ELECTRUM DISCOVERY CORP — Audit Report / Information 2021

Apr 25, 2022

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(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended December 31, 2021 and 2020

(Expressed in Canadian Dollars)

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INDEPENDENT AUDITORS' REPORT

TO THE SHAREHOLDERS OF MEDGOLD RESOURCES CORP.

Opinion

We have audited the consolidated financial statements of Medgold Resources Corp. (the "Company"), which comprise:

•  the consolidated statements of financial position as at December 31, 2021 and 2020;

•  the consolidated statements of loss and comprehensive loss for the years then ended;

•  the consolidated statements of changes in shareholders' equity for the years then ended;

•  the consolidated statements of cash flows for the years then ended; and

• the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2021 and 2020, and its consolidated financial performance and consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss of $977,547 during the year ended December 31, 2021. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

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

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

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

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

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

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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

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

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

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

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

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

The engagement partner on the audit resulting in this independent auditors' report is Michelle Chi Wai So.

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Chartered Professional Accountants

Vancouver, British Columbia

April 21, 2022

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Medgold Resources Corp. (Exploration Stage Company) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at December 31, 2021 and 2020 (Expressed in Canadian Dollars)

		2021	2020
ASSETS
Current assets
Cash	$	396,825	$ 1,287,143
Amounts receivable		4,280	11,267
Prepaid expenses and deposits		5,599	6,302
Total current assets		406,704	1,304,712
Non-current assets
Long-term deposits (Note 12)		61,000	61,000
Property and equipment (Note 6)		42,240	75,049
Exploration and evaluation assets (Note 7)		43,020	43,020
Total non-current assets		146,260	179,069
	$	552,964	$ 1,483,781
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	25,528	$ 110,775
Due to related parties (Note 12)		50,227	45,415
Total liabilities		75,755	156,190
Shareholders' equity
Share capital (Note 8)		15,751,347	15,751,347
Other equity reserves (Note 8)		1,649,086	1,521,921
Accumulated other comprehensive loss		(157,952)	(157,952)
Deficit		(16,765,272)	(15,787,725)
Total shareholders'equity		477,209	1,327,591
	$	552,964	$ 1,483,781

APPROVED ON BEHALF OF THE BOARD ON APRIL 21, 2022:

“Jeremy Crozier” eremy Crozier, Director	“Ralph Rushton”
	Ralph Rushton, Director

The accompanying notes form an integral part of these consolidated financial statements

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Medgold Resources Corp. (Exploration Stage Company) CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

		2021	2020
Exploration expenditures(Notes 10 and 12)	$	487,081	$ 915,452
General and administrative expenses
Consulting		-	16,083
Depreciation (Note 6)		32,809	33,758
Foreign exchange loss		3,418	725
Legal and accounting		75,327	93,766
Management fees (Note 12)		89,000	99,750
Office and administration (Note 12)		64,316	81,214
Salaries and benefits (Note 12)		75,373	84,561
Shareholder communications (Note 12)		69,688	80,424
Share-based payments (Notes 9 and 12)		127,165	-
Transfer agent and regulatory fees (Note 12)		20,802	15,010
Traveland accommodation(Note12)		25,666	29,161
		583,564	534,452
Loss before other item		(1,070,645)	(1,449,904)
Other item
Interest and other income (Note7)		93,098	1,731
Net loss and comprehensive loss for the year	$	(977,547)	$(1,448,173)
Loss pershare, basic and diluted		$(0.01)	$(0.01)
Weighted averagenumberofshares outstanding		134,789,032	113,258,977

The accompanying notes form an integral part of these consolidated financial statements

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Medgold Resources Corp.

(Exploration Stage Company) CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Other equity reserves

					Accumulated
	Number of			Share-based	other		Total
	common	Share	Warrants	payment	comprehensive		shareholders'
	shares	capital	reserve	reserve	loss	Deficit	equity
Balance, December 31, 2019	94,789,032	$ 13,829,198	$ 65,949	$ 1,433,178	$ (157,952)	$ (14,339,552)	$ 830,821
Loss for the year	-	-	-	-	-	(1,448,173)	(1,448,173)
Shares issued for private
placement	40,000,000	2,000,000	-	-	-	-	2,000,000
Shareissuance costs	-	(77,851)	22,794	-	-	-	(55,057)
Balance, December 31, 2020	134,789,032	15,751,347	88,743	1,433,178	(157,952)	(15,787,725)	1,327,591
Loss for the year	-	-	-	-	-	(977,547)	(977,547)
Share-based payments	-	-	-	127,165	-	-	127,165
Balance, December 31, 2021	**134,789,032 **	$ 15,751,347	$88,743	$ 1,560,343	$(157,952)	$ (16,765,272)	$ 477,209

The accompanying notes form an integral part of these consolidated financial statements

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Medgold Resources Corp. (Exploration Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

