EDM Resources Inc. — Interim / Quarterly Report 2022

Aug 27, 2022

EDM RESOURCES INC. (Formerly ScoZinc Mining Ltd.)

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

JUNE 30, 2022 AND 2021 (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.

EDM Resources Inc.

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

As at	June 30, 2022	December 31, 2021
ASSETS
Current
Cash	1,322,843	1,134,917
Amounts receivable andprepaid expenses(Note 5)	119,301	125,132
	1,442,144	1,260,049
Cash held for reclamation (Note 3)	3,251,776	3,133,752
Property, plant and equipment (Note 4)	7,767,808	7,861,807
Exploration and evaluation assets(Note 6)	7,500,714	7,500,714
	18,520,298	18,496,273
	19,962,442	19,756,322
LIABILITIES
Current
Accounts payable and accrued liabilities (Note 7)	163,439	104,668
Amountspayable to relatedparties(Note 12)	-	63,636
	163,439	168,304
Decommissioning liability (Note 8)	8,666,355	8,695,070
Loanpayable(Note 13)	60,000	60,000
	8,889,793	8,923,374
SHAREHOLDERS' EQUITY
Share capital (Note 9)	88,113,961	86,313,034
Warrants (Note 10(b))	275,436	813,265
Contributed surplus (Notes 10(a), 10(c))	803,818	929,882
Deficit	(78,120,567)	(77,223,233)
	11,072,649	10,832,948
	19,962,442	19,756,322

Nature of Operations and Going Concern (Note 1)

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

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EDM Resources Inc.

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

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Three Months ended Six Months ended
June 30 June 30
(Restated) (Restated)
(Note 14) (Note 14)
2022 2021 2022 2021
EXPENSES
Salaries and benefits (Note 12) 131,141 126,511 237,109 231,838
Office and general 115,657 51,200 136,145 69,006
Legal and accounting fees 119,490 31,789 176,406 58,463
Investor relations 15,806 60,284 15,806 1,547
Amortization (Note 4) 5,207 45,371 10,414 10,739
Consulting 70,000 40,116 132,000 192,501
Stock ‑ based payments (Note 10(a) and (c)) 74,295 22,831 151,941 48,645
Regulatory fees 10,504 11,110 19,446 53,015
(542,100) (389,212) (879,267) (665,752)
Interest income 9,107 8,842 18,024 9,992
Accretion of decommissioning liability (Note 8) (14,366) - (22,422) -
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD (547,359) (380,370) (883,665) (655,760)
Basic and diluted loss per share (Note 11) (0.03) (0.03) (0.02) (0.05)
Weighted average number of common shares
outstanding ‑ basic and diluted 19,902,259 12,420,760 19,902,259 14,311,278
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The accompanying notes are an integral part of these condensed interim consolidated financial statements. - 2 -

EDM Resources Inc.

(Formerly ScoZinc Mining Ltd.)

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

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Number of Contributed
Shares Amount Warrants Surplus Deficit Total
Balance, December 31, 2020 14,084,794 83,791,810 1,031,722 841,538 (75,870,768) 9,794,302
Exercise of warrants 333,333 166,667 166,667
Stock ‑ based compensation 48,645 48,645
Loss for the period (655,760) (655,760)
Balance, June 30, 2021 14,418,127 83,958,477 1,031,722 890,183 (76,526,528) 9,353,854
Balance, December 31, 2021 17,932,068 86,313,034 813,265 206,045 (77,236,902) 10,095,442
Exercise of warrants 1,970,191 1,800,927 (537,829) 445,833 1,708,931
Stock ‑ based compensation 151,940 151,940
Loss for the period (883,665) (883,665)
Balance, June 30, 2022 19,902,259 88,113,961 275,436 803,818 (78,120,567) 11,072,649
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The accompanying notes are an integral part of these condensed interim consolidated financial statements. - 3 -

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

For the Six Months Ended June 30 CASH (USED IN) PROVIDED BY: OPERATING ACTIVITIES Loss for the period: Amortization Share‑based payments Accrued interest income Accretion of decomissioningliability	(Restated) (Note 14) 2022 2021
	(897,334) (655,760) 93,999 10,739 (571,897) 48,465 (118,024) (8,953) (28,715) -
Net change in non‑cash working capital: Amounts receivable and prepaid expenses Accounts payable and accrued liabilities Amountspayable to relatedparties	(1,521,971) (605,329) 5,831 6,262 58,771 67,289 (63,636) 4,698
INVESTING ACTIVITIES Exploration and evaluation assets	(1,521,005) (527,080) - (129,745)
FINANCING ACTIVITIES Share capital issued on exercise of warrants Proceeds from loans payable Proceeds frompromissorynotepayable	- (129,745) 1,708,931 166,667 - 20,000 - 250,000
	1,708,931 436,667
CHANGE IN CASH CASH, BEGINNING OF PERIOD	187,926 (220,158) 1,134,917 243,354
CASH, END OF PERIOD	1,322,843 23,196

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

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

1. NATURE OF OPERATIONS AND GOING CONCERN

EDM Resources Inc. (formerly ScoZinc Mining Ltd.) (the “Company” or “EDM”), and its wholly owned subsidiary Scotia Mine 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, incorporated on March 9, 2004 and domiciled in Canada. The address of its registered office is Purdy's Wharf, 1959 Upper Water Street, Suite 1301, Nova Scotia, B3J 3N2.

