Libertystream Infrastructure Partners — Interim / Quarterly Report 2021

May 11, 2021

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Consolidated Financial Statements (Expressed in thousands of United States dollars)

AFRICA ENERGY CORP.

For the three months ended March 31, 2021 and 2020

AFRICA ENERGY CORP.

Consolidated Balance Sheets (Expressed in thousands of United States dollars) (Unaudited)

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March 31, December 31,
2021 2020
ASSETS Note
Current assets
Cash and cash equivalents $ 13,864 $ 19,643
Accounts receivable 198 151
Prepaid expenses 105 195
14,167 19,989
Long-term assets
Investment in associate 3, 4 1,633 1,638
Financial asset 3 218,997 215,197
Property and equipment 5 33 42
Intangible exploration assets 6 7,338 7,168
228,001 224,045
Total assets $ 242,168 $ 244,034
LIABILITIES AND EQUITY ATTRIBUTABLE TO COMMON SHAREHOLDERS
Current liabilities
Accounts payable and accrued liabilities $ 2,130 $ 1,777
Lease obligations 14 12 19
2,142 1,796
Total liabilities 2,142 1,796
Equity attributable to common shareholders
Share capital 7 357,905 357,905
Contributed surplus 8 6,974 6,820
Deficit (124,853) (122,487)
Total equity attributable to common shareholders 240,026 242,238
Total liabilities and equity attributable to common shareholders $ 242,168 $ 244,034
Commitments and contingencies 13
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The notes are an integral part of the consolidated interim financial statements.

Approved on behalf of the Board:

“IAN GIBBS”

_________ IAN GIBBS, DIRECTOR

“ADAM LUNDIN”

_____ ADAM LUNDIN, CHAIRMAN

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AFRICA ENERGY CORP.

Consolidated Statements of Net Loss and Comprehensive Loss (Expressed in thousands of United States dollars) (Unaudited)

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For the three months ended March 31, March 31,
2021 2020
Note
Operating expenses
Salaries and benefits $ 1,709 $ 1,023
Stock-based compensation 8 154 574
Travel - 24
Consulting fees 10 102 57
Office and general 59 38
Depreciation 5 9 9
Professional fees 188 77
Stock exchange and filing fees 148 68
Share of (income)/loss from equity investments 3 5 (14)
2,374 1,856
Finance expense 9 3 195
Finance income 9 (11) (60)
Net loss and comprehensive loss attributable to
common shareholders (2,366) (1,991)
Net loss per share 11
Basic $ (0.00) $ (0.00)
Diluted $ (0.00) $ (0.00)
Weighted average number of shares outstanding for
the purpose of calculating earnings per share 11
Basic 1,395,333,039 749,014,694
Diluted 1,395,333,039 749,014,694
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The notes are an integral part of the consolidated interim financial statements.

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AFRICA ENERGY CORP.

Consolidated Statements of Equity Attributable to Common Shareholders (Expressed in thousands of United States dollars) (Unaudited)

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March 31, March 31,
2021 2020
Note
Share capital: 7(b)
Balance, beginning of the period $ 357,905 $ 152,649
-
Private placement, net of issue costs 23,959
Exercise of options - 110
Balance, end of the period 357,905 176,718
Contributed surplus: 8
Balance, beginning of the period $ 6,820 $ 7,019
-
Excercise of options (44)
Stock-based compensation 154 574
Balance, end of the period 6,974 7,549
Deficit:
Balance, beginning of the period $ (122,487) $ (118,224)
Net loss for the period (2,366) (1,991)
Balance, end of the period (124,853) (120,215)
Equity attributable to common shareholders $ 240,026 $ 64,052
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The notes are an integral part of the consolidated interim financial statements.

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AFRICA ENERGY CORP.

