Evergold Corp. — Interim / Quarterly Report 2020

Nov 25, 2020

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Evergold Corp.

Condensed Financial Statements For the 9 months ended September 30, 2020 and 2019

Page 1

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CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

Evergold Corp. Condensed Statements of Financial Position

(Expressed in Canadian dollars) (unaudited)

Assets Current Cash HST receivable Prepaid expenses and deposits	As at As at
	September 30 December 31
	2020 2019
	$ $
	468,052 2,247,406
	230,300 93,410
	196,565 19,660
Total current assets Reclamation bond (note 4)	894,917 2,360,476
	57,000 57,000
Total assets	951,917 2,417,476
Liabilities Current Accounts payable and accrued liabilities (note 10)
	680,129 87,595
Shareholders’ equity Share capital (note 6) Warrants (note 6) Contributed surplus (note 6) Retained deficit
	6,709,873 3,477,632
	693,089 883,304
	539,534 123,231
	(7,670,708) (2,154,286)
Total shareholders'equity	271,788 2,329,881
Total liabilities and shareholders' equity
	951,917 2,417,476

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

Approved by the Board of Directors and authorized for issue on November 24, 2020.

(signed) Kevin M. Keough (signed) Rosie Moore Director Director Going concern (note 1) Commitments and contingencies (note 12) Subsequent events (note 13)

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CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

Evergold Corp. Condensed Statements of Loss and Comprehensive Loss

(Expressed in Canadian dollars) (unaudited)

	Three months	ended	Nine months ended	Nine months ended
	September	30	September 30
	2020	2019	2020	2019
	$	$	$	$
Operating expenses
Exploration expenditures (note 5)	3,765,407	398,033	4,388,104	503,677
Management and consulting fees (note 10)	51,000	51,488	153,000	133,488
Directors’ fees	6,500	-	19,500	-
Share-based compensation (note 6)	135,652	-	420,450	-
Professional fees	11,388	101,276	36,100	135,698
General and administrative	169,528	52,947	499,268	87,782
	4,139,475	603,744	5,516,422	860,645
Loss from operations	(4,139,475)	(603,744)	(5,516,422)	(860,645)
Loss and comprehensive loss for the period	(4,139,475)	(603,744)	(5,516,422)	(860,645)
Loss per share	(0.13)	(0.06)	(0.18)	(0.08)
Weighted average number of shares – basic
and fully diluted	32,415,942	10,371,467	29,964,384	10,371,467

The accompanying notes are an integral part of these financial statements

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CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

Evergold Corp. Condensed Statements of Changes in Shareholders’ Equity

(Expressed in Canadian dollars) (unaudited)

Balance, December 31, 2019 Issuance of shares in private placement Issuance of warrants Share issuance costs Issuance of shares pursuant to exercise of warrants Exercise of warrants Exercise of options Exercise of options Share-based compensation Net loss	Number of Shares Share Capital Amount $ Warrants Reserve $ Contributed Surplus $ Deficit $ Total $
	27,621,467 3,477,632 883,304 123,231 (2,154,286) 2,329,881
	4,255,988 2,459,250 - - - 2,459,250
	- (20,166) 20,166 - - -
	- (121,929) - - - (121,929)
	2,480,300 693,558 - - - 693,558
	444,926 210,381 (210,381) - - -
	35,000 7,000 - - - 7,000
	- 4,147 - (4,147) - -
	- - - 420,450 - 420,450
	- - - - (5,516,422) (5,516,422)
Balance, September 30, 2020	34,837,681 6,709,873 693,089 539,534 (7,670,708) 271,788

	Number of Shares	Share Capital Amount $	Warrants Reserve $	Contributed Surplus $	Deficit $	Total $
Balance, December 31, 2018	10,371,467	982,532	254,873	-	(951,020)	286,385
Net loss	-	-	-	-	(860,645)	(860,645)
Balance, September 30, 2019	10,371,467	982,532	254,873	-	(1,811,665)	(574,260)

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

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CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

Evergold Corp. Condensed Statements of Cash Flows

(Expressed in Canadian dollars) (unaudited)