	2021	2020
Cash provided by (used in):
OPERATING ACTIVITIES
Net loss for the year	$ (977,547)	$ (1,448,173)
Items not involving cash:
Depreciation	32,809	33,758
Share-based payments	127,165	-
	(817,573)	(1,414,415)
Changes in non-cash working capital balances:
Amounts receivable	6,987	73,060
Prepaid expenses and deposits	703	5,705
Accounts payable and accrued liabilities	(85,247)	6,700
Due to related parties	4,812	(32,977)
Net cash used in operating activities	(890,318)	(1,361,927)
FINANCING ACTIVITY
Net proceeds from issuance of common shares	-	1,944,943
Net cash provided by financing activity	-	1,944,943
Increase (decrease) in cash	(890,318)	583,016
Cash, beginning ofyear	1,287,143	704,127
Cash, end of year	$396,825	$ 1,287,143

The accompanying notes form an integral part of these consolidated financial statements

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Medgold Resources Corp. (the “Company”) is a public company incorporated and domiciled in British Columbia. The address of the Company’s head office and principal place of business is 650 – 200 Burrard Street, Vancouver, BC, Canada V6C 3L6. The Company is engaged in the acquisition and exploration of resource properties.

These consolidated financial statements of the Company as at December 31, 2021 and for the year then ended include the accounts of the Company and its subsidiaries (Note 3(a)).

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments could be material. At December 31, 2021, the Company has not yet achieved profitable operations, has accumulated losses of $16,765,272 since its inception, and expects to incur further losses in the development of its business. For the year December 31, 2021, the Company incurred a net loss of $977,547. The Company has been financed primarily through the issuance of equity instruments, but management cannot be certain it will continue to be able obtain such funding. All of these conditions may cast significant doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management is continuing to investigate opportunities to raise financing for the Company.

At the time these consolidated financial statements were prepared, the COVID-19 pandemic continued to cause significant disruptions to the global economy and increased volatility in the global financial markets. While the COVID-19 pandemic has not significantly impacted the Company’s operations during the 2021 fiscal year, the extent to which COVID-19 may adversely impact the Company’s business and financing opportunities going forward will depend on future developments such as the geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing at the properties, business closures or business disruptions, and the effectiveness of actions taken in Canada, and other countries to contain and treat the disease.

2. BASIS OF PREPARATION

Statement of Compliance

These consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

Basis of Measurement

These consolidated financial statements have been prepared on the historical cost basis, except for certain 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.

The consolidated financial statements are presented in Canadian dollars (“CAD”).

The preparation of consolidated financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements.

a) Basis of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. A subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. All material intercompany transactions and balances have been eliminated on consolidation.

Details of the Company’s principal subsidiaries as at December 31, 2021 are as follows:

	Place of	Ownership
Name	incorporation	%	Principal activity
Medgold Istrazivanja d.o.o.	Serbia	100%	Exploration company
MGold International Ltd.	Malta	100%	Holding company
TlaminoMiningLtd.	Malta	100%	Holding company

b) Foreign Currency Translation

The functional and presentation currency of the Company is the Canadian dollar. The individual financial statements of each subsidiary are presented in the currency of the primary economic environment in which the entity operates (its functional currency). The functional currency of the subsidiaries is the Canadian dollar. Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on dates of transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the reporting date. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange gains and losses on translation are included in profit and loss.

c) Cash and Cash Equivalents

Cash and cash equivalents include cash at banks and on hand, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and are subject to an insignificant risk of change of value. The Company had no cash equivalents as at December 31, 2021 and 2020.

d) Exploration and Evaluation Assets

The Company capitalizes the acquisition cost of exploration and evaluation assets and expenses all other exploration expenditures. Acquisition costs include the cash consideration paid and the fair value of common shares issued on acquisition, based on the date of issuance of the shares if the fair value of the mineral property is not reliably measurable. Exploration and evaluation assets are classified as intangible assets.

Recoveries for option payments or shares received are recorded on receipt, as the payments or shares received under the agreement are made at the sole discretion of the optionee. Proceeds from the sale of minerals recovered during the exploration stage are recorded when title to the minerals passes, the proceeds are reasonably determinable and the collectability is assured.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

d) Exploration and Evaluation Assets (continued)

Where the Company has entered into option agreements to acquire interests in mineral properties that provide for periodic payments or periodic share issuances, amounts unpaid and unissued are not recorded as liabilities since they are payable and issuable entirely at the Company’s option. Option payments are capitalized when the payments are made or received and the share issuances are capitalized using the fair market value of the Company’s common shares at the earlier of the date the counterparty’s performance is complete or the issuance date.

The Company is in the exploration stage and is in the process of determining whether its exploration and evaluation assets contain ore reserves that are economically recoverable. The recoverability of amounts recorded as exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, maintenance of the Company’s legal interests in its mineral claims, obtaining further financing for exploration and development of its mineral claims and commencement of future profitable production, or receiving proceeds from the sale of all or an interest in its mineral properties. Management reviews the carrying value of exploration and evaluation assets on a periodic basis and will recognize impairment in value based upon current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the property or from the sale of the property. Amounts shown for exploration and evaluation assets represent costs incurred, net of write-downs and recoveries, and are not intended to represent present or future values.