Consolidated Statements of Cash Flows (Expressed in thousands of United States dollars) (Unaudited)

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For the three months ended March 31, March 31,
2021 2020
Cash flows provided by (used in): Note
Operations:
Net loss for the year $ (2,366) $ (1,991)
Items not affecting cash:
Stock-based compensation 8 154 574
Depreciation 5 9 9
Interest on lease obligations 14 1 1
Share of loss / (income) from equity investments 3 5 (14)
Unrealized foreign exchange loss 3 195
Changes in non-cash operating working capital 15 333 (120)
Net cash used in operating activities (1,861) (1,346)
Investing:
Intangible exploration expenditures 6 (170) (27)
Investment in Main Street 1549 Class B shares 3 (3,800) -
Changes in non-cash investing working capital 15 63 1,425
Net cash (used in) / provided by investing activities (3,907) 1,398
Financing:
-
Common shares issued on private placement 7(b) 25,066
Share issuance costs 7(b) - (1,041)
Payment of lease obligations 14 (10) (9)
Net cash (used in) / provided by financing activities (10) 24,016
Effect of exchange rate changes on cash and
cash equivalents denominated in foreign currency (1) (195)
(Decrease) / increase in cash and cash equivalents (5,779) 23,873
Cash and cash equivalents, beginning of the period $ 19,643 $ 2,408
Cash and cash equivalents, end of the period $ 13,864 $ 26,281
Supplementary information:
Interest paid Nil Nil
Taxes paid Nil Nil
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The notes are an integral part of the consolidated interim financial statements.

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

1) Incorporation and nature of business:

Africa Energy Corp. (collectively with its subsidiaries, “Africa Energy” or the “Company”) was incorporated under the Business Corporations Act (Alberta) on April 27, 2010 and is an international oil and gas exploration company based in Canada. The Company was continued into the Province of British Columbia under the Business Corporations Act (British Columbia) in 2011 following the acquisition from Africa Oil Corp. (“AOC”) of all the issued and outstanding shares of the subsidiaries holding AOC’s interests in certain oil and gas projects. The Company’s registered address is Suite 2500, 666 Burrard Street, Vancouver, BC, V6C 2X8.

Africa Energy is, an exploration-stage enterprise that currently has no proved reserves and, owns the following interest in exploration assets:

• 49% of the common shares and 100% of the Class B shares in Main Street 1549 Proprietary Limited (“Main Street 1549”), which has a 10% participating interest in the Exploration Right for Block 11B/12B offshore the Republic of South Africa (“Block 11B/12B”);

• a 27.5% participating interest in the Exploration Right for Block 2B offshore the Republic of South Africa (“Block 2B”) as a result of farmout agreements completed subsequent to the end of the period, see Note 6 and Note 16; and

• one-third of the shares in a wholly-owned subsidiary of Pancontinental Oil and Gas N.L. (“Pancontinental”) that currently holds a 43.85% participating interest in Petroleum Exploration License 37 offshore the Republic of Namibia (“PEL 37”).

Oil and gas exploration, development and production activities in emerging markets are subject to significant uncertainties that may adversely affect the Company’s operations. Uncertainties include, but are not limited to, the risk of war, terrorism, civil unrest, expropriation, nationalization or other title dispute challenges, renegotiation or nullification of existing or future concessions and contracts, the imposition of international sanctions, a change in crude oil or natural gas pricing policies, a change to laws and regulations, a change in taxation policies, the imposition of currency controls, and health pandemics, in addition to the risks associated with exploration activities and dependence on partners and shared ownership. These uncertainties, all of which are beyond the Company’s control, could have a material adverse effect on Africa Energy’s business, prospects and results of operations. In addition, if legal disputes arise related to oil and gas concessions acquired by the Company, Africa Energy could be subject to the jurisdiction of courts other than those of Canada. The Company’s recourse may be very limited in the event of a breach by a government or government authority of an agreement governing a concession in which Africa Energy has or may acquire an interest. The Company may require licenses or permits from various governmental authorities to carry out future exploration, development and production activities. There can be no assurance that Africa Energy will be able to obtain all necessary licenses and permits when required .

