Gold Mountain Mining Corp. - Interim / Quarterly Report 2022

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Vancouver, BC

GOLD MOUNTAIN MINING CORP. (Formerly Freeform Capital Partners Inc.)

Condensed Interim Consolidated Financial Statements Three and Six-Month Periods Ended July 31, 2021 and 2020

(Expressed in Canadian Dollars)

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Financial Position As of July 31, 2021 and January 31, 2021 (Unaudited - Expressed in Canadian Dollars)

Notes	$ 14,931,106 $ 2,691,382 351,589 124,626 58,851 58,851 823,104 467,891 16,164,650 3,342,750 663,125 526,875 13,125,489 73,258 180,000 160,000 1,555,526 9,881,559 $ 31,688,790 $ 13,984,442 $ 1,498,148 $ 1,493,740 78,420 76,930 2,631,532 2,860,506 4,208,100 4,431,176 101,027 60,000 202,382 - 2,219,319 4,471,018 6,730,828 8,962,194 33,964,719 11,628,629 4,860,335 1,406,273 2,951,686 1,135,288 (16,818,778) (9,147,942) 24,957,962 5,022,248 $ 31,688,790 $ 13,984,442 July 31, 2021 January 31, 2021
Assets Current assets Cash
Receivables 4 Tax credit receivable Prepaid expenses and deposits 5
Non-current assets Prepaid expenses and deposits 5 Property and equipment 6 Reclamation deposits 8 Exploration and evaluation asset 7
Total Assets
Liabilities Current liabilities Accounts payable and accrued liabilities 9,14 Short-term loans 10 Current portion of promissory note 11
Non-current liabilities Reclamation provision Flow-through share premium liability 12
Promissory note 11

Total Liabilities
Shareholders' Equity Share capital 13 Warrants 13 Contributed surplus 13 Accumulated deficit
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity

Nature of operations (Note 1) Commitments (Note 17) Events after reporting period (Note 18)

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the Three- and Six-Month Periods Ended July 31, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars)

		Three months ended July 31, Three months ended July 31, Six months ended July 31, Six months ended July 31,
	Notes	2021 2020 2021 2020
Operating Expenses
Management, director and consulting fees	13,14	$ 421,042 $ 35,454 $ 994,056 $ 74,835 16,009 1,415 30,009 7,766 46,024 - 53,822 - 1,679,998 - 2,253,577 - 24,423 31,203 54,409 63,891 36,012 - 67,101 - 2,487,691 169,218 3,758,395 726,500 3,733 -15,067 -
General and administration
Investor relations Marketing Professional fees Regulatory and transfer agent fees Share-based payments Travel	13,14
Total operating expenses Other Items Interest income Interest expense and finance costs Recovery of flow-through share premium	10,11 12	(4,714,932) (237,290) (7,226,436) (872,992) 110 139 244 743 (219,793) (275,190) (520,817) (532,695) 76,173 -76,173 -
Net loss and comprehensive loss		$ (4,858,442) $(512,341) $ (7,670,836) $(1,404,944)
Basic and diluted lossper common share		$(0.08) $(0.02) $(0.13) $(0.05)

Weighted average number of common shares outstanding		64,377,814 27,543,470 60,824,132 27,472,435

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity For the Six-Month Period Ended July 31, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars except number of shares)

		Number of			Contributed
	Notes	shares	Share Capital	Warrants	Surplus	Deficit	Total
Balance at January 31, 2020		27,297,600	$ 2,398,082	$ 13,676	$ -	$ (1,450,512)	$ 961,246
Shares issued in private placement		4,517,946	1,129,486	-	-	-	1,129,486
Share-based payments		-	-	-	726,500	-	726,500
Net loss for the period		-	-	-	-	(1,404,944)	(1,404,944)
Balance at July 31, 2020		31,815,546	$ 3,527,568	$ 13,676	$ 726,500	$(2,855,456)	$ 1,412,288
Balance at January 31, 2021		49,069,852	$ 11,628,629	$ 1,406,273	$ 1,135,288	$ (9,147,942)	$ 5,022,248
Shares issued in private placements	12,13	15,891,640	17,271,218	4,450,926	-	-	21,722,144
Broker warrants	13	-	-	527,127	-	-	527,127
Share issuance costs	13	-	(1,562,427)	(382,253)	-	-	(1,944,680)
Shares subscription		-	(892)	-	-	-	(892)
Shares issued on exercise of warrants	13	2,109,409	3,546,938	(1,141,738)	-	-	2,405,200
Shares issued for bonus shares	13,14	230,000	289,800	-	-	-	289,800
Shares issued for RSUs	13	567,500	1,125,014	-	(1,125,014)	-	-
Shares issued for PSUs	13	815,500	1,146,751	-	(1,146,032)	-	719
Shares issued on exercise of options	13	386,531	519,688	-	(211,828)	-	307,860
Share-based payments	13	-	-	-	4,299,272	-	4,299,272
Net loss for the period		-	-	-	-	(7,670,836)	(7,670,836)
Balance at July 31, 2021		69,070,432	$ 33,964,719	$ 4,860,335	$ 2,951,686	$ (16,818,778)	$ 24,957,962

