EDM Resources Inc. — Interim / Quarterly Report 2020

Nov 6, 2020

SCOZINC MINING LTD.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

NOTICE TO READER

The Company's independent auditor has not performed a review of these condensed interim consolidated financial statements.

ScoZinc Mining Ltd. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (PRESENTED IN CANADIAN DOLLARS) (UNAUDITED)

	September 30,	September 30,	December 31,	December 31,
As at		2020		2019
ASSETS
Current
Cash	$	260,088	$	519,138
Amounts receivable and prepaid expenses (Note 5)		96,800		85,855
		356,888		604,993
Cash held for reclamation (Note 3)		3,189,767		3,163,616
Property, plant and equipment (Note 4)		7,810,223		7,934,074
Exploration and evaluation assets (Note 6)		7,778,341		7,252,535
Right-of-use asset (Note 7)		-		85,425
		18,778,331		18,435,650
	$	19,135,219	$	19,040,643
LIABILITIES
Current
Accounts payable and accrued liabilities (Note 9)	$	230,925	$	339,124
Amounts payable to related parties (Note 15)		57,389		52,768
Lease obligation-current portion (Note 8)		-		14,545
		288,314		406,437
Lease obligation - long term portion (Note 8)		-		67,420
Decommissioning liability (Note 10)		2,600,000		2,600,000
Loan payable (Note 16)		40,000		-
		2,928,314		3,073,857
EQUITY
Share capital (Note 11)		83,067,973		82,642,357
Warrants (Note 12(b))		1,755,559		1,021,145
Contributed surplus		795,785		711,192
Deficit		(69,412,412)		(68,407,908)
		16,206,905		15,966,786
	$	19,135,219	$	19,040,643

Nature of Operations and Going Concern (Note 1) Contingencies (Note 13) Subsequent Events (Note 17)

The accompanying notes are an integral part of these condensed interim consolidated financial statements. - 1 -

ScoZinc Mining Ltd. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (PRESENTED IN CANADIAN DOLLARS) (UNAUDITED)

		Three Months	Three Months	Ended		Nine Months Ended	Nine Months Ended	Nine Months Ended
		September 30,				September 30,
		2020		2019		2020		2019
EXPENSES
Salaries and benefits	$	95,965	$	128,321	$	494,564	$	336,572
Office and general		9,465		94,318		126,021		156,431
Legal and accounting fees		28,325		21,907		78,271		86,152
Investor relations		156		6,688		64,162		15,316
Amortization (Notes 4 and 7)		46,920		45,148		137,664		133,695
Consulting		89,884		92,737		160,833		139,806
Share-based payments (Note 12(a) and (c))		37,726		146,575		84,593		150,320
Regulatoryfees		3,006		3,234		14,778		19,389
Net loss before interest and other items:		(311,447)		(538,928)		(1,160,886)		(1,037,681)
Interest income		7,315		8,855		25,192		27,048
Gain on settlement of liabilities(Note 9)		-		19,519		131,190		(65)
NET LOSS AND COMPREHENSIVE
LOSS FOR THE PERIOD	$	(304,132)	$	(510,554)	**$ **	(1,004,504)	$	(1,010,698)
Basic and diluted loss per share(Note 14)	$	(0.04)	$	(0.08)	$	(0.08)	$	(0.16)
Weighted average number of common
shares outstanding - basic and diluted		14,084,793		7,599,149		12,220,785		6,380,466

The accompanying notes are an integral part of these condensed interim consolidated financial statements. - 2 -

ScoZinc Mining Ltd.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (PRESENTED IN CANADIAN DOLLARS, EXCEPT SHARE AMOUNTS) (UNAUDITED)

