Globex Mining Enterprises Inc. — Audit Report / Information 2019

Mar 23, 2020

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CONSOLIDATED FINANCIAL STATEMENTS OF GLOBEX MINING ENTERPRISES INC. YEARS ENDED DECEMBER 31, 2019 AND 2018 (EXPRESSED IN CANADIAN DOLLARS)

Independent Auditor's Report

To the Shareholders of Globex Mining Enterprises Inc.:

Opinion

We have audited the consolidated financial statements of Globex Mining Enterprises Inc. (the "Corporation") and its subsidiary, which comprise the consolidated statements of financial position as at December 31, 2019 and December 31, 2018, and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Corporation as at December 31, 2019 and December 31, 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

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

Other Information

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

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

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

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

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

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

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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

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

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

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

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

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

The engagement partner on the audit resulting in this independent auditor's report is Jo-Ann Lempert.

Montréal, Québec

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March 20, 2020

1 CPA auditor, CA, public accountancy permit no. A122514

GLOBEX MINING ENTERPRISES INC.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in Canadian Dollars)

		Year	ended	ended
		December 31,
		2019		2018
Continuing operations
Revenues(note 15)	$	2,292,147	$	3,050,420
Expenses
Exploration and evaluation expenditures (note 17)		1,734,098		1,428,395
Administration (note 16)		500,012		333,580
Professional fees and outside services (note 16)		422,259		380,512
Salaries		341,449		421,046
Share-based compensation (note 19)		257,571		113,146
Loss (gain) on foreign exchange		131,127		(157,126)
Depreciation (note 11)		29,496		27,061
Bad debt recovery		-		(6,138)
		3,416,012		2,540,476
(Loss) income from operations		(1,123,865)		509,944
Other (expenses) income
Decrease in fair value of financial assets		(122,578)		(657,977)
Interest and dividends		57,846		25,648
Gain on the sale of investments		9,993		82,485
Management services (note 20)		7,054		12,335
Gain on sale of property, plant and equipment		7,000		-
Other		1,825		649
Joint venture loss(note 10)		-		(1,338)
		(38,860)		(538,198)
Loss before taxes		(1,162,725)		(28,254)
Income tax(recovery)expense(note 14)		116,613		(67,373)
Loss and comprehensive loss for theyear	**$ **	(1,046,112)	$	(95,627)
Basic and diluted lossper share (note 18)	$	(0.02)	$	0.00
Weighted average number of common shares outstanding - basic and diluted		52,921,952		51,462,625

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

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GLOBEX MINING ENTERPRISES INC.

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

		Year	ended	ended
		December		31,
		2019		2018
Operating activities:
Loss and comprehensive loss for the year	**$ **	(1,046,112)	$	(95,627)
Adjustments for:
Disposal of mineral properties for investments (note 21)		(691,995)		(447,500)
Decrease in fair value of financial assets		122,578		657,977
Depreciation (note 11)		29,496		27,061
Foreign exchange rate variation on reclamation bond		7,334		(12,565)
Gain on sale of investments		(9,993)		(82,485)
Gain on sale of property, plant and equipment		(7,000)		-
Deferred tax recovery (note 14)		(233,790)		(386,488)
Fair value of shares issued in connection with mineral property (notes 19 and 21)		60,000		-
Foreign exchange loss (gain)		93,256		(156,966)
Restoration liabilities (notes 9 and 21)		266,315		-
Share-based compensation (note 19)		257,571		113,146
Share of net loss from investment injoint venture(note 10)		-		1,338
		(1,152,340)		(382,109)
Change in non-cash workingcapital items(note 21)		(301,647)		169,518
Net cash and cash equivalents used in operating activities		(1,453,987)		(212,591)
Financing activities:
Issuance of common shares (note 19)		1,240,000		875,000
Proceeds from exercised options (note 19)		15,275		-
Share capital issue costs (note 19)		(62,646)		(61,656)
Share repurchased (note 19)		(244,325)		(213,491)
(Decrease)increase in relatedparty payable(note 20)		(101,349)		10,358
Net cash and cash equivalentsprovided by financing activities		846,955		610,211
Investing activities:
Acquisition of property, plant and equipment (note 11)		(10,242)		(60,400)
Proceeds from disposition of property, plant and equipment (note 11)		7,000		-
Proceeds from sale of investment		67,785		427,245
Decrease in investment injoint venture(note 10)		38,058		-
Net cash and cash equivalentsprovided by investing activities		102,601		366,845
Net change in cash and cash equivalents		(504,431)		764,465
Effect of exchange rate changes on cash held in foreign currencies		(93,256)		156,966
Cash and cash equivalents, beginning ofyear		3,448,199		2,526,768
Cash and cash equivalents, end ofyear	$	2,850,512	$	3,448,199
Cash and cash equivalents	$	1,610,513	$	2,704,326
Cash reserved for exploration		1,239,999		743,873
	$	2,850,512	$	3,448,199

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

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GLOBEX MINING ENTERPRISES INC.

Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC. Consolidated Statements of Financial Position (Expressed in Canadian Dollars)
		As at		As at
	December 31,		December 31,
		2019		2018
ASSETS
Current assets
Cash and cash equivalents (note 5)	$	1,610,513	$	2,704,326
Cash reserved for exploration (note 6)		1,239,999		743,873
Investments (note 7)		1,416,169		904,544
Accounts receivable (note 8)		94,104		215,149
Prepaid expenses and deposits		64,328		37,619
Related party receivable (note 20)		33,301		-
Current income tax receivable		149,617		-
Total current assets		4,608,031		4,605,511
Non-current assets
Reclamation bonds (note 9)		781,786		789,120
Investment in joint venture (note 10)		8,464		46,522
Property, plant and equipment(note 11)		399,548		418,802
Total assets	$	5,797,829	$	5,859,955
LIABILITIES AND EQUITY
Current liabilities
Payables and accruals (note 12)	$	130,156	$	190,916
Current income tax		-		185,606
Total current liabilities		130,156		376,522
Non-current liabilities
Related party payable (note 20)		-		68,048
Other liabilities (note 13)		145,304		233,789
Restoration liabilities(note 9)		894,490		628,175
Total liabilities		1,169,950		1,306,534
Equity
Share capital (note 19)		55,901,915		55,685,745
Contributed surplus		4,926,434		4,676,969
Deficit		(56,200,470)		(55,809,293)
Total equity		4,627,879		4,553,421
Total liabilities and equity	$	5,797,829	$	5,859,955

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

Approved on behalf of the Board:

"Jack Stoch", Director

"Dianne Stoch", Director

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GLOBEX MINING ENTERPRISES INC. Consolidated Statements of Changes in Shareholders' Equity (Expressed in Canadian Dollars)

Equity attributable to shareholders

	Share	Contributed	Contributed
	capital		surplus	Deficit	Total
Balance, December 31, 2017	$ 55,925,483	$	4,563,823	$ (56,278,257) $	4,211,049
Fair value of shares issued under private placements	600,000		-	-	600,000
Share repurchased	(778,082)		-	564,591	(213,491)
Share issuance costs	(61,656)		-	-	(61,656)
Share-based compensation	-		113,146	-	113,146
Loss and comprehensive loss	-		-	(95,627)	(95,627)
Balance, December 31, 2018	55,685,745		4,676,969	(55,809,293)	4,553,421
Fair value of shares issued under private placements	1,094,695		-	-	1,094,695
Share repurchased	(899,260)		-	654,935	(244,325)
Shares issuance costs	(62,646)		-	-	(62,646)
Exercise of stock options	23,381		(8,106)	-	15,275
Shares issued for mineral properties	60,000		-	-	60,000
Share-based compensation	-		257,571	-	257,571
Loss and comprehensive loss	-		-	(1,046,112)	(1,046,112)
Balance, December 31, 2019	$ 55,901,915	$	4,926,434	$ (56,200,470) $	4,627,879

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

• 5 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

1. General Business Description

Globex Mining Enterprises Inc. (“Globex” or the ‘’Corporation’’) is a North American focused exploration and development property bank which operates under the project generator business model. It seeks to create shareholder value by acquiring mineral properties, undertaking limited exploration and therefore readying them for optioning, joint venturing, or outright sale. Globex's current mineral portfolio consists of approximately 190 early to mid-stage exploration, development and royalty properties which contain Base Metals (copper, nickel, zinc, lead), Precious Metals (gold, silver, platinum, palladium), Specialty Metals and Minerals (manganese, titanium oxide, iron, molybdenum, lithium, rare earths and associated elements) and Industrial Minerals (mica, silica, potash, feldspar, pyrophyllite as well as talc and magnesite).

Globex was incorporated in the Province of Quebec and following the approval of shareholders on June 12, 2014, it was continued under the Canada Corporations Act, effective October 28, 2014. Its head office is located at 89 Belsize Drive, Toronto, Ontario M4S 1L3 and its principal business office is located at 86, 14th Street, Rouyn-Noranda, Quebec, J9X 2J1, Canada.

Globex’s common shares are listed on the Toronto Stock Exchange ("TSX") under the symbol GMX, in Europe under the symbol G1MN on the Frankfurt, Stuttgart, Berlin, Munich, Tradegate, Lang & Schwarz Stock Exchanges and trades under the symbol GLBXF on the OTCQX International Exchange in the United States.

2. Basis of Presentation

Basis of Presentation

These consolidated financial statements were prepared on a going concern basis, under the historical cost basis, except for certain assets that are measured at fair value through profit and loss ("FVTPL") as indicated in note 3. All financial information is presented in Canadian dollars.

Statement of Compliance

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

Approval of Financial Statements

The Corporation’s Board of Directors approved these consolidated financial statements on March 20, 2020.

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GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies

The principal accounting policies applied in the presentation of these consolidated financial statements are set out below.

(a) Basis of consolidation

The consolidated financial statements include the accounts of the Corporation, and its controlled subsidiary Globex Nevada Inc.

All significant intercompany transactions and balances have been eliminated on consolidation. The table which follows outlines Globex's interest in the entity:

Corporate Entity	Relationship	December 31, 2019	December 31, 2018
Globex Nevada Inc.	Subsidiary	100%	100%

The Corporation has control when it holds power over the investee, is exposed, or has right to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. The Corporation must reassess whether it controls the investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Subsidiaries are included in the consolidated financial statements from the date control commences until the date control ceases. All inter-corporation transactions, balances, income and expenses are eliminated on consolidation.