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Cash Flows For the Six-Month Period Ended July 31, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars)

	Six months ended July 31, Six months ended July 31,
	2021 2020
	Operating activities Net loss $ (7,670,836) $ (1,404,944) Adjustments for non-cash items: Depreciation 138 - Bonus shares issued to management 289,800 - Share-based payments 3,758,395 726,500 Interest expense and finance costs 520,817 532,695 Recovery of flow-through share premium (76,173) - Changes in non-cash working capital items: Receivables (217,793) (56,694) Tax credit receivable - (58,851) Prepaid expenses and deposits (355,213) 9,582 Accounts payable and accrued liabilities (1,155,972) (404,186)







	Net cash flows used in operating activities (4,906,837) (655,898)
	Investing activities Exploration and evaluation expenditures (1,122,456) (111,709) Mineral property expenditures (1,598,490) - Deposits for exploration and evaluation expenditures (325,775) - Increase in reclamation bonds (20,000) - Purchase of property and equipment (73,582) -
	Net cash flows used in investing activities (3,140,303) (111,709)
	Financing activities Repayment of promissory note (3,000,000) - Shares issued for cash, net of share issuance costs 20,773,780 1,129,486 Share issuance costs (199,084) - Proceeds from short-term loan - 75,000 Warrants exercised 2,404,308 - Options exercised 307,860 -
	Net cash flowsprovided by financing activities 20,286,864 1,204,486
	Net change in cash 12,239,724 436,879 Cash, beginning of the period 2,691,382 378,902
	Cash, ending of theperiod $ 14,931,106 $ 815,781
	Non-cash transactions: Broker warrants $ 527,127 $ - Vested PSUs and RSUs 2,271,046 - Reclamation provision 41,027 - Exploration expenditures in accounts payable and accrued liabilities 433,070 - Mine development costs and mineral property expenditures in accounts payable and accrued liabilities 727,311 -
	Share-based payment capitalized to mine construction work-in- progress 163,950 - Share-based payment capitalized to mineral property expenditures 376,927 - Depreciation capitalized to mineralpropertyexpenditures 11,128 -

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Notes to the Condensed Interim Consolidated Financial Statements For the Three- and Six-Month Periods Ended July 31, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars)

1. Nature of operations

Gold Mountain Mining Corp., (the "Company" or “GMTN”) previously Freeform Capital Partners Inc. was incorporated pursuant to the provisions of the Business Corporations Act of British Columbia on November 5, 2018. The Company’s common shares were listed on the TSX Venture Exchange (the “TSXV”) under the stock symbol “FRM.P” and commenced trading on June 19, 2020. On December 23, 2020, the Company changed its name to Gold Mountain Mining Corp. On December 31, 2020, the Company listed on the TSXV as a Tier 2 Mining Issuer and began trading on the TSXV under the stock symbol “GMTN.V”. On April 15, 2021, the Company’s common shares also began trading on the OTCQB Venture Market under the stock symbol “GMTNF”.

On December 23, 2020, the Company completed the three-cornered amalgamation between the Company, its wholly owned subsidiary, 1262975 B.C. Ltd. (“975 B.C.”), and Bayshore Minerals Incorporated (“Bayshore”), under which 975 B.C. amalgamated with Bayshore and Bayshore became a wholly owned subsidiary of the Company. For accounting purposes, the amalgamation and acquisition constituted a reverse takeover (“RTO”) whereby Bayshore is identified as the acquirer of GMTN.

GMTN is a mineral exploration and development company and is focused on the exploration and development of gold properties.

The registered head office and principal address of the Company is 1285 West Pender Street, Suite 1000, Vancouver, British Columbia, Canada, V6E 4B1.

Since March 2020, several measures have been implemented in Canada and the rest of the world in response to the increased impact from novel coronavirus (“COVID-19”). The impact of COVID-19 is expected to be long term, and the effects on business operations cannot be reasonably estimated at this time. The Company anticipates this could have an adverse impact on its business, results of operations, financial position, and cash flows in future periods.