	Number of			Contributed	Contributed
	Shares	Amount	Warrants		Surplus	Deficit	Total
Balance, December 31, 2018	5,266,044 $ 81,358,592 $		318,006	$	558,065	$(66,914,948) $ 15,319,715
Issued on private placement, net of costs	4,350,000	1,776,435	-		-	-	1,776,435
Warrants issued on private placement	-	(698,455)	698,455		-	-	-
Broker warrants issued on private placement	-	(4,684)	4,684		-	-	-
Stock-based compensation	-	-	-		150,320	-	150,320
Issued on settlement of debt	485,416	210,469	-		-	-	210,469
Lossforthe period	-	-	-		-	(1,010,698)	(1,010,698)
Balance, September 30, 2019	10,101,460	82,642,357	1,021,145		708,385	(67,925,646)	16,446,241
Balance, December 31, 2019	10,101,460	82,642,357	1,021,145		711,192	(68,407,908)	15,966,786
Issued on private placement, net of costs	3,833,333	1,094,030	-		-	-	1,094,030
Warrants issued on private placement	-	(723,837)	723,837		-	-	-
Broker warrants issued on private placement	-	(10,577)	10,577		-	-	-
Issued on settlement of debt	150,000	66,000	-		-	-	66,000
Stock-based compensation	-	-	-		78,977	-	78,977
Vesting of restricted share units (Note 12(c))	-	-	-		5,616	-	5,616
Lossforthe period	-	-	-		-	(1,004,504)	(1,004,504)
Balance, September 30, 2020	**14,084,793 $ 83,067,973 $ **		**1,755,559 **	$	**795,785 **	$(69,412,412) $ 16,206,905

The accompanying notes are an integral part of these condensed interim consolidated financial statements. - 3 -

ScoZinc Mining Ltd. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (PRESENTED IN CANADIAN DOLLARS) (UNAUDITED)

For the Nine Months Ended September 30,		2020		2019
CASH (USED IN) PROVIDED BY:
OPERATING ACTIVITIES
Net loss for the period:	$	(1,004,504)	$	(1,010,698)
Amortization		137,664		133,695
Share-based payments		84,593		150,320
(Gain (loss) on settlement of liabilities		(131,190)		65
Debt settled through issuance of shares		-		194,166
Accrued interest income		(26,594)		(18,193)
		(940,031)		(550,645)
Net change in non-cash working capital:
Amounts receivable and prepaid expenses		(10,945)		(92,082)
Accounts payable and accrued liabilities		88,991		(273,424)
Amountspayable to relatedparties		4,621		45,221
		(857,364)		(870,930)
Interest received		442		1,433
		(856,922)		(869,497)
INVESTING ACTIVITIES
Exploration and evaluation assets		(525,806)		(107,008)
Acquisition ofproperty, plant and equipment		(4,500)		(18,000)
		(530,306)		(125,008)
FINANCING ACTIVITIES
Lease obligation expense		(5,852)		(10,480)
Share capital issued for cash		1,150,000		1,850,000
Share issue costs		(55,970)		(73,565)
Proceeds from loanpayable		40,000		-
		1,128,178		1,765,955
CHANGE IN CASH		(259,050)		771,450
CASH, BEGINNING OF PERIOD		519,138		279,305
CASH, END OF PERIOD	$	260,088	$	1,050,755

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

• 4 -

ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

1. NATURE OF OPERATIONS AND GOING CONCERN

Scozinc Mining Ltd. (the “Company” or “ScoZinc”), and its wholly owned subsidiary Scozinc Limited (collectively, the “Group”) is engaged in base metals mining and related activities, including the exploration and evaluation of mineral property interests that are considered to have the potential for economic mineralization and development. The Company is a public company, which is listed on the TSX Venture Exchange and incorporated and domiciled in Canada. The address of its registered office is Purdy's Wharf, 1959 Upper Water Street, Suite 1301, Nova Scotia, B3J 3N2.

The condensed interim consolidated financial statements have been prepared on a going concern basis, which assumes the Group will continue in operation through the fiscal year and into the foreseeable future and will be able to realize assets and discharge its liabilities and commitments in the normal course of operations at the amounts stated in the consolidated financial statements.