2) Basis of preparation:

• a) Statement of compliance:

The Company prepares these condensed consolidated interim financial statements in accordance with Canadian generally accepted accounting principles, specifically International Accounting Standard 34 Interim Financial Reporting as issued by the International Accounting Standards Board (“IASB”). They are condensed as they do not include all the information required for full annual financial statements, and they should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020. The

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Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

AFRICA ENERGY CORP.

policies applied in these condensed consolidated financial statements are based on International Financial Reporting Standards (“IFRS”) issued and outstanding as at May 10, 2021, the date the Board of Directors approved the statements.

• b) Basis of measurement:

The consolidated financial statements have been prepared on the historical cost basis. Where there are assets and liabilities calculated on a different basis, this fact is disclosed in the Company’s consolidated financial statements for the year ended December 31, 2020. Those accounting policies have been applied consistently to all periods presented in these consolidated financial statements.

c) Functional and presentation currency:

These consolidated financial statements are presented in United States (US) dollars. The functional currency of all the Company’s individual entities is US dollars, which represents the currency of the primary economic environment in which the entities operate.

• d) Use of estimates and judgments:

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected.

Information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are noted below with further details of the assumptions contained in the relevant note.

All other significant estimates and judgment used in the preparation of these consolidated financial statements are described in the Company’s consolidated financial statements for the year ended December 31, 2020.

3) Investment in Main Street 1549:

Financial Asset:

Financial Asset:
	March 31,	December 31,
	2021	2020
Balance, beginning of the period	215,197 $	- $
Amounts transferred from equity investment in Main Street 1549	-	215,197
Fund contributed to Main Street 1549 through subscription of Class B Shares	3,800
Balance, end of the period	218,997 $	215,197 $

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

Equity Investment:

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March 31, December 31,
2021 2020
Balance, beginning of the period $ 1,638 $ 32,255
Funds contributed to Main Street 1549 through loans - 2,146
Funds contributed to Main Street 1549 through subscription for Class B Shares - 31,164
Common shares issued by the Impact Subscription Agreement - 151,292
Derecognition of investment in joint venture - (215,197)
Share of loss from equity investment (5) (22)
Balance, end of the period $ 1,633 $ 1,638
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At March 31, 2021, Africa Energy holds 49% of the common shares and 100% of the Class B Shares of Main Street 1549, a private South African entity. The remaining 51% of the common shares of Main Street 1549 are held by Arostyle Investments (RF) (Proprietary) Limited (“Arostyle”). Main Street 1549 holds a 10% participating interest in the Exploration Right for Block 11B/12B offshore the Republic of South Africa (“Block 11B/12B Participating Interest”).

At March 31, 2021, the Company accounted for its investment in Main Street 1549 as follows: $219.0 million as a financial asset and $1.6 million as an equity investment. Prior to the completion of the two definitive agreements described below, the Company accounted for the investment in Main Street 1549 solely as an equity investment.

On October 22, 2020, the Company completed two definitive agreements, that allow Africa Energy to increase its effective interest in Block 11B/12B offshore South Africa from 4.9% to 10%.

In accordance with the definitive agreement entered into with Impact Oil & Gas Limited (“Impact”), Africa Energy subscribed for all of the Class B shares of Impact Oil & Gas SA Blocks 11B-12B Limited (“Impact 11B/12B”) and thereby obtained 99.9% voting control of Impact 11B/12B, whose sole asset is a loan to Arostyle that provides for an indirect financial interest in Main Street 1549 (“Arostyle Loan Agreement”). In addition, Impact completed a subscription agreement with Africa Energy to subscribe for 509,092,771 common shares of the Company, which completed on November 12, 2020. The common shares issued to Impact were subject to resale restrictions that expired on March 13, 2021.