2. Significant accounting policies and basis of preparation

These condensed interim consolidated financial statements were authorized for issue by the directors of the Company on September 29, 2021.

Statement of compliance with International Financial Reporting Standards

These condensed interim consolidated financial statements have been prepared under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) in accordance with IAS 34, Interim Financial Reporting, using accounting policies consistent with those accounting policies followed by the Company in the most recent audited annual consolidated financial statements. These unaudited condensed interim consolidated financial statements do not include all of the information required for annual audited consolidated financial statements and should be read in conjunction with the annual audited consolidated financial statements of the Company for the year ended January 31, 2021.

These condensed interim consolidated financial statements have been prepared using the historical cost basis. The condensed interim consolidated financial statements are presented in Canadian dollars unless otherwise specified.

2. Significant accounting policies and basis of preparation (continued)

New accounting policies adopted in the reporting period

Property and equipment

Other equipment

Items of equipment are initially recognized at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items. All items of equipment are subsequently carried at depreciated cost less impairment loss, if any.

Depreciation is provided on all items of equipment to write off the carrying value of items over their expected useful economic lives. It is applied using the straight-line method using the following useful lives:

Asset category Useful life (years) Field equipment Computer equipment Vehicles

Material residual value estimates and estimates of useful life are updated as required, but at least annually.

Mine construction work-in-progress and mineral property

Costs recorded for assets under construction are capitalized as mine construction work-in-progress. On completion, the cost of construction is transferred to the appropriate category of plant and equipment. No deprecation or depletion is recorded until the assets are substantially complete and available for their intended use.

On the commencement of commercial production, depletion of mineral property will be provided for on a unit-of-production basis using the estimated mineral resources as the depletion base.

Reclamation provision

The Company records a reclamation provision from the legal and constructive obligations to restore exploration, development and mining operations in the period in which the obligation is incurred. When the liability is initially recognized the present value of the estimated costs is capitalized by increasing the carrying amount of the related mineral property asset. The provision is reviewed at each reporting date and all changes to the liability, including changes in discount rate, are recorded as a change to the mineral property asset to which it relates. Over time the discount is unwound through accretion expenses in the statement of comprehensive loss.

Flow-through units

The Company may, from time to time, issue flow-through common shares or units to finance a portion of its Canadian exploration programs. Pursuant to the terms of the flow-through share agreements and the Income Tax Act (Canada) (the “ITA”), these equity instruments transfer the tax deductibility of qualifying resource expenditures to investors.

Upon the issuance of a flow-through share, the Company bifurcates the flow-through share into i) fair value of capital stock issued, based on market price at time of issuance, and ii) the residual as a flow-through share premium, which is recognized as a liability.

2. Significant accounting policies and basis of preparation (continued)

New accounting policies adopted in the reporting period (continued)

Flow-through units (continued)

If a flow-through unit is issued concurrently with the regular unit, the flow-through premium is calculated as the difference in prices of these units.

Upon incurring qualifying expenses, the Company derecognizes the flow-through share premium liability and recognizes a credit to recovery of flow-through share premium. Proceeds received from the issuance of flow-through shares are to be used for Canadian resource property exploration expenditures within a certain time period as prescribed by the Government of Canada’s flow-through regulations, as contained in the ITA. The portion of the proceeds received but not yet expended at the end of the Company’s relevant reporting period is disclosed separately in the notes to the condensed interim consolidated financial statements as flow-through expenditure commitments. The Company is also subject to Part XII.6 of the ITA, which imposes a tax on flow-through proceeds renounced under the “Look-back Rule”, in accordance with the Government of Canada’s flow-through regulations. When applicable, this tax is accrued until paid.

New IFRS pronouncements

Amendments to IAS 16 – Property, plant and equipment: Proceeds before intended use

In May 2020, the International Accounting Standards Board issued amendments to IAS 16, Property, Plant and Equipment (IAS 16). The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related costs in profit (loss). An entity is required to apply these amendments for annual reporting periods beginning on or after January 1, 2022. The amendments are applied retrospectively only to items of property, plant and equipment that are available for use after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. The Company adopted the amendments in the current quarter. There was no impact of this amendment on the consolidated financial statements as no incidental revenues were generated in the three- and six-month periods ended July 31, 2021. The Company anticipates an impact in the third quarter of the current fiscal year as production is forecast to commence then.