The Company has not generated revenue from operations. The Company has incurred a net loss of $ 1,004,504 for the nine months ended September 30, 2020 (nine months ended September 30, 2019 - $1,010,698), and as of that date has an accumulated deficit of $69,412,412 (December 31, 2019 - $68,407,908). As at September 30, 2020, cash amounted to $ 260,088 (December 31, 2019 - $519,138) and the Company had a working capital deficiency of $ (68,574) (December 31, 2019 - working capital of $198,556). The ability of the Company to carry out its planned business objectives is dependent on its ability to raise adequate financing from lenders, shareholders and other investors and/or generate operating profitability and positive cash flow. There can be no assurances that the Company will continue to obtain the additional financial resources necessary and/or achieve profitability or positive cash flows. If the Company is unable to obtain adequate financing, the Company will be required to curtail operations, and development activities and there would be significant uncertainty whether the Company would continue as a going concern and realize its assets and settle its liabilities and commitments in the normal course of business.

At September 30, 2020, the Company did not have sufficient cash on hand to meet all planned exploration, development, general expenses and property payments for the next twelve months. The Company plans to raise additional capital to further develop and explore its project, however the Company may increase or decrease expenditures as necessary to adjust to a changing capital market environment.

The above factors indicate the existence of material uncertainties that may cast significant doubt on the ability of the Company to continue as a going concern.

The condensed interim consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If management is unsuccessful in securing capital, the Company’s assets may not be realized or its liabilities discharged at their carrying amounts and these differences could be material.

2. ACCOUNTING POLICIES

Statement of Compliance

These condensed interim financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by IASB and interpretations issued by IFRIC. These condensed interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2019.

These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors of the Company on November 5, 2020.

• 5 -

ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

2. ACCOUNTING POLICIES (Continued)

Basis of Presentation

These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments which are measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

In the preparation of these unaudited condensed interim consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Actual results could differ from these estimates.

Basis of Consolidation

These condensed interim consolidated financial statements include the accounts of the Company, and its active subsidiary, ScoZinc Limited. All significant intercompany transactions are eliminated on consolidation.

Accounting Pronouncements Adopted During the Period

IAS 1, Presentation of Financial Statements ("IAS 1")

Amendments to IAS 1, issued in October 2018, provide clarification on the definition of material and how it should be applied. The amendments also align the definition of material across IFRS and other publications.

This standard was adopted on January 1, 2020, with no impact on the Company's condensed interim consolidated financial statements.

IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors ("IAS 8")

Amendments to IAS 8, issued in October 2018, provide clarification on the definition of material and how it should be applied. The amendments also align the definition of material across IFRS and other publications.

This standard was adopted on January 1, 2020, with no impact on the Company's condensed interim consolidated financial statements.

3. CASH HELD FOR RECLAMATION

The Company is required to make reclamation deposits in respect of its expected rehabilitation obligations as set out below.

The Company has agreed with the Province of Nova Scotia (Department of Natural Resources) to remediate the Scotia Mine facility to an agreed status at the end of the mining operations at the site; as a result the Company is required to make reclamation deposits in respect of this obligation. As at September 30, 2020, a $2,898,861 (December 31, 2019 – $2,874,286) cash bond, including accrued interest, is posted with the Province of Nova Scotia.

In addition, the Company has a reclamation bond with the Nova Scotia Department of Environment for $190,907 (December 31, 2019 – $189,330), including accrued interest, which is required to address the potential replacement of domestic water supplies that could potentially be downgraded by mining operations.

Nova Scotia Business Inc. holds a reclamation bond in the amount of $100,000 (December 31, 2019 - $100,000) in relation to the land, which the Company leases from the organization in Sheet Harbour. The bond will be held until the current lease agreement expires on April 1, 2028.