On January 12, 2022, the Company changed its name to EDM Resources Inc. On March 25, 2022, the Company changed the name of its wholly owned subsidiary to Scotia Mine Limited.

The condensed interim consolidated financial statements have been prepared on a going concern basis, which assumes the Company 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 condensed interim consolidated financial statements.

The Company has not generated revenue from operations. The Company has incurred a loss of $883,665 for the six months ended June 30, 2022 (six months ended June 30, 2021 – $655,760), and as of that date has an accumulated deficit of $86,852,295 (December 31, 2021 – $86,313,034). As at June 30, 2022, cash amounted to $1,322,843 (December 31, 2021 – $1,134,917), and the Company had working capital of $832,872 (December 31, 2021– $1,091,745), 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 June 30, 2022, the Company had 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.

Covid-19 Impact

Due to the worldwide COVID-19 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

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

1. NATURE OF OPERATIONS AND GOING CONCERN (Continued)

Covid-19 Impact (Continued)

At the date of the approval of these condensed interim 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.

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, 2021.

These condensed interim consolidated financial statements were authorized for issuance by the Board of Directors of the Company on August 26, 2022.

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, Scotia Mine Ltd. All significant intercompany transactions are eliminated on consolidation.

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 March 22, 2022, a $2,948,581 (December 31, 2021 – $2,940,195) 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 $194,088 (December 31, 2021 – $193,557), including accrued interest, which is required to address the potential replacement of domestic water supplies that could potentially be downgraded by mining operations.

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

4. PROPERTY, PLANT AND EQUIPMENT

ROPERTY, PLANT AND EQUIPMENT
	Mine Plant,	Exploration
	Equipment	Field
	and Land	Equipment	Total
Cost
Balance, December 31, 2020	9,307,141	836,641	10,143,782
Additions	4,500	-	4,500
Balance, December 31, 2021	9,311,641	836,641	10,148,282
Additions	24,552	-	24,552
Balance, June 30, 2022	9,336,193	836,641	10,172,834
Accumulated Amortization
Balance, December 31, 2020	1,447,242	836,641	2,283,883
Amortization	2,592	-	2,592
Balance, December 31, 2021	1,449,834	836,641	2,286,475
Amortization	118,551	-	118,551
Balance, June 30, 2022	1,568,385	836,641	2,405,026
Net Book Value, December 31, 2021	7,861,807	-	7,861,807
Net Book Value, June 30, 2022	7,767,808	-	7,767,808

5. ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

Refundable GST/HST Prepaid expenses	June 30, December 31, 2022 2021 93,345 86,476 25,956 38,656
	119,301 125,132

6. EXPLORATION AND EVALUATION ASSETS

Scotia Mine Project, 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:

Balance, January 1, 2021	5,824,918
Additions	18,457
Change in decommissioningliabilityestimate	1,657,339
Balance, December 31, 2021	7,500,714
Balance, June 30, 2022	7,560,585

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	30-Jun	December 31,
	2022	2021
Trade payables	41,723	58,918
Accrued expenses	121,716	45,750
	163,439	104,668

8. DECOMMISSIONING LIABILITY

The Company has estimated that the present value of future rehabilitation costs required to remediate the Scotia Mine facility based on its current state.

Although the ultimate amount of the rehabilitation liability is uncertain, the best estimate of these obligations is based on information currently available. Current significant closure and rehabilitation activities include dismantling and removing facilities, equipment removal and remediation of the mine site.

The total amount of estimated undiscounted cash flow required to settle the Company’s estimated obligation as at June 30, 2022 was $6,903,002 (December 31, 2021 – $6,903,002). The calculation of present value of estimated future cash flows assumed a discount rate of 1.27% (2021 – 1.27%) and an inflation rate of 4.8% (2021 – 4.8%). Rehabilitation costs are estimated to be settled at various dates between 2029 and 2032.