	Three months ended	Three months ended	Nine months ended	Nine months ended
	September 30		September 30
	2020	2019	2020	2019
	$	$	$	$
Cash provided by (used in)
Operating activities
Loss for the period	(4,139,475)	(603,744)	(5,516,422)	(860,645)
Items not affecting cash	-	-	-	-
Share- based compensation	135,652	-	420,450	-
Changes in non-cash working capital:	-	-	-	-
HST receivable	(178,948)	(33,467)	(136,891)	(57,265)
Prepaid expenses and deposits	99,255	(33,640)	(176,905)	(71,140)
Accounts payable and accrued liabilities	309,913	649,411	592,535	691,186
Net cash used in operating activities	(3,773,603)	(21,440)	(4,817,233)	(297,864)
Financing activities
Repayment of loan receivable	-	-	-	150,000
Proceeds from the issuance of shares	1,281,800	-	2,459,250	-
Share issuance costs	(65,463)	-	(121,929)	-
Proceeds from the exercise of warrants	108,123	-	693,558	-
Proceeds from the exercise of options	-	-	7,000	-
Net cash from financing activities	1,324,460	-	3,037,879	150,000
Investing activities
Posting of reclamation deposit	-	-	-	(25,000)
	-	-	-	(25,000)
Net increase (decrease) in cash and cash
equivalents	(2,449,143)	(21,440)	(1,779,354)	(172,864)
Cash and cash equivalents, beginning of period	2,917,195	24,970	2,247,406	176,394
Cash and cash equivalents, end of period	468,052	3,530	468,052	3,530

The accompanying notes are an integral part of these financial statements

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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Notes to the Condensed Financial Statements

1. NATURE AND CONTINUANCE OF OPERATIONS AND GOING CONCERN

Evergold Corp. (the "Company" or “Evergold”) was formed on October 30, 2015 and became a reporting issuer through an Initial Public Offering (“IPO”) on the TSX Venture Exchange (“TSXV”) on October 4, 2019. The Company’s registered and records office is located at 18 King Street East, Suite 902, Toronto, Ontario M5C 1C4.

These financial statements were approved by the Board of Directors on November 24, 2020.

The Company is in the process of exploring its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable. The recoverability of the amounts expended on exploration properties is dependent upon the discovery of economically recoverable reserves, the preservation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain financing necessary to complete development of the properties, and the future profitable production therefrom or alternatively upon the Company’s ability to dispose of its interests on an advantageous basis.

Although the Company has taken customary steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company's title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

As at September 30, 2020, the Company had a deficit of $7,670,708 (December 31, 2019 - $2,154,286) and working capital of $214,788 (December 31, 2019 - $2,272,881). The Company’s working capital position is therefore weaker than desired and at present it is uncertain whether it will have sufficient capital to operate beyond six months in the absence of securing additional financing. The Company recently announced that it had opted to formally close off the August 26/28 tranched private placement financing at a single tranche after the TSX Venture Exchange would not allow the Company to wait for pending exploration assays and a subsequent financing. Assay results and a new financing are expected to be announced in the near term.

At present there can be no assurance that the Company will be able to raise the additional capital required. However, management has shown itself capable of raising capital and advancing corporate plans and shareholder interests through uniquely challenging circumstances, and believes it can continue to do so. These matters represent material uncertainties that cast significant doubt on the ability of the company to continue as a going concern.

2. BASIS OF PREPARATION

Statement of compliance:

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. The policies set out in the Company’s annual consolidated financial statements for the year ended December 31, 2019 were consistently applied to all periods presented unless otherwise noted below.

Basis of measurement:

These financial statements have been prepared on the historical cost basis except for those financial instruments carried at fair value. In addition, these financial statements are prepared using the accrual basis of accounting except for cash flow information.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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2. BASIS OF PREPARATION (CONTINUED)

Basis of preparation:

These financial statements have been prepared on the basis of a going concern which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of operations rather than through a process of forced liquidation. These financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern; such adjustments could be material.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied in preparing the financial statements for the nine months ended September 30, 2020 and 2019.

Functional and presentation currency:

The Company’s presentation and functional currency is the Canadian dollar. The Company does not have any foreign operations. Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at period end exchange rates are recognized in the statements of loss.

Cash and cash equivalents:

Cash includes cash on hand and balances with banks. Cash equivalents include investments with original maturities of ninety days or less. The Company has not held cash equivalents to September 30, 2020.

Income taxes:

Income tax expense consists of current and deferred tax expense. Current and deferred tax are recognized in profit or loss except to the extent that they relate to items recognized directly in equity or other comprehensive income. Current tax is recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years. Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable earnings. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized and the liability is settled. The effect of a change in the enacted or substantively enacted tax rates is recognized in the statements of loss or in equity depending on the item to which the adjustment relates.

Deferred tax assets are recognized to the extent future recovery is probable. At the end of each reporting period, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Loss per share:

Loss per share is based on the weighted average number of common shares of the Company outstanding during the period. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding stock options and warrants, in the weighted average number of common shares outstanding during the period, if dilutive. In the Company’s case, diluted loss per share is the same as basic

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

loss per share for the periods presented as any warrants or options issued were determined to be antidilutive for the three and nine months ended September 30, 2020 and 2019.

Financial instruments:

Financial assets and financial liabilities that are purchased and incurred with the intention of generating profits in the near term are measured at fair value through profit or loss (“FVTPL”). These instruments are measured at fair value with subsequent changes in fair value recognized in the statements of loss. The Company’s cash equivalents and short-term investments are classified as FVTPL.