(b) Functional and presentation currency

The Corporation’s presentation currency and the functional currency of all of its operations is the Canadian dollar ("CDN") as this is the principal currency of the economic environment in which it operates. Transactions in foreign currencies are initially recorded in the Corporation’s functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rate of exchange ruling at the end of each reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. All gains and losses on conversion of these foreign currency transactions are included in income and loss.

The subsidiary's functional currency is the US dollar. For the purpose of presenting consolidated financial statements, the assets and liabilities of foreign operations are expressed in Canadian dollars using exchange rates prevailing at the end of the reporting period. Revenue and expense items are translated at the average exchange rates for the period. Exchange differences arising, if any, are recognized as other comprehensive income in the consolidated statement of loss and comprehensive loss. However, the foreign operations have been minimal over the past years.

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GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(c) Interest in joint ventures

A joint venture can take the form of a jointly controlled entity, jointly controlled operation or jointly controlled assets. A joint venture is a contractual arrangement whereby the Corporation and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control).

When the Corporation undertakes its activities under joint venture arrangements, its share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognized in the consolidated financial statements and classified according to their nature. Liabilities and expenses incurred directly in respect of interest in jointly controlled assets are accounted for on an accrual basis.

Joint venture arrangements that involve the establishment of a separate entity in which each venture has an interest are referred to as jointly controlled entities. The Corporation reports its interest in jointly controlled entities using the equity method.

(d) Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand, redeemable deposits and short-term deposits with an original maturity of three months or less, which are readily convertible into a known amount of cash.

(e) Cash reserved for exploration

Cash reserved for exploration comprise cash at banks and on hand, and short-term deposits with an original maturity of three months or less, which are readily convertible into a known amount of cash. These funds are reserved for funding prescribed resource expenditures.

(f) Refundable tax credits and mining duties

The Corporation is entitled to a refundable tax credit of 28% on qualified exploration expenditures incurred in the province of Quebec. The Corporation is also entitled to a refund of mining duties of the lesser of 16% on 50% of qualified mining exploration expenses or operating losses during the period, net of the refundable tax credit. The credit or refunds are recorded based on management’s best estimates once the necessary information is available and management believes that the amounts are collectible.

(g) Financial instruments

Under IFRS 9, Financial Instruments ("IFRS 9"), financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 contains the primary measurement categories for financial assets: measured at amortized cost, fair value through other comprehensive income (“FVTOCI”) and FVTPL.

The new hedge accounting guidance had no impact on the Corporation's consolidated financial statements.

• 8 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

3. Summary of Significant Accounting Policies (Continued)

(g) Financial instruments (continued)

Below is a summary showing the classification and measurement bases of our financial instruments :

Classification
Cash and cash equivalents	FVTPL
Cash reserved for exploration	FVTPL
Investments	FVTPL
Accounts receivable (less taxes receivable)	Amortized cost
Reclamation bonds	Amortized cost
Payables and accruals	Amortized cost
Relatedpartyreceivable/payable	Amortized cost

Financial assets:

Financial assets are classified as either financial assets at FVTPL, amortized cost, or FVTOCI. The Corporation determines the classification of its financial assets at initial recognition.

(a) Financial assets recorded at FVTPL

Financial assets are classified as FVTPL if they do not meet the criteria of amortized cost or FVTOCI. Gains or losses on these items are recognized in profit or loss. The Corporation’s cash and cash equivalents, cash reserved for exploration and investments are classified as financial assets measured at FVTPL.

(b) Amortized cost

Financial assets are classified as measured at amortized cost if both of the following criteria are met and the financial assets are not designated as at FVTPL: 1) the object of the Corporation’s business model for these financial assets is to collect their contractual cash flows; and 2) the asset’s contractual cash flows represent "solely payments of principal and interest". The Corporation’s accounts receivable (less taxes receivable), reclamation bonds and related party receivable are classified as financial assets measured at amortized cost.

Financial liabilities:

Financial liabilities are classified as either financial liabilities at FVTPL or at amortized cost. The Corporation determines the classification of its financial liabilities at initial recognition.

(a) Amortized cost

Financial liabilities are classified as measured at amortized cost unless they fall into one of the following categories: financial liabilities at FVTPL, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition, financial guarantee contracts, commitments to provide a loan at a below-market interest rate, or contingent consideration recognized by an acquirer in a business combination. The Corporation’s payables and accruals and related party payable do not fall into any of the exemptions and are therefore classified as measured at amortized cost.

(b) Financial liabilities recorded at FVTPL

Financial liabilities are classified as FVTPL if they fall into one of the five categories detailed above. The Corporation does not have any liabilities classified at FVTPL.

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GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(g) Financial instruments (continued)

Transaction costs:

Transaction costs associated with financial instruments carried at FVTPL are expensed as incurred, while transaction costs associated with all other financial instruments are included in the initial carrying amount of the asset or the liability.

Subsequent measurement:

Instruments classified as FVTPL are measured at fair value with unrealized gains and losses recognized in profit or loss. Instruments classified as amortized cost are measured at amortized cost using the effective interest rate method. Instruments classified as FVTOCI are measured at fair value with unrealized gains and losses recognized in other comprehensive income.

Derecognition:

The Corporation derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Expected Credit Loss Impairment Model:

IFRS 9 introduced a single expected credit loss (“ECL”) impairment model, which is based on changes in credit quality since initial application. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past event, current conditions and forecasts of future economic conditions. The Corporation’s financial assets, other than financial assets measured at FVTPL, include accounts receivable, reclamation bonds, and related party receivable, and the Corporation applies the simplified approach for accounts receivable. Using the simplified approach, the Corporation records a loss allowance equal to the ECLs resulting from all possible default events over the assets’ contractual lifetime. The general approach is applied to all other financial assets to which the impairment requirements of IFRS 9 apply. The adoption of the expected credit loss impairment model had no impact on the Corporation’s consolidated financial statements.

The Corporation assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Corporation considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Corporation in full or when the financial asset is more than 90 days past due.

The carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Corporation determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

(h) Reclamation bonds

Reclamation bonds represent funds that are lodged with government authorities to be held against future reclamation and remediation of environmental disturbances as a result of exploration and development activities. After reclamation and remediation, the funds may be recovered. Where applicable under the arrangement with the government authority, the carrying value is increased by the accrued interest earned during the year.

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GLOBEX MINING ENTERPRISES INC. Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(i) Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation, depletion and impairment charges.

Where an item of property, plant and equipment comprises major components with different useful lives, the components are accounted for as separate items of property, plant and equipment. Expenditures incurred to replace a component of an item of property, plant and equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized. Directly attributable expenses incurred for major capital projects and site preparation are capitalized until the asset is brought to a working condition for its intended use. These costs include dismantling and site restoration costs to the extent these are recognized as a provision.

Management reviews the estimated useful lives, residual values and depreciation methods of the Corporation’s property, plant and equipment at the end of each annual financial reporting period or when events and circumstances indicate that such a review should be made. Changes to estimated useful lives, residual values or depreciation methods resulting from such review are accounted for prospectively.

(j) Non-monetary transactions

All non-monetary transactions are measured at the fair value of the asset surrendered or the asset received whichever is more reliable. When the fair value of a non-monetary transaction cannot be reliably measure, it is recorded at the carrying amount (after reduction, when appropriate, for impairment) of the asset given up.

(k) Mineral properties and exploration expenses

The Corporation expenses all acquisition costs of mineral properties and exploration expenses as incurred.

Once a project has been established as commercially viable and technically feasible, related development expenditures are capitalized. This includes costs incurred in preparing the site for mining operations. Capitalization ceases when the mine is capable of commercial production, with the exception of development costs that give rise to a future benefit.

(l) Depreciation

Property, plant and equipment are depreciated using the straight-line method over the estimated useful lives of the related assets. The significant classes and their estimated useful lives are as follows:

Buildings	20 years
Mining equipment	5 years
Office equipment	2 to 5 years
Vehicles	5 years
Computer systems	3years

(m) Restoration liabilities

The Corporation recognizes the fair value of restoration liabilities related to statutory, contractual or legal obligations associated with the retirement of mining claims in the year in which it is incurred when a reasonable estimate of fair value can be made. The Corporation’s estimates of such costs could change as a result of changes in regulatory requirements and assumptions regarding the amount and timing of the future expenditures and changes in the net present value.

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GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(n) Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation estimated at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle, a provision is expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount receivable can be measured reliably.

(o) Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods or arising from the use by others of the Corporation’s assets yielding option income, royalties, interest and dividends. The Corporation recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Corporation and when the specific criteria have been met for each of the Corporation’s activities as described below.

(i) Sales of mineral properties

The proceeds from the sale of mineral properties are recorded as option income.

(ii) Option income

Option income is recognized on an accrual basis in accordance with the substance of the relevant agreements. Shares received under option agreements are valued at fair value which is determined at quoted market prices if the shares are quoted on an active market. If the market for the shares is not active, fair value is established by using a valuation technique.

(iii) Royalty income

Royalty income is recognized on an accrual basis in accordance with the substance of the relevant agreements.

(iv) Interest and dividend income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Corporation and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Corporation and the amount of income can be measured reliably).

• 12 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(p) Share-based compensation and payments

Share-based payments to non-employees

Share-based payments granted to non-employees are measured at the fair value of the goods or services received.

In the event the Corporation cannot reasonably estimate the fair value of goods or services received, the transaction is recorded at the estimated value of the underlying equity instrument, measured at the date the Corporation obtains the goods or the counterparty renders the service.

Share-based compensation

The Corporation grants stock options to buy common shares of the Corporation to directors, officers, and employees. The Board of Directors grants such options for periods up to five years, with vesting periods determined at its sole discretion and at the TSX prices at the close of business on the day prior to the option grant. The fair value of the options is measured at the grant date, using the Black-Scholes option pricing model, and is recognized over the vesting period that the options are earned.

