treats the acquisition of a mineral property interest as either a business combination or asset purchase. The determination of treatment is based upon an assessment of factors at the time of acquisition.

A business combination is a transaction in which control over one or more businesses is obtained. A business is defined as an integrated set of activities and assets that is capable of creating outputs which provide a positive economic return to stakeholders. If the integrated set of activities and assets is in the exploration or development stage and therefore does not have outputs, the Company considers other factors to determine if the assets are a business. These include, but are not limited to, whether the set of activities and assets:

• (a) has planned principal activities;

• (b) has identified mineral reserves and processes needed to generate the inputs required for output production;

• (c) is pursuing a plan to produce outputs; and

• (d) will be able to sell the produced outputs.

Not all of the above factors need to be present for a particular integrated set of activities and assets in the development stage to qualify as a business. Business acquisitions are accounted for using the acquisition method, in which the acquired assets and liabilities are recorded at fair value at the date of acquisition. Direct costs associated with a business combination are expensed as incurred.

Acquisitions in which a business is not acquired are treated as an asset purchase. Under an asset purchase, the fair value of the consideration provided is allocated to the individual fair value of assets and liabilities assumed on the basis of their relative fair values at the time of acquisition. The costs of acquisition for an asset acquisition are deferred and capitalized in the period they are incurred. In the event the acquisition is not completed, these costs would be immediately expensed.

The Apolo and Caballo Blanco acquisitions were treated as an asset purchase since, at time of acquisition, it was not a business.

Exploration and evaluation expenditures

The application of the Company’s accounting policy for exploration and evaluation expenditure requires judgment to determine whether it is likely that future economic benefits are likely, from either future exploitation or sale, or whether activities have not reached a stage that permits a reasonable assessment of the existence of reserves. The determination of a compliant resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e., measured, indicated or inferred).

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

Estimates and assumptions may change if new information becomes available. If, after expenditures are capitalized, information becomes available suggesting that the recovery of such expenditures is unlikely, the amount capitalized is written off in profit or loss in the period when the new information becomes available.

Deferred taxes

The Company recognizes a deferred tax asset to the extent recovery is probable. Assessing the recoverability of deferred tax assets requires management to make significant estimates of future taxable profit. To the extent that future cash flows and taxable profit differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods.

Share-based payments

The Company grants share-based awards as an element of compensation that includes stock options and restricted share units.

Share-based payments for stock options are determined using the Black-Scholes option pricing model based on estimated fair values at the date of grant and is expensed to profit or loss over each award’s vesting period. The Black-Scholes option pricing model utilizes subjective assumptions such as expected price volatility and expected life of the option. Changes in these input assumptions can significantly affect the fair value estimate.

Share-based payments for restricted share units are determined using the market price at the date of grant and is expensed to profit or loss over each award’s vesting period.

Derivative assets and liabilities

Management is required to determine assumptions used in financial fair value models to estimate derivatives liabilities raised from share purchase warrants, and gold forward contracts where contractually applicable. The assumptions may be adjusted at each reporting period and the actual value of the derivative liability may differ from the amount currently provided.

Functional Currency

The Company is involved in the exploration and development of gold with continued operations that are heavily reliant on international economics such as the price and demand of gold and other commodities. The parent company’s resources, and competitive forces are measured in CAD and have determined the functional currency of all its entities to be CAD. For all of the foreign subsidiaries, which are located in Mexico, the functional currency is denominated in Mexican Pesos.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries. All amounts are expressed in Canadian dollars, unless otherwise stated. Intercompany transactions and balances between the Company and its subsidiaries are eliminated. The principal subsidiaries of the Company and their geographic location as at October 31, 2021 were as follows:

	Jurisdiction	Ownership %
Candelaria Mining Corp. Grupo Minero Candelaria SAPI de CV Maquila de Minerales SA de CV Minera Apolo SA de CV Minera Catanava SA de CV Minera Caballo Blanco SA de CV	Canada Mexico Mexico Mexico Mexico Mexico	N/A – parent company 100% 100% 100% 100% 100%

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

3 Other Receivables and Prepaid Expenses

	October 31, 2021	April 30, 2021
Other receivable IVA receivables* Prepaid expenses	$ 66 1,475 892	$ 79 1,839 25
	$2,433	$1,943
Non current portion	$1,475	$1,839
Currentportion	$ 958	$104

*IVA receivables are value added tax receivables in Mexico that generally apply to all imports, supplies of goods, and the provision of services by a taxable person unless specifically exempted by a particular law. The tax is imposed by the federal government of Mexico and ordinarily applies on each level of the commercialization chain.

