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Glen Eagle Resources Inc. Interim / Quarterly Report 2020

Nov 28, 2020

42904_rns_2020-11-27_a405cf99-7f90-4df7-919d-96ed4a6ffe86.pdf

Interim / Quarterly Report

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Unaudited Condensed Consolidated Interim Financial Statements

Glen Eagle Resources Inc.

Third quarter ended September 30, 2020 (in Canadian dollars, unless otherwise stated)

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UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3 (3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of the Corporation have been prepared by, and are the responsibility of the Corporation's management.

The unaudited condensed interim consolidated financial statements of Glen Eagle Resources Inc. as at September 30, 2020 and for the three-month periods ended September 30, 2020 and 2019, have not been reviewed by the Corporation’s external auditors.

Jean Labrecque Daniel Bélisle Jean Labrecque Daniel Bélisle, CPA, CA President and Chief Executive Officer Chief Financial Officer & Corporate Secretary

Date: November 27, 2020

Glen Eagle Resources Inc. Consolidated Interim Statements of Financial Position Unaudited

(in Canadian dollars)

Assets
Current assets
Cash
Short term investments – term deposits
Prepaids
Amounts receivable (note 3)
Inventory (note 4)
Non-current assets
Property, plant and equipment (note 5)
Exploration and evaluation assets (note 6)
TOTAL ASSETS
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 7)
Non-current liabilities
Term loans (note 8)
Provision (note 9)
Convertible debenture (note 10)
TOTAL LIABILITIES
Equity
Share capital (note 11)
Subscriptions received
Warrants
Stock options (note 12)
Equity component of convertible debenture
Contributed surplus
Deficit

Accumulated other comprehensive income (loss)
Total equity
TOTAL LIABILITIES AND EQUITY
Going concern(note 1)		 September 30
2020
$		 December 31
2019
$
397,681
8,099
9,554
61,624
236,272		 7,470
8,096
-
57,884
235,722
713,230 309,172
2,989,510
214,727		 3,066,089
214,727
3,204,237 3,280,816
3,917,467 3,589,988
1,316,443 1,002,887
660,000
69,637
238,269		 660,000
65,678
137,596
967,906 863,274
2,284,349 1,866,161
28,777,777
-
192,005
588,495
7,140
3,208,228
(31,035,838)
(104,689)		 28,138,995
-
-
617,106
-
3,050,304
(29,895,310)
(187,268)
1,633,118 1,723,827
3,917,467 3,589,988

The accompanying notes are an integral part of these consolidated financial statements Approved by the Board of Directors

/s/ Jean Labrecque___ Director /s/ Guy Chamard__ Director

2

Glen Eagle Resources Inc.

Consolidated Interim Statements of Comprehensive Income (Loss) For the three and nine months periods ended September 30, 2020 and 2019 Unaudited

(in Canadian dollars)

Sales (note 2)
Gold & silver
Cost of sales (note 13)
Gross operating margin
General and administrative (note 13)
Selling expenses
General exploration, net of tax credits
Operating loss
Interest expense
Foreign exchange gain (loss)
Net income (loss) for the period
Other comprehensive income (loss)
net of income tax:
Currency translation adjustment
Net comprehensive income (loss)
for the period
Weighted average number of
outstanding common
shares
Loss per share
Basic and diluted		 Three-month
period ended
September 30,
2020
$
Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$		 Three-month
period ended
September 30,
2020
$
Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$		 Nine-month
period ended
September 30,
2019
$
-
688,805
697,138
(222,736)
(546,317)
(1,050,887)		 1,606,852
(1,797,060)
(222,736)
142,488
(353,749)
(270,085)
(107,739)
(527,154)
(10,360)
(47,903)
(51,097)
(94,688)
-
(94,688)		 (190,208)
(554,179)
(98,084)
(599)
(597,869)
(13,154)
(1,026,688)
(26,058)
(28,816)
(96,849)
(12,674)
(10,214)
(16,991)		 (843,070)
(60,729)
(14,440)
(636,601)
(52,184)
(1,140,528)
(22,230)
41,383
82,579		 (918,239)
(113,932)
(658,831)
(10,801)
(1,057,949)		 (1,032,171)
86,933,733
82,868,108
83,892,866		 82,868,108
(0.01)
(0.00)
(0.00)
(0.		 01)

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

3

Glen Eagle Resources Inc.