In accordance with the definitive agreement entered into with Arostyle, amendments to the Main Street 1549 shareholders agreement (“Main Street 1549 SHA”) provide that Africa Energy fund 100% of the obligations of Main Street 1549 by way of Class B share subscriptions, which provide a risk-adjusted return linked to the proceeds on any future sale of Main Street 1549 or the Block 11B/12B Participating Interest. In addition, the amendments to the Main Street 1549 SHA provide that either Africa Energy or Arostyle has the right to trigger the sale of the 10% participating interest in Block 11B/12B to a wholly-owned subsidiary of Africa Energy. The Arostyle Option became exercisable by either party at completion of the Luiperd-1X well for an unlimited period of time and will be subject to receiving all required regulatory approvals and joint venture partner consents and waivers. Exercise of the Arostyle Option would result in Arostyle being issued 64,455,916 Africa Energy shares. The Arostyle Option remains unexercised.

During the three months ended March 31, 2021, the Company invested $3.8 million in Main Street 1549 by way of Class B share subscriptions. During the year ended December 31, 2020, the Company invested $184.6 million in Main Street 1549, consisting of $31.2 million in Main Street 1549 Class B share subscriptions, $2.1 million by way of non-interest bearing advances and $151.3 million representing the issuance of 509,092,771 common shares of Africa Energy in exchange for 100% of the Class B shares of Impact 11B/12B.

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

At completion of the two definitive agreements described above, the Company recognized $215.2 million of the investment in Main Street 1549 as a financial asset. The Main Street 1549 SHA provides priority dividend distribution entitlement by class of share. For accounting purposes, shares that have priority distribution entitlements do not meet the definition of Solely Payments of Principal and Interest (“SPPI”), and therefore the majority of the investment in Main Street 1549 would be derecognized from the equity investment and recorded as a financial instrument at fair value through profit or loss (“FVTPL”).

In order to value the financial asset recognized at FVTPL, the Company estimated the priority dividend distributions to be received by the Company as this represents fair value of future cash flows to be received by Africa Energy in accordance with the amended Main Street 1549 SHA. The total proceeds estimated to be received by Main Street 1549 to be distributed to its shareholders were based on a discounted future cash flow model of the Company’s effective interest in Block 11B/12B. For accounting purposes, the Company used a discount rate of 16.4%, a base gas price of $7.89/mcf and a base Brent oil price of $60/bbl to determine the fair value of the financial asset, which was estimated to be $219.0 million at March 31, 2021 (December 31, 2020, $215.2 million). The value of the remaining, non-priority dividends for common shares to be received by the Company was estimated to be $1.6 million and accounted for as an equity investment.

As at March 31, 2021, a one percent increase in the effective discount rate would have resulted in a reduction of disposal proceeds of $34.6 million. A one percent decrease in the effective discount rate would have resulted in an increase of disposal proceeds of $40.0 million. An increase in the gas price of $1/mcf would result in an increase of disposal proceeds of $38.0 million and a decrease of $1/mcf would result in a decrease of disposal proceeds of $38.7 million. In terms of the actual disposal proceeds used in the model, a $30.0 million increase/decrease in the disposal proceeds would create an after-tax impact of $27.0 million.

In accordance with the farmin agreements entered into in December 2018 with each of Total E&P South Africa BV (“Total”), a wholly-owned subsidiary of Total SA, and CNR International (South Africa) Limited (“CNRI”), a whollyowned subsidiary of Canadian Natural Resources Limited (together, the “Block 11B/12B Farmin Agreements”), Main Street 1549 funded $5.0 million of Total’s and CNRI’s portion of the 3D seismic costs in 2020 and $5.0 million of Total’s and CNRI’s portion of the drilling costs for the Luiperd-1X well due to the discovery at the Brulpadda1AX well in February 2019.

Further, the Block 11B/12B Farmin Agreements require that in the event of a commercial discovery and granting of a production right, Main Street 1549 will be obligated to fund a discovery bonus. If the proposed development is for exploitation of predominantly oil, Main Street 1549 will be obligated to pay Total and CNRI up to $90.0 million depending on the amount of reserves at that time. If the proposed development is for exploitation of gas, Main Street 1549 will be obligated to pay Total and CNRI up to $24.0 million depending on the amount of reserves at that time.