• 6 -

ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

4. PROPERTY, PLANT AND EQUIPMENT

	Mine Plant,	Exploration	Exploration
	Equipment		Field
	and Land	Equipment		Total
Cost
Balance, December 31, 2018	$ 9,289,141	$	836,641	$10,125,782
Additions	18,000		-	18,000
Balance, December 31, 2019	9,307,141		836,641	10,143,782
Additions	4,500		-	4,500
Balance, September 30, 2020	**$ 9,311,641 **	$	836,641	$10,148,282
Accumulated Amortization
Balance, December 31, 2018	$ 1,204,632	$	836,641	$ 2,041,273
Amortization	168,435		-	168,435
Balance, December 31, 2019	1,373,067		836,641	2,209,708
Amortization	128,351		-	128,351
Balance, September 30, 2020	**$ 1,501,418 **	$	836,641	$ 2,338,059
Net Book Value,December 31,2019	$ 7,934,074	$	-	$ 7,934,074
Net Book Value, September 30, 2020	**$ 7,810,223 **	$	-	$ 7,810,223

5. ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

		September 30,	September 30,	December 31,
		2020		2019
Refundable GST/HST	$	46,903	$	50,822
Prepaid expenses		49,897		35,033
	$	96,800	$	85,855

• 7 -

ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

6. EXPLORATION AND EVALUATION ASSETS

Scozinc Projects, Nova Scotia

As part of the business combination with ScoZinc Limited on May 31, 2011, the Company acquired 100% of the Scotia Mine and several other mineral resource prospects in Halifax, Nova Scotia. The properties are comprised of exploration licences and a mineral property lease that provides for zinc and lead exploration and development.

The following is a continuity of the Company's Projects:

The following is a continuity of the Company's Projects:
Balance, December 31, 2018	$	7,034,767
Additions		217,768
Balance, December 31, 2019		7,252,535
Additions		615,806
Grant received		(90,000)
Balance, September 30, 2020	$	7,778,341

During the period, the Company received $90,000 from the Nova Scotia Mineral Resources Development Fund as the first instalment of a grant payment of totalling $150,000. Subsequent to September 30, 2020, the Company received the remaining $60,000 on completion of the Company’s Pre-Feasibility Study Technical Report.

7. RIGHT-OF-USE ASSETS

RIGHT-OF-USE ASSETS
Right-of-use assets at January 1, 2019		95,780
Amortization		(10,355)
Balance, December 31, 2019	$	85,425
Amortization		(7,766)
Modification to lease terms		(77,659)
Balance, September 30, 2020	$	-

Right-of-use assets consisted of the operating lease for the Company's Sheet Harbour Port facilities and are amortized over a period of 111 months. In July 2020, the Company terminated this operating lease, without penalty.

• 8 -

ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

8. LEASE LIABILITIES

At the commencement date of the lease, the lease liability was measured at the present value of the lease payments that were not paid at that date. The lease payments are discounted using an interest rate of 10%, which is the Company's estimated incremental borrowing rate. The continuity of the lease liabilities are presented in the table below:

presented in the table below:
Lease liability recorded at January 1, 2019 on adoption of IFRS 16	$	95,780
Interest accretion		2,186
Leasepayments		(16,000)
Balance, December 31, 2019	$	81,966
Interest accretion		6,143
Lease payments		(10,166)
Termination of lease(Note 7)		(77,943)
Balance, September 30, 2020	$	-

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		September 30,	September 30,	December 31,
		2020		2019
Trade payables	$	197,675	$	250,215
Accrued expenses		33,250		88,909
	$	230,925	$	339,124

On March 17, 2020 the Company issued 150,000 common shares (ascribed a fair value of $66,000) to the Company’s former CEO to settle $197,190 in accrued liabilities owed to the former CEO resulting in a gain on settlement of debt of $131,190 recognized on the Company's statement of loss on comprehensive loss.

10. DECOMMISSIONING LIABILITY

The Company has agreed with the Province of Nova Scotia (Department of Natural Resources) to remediate the Scotia Mine facility to an agreed status at the completion of the mining operations at the site. The Company believes that the reclamation of the mine site will cost $2,600,000. As the Scotia Mine facility is currently not in production and under care and maintenance, the Company has accrued the full amount potentially due.