Consolidated Interim Statements of Changes in Equity For the three and nine months periods ended September 30, 2020 and 2019 Unaudited

(in Canadian dollars, except for the number of shares)

(note)
Balance as at January 1, 2019
Net loss for the period
Currency translation adjustment
Comprehensive loss for the
period
Fair value of stock option expired
(12)
Share based compensation expense
(12)
Balance as at
September 30, 2019
Balance as at January 1, 2020
Net loss for the period
Currency translation adjustment
Comprehensive loss for the
period
Issued and paid in cash
(11)
Warrants issued
(11)
Equity component on convertible
debenture
(10)
Fair value of stock optioncancelled and
expired
(12)
Share based compensation expense
(12)
Balance as at
September 30, 2020		 Number
of common
shares
Share
capital
$
Warrants
$
Stock
options
$
Equity
component
on
convertible
debenture
$
Contributed
surplus
$
Accumulated
other
comprehensive
loss
$
Deficit
$
Total
$		 Number
of common
shares
Share
capital
$
Warrants
$
Stock
options
$
Equity
component
on
convertible
debenture
$
Contributed
surplus
$
Accumulated
other
comprehensive
loss
$
Deficit
$
Total
$
82,868,108
28,138,995
-
596,676
-
2,929,176
(32,095)
(27,491,289)
4,141,463
-
(918,239)
(918,239)
(113,932)
-
(113,932)
(113,932)
(918,239)
(1,032,171)
-
-
-
(121,128)
-
121,128
-
-
-
-
-
-
141,558
-
-
-
-
141,558
-
-
-
20,430
-
121,128
(113,932)
(918,239)
(890,613)
82,868,108
28,138,995
-
617,106
-
3,050,304
(146,027)		 (28,409,528)
3,250,850
82,868,108
28,138,995
-
617,106
-
3,050,304
(187,268)
(29,895,310)
1,723,827
-
(1,140,528)
(1,140,528)
82,579
-
82,579
(82,579)
(1,140,528)
(1,057,949)
11,087,500
830,787
-
-
-
-
-
-
830,787
-
(192,005)
192,005
-
-
-
-
-
-
-
-
-
-
7,140
-
-
-
7,140
-
-
-
(157,924)
-
157,924
-
-
-
-
-
-
129,313
-
-
-
-
129,313
-
-
192,005
(28,611)
7,140
157,924
(104,689)
(1,140,528)
(90,709)
93,955,108
28,777,777
192,005
588,495
7,140
3,208,228
(104,689)
(31,035,838)
1,633,118

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

4

Glen Eagle Resources Inc. Consolidated Interim Statement of Cash Flows For the three and nine months periods ended September 30, 2020 and 2019 Unaudited

(in Canadian dollars)

Three-month
period ended
September 30,
2020
$
Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$
Cash flows provided (used in)
Operating activities
Net income (loss) for the period
(636,601)
(52,184)
(1,140,528)
Adjustments for
Depreciation and amortization
61,359
57,205
178,540
Unrealised foreign exchange gain (loss)
(234)
41,383
-
Accretion excpense
2,885
1,821
7,813
Share-based compensation expense
101,480
-
129,313
Foreign exchange on cash
12,674
10,214
16,991
(458,437)
58,439
(807,871)
Changes in working capital items
Amounts receivable
10,943
54,143
(5,603)
Prepaid expenses
11,547
-
(9,554)
Inventory
(145,835)
(6,090)
(551)
Accounts payable and accrued liabilities
79,501
39,292
313,556
Net cash from (used in) operating activities
(502,281)
145,784
(510,023)
Investing activities
Acquisition of exploration and evaluation asset
-
-
-
Acquisition of property, plant & equipment
(8,611)
(53,244)
(13,562)
Net cash used in investing activities
(8,611)
(53,244)
(523,585)
Financing activities
Increase in convertible debenture
100,000
4,369
100,000
Increase in long term debt
-
-
-
Issuance of share capital net of issue costs
786,787
-
830,787
Net cash provided by financing activities
886,787
4,369
930,787
Foreign exchange on cash
(12,674)
(10,214)
(16,991)
Net increase (decrease) – cash and cash
equivalent
363,221
96,909
390,211
Cash and cash equivalents
– Beginning of period
34,460
123,936
7,470
Cash and cash equivalents
– End of period
397,681
210,631
397,681
Additional information
Interest received
-
-
-		 Three-month
period ended
September 30,
2020
$
Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$		 Nine-month
period ended
September 30,
2019
$
(636,601)
(52,184)
(1,140,528)
61,359
57,205
178,540
(234)
41,383
-
2,885
1,821
7,813
101,480
-
129,313
12,674
10,214
16,991		 (918,239)
173,396
(113,933)
-
141,558
14,440
(458,437)
58,439
(807,871)
10,943
54,143
(5,603)
11,547
-
(9,554)
(145,835)
(6,090)
(551)
79,501
39,292
313,556		 (702,778)
12,487
-
59,376
240,445
(390,470)
(4,565)
73,315
(8,611)
(53,244)
(523,585)		 68,750
100,000
4,369
100,000
-
-
-
786,787
-
830,787		 -
410,000
-
886,787
4,369
930,787		 410,000
(12,674)
(10,214)
(16,991)
363,221
96,909
390,211
34,460
123,936
7,470		 (14,440)
88,280
136,791
397,681
210,631
397,681		 210,631
-
-
-		 92

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

5

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

1 Incorporation, nature of activities and going concern

Glen Eagle Resources Inc. (the “Corporation”) is incorporated under the Canada Business Corporations Act and is engaged in the acquisition, the exploration and the evaluation of mining properties. The address of the registered office and its principal place of business is 2075 Victoria Street, Suite 201 St-Lambert (Québec), Canada. The Corporation’s shares are listed on the TSX Venture Exchange (symbol: GER).