Amendments to IAS 12 – Income Taxes

In May 2021, the IASB issued amendments to IAS 12, Income Taxes (IAS 12). The amendments will require companies to recognize deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. The proposed amendments will typically apply to transactions such as leases for the lessee and decommissioning and restoration obligations related to assets in operation. An entity is required to apply these amendments for annual reporting periods beginning on or after January 1, 2023. Early application is permitted. The amendments are applied to transactions that occur on or after the beginning of the earliest comparative period presented. The Company does not expect these amendments to have a material effect on it consolidated financial statements.

3. Management judgments and key sources of estimation uncertainty

Significant accounting judgments, estimates and assumptions

The preparation of condensed interim consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and the reported revenues and expenses during this period.

Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

The most significant accounts that require estimates as the basis for determining the stated amounts include the recoverability of evaluation and exploration assets and share-based payments.

Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the condensed interim consolidated financial statements is the application of the Company’s accounting policy for exploration and evaluation assets, which requires judgement in the following areas:

a) Determination of whether any impairment indicators exist at each reporting date giving consideration to factors such as mining title expiration dates, budgeted expenditures on the project, discontinuation of activities in any area and evaluation of any data which would indicate that the carrying amount of exploration and evaluation assets is not recoverable; and

b) Assessing when the commercial viability and technical feasibility of the project has been determined, at which point the asset is reclassified to mineral properties.

Determination of technical feasibility and commercial viability of the Elk Gold Property

The application of the Company’s accounting policy for mineral property development costs requires judgment to determine when technical feasibility and commercial viability of the Elk Gold Property was demonstrable. The Company considered the positive National Instrument (“NI”) 43-101 compliant Preliminary Economic Assessment, the receipt of key environmental mine permits and the completion of the financing to fund development as key indicators confirming that technical feasibility and commercial viability of the Elk Gold Property had been established. Accordingly, effective June 1, 2021, the Company commenced capitalization of all direct costs related to the development of the Elk Gold Property, and reclassified capitalized costs from exploration and evaluation assets to property and equipment, and tested for impairment. No impairment was recognized after management concluded that the forecast discounted cash flows valuation of the Elk Gold Property, based on the NI 43-101 compliant Preliminary Economic Assessment, exceeded the carrying value of the project of $12.3 million as at the date of the final investment decision.

4. Receivables

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5. Prepaid expenses and deposits

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6. Property and equipment

		Mine
		construction -
		work-in-		Mineral			Other
		progress		property			equipment		Total
Cost
Balance January 31, 2021	$	-	$		-	$	111,278	$	111,278
Additions		660,780			-		73,582		734,362
Transfer from exploration and evaluation asset		-		12,288,108			-		12,288,108
Reclamation costs		-		41,027			-		41,027
Balance July 31, 2021	$	660,780	$	12,329,135		$	184,860	$	13,174,775
Accumulated depreciation
Balance January 31, 2021	$	-	$		-	$	38,020	$	38,020
Depreciation		-			-		11,266		11,266
Balance July 31, 2021	$	-	$		-	$	49,286	$	49,286
Net book value
Balance January 31, 2021	$	-	$		-	$	73,258	$	73,258
Balance July 31, 2021	$	660,780	$	12,329,135		$	135,574	$	13,125,489

6. Property and equipment (continued)

Effective June 1, 2021, the Company commenced capitalization of all direct costs related to the development of the Elk Gold Property, as management determined that the technical feasibility and commercial viability of the project had been established. Accordingly, the Company reclassified capitalized costs associated with the Elk Gold Property from exploration and evaluation asset (Note 7) to mineral property within property and equipment. Capitalized mineral property costs will be carried at cost until the Elk Gold Property is placed in commercial production, sold, abandoned, or determined by management to be impaired in value. Costs related to development work are capitalized in property and equipment as mine construction work-in-progress.

The Company incurred $660,780 on mine development activities in the six-month period ended July 31, 2021.

During the six-month period ended July 31, 2021, other equipment additions comprised of a truck and computer equipment acquired by the Company for an aggregate amount of $73,582.

7. Exploration and evaluation asset

Elk Gold Property

On May 16, 2019, pursuant to the acquisition of Elk Mining and GMRC, the Company acquired the Elk Gold Property in British Columbia, Canada from Equinox Gold Corp. (“Equinox”) for total consideration of $10,000,000 as follows:

Cash of $1,000,000 paid at the closing date; and
A secured promissory note for $9,000,000 payable in annual installments of $3,000,000 commencing two years from closing (Note 11).

The Elk Gold Property is located near Merritt, British Columbia, Canada within the Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease. Production from the Elk Gold Property is subject to a 2% net smelter return royalty. A further 1% net smelter return royalty is payable on production from the Agur Option block which is outside of any of the identified mineralized zones.