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitment to a plan of action based on the then known facts.

e) Property, Equipment and Depreciation

Recognition and Measurement

Property and equipment are recorded at cost less accumulated depreciation and any impairment losses.

Depreciation

Depreciation is recognized in profit or loss, and property and equipment are amortized over their estimated useful lives using the following methods:

Vehicles 4 - 8 years straight-line Furniture and equipment 6% - 25% declining-balance Computer equipment 25% declining-balance

f) Impairment of Non-financial Assets

Non-financial assets, including exploration and evaluation assets, are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

f) Impairment of Non-financial Assets (continued)

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets.

An impairment loss is charged to profit or loss, except to the extent they reverse gains previously recognized in other comprehensive income (loss).

g) Provisions

Rehabilitation Provision

The Company recognizes and measures the liabilities for obligations associated with the retirement of mineral properties when those obligations result from the acquisition, construction, development or normal operation of the asset. The obligation is measured at fair value and the related costs are recorded as part of the carrying value of the related asset. In subsequent periods, the liability is adjusted for the change in present value and any changes in the discount rate or in the amount or timing of the underlying future cash flows required to settle the obligation. Actual costs to retire mineral properties are deducted from the accrued liability, as these costs are incurred.

As at December 31, 2021 and 2020, the Company had no asset retirement or rehabilitation obligations.

Other Provisions

Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as accretion expense.

h) Income Taxes

Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net loss, except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive income (loss).

Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.

Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting year the Company reassesses unrecognized deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

i) Share Capital

Equity instruments are contracts that give a residual interest in the net assets of the Company. Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Company’s common shares, share warrants and options are classified as equity instruments.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Warrants issued by the Company typically accompany an issuance of shares in the Company (a “unit”) and entitle the warrant holder to exercise the warrants for a stated price and a stated number of common shares in the Company. The fair value of units issued is measured using the residual value approach, with the allocation of proceeds first to shares based on the fair value of the shares on the date of issuance and the remainder to warrants.

j) Earnings/Loss Per Share

Basic earnings/loss per share is computed by dividing the net income or loss applicable to common shares of the Company by the weighted average number of common shares outstanding for the relevant year.

Diluted earnings/loss per share is computed by dividing the net income or loss applicable to common shares by the sum of the weighted average number of common shares issued and outstanding and all additional common shares that would have been outstanding, if potentially dilutive instruments were converted.

Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of common shares outstanding.

k) Share-based Payments

Where equity-settled share options or equity instruments are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period using the graded vesting method. Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a nonvesting condition is not satisfied.

Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in profit or loss. Options or warrants granted related to the issuance of shares are recorded as a reduction of share capital.

When the fair value of goods or services received in exchange for the share-based payment cannot be reliably estimated, they are measured by use of a valuation model.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

k) Share-based Payments (continued)

All equity-settled share-based payments are reflected in other equity reserve until exercised. Upon exercise, shares are issued and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid. For those unexercised options and share purchase warrants that expired, the recorded value remains in other equity reserve.

Where a grant of options is cancelled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognizes the amount that otherwise would have been recognized for services received over the remainder of the vesting period. Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest, except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date. Any such excess is recognized as an expense.

l) Financial Instruments

Financial Assets

The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument. The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income, or measured at fair value through profit or loss.

Financial assets measured at amortized costs

A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost.

• The Company’s business model for the such financial assets, is to hold the assets in order to collect contractual cash flows.

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if any.

Financial assets measured at fair value through other comprehensive income (“FVTOCI”)

A financial asset measured at fair value through other comprehensive income is recognized initially at fair value plus transaction costs directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income.

Financial assets measured at fair value through profit or loss (“FVTPL”)

A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

l) Financial Instruments (continued)

Financial Assets (continued)

The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss).

Financial Liabilities

Financial liabilities are classified as amortized cost, based on the purpose for which the liability was incurred. These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method. This ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statements of financial position. Interest expense in this context includes initial transaction costs and premiums payable on redemptions, as well as any interest or coupon payable while the liability is outstanding.

Accounts payable and accrued liabilities and amounts due to related parties represent liabilities for goods and services provided to the Company prior to the end of the period, which are unpaid. Accounts payable and accrued liabilities are unsecured and are usually paid within 45 days of recognition.

The Company has made the following designations of its financial instruments:

Cash	FVTPL
Amounts receivable	Amortized cost
Deposits	Amortized cost
Accounts payable and accrued liabilities	Amortized cost
Due to related parties	Amortized cost

m) New Standards and Interpretations Not Yet Adopted

The Company has reviewed upcoming policies and determined that none are expected to have an impact on the Company’s consolidated financial statements.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized prospectively by including it in profit or loss in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.