At March 31, 2021, Main Street 1549 has not accrued any material obligations related to the commercial discovery bonus.

The Company recognized losses of $0.005 million for the three months ended March 31, 2021 relating its equity investment in Main Street 1549 (the Company recognized a gain of $0.01 million for the three months ended March 31, 2020).

The Company has determined there are no indicators of impairment in Main Street 1549 at March 31, 2021.

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

The following is a financial summary of Main Street 1549:

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March 31, December 31,
2021 2020
Cash and cash equivalents included in current assets $ 54 $ 50
Other current assets 2,002 2,001
Non-current assets 103,294 102,669
Preferential interest on dividend distributions (1) (101,568) (95,528)
Current liabilities (449) (5,849)
Net assets of Main Street 1549 $ 3,333 $ 3,343
Percentage of ownership 49% 49%
Proportionate share of Main Street 1549's net assets $ 1,633 $ 1,638
For the three months ended March 31, March 31,
2021 2020
Operating expense $ (13) $ (3)
Finance income 2 32
Net (loss)/income and comprehensive (loss)/income $ (11) $ 29
Percentage of ownership 49% 49%
Proportionate share of Main Street 1549's net (loss)/income $ (5) $ 14
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• (1) Included in the financial summary is an adjustment for preferential interest on dividend distributions.

At March 31, 2021, Main Street 1549 had cash of $0.05 million (gross) with working capital of $1.6 million (gross).

4) Investment in Pancontinental Namibia:

The Company owns one-third of the shares of Pancontinental Namibia, which holds a 43.85% participating interest in PEL 37 offshore the Republic of Namibia. The Company’s effective interest in PEL 37 is therefore 14.6%. Pancontinental Namibia is currently seeking an extension to the Second Renewal Exploration Period, which expired on March 27, 2021. The PEL 37 joint venture partnership has fulfilled its obligations of the current exploration period. The Company fully wrote off the value of its investment in Pancontinental Namibia in 2018.

5) Property and equipment:

		March 31,		December 31,
		2021		2020
Cost, beginning of the period	$	233	$	233
Additions		-		-
Cost, end of the period		233		233
Accumulated depreciation, beginning of the period		(191)		(159)
Depreciation		(9)		(32)
Accumulated depreciation, end of the period		(200)		(191)
Net carrying amount, beginning of the period	$	42	$	74
Net carrying amount, end ofthe period	$	33	$	42

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

As at March 31, 2021, the Company has recorded $0.03 million of property and equipment (December 31, 2020 - $0.04 million) consisting primarily of right-of-use assets, which is defined as the lessee's right to use an asset over the life of a lease. The Company depreciates its right-of-use assets over the term of the contract. The Company depreciates its property and equipment, other than right of use assets, on a straight-line basis over the useful life of the assets (one to three years). Included in depreciation is $0.009 million related to the Company’s right-ofuse assets.

6) Intangible exploration assets:

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March 31, December 31,
2021 2020
Net carrying amount, beginning of the period $ 7,168 $ 7,024
Intangible exploration expenditures 170 144
Net carrying amount, end of the period $ 7,338 $ 7,168
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As at March 31, 2020, $7.3 million of exploration expenditures have been capitalized as intangible exploration assets (December 31, 2020, $7.2 million). These expenditures relate to license fees, geological, geophysical and well studies and general and administrative costs related to Block 2B.

On April 19, 2021, the Company completed two farmout agreements whereby the Company transferred an aggregate 62.5% participating interest in the Block 2B Exploration Right. Africa Energy retained a 27.5% participating interest in Block 2B.