The fair value is recognized as an expense with a corresponding increase in contributed surplus. The amount recognized as an expense is adjusted to reflect the number of share options expected to vest. Where the terms of a stock option are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional expense is recognized for any modifications which increases the total fair value of the stock-based compensation arrangement, or is otherwise beneficial to the employee as measured at the date of modification over the remaining vesting period. If and when the stock options are exercised, the applicable fair value amounts charged to contributed surplus are transferred to share capital.

(q) Current and deferred taxes

Taxes, comprising both income and resource taxes accounted for as income taxes, are recognized in the consolidated statements of loss and comprehensive loss, except where they relate to items recognized in other comprehensive income or directly in equity, in which case the related taxes are recognized in other comprehensive income or equity. Taxes on income are recorded using the tax rate that would be applicable to expected annual income.

The current income tax charge is based on taxable income for the period. Taxable income differs from net income as reported in the consolidated statements of loss and comprehensive loss because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are not taxable or deductible.

Deferred tax is recognized, using the asset and liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable income or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

• 13 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(q) Current and deferred taxes (continued)

At the end of each reporting period, the Corporation reassesses unrecognized deferred tax assets. The Corporation recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profits will enable the deferred tax asset to be recovered. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and is adjusted to the extent that it is no longer probable that sufficient taxable income will be available to ensure that all or part of the asset will be recovered.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Corporation intends to settle its current tax assets and liabilities on a net basis.

(r) Flow-through shares

The Corporation raises funds through the issuance of flow-through shares which entitles investors to prescribed resource tax benefits and credits once the Corporation has renounced these benefits to the subscribers in accordance with the tax legislation. The Corporation considers the issuance of flow-through shares in substance; (a) an issue of an ordinary share; and (b) the sale of tax deductions.

The sale of tax deductions has been measured based on the residual fair value method. At the time, the flow-through shares are issued; the sale of tax deductions is deferred and presented as Other Liabilities. When the Corporation fulfills its obligation; the liability is reduced and the sale of tax deductions is recognized in the consolidated statements of loss and comprehensive loss as a reduction of the deferred tax expense; and a deferred tax asset is recognized, in accordance with IAS 12, Income Taxes, for the taxable temporary differences between the tax base of the eligible expenditures and the expensed amount for accounting purposes.

(s) Share capital

The Corporation’s common shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

(t) Valuation of warrants

Equity financing transactions may involve the issuance of common shares or units. A unit may consist of a certain number of common shares and a certain number of share purchase warrants. Depending upon the terms and conditions of each equity financing agreement, the warrants are exercisable into additional common shares prior to expiry at a price stipulated by the agreement.

Warrants that are part of units are valued based on a relative fair value method. The Corporation considers the market value of the common shares issued as fair value, and measures the fair value of the warrant component of the unit using the Black-Scholes option pricing model. Warrants that are issued as payment for an agency fee or other transaction costs are accounted for as share-based payments.

• 14 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

3. Summary of Significant Accounting Policies (Continued)

(u) Loss per common share

Basic loss per share is computed by dividing the net loss attributable to common shareholders by the weighted average number of shares outstanding during the reporting year.

Diluted loss per share is computed similar to basic loss per share except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options (if dilutive).

The number of additional shares is calculated by assuming that outstanding dilutive stock options were exercised and the proceeds from such exercise were used to acquire common stock at the average market price during the reporting periods.

(v) New and revised IFRS issued and adopted

IFRS 16, Leases ("IFRS 16"):

On January 13, 2016, the IASB issued IFRS 16. The new standard is effective for annual periods beginning on or after January 1, 2019. IFRS 16 will replace IAS 17 - Leases ("IAS 17"). This standard introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognize a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. IFRS 16 substantially carries forward the lessor accounting requirements of IAS 17, while requiring enhanced disclosures to be provided by lessors. Other areas of the lease accounting model have been impacted, including the definition of a lease. Transitional provisions have been provided. Management early adopted this Standard as at January 1, 2017 which resulted in no material impact on the consolidated financial statements.

IAS 28, Investments in Associates and Joint Ventures ("IAS 28"):

In October 2017, the IASB issued amendments to IAS 28.

The amendments to the financial instruments Standard, IFRS 9, allow companies to measure particular pre-payable financial assets with so-called negative compensation at amortised cost or at FVTOCI if a specified condition is met instead of at FVTPL.

The amendments to IAS 28 clarify that companies account for long-term interests in an associate or joint venture to which the equity method is not applied using IFRS 9.

These amendments to IAS 28 are effective for annual periods beginning on or after January 1, 2019. The Corporation adopted these amendments to IAS 28 and it has not resulted in any material changes in the consolidated financial statements.

IFRIC 23, Uncertainty Over Income Tax Treatments ("IFRIC 23"):

Issued by the IASB in June 2017 and provides guidance as to when it is appropriate to recognize a current tax asset when the taxation authority requires an entity to make an immediate payment related to an amount in dispute. This interpretation applies for annual reporting periods beginning on or after January 1, 2019. The Corporation adopted IFRIC 23 and it has not resulted in any material changes in the consolidated financial statements.

• 15 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

4. Significant Accounting Assumptions, Judgments and Estimates

The preparation of consolidated financial statements under the principles of IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates is recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Information about such judgments and estimates is contained in the accounting policies and/or the notes to the consolidated financial statements and the key areas are summarized below. Areas of judgment and estimates that have the most significant effect on the amounts recognized in the consolidated financial statements are:

Judgments

(a) Collectability of option agreements

Collectability of considerations to be received on option agreements entered into with third parties on the Corporation’s properties, involves judgment regarding the probability that the optionees will be able to meet their spending commitments and pay the considerations specified in the agreement.

Since there is significant uncertainty as to whether the optionee will be able to make all the required payments in the contract, the Corporation only recognizes revenue as the option payments are due. The optionee can avoid payments prior to them becoming due, but not after.

Estimates

(a) Estimate of share-based compensation

The estimate of share-based compensation costs requires the selection of an appropriate valuation model and consideration as the inputs necessary for the model chosen. The Corporation has made estimates of the volatility of its own shares, the probable life of options granted, interest rates, and the time of exercise of those options.

The Corporation uses the Black-Scholes option pricing model to calculate the fair value of the share-based compensation costs.

Globex enters into option agreements for its properties. Under these arrangements, the Corporation typically receives a series of cash option payments over a period of time and it also often receives shares in the optionee corporation.

(b) Fair value estimates of investments

Globex attempts to determine the fair value of the shares on receipt based on published price quotations in an active market. However, in some cases, when received, the shares may not be traded in an active market and as a result Globex must use a valuation technique to determine the fair market value. In some cases, as a result of the strategic nature or volume of trading in the market, the quoted price may also not be representative of the price that these shares could be sold to a willing arm’s length party. These valuation issues could also impact the fair value measurement of financial assets at each period end.

• 16 -

GLOBEX MINING ENTERPRISES INC. Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

4. Significant Accounting Assumptions, Judgments and Estimates (Continued)

Estimates (continued)

(c) Property, plant and equipment

The Corporation reviews the estimated useful lives and residual value of property, plant and equipment at the end of each annual reporting period. During the year, Management determined that the useful lives and residual value of the property, plant and equipment were appropriate.

(d) Refundable tax credits and mining duties

The estimates are based on an interpretation of legislation substantially enacted and management’s application of their interpretation of the treatment of various items which could impact the valuation.

(e) Deferred income taxes balances

The Corporation uses the asset and liability method in accounting for deferred income taxes and mining duties. Under this method, deferred income taxes are recognized for the future income tax.

In preparing these estimates, management is required to interpret, substantially enacted legislation as well as economic and business conditions along with management’s tax and corporate structure plans which may impact taxable income in future periods.

5. Cash and Cash Equivalents

		As at		As at
	December 31,		December 31,
		2019		2018
Bank balances	$	358,350	$	641,669
Short-term deposit		1,252,163		2,062,657
	$	1,610,513	$	2,704,326

6. Cash Reserved for Exploration

		As at		As at
	December 31,		December 31,
		2019		2018
Bank balances	$	239,999	$	43,873
Short-term deposit		1,000,000		700,000
	$	1,239,999	$	743,873

Globex raises flow-through funds for exploration under subscription agreements which require the Corporation to incur prescribed resource expenditures.

The Corporation must use these funds for exploration of mining properties in accordance with restrictions imposed by the financing. If the Corporation does not incur the resource expenditures, then it will be required to indemnify these shareholders for any tax and other costs payable by them.

• 17 -

GLOBEX MINING ENTERPRISES INC. Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

7. Investments

7. Investments
		December 31,			December 31,
			2019			2018
	Number of		Fair	Number of		Fair
Corporation Name	shares		value	shares		value
Excellon Resources Inc.	226,837	$	233,642	-	$	-
Falco Resources Ltd.	350,000		117,250	350,000		138,250
Galway Metals Inc.	230,000		77,050	260,000		46,800
Great Thunder Gold Corp.	518,750		31,125	2,075,000		20,750
Integra Resources Corp.	128,000		153,600	128,000		107,520
Knick Exploration Inc.	1,000,000		5,000	1,000,000		5,000
Laurion Mineral Exploration Inc.	-		-	88,000		8,360
Manganese X Energy Corp.	1,925,000		144,375	2,000,000		260,000
NSGold Corporation (note 15)	1,745,408		174,541	-		-
Opawica Explorations Inc.(3)	125,000		7,500	250,000		7,500
Pasofino Gold Limited(2)(4)	388,888		33,056	1,166,667		75,833
Pershimex Resources Corporation	175,000		7,000	175,000		5,250
Renforth Resources Inc. (note 15)(1)	10,800,000		378,000	3,700,000		166,500
RJK Explorations Inc.	-		-	50,000		2,000
Rogue Resources Inc.	50,000		3,500	50,000		6,000
Sphinx Resources Ltd.	513,000		15,390	513,000		20,520
Other equityinvestments	-		35,140	-		34,261
		$	1,416,169		$	904,544

These investments were received under various mining option agreements and all of the shareholdings represent less than 10% of outstanding shares of each individual Issuer except for NSGold Corporation (refer to note 17).