7. Exploration and evaluation asset (continued)

The following table summarizes the cumulative costs capitalized as exploration and evaluation assets at July 31, 2021 and January 31, 2021 by their nature:

	Six Months	Twelve Months
	Ended	Ended
Elk Gold Property	July 31, 2021	January 31, 2021
Property acquisition costs
Balance, beginning	$ 6,248,405	$ 6,248,405
Transfer to property and equipment	(6,248,405)	-
Property acquisition costs, ending	-	6,248,405
Exploration and evaluation costs
Balance, beginning	3,633,154	793,539
Costs incurred during the period:
Aircraft	27,083	-
Assaying	225,896	48,676
Camp operations	256,759	47,854
Consulting	423,959	121,906
Drilling	1,255,974	585,088
Depreciation	11,128	22,255
Environmental	338,155	1,183,480
Geological	660,210	376,071
Maintenance	357,647	426,541
Share-based payments	376,927	-
Travel and accommodation	28,337	26,595
	3,962,075	2,838,466
Other Items:
Exploration tax credits	-	(58,851)
Transfer to property and equipment	(6,039,703)	60,000
Exploration and evaluation costs, ending	1,555,526	3,633,154
Total	$1,555,526	$9,881,559

The share-based payments of $376,927 were reclassified to mineral property under property and equipment.

8. Reclamation deposits

The Company has posted bonds and investment certificates to provide for certain potential reclamation liabilities as agreed with the Province of British Columbia – Ministry of Energy, Mines and Low Carbon Innovation (formerly Ministry of Energy, Mines and Petroleum Resources).

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9. Accounts payable and accrued liabilities

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10. Short-term loans

On April 30, 2020, the Company received a loan in the amount of $50,000 from K2 Solutions Ltd, an arm’slength company. The loan is unsecured, bears interest at 5% per annum and is due on December 31, 2021. During the three and six-month periods ended July 31, 2021, the Company recorded $782 and $1,490, respectively (three and six-month periods ended July 31, 2020 - $640) in interest on the loan. The balance of the loan at July 31, 2021 is $53,420 (January 31, 2021 - $51,930).

On May 1, 2020, the Company received a loan in the amount of $25,000 from K2 Solutions Ltd. The loan is unsecured, non-interest bearing and has no specified terms of repayment. The balance of the loan at July 31, 2021 is $25,000 (January 31, 2021 - $25,000).

11. Promissory note

On May 16, 2019, the Company entered into a secured promissory note agreement with Equinox in the amount of $9,000,000 with respect to the purchase of 100% of the common shares of Elk Mining, which is the owner of the Elk Gold Property and its subsidiary GMRC. The fair value of the promissory note was $5,527,813, calculated by discounting the future cash payments at a market rate of interest of 18%.

During the three and six-month periods ended July 31, 2021, interest of $219,011 and $519,327, respectively was recorded in the condensed interim consolidated statements of loss and comprehensive loss (three and six-month periods ended July 31, 2020 - $274,550 and $532,055, respectively).

At July 31, 2021, the promissory note is made up as follows:

	July 31, 2021	January 31, 2021
Current portion	$ 2,631,532	$ 2,860,506
Longtermportion	2,219,319	4,471,018
	$ 4,850,851	$ 7,331,524

The promissory note is non-interest bearing. In the event of default, the outstanding amount shall bear interest at a rate of 10% per annum, payable monthly from the date of default until the earlier of (i) the date of repayment; or (ii) the date of default is cured. The promissory note is a direct first ranking secured obligation of the Company in priority to all current and future debt and other liabilities of the Company and in priority to all equity securities of the Company of any nature whatsoever. If the Company defaults on the payment of the promissory note, Equinox may take possession of the Elk Mining common shares.

11. Promissory note (continued)

The principal is payable as follows:

$3,000,000 shall be payable on the second anniversary date of the promissory note (“First Installment Date”). Paid on May 17, 2021;
$3,000,000 shall be payable on the third anniversary date of the promissory note (“Second Installment Date”). Due on May 16, 2022; and
$3,000,000 shall be payable on the fourth anniversary date of the promissory note. Due on May 16, 2023.

If the Company pays $5,500,000 on the Second Installment Date, said payment shall represent full and final payment of the principal.