Although management has taken steps to verify titles of mining properties in which the Corporation has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Corporation’s title. Property title may be subject to unregistered prior agreements and non-compliant with regulatory requirements.

The Corporation has not yet determined whether the exploration and evaluation assets have economically recoverable ore reserves. Recovery of amounts indicated under exploration and evaluation assets and other tangible assets are subject to certain conditions: the discovery of economically recoverable reserves, the Corporation’s ability to obtain the financing required to complete exploration, evaluation, development, construction and, ultimately, the sale of such assets.

The Corporation’s consolidated financial statements have been prepared using accounting principles applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to twelve months from the end of the reporting period. Management is aware, in making its assessment, of material uncertainties related to events and conditions that may cast a significant doubt upon the Corporation’s ability to continue as a going concern as described in the following paragraph, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. These consolidated financial statements do not reflect the adjustment to the carrying values of assets and liabilities, expenses and balance sheet classifications that would be necessary were the going concern assumption would not be appropriate. These adjustments could be material.

For the period ended September 30, 2020, the Corporation reported a net loss of $636,601 (net loss of $52,184 for the period ended September 30, 2019) and has an accumulated deficit of $31,035,838 as at September 30, 2020. In addition to ongoing working capital requirements, the Corporation must secure sufficient funding to meet its existing commitments for exploration and evaluation programs and pay general and administration costs. As at September 30, 2020, the Corporation has a negative working capital of $603,213 (negative of $693,715 as at December 31, 2019). Management estimates that current funds will not be sufficient to meet the Corporation’s obligations and budgeted expenses through December 31, 2020. Any additional funding may be met in the future in a number of ways including but not limited to, increase in production, the issuance of new equity instruments and debt financing. While management has been successful in securing financing in the past, there can be no assurance it will be able to do so in the future or that these sources of funding or initiatives will be available for the Corporation or that they will be available on terms which are acceptable to the Corporation. If management is unable to obtain new funding, the Corporation may be unable to continue its operations, and amounts realized for assets might be less than amounts reflected in these consolidated financial statements.

These condensed consolidated interim financial statements were approved and authorized for issue by the board of directors on november 27th, 2020.

6

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

2 Basis of preparation

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”).

The accounting policies followed in these condensed interim consolidated financial statements are consistent with those applied in the Corporation’s annual financial statements for the year ended December 31, 2019. These condensed interim consolidated financial statements should be read in conjunction with the Corporation’s annual financial statements for the year ended December 31, 2019 which have been prepared in accordance with IFRS as issued by the IASB.

Uncertainty due to COVID-19

The duration and full financial effect of the COVID-19 pandemic is unknown at this time, as are the measures taken by governments, companies and others to attempt to reduce the spread of COVID-19. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 may materially and adversely affect the Corporation's operations, financial results and condition in future periods are also subject to significant uncertainty. Glen Eagle Resources ’s operating counterparties have announced temporary operational restrictions due to the ongoing COVID-19 pandemic, including reduced activities and operations placed on care and maintenance. In the current environment, the assumptions and judgements made by the Corporation are subject to greater variability than normal, which could in the future significantly affect judgments, estimates and assumptions made by management as they relate to potential impact of the COVID-19 and could lead to a material adjustment to the carrying value of the assets or liabilities affected. The impact of current uncertainty on judgments, estimates and assumptions extends, but is not limited to, the Corporation's valuation of its long-term assets, including the assessment for impairment and impairment reversal. Actual results may differ materially from these estimates.

7

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

3 Amounts receivable

Sales tax receivable
Trade receivables		 September 30
2020
December 31
2019
$
$
27,956
9,607
33,668
48,277
61,624
57,884

All of the Corporation’s gold and silver sales are with one customer at the market prices in effect at the time of delivery, however economic dependence is mitigated as the Corporation can sell its gold to numerous clients throughout the world.

4 Inventories

Doré bars (1)
Consummables (2)
Work in process		 September 30
2020
December 31
2019
$
$
95,882
-
140,390
62,752
-
172,970
236,272
235,722

(1) The doré bars produced during the second quarter for $95,882, were sold on October 2[nd] , 2020. (2) The consummables includes the items for production and exploration.