4 Financial Instruments

Fair values of financial instruments

The fair values of financial instruments are summarized as follows:

	October 31, 2021	October 31, 2021	April 30, 2021	April 30, 2021
	Carrying value $	Fair value $	Carrying value $	Fair value $
Financial assets Amortized cost Cash and cash equivalents Other receivables Financial liabilities Amortized cost Accounts payable & accrued liabilities Debenture Caballo Blanco acquisition payable	5,951 66 911 1,156 1,358	5,951 66 911 1,156 1,358	756 79 1,794 990 1,321	756 79 1,794 990 1,321

Credit Risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company’s cash and cash equivalents are held through large Canadian financial institutions.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk through the management of its capital structure as described in Note 10. The accounts payable is due within the current operating period.

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate because of changes to market interest rates. The Company is exposed from time to time to interest rate risk as a result of holding fixed income cash equivalents and investments, of varying maturities. A 1% change in market interest rates would result in no significant change in value of cash and cash equivalents or fixed income securities. The risk that the Company will realize a loss as a result of a decline in the fair value of these assets is limited as they are generally held to maturity.

Foreign Exchange Risk

The Company operates in Canada and Mexico. As a result, the Company is exposed to foreign exchange risk arising from transactions denominated in foreign currencies.

The operating results and the financial position of the Company are reported in Canadian dollars. Fluctuations of the operating currencies in relation to the Canadian dollar will have an impact upon the reported results of the Company and may also affect the value of the Company’s assets and liabilities.

The Company’s financial assets and liabilities as at October 31, 2021 are denominated in United States Dollars, Canadian Dollars, and Mexican Pesos, and are set out in the following table:

	Canadian Dollars	US Dollars	Mexican Pesos	Total
Financial assets Cash and cash equivalents Other receivables	$ 5,688 21	$ 156 -	$ 107 937	$ 5,951 958
Financial liabilities Accounts payables and accrued liabilities Debenture Caballo Blanco Acquisition Payable	5,709 (237) - -	156 (404) (1,156) (1,358)	1,044 (270) - -	6,909 (911) (1,156) (1,358)
Net financial (liabilities) assets	$ 5,472	$ (2,762)	$ 774	$ 3,484

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

The Company’s financial assets and liabilities as at April 30, 2021 are denominated in United States Dollars, Canadian Dollars, and Mexican Pesos, and are set out in the following table:

	Canadian Dollars	US Dollars	Mexican Pesos	Total
Financial assets Cash and cash equivalents Other receivables	$ 20 10	$ 372 -	$ 364 94	$ 756 104
Financial liabilities Accounts payables and accrued liabilities Debenture Caballo Blanco Acquisition Payable	30 (234) - -	372 (1,421) (990) (1,321)	458 (139) - -	860 (1,794) (990) (1,321)
Net financial (liabilities) assets	$ (204)	$ (3,360)	$ 319	$ (3,245)

The Company’s reported results will be affected by fluctuations in the US dollar to Canadian Dollar and Mexican Pesos to Canadian Dollar exchange rate. As of October 31, 2021, a 10% appreciation of the Canadian Dollar relative to the US Dollars would have decreased net financial assets by approximately $276 (April 30, 2021 - $373). A 10% depreciation of the US Dollar relative to the Canadian Dollar would have had the equal but opposite effect. A 10% appreciation of the Canadian Dollar relative to the Mexican Pesos would have decreased net financial assets by approximately $77 (April 30, 2021 - $32) and a 10% depreciation of the Mexican Peso would have had an equal but opposite effect. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risk.

The table below summarizes the maturity profile of the Company’s non-derivative financial liabilities.

October 31, 2021	Current – within 1 year	Non-current – 1 to 5 years
Accounts payables and accrued liabilities Debenture Caballo Blanco Acquisition Payable	$ 911 - 929	$ - 1,156 429
	$1,840	$1,585

During the period ended October 31, 2021, the Company recorded a gain in settlement of accounts payable of $214 (2020 - $nil).