Notes:

(1) On January 22, 2018, Renforth Resources Inc. issued to Globex 500,000 shares (fair market value of $25,000) in connection with the option on Parbec Property. In addition, on November 21, 2018, Renforth Resources Inc. issued to Globex 2,500,000 shares (fair market value of $62,500) in connection with the option on Parbec Property. On January 17, 2019, Globex received 250,000 common shares with a fair market value of $12,500 from Renforth Resources Inc. in connection with the option of Parbec Property.

(2) In November 2018, Enforcer Gold Corp. completed a three for one reverse split.

(3) In February 2019, Opawica Explorations Inc. completed a two for one share consolidation.

(4) In July 2019, Enforcer Gold Corp. completed a three for one share consolidation. In October 2019, Enforcer Gold Corp. changed its name to Pasofino Gold Limited.

8. Accounts Receivable

8. Accounts Receivable
	December 31,		December 31,
		2019		2018
Trade receivables	$	95,700	$	207,324
Bad debtprovision		(4,109)		(4,109)
Net trade receivables		91,591		203,215
Taxes receivable		2,513		11,934
	$	94,104	$	215,149

• 18 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

8. Accounts Receivable (Continued)

Net trade receivables of $91,591 (December 31, 2018 - $203,215) consist primarily of amounts recoverable under joint venture arrangements and royalties. These items are all current and the Corporation anticipates full recovery of these amounts. The taxes receivable represents harmonized and Quebec sales tax ("GST", "HST", "QST") receivable from Canadian taxation authorities.

9. Reclamation Bonds and Restoration Liabilities

Reclamation Bonds

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Nova Scotia bond - Department of Natural Resources	$	57,974	$	57,974
Option reimbursement		(50,000)		(50,000)
Nova Scotia bond		7,974		7,974
Washington State bond - Department of Natural Resources		145,637		152,971
Deposits with Province ofQuebec,MERN		628,175		628,175
	$	781,786	$	789,120

The Nova Scotia and Washington State reclamation and environmental bonds were posted by the Corporation to secure clean-up expenses in the event of mine closure or property abandonment as required by regulations or laws in the various jurisdictions. These reclamation and environmental bonds are carried at amortized cost and represent management’s estimate of their right to reimbursement. Changes in the carrying value of the rights are recognized in income or loss in the period in which these changes occur.

On June 30, 2016, Globex acquired the Francoeur Property and related mining infrastructure as well as the Arncoeur and Norex Properties from Richmont Mines Inc. At that time, Globex also assumed the liabilities for the restoration and rehabilitation of the Francoeur Property mining site of $628,175 which had been included in a 2013 Closure Plan that had been accepted by the Ministère de l’Energie et des Ressources naturelles (“MERN”).

As part of the arrangement with Richmont Inc., the ownership of $471,132 deposited with the MERN was transferred to Globex. The transfer of the Francoeur closure liabilities and deposit was approved by the MERN on July 13, 2016. On November 24, 2016, Globex issued a letter of credit of $157,043 to the MERN resulting in the liability being fully funded. The letter of credit is fully secured by a Globex short-term investment which will remain in place until the letter of credit is withdrawn.

During the year ended December 31, 2019, Globex received a letter from the MERN in which the Francoeur Property closure liabilities were revised to $894,490. In the letter, the MERN requested that Globex secures the balance of $266,315 with a short-term investment of $42,693 by July 24, 2020 and a short-term investment of $223,622 by July 24, 2021.

Restoration Liabilities

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Francoeur Property restoration and rehabilitation liabilities
Balance, beginning of the year	$	628,175	$	628,175
Additions duringtheyear		266,315		-
Balance,end of theyear	$	894,490	$	628,175

• 19 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

10. Investment in Joint Venture

Balance, December 31, 2017	$	47,860
Add:
Globex's 50% share of DAL's net loss for theyear ended December 31,2018		(1,338)
Balance, December 31, 2018		46,522
Add:
Globex's 50% share of DAL's net loss for the year ended December 31, 2019		-
Decrease in investment injoint venture		(38,058)
Balance, December 31, 2019	$	8,464

On February 18, 2010, a mineral option agreement, related to the Duquesne West Gold Property located in Duparquet and Destor townships, Québec, was signed between Globex and Jack Stoch Geoconsultant Limited (“GJSL”, a company owned by Jack Stoch President, Chief Executive Officer (“CEO”) and Director of Globex) as vendors, (b) Duparquet Assets Limited (“DAL”) and (c) Xmet Inc. as Optionee.

The property was owned 50% by Globex and 50% by GJSL. On February 16, 2010, DAL entered into a joint venture agreement with GJSL and Globex. Globex’s investment has been recorded using the equity method. July 3, 2013, Xmet Inc. dropped its interest in the Duquesne West Gold Property and returned it to DAL. The joint venture is currently inactive.

During the year ended December 31, 2019, Globex had a payable to DAL of $76,118 which was netted against the investment in joint venture and the portion relating to GJSL was repaid.

A summary of the financial assets, liabilities and earnings for the respective period-ends follows.

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Assets
Mineral property and deferred exploration expenses	$	27,206	$	27,206
Due from Globex Mining Enterprises Inc.		-		76,208
Current loss	$	-	$	(2,675)

On October 3, 2019, Globex announced that it entered into an option agreement (the "Option Agreement") with DAL and GJSL under which GJSL has the right to subscribe for additional shares of DAL in the event of a change of control of Globex, as that term is defined in the Option Agreement. At present, Globex and GJSL each own 50% of the issued and outstanding shares of DAL. The Option Agreement was approved by Globex’s independent directors.

• 20 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

11. Property, Plant and Equipment

		Land and		Mining		Office				Computer
Cost		buildings	equipment			equipment		Vehicles		systems		Total
Balance, December 31, 2017	$	497,627	$	88,210	$	146,274	$	56,177	$	271,673	**$ **	1,059,961
Additions		39,340		-		-		-		21,060		60,400
Balance, December 31, 2018		536,967		88,210		146,274		56,177		292,733		1,120,361
Additions		-		-		-		-		10,242		10,242
Dispositions		-		-		-		(56,177)		-		(56,177)
Balance, December 31, 2019	$	536,967	$	88,210	$	146,274	$	-	$	302,975	**$ **	1,074,426
		Land and		Mining		Office				Computer
Accumulated depreciation		buildings	equipment			equipment		Vehicles		systems		Total
Balance, December 31, 2017	$	129,689	$	88,210	$	146,274	$	56,177	$	254,148	$	674,498
Depreciation duringtheyear		13,838		-		-		-		13,223		27,061
Balance, December 31, 2018		143,527		88,210		146,274		56,177		267,371		701,559
Depreciation during the year		13,838		-		-		-		15,658		29,496
Disposition duringtheyear		-		-		-		(56,177)		-		(56,177)
Balance, December 31, 2019	$	157,365	$	88,210	$	146,274	$	-	$	283,029	$	674,878
		Land and		Mining		Office				Computer
Carrying value		buildings	equipment			equipment		Vehicles		systems		Total
Balance, December 31, 2018	$	393,440	$	-	$	-	$	-	$	25,362	$	418,802
Balance, December 31, 2019	$	379,602	$	-	$	-	$	-	$	19,946	$	399,548

During the year ended December 31, 2019, the Corporation sold vehicles for cash proceeds of $7,000 which resulted in a gain on sale of property, plant and equipment of $7,000.

12. Payable and Accruals

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Trade payables and accrued liabilities	$	98,022	$	159,091
Sundryliabilities		32,134		31,825
	$	130,156	$	190,916

13. Other Liabilities

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Balance, beginning of period	$	233,789	$	345,277
Additions during the period		145,305		275,000
Reduction related toqualified exploration expenditures		(233,790)		(386,488)
Balance,end ofperiod	$	145,304	$	233,789

The Other Liabilities represent the excess of the proceeds received from flow-through shares over the fair value of the shares issued. Further details are provided in note 19.

• 21 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

14. Income Taxes

Income tax expense

Income tax expense
		Year	ended
		December		31,
		2019		2018
Current tax expense	$	117,177	$	453,861
Recovery of income and mining duties as a result
of the sale of tax benefits(flow-through shares)		(233,790)		(386,488)
	$	(116,613)	$	67,373

Tax expense reconciliation

The recovery of income and mining taxes attributable to the loss before taxes differs from the amounts computed by applying the combined federal and provincial tax rate of 26.6% (2018 - 26.7%) as a result of the following:

		Year	ended	ended
		December		31,
		2019		2018
Loss before taxes	**$ **	(1,162,725)	$	(28,254)
Combined tax rates		26.60%		26.70%
Loss and mining tax provision calculated at combined rate		(309,285)		(7,544)
Deferred tax expense related to flow-through shares		208,874		289,884
Non-deductible expenses and other		62,111		101,018
Change in tax estimates		346,702		(658,231)
Tax benefits not recognised		(193,210)		696,039
Effect of tax rates of foreign jurisdictions		1,984		32,695
Federal Foreign Tax Credit		(229,983)		(453,861)
Foreign Taxes		229,984		453,861
Income and mining taxprovision		117,177		453,861
Other liabilities(sale of tax benefits(flow-through shares))		(233,790)		(386,488)
Income and mining taxprovision related to continuing operations	$	(116,613)	$	67,373

At December 31, 2019, the Corporation had non-capital loss carry forwards available to reduce future years' income for tax purposes. The non-capital losses will expire as follows:

		Federal		Provincial
2033	$	419,533	$	-
2034		908,222		-
2035		864,447		-
2039		1,290,244		-
	$	3,482,446	$	-

The Corporation also has non-capital loss carry forwards in the United States totalling $585,154 expiring between 2020 and 2039.