12. Flow-through share premium liability

For the purpose of calculating any premium related to the issuance of flow-through shares, the Company compares the fair value of its shares to the subscription price of the flow-through shares to determine if there was a premium paid on the flow-through shares. As a result, the Company’s flow-through liability on issuance of flow-through shares in connection with private placement is as follows:

	July 31, 2021
Balance, beginning	$ -
Liability incurred on flow-through shares issued	278,555
Settlement of flow-through share premium liability upon incurring qualifying expenses	(76,173)
Balance, ending	$ 202,382

During the six-month period ended July 31, 2021, the Company incurred a total of $837,898 (six-month period ended July 31, 2020 - $Nil) qualifying flow-through expenditures on the Elk Gold Property. The Company derecognized the associated flow-through share premium liability and recognized a deferred income tax recovery of flow-through share premium of $76,173 (six-month period ended July 31, 2020 - $Nil)

As at July 31, 2021, the Company is committed to spending approximately $2,226,202 of qualifying expenditures in connection with its flow-through offerings (January 31, 2021 - $Nil).

13. Share capital

Authorized share capital

An unlimited number of common shares and preferred shares without par value.

13. Share capital (continued)

Issued share capital

At July 31, 2021, there were 69,070,432 issued and fully paid common shares outstanding (January 31, 2021 – 49,069,852).

On February 23, 2021, the Company closed its brokered private placement by issuing 10,310,000 units at a price of $0.97 per unit. Each unit consists of one common share of the Company and one-half of a share purchase warrant. Each full warrant is exercisable for one common share of the Company for a price of $1.25 for a period of three years following the closing of the private placement. Further, a broker commission of $262,507 in cash and 270,626 warrants with a fair value of $243,779 were paid. Each brokers’ warrant is exercisable for one common share of the Company for a price of $0.97 for a period of two years. Share issuance costs of $562,587 in connection with the private placement were allocated to share capital.
On March 24, 2021, 230,000 bonus shares were issued to officers of the Company with a fair value of $289,800 included in the condensed interim consolidated statement of loss and comprehensive loss (Note 14).
On June 24, 2021, the Company closed its bought deal private placement by issuing a total of 4,255,190 units (the “HD Units”) at a price of $2.10 per HD Unit and 1,326,450 flow-through units (the “FT Units”) at a price of $2.31 per FT Unit, for total gross proceeds of $11,999,999. Each FT Unit consists of one common share of the Company and one-half of one common share purchase warrant where each common share entitles the holder to a renunciation of qualifying expenditures incurred by the Company in respect of the Elk Gold Property. Each HD Unit consists of one common share of the Company and one-half of one common share purchase warrant. Each HD Unit and FT Unit warrant will entitle the holder thereof to purchase one common share of the Company at an exercise price of $3.15 for a period of two years following the closing date of the private placement. Further, a broker commission of $690,000 in cash and 320,612 warrants with a fair value of $283,348 were paid. Each brokers’ warrant is exercisable for one common share of the Company for a price of $2.10 for a period of two years. Share issuance costs of $999,840 in connection with the private placement were allocated to share capital. The Company recorded a flow-through share premium liability of $278,555 related to the value of flow-through component.
During the six-month period ended July 31, 2021, 567,500 of vested Restricted Share Units (“RSUs”) with a fair value of $1,125,014 and 815,000 Performance Share Units (“PSUs”) with a fair value of $1,145,032 were converted to common shares (Note 13).

Warrants

In connection with the February 23, 2021 private placement, 5,154,999 warrants were issued. Each warrant gives the holder the right to acquire one common share of the Company at a price of $1.25 for a term of three years. Proceeds from the private placement were allocated between warrants and common shares based on the relative fair value method and the warrants were valued at $2,973,499 using the BlackScholes option pricing model with the following assumptions: risk-free rate of 0.40%, volatility of 167%, dividends of $Nil, and expected life of 3 years.

13. Share capital (continued)

Warrants (continued)

In connection with the June 24, 2021 private placement, 2,790,820 warrants were issued. Each warrant gives the holder the right to acquire one common share of the Company at a price of $3.15 for a term of two years. Proceeds from the private placement were allocated between warrants and common shares based on the relative fair value method and the warrants were valued at $1,477,427 using the BlackScholes option pricing model with the following assumptions: risk-free rate of 0.43%, volatility of 73%, dividends of $Nil, and expected life of 2 years.

During the six-month period ended July 31, 2021, 2,109,409 warrants were exercised for gross proceeds of $2,405,200.

The changes in warrants during the six-month period ended July 31, 2021 are as follows:

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Warrants outstanding as at July 31, 2021 are as follows:

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Share-based compensation

The Company has adopted a new equity incentive compensation plan (“New Plan”) which provides for the granting of options which equal a maximum of 10% of the Company’s issued and outstanding common shares at any given time. The New Plan also provides for the issuance of up to 4,800,000 fixed share awards which include Deferred Share Units (“DSUs”), RSUs and PSUs.