8

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

5 Property and equipment

Cost
As at January 1, 2020
Additions
Foreign exchange
As at Setember 30,2020
Accumulated depreciation
As at January 1, 2020
Depreciation
Foreign exchange
As at September 30, 2020
Net book value
September 30, 2020
Cost
As at January 1, 2019
Additions
Foreign exchange
As at December 31, 2019
Accumulated depreciation
As at January 1, 2019
Depreciation
Foreign exchange
As at December 31, 2019
Net book value
December 31, 2019		 Land
$
Building
$
Plant
equipment
$		 Land
$
Building
$
Plant
equipment
$		 Land
$
Building
$
Plant
equipment
$		 Machinery and Machinery and

Vehicle
Equipment		 Total

$
$		 $

524,017
394,993 2,148,032
18,306
-
-
-
-
14,341
10,808
58,780
501		 517,184
13,561
14,328		 3,602,532
13,561
98,758
3,714,851
538,358
405,801
2,206,812
18,807		 545,073



-
(78,332)
(353,292)
(9,967)
-
(33,757)
(111,395)
(2,799)
-
(2,074)
(9,437)
(267)		 (94,850)
(26,631)
(2,540)		 (536,441)
(174,582)
(14,318)
(725,341)
2,989,510
-
(114,162)
(474,124)
(13,033)		 (124,022)
538,358
291,639
1,732,688 5,774		 421,051
Land
$
Building
$
Plant
equipmen
t
$


Total
$
Machinery and
Vehicle
Equipment
$ $

550,366
414,853
2,256,039
19,227
-
-
-
-
(26,349)
(19,862)
(108,007)
(921)		 492,405
49,464
(24,685)		 3,732,890
49,464
(179,824)
3,602,530
(325,942)
(230,391)
19,892
(536,441)
3,066,089
524,017
394,991
2,148,032
18,306		 517,184


-
(36,354)
(219,532)
(6,662)
-
(44,548)
(147,005)
(3,693)
-
2,570
13,245
388		 (63,394)
(35,145)
3,689
-
(78,332)
(353,292)
(9,967)		 (94,850)
524,017
316,659
1,794,740
8,339		 422,334

9

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

6 Exploration and evaluation assets

Costs of E&E assets at the end of the year:
Mining properties
Balance January 1, 2019
Additions
Balance December 31, 2019
Additions
Balance September 30, 2020		 Moose Lake
Canada
(phosphate)
$
Piedra Dorada
Honduras
(gold)
$
Total
$
210,160
1
4,566
-		 210,161
4,566
214,726
1
-
-
214,726
1		 214,727
-
214,727

During the period, the Corporation has not spent on exploration and evaluation assets as funds were allocated to the Honduran processing plant.

During the second quarter, the Corporation concluded a final agreement to obtain ownership of the Piedra Dorada concession in the municipality of El Corpus, Choluteca in Honduras. The property La Cobra was remitted in exchange of 80% of the concession Piedra Dorada owned by a private Corporation in Honduras.

7 Accounts payable and accrued liabilities

Accounts payable
Accrued and other liabilities (a)		 September 30
2020
December 31
2019
$
$
276,839
232,963
1,039,604
769,924
1,316,443
1,002,887

(a) As at September 30, 2020 and December 31, 2019, the the accrued and other liabilities included a provision of $431,736 for tax and other non-compliance penalty. It also includes interest on loans and debenture due to insiders for $141,253 and management fees due for $121,800 (note 13).

10

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

8 Term loans

Term loans
Balance – Beginning of the period
Increase during the period
Balance – End of period		 September 30
2020
$
December 31
2019
$
250,000
250,000
410,000
410,000
660,000
660,000

A first loan by an insider of $100,000 is a non-guaranteed loan due on April 30, 2021, that was closed on October 20, 2018, bears interest at an annual rate of 15%. The interest is payable twice a year on June 30 and December 31. An Officer of the Corporation has guaranteed this loan.

A second loan by an insider of $150,000 is a non-guaranteed long term loan due on April 30, 2021, that was closed on December 19, 2018, bears interest at an annual rate of 15%. The interest is payable twice a year on June 30 and December 31.

A third loan by an insider of $410,000 is a non-guaranteed long term loan due on May 29, 2023, that was closed on May 30, 2019, bears interest at an annual rate of 12%. The interest is payable monthly.