• 9 -

ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

11. SHARE CAPITAL

(a) AUTHORIZED

Unlimited number of common shares without par value Unlimited number of Class A preferred shares with no par value Unlimited number of Class B preferred shares with a par value of $10 per share

(b) ISSUED - COMMON SHARES

(b) ISSUED - COMMON SHARES
	Shares		Amount
Balance, December 31, 2018	5,266,044	$	81,358,592
Private placement, net of costs	4,350,000		1,776,435
Issuance of warrants on private placement	-		(698,455)
Issuance of broker warrants on private placement	-		(4,684)
Issued on settlement of debt	485,416		210,469
Balance, September 30, 2019	10,101,460	$	82,642,357
Balance, December 31, 2019	10,101,460	$	82,642,357
Private placements, net of costs	3,833,333		1,094,030
Issuance of warrants on private placement	-		(723,837)
Issuance of broker warrants on private placement	-		(10,577)
Issued on settlement of debt(Note 9)	150,000		66,000
Balance, September 30, 2020	14,084,793	$	83,067,973

On May 29, 2020, the Company closed a third and final tranche of a non-brokered private placement of units of the Company (“Units”), with previous tranches having been closed on April 22, 2020 and May 22, 2020. The aggregate gross proceeds of the private placement was $1,150,000 based on the issuance of 3,833,333 Units at a price of $0.30 per Unit. Each Unit consists of one common share of the Company and a common share purchase warrant (a “Warrant”). Each full Warrant is exercisable into a common share at a price of $0.50 per common share for a period of twenty-four months from the date of issue.

In connection with the private placement the Company paid cash finder’s fees of $18,759 and issued 62,531 compensation warrants as share issue costs, with each compensation warrant having the same terms as the Warrants issued as part of a Unit. Total cash costs of issue were $55,970.

Directors, officers and other insiders of the Company subscribed 1,256,620 Units, for gross proceeds of $376,986.

The fair value of the 3,833,333 warrants issued in conjunction with this private placement is $723,837, as calculated using the Black-Scholes option pricing model with the following assumptions: a 24 months expected life; share price of $0.50; 124% expected volatility; risk free interest rate of between 0.28% and 0.33%; and an expected dividend yield of 0%. Volatility is calculated based on the changes in historical stock prices over the expected life of the warrants.

The fair value of the 62,531 broker warrants issued in conjunction with this private placement is $10,577, as calculated using the Black-Scholes option pricing model with the following assumptions:a 24 months expected life; share price of $0.50; 124% expected volatility; risk free interest rate of between 0.28% and 0.33%; and an expected dividend yield of 0%. Volatility is calculated based on the changes in historical stock prices over the expected life of the warrants.

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ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

12. SHARE BASED PAYMENTS

a) Stock Option Plan

A stock option plan (“Plan”) was established to provide incentive to qualified parties to increase their proprietary interest in the Company and thereby encourage their continuing association with the Company. Each year, shareholders of the Company approve the Plan at the Annual General Meeting. The Plan provides that the Board of Directors of the Company may from time to time, in its discretion, grant to directors, officers, employees and consultants of the Company, or any subsidiary of the Company, the option to purchase common shares. The Plan provides for a floating maximum limit of 10% of the outstanding common shares of the common shares as permitted by the policies of the TSXV. Options under the Plan have five-year terms with vesting as determined by the Board.