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

5 Exploration and Evaluation Assets

			Pinos	Caballo Blanco	Total
			Project	Project
April 30, 2020			$ 9,473	$ -	$ 9,473
Royalty Cumulative translation adjustment – foreign exchange			(974) 466	- -	(974) 466
April 30, 2021			$ 8,965	$ -	$ 8,965
Cumulative translation adjustment – foreign exchange			(122)	-	(122)
October 31, 2021			$ 8,843	$ -	$ 8,843

a) Pinos Project

On February 27, 2015, the Company, entered into an agreement (the “Agreement”) with the shareholders of Apolo to acquire 60% of Apolo’s issued and outstanding common shares. On December 5, 2018, the Company announced that it has agreed to issue 7,075,472 of the Company’s common shares to the shareholder of Apolo to acquire the remaining 40% of the shares of Minera Apolo.

On July 31, 2020, the Company acquired the remaining 40% of Apolo. The Company issued 7,075,472 shares with a fair value of $3,750. The Company incurred a transaction cost of $16. As there was no change in control within Apolo, a reversal of NCI of $1,763 was recorded. The net impact of $2,003 was recorded in retained deficit.

The Company will grant a 1.5% net smelter royalty (“NSR”) on the Apolo Property to the shareholders of Apolo. The Company will have a right of first refusal on the NSR.

On November 25, 2020, the Company sold a 0.5% net smelter return royalty (“NSR”) on production from the Pinos Project to Empress Royalty Corp. (“Empress”) for $974 (US$750). The Company can buy back 0.25% of this NSR, from Empress, for US$937.

Empress also purchased an additional 0.5% NSR from a previous royalty holder on the Pinos Project, for a total of a 1.0% NSR on the Pinos Project.

The Pinos Project, in total, is subjected to NSR royalties of 2.0%.

b) Mineral interest in Caballo Blanco

On May 11, 2016, the Company signed an agreement to acquire the Caballo Blanco Gold Project (“Caballo Blanco”) in Veracruz, Mexico from Molimentales Del Noroeste, SA de CV, a subsidiary of Argonaut Gold Inc. Pursuant to the terms of the agreement, the Company will pay Molimentales a total of US$12.5 million in cash and assume US$5 million in liabilities in exchange for the project and all related rights and assets.

Pursuant to the terms of the agreement, the Company will acquire the Caballo Blanco project in exchange for cash payments to be paid over a period of twelve months. The Company has fulfilled all of terms and payments except for US$750 ($921 as at April 30, 2021). This amount would be paid out to Alio when one of the concessions, which is currently under legal dispute, reaches legal settlement.

The Company agreed to assume a US$5.0 million payment obligation owing to Goldgroup Mining Inc (“Goldgroup”). On August 18, 2016, the Company settled a US$5 million contingent payment to Goldgroup in exchange for US$3.1 million in payments. Pursuant to the settlement, the Company has paid US$2.5 million. This was paid directly from Credipresto; as a result, the Company issued a corresponding US$2.5 million convertible debenture. The remaining balance is US$600 ($807), to be paid upon SEMARNAT approval.

Caballo Blanco is subjected to two separate underlying royalty commitments as defined below:

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

• i) Almaden Minerals Limited retains a 1.5% NSR

• ii) A 3[rd] party (arm’s length) retains an NSR as follows:

• 1.25% NSR up to 1,000 tonnes per day

• 1.00% NSR from 1,001 to 1,500 tonnes per day

• 0.75% NSR from 1,501 to 10,000 tonnes per day

• 0.5% NSR from 10,001 or more tonnes per day

As at April 30, 2021, the Company expects the liability to be settled in 5 years. The face value of US$600 was discounted over 3 years with the discount rate of 13%. The difference in the fair value of the liability as a result of the change in estimate of $177 was recorded in the profit and loss.

	October 31, 2021
Opening balance at beginning of the fiscal year Accretion expense Foreign exchange impact	$ 400 26 3
Caballo Blanco Acquisition – non currentportion	$429
Caballo Blanco Acquisition – currentportion	$929
Caballo Blanco Acquisition – total	$1,358

Total Caballo Blanco acquisition payable as at October 31, 2021 was $1,358 (April 30, 2021 - $1,321).