9 Provision

Balance – Beginning of the period
Increase (decrease) during the period
Balance – End of period
Asset retirement obligations		 September 30
2020
$
December 31
2019
$
65,678
66,150
3,959
(472)
69,637
65,678

During 2017, an asset retirement obligation study was conducted, for the subsidiary in Honduras. The liability for asset retirement obligations as at September 30, 2020 was $69,637. The estimated undiscounted value of this liability was $107,930 on September 30, 2020 and disbursments are expected to be made in 2031. A discount rate of 4.22% was used to estimate the obligation. Each quarter, the Corporation reviews the expected timing of the cash payments required to settle the obligations, and adjusts the asset retirement obligation accordingly, which also includes foreign exchange differences. During the period ended September 30, 2020, the increase in asset obligation retirement is due to the foreign exchange factor.

11

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

10 Convertible debenture

Convertible debenture
Balance – January 1, 2020
Increase during the year (b)
Decrease for equity component (b)
Change In fair value of derivative
Accretion expense
Balance – September 30, 2020		 September 30
2020
$
December 31
2019
$
137,596
150,793
100,000
-
(7,140)
-
351
(21,252)
7,462
8,055
238,269
137,596
  • (a) Convertible debenture of $150,000 – December 12, 2021
Balance – January 1, 2020
Unrealized loss on fair value of derivative
Accretion
Balance – September 30, 2020		 Host
Derivative
Total
130,316
7,280
137,596
-
351
351
7,071
-
7,071
137,387
7,631
145,018

On December 13, 2018, the Corporation completed the financing of a $150,000 convertible debenture bearing interest at a rate of 12% per annum and maturing on December 12, 2021. The principal amount of the debenture will be payable at the maturity date and accrued interest will be paid on June 30 and December 31 of each year until maturity date. Interest were not paid and recorded in accrued liabilities.

The debenture is convertible at $0.20 into units, composed of one common share and one common share purchase warrant. The unit is to be converted at $0.20 a share until maturity date for a total of 750,000 shares and 750,000 common share purchase warrants to be exercised at $0.30 for two years after conversion of the debenture.

The convertible debenture is a hybrid instrument, which is in its entirety a financial liability. The initial carrying amount of $122,261 for the host represents the residual amount of the proceeds after separating out the $28,532 fair value of the derivative. The derivative value was increased by $351 during the period ended June 30, 2020.

The derivative was valued using a binomial model.

  • (b) Convertible debenture of $100,000 – July 18, 2020

On July 18, 2020, the Corporation completed the financing of a $100,000 convertible debenture bearing interest at a rate of 12% per annum and maturing on July 18, 2023. The principal amount of the debenture will be payable at the maturity date and accrued interest is payable on December 31 of each year until the maturity date.

12

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

The debenture is convertible into common shares of the Corporation at the option of the holder at any time prior to the maturity date, at a conversion price equal to $0.12 per common share. On conversion date, the holder will receive accrued interest on the debenture from the last payment date of interest before the conversion date.

11 Share capital and warrants

Share capital Authorized

Unlimited number of voting common shares, participating, without par value.

  • a) Issued and fully paid

  • i) On September 1, 2020, the Corporation completed the final closing of a private placement for 3,587,500 units at a price of $0.08 per unit for a cash consideration of $287,000.

  • On July 21, 2020, a first closing for 1,250,000 units was completed. Each unit consists of one common share and one warrant common share which entitles its holder to purchase one common share at a price of $0.12 per share for 24 months. The fair value of $18,228 was assigned to the warrant account and the total share issue cost amounted to $761. The fair value of the warrants was determined using the BlackScholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 72.5%, risk free rate of 0.27% and expected life of 2 years.

  • On September 1, 2020, a second closing for 2,337,500 units was completed. Each unit consists of one common share and one warrant common share which entitles its holder to purchase one common share at a price of $0.12 per share for 24 months. The fair value of $$34,913 was assigned to the warrant account and the total share issue cost amounted to $3,363. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 73.9%, risk free rate of 0.27% and expected life of 2 years.

  • ii) On September 1, 2020, the Corporation completed the final closing of a private placement for 7,500,000 units at a price of $0.08 per unit for a cash consideration of $600,000. Each unit consists of one common share and one warrant common share which entitles its holder to purchase one common share at a price of $0.12 per share for 36 months. The fair value of $139,689 was assigned to the warrant account and the total share issue cost amounted to $52,089 reduced by a value of $12,000 attributable to the warrants. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 73.1%, risk free rate of 0.28% and expected life of 3 years.

  • iii) On September 1, 2020, the Corporation issued 600,000 broker warrants exercisable at $0.12 for 36 months. The fair value of $11,175 was assigned to the warrant account. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: share price of $0.08, expected dividend yield of 0%, expected volatility of 73.1%, risk free rate of 0.28% and expected life of 3 years.