Share option activity for the nine months ended September 30, 2020 and 2019 are as follows:

	Number of
	Stock Options	Weighted Average
	Outstanding	Exercise Price ($)
Balance - December 31, 2018	339,000	1.40
Granted	405,000	0.51
Balance- September 30, 2019	744,000	2.79
Balance - December 31, 2019	733,000	0.83
Granted	268,000	0.46
Expired/cancelled	(126,000)	(1.61)
Balance- September 30, 2020	875,000	0.64

On February 5, 2020, the Company granted 40,000 options to purchase common shares of the Company to a director of the Company. Each option is exercisable at a price of $0.52 for a ten year term. A fair value of $24,556 was assigned to these options, estimated using the Black-Scholes valuation model with the following weighted average assumptions: dividend yield 0%, share price of $0.64 expected volatility 124% a risk-free rate of return 1.39% and expected life of 10 years. These options are subject to vesting at a rate of 25% every six months.

On June 28, 2020, the Company granted 228,000 options to purchase common shares of the Company to officers and employees of the Company. Each option is exercisable at a price of $0.45 for a ten year term. A fair value of $91,268 was assigned to these options, estimated using the Black-Scholes valuation model with the following weighted average assumptions: dividend yield 0%, share price of $0.42 expected volatility 124% a risk-free rate of return 1.39% and expected life of 10 years. These options are subject to vesting at a rate of 25% every six months.

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ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

12. SHARE BASED PAYMENTS (Continued)

a) Stock Option Plan (continued)

The following table summarizes information about stock options outstanding as at September 30, 2020:

			Weighted Average	Number of
Number of			Remaining	Options
Options		Exercise	Contractual	Vested
Outstanding	Expiry Date	Price($)	Life(years)	(Exercisable)
162,000	July 13, 2022	1.11	1.79	162,000
210,000	July 3, 2024	0.45	3.76	202,500
90,000	August 12, 2024	0.45	3.87	90,000
50,000	August 20, 2024	0.75	3.89	50,000
50,000	August 20, 2024	0.60	3.89	50,000
20,000	October 3, 2024	0.60	4.01	6,667
9,000	October 3, 2024	0.45	4.01	9,000
9,000	October 3, 2024	0.60	4.01	9,000
7,000	October 3, 2024	0.75	4.01	7,000
40,000	February 5, 2030	0.52	9.36	10,000
228,000	June 18,2030	0.45	9.72	57,000
875,000		0.64	5.04	653,167

b)

Warrants

The following table reflects the continuity of warrants for the nine months ended September 30, 2020 and 2019:

and 2019:
	Number of
	Warrants	Weighted Average
	Outstanding	Exercise Price
Balance, December 31, 2018	1,060,000	$	1.50
Issued	3,837,000	$	0.58
Balance- September 30, 2019	4,897,000	$	0.78
Balance - December 31, 2019	4,897,000	$	0.78
Issued	3,895,864	$	0.50
Expired	(1,060,000)	$	(1.50)
Balance- September 30, 2020	7,732,864	$	0.60

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ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

12. SHARE BASED PAYMENTS (Continued)

b) Warrants

The following table summarizes information about warrants outstanding as at September 30, 2020:

			Weighted Average
Number of			Remaining	Number of
Warrants		Exercise	Contractual	Warrants
Outstanding	Expiry Date	Price($)	Life(years)	(Exercisable)
550,000	April 10, 2021	0.75	0.53	550,000
37,000	April 10, 2021	0.75	0.53	37,000
1,250,000	August 20, 2021	0.55	0.89	1,250,000
2,000,000	Sept. 20, 2021	0.55	0.97	2,000,000
1,721,178	April 22, 2022	0.50	1.56	1,721,178
1,658,549	May 22, 2022	0.50	1.64	1,658,549
516,137	May29,2022	0.50	1.66	516,137
7,732,864		0.60	1.16	7,732,864

c )

Restricted Share Units

On October 25, 2019, the Company adopted a Restricted Stock Unit Incentive Plan ("the Plan"), pursuant to shareholder approval.

The number of shares reserved for stock options and all other forms of equity based incentive compensation under the Plan cannot exceed 10% of the Company`s issued and outstanding common shares.