The key areas of judgment applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

• a) The determination of the Company’s and its subsidiaries’ functional currency are determined based on management’s assessment of the currency of the primary economic environment in which the entities operate.

• b) The application of the Company’s accounting policy for exploration and evaluation expenditures requires judgment in determining whether it is likely that future economic benefits will flow to the Company.

Assets or cash-generating units are evaluated at each reporting date to determine whether there are any indications of impairment. The Company considers both internal and external sources of information when making the assessment of whether there are indications of impairment for the Company’s exploration and evaluation assets.

In respect of costs incurred for its investment in exploration and evaluation assets, management has determined the acquisition costs that have been capitalized are economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit, including geologic and metallurgic information, economics assessment/ studies, accessible facilities and existing permits.

• c) Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

• d) Although the Company has taken steps to identify any decommissioning liabilities related to mineral properties in which it has an interest, there may be unidentified decommissioning liabilities present.

• e) The assessment of the Company’s ability to continue as a going concern and to raise sufficient funds to pay its ongoing operating expenditures, meet its liabilities for the ensuing year, and to fund planned and contractual exploration programs involves significant judgment based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

The key estimates applied in the preparation of the consolidated financial statements that could result in a material adjustment to the carrying amounts of assets and liabilities are as follows:

• a) The Company may be subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. During the ordinary course of business and on dispositions of mineral property or interests therein, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. This assessment relies on estimates and assumptions and may involve a series of judgments about future events, and interpretation of tax law. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.

15

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (continued)

• b) In estimating the fair value of share-based payments, using the Black-Scholes option pricing model, management is required to make certain assumptions and estimates. Changes in assumptions used to estimate fair value could result in materially different results.

5. FORMER CONTINGENCY

In early 2015, the Company entered into an agreement whereby its former subsidiary, MedgoldMinas Unipessoal Lda. (“MedgoldMinas”), proposed to acquire, subject to certain conditions, an interest in a mineral property located in Portugal, in consideration for the assumption of certain debts owing by the property owner. The conditions were not met, and the transaction did not proceed. However, one of the creditors of the property owner subsequently filed a claim in Portugal against the owner for approximately €1.17 million. Upon request by the creditor, the court then added the Company and MedgoldMinas to be defendants in the event the property owner was found to be not liable to the creditor. The Company vigorously contested being brought into this proceeding as the Company and MedgoldMinas did not consummate the transaction with the property owner, did not acquire any interest in the property, and therefore did not assume any liabilities of the owner. In June 2019, the court held that the Company was not responsible for the debts owing by the property owner. This judicial decision was appealed by the plaintiff; however, in February 2020, the Court of Appeal upheld the original court decision in favour of the Company, and the Company was entitled to receive partial reimbursement of its court/legal fees. The plaintiff did not submit a counter-appeal. On November 12, 2020, the Supreme Court made a final and binding decision to confirm the Court of Appeal’s decision, thereby closing the case and acquitting the Company from the lawsuit.

6. PROPERTY AND EQUIPMENT

		Computer	Furniture and
	Vehicles	equipment	equipment	Total
Cost
Balance, December 31, 2019 and 2020	$ 155,745	$ 26,280	$ 35,463	$ 217,488
Balance, December 31, 2021	$ 155,745	$ 26,280	$35,463	$ 217,488
Accumulated depreciation
Balance, December 31, 2019	$ 73,337	$ 18,942	$ 16,402	$ 108,681
Charge for year	26,032	3,487	4,239	33,758
Balance, December 31, 2020	99,369	22,429	20,641	142,439
Chargeforyear	25,211	3,851	3,747	32,809
Balance, December 31, 2021	$ 124,580	$ 26,280	$ 24,388	$ 175,248
Carrying amounts
AtDecember31,2020	$ 56,376	$ 3,851	$14,822	$75,049
At December 31, 2021	$31,165	$ -	$ 11,075	$ 42,240

16

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

7. EXPLORATION AND EVALUATION ASSETS

Capitalized acquisition costs as of December 31, 2021 consist of $43,020 (2020: $43,020) relating to its Serbian mineral property interests.

Serbia

a) Exploration Licences

As of December 31, 2021, the Company held three granted exploration licences, including the Donje Tlamino and Surlica-Dukat licences which comprise the Tlamino Project.

During 2020, the Ljubata and Radovnica licences which comprised the Ljubata Project were allowed to lapse and a new exploration licence called Zuti Kamen which adjoins the southern border of the Tlamino Project’s Surlica Dukat licence was granted.

During the year ended December 31, 2021, the Company received a non-refundable option fee of $91,442 (AUD$100,000) relating to a transaction to sell the Company’s interest in the Tlamino Project. The agreement was terminated and as a result, $91,442 was recorded as other income.

b) Tlamino Project Option

Pursuant to an agreement signed in March 2017, as amended, the Company granted to Fortuna Silver Mines Inc. (“Fortuna”) the option to acquire an initial 51% interest in the Tlamino Project (the “Project”). During the 2019 fiscal year, Fortuna earned its 51% interest.