13

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

b) Changes in Corporation warrants are as follows:

Share purchase warrants
Balance – Beginning of period
Exercised
Issued
Balance – End ofperiod		 September 30
2019		 September 30
2019
December 31
2018
December 31
2018
Number
Weighted
average
exercise
price
$




Number
Weighted
average
exercise
price
$
-
-
11,687,500		 -
-
0.12		 2,000,000
(2,000,000)
-		 0.10
0.10
-
11,687,500 0.12 - -
Number of warrants Exercise price
Expiry date

$
1,250,000
2,337,500
7,500,000
600,000		 0.12

0.12
0.12
0.12		 July 20, 2022
August 31, 2022
August 31, 2023
August 31, 2023
Number of warrants Exercise price
$		 Expiry date
1,250,000 0.12 July 20, 2022
2,337,500 0.12 August 31, 2022
7,500,000 0.12 August 31, 2023
600,000 0.12 August 31, 2023

14

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

12 Share based payments

The Corporation has a stock option plan whereby the Board of Directors may grant to directors, officers or consultants of the Corporation, options to acquire common shares. The Board of Directors has the authority to determine the terms and conditions of the grant of options. The Board of Directors approved a ‘‘Rolling’’ stock option plan (“Plan”) reserving a maximum of 10% of the shares of the Corporation at the time of the stock option grant, with a vesting period allowed of zero up to eighteen months, when the grant of option is made at market price, for the benefit of its directors, officers, employees and consultants. The Plan provides that no single person may hold options representing more than 5% of the outstanding common shares. The number of stock options granted to a beneficiary and the vesting period are determined by the Board of Directors.

The exercise price of any option granted under the Plan is fixed by the Board of Directors at the time of the grant and cannot be less than the market price per common share the day before the grant. The term of an option will not exceed five years from the date of grant. Options are not transferable and can be exercised while the beneficiary remains a director, an officer, an employee or consultant of the Corporation or between three and up to twelve months after the beneficiary has left.

The options granted in 2020 and 2019 were granted at a price equal to the closing market value of the shares, the previous day before the grant. The changes to the number of stock options granted by the Corporation and their weighted average exercise price are as follows:

Stock option
Balance – Beginning of period
Granted
Expired and cancelled
Balance – End of period
Options exercisable
End of period		 September 30
2020
Number
Weighted
average
exercise
price
$		 December 31
2019
Number Weighted
average
exercise
price
$
8,080,000
0.11
2,125,000
0.10
(2,300,000)
(0.10)		 7,270,000
1,800,000
(990,000)		 0.12
0.11
(0.17)
7,905,000
0.11		 8,080,000 0.11
7,905,000
0.11		 8,080,000 0.11

Options granted

  • i) On September 18, 2020, the Corporation granted an aggregate of 1,700,000 options to officers and a consultant . The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.10 until September 18, 2025. The fair value of these options was estimated at $101,481 using the Black-Scholes option-pricing model with the following assumptions: share price of $0.10, expected dividend yield of 0%, expected volatility of 81.9%, risk free rate of 0.37% and expected life of 5 years.

  • ii) On February 13, 2020, the Corporation granted an aggregate of 425,000 options to one officer and two employees . The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.10 until February 13, 2025. The fair value of these options was estimated at $27,832 using the Black-Scholes option-pricing model with the following

15

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

assumptions: share price of $0.10, expected dividend yield of 0%, expected volatility of 78.9%, risk free rate of 1.4% and expected life of 5 years.

  • iii) On June 26th, 2019, the Corporation granted an aggregate of 1,450,000 options to directors and one consultant. The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.105 until June 25, 2024. The fair value of these options was estimated at $114,886 using the Black-Scholes option-pricing model with the following assumptions: share price of $0.105, expected dividend yield of 0%, expected volatility of 102%, risk free rate of 1.4% and expected life of 5 years.

  • iv) On January 24th, 2019, the Corporation granted an aggregate of 350,000 options to directors and one consultant. The options are fully vested on the day of granting, in accordance with the option plan. The options issued are exercisable at the price of $0.13 until January 24, 2024. The fair value of these options was estimated at $26,672 using the Black-Scholes option-pricing model with the following assumptions: share price of $0.13, expected dividend yield of 0%, expected volatility of 70%, risk free rate of 1.86% and expected life of 5 years.

  • b) Options expired and cancelled

  • i) On February 13, 2020, a total of 525,000 options (exercisable at prices between 0.105 to 0225) were cancelled without being exercised. An amount of $43,413 was reclassified from the Stock option account to the Contributed surplus account.

  • ii) On April 23[th] , 2020, a total of 1,525,000 options (exercisable at 0.095) expired without being exercised. An amount of $102,186 was reclassified from the Stock option account to the Contributed surplus account.

  • iii) On May 15[th] , 2020, a total of 250,000 options exercisable at 0.07 were cancelled without being exercised. An amount of $12,325 was reclassified from the Stock option account to the Contributed surplus account.