• 22 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

14. Income Taxes (Continued)

Deferred tax balances

	December 31,	December 31,	Recognized in	Recognized in		Recognized	December 31,	December 31,
		2018	income or loss			in equity		2019
Deferred tax assets
Non-capital losses	$	579,246	$	66,004	$	-	$	645,250
Share issuance costs		48,351		(7,010)		-		41,341
Property, plant and equipment		38,134		5,961		-		44,095
Resource related deductions		1,965,839		(322,198)		-		1,643,641
Restoration liabilities		-		70,573		-		70,573
Investments		367,831		16,242		-		384,073
Capital losses		17,610		9,091		-		26,701
Foreign business income tax credits		842,336		(31,874)		-		810,462
		3,859,347		(193,211)		-		3,666,136
Deferred tax assets not recognized		(3,859,347)		193,211		-		(3,666,136)
Deferred tax assets	$	-	$	-	$	-	$	-
	December 31,		Recognized in			Recognized	December 31,
		2017	income or loss			in equity		2018
Deferred tax assets
Non-capital losses	$	1,113,185	$	(533,939)	$	-	$	579,246
Share issuance costs		60,773		(12,422)		-		48,351
Property, plant and equipment		30,963		7,171		-		38,134
Resource related deductions		1,677,740		288,099		-		1,965,839
Financial asset at FVTPL		280,649		87,182		-		367,831
Capital losses		-		17,610		-		17,610
Foreign business income tax credits		-		842,336		-		842,336
		3,163,310		696,037		-		3,859,347
Deferred tax assets not recognized		(3,163,310)		(696,037)		-		(3,859,347)
Deferred tax assets	$	-	$	-	$	-	$	-

15. Revenues

Based on IFRS 15, Revenue from Contracts with Customers, management has concluded that its typical sale/option agreements with a customer (optionee/purchaser) clearly identifies; (a) the rights and obligations of both parties, (b) Globex performance obligations and (c) the overall transaction price.

Under the option arrangements, the control over the mineral properties occurs at the outset of the agreement while the transfer of title may not occur until after all of the option/sale terms have been satisfied.

Within the option agreements, Globex’s performance obligations are to:

• (i) provide access to the mineral property to allow the customer the right to explore and assess a mineral property during an option period; and

(ii) transfer the title to the mineral property after all of the option/sale terms have been completed.

As a result of the challenges of estimating future payments, Globex believes that it is appropriate to recognize option revenues as received. As a result of the limited number of contracts in place on an ongoing basis, Globex applies the five step model at the individual contract level.

• 23 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

15. Revenues (Continued)

Payment terms are also clearly identified in the agreement, and usually include the following:

• (i) cash (upfront and pre-determined amounts at milestone dates);

• (ii) shares (upfront and a fixed number of shares at milestone dates). The shares are valued at the stock price on the date of the share certificate.

Once the option term is completed, and all commitments are met, Globex is also entitled to payments (in cash) relating to the Gross Metal Royalty ("GMR"). Under current accounting policies, net metal royalty income is recognized on an accrual basis in accordance with the substance of the relevant agreements. The Corporation will continue to apply the same methods and processes in recording this revenue.

A summary of the revenues for the respective year-ends follows:

		Year	ended	ended
		December		31,
		2019		2018
Option income and advance royalties	$	1,191,995	$	1,234,985
Royalties		1,100,152		1,815,435
	$	2,292,147	$	3,050,420

In the year ended December 31, 2019, Globex reported option income and advances royalties of $1,191,995 (year ended December 31, 2018 – $1,234,985) which consisted of cash receipts of $500,000 (year ended December 31, 2018 - $787,485) and shares in optionee corporations with a fair market value of $691,995 (year ended December 31, 2018 - $447,500).

In 2019, Globex received the following option payments which were greater than 10% of option income and advance royalties:

• On January 17, 2019, Globex received a cash payment of $200,000 and 250,000 common shares with a fair market value of $12,500 from Renforth Resources Inc. in connection with the option of Parbec Property, Malartic Twp., Quebec.

• On March 27, 2019, Globex received 7,500,000 common shares with a fair market value of $262,500 from Renforth Resources Inc. in connection with the option of Parbec Property, Malartic Twp., Quebec.

• On April 12, 2019, Globex received 1,745,408 common shares with a fair market value of $191,995 from NSGold Corporation in connection with the option of Mooseland Gold Property, Nova Scotia.

• On September 23, 2019, Globex received a cash payment of $100,000 from Excellon Resources Inc. ("Excellon") in connection with the options in Europe. On October 17, 2019, Globex received 226,837 common shares with a fair market value of $225,000 from Excellon in connection with the options in Europe.

• On October 25, 2019, Globex received a cash payment of $140,000 from Chalice Gold Mines (Quebec) Inc. in connection with the option of the Nordeau Property.

• 24 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

15. Revenues (Continued)

In 2018, Globex received the following option payments which were greater than 10% of option income and advance royalties:

• On January 16, 2018, Globex received a cash payment of $125,000 and on January 22, 2018, Globex received 500,000 common shares with a fair market value of $25,000 from Renforth Resources Inc. in connection with the option of Parbec Property, Malartic Twp., Quebec. In addition, on November 21, 2018, Globex received 2,500,000 common shares with a fair market value of $62,500 from Renforth Resources Inc. in connection with the option on Parbec Property.

• On February 26, 2018, Globex sold Certac Property to Osisko Mining Inc. In consideration for the sale is a cash payment of $250,000 and a GMR payable to Globex on all metal production based upon the gold price upon the date of delivery of the metals by a smelter or refinery.

• On October 26, 2018, Globex received a cash payment of $140,000 from Chalice Gold Mines (Quebec) Inc. in connection with the option of the Nordeau Property.

• On November 30, 2018, Globex received 2,000,000 common shares with a fair market value of $360,000 from Manganese X Energy Corp. in connection with the option of Houlton Woodstock Property, New Brunswick.

During the year ended December 31, 2019, Globex recorded metal royalty income of $1,100,152 (year ended December 31, 2018 - $1,815,435) from Nyrstar Mid-Tennessee Mines.

16. Expenses by Nature

		Year	ended	ended
		December		31,
		2019		2018
Administration
Office expenses	$	379,357	$	255,858
Conventions and meetings		41,719		32,798
Advertising and shareholder information		35,292		32,201
Transfer agent		29,439		11,982
Other administration		14,205		741
	$	500,012	$	333,580
		Year	ended
		December		31,
		2019		2018
Professional fees and outside services
Investor relations	$	130,140	$	103,217
Audit and accounting fees		101,286		89,305
Management consulting		90,966		74,545
Legal fees		47,601		26,382
Filing fees		26,196		23,781
Otherprofessional fees		26,070		63,282
	$	422,259	$	380,512

• 25 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

17. Exploration and Evaluation Expenditures

		Year	ended	ended
		December		31,
		2019		2018
Ontario
Timmins Talc-Magnesite (Deloro)	$	18,795	$	16,108
Laguerre-Knutson (Hearst, McVittie twps)		22,870		-
Otherprojects		15,276		17,349
	$	56,941	$	33,457
Quebec
Black Dog South (Stuart)	$	5,463	$	5,131
Dalhousie (Bourbaux)		1,967		103,147
Depletion (Guyenne)		13,580		-
Discloflo (Desjardins)		14,553		-
Fabie Bay / Magusi (Hebecourt, Montbray)		48,949		32,168
Francoeur (Beauchastel)		791,362		285,654
Great Plains (Clermont)		980		16,992
Joutel (Joutel)		18,835		-
Hunter East (Duparquet)		196		26,307
Kelly Lake (Blondeau)		17,370		7,794
Lac Ontario (St-Urbain)		28,290		25,355
Lac Savignac (Northern Quebec)		12,619		10,251
Lyndhurst (Destor/Poularies)		20,017		26,539
Mc Neely (Lacorne)		19,344		-
Moly Hill (La Motte)		18,697		15,211
New Richmond (New Richmond)		263		44,633
Pandora-Wood & Central Cadillac (Cadillac)		10,418		105,889
Pyrox (Clairy)		3,407		68,636
Shortt Lake Mine		2,566		29,741
Silidor Mine		2,450		10,328
Smitth-Zulapa-Vianor (Tiblemont)		12,852		-
Standard Gold (Duverny)		66,491		-
Tonnancour (Tonnancour, Josselin)		23,812		393
Trinity (Lamorandiere)		-		11,971
Windfall East (Bressami)		12,837		7,147
Other projects		168,787		297,970
Quebecgeneral exploration		197,562		191,093
	**$ **	1,513,667	$	1,322,350
Other regions
Nova Scotia	$	8,240	$	811
New Brunswick		4,465		9,410
Canada (others)		125		325
Europe		149,137		39,441
Other includingBell Mountain(USA)		1,523		22,601
	$	163,490	$	72,588
Exploration and evaluation expenditures	**$ **	1,734,098	$	1,428,395

• 26 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

17. Exploration and Evaluation Expenditures (Continued)

		Year	ended	ended
		December		31,
		2019		2018
Exploration and evaluation expenditures
Consulting	$	149,272	$	122,266
Core shack, storage and equipment rental		200		-
Drilling		157,773		-
Environmental		-		34,573
Geology		5,938		53,048
Geophysics		151,612		44,495
Laboratory analysis and sampling		64,475		38,593
Labour		684,146		727,485
Line cutting		7,199		19,169
Mineral property acquisitions		90,953		141,670
Mining property tax, permits and prospecting		52,909		152,467
Rehabilitation		266,315		-
Reports, maps and supplies		49,424		37,706
Transport and road access		53,882		56,923
	$	1,734,098	$	1,428,395

(i) During the year ended December 31, 2019, Globex cancelled the option agreements on the Magusi/Fabie Bay property as well as on the Normetal and Normetmar properties. Globex also cancelled the option agreement on the Kelly Lake Property.

(ii) During the year ended December 31, 2019, Globex acquired additional mineral rights in the Joutel gold and base metal mining camp of Quebec.

(iii) On March 19, 2019, Globex announced that it agreed to waive the remaining work requirement by Renforth Resources Inc. on Globex’s Parbec Gold property, allowing Renforth Resources Inc. to gain 100% interest in the property package located on the Cadillac Fault, west of the Canadian Malartic Mine, in Quebec. In consideration for waiving the remaining work requirement, Renforth Resources Inc. agreed to the following:

• The previous GMR which varied between 1% and 2% GMR dependent upon the gold price will henceforth be a stable 3% GMR;

• Renforth Resources Inc. shall issue to Globex 5,000,000 Renforth shares;

• Should Renforth Resources Inc. consolidate its shares within 4 years, an additional 1,500,000 post consolidated Renforth Resources Inc. shares will be issued to Globex;

• Upon the commencement of mining and the transport of the first ore for milling, a one-time payment of $1,000,000 will be made to Globex subject to inflation and the deduction of any $50,000 per year advance royalties received by Globex that may commence 8 years from the date of signing of the original option agreement.