On August 20, 2020, the Company granted 123,456 restricted stock units to the Company's CEO, vesting on August 20, 2021, ascribed a fair value of $50,000. During the period, the Company recognized $5,616 (three months ended September 30, 2019 - $nil) in stock based compensation expense related to these restricted share units, representing the graded vesting portion of this grant.

As at September 30, 2020, the there are 123,456 restricted stock units issued and outstanding. (December 31, 2019 - nil)

13. COMMITMENTS AND CONTINGENCIES

COVID-19

Due to the worldwide COVID-l9 outbreak, material uncertainties may come into existence that could influence management's going concern assumption. Management cannot accurately predict the future impact COVID-19 may have on:

• Global metal prices;

• The severity and the length of potential measures taken by governments to manage the spread of the virus and their effect on labour availability and supply lines;

• Availability of essential supplies;

• Purchasing power of the Canadian dollar; and

• Ability to obtain funding.

At the date of the approval of these consolidated financial statements, the Canadian government has not introduced measures which impede the activities of the Company. Management believes the business will continue and accordingly, the current situation bears no impact on management's going concern assumption. However, it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

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ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

14. BASIC AND DILUTED LOSS PER SHARE

Basic loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted loss per share, which reflects the maximum possible dilution from the potential exercise of warrants and stock options, is the same as basic loss per share for the period ended. The effect of potential issuances of shares under options and warrants would be anti-dilutive for the nine months ended September 30, 2020 and 2019 as they would decrease the loss per share, consequently the weighted average number of common shares outstanding for basic and diluted are the same.

15. RELATED PARTY TRANSACTIONS

All transactions with related parties have occurred in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Except as noted, amounts with related parties are non-interest bearing, unsecured, payable on demand and have arisen from the provision of services and expense reimbursements described.

Key Management Personnel Compensation

		Three	Months Ended		Nine	Months	Ended
		September 30,			September 30,
		2020	2019		2020		2019
Board of Directors, Officers, and Key		Management Personnel
Remuneration	$	52,667 $	64,273	$	161,000	$	180,348
Share-based compensation1		5,616	125,565		70,202		125,565
	$	58,283 $	189,838	$	231,202	$	305,913

1Share-based compensation is disclosed in this table based on the fair value of the stock option grant at the date of grant.

During the three and nine months ended September 30, 2020, the Company expensed $7,500 and $31,623, respectively (three and nine months ended September 30, 2019 - $33,495 and $80,639, respectively) to Marrelli Support Services Inc. (“Marrelli Support”) and DSA Corporate Services Inc. (the “DSA”), together known as the “Marrelli Group” for:

• (i) Robert D.B. Suttie, President of Marrelli Support, to act as Chief Financial Officer (“CFO”) of the Company;

(ii) Bookkeeping and office support services; (iii) Regulatory filing services; and (iv) Corporate secretarial services.

The Marrelli Group is also reimbursed for out of pocket expenses.

As at September 30, 2020, amounts due to related parties totaled $57,389 (December 31, 2019 - $52,768) pertaining to amounts payable for key management remuneration, director's fees, support services from the Marrelli Group, and reimbursement of expenses paid on behalf of the Company.

See also notes 11(b) and 12(c).

The above noted transactions are in the normal course of business and are measured at the exchange amount, as agreed to by the parties, and approved by the Board of Directors in strict adherence to conflict of interest laws and regulations.

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ScoZinc Mining Ltd. NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

16. LOAN PAYABLE

In May 2020, the Company benefitted from a $40,000 Government of Canada Covid-19 “Canada Emergency Business Account” loan, administered by the Royal Bank of Canada. The proceeds of the loan are interest free until December 31, 2022 with a 25% balance forgiveness if repaid by that date.

17. SUBSEQUENT EVENTS

In October 2020, the Company received $214,822 from the sales of surplus equipment at the Scotia Mine. The Company also received $60,000 from the Nova Scotia Mineral Resources Development Fund as the final grant payment of a total $150,000 grant for the completion of the Company’s Pre-Feasibility Technical Report.

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