For the nine months period ended September 30, 2020 the stock-based compensation charged to the consolidated statement of comprehensive income (loss) was $157,924 (December 2019 – $141,558).

As at September 30 , 2020, the
Corporation had the following
stock options outstanding:
Expiry date:
December 29, 2020
July 13, 2021
February 13, 2022
April 26, 2022
January 25, 2023
January 24, 2024
June 25, 2024
February 13, 2025
September 18, 2025		 Exercise
price
$		 Options
granted
Number
of options
exercisable		 Options
granted
Number
of options
exercisable		 Remaining

contracts
life (year)
0.07
0.105
0.12
0.20
0.225
0.13
0.105
0.10
0.10		 1,550,000
1,550,000
1,335,000
1,335,000
70,000
70,000
850,000
850,000
175,000
175,000
350,000
350,000
1,450,000
1,450,000
425,000
425,000
1,700,000
1,700,000
7,905,000
7,905,000

16

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

13 Information included in the consolidated statements of comprehensive income

Cost of sales
Material supplies
Consumables
Salaries, benefits and other employee
expenses
Electricity
Equipment repair and maintenance
Production supplies
Depreciation of plant and equipment
Depreciation vehicle
Variation of finished goods (1)
Variation of work in process inventory		 Three-month
period ended
September 30,
2020
$		 Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$		 Nine-month
period ended
September 30,
2019
$
7,854
6,991
108,427
23,433
57,910
43,360
39,815
6,374
(69,126)
(2,302)		 227,111
149,003
18,490
66,886
97,253
276,206
76,366
114,072
22,575
105,733
59,388
115,145
41,389
122,631
6,626
19,631
237
(95,600)
(3,118)
177,180		 574,195
115,178
350,643
195,416
154,990
190,420
123,500
19,769
87,086
(14,137)
1,797,060
222.736 546,317
1,050,887
General and administrative
Office expenses and rent
Consulting and management fees
Share base payments
Professional fees
Public Corporation expenses
Depreciation and amortization
Business development		 Three-month
period ended
September 30,
2020
$		 Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$
Nine-month
period ended
September 30,
2019
$
48,632
55,950
101,481
38,217
13,524
10,208
2,073
17,772
66,186
73,227

55,712
160,950
193,239

-
129,314
141,558

15,750
90,116
53,110

1,603
34,059
24,415

10,613
31,581
31,669

6,289
14,948
36,961
270,085
107,739
527,154
554,179

17

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

14 Related party transactions

Remuneration of key management

Key management includes directors and senior executives of the parent Corporation and its subsidiary. The compensation recognized as an expense and paid to key management for services is presented below:

Related party transactions
Management fees
Share based payments		 Three-month
period ended
September 30,
2020
$		 Three-month
period ended
September 30,
2019
$
Nine-month
period ended
September 30,
2020
$
Nine-month
period ended
September 30,
2019
$
52,500
89,541
52,500
157,500
157,500

-
110,825
116,036
142,041
52,500
268,325
273,536

During the period, companies controlled by officers and directors charged an amount of $3,600 ($3,600 - 2019) for office expenses and rent. An amount of $121,800 is due to Officers of the Corporation at the end of the period. Out of this amount due, a share for debt contracted on February 11th, 2020, with an Officer by which consulting fees for an amount of $40,000, are to be converted at $0.08 per share into 500,000 shares. See subsequent events.

15 Capital management policies and procedures

The Corporation considers the items included in equity as capital components.

The Corporation’s capital management objectives are:

  • to ensure the Corporation’s ability to continue as a going concern;

  • to increase the value of the assets of the business; and

  • to provide an adequate return to shareholders.

These objectives will be achieved by identifying the right exploration projects, adding value to these projects and ultimately taking them through to production or sale and cash flow, either with partners or by the Corporation’s own means.

The Corporation is not exposed to any externally imposed capital requirements except when the Corporation issues flow-through shares for which amounts should be used for E&E work. There is no dividend policy. Changes in capital are described in the consolidated statements of Changes in Equity and the related notes.

18

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

16 Financial instruments

Measurement categories

As explained in Note 3 of the Corporation’s annual financial statements for the year ended December 31, 2019, financial assets and liabilities have been classified into categories that determine their basis of measurement and, for items measured at fair value, whether changes in fair value are recognized in the consolidated statement of comprehensive loss. Those categories are: fair value through profit or loss; loans and receivables; available for sale financial assets; and, for liabilities, amortized cost. The following table shows the carrying values of assets and liabilities for each of these categories as at September 30, 2020 and December 31,2019.