Globex has agreed to give Renforth Resources Inc. a one-time first right of refusal to purchase Globex’s GMR should Globex decide at any time to sell all or part of its GMR.

• 27 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

17. Exploration and Evaluation Expenditures (Continued)

(iv) On April 15, 2019, Globex announced that 1,745,408 common shares were issued by NSGold Corporation pursuant to an Amendment dated March 19, 2019 to a Purchase Agreement dated April 14, 2010 between NSGold Corporation and Globex, whereby NSGold Corporation acquired 100% ownership of the Mooseland Gold Property in Nova Scotia and certain secondary properties from Globex. Pursuant to the Amendment, a GMR payable by NSGold Corporation to Globex on the properties was reduced from 4% to 2% and a share issuance by NSGold Corporation to Globex conditional upon commencement of commercial production on any of the properties was eliminated. As consideration for the Amendment, NSGold Corporation issued 1,745,408 common shares to Globex (the “Transaction”).

Immediately prior to the closing of the Transaction, Globex did not hold any securities of NSGold Corporation. Immediately following the closing of the Transaction, Globex holds 1,745,408 common shares of NSGold Corporation, representing approximately 11.1% of the issued and outstanding common shares of NSGold Corporation.

(v) On July 23, 2019, Globex announced that it acquired 100% interest in the Standard Gold Property located in Duverny Township, Quebec free and clear of any and all potential obligations, encumbrances or liabilities in exchange for 160,000 Globex common shares (valued at $60,000), subject to the normal four month hold period.

(vi) On September 24, 2019, Globex announced that it optioned the Bräunsdorf Exploration License in Saxony Germany to Excellon. Under the terms of the agreement, Excellon will, over a three year period, pay Globex $500,000 in cash payments and $1,600,000 in Excellon stock (received - 226,837 shares value at $225,000). The first payment at signing and the second at the first anniversary are firm commitments totalling $200,000 in cash ($100,000 on signing (received) and $100,000 at the first anniversary). Excellon will undertake Globex's current year property exploration obligation of $500,000 and pay the final portion of the cost of geophysical surveys recently completed for Globex.

In addition, upon filing of a maiden independent mineral resource estimate, Excellon will make a one-time payment of $300,000 to Globex and on the commencement of commercial production on any portion other property, and additional one-time payment of $700,000.

Globex retains a 3.0% GMR on recovered precious metals and a 2.5% GMR on all other metals. Excellon may purchase 1% of Globex's 3% GMR on precious metals and 1% of Globex's 2.5% GMR on all other metals for a payment of $1,500,000.

18. Loss Per Common Share

Basic loss per common share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share is calculated by dividing the net loss applicable to common shares by the weighted average number of common shares outstanding during the period, plus the effects of dilutive common share equivalents such as warrants and stock options.

Diluted net loss per share is calculated using the treasury method, where the exercise of options is assumed to be at the beginning of the period and the proceeds from the exercise of options and the amount of compensation expense measured, but not yet recognized in loss are assumed to be used to purchase common shares of the Corporation at the average market price during the period. Diluted loss did not include the effect of options for the year ended December 31, 2019, as they are anti-dilutive.

• 28 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

19. Share Capital

In accordance with the Certificate of Continuance, under the Canada Business Corporations Act, effective October 28, 2014, the Corporation was authorized to issue an unlimited number of common shares and an unlimited number of preferred shares, issuable in series.

Changes in capital stock

		December 31,		December 31,
		2019		2018
	Number of		Number of
Fully paid common shares	shares	Capital stock	shares	Capital stock
Balance, beginning of period	52,078,077	$ 55,685,745	51,053,577	$ 55,925,483
Issued in connection with mineral property acquisition (vi)	160,000	60,000	-	-
Issued on exercise of options (iii)(iv)(v)	65,000	23,381	-	-
Private placements - Flow-through shares (i)(ii)(ix)(x)	2,927,775	1,094,695	1,750,000	600,000
Share issuance costs (vii)(xi)	-	(62,646)	-	(61,656)
Share repurchase(viii)(xii)	(841,000)	(899,260)	(725,500)	(778,082)
Balance,end ofperiod	54,389,852	$ 55,901,915	52,078,077	$ 55,685,745

2019 issuances

Private placements

(i) On July 10, 2019, Globex issued 1,500,000 flow-through common shares at a price of $0.40 per share to subscriber outside Quebec and 666,666 flow-through common shares at a price of $0.45 per share to subscribers in Quebec, for gross proceeds to Globex of $900,000. The fair value of these shares was $801,667 ($0.37 per share) based on the TSX closing price on July 9, 2019. The $98,333 difference between the gross proceeds and the fair value of the shares at issuance has been reflected as an increase in other liabilities.

Jack Stoch, director and CEO of Globex, purchased 150,000 flow-through shares for a total consideration of $60,000 in the private placement.

(ii) On July 19, 2019, Globex issued 50,000 flow-through common shares at a price of $0.40 per share to subscriber outside Quebec and 711,109 flow-through common shares at a price of $0.45 per share to subscribers in Quebec, for gross proceeds to Globex of $340,000. The fair value of these shares was $293,028 ($0.385 per share) based on the TSX closing price on July 18, 2019. The $46,972 difference between the gross proceeds and the fair value of the shares at issuance has been reflected as an increase in other liabilities.

Issued on exercise of options

(iii) On March 11, 2019, 30,000 stock options with a fair value per share of $0.124 were exercised at an exercise price of $0.235 per share. Globex’s shares closed at $0.295 per share that date.

(iv) On May 23, 2019, 30,000 stock options with a fair value per share of $0.124 were exercised at an exercise price of $0.235 per share. Globex’s shares closed at $0.345 per share that date.

(v) On June 3, 2019, 5,000 stock options with a fair value per share of $0.124 were exercised at an exercise price of $0.235 per share. Globex’s shares closed at $0.355 per share that date.

• 29 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

19. Share Capital (Continued)

2019 issuances (continued)

Shares issued in connection with mineral property acquisitions

(vi) On July 22, 2019, Globex acquired a 100% interest in the Standard Gold Property located in Duverny Township, Quebec by issuing 160,000 Globex common shares at a deemed price of $0.375 per share for a deemed value of $60,000.

Share issuance costs

(vii) During the year ended December 31, 2019, the share issuance costs totalled $62,646.

Normal course issuer bid

(viii) During the year ended December 31, 2019, 841,000 commons shares were repurchased for cash consideration of $244,325 in accordance with the Normal course issuer bid ("NCIB"). The amount by which the repurchased amount was less than the stated capital of the shares has been credited to deficit.

2018 issuances

Private placements

(ix) On August 30, 2018, the Corporation issued 1,000,000 flow-through shares under a private placement at a price of $0.50 per share for gross proceeds of $500,000. The fair value of these shares was $345,000 ($0.345 per share) based on the TSX closing price on August 29, 2018. The $155,000 difference between the gross proceeds and the fair value of the shares at issuance has been reflected as an increase in other liabilities.

(x) On September 28, 2018, the Corporation issued 750,000 flow-through shares under a private placement at a price of $0.50 per share for gross proceeds of $375,000. The fair value of these shares was $255,000 ($0.34 per share) based on the TSX closing price on September 27, 2018. The $120,000 difference between the gross proceeds and the fair value of the shares at issuance has been reflected as an increase in other liabilities.

Share issuance costs

(xi) In 2018, the share issuance costs totalled $61,656, in connection with private placements (August 30, 2018 and September 28, 2018), consisting of sales commissions of $40,875, listing fees of $14,881, and legal fees of $4,077 and other disbursements of $1,823.

Normal course issuer bid

(xii) During the year ended December 31, 2018, 725,500 common shares were purchased for cash consideration of $213,491 in accordance with the NCIB. The amount by which the repurchased amount was less than the stated capital of the shares has been credited to deficit.

• 30 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

19. Share Capital (Continued)

Stock options

Under the Corporation’s stock option plan (the “Plan”), the Board of Directors may, from time to time, grant stock options to directors, officers, employees of and service providers to, the Corporation and its subsidiaries. Stock options granted under the Plan may have a term of up to ten years, as determined by the Board of Directors at the time of granting the stock options.

On April 21, 2016, the Board of Directors amended the 2006 Stock Option Plan so as to increase the number of shares that can be issued thereunder from 2,500,000 to 4,500,000. The amendment to the Plan was approved by the shareholders on May 31, 2016 and on June 20, 2016, the TSX approved the listing and reservation of an additional 2,000,000 common shares for issuance upon exercise of stock options granted.

At December 31, 2019, 1,792,500 (December 31, 2018 – 1,587,500) options were available for grant under 2003 and 2006 Option Plans in addition to the common share purchase options currently outstanding.

The following is a summary of option transactions under the stock option plan for the relevant periods:

		December 31,	December 31,		December 31,	December 31,
			2019			2018
			Weighted			Weighted
	Number of		average	Number of		average
	options	exerciseprice		options	exerciseprice
Balance, beginning of period	2,912,500	$	0.30	2,997,500	$	0.29
Exercised	(65,000)		0.24	-		-
Expired/cancelled	(1,277,500)		0.23	(570,000)		0.31
Granted to employees(i)(ii)	1,300,000		0.35	485,000		0.39
Balance - end ofperiod	2,870,000	$	0.36	2,912,500	$	0.30
Options exercisable	2,870,000	$	0.36	2,912,500	$	0.30

(i) On January 31, 2018, 85,000 stock options with a fair value per share of $0.2676 were granted at an exercise price of $0.44 per share. Globex’s shares closed at $0.44 per share on the day before. On July 3, 2018, 400,000 stock options with a fair value per share of $0.226 were granted at an exercise price of $0.38 per share. Globex’s shares closed at $0.38 per share on the day before.

(ii) On March 2, 2019, 10,000 stock options with a fair value per share of $0.1712 were granted at an exercise price of $0.285 per share. Globex’s shares closed at $0.285 per share on the day before. On June 17, 2019, 1,160,000 stock options with a fair value per share of $0.1996 were granted at an exercise price of $0.35 per share. Globex’s shares closed at $0.35 per share on the day before. On November 28, 2019, 130,000 stock options with a fair value per share of $0.1871 were granted at an exercise price of $0.34 per share. Globex’s shares closed at $0.34 per share on the day before.