During the 2020 fiscal year, the Company entered into an agreement with Fortuna whereby the Company was granted an exclusive option (the “Option”) to purchase Fortuna’s 51% interest in the Project for a cash consideration of US$3.468 million. The Option is exercisable for up to three years but must be exercised upon the earlier of (i) the date of completion of a sale by the Company of a 100% interest in the Project to a third party, or (ii) the date of completion of a merger between the Company and a third party.

If the Option is not exercised within the term of the Option, the Company will transfer its 49% interest in the Project to Fortuna for no consideration, such that Fortuna will then hold a 100% interest in the Project.

If the Company completes a sale of the Project or corporate merger as described above and receives consideration attributable to 100% of the Project in excess of US$8,840,000 or enters into a third party option in which the consideration payable by the third party is greater than US$8,840,000, the consideration payable to Fortuna will be an amount equal to 10.2% of the difference between the Project value and US$8,840,000, less all reasonable and documented costs incurred by the Company to complete the sale or merger.

Bulgaria

During the 2020 fiscal year, the Company entered into an exclusive letter agreement with Gecon EOOD (“Gecon”), a private Bulgarian company, with respect to an exploration licence application on the Zlogosh Property in western Bulgaria.

Under the terms of the agreement, the Company has the right to complete certain due diligence activities on the property which, if satisfactory, gives the Company the right to enter into an option agreement with Gecon to earn an initial 51% interest in Gecon by financing approximately €330,000 in permitting and permitting-related expenditures, followed by a second option to earn a further 44% interest in Gecon by incurring approximately €650,000 in exploration expenditures. The remaining 5% interest in Gecon may be purchased by the Company for €200,000 in cash on the third anniversary of Zlogosh exploration licence once awarded or, at the election of the residual shareholder, for €200,000 in shares of the Company subsequent to the attainment of incurring exploration expenditures to the value of €1,000,000.

17

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

8. SHARE CAPITAL AND RESERVES

Common Shares

The Company is authorized to issue an unlimited number of common shares without par value.

There was no share capital activity during the year ended December 31, 2021.

During the year ended December 31, 2020, the Company closed a private placement of 40,000,000 units at $0.05 per unit for gross proceeds of $2,000,000. Each unit consists of one common share and one share purchase warrant entitling the holder to purchase an additional common share exercisable for three years at a price of $0.10. Of the total gross proceeds, $2,000,000 was allocated to share capital and $Nil to warrants. In connection with this financing, the Company paid finders’ fees totaling $43,500 cash and issued a total of 870,000 warrants which have the same terms as the unit warrants. The fair value of the finders’ fee warrants was $22,794 and was recorded as share issuance costs and an offset to other equity reserve. The fair value of each finders’ fee warrant has been estimated as of the date of the issuance using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 0.27%, dividend yield of 0%, volatility of 88%, and expected life of three years. Other share issuance costs associated with this financing totalled $11,557.

Share Purchase Warrants

A summary of share purchase warrants activity for the years ended December 31, 2021 and 2020 is as follows:

		Weighted
	Number of	average
	warrants	exercise price
Balance, December 31, 2019	4,902,800	$0.40
Issued on private placement	40,000,000	$0.10
Issued for finance fee	870,000	$0.10
Expired	(4,902,800)	$0.40
Balance,December31,2020	40,870,000	$0.10
Balance, December 31, 2021	40,870,000	$0.10

Details of share purchase warrants outstanding as of December 31, 2021 are:

	Number of	Exercise
Expiry date	warrants	price
July14,2023	40,870,000	$0.10

18

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

9. SHARE-BASED PAYMENTS

Option Plan Details

The Company has in place a stock option plan (the “Plan”), which allows the Board of Directors to grant incentive stock options to the Company’s officers, directors, employees and consultants. The exercise price of stock options granted is determined by the Board of Directors at the time of the grant in accordance with the terms of the Plan and the policies of the TSX Venture Exchange (“TSX-V”). Options vest on the date of granting unless stated otherwise. Options granted to investor relations consultants vest in accordance with TSX-V policies. The options are for a maximum term of ten years.

The following is a summary of changes in options for the year ended December 31, 2021:

Expiry date Exercise price Opening balance	During the year Granted Exercised Expired / forfeited Closing balance Vested and exercisable
February 23, 2024 $0.15 1,480,000 June 18, 2024 $0.11 500,000 June 28, 2026 $0.15 960,000 July 24, 2027 $0.20 100,000 February 7, 2028 $0.20 100,000 January 15, 2029 $0.15 2,025,000 June 2, 2029 $0.15 480,000 March 1,2031* $0.10 -	- - (1,400,000) 80,000 80,000 - - - 500,000 500,000 - - (900,000) 60,000 60,000 - - (100,000) - - - - (100,000) - - - - (1,525,000) 500,000 500,000 - - (480,000) - - 6,485,000 - - 6,485,000 -
5,645,000	6,485,000 - (4,505,000) 7,625,000 1,140,000
Weighted average exercise price $0.15	$0.10 - $0.15 $0.10 $0.13

• Options granted on March 2, 2021, with an expiry date of March 1, 2031, are subject to the following vesting terms:

• a) 1/3 of the options will vest after twelve months, a cumulative of 2/3 after eighteen months, and a cumulative of 100% after twenty-four months, or

• b) 100% of the options will vest at any time during the term of the options upon (i) a change of control of the Company resulting from a sale of the Company, or (ii) the sale of the Tlamino Project.