6 Debenture

On June 24, 2020, the Company closed a US$9,000 medium term loan facility (“Debenture”) with Accendo Banco, S.A. (“Accendo”). Funds advanced under the Debenture will be used for financing construction of the Company’s Pinos project and working capital purposes. The Debenture will be secured against the assets of the Company and its subsidiaries, will bear interest at 13% per annum, and have a term of 60 months from the initial draw date. Candelaria withdrew US$1,500 ($2,040) upon execution of the Debenture, with the balance to be made available on completion of final loan documentation.

In connection with the Debenture, Accendo received a cash fee from the Company of 2% of the drawn amount of the Debenture, as well as 18 million non-transferable share purchase warrants (the “Bonus Warrants”). Each Bonus Warrant will entitle Accendo to purchase one common share of the Company at a price (the “Exercise Price”) of $0.11 per share for a period of 60 months. The warrants and other transaction costs were determined to be prepayment for financing services in relation to the funds available under the Debenture. The transaction costs have been recorded as a deferred asset on the balance sheet and will be recognized against the liability and amortized into finance cost as amounts are drawn.

On September 28, 2021, the Company learned that the Mexican National Banking and Securities Commission notified Accendo of the revocation of its authorization to organize and operate as a multiple banking institution due to Accendo falling below the regulatory minimum levels of liquidity coverage ratio of the institution. The Company was not expecting to draw additional funds under the loan facility in the short term. Accordingly, the Company does not expect any material impact from these developments. The Company will continue to monitor the situation.

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Candelaria Mining Corp.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

The following are the transaction costs incurred related to the Debenture:

Deferred Charges - Debenture	Carrying value
Warrants issued Other transaction cost Allocated to debt(pro rata based on drawn amount)	$ 6,253 52 (1,044)
Deferred charges – Debenture, April 30, 2021	$5,261
Deferred charges – Debenture, October 31, 2021	$5,261

The following table is the carrying value of the Debenture:

Debenture – Carrying Value
Withdrawal Transaction cost capitalized (allocation from Deferred Charges) Finance cost – interest accrued Interest paid Finance cost – accretion of Debenture Foreign exchange impact	$ 2,040 (1,044) 213 (193) 173 (199)
Debenture – April 30, 2021	$990
Finance cost – interest accrued Interest paid Finance cost – accretion of Debenture Foreign exchange impact	121 (121) 104 62
Debenture – October 31, 2021	$1,156

7 Share Capital

The Company’s authorized share capital consists of an unlimited number of common shares without par value.

Share issuance – period ended October 31, 2021

• a) On July 2, 2021, 83,333 common shares were issued in connection stock options exercised at $0.45 per share. Total proceeds received was $38.

• b) On July 27, 2021, 870,000 common shares were issued from the vesting of RSUs.

• c) On September 21, 2021, 17,622,494 units shares issued at a price of $0.45 per unit for gross proceeds of $7,930. Each unit will consist of one common share of the Company and one-half of a common share purchase warrant, with each full warrant entitling the holder thereof to acquire one common share of the Company at a price $0.65 (with an expiry date of September 23, 2024). Total transaction cost was $1.

• d) October 29, 2021, 1,136,997 units shares issued at a price of $0.45 per unit for a gross proceeds of $512 of a nonbrokered private placement. Each unit consist of one common share of the Company and one-half of a common share

15

Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

purchase warrant, with each full warrant entitling the holder thereof to acquire one common share of the Company at a price $0.65 (with an expiry date of October 29, 2024). Total direct transaction cost is $49.

Share issuance – year ended April 30, 2021

• e) On July 31, 2020, 7,075,472 common shares were issued in connection to acquisition of the 40% of Apolo (see note 5a).

• f) During the year ended April 30, 2021, 500,000 common shares were issued in connections to stock options exercised at $0.15 per share. In addition, 1,020,000 common shares were issued in connections to RSU redemption, $1,649 was reclassed from RSU reserves to share capital.

• g) On September 25, 2020, 2,175,030 common shares were issued in settlement of $1,087 of indebtedness. The fair value of the shares issued was $1,174, resulting a loss on debt settlement of $87.