• 31 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

19. Share Capital (Continued)

Stock option (continued)

The following table summarizes information regarding the stock options outstanding and exercisable as at December 31, 2019:

			Weighted
			average
	Number of	Number of	remaining		Weighted
	options	options	contractual		average
Range ofprices	outstanding	exercisable	**life(years) **	exerciseprice
$0.22 - $0.24	110,000	110,000	4.03	$	0.24
$0.25 - $0.29	265,000	265,000	1.02		0.29
$0.30 - $0.38	1,690,000	1,690,000	4.27		0.36
$0.39 - $0.42	720,000	720,000	1.57		0.39
$0.44 -$0.50	85,000	85,000	3.09		0.44
	2,870,000	2,870,000	3.25	$	0.36

Stock-based compensation and payments

The Corporation uses the fair value method for stock options granted to directors, officers, employees and nonemployees. Accordingly, the fair value of the options at the date of grant is charged to operations, with an offsetting credit to contributed surplus, over vesting periods (which can vary from immediate vesting to 5 years).

Globex uses the Black-Scholes option pricing model to estimate fair value using the following weighted average assumptions:

	December 31,	December 31,
	2019	2018
Stock price	$0.35	$0.43
Expected dividend yield	Nil	Nil
Expected stock price volatility	68.27%	71.43%
Risk free interest rate	1.36%	2.05%
Expected life	5years	5years
Weighted average fair value ofgranted options	$0.20	$0.23

During the year ended December 31, 2019, an expense of $257,571 (year ended December 31, 2018 - $113,146) related to stock-based compensation costs has been recorded and presented separately in the consolidated statements of loss and comprehensive loss.

Restricted Share Unit Plan

On April 11, 2012, the Board of Directors adopted a Restricted Share Unit Plan (the “RSU Plan”) for the Corporation’s executives and key employees, subject to regulatory approval.

The RSU Plan is designed to attract and retain qualified individuals, to serve as executives and key employees of the Corporation and its subsidiaries and to promote the alignment of interests of such executives and key employees, on the one hand, and the shareholders of the Corporation, on the other hand. A maximum of 600,000 common shares may be issued from treasury under the RSU Plan.

• 32 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

19. Share Capital (Continued)

Restricted Share Unit Plan (continued)

Under the RSU Plan, from time-to-time, the Board of Directors may, in its sole discretion, upon the recommendation of the Compensation Committee after consultation with the CEO of the Corporation, may grant RSUs to executives and key employees in lieu of a bonus or other similar arrangements.

The RSU Plan was approved by the shareholders on June 1, 2012 and subsequently on June 19, 2012, the TSX confirmed that it had listed and reserved 600,000 common shares of the Corporation for issuance under the Plan.

To date, no shares have been issued under the RSU Plan.

Shareholders' Rights Plan

On May 31, 2017, the Shareholders of the Corporation approved an amended and restated Shareholder Rights Plan (the “Amended Rights Plan”). On April 20, 2017, the TSX accepted notice for filing the Amended Rights Plan and on July 13, 2017, they confirmed that they were in receipt of all necessary documents needed to confirm their approval.

The Amended Rights Plan was adopted to: (i) provide shareholders and the Board of Directors time to consider and evaluate any take-over bid made for the outstanding shares of the Corporation; (ii) provide the Board of Directors with adequate time to identify, develop and negotiate value-enhancing alternatives to any such take-over bid made for the outstanding shares of the Corporation; (iii) encourage the fair treatment of shareholders in connection with any takeover bid for the outstanding shares of the Corporation; and (iv) generally prevent any person from acquiring beneficial ownership of or the right to vote more than 20% of the outstanding common shares of the Corporation (or where such person already owns more than 20% of the shares, from acquiring ownership of or right to vote any additional shares) while this process is ongoing or entering into arrangements or relationships that have a similar effect.

The Amended Rights Plan is designed to prevent the use of coercive and/or abusive take-over techniques and to encourage any potential acquirer to negotiate directly with the Board of Directors for the benefit of all of the Corporation’s shareholders. In addition, the Amended Rights Plan is intended to provide increased assurance that a potential acquirer would pay an appropriate control premium in connection with any acquisition of the Corporation.

The Amended Rights Plan will provide the Board of Directors with time to review any unsolicited takeover bid that may be made and to take action, if appropriate, to enhance shareholder value. The Amended Rights Plan attempts to protect the Corporation’s shareholders by requiring that all potential bidders comply with the conditions specified in the permitted bid provisions, failing which such bidders are subject to the dilutive features of the Amended Rights Plan. By creating the potential for substantial dilution of a bidder’s position, the Amended Rights Plan encourages an offeror to proceed by way of a permitted bid or to approach the Board of Directors with a view to negotiation.

The Amended Rights Plan will require reconfirmation by the Corporation’s shareholders at the annual meeting of shareholders to be held in 2020.

• 33 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

19. Share Capital (Continued)

NCIB

On March 8, 2018, the Corporation announced that it will conduct a NCIB.

Under the NCIB, Globex will be entitled to repurchase for cancellation up to 1,000,000 common shares, representing 2.15% of Globex’s “public float” as of March 7, 2018, over a twelve-month period starting on March 12, 2018 and ending on March 11, 2019. The purchases by Globex will be effected through the facilities of the TSX and on other alternative trading systems in Canada and will be made at the market price of the shares at the time of the purchase.

Any purchases made pursuant to the NCIB will be made in accordance with the requirements of the TSX. Except for exempt offers, Globex will make no purchases of common shares other than open market purchases during the period of the NCIB.

In connection with the NCIB, Globex has entered into an automatic share purchase plan with a Canadian securities dealer pursuant to which the securities dealer, acting as Globex’s agent, may acquire at its discretion shares on Globex’s behalf during “black-out” or “closed” periods under Globex’s stock trading policy, subject to certain parameters as to price and number of shares.

During the year period ended December 31, 2018, 725,500 common shares were purchased for cash consideration of $213,491 in accordance with the NCIB. The amount by which the repurchased amount was less than the stated capital of the shares has been credited to deficit.

On March 11, 2019, the Corporation announced that TSX approved the renewal of the NCIB. Under the original NCIB, Globex was entitled to repurchase for cancellation up to 1,000,000 common shares, representing 2.15% of Globex’s “public float” as of March 7, 2018, over a twelve-month period starting on March 12, 2018 and ending on March 11, 2019.

Under the renewal of NCIB, Globex will be entitled to repurchase for cancellation up to 1,000,000 common shares, representing 1.9% of Globex’s “public float” as of March 1, 2019, over a twelve-month period starting on March 12, 2019 and ending on March 11, 2020. The purchases by Globex will be effected through the facilities of the TSX and on other alternative trading systems in Canada and will be made at the market price of the shares at the time of the purchase.

During the year ended December 31, 2019, 841,000 common shares of Globex were purchased for cash consideration of $244,325 in accordance with the NCIB completing the buyback. The amount by which the repurchased amount was less than the stated capital of the shares has been credited to deficit.

20. Related Party Information

	December 31,	December 31,	December 31,	December 31,
Relatedparty (receivable) payable		2019		2018
GJSL	$	(1,084)	$	(6,717)
Chibougamau Independent Mines Inc. ("CIM")		(32,217)		(1,443)
DAL		-		76,208
	$	(33,301)	$	68,048

The receivables due from related parties bear no interest, are without specific terms of repayment and are not secured.

As reflected in the consolidated statement of cash flows there was a net cash decrease of $101,349 (year ended December 31, 2018 - increase of $10,358) in the related party net payables during the year ended December 31, 2019.

• 34 -

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

GLOBEX MINING ENTERPRISES INC.

20. Related Party Information (Continued)

CIM

CIM is considered a related party as Globex Management consisting of the President and CEO and a Director hold the same positions with both entities. In addition, the President and CEO holds a large number of common shares of both organizations through GJSL, a private company which is the principal shareholder of CIM, and Globex and therefore can significantly influence the operations of both entities.

Management services

On December 29, 2012, Globex entered into a Management Services Agreement with CIM under which the Corporation agreed to provide management services including administrative, compliance, corporate secretarial, risk management support and advisory services to CIM.

Management services income of $7,054 for the year ended December 31, 2019 (year ended December 31, 2018 - $12,335) represents Globex’s estimate of the specific costs related to performing these services in accordance with the Management Services Agreement.

All related party transactions disclosed above were at the agreed amounts that approximate fair value.

Management compensation

The total compensation for the respective periods paid to directors and key management personnel having authority and responsibility for planning, directing and controlling the activities of the Corporation (Management personnel includes President and CEO, Executive Vice-President, Vice-President Operations (retired in 2018) and Chief Financial Officer, Treasurer and Corporate Secretary) are as follows:

		Year	ended	ended
		December		31,
		2019		2018
Management compensation
Salaries and other benefits	$	179,810	$	208,831
Professional fees and outside services (i)		90,966		75,545
Fair value of share-based compensation		135,728		36,160
	$	406,504	$	320,536

(i) In the year ended December 31, 2019, management consulting fees of $90,966 (year ended December 31, 2018 - $75,545) were paid to the Chief Financial Officer and the Corporate Secretary. They were appointed on September 20, 2017. As at December 31, 2019, the balance due to Chief Financial Officer and Corporate Secretary is $12,815 (December 31, 2018 - $3,162) which is included in payables and accruals due under normal credit terms.