Items classified as financial assets are measured at amortized cost using the effective interest method. Any gains or losses on the realization of loans and receivables are recognized in the statements of loss. The Company’s cash and loan receivables are classified as financial assets at amortized cost. The estimated fair values of these financial instruments approximate their carrying values because of the limited terms of these instruments.

Financial liabilities that are not measured at fair value through profit or loss are carried at amortized cost using the effective interest method. Any gains or losses arising from the realization of other financial liabilities are recognized in the statements of loss. The Company has classified accounts payable and accrued liabilities as other financial liabilities at amortized cost. Due to their short-term natures, the fair values of these financial instruments approximate their carrying values.

The Company classifies its fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) 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) (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). At September 30, 2020 and December 31, 2019, no financial instruments were carried at fair value.

Impairment of financial assets:

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that the estimated future cash flows of the assets have been negatively impacted. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced by the amount of the impairment and the loss is recognized in the statements of loss.

If in a subsequent period, the amount of impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed to the extent that the carrying value of the asset does not exceed what the amortized cost would have been had the impairment not been recognized. Any subsequent reversal of an impairment loss is recognized in the statements of loss.

Impairment of non-financial assets:

The carrying value of non-financial assets is assessed for impairment when indicators of such impairment exist. If any indication of impairment exists an estimate of the asset’s recoverable amount is calculated. The recoverable amount is determined as the higher of the fair value less costs to sell for the asset and the asset’s value in use.

Impairment is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. If this is the case, the individual assets

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

of the Company are grouped together into cash generating units (“CGUs”) for impairment purposes. Such CGUs represent the lowest level for which there are separately identifiable cash inflows that are largely independent of the cash flows from other assets or other groups of assets. This generally results in the Company evaluating its non-financial assets on a geographical or license basis.

If the carrying amount of the asset or CGU exceeds its recoverable amount, the asset or CGU is impaired and an impairment loss is charged to the statement of loss so as to reduce the carrying amount to its recoverable amount.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company makes an estimate of the recoverable amount.

A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statements of loss.

Share-based payments:

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity settled share-based transactions are set out in the stock option note.

The fair value is measured at the grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in the statement of loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to contributed surplus.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

Interests in exploration properties and exploration expenditures:

Exploration and evaluation costs are expensed as incurred and included in profit or loss until technical feasibility and commercial viability of extraction of reserves are demonstrable. Once a mine development decision has been made by the Company, subsequent expenditures incurred to develop the mine are capitalized to mineral properties.

Exploration expenditures include costs to acquire exploration properties, and costs to explore and evaluate exploration properties.

Equipment:

Equipment is measured at cost less accumulated depreciation and accumulated impairment losses. The cost of equipment comprises its purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the estimated decommissioning and restoration costs associated with the asset. Equipment is depreciated on a diminishing balance basis at 20% per year.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Provisions:

General

Provisions are recognized when (a) the Company has a present obligation (legal or constructive) as a result of a past event, and (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the statements of loss, net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Rehabilitation provision

The Company records the present value of estimated costs of legal and constructive obligations required to restore operating locations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, dismantling operating facilities, and restoration, reclamation and re-vegetation of affected areas.

The obligation generally arises when the asset is installed or the ground / environment is disturbed at the exploration or production location. When the liability is initially recognized, the present value of the estimated cost is capitalized by increasing the carrying amount of the related exploration and evaluation asset to the extent that it was incurred prior to the production of related ore. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognized in the statement of loss as a finance cost. Additional disturbances or changes in rehabilitation costs are recognized as additions or charges to the corresponding assets and rehabilitation liability when they occur. For closed sites, changes to estimated costs are recognized immediately in the statement of loss.

The Company does not currently have any such significant legal or constructive obligations and therefore no decommissioning liabilities have been recorded as at September 30, 2020 and December 31, 2019.

Critical judgements and estimation uncertainties:

The preparation of financial statements in conformity with IFRS requires the Company’s management to make judgements, estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes to the financial statements. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may differ from those estimates and these differences could be material.

The areas which require management to make significant judgements, estimates and assumptions in determining carrying values include, but are not limited to:

Estimation of decommissioning and restoration costs and the timing of expenditure

Decommissioning, restoration and similar liabilities are estimated based on the Company’s interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgement is required in determining the Company’s provisions for such taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

Share-based payments and warrants

Management determines the value of any share-based payments using market-based valuation techniques such as the Black-Scholes model outlined in note 6. The fair value of the market-based and performancebased share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgement used in applying valuation techniques. These assumptions and judgements include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviours and corporate performance. Warrants are valued using a similar approach. Such judgements and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

New IFRS adopted:

On January 1, 2020, the Company adopted certain new IFRS, amendments and interpretations to existing standards. There was no impact to the financial statements as a result of the adoption of these new standards.

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in October 2018 to refine the definition of materiality and clarify its characteristics.