The Company intends to use the proceeds of the Private Placement for general working capital.

Warrants

• h) Share purchase warrants

As at October 31, 2021, the Company has the following share purchase warrants outstanding:

Warrants outstanding (‘000)		Exerciseprice		Date of Grant		Date of Expiry
2,118 18,000 8,811 568		0. 0. 0. 0.	60 11 65 65	3-Apr-20 29-Jun-20 21-Sep-20 29-Oct-20	20 20 21 21	3-Apr-2023 28-June-2025 21-Sept-2024 29-Oct-2024
29,497		$ 0.32

As at April 30, 2021, the Company has the following share purchase warrants outstanding:

Warrants outstanding (‘000)		Exerciseprice		Date of Grant		Date of Expiry
2,118 18,000		0. 0.	60 11	3-Apr-20 29-Jun-20	20 20	3-Apr-2023 28-June-2025
20,118		$ 0.16

8 Share Based Compensation

The Company has a share purchase option plan which provides for equity participation in the Company by its directors, officers, employees, consultants and consultant companies through the acquisition of common shares pursuant to the grant of options to purchase shares. The option plan is administered by the Board of Directors. Options may be granted on such terms as the Board may determine within the limitations of the option plan and subject to the rules and policies of applicable regulatory authorities. The maximum aggregate number of shares reserved for issuance for options granted

16

Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

under the option plan is approximately 14.85 million common shares. The exercise price for options granted may not be less than the market price of the shares on the day immediately preceding the date of the grant of the option.

October 31, 2021	October 31, 2021	April 30, 2021	April 30, 2021
Number of shares (000’s)	Weighted average exerciseprice	Number of shares (000’s)	Weighted average exerciseprice
9,531	$ 0.60	6,591	$ 0.67
(83) (4,534)	0.45 0.79 -	(500) (600) 4,040	0.15 0.15 0.36
4,914	$ 0.43	9,531	$ 0.60

The average trading price for the options exercised was $0.55 for the six months ended October 31, 2021 (April 30, 2020 – $0.53).

The following table discloses the number of options and vested options outstanding as at October 31, 2021:

Number of options		Number of options		Weighted average remaining
(‘000s)		vested(‘000s)		contractual life(years)		Exerciseprice		Expiry Date
1	24	1	24	0.	31	$0.	90 68 30 30 54	23-Nov-2021 27-Mar-2023 27-Jul-2025 27-Jul-2022 21-Mar-2026
7	50	7	50	1.	65	$0.
2,8	15	1,8	76	3.	99	$0.
2	00	2	00	0.	99	$0.
1,0	25	3	42	4.	64	$0.
4,9	14	3,292		3.30		$0.42

The following table discloses the number of options and vested options outstanding as at April 30, 2021:

Number of options		Number of options		Weighted average remaining
(‘000s)		vested(‘000s)		contractual life(years)		Exerciseprice		Expiry Date
1,1	34	1,1	34	0.	19	$0.	45 90 90 90 68 30 30 54	4-Jul-2021 27-Jul-2021 31-Oct-2021 23-Nov-2021 27-Mar-2023 27-Jul-2025 27-Jul-2022 21-Mar-2026
3,3	83	3,3	83	0.	25	$0.
1	00	1	00	0.	52	$0.
1	24	1	24	0.	58	$0.
7	50	7	50	1.	91	$0.
2,8	15		-	4.	25	$0.
2	00	1	00	1.	25	$0.
1,0	25	3	42	4.	85	$0.
9,5	31	5,933		2.08		$0.60

The weighted average exercise price of vested options as at October 31, 2021 was $0.43 (April 30, 2021 - $0.60).

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

9 Related Party Transactions

The Company’s related parties include its subsidiaries, associates over which it exercises significant influence, and key management personnel. Transactions with related parties for goods and services are made on normal commercial terms and are considered to be at arm’s length.

The Company incurred the following expenses with related parties during the period ended October 31, 2021, as follows:

	Three months ended October 31,		Six months ended October 31,
	2021	2020	2021	2020
Professional fees Director’s fees Stock based compensation	$ 148 31 298	$ 125 - 469	$ 338 31 407	$ 560 - 490

Professional fees were paid and accrued to firms of which one of the partners has been the Chief Financial Officer, Chief Executive Officer or President of the Company during 2021 and 2020. Management fees were paid and accrued to firms of which one of the partners has been the Chief Executive Officer, President of the Company or a Director/Executive. General and administration (rent, corporate service management) were paid and accrued to a firm of which one of the partners has been the President of the Company during the period. These expenses were measured at the exchange amounts agreed upon by the parties.