The following is a summary of changes in options for the year ended December 31, 2020:

Expiry date Exercise price Opening balance	During the year Granted Exercised Expired / forfeited Closing balance Vested and exercisable
February 23, 2024 $0.15 1,930,000 June 18, 2024 $0.11 500,000 June 28, 2026 $0.15 1,290,000 July 24, 2027 $0.20 200,000 February 7, 2028 $0.20 100,000 January 15, 2029 $0.15 2,025,000 June 2, 2029 $0.15 570,000	- - (450,000) 1,480,000 1,480,000 - - - 500,000 500,000 - - (330,000) 960,000 960,000 - - (100,000) 100,000 100,000 - - - 100,000 100,000 - - - 2,025,000 2,025,000 - - (90,000) 480,000 480,000
6,615,000	- - (970,000) 5,645,000 5,645,000
Weighted average exercise price $0.15	- - $0.16 $0.15 $0.15

19

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

9. SHARE-BASED PAYMENTS (continued)

Fair Value of Options Issued During the Year

The weighted average fair value at grant date of options granted during the year ended December 31, 2021 was $0.05 per option. There were no options granted during the year ended December 31, 2020.

The weighted average remaining contractual life of the options outstanding at December 31, 2021 is 8.48 (2020: 5.91) years.

There were no options exercised during the years ended December 31, 2021 and 2020.

Options Issued to Employees

The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

Options Issued to Non-Employees

Options issued to non-employees are measured based on the fair value of the goods or services received, at the date of receiving those goods or services. If the fair value of the goods or services received cannot be estimated reliably, the options are measured by determining the fair value of the options granted using the Black-Scholes option pricing model.

The model inputs for options granted during the year ended December 31, 2021 included expected volatility factor of 92%, risk-free interest rate of 1.39%, expected life of ten years, and expected dividend yield of 0%. The weighted average model inputs for options cancelled and replaced during the year ended December 31, 2021 by options granted during the year ended December 31, 2021 included a risk-free interest rate of 0.96%, dividend yield of 0%, volatility of 89%, and expected life of 6.2 years. Companies are required to utilize an estimated forfeiture rate when calculating the expense for the reporting period. Based on the best estimate, management applied the estimated forfeiture rate of 0% in determining the expense recorded in the accompanying consolidated statements of comprehensive loss.

The expected volatility is based on the historical volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information. The risk-free rate of return is the yield on a zero-coupon Canadian Treasury Bill of a term consistent with the assumed option life. The expected average option term is the average expected period to exercise, based on the historical activity patterns for each individually vesting tranche.

Option pricing models require the input of highly subjective assumptions including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate.

Expenses Arising from Share-based Payment Transactions

Total expenses arising from the share-based payment transactions related to the granting of stock options and recognized as part of share-based compensation during the year ended December 31, 2021 were $127,165 (2020: $Nil).

20

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

10. EXPLORATION EXPENDITURES

During the year ended December 31, 2021, the Company incurred the following exploration expenditures:

	Tlamino
	Project	**Other **	**Total **
Assaying	$ 1,589	$ -	$ 1,589
Geological and other consulting (Note 12)	185,017	43,219	228,236
Legal and accounting	105,569	-	105,569
Licenses, rights and taxes	24,946	-	24,946
Office and administration	67,048	-	67,048
Salaries and benefits	45,361	-	45,361
Travel	21,271	-	21,271
	450,801	43,219	494,020
Expenserecovery	-	(6,939)	(6,939)
	$450,801	$ 36,280	$ 487,081

During the year ended December 31, 2020, the Company incurred the following exploration expenditures:

		Tlamino
		Project	Other	Total
Assaying	$	47,717	$ -	$ 47,717
Community relations and promotional		68,694	-	68,694
Field expenses		5,813	-	5,813
Geological and other consulting (Note 12)		342,045	107,851	449,896
Legal and accounting		241,308	-	241,308
Licenses, rights and taxes		17,312	-	17,312
Office and administration		104,004	-	104,004
Salaries and benefits		92,974	-	92,974
Travel		17,379	5,675	23,054
		937,246	113,526	1,050,772
Expense recoveries*		(135,320)	-	(135,320)
	$	801,926	$ 113,526	**$915,452 **

• Expense recoveries for the Tlamino Project during the 2020 fiscal year consist of funding from Fortuna per its option agreement with the Company (Note 7(b)).