A continuity of the Company's decommissioning liability is as follows:

Balance, December 31, 2020	7,005,506
Accretion	32,225
Change in estimate	1,657,339
Balance, December 31, 2021	8,695,070
Change in estimate	(51,137)
Accretion	22,422
Balance, June 30, 2022	8,666,355

9. 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 – 19,902,259

Balance, December 31, 2021 Exercise of warrants Balance, March 31, 2022 Exercise of warrants Balance, June 30, 2022	Shares
	17,932,068 110,400
	18,042,468
	1,859,791
	19,902,259

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

10. SHARE BASED PAYMENTS

a) Stock Option Plan

A stock option plan (“Options 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 Options Plan at the Annual General Meeting. The Options 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 Options 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 TSX-V. Options under the Options Plan have terms and vesting as determined by the Board. The expiry date shall not be more than 10 years from the date of grant.

Share option activity for the six months ended June 30, 2022 and 2021 are as follows:

Balance‑December 31, 2020 and June 30, 2021 Balance‑December 31, 2021 and June 30, 2022	Number of Stock Options Outstanding Weighted Average Exercise Price ($)
	875,000 0.64 1,287,000 0.61

10. SHARE BASED PAYMENTS (Continued)

• a) Stock Option Plan (Continued)

The following table summarizes information about stock options outstanding as at June 30, 2022:

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Weighted
Average Number of
Number of Remaining Options
Options Exercise Contractual Vested
Outstanding Expiry Date Price ($) Life (years) (Exercisable)
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157,000	13-Jul-22	1.11	0.03	157,000
205,000	03-Jul-24	0.45	2.01	205,000
90,000	12-Aug-24	0.45	2.12	90,000
50,000	20-Aug-24	0.75	2.14	50,000
50,000	20-Aug-24	0.60	2.14	50,000
20,000	03-Oct-24	0.60	2.26	20,000
9,000	03-Oct-24	0.45	2.26	9,000
9,000	03-Oct-24	0.60	2.26	9,000
7,000	03-Oct-24	0.75	2.26	7,000
220,000	18-Jun-30	0.45	7.97	165,000
470,000	29-Oct-31	0.60	9.33	-
1,287,000		0.61	5.74	762,000

During the six months ended June 30, 2022, the Company recognized $151.941 (six months ended June 30, 2021 – $48,645) related to vesting of stock options.

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

b) Warrants

The following table reflects the continuity of warrants for the three months ended June 30, 2022 and 2021:

Balance‑December 31, 2020 Issued Exercised Balance, June 30, 2021 Balance, December 31, 2021 Exercised Expired Balance, June 30, 2022	Number of Warrants Outstanding Weighted Average Exercise Price 7,732,864 0.54 - - (333,333) (0.50)
	7,399,531 0.54 3,545,531 0.50 (1,859,458) (0.50) (1,686,073) (0.50)
	- -

10. SHARE BASED PAYMENTS (Continued)

c ) Restricted Share Units

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

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

During the year ended December 31, 2020, the Company granted a total of 188,456 Restricted Stock Units (“RSU”) with a fair value of $85,100. 123,456 RSUs vested on August 20, 2021, and 65,000 RSUs vested on November 5, 2021.

On February 25, 2021, the Company issued 7,200 RSUs which vest on February 25, 2022 with a fair value of $5,040. On August 31, 2021, the Company issued a total of 87,719 Restricted Stock Units (“RSU”) to an officer of the Company, with a fair value of $50,000. These RSU's vest on August 19, 2022.

On November 5, 2021, the Company issued 36,765 RSUs which vest on November 5, 2022 with a fair value of $25,000 to an employee of the Company.

As at June 30, 2022, there were 131,684 (December 31, 2021 - 131,684) restricted stock units issued and outstanding.

11. 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 six months ended June 30, 2022, and 2021 as they would decrease the loss per share, consequently the weighted average number of common shares outstanding for basic and diluted are the same.

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EDM Resources Inc. (Formerly ScoZinc Mining Ltd.) NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (EXPRESSED IN CANADIAN DOLLARS) (UNAUDITED)

12. RELATED PARTY TRANSACTIONS

Key Management Personnel Compensation

Key management personnel include those persons having the authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s board of directors and corporate officers and/or companies controlled by those individuals.

Remuneration attributed to key management personnel during the three months ended June 30, 2022, and 2021 is as follows:

For the six months ended Remuneration Share‑based compensation	2022 2021 2022 2021 111,328 100,749 228,183 206,500 74,295 22,831 151,941 22,831 Three months ended June 30 Six months ended June 30
	185,623 123,580 380,124 229,331

13. 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. In January 2021, this loan was increased by $20,000, or $60,000 in aggregate. The proceeds of the loan are interest free until December 31, 2022 with a 25% balance forgiveness if repaid by that date. After December 31, 2022, the outstanding balance will accrue interest at 5% per annum and is due in full by December 31, 2025.

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