In connection with the issuance of flow-through shares in 2020, the Company adopted the following policy:

Flow-Through Shares:

Flow-through shares are a unique Canadian tax incentive. The Company has adopted a policy whereby flow-through proceeds are allocated between the offering of the common shares and the sale of tax benefits when the common shares are offered. The allocation is made based on the difference between the quoted price of the common shares and the amount the investor pays for the flow-through shares. A liability is recognized for the premium paid by the investors and is then derecognized in the period of renunciation. The recognition of a deferred income tax liability upon renunciation of the flow through expenditure is recorded as income tax expense in the period of renunciation. Any difference between the amount of the liability component derecognized and deferred income tax liability recognized is recorded in the statement of loss.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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4. RECLAMATION BONDS

The Company posts reclamation bonds with the B.C. Ministry of Energy, Mines and Petroleum Resources as security toward planned exploration work and the related future potential cost of reclamation of the Company’s land and unproven mineral interests. Once reclamation of the properties is complete, the bond funds will be returned to the Company. As at September 30, 2020, the Company has posted a $25,000 reclamation bond covering anticipated work on the Snoball property, a $27,000 reclamation bond covering anticipated work on the Golden Lion property, and a $5,000 reclamation bond covering anticipated work on the Holy Cross property, for a combined total of $57,000 (December 31, 2019 - $57,000).

5. INTEREST IN EXPLORATION PROPERTIES AND EXPLORATION EXPENDITURES

Snoball Property

The Snoball property is located in the Liard Mining Division of northwestern British Columbia. The Company acquired a 100% ownership interest in the property effective April 5, 2016, further to a Mineral Property Acquisition Agreement (the “Agreement”), covering four mineral properties. The Agreement includes a 0.5% Net Smelter Returns (“NSR”) royalty payable to the property vendors on any future production from the Snoball property. There is no buy-back option on the NSR.

Golden Lion Property

The Golden Lion property is located in the Toodoggone region of northcentral British Columbia, Canada. The Company acquired a 100% ownership interest in the property effective April 5, 2016, further to the above-mentioned Agreement. The Agreement includes a 0.5% NSR royalty payable to the property vendors on any future production from the Golden Lion property. There is no buy-back option on the NSR.

Holy Cross Property

The Holy Cross property is located in central British Columbia, Canada. The Company acquired a 100% ownership interest in the property effective April 5, 2016, further to the above-mentioned Agreement. The Agreement includes a 0.5% NSR royalty payable to the property vendors on any future production from the Holy Cross property. There is no buy-back option on the NSR.

Spanish Lake Property

The Spanish Lake property is located in the Cariboo Mining District of central British Columbia, Canada. The Company acquired a 100% ownership interest in the property effective April 5, 2016, further to the above-mentioned Agreement. The Agreement includes a 0.5% NSR royalty payable to the property vendors on any future production from the Spanish Lake property. There is no buy-back option on the NSR.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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5. INTEREST IN EXPLORATION PROPERTIES AND EXPLORATION EXPENDITURES (CONTINUED)

The following is a summary of exploration expenditures by property during the first nine months of 2020:

Expense Category	Snoball	Golden Lion	Holy Cross	Spanish Lake	Total $
	$	$	$	$
Aircraft	271,924	802,110	-	-	1,074,034
Assaying	90,078	30,055	-	-	120,133
Camp	548,923	745,853	-	-	1,294,776
Drilling	479,476	429,253	-	-	908,729
Environmental	26,809	44,625	-	-	71,434
Fuel	78,423	6,243	-	-	84,666
Geological	169,067	238,255	-	2,163	409,485
Geophysics	-	198,686	313	-	198,999
Miscellaneous	33,655	102,619	678	3,412	140,364
Surveys	3,700	81,784	-	-	85,484
Total	1,702,055	2,679,483	991	5,575	4,388,104

The following is a summary of exploration expenditures by property during the first nine months of 2019:

Expense Category	Snoball	Golden Lion	Holy Cross	Spanish Lake	Total
	$	$	$	$	$
Aircraft	224	662	29,334	-	30,220
Assaying	57,586	53,860	-	-	111,446
Camp	12,376	19,594	1,684	4,126	37,780
Drilling	57,225	375	-	-	57,600
Environmental	13,153	12,880	1,841	-	27,874
Fuel	1,262	171	132	579	2,144
Geological	23,929	79,427	5,772	5,510	114,638
Geophysics	-	56,414	11,000	-	67,414
Miscellaneous	10,928	8,696	1,408	704	21,736
Surveys	317	17,153	4,480	10,875	32,825
Total	177,000	249,232	55,651	21,794	503,677

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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6. CAPITAL STOCK, OPTIONS AND WARRANTS

(a) Authorized

Unlimited number of common shares, without par value.