13. Share capital (continued)

Share-based compensation (continued)

(i) Stock options

The changes in stock options during the six-month period ended July 31, 2021 are as follows:

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Stock options outstanding and exercisable at July 31, 2021 are as follows:

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The average remaining life of the options is 3.77 years as at July 31, 2021.

On April 9, 2021, the Company granted 310,000 stock options with an exercise price of $1.20 per common share, vesting 25% per quarter beginning April 30, 2021 and expiring on April 9, 2026 with a fair value of $418,649 calculated using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 0.92%, volatility of 162%, dividends of $Nil, and expected life of 5 years.

During the three and six-month periods ended July 31, 2021, the Company recorded share-based payments of $480,275 and $943,902, respectively, related to the stock options granted and vested during the period (three and six-month periods ended July 31, 2020 – $169,218 and $726,500, respectively).

During the six-month period ended July 31, 2021, 386,531 stock options were exercised for gross proceeds of $307,860.

13. Share capital (continued)

Share-based compensation (continued)

(ii) Restricted Share Units (RSUs) and Performance Share Units (PSUs)

The Company intends to settle RSUs and PSUs in equity and each may be granted to directors, consultants, officers and employees of the Company. Share-based payment expense is recognized based on the share price of the Company’s common shares on the grant date multiplied by the number of RSUs and PSUs expected to vest and recognized ratably over the vesting period, with a corresponding credit to the contributed surplus. Adjustments to the number of RSUs and PSUs expected to vest are recognized in the current period. Share-based payments of $2,253,342 and $3,355,370 were recorded for RSUs and PSUs vested during the three and six-month periods ended July 31, 2021, respectively (three and six-month periods ended July 31, 2020 - $Nil), of which $2,007,416 and $2,814,493, respectively were recorded as share-based payment expense, $81,976 and $376,927, respectively were capitalized to mineral property (three and six-month periods ended July 31, 2020 - $Nil), and $163,950 was capitalized to mine construction work-in-progress (three and six-month periods ended July 31, 2020 - $Nil).

The continuity of RSUs and PSUs for the six-month period ended July 31, 2021 is as follows:

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14. Related party transactions

Balances

The following amounts due to related parties are unpaid director and consulting fees included in trade payables and accrued liabilities (Note 9). These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

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14. Related party transactions (continued)

Transactions

The Company has identified the CEO, President, CFO, COO, General Counsel & Corporate Secretary and the Company’s directors as its key management personnel. During the three and six-month periods ended July 31, 2021 and 2020, the following amounts were incurred for directors and officers of the Company:

	Three Months Ended July 31, 2021 Three Months Ended July 31, 2020 Six Months Ended July 31, 2021 Six Months Ended July 31, 2020
Management, director and consulting fees(1)	$ 217,625 $ 6,000 $ 726,091 $ 12,217 966,596 25,441 2,155,376 225,064
Share-based payments(2)
	$1,184,221 $31,441 $2,881,467 $237,281

(1) Included in management, director and consulting fees disclosed above are fees capitalized to mineral property under property and equipment. For the three and six-month periods ended July 31, 2021, the Company recorded $38,750 and $136,423 of capitalized management, director and consulting fees respectively (Note 6) (three and six-month periods ended July 31, 2020 - $Nil).
(2) Included in share-based payments disclosed above are payments capitalized to mineral property and mine construction work-in-progress under property and equipment. For the three and six-month periods ended July 31, 2021, the Company recorded capitalized share-based payments of $81,976 and $376,927, respectively, to mineral property, and $163,950 to mine construction work-in-progress (Note 6) (three and six-month periods ended July 31, 2020 - $Nil).

Included in the management, director and consulting fees for the six-month period ended July 31, 2021 was 230,000 bonus shares issued to officers of the Company with a fair value of $289,800 (Note 13).

During the six-month period ended July 31, 2021, the Company converted 116,250 of vested RSUs and 815,000 of vested PSUs and issued them to the directors and officers of the Company (Note 13).

15. Capital management

The Company defines its capital as both debt and shareholders’ equity. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration and development of mineral properties.

The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of management to sustain future development of the business. As such, the Company expects to rely on the equity markets to fund its activities. In addition, the Company is dependent upon external financings to fund activities.