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GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

21. Supplementary Cash Flows Information

21. Supplementary Cash Flows Information
	December 31,		December 31,
Changes in non-cash working capital items		2019		2018
Accounts receivable	$	121,045	$	10,800
Prepaid expenses and deposits		(26,709)		3,698
Current tax receivable		(149,617)		-
Payables and accruals		(60,760)		30,574
Current taxpayable		(185,606)		124,446
	$	(301,647)	$	169,518
	December 31,		December 31,
Non-cash operating and investing activities		2019		2018
Disposal of mineral properties for investments	$	691,995	$	447,500
Restoration liabilities		266,315		-
Shares issued for mineralproperties		60,000		-
	$	1,018,310	$	447,500
	December 31,		December 31,
Income taxespaid		2019		2018
Income taxespaid	$	469,392	$	329,415

22. Financial Instruments

Capital risk management

The Corporation manages its share capital, warrants, contributed surplus and deficit as capital. The Corporation’s objectives when managing capital are to safeguard the Corporation’s ability to continue as a going concern while it pursues its objective of enhancing projects, properties or the development of properties to the benefit of all stakeholders. As a Canadian exploration corporation, its principal sources of funds consist of:

(a) Option income on properties; (b) metal royalty income; (c) investment income; (d) proceeds from the issuance of common and flow-through shares and (e) other working capital items. The Corporation manages the capital structure and makes adjustments to it in light of operating results in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Corporation issues shares, enters into joint venture property arrangements or disposes of properties.

The Corporation’s investment policy is to invest its cash in low risk highly liquid short-term interest-bearing instruments selected with a duration which is expected to align with the Corporation’s planned expenditures.

In order to facilitate the management of its capital requirements, the Corporation prepares annual expenditure budgets that are updated as necessary. The annual and updated budgets are approved by the Board of Directors. For capital management purposes, the Corporation has developed two objectives which are as follows:

• Retain cash and cash equivalents, cash reserved for exploration expenditures and accounts receivable which are equal to or greater than the committed exploration expenditures,

• Retain equity investments and debt instruments with a combined fair market value which are greater than twelve months of projected operating and administrative expenditures.

The Corporation’s overall strategy remains unchanged from 2018.

The Corporation may need additional capital resources to complete or carry out its exploration and development plans beyond the next twelve months. The Corporation continually considers a number of options including the optioning and sale of properties as well as other financing activities.

• 36 -

GLOBEX MINING ENTERPRISES INC. Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

22. Financial Instruments (Continued)

Financial risk management objectives

The Corporation’s financial instruments are exposed to certain financial risks including credit risk, liquidity risk, equity market risk, currency risk and fair value measurements recognized in the consolidated statement of financial position.

(a) Credit risk

The Corporation had cash and cash equivalents as well as cash reserved for exploration which totaled $2,850,512 as at December 31, 2019, (December 31, 2018 - $3,448,199). These funds are subject to a combination of the $100,000 maximum guarantee per individual institution as provided by the Canadian Deposit Insurance Corporation (“CDIC”): CDIC, a federal Crown Corporation as well as a guarantee of $1,000,000 provided by the Canadian Investors Protection Fund.

The Corporation does not believe that it is subject to any significant concentration of credit risk. Cash and cash equivalents and cash reserved for exploration are in place with major Canadian financial institutions. 40% of accounts receivable should be reflected as an increase in credit risk but as a result of this amount not being significant to the consolidated financial statements as a whole, the increased credit risk has not been recorded as an expected credit loss.

The carrying amount of financial assets represents the Corporation’s maximum credit exposure.

The maximum exposure to credit risk was:

		December 31,	December 31,	December 31,	December 31,
	Notes		2019		2018
Cash and cash equivalents	5	$	1,610,513	$	2,704,326
Cash reserved for exploration	6		1,239,999		743,873
Investments	7		1,416,169		904,544
Accounts receivable (less taxes receivable)	8		91,591		203,215
Relatedpartyreceivable	20		33,301		-
		$	4,391,573	$	4,555,958

The following is an aged analysis of the accounts receivable less taxes receivable:

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Less than 3 months	$	47,529	$	163,707
Greater than 3 months		48,171		43,617
Allowance for doubtful accounts		(4,109)		(4,109)
	$	91,591	$	203,215

(b) Liquidity risk

Liquidity risk represents the risk that the Corporation will not be able to meet its financial obligations as they fall due. The Corporation manages liquidity risk through its capital structure and by continuously monitoring actual and projected cash flows. The Corporation finances its exploration activities through flow-through shares, operating cash flows and the utilization of its liquidity reserves.

The Board of Directors reviews and approves the Corporation’s operating and capital budgets, as well as any material transactions out of the ordinary course of business.

• 37 -

GLOBEX MINING ENTERPRISES INC. Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

22. Financial Instruments (Continued)

(b) Liquidity risk (continued)

Contractual maturities of financial liabilities are as follows; payables and accruals less than one year; restoration liabilities over one year; and related party liabilities from future free cash flow.

(c) Commodity price risk

Commodity price risk arises from the possible adverse effect on current and future earnings due to fluctuations in commodity prices. The ability of the Corporation to develop its properties and the future profitability of the Corporation is directly related to these prices.

Globex is entitled to a GMR for zinc production from the Nyrstar Tennessee Gordonsville facility. Under this agreement, if the LME zinc sale price is at or above USD $0.90 per pound, but below USD $1.10 per pound, then the royalty is 1% GMR. If the LME zinc sale price is equal to or above USD $1.10 per pound, then the royalty is 1.4% GMR. With a Zinc price at USD $1.03 per pound at December 31, 2019, the Corporation believes that Zinc price would need to drop dramatically before having a significant impact on the profitability.

(d) Equity market risk

Equity market risk is defined as the potential adverse impact on the Corporation's earnings due to movements in individual equity prices or general movements in the level of the stock market. The Corporation closely monitors the general trends in the stock markets and individual equity movements, and determines the appropriate course of action to be taken by the Corporation.

The Corporation currently holds investments in a number of optionee companies which are subject to fair value fluctuations arising from changes in the Canadian mining sector and equity markets with a current fair market value of $1,416,169 (December 31, 2018 - $904,544). Based on the balance outstanding at December 31, 2019, a 10% increase or decrease would impact income and loss by $122,853 (December 31, 2018 - $78,469).

(e) Currency risk

Globex receives US dollar GMR payments from to Nyrstar’s Zinc operations in Tennessee if the Zinc price is greater than USD $0.90 per pound. It is required to pay U.S. tax on these receipts. Globex’s practice is to convert the U.S. dollars to Canadian dollars as the funds are received after retaining sufficient funds to meet its U.S. dollar tax obligations. The Corporation has not entered into any foreign currency contracts to hedge its exposure to the currency risk.

Assets and liabilities in foreign currency are as follows:

	December 31,	December 31,	December 31,	December 31,
		2019		2018
		USD		USD
Cash and cash equivalents	$	1,425,934	$	1,430,862
Accounts receivable		22,055		66,791
Reclamation bonds		112,132		112,132
	$	1,560,121	$	1,609,785

During the year ended December 31, 2019, Globex received royalty payments of $1,100,152 (USD $829,114) (2018 - $1,815,435; USD - $1,401,123) and recorded a current tax expense of $275,038 (USD - $207,279) (2018 - $453,861; USD - $350,282).

• 38 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

22. Financial Instruments (Continued)

(e) Currency risk (continued)

The following table shows the estimated sensitivity of the Corporation’s financial instruments for the year ended December 31, 2019 from a change in U.S. dollars with all other variables held constant as at December 31, 2019:

	Impact on net	Impact on net	Impact on net
	loss from %		loss from %
		increase in	decrease in
Percentage of change in closing exchange rate	exchange rate		exchange rate
2%	$	31,202	$ (31,202)
4%		62,405	(62,405)
6%		93,607	(93,607)
8%		124,810	(124,810)
10%		156,012	(156,012)

(f) Fair value measurements recognized in the statement of consolidated financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

• Level 1 - fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 - fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 - fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs)

							Total financial	Total financial
							assets at fair
December 31, 2019		Level 1		Level 2		Level 3		value
Financial assets
Cash and cash equivalents	$	-	$	1,610,513	$	-	$	1,610,513
Cash reserved for exploration		-		1,239,999		-		1,239,999
Investments		1,416,169		-		-		1,416,169
	$	1,416,169	$	2,850,512	$	-	$	4,266,681

There were no transfers between level 1, level 2 and level 3 during the year.

							Total financial	Total financial
							assets at fair
December 31, 2018		Level 1		Level 2		Level 3		value
Financial assets
Cash and cash equivalents	$	-	$	2,704,326	$	-	$	2,704,326
Cash reserved for exploration		-		743,873		-		743,873
Investments		904,544		-		-		904,544
	$	904,544	$	3,448,199	$	-	$	4,352,743

• 39 -

GLOBEX MINING ENTERPRISES INC.

Notes to the Consolidated Financial Statements December 31, 2019 and 2018 (Expressed in Canadian Dollars)

22. Financial Instruments (Continued)

(f) Fair value measurements recognized in the statement of consolidated financial position (continued)

There were no transfers between level 1, level 2 and level 3 during the year.

For all other financial assets and liabilities, the fair value is equal to the carrying value.

The fair values of the Corporation’s cash and cash equivalents, cash reserved for exploration, accounts receivable, payables and accruals approximate their carrying values due to their short-term nature. The fair value of the Corporation's reclamation bonds approximates the carrying value since the carrying value is increased by the accrued interest earned during the year. Investments has been adjusted to reflect the fair market value at the period end based on quoted market rates.

23. Commitments and Contingencies

At year end, the Corporation had no outstanding commitments other than its commitment to incur qualified exploration expenditures to meet its flow-through obligations as described in notes 6 and 13. At this time, management anticipates meeting that obligation and as a result, no additional disclosures are required.

24. Subsequent Events

(i) Subsequent to December 31, 2019, 17,000 common shares of Globex were purchased for cash consideration of $5,700 in accordance with the NCIB completing the buyback.

(ii) On March 11, 2020, the Corporation announced that TSX approved the renewal of the NCIB. Under the original NCIB, Globex was entitled to repurchase for cancellation up to 1,000,000 common shares, representing 1.84% of Globex’s issued and outstanding shares as of March 1, 2020, over a twelve-month period starting on March 13, 2020 and ending on March 12, 2021. The purchases by Globex will be effected through the facilities of the TSX and on other alternative trading systems in Canada and will be made at the market price of the shares at the time of the purchase.

(iii) On March 16, 2020, the Corporation acquired 100% interest in the Lac Fortune Gold Mine property in Beauchastel township, Quebec for 250,000 Globex shares and a 2% NSR of which 1% may be purchased by Globex for $200,000 at any time.

(iv) Since December 31, 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Corporation in future periods.

• 40 -