(b) Issued

34,837,681 common shares

Summary of changes in capital stock:

Summary of changes in capital stock:
	Shares	Amount
	#	$
Balance, December 31, 2018	10,371,467	982,532
Issuance of common share units pursuant to IPO	17,250,000	3,450,000
Issuance of unit warrants pursuant to IPO	-	(607,000)
Issuance of compensation options pursuant to IPO	-	(78,845)
Share issuance costs	-	(269,055)
Balance, December 31, 2019	27,621,467	3,477,632
Issuance of common shares in private placement	4,255,988	2,459,250
Issuance of warrants	-	(20,166)
Share issuance costs	-	(121,929)
Issuance of shares pursuant to the exercise of warrants	2,925,226	903,939
Issuance of sharespursuant to the exercise of options	35,000	11,147
Balance, September 30, 2020	34,837,681	6,709,873

On September 22, 2020, the Company completed the first of two then-planned tranches of a non-brokered private placement financing announced August 26, 2020 and amended August 28, under the amended terms of which the Company proposed to raise up to $3,500,000 of hard dollar units at a price of $0.50 per unit and flow-through shares at a price of $0.60 per flow-through share, with each hard dollar unit comprising one common share and half a warrant. The first tranche targeted the sale of a minimum $1 million in hard dollar units. It closed with the sale of 2,173,600 hard dollar units to a fund and retail investors for gross hard dollar proceeds of $1,086,800, plus the sale of 325,000 flow-through shares, all to retail investors, for gross flow-through proceeds of $195,000. Gross proceeds of the first tranche, hard dollars and flow-through combined, amounted to $1,281,800. In connection with the first tranche of the offering, the Company paid finder’s fees of $47,901 and issued 89,852 finder’s warrants entitling finders to purchase one common share at a price of $0.60 until September 22, 2021, and at a price of $0.70 until September 22, 2022.

On October 9, 2020, the Company announced that it had chosen to await initial assays from drilling this summer at the Company’s promising GL 1 Main target, located on the Golden Lion property in northern B.C., prior to completing the second tranche of its previously announced (news, August 26/28) tranched private placement.

On November 16, 2020, the TSX Venture Exchange advised the Company that the time limit for closing of the second tranche had expired, and that further extensions would not be granted. Accordingly, on the same day the Company announced it had opted to formally close off the August 26/28 tranched private placement financing at a single tranche. The Company anticipates that assay results for several holes should be completed and a subsequent financing announced in the near term.

Page 14

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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6. CAPITAL STOCK, OPTIONS AND WARRANTS (CONTINUED)

On May 21, 2020, the Company completed a non-brokered private placement financing of 1,757,388 flowthrough (FT) common shares at a price of $0.67 per FT share, for gross proceeds of $1,177,450. In connection with the offering, the Company paid a finder’s fee of $40,000 and issued 35,147 finder’s warrants entitling the finder to purchase one common share at a price of $0.67 until May 21, 2022. The Company calculated the flow-through share premium as $nil by comparing the issue price to the market price at the date of the financing.

Stock options

The Company has adopted a stock option plan (the “Option Plan”) for directors, officers and consultants of the Company. Under the Option Plan, the Company may grant non-transferable options to purchase common shares of the Company for a period of up to ten years from the date of grant. The maximum number of common shares reserved for issuance under the Option Plan together with any common shares reserved for issuance pursuant to any other stock options may not exceed 10% of the issued and outstanding common shares of the Company.

The exercise price of options is determined by the Board of Directors at the time of grant and cannot be less than the price permitted by any exchange on which the Company’s common shares are listed or any regulatory body having jurisdiction. Currently, the TSX Venture Exchange (the “TSXV”) requires that the exercise price of the options must be equal to or greater than the Discounted Market Price (as defined in the policies of the TSXV). The exercise price of options is solely payable in cash. The Board of Directors has the discretion to determine the term and vesting provisions of any options granted under the Option Plan at the time of grant subject to the policies of the TSXV.

Of the total 2,380,000 options granted on October 4, 2019, 2,280,000 are exercisable and vesting in thirds, at 20, 25 and 30 cents respectively, with the vesting commencing on the date of grant (October 4, 2019) and the subsequent first (October 4, 2020) and second anniversaries (October 4, 2021) thereof, and ending 5 years thereafter, respectively. The residual of 100,000 options, granted to Peak Investor Marketing Corp. also on October 4, 2019, are all exercisable at 20 cents a share, vest at a rate of 25% on each of the three, six, nine, and twelve-month anniversaries of grant, and expire 30 days following the conclusion of Peak’s agreement with the Company.

On June 16, 2020, the Company granted 820,000 options to directors, officers, and consultants, exercisable at $0.66 per common share until June 16, 2025. Of this total, 50% vest on the date of grant, and 50% vest on December 16, 2020. In addition, the Company issued 20,000 options to Peak Investor Marketing Corp. exercisable at $0.66 per share, and vesting at a rate of 25% on the date of grant, then 25% on each of the three, six, and nine-month anniversaries of grant, and expiring 30 days following the conclusion of Peak’s agreement with the Company.