Financial instruments
Loans and receivable
Cash
Term deposit
Receivable from related party and other receivables (except
indirect taxes)
Liabilities – Amortized cost
Accounts payable, accrued liabilities(1)
Term loans
Convertible debenture – Host
Liabilities at fair value through profit or lost
Convertible debenture – Derivative level (level 3)		 September 30
2020
$
December 31
2019
$
397,681
7,470
8,099
8,096
33,668
48,277
439,448
63,843
1,316,443
571,151
660,000
660,000
238,269
130,316
7,631
7,280

(1) Includes interest expenses due to insiders for $141,253 and management fees for $121,800. (note 7).

19

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

Fair values, including valuation methods and assumptions

As at September 30, 2020, the carrying values of cash, amounts receivable, convertible debenture, trade payables and accrued liabilities approximate their fair value due to their relative short maturities. Interest income on term deposits measured at amortized cost was nil for the current period (2019- nil).

As at September 30, 2020, the Coporation is committed to minimum future principal and interest payments for term loans and convertible debentures, as follows:

Year ending December 31, 2020
Year ending December 31, 2021
Year ending December 31, 2022
Year ending December 31, 2023		 Term loans
$ (Note 8)
Convertible debenture
$ (Note 9)
Total
$
86,700
18,000
104,700
336,700
168,000
504,700
49,200
-
49,200
459,200
-
459,200
931,800
186,000
1,117,800

Financial risks factors

The Corporation’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk, and price risk), credit risk and liquidity risk. Risk management is carried out by management under policies approved by the board of directors. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, fair value risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. The Corporation’s overall risk management program seeks to minimize potential adverse effects on the Corporation’s financial performance.

b) Market risk

  • i) Foreign exchange risk

On September 30, 2020, the subsidiary of the Corporation has certain transactions in foreign currencies such as the Hondurans Lempira and the US dollar. Consequently, certain assets and liabilities and expenses are exposed to currency fluctuations. The Corporation does not use derivative or hedge instruments to manage foreign exchange risks.

The Corporation’s consolidated statement of financial position contains balances of cash,receivables and payables and accrued liabilities in currencies other than the operation’s relevant functional currency. Accordingly, the Corporation is exposed to foreign exchange risk.

The balances in currencies are as follows as at September 30, 2020 and December 31,2019 :

20

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

Cash in Lempiras
CAD dollar equivalents		 September 30
2020
December 31
2019
HNL
HNL
2,872
131,424
389,823
6,973

The sensitivity of the Corporation to a variation of 10% in the value of the Honduran Lempira and the US dollar would not have a significant impact on the assets, liabilities and expenses.

  • ii) Interest rate risk: Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. As at September 30, 2020, a term deposit of $8,099 (December 31, 2019 – $8,096) is in the current assets. The sensitivity of the Corporation to a variation of 1% in the interest rate would not have an impact. The Corporation’s other financial assets and liabilities do not comprise any interest rate fair value risk since they do not bear interest.

  • iii) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Corporation is subject to concentrations of credit risk through cash and accounts receivable. The Corporation reduces its credit risk by maintaining part of its cash in financial instruments held with a Canadian chartered bank.

  • iv) Liquidity risk Liquidity risk is the risk that the Corporation will not be able to meet the obligations associated with its financial liabilities. Management estimates that the funds as at June 30, 2020 will not be sufficient to meet the Corporation’s obligations and budgeted assets through December 31, 2020. Any additional funding may be met in the future in a number of ways including but not limited to, the issuance of new equity instruments. Cash flow forecasting is performed by the Corporation which monitors rolling forecasts of the Corporation’s liquidity requirements to ensure it has sufficient cash to meet operational needs at all times. Surplus cash over and above balances required for working capital management are invested in interest bearing short-term deposits with a maturity within 12 months, which are selected with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts. Accounts payable and accrued liabilities as at June 30, 2020 consist of items that should be settled within approximately 30 days (see note 1 for information on going concern), except for provision made in the accounts payable and accrued liabilities (note 6).

21

Glen Eagle Resources Inc. Notes to condensed consolidated interim financial statements For the three and nine months periods ended September 30, 2020 and 2019

(in Canadian dollars, except per share amounts)

17 Segmented information

The Corporation operates in 2 different geographic segments located in Canada and Honduras.

ASSETS
Current assets
Non-current assets
Property and equipment
Exploration and evaluation assets
Current liabilities
Non-current liability
Term loans
Provision
Convertible debenture		 Glen Eagle
Resources
(Canada)
$
Cobra Oro De
Honduras SA
(Honduras)
$
Total
$
442,028
271,202
713,230
-
2,989,510
2,989,510
214,727
-
214,727
801,746
514,697
1,316,443
660,000
-
660,000
-
69,637
69,637
238,269
-
238,269

18 Subsequent events

On October 13[th] , the Corporation issued 500,000 shares in reimbursement of an amount of $40,000 due to an officer of the Corporation. This transaction was approved by TSX and by desinterested shareholders at the annual meeting.

22

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