As at October 31, 2021, the Company had amounts payable of $150 (April 30, 2021 - $1,172) to these parties. These amounts are unsecured and non-interest bearing, due on demand and included in accounts payable and accrued liabilities.

10 Capital Management

The capital of the Company consists of items included in shareholder’s equity. The Company’s objectives for capital management are to safeguard its ability to support the Company’s normal operating requirement on an ongoing basis, continue the development and exploration of its mineral properties and support any expansionary plans.

The capital of the Company consists of items included in shareholders’ equity, net of cash and cash equivalents as follows:

	October 31, 2021	April 30, 2021
Total equity for owners Less: cash and cash equivalents	$ 20,546 (5,951)	$ 14,177 (756)
	$ 14,595	$ 13,421

The Company manages its capital structure and makes adjustments in light of changes in its economic environment and the risk characteristics of the Company’s assets. To effectively manage the entity’s capital requirements, the Company has in place a planning, budgeting and forecasting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. As at October 31, 2021, the Company expects its capital resources will support its normal operating requirements, planned development and exploration of its mineral properties. There are no externally imposed capital requirements to which the Company has not complied.

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Candelaria Mining Corp. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended October 31, 2021 and 2020 (Amounts expressed in thousands of Canadian dollars, except where indicated)

11 Segment Disclosures

The Company operates in one operating segment (mineral exploration) in Mexico. Details of the investments in exploration and evaluation assets are disclosed in Note 5 and 12. The Company’s assets by country are:

October 31, 2021	Canada	Mexico	Total
Cash and cash equivalents Accounts receivable andprepaid expenses	$ 5,843 876	$ 108 82	$ 5,951 958
Other receivables – non current Deposit – non current Deferred charges - Debenture Equipment Exploration and evaluation assets	6,719 - - 5,261 - -	190 1,475 1,087 - 396 8,843	6,909 1,475 1,087 5,261 396 8,843
Total assets	$ 11,980	$ 11,991	$ 23,971
Segment loss for the three months ended	$ (782)	$ (585)	$ (1,367)
Segment loss for the six months ended	$ (1,597)	$ (886)	$ (2,483)

October 31, 2020	Canada	Mexico	Total
Cash and cash equivalents Accounts receivable and prepaid expenses	$ 99 3	$ 305 -	$ 404 3
Other receivables – non current Prepaid – non current Deferred charges - Debenture Exploration and evaluation assets	102 - 1,087 4,871 -	305 3,084 - - 10,252	407 3,084 1,087 4,871 10,252
Total assets	$ 6,060	$ 13,641	$ 19,701
Segment loss for the three months ended	$ (1,187)	$ (259)	$ (1,446)
Segment loss for the six months ended	$ (1,884)	$ (1,196)	$ (3,080)

12 Exploration Expenses

During the period ended October 31, 2021, the Company incurred an exploration expense on general project investigation and evaluation expense on various projects:

		Caballo Blanco	Caballo Blanco	Pinos	Pinos	Total
Salary, consulting and administration Equipment maintenance and rental		$ - -		$ 305 71 41		$ 305 71 238
Concessions andpermitting		197		41
Period ended October 31, 2021		$ 197		$ 417		$ 614
Project to date – October 31, 2021		$ 3,368		$ 2,955		$ 6,323

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Candelaria Mining Corp.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended October 31, 2021 and 2020

(Amounts expressed in thousands of Canadian dollars, except where indicated)

During the period ended October 31, 2020, the Company incurred an exploration expense on general project investigation and evaluation expense on various projects:

		Caballo Blanco	Caballo Blanco	Pinos	Pinos	Total
Salary, consulting and Equipment maintenance and rental		$ - -		$ 129 87 41		$ 129 87 695
Concessionpayments		654		41
Period ended October 31, 2020		$ 654		$ 257		$ 911
Project to date – October 31, 2020		$ 2,957		$ 2,262		$ 5,219

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