Exercise price	Options outstanding	Options exercisable	Expiry date
$0.20	824,997	774,997	October 4, 2024
$0.25	760,000	-	October 4, 2025
$0.30	760,003	-	October 4, 2026
$0.66	840,000	415,000	June 16,2025
Total	3,185,000	1,189,997

The weighted average remaining contractual life of options outstanding is 4.85 years.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS For the 9 Months Ended September 30, 2020 and 2019

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6. CAPITAL STOCK, OPTIONS AND WARRANTS (CONTINUED)

The following is a summary of stock option grant activity and related Black-Scholes option pricing model input factors used for the periods ended September 30, 2020 and December 31, 2019:

Option grant activity and Black-Scholes option pricing model input factors	Nine months ended September 30, 2020	Year ended December 31, 2019
Stock options granted during the period	840,000	2,380,000
Weighted-average exercise price	$0.66	$0.20-$0.30
Expected stock option life(1)	5 years	5-7 years
Expected volatility(2)	100%	100%
Risk-free interest rate(3)	0.38%	1.25%
Dividend yield	Nil	Nil
Forfeiture rate	Nil	Nil

1. The Company estimates the expected stock option life (estimated period of time outstanding) of options granted to be the length of time before the stock option’s expiry until such time that the Company can base its estimate on historical information on the Company’s options.

2. The expected volatility was based on the trading history of comparable companies over a period equal to the expected stock option life.

3. The risk-free rate is based on the yield of a Government of Canada marketable bond in effect at the time of grant with an expiry commensurate with the expected life of the award.

During the nine months ended September 30, 2020, an amount of $411,139 (September 30, 2019 - $nil) was recorded as share-based compensation in connection with the granting of 2,280,000 stock options to directors, officers and consultants on October 4, 2019, and 820,000 options granted to directors, officers and consultants on June 16, 2020. An amount of $9,311 (September 30, 2019 - $nil) was recorded as sharebased compensation in connection with the granting of options to Peak Investor Marketing Corp.

Warrants

A summary of the Company’s warrants is presented below:

A summary of the Company’s warrants is presented below:
Balance, December 31, 2018 Warrants issued to investors pursuant to IPO Warrants issued to agentspursuant to IPO	Number of warrants Weighted average exercise price
	$
	3,146,575 0.14
	8,625,000 0.25
	1,207,500 0.20
Balance, December 31, 2019 Warrants issued to finders pursuant to private placement Warrants exercised byshareholders and agents	12,979,075 0.22
	124,999 0.66
	(2,925,226) 0.24
Balance, September 30, 2020	10,178,848 0.22

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

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For the 9 Months Ended September 30, 2020 and 2019

6. CAPITAL STOCK, OPTIONS AND WARRANTS (CONTINUED)

	Number of warrants
Exercise price	remaining to be exercised at	Expiry date
	each exerciseprice
$0.12	2,047,075	May 1, 2022
$0.18	924,500	July 12, 2021
$0.25	6,381,500	October 4, 2021
$0.20	700,774	October 4, 2021
$0.60	44,926	September 22, 2021
$0.67	35,147	May 21, 2022
$0.70	44,926	September 22,2022
Outstanding at September 30, 2020	10,178,848

The following is a summary of warrant activity and related Black-Scholes option pricing model input factors used for the periods ended September 30, 2020 and December 31, 2019:

Warrant grant activity and Black-Scholes	Nine months ended	Year ended
pricing model input factors	September 30, 2020	December 31, 2019
Warrants granted during the period	124,999	9,832,500
Weighted-average exercise price	$0.66	$0.24
Expected warrant life(1)	1-2 years	2 years
Expected volatility(2)	100%	100%
Risk-free interest rate(3)	0.20%-0.30%	1.41%
Dividend yield	Nil	Nil
Forfeiture rate	Nil	Nil

1. The Company estimates the expected warrant life (estimated period of time outstanding) of warrants granted to be the length of time before the warrant’s expiry until such time that the Company can base its estimate on historical information on the Company’s options.

2. The expected volatility was based on the trading history of comparable companies over a period equal to the expected stock warrant life.

3. The risk-free rate is based on the yield of a Government of Canada marketable bond in effect at the time of grant with an expiry commensurate with the expected life of the award.

Contributed surplus

	$
Balance, December 31, 2018	-
Share-basedpayment expense	123,231
Balance, December 31, 2019	123,231
Exercise of options	(4,147)
Share-basedpayment expense	420,450
Balance, September 30, 2020	539,534

Page 17

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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7. FINANCIAL INSTRUMENTS

Fair Value

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the end of the reporting period based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgement and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

8. CAPITAL MANAGEMENT

The Company considers its capital structure to consist of shareholders’ equity. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of exploration properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

The Company's capital management objectives, policies and processes have remained unchanged during the periods ended September 30, 2020 and December 31, 2019.