21

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

11. INCOME TAXES

The following table reconciles the amount of income tax recoverable on application of the statutory income tax rates:

		2021		2020
Net loss for the year	$	(977,547)	$	(1,448,173)
Statutoryincome tax rate		27.00%		27.00%
Expected income tax recovery		(263,938)		(391,007)
Decrease (increase) resulting from:
Non-deductible expenses and others		35,406		368
Differences between Canadian and foreign tax rates		(3,606)		154,221
Change in timing differences		(37,205)		121,834
Impact of foreign exchange on tax assets and liabilities		255,052		28,790
Under provided in prior years		(88,945)		(54,692)
Unused tax losses and tax offsets not recognized		103,236		140,486
Income tax recovery	$	-	$	-

The tax rates represent the federal and provincial statutory rate applicable for the 2021 taxation year, 27% for Canada, 15% for Serbia, and 19% for the United Kingdom.

The Company recognizes tax benefits on losses or other deductible amounts where it is probable the Company will generate sufficient taxable income for the recognition of deferred tax assets. The Company’s unrecognized deductible temporary differences and unused tax losses for which no deferred tax asset is recognized consist of the following amounts:

		2021		2020
Non-capital loss carry-forwards	$	15,603,111	$	16,506,953
Exploration and evaluation assets		10,225,930		10,225,930
Property and equipment		224,859		214,702
Shareissuance cost		-		1,070
Unrecognized deductible temporary differences	$	26,053,900	$	26,948,655

Subject to certain restrictions, the Company has non-capital losses of $7,305,665 (2020: $6,908,140) available to reduce future Canadian taxable income. The non-capital losses expire as follows:

Year
2026	$	1,505,389
2028		57,142
2029		184,122
2032		263,577
2033		485,883
2034		539,445
2035		680,434
2036		462,708
2037		522,527
2038		596,487
2039		992,081
2040		618,345
2041		397,525
	$	7,305,665

22

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

11. INCOME TAXES (continued)

The Company also has non-capital losses for income tax purposes of $3,071,079 (2020: $3,496,566) available to reduce future UK taxable income, non-capital losses for income tax purposes of $5,226,367 (2020: $4,916,358) available to reduce future Serbian taxable income. The UK non-capital losses do not expire, and the Serbian non-capital losses expire in five years as follows:

Year
2022	$	1,013,238
2023		1,841,254
2024		1,438,408
2025		623,458
2026		310,009
	$	5,226,367

12. RELATED PARTY TRANSACTIONS AND BALANCES

The Company’s related parties with transactions during the years ended December 31, 2021 and 2020 consist of directors, officers and the following companies controlled by directors and/or officers:

Related party	Nature of transactions
Gold Group Management Inc.
(“Gold Group”)	Shared office, personnel and administrative charges
Mill Street Services Ltd. (“Mill Street”)	Management and geological services
Virv International Inc. (“Virv”)	Management and geological services

Balances and transactions with related parties not disclosed elsewhere in these consolidated financial statements are as follows:

• a) Gold Group is reimbursed by the Company for certain shared costs and other business-related expenses paid by Gold Group on behalf of the Company. Gold Group is controlled by Simon Ridgway, who was a Director and Chairman of the Company until February 2, 2021, at which time Gold Group ceased being a related party.

Transactions, up to the date Gold Group ceased to be a related party, consisted of the following cost reimbursements to Gold Group:

		2021		2020
General and administrative expenses:
Office and administration	$	3,660	$	62,662
Salaries and benefits		5,310		84,561
Shareholder communications		250		3,642
Transfer agent and regulatory fees		-		2,515
Travel and accommodation		53		5,294
	$	9,273	$	158,674

Long-term deposits as of December 31, 2021 consist of $61,000 (2020: $61,000) paid to Gold Group as a deposit pursuant to its shared costs agreement with Gold Group.

23

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

12. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

• b) Amounts due to related parties as of December 31, 2021 consists of $50,227 (2020: $21,938) owing to Virv, which is controlled by Jeremy Crozier, a Director and the Chief Executive Officer of the Company, for management fees and expense reimbursement and $Nil (2020: $23,477) owing to Gold Group.

Key Management Compensation

The Company has identified certain of its directors and senior officers as its key management personnel. Included for the years ended December 31, 2021 and 2020 at their exchange amounts are the following items paid or accrued to key management personnel and/or companies with common directors. These transactions are in the normal course of operations.

	2021	2020
Management fees	$ 89,000	$ 99,750
Geological fees	87,000	131,750
Salaries and benefits	25,549	25,024
Value of stock option grants recorded as share-based payments	29,961	-
	$ 231,510	$ 256,524

Key management compensation includes management and geological fees paid to Virv, and to Mill Street, a company controlled by Simon Ridgway who was a Director and Chairman of the Company until February 2, 2021, at which time Mill Street ceased being a related party.

24

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company is exposed through its operations to the following financial risks:

• Market risk

• Credit risk

• Liquidity risk

In common with other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these consolidated financial statements.

There have been no substantive changes in the Company’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in the notes.