In order to carry out planned exploration and development activities and pay for administrative costs, the Company will need to raise additional funds. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

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

16. Financial instruments

The following table summarizes the classification of the Company’s financial instruments under IFRS 9:

Financial Asset/Liability	IFRS 9 Classification
Cash	Amortized cost
Receivables excluding GST receivables	Amortized cost
Reclamation deposits	Amortized cost
Accounts payable and accrued liabilities	Amortized cost
Short-term loans	Amortized cost
Promissorynote	Amortized cost

The carrying values of cash, receivables, excluding GST receivables, accounts payable and accrued liabilities and short-term loans approximate their fair value because of the relatively short-term nature of the instruments and are measured and reported at amortized cost. The promissory note and reclamation deposits are measured and reported at amortized cost using the effective interest rate method. These estimates are subjective and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumption could significantly affect the estimates.

There are three levels of the fair value hierarchy as follows:

Level 1: Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.
Level 3: Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is summarized as follows:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash held in bank accounts. The majority of cash is deposited in bank accounts at a major bank in Canada. As most of the Company’s cash is held by one bank there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company aims to have sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from its ability to raise equity capital or borrowing sufficient funds and its holdings of cash.

16. Financial instruments (continued)

Historically, the Company’s principal source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to necessary levels of equity funding.

The following table sets forth details of the payment profile of financial liabilities based on their undiscounted cash flows:

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Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risks.

Foreign exchange risk

The Company’s functional and reporting currency is the Canadian dollar and major purchases are transacted in Canadian dollars. As a result, the Company’s exposure to foreign currency risk is minimal.

17. Commitments

On January 26, 2021, the Company entered into an Ore Purchase Agreement (“OPA”) with New Gold Inc. (“New Gold”) for a three-year term. Under the terms of the OPA, GMTN will deliver 70,000 tonnes of ore per annum, approximately 200 tonnes per day, to the mill located at New Gold’s New Afton Mine situated 130km from the Elk Gold Property, in Kamloops British Columbia.

The OPA is effective upon the first delivery of ore to the New Afton Mine. Prior to the first delivery of ore, the parties must settle on a sampling procedure for tracking the tonnes and grade delivered, GMTN must receive the Joint Permit Amendment Application and New Gold must obtain a permit amendment to allow for the processing to occur.

18. Events after reporting period

Share capital transactions

a) On August 1, 2021, 325,000 stock options were granted to contractors at an exercise price of $2.00 with an expiration of August 1, 2023.
b) On August 3, 2021, 50,000 PSUs were converted into common shares.
c) Subsequent to July 31, 2021, 221,151 warrants were exercised for gross proceeds of $238,236.

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Gold Mountain Mining Corp. — Interim / Quarterly Report 2022

47810_rns_2021-09-29_a81661d9-d819-481e-825b-83584abd3ce8.pdf

(Expressed in Canadian Dollars)

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Financial Position As of July 31, 2021 and January 31, 2021 (Unaudited - Expressed in Canadian Dollars)

1. Nature of operations

2. Significant accounting policies and basis of preparation

Statement of compliance with International Financial Reporting Standards

2. Significant accounting policies and basis of preparation (continued)

New accounting policies adopted in the reporting period

Property and equipment

Mine construction work-in-progress and mineral property

Reclamation provision

Flow-through units

2. Significant accounting policies and basis of preparation (continued)

New accounting policies adopted in the reporting period (continued)

Flow-through units (continued)

New IFRS pronouncements

Amendments to IAS 16 – Property, plant and equipment: Proceeds before intended use

Amendments to IAS 12 – Income Taxes

3. Management judgments and key sources of estimation uncertainty

4. Receivables

5. Prepaid expenses and deposits

6. Property and equipment

6. Property and equipment (continued)

7. Exploration and evaluation asset

Elk Gold Property

7. Exploration and evaluation asset (continued)

8. Reclamation deposits

9. Accounts payable and accrued liabilities

10. Short-term loans

11. Promissory note

11. Promissory note (continued)

12. Flow-through share premium liability

13. Share capital

Authorized share capital

13. Share capital (continued)

Issued share capital

Warrants

13. Share capital (continued)

Share-based compensation

13. Share capital (continued)

Share-based compensation (continued)

(i) Stock options

13. Share capital (continued)

Share-based compensation (continued)

(ii) Restricted Share Units (RSUs) and Performance Share Units (PSUs)

14. Related party transactions

Balances

14. Related party transactions (continued)

Transactions

15. Capital management

16. Financial instruments

Credit risk

Liquidity risk

16. Financial instruments (continued)

Interest rate risk

Foreign exchange risk

17. Commitments

18. Events after reporting period

Share capital transactions

More from Gold Mountain Mining Corp.

Gold Mountain Mining Corp. Interim / Quarterly Report 2022