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange (“TSXV”) which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months.

As of September 30, 2020, the Company believes it is compliant with the policies of the TSXV. However, as of the date of writing the Company’s working capital position is weak. The Company strives to maintain sufficient cash resources to cover at least six months of corporate overheads. At present it is uncertain if the Company will have sufficient capital to operate beyond six months. The Company’s ability to continue as a going concern will therefore be dependent upon its ability to successfully close its next financing, without which it will be in financial jeopardy. At present there can be no assurance that it will be able to raise the additional capital required. However, management has shown itself capable of raising capital and advancing corporate plans and shareholder interests through uniquely challenging circumstances, and believes it can continue to do so.

9. FINANCIAL RISK FACTORS

The Company's risk exposures and the impact on the Company's financial instruments are summarized below. There have been no changes in the risks, objectives, policies and procedures during the periods ending September 30, 2020 and December 31, 2019.

Credit risk

The Company's credit risk is primarily attributable to cash and cash equivalents, amounts receivable, and reclamation bonds. The Company has no significant concentration of credit risk arising from operations. Financial instruments included in amounts receivable consist of goods and services tax due from the Federal Government of Canada. Management believes that the credit risk concentration with respect to financial instruments included in amounts receivable and reclamation bonds is remote.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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9. FINANCIAL RISK FACTORS (CONTINUED)

Liquidity risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient cash on hand to meet liabilities when due, and to cover at least six months of corporate overheads. The Company's financial liabilities generally have contractual maturities of less than 30 days and are subject to normal trade terms.

As at September 30, 2020, the Company had a cash and cash equivalents balance of $468,052 (December 31, 2019 - $2,247,406) to settle current liabilities of $680,129 (December 31, 2019 - $87,595). Working capital at September 30, 2020 stood at $214,788. The Company’s working capital position is therefore weaker than desired and at present it is uncertain whether it will have sufficient capital to operate beyond six months in the absence of securing additional financing. The Company recently announced that it had opted to formally close off the August 26/28 tranched private placement financing at a single tranche after the TSX Venture Exchange would not allow the Company to wait for pending exploration assays and a subsequent financing. Assay results and a new financing are expected to be announced in the near term.

The Company’s ability to continue as a going concern will therefore be dependent upon its ability to successfully close its next financing, without which it will be in financial jeopardy. At present there can be no assurance that it will be able to raise the additional capital required. However, management has shown itself capable of raising capital and advancing corporate plans and shareholder interests through uniquely challenging circumstances, and believes it can continue to do so. These matters represent material uncertainties that cast significant doubt on the ability of the company to continue as a going concern.

Interest rate risk

The Company has cash and cash equivalents subject to interest. Management does not believe the Company is exposed to significant interest rate risk.

Foreign currency risk

The Company's functional currency is the Canadian dollar and virtually all purchases are transacted in Canadian dollars. The Company is not exposed to foreign exchange risk.

Price risk

To the degree that commodity prices impact investor sentiment toward the sector, and thus increase or decrease the Company’s ability to potentially raise capital, the Company is exposed to price risk with respect to commodity prices. The Company closely monitors commodity prices and investor sentiment to determine the appropriate course of action to be taken by the Company.

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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10. RELATED PARTY TRANSACTIONS

Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions.

Evergold entered into the following transactions with related parties:

For the 9 months ended Amount payable as at	For the 9 months ended Amount payable as at
September 30, September 30, 2020 2019 2020	December 31,
	2019
$ $ $	$
Consulting fees paid or accrued to the Company’s Chief Executive Officer 112,500 100,000 29,773
	14,125
Exploration expenses paid or accrued to C.J. Greig & Associates Ltd., an exploration services company controlled by a former Director or spouse of a current Director(1) 542,224 221,877 -
	15,227
Exploration expenses paid or accrued to Alex Walcott & Associates Ltd., and Peter E. Walcott & Associates Limited exploration services companies controlled by a Director of the Company, and/or a relative of a Director of the Company 159,031 - 55,641
Consulting fees paid or accrued to the Company’s Chief Financial Officer 40,500 33,000 10,170
	5,085
Totals 854,255 354,877 95,584
	34,437

During the period ended September 30, 2020, the Company expensed $300,965 (September 30, 2019 - $nil) in share-based compensation related to options granted to Officers and Directors of the Company.

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including directors (executive or non-executive).