General Objectives, Policies and Processes

The Board of Directors has overall responsibility for the determination of the Company’s risk management objectives and policies, and whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s finance function. The Board of Directors receives periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below.

a) Market Risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. As at December 31, 2021, the Company is exposed to foreign currency risk and interest rate risk.

Foreign Currency Risk

As at December 31, 2021 and 2020, the Company is exposed to currency risk through the following financial assets and liabilities denominated in currencies other than the Canadian dollar:

As at	December 31, 2021
	British Pound Sterling (CDN equivalent) US Dollars (CDN equivalent) Serbian Dinars (CDN equivalent)
Cash Amounts receivable Accounts payable and accrued liabilities	$ 401 $ 5,180 $ 11,995 - - 2,020 (6,270) (22) (11,736)
Net exposure	$(5,869) $ 5,158 $ 2,279

25

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

a) Market Risk (continued)

Foreign Currency Risk (continued)

As at	December 31, 2020
	British Pound Sterling (CDN equivalent) US Dollars (CDN equivalent) Euros (CDN equivalent) Serbian Dinars (CDN equivalent)
Cash Amounts receivable Accounts payable and accruedliabilities	$ 553 $ 1,738 $ 12,329 $ 18,430 - - - 6,719 (55,381) (4,478) (10,233) (11,123)
Net exposure	$(54,828) $(2,740) $ 2,096 $ 14,026

Based on the above net exposures at December 31, 2021, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would result in approximately a $200 (2020: $4,100) increase or decrease in profit or loss, respectively.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. As at December 31, 2021, the Company does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered on cash held with Canadian, British and Serbian financial institutions. The Company considers this risk to be limited.

b) 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. The Company’s credit risk is primarily attributable to its cash. The Company limits exposure to credit risk by maintaining its cash with large financial institutions. The Company’s receivables consist of sales tax receivable from the governments of Canada and Serbia. The Company considers credit risk with respect to these amounts to be low.

c) 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’s approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. At December 31, 2021, the Company had working capital of $330,949 (2020: $1,148,522). All of the Company’s financial liabilities had contractual maturities of less than 45 days and are subject to normal trade terms.

Determination of Fair Value

Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

The consolidated statements of financial position carrying amounts for cash, amounts receivable, accounts payable and accrued liabilities, and due to related parties, approximate fair values due to their short-term nature.

26

Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (continued)

Fair Value Hierarchy

Financial instruments that are measured subsequent to initial recognition at fair value are categorized in Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair values of the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2021 were calculated as follows:

	Balance at
	December 31,
	2021	Level 1	Level 2	Level 3
Financial Asset:
Cash	$ 396,825	$ 396,825	$-	$-

14. CAPITAL MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its properties and to maintain flexible capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company includes the components of shareholders’ equity. There were no changes in the Company’s capital management approach during the year ended December 31, 2021.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares or adjust the amount of cash. Management reviews the capital structure on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements. The Company does not expect its capital resources as of December 31, 2021 to be sufficient to cover its corporate operating costs, potential future mineral property acquisitions, or significant exploration activities through the next twelve months. As such, the Company will need to raise additional capital and believes it will be able to do so, but recognizes the uncertainty attached thereto. Actual funding requirements may vary from those planned due to a number of factors, including potential property acquisitions and exploration activity.

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Medgold Resources Corp. (Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

15. SEGMENTED REPORTING

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. All of the Company’s operations are within the mining sector relating to precious metals exploration. Due to the geographic and political diversity, the Company’s exploration operations are decentralized whereby regional corporate offices provide support to the exploration programs in addressing local and regional issues. The Company’s operations and assets are therefore segmented on a country basis.

Year ended December 31, 2021		Canada	Serbia		Other		Total
Exploration expenditures	$	-	$ 450,801	$	36,280	$ 487,081
Interest and other income		93,098	-		-		93,098
Netloss		(306,233)	(601,739)		(69,575)		(977,547)
Year ended December 31, 2020		Canada	Serbia		Other		Total
Exploration expenditures	$	-	$ 915,452	$	-	$ 915,452
Interest and other income		1,731	-		-		1,731
Netloss		(481,423)	(949,210)		(17,540)		(1,448,173)
As at December 31, 2021		Canada	Serbia		Other	Consolidated
Total current assets	$	388,846	$ 17,457	$	401	$	406,704
Total non-current assets		61,000	85,260		-		146,260
Total assets	$	449,846	$ 102,717	$	401	$	552,964
Total liabilities	$	57,602	$ 11,883	$	6,270	$	75,755
As at December 31, 2020		Canada	Serbia		Other	Consolidated
Total current assets	$	1,272,741	$ 31,418	$	553	$	1,304,712
Total non-current assets		61,000	118,069		-		179,069
Total assets	**$ **	1,333,741	**$ 149,487 **	$	553	$	**1,483,781 **
Total liabilities	$	124,679	$ 11,123	$	20,388	$	156,190

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