• (1) As described in Note 5, the 2016 Agreement to acquire the Company’s four exploration properties was entered into with C.J. Greig Holdings Ltd., a company owned and controlled by a then-director and officer of the Company, C.J. (Charlie) Greig. Charlie Greig stepped down as a director of the Company on June 25, 2019, but continues to serve as senior technical advisor to the Company, and his spouse Bernice Greig is a Company director. C.J. Greig Holdings Ltd. continues to hold four 0.5% NSRs, one for each of the Company’s four mineral properties, that resulted from the Agreement. C.J. Greig & Associates Ltd. continues to provide under contract the services of multiple geologists to the Company, including the Company’s Vice President, Exploration, Andrew Mitchell.

Page 20

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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11. BASIC AND DILUTED LOSS PER SHARE

The calculation of basic and diluted loss per share for the three months ended September 30, 2020 was based on the net loss attributable to common shareholders of $4,139,475 (September 30, 2019 - $603,744) and the weighted average number of common shares outstanding of 32,415,942 (September 30, 2019 - 10,371,467).

The calculation of basic and diluted loss per share for the nine months ended September 30, 2020 was based on the net loss attributable to common shareholders of $5,516,422 (September 30, 2019 - $860,645) and the weighted average number of common shares outstanding of 29,964,384 (September 30, 2019 - 10,371,467).

Diluted loss per share in all periods did not include the effect of 10,178,848 warrants outstanding (September 30, 2019 – 3,138,658 warrants outstanding) and 3,185,000 options outstanding (September 30, 2019 – nil options outstanding) as they are anti-dilutive.

12. COMMITMENTS AND CONTINGENCIES

Environmental Contingencies

The Company’s mineral exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

Management Contract

The Company has entered into an agreement (the “Agreement”) with Kevin Keough (the “Executive”) to provide services to the Company in the general capacity of President and CEO and to undertake the duties and exercise the powers associated with this role. Under the terms of the Agreement, the Executive is contracted by the Company for an indefinite term, commencing as of February 1, 2019. The Company pays the Executive $150,000 per annum. Upon the occurrence of a change of control or termination without cause, the Agreement requires additional contingent payments equal to 12 months of salary. As a triggering event has not taken place, the contingent payments have not been reflected in these financial statements.

Exploration Properties

See Note 5.

Indemnity Agreements

The Company has indemnified the directors and officers of the Company against amounts that may become due by the directors and officers in connection with their acting as directors or officers of the Company.

Flow Through Indemnity Provision

The Company indemnifies the subscribers of flow-through shares for certain tax related amounts that may become payable by the subscribers if the Company were found to have not completed expenditure requirements pursuant to the flow-through subscription agreements.

Page 21

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the 9 Months Ended September 30, 2020 and 2019

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12. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Novel Coronavirus (“COVID-19”)

The Company’s plans and operations have been somewhat affected by various governments’ reactions to the COVID-19 virus principally through cost increases associated with mandated safety measures. Mineral exploration and development are designated an “essential service” under British Columbia’s COVID-19 State of Emergency orders. The Company’s key suppliers are all located relatively close to its two primary exploration sites in northern and central interior B.C. and, in cooperation with these suppliers, the Company has put in place virus mitigation protocols. Nonetheless, should the economic and market disruption resulting from COVID-19 continue for an extended period, the Company may find its ability to raise additional capital and/or execute its exploration programs restricted, in part or in whole. It is also conceivable that COVID-19 may negatively impact the financial health of key vendors to the Company in ways that the Company may not anticipate, possibly causing vendor failure during execution of the Company’s exploration programs.

13. SUBSEQUENT EVENTS

On September 22, 2020, the Company completed the first of two planned tranches of a non-brokered private placement financing announced August 26, 2020 and amended August 28, under the amended terms of which the Company proposed to raise up to $3,500,000 of hard dollar units at a price of $0.50 per unit and flow-through shares at a price of $0.60 per flow-through share, with each hard dollar unit comprising one common share and half a warrant. The first tranche targeted the sale of a minimum $1 million in hard dollar units. It closed with the sale of 2,173,600 hard dollar units to a fund and retail investors for gross hard dollar proceeds of $1,086,800, plus the sale of 325,000 flow-through shares, all to retail investors, for gross flowthrough proceeds of $195,000. Gross proceeds of the first tranche, hard dollars and flow-through combined, amounted to $1,281,800. In connection with the first tranche of the offering, the Company paid finder’s fees of $47,901 and issued 89,852 finder’s warrants entitling finders to purchase one common share at a price of $0.60 until September 22, 2021, and at a price of $0.70 until September 22, 2022.

On October 9, 2020, the Company announced that it had chosen to await initial assays from drilling this summer at the Company’s promising GL 1 Main target, located on the Golden Lion property in northern B.C., prior to completing the second tranche of its previously announced (news, August 26 and 28) tranched private placement.

On November 16, 2020, the TSX Venture Exchange advised the Company that the time limit for closing of the second tranche has expired, and that further extensions would not be granted. Accordingly, on the same day the Company announced it had opted to formally close off the August 26/28 tranched private placement financing at a single tranche, pending exploration news and a subsequent financing, to be announced.

Page 22