Africa Energy farmed-out a 50% participating interest and transferred operatorship in Block 2B to Azinam (the “Azinam Farmout Agreement”). In consideration for the assignment of this interest, Azinam paid Africa Energy $0.8 million at close, which includes reimbursement of costs incurred prior to completion. In addition, Azinam will pay a disproportionate amount of the Gazania-1 exploration well and other joint venture costs on behalf of the Company. To support this obligation, Azinam paid a $1.5 million deposit at close, subsequent to the end of the period and is required to place additional funds in escrow prior to signing a rig contract.

Africa Energy farmed-out a 12.5% participating interest in Block 2B to Panoro. In consideration for the assignment of this interest, subject to Azinam placing the required funds in escrow as noted above, Panoro will pay a disproportionate amount of the Gazania-1 exploration well costs on behalf of the Company.

During the three months ended March 31, 2021, the Company capitalized $0.03 million of general and administrative expenses related to intangible exploration assets (December 31, 2020, $0.06 million).

The Company has determined that as at March 31, 2021, intangible exploration assets are not impaired.

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Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

AFRICA ENERGY CORP.

7) Share capital:

a) The Company is authorized to issue an unlimited number of common shares with no par value.

b) Issued:

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March 31, 2021 December 31, 2020
Note Shares Amount Shares Amount
Balance, beginning of the period 1,395,333,039 $ 357,905 684,216,927 $ 152,649
Exercise of options 8 - - 15,704,167 3,296
- -
Private placement, net of issue costs 186,319,174 50,668
Impact Subscription Agreement 3 - - 509,092,771 151,292
Balance, end of the period 1,395,333,039 $ 357,905 1,395,333,039 $ 357,905
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On February 5, 2020, the Company completed a private placement issuing an aggregate of 104,652,174 common shares at a price of SEK 2.30 (approximately CAD$0.32) per share for gross proceeds of $25.0 million. A broker’s fee of approximately $1.0 million was paid in cash to Pareto Securities AB and SpareBank1 Markets AS.

On September 30, 2020, the Company completed a private placement issuing an aggregate of 81,667,000 common shares at a price of SEK 3.00 (approximately CAD$0.45) per share for gross proceeds of approximately $27.6 million. A broker’s fee of approximately $0.8 million was paid in cash to Pareto Securities AB, Arctic Securities AS and Fearnley Securities AS.

On November 12, 2020, the Company issued 509,092,771 common shares to Impact pursuant to the terms of a subscription agreement between the Company and Impact dated August 24, 2020 (see note 4). The common shares issued to Impact were subject to resale restrictions under Canadian securities laws that expired March 13, 2021. For accounting purposes, the shares issued to Impact were valued at CAD$0.39 per share. Impact owns 36.5% of the common shares of Africa Energy.

No common shares were issued during the three months ending March 31, 2021.

8) Share purchase options:

At the Annual General and Special Meeting held on June 11, 2020, the Company’s shareholders ratified and approved the Company’s stock option plan (the “Plan”). The Plan provides that the aggregate number of incentive stock options issued shall not exceed 10% of the total common shares outstanding, and that the option exercise price will not be below the market trading value of the Company’s shares at the time of grant. The term of any option granted under the Plan will be fixed by the Board of Directors and may not exceed five years from the date of grant. Vesting periods are determined by the Board of Directors and no optionee shall receive a grant of more than 5% of the Company’s total common shares outstanding.

11

AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

Share purchase options outstanding are as follows:

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March 31, 2021 December 31, 2020
Weighted average Weighted average
Number exercise price Number exercise price
of options (CAD$) of options (CAD$)
Outstanding, beginning of the period 42,780,000 0.18 44,634,167 0.18
Granted - - 14,700,000 0.17
Expired - - (850,000) 0.21
Exercised - - (15,704,167) 0.16
Balance, end of the period 42,780,000 0.18 42,780,000 0.18
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• i) During the three months ended March 31, 2021, no stock options were exercised. During the year ended December 31, 2020, 15,704,167 stock options were exercised from which $1.3 million in contributed surplus was transferred to share capital.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes options pricing model. The fair value of each option granted during the three months ended March 31, 2021 and the year ended December 31, 2020 were estimated on the date of grant using the following weighted average assumptions:

	2021	2020
Number of options granted during the period	-	14,700,000
Fair value of options granted (CAD$)	-	0.10
Risk-free interest rate (%)	-	0.66
Expected life (years)	-	3.00
Expected volatility (%)	-	92
Expected dividendyield	-	-

The following table summarizes information regarding stock options outstanding at March 31, 2021:

Weighted average exercise price		Weighted average remaining	Weighted average remaining
(CAD$/share)	Options outstanding	contractual life inyears
0.125	2,770,000		0.13
0.11	500,000		0.17
0.17	2,500,000		1.26
0.165	11,230,000		2.12
0.245	11,285,000		2.92
0.17	14,495,000		3.99
0.18	42,780,000		2.76

2,500,000 options granted at CAD$0.17 per share during 2017 cliff vest three years from the date of grant and expire after five years. All remaining options granted vest over a two-year period, with one-third vesting immediately, and expire five years after the grant date.

12

AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

The following table summarizes information regarding stock options exercisable at March 31, 2021:

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Weighted average exercise price Weighted average remaining
(CAD$/share) Options exercisable contractual life in years
0.125 2,770,000 0.13
0.11 500,000 0.17
0.17 2,500,000 1.26
0.165 11,230,000 2.12
0.245 11,285,000 2.92
0.17 9,595,000 3.99
0.19 37,880,000 2.60
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The Company recognized $0.2 million in stock-based compensation expense for the three months ended March 31, 2021 ($0.6 million for the three months ended March 31, 2020).

9) Finance income and expense:

Finance income and expense is comprised of the following:

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For the three months ended March 31, March 31,
2021 2020
Interest and other income $ (11) $ (60)
Foreign exchange loss 3 195
Finance expense 3 195
Finance income $ (11) $ (60)
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10) Related party transactions:

a) Transactions with AOC:

At March 31, 2021, AOC owned 19.9% of the common shares of Africa Energy.

Under the terms of the General Service Agreement between AOC and the Company for the provision of management and administrative services, AOC invoiced the Company $0.02 million during the three months ended March 31, 2021 ($0.03 million for the three months ended March 31, 2020). At March 31, 2021, the outstanding balance payable to AOC was $ nil (at December 31, 2020, $ nil). The service fee charged to the Company by AOC is for the provision of administrative services and is intended to cover the administrative and salary costs paid by AOC on behalf of Africa Energy. The service fee is recognized as part of consulting fees.

Under the terms of the Consulting Services Agreement, effective March 1, 2019, between AOC and the Company for the provision of new venture consulting services, the Company invoiced AOC $0.3 million during 2020 until the expiration of the Consulting Services Agreement on June 30, 2020. The consulting fee charged to AOC by the Company was intended to cover the costs of the Company’s employees that provided AOC with new venture services. The consulting fee was recognized as a reduction in salaries and benefits expense.

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

On July 1, 2020, the Company entered into a General Technical and Administrative Service Agreement with Africa Oil SA Corp. (“AOSAC”), a wholly-owned subsidiary of AOC. The Company invoiced AOSAC $0.1 million during the three months ended March 31, 2021 ($ nil for the three months ended March 31, 2020). The consulting fee charged to AOSAC by the Company is intended to cover the costs of the Company’s employees that are providing AOSAC with technical and administrative services related to AOC’s interest in Block 3B/4B offshore South Africa. The consulting fee is recognized as a reduction in salaries and benefits expense, and office and general costs.

b) Transactions with Impact:

At March 31, 2021, Impact owned 36.5% of the common shares of Africa Energy.

In November 2020, Impact completed a subscription agreement with Africa Energy (the "Subscription Agreement") to subscribe for 509,092,771 common shares of Africa Energy (the "Subscription Shares"). The Common Shares issued to Impact pursuant to the Subscription Agreement were subject to resale restrictions under Canadian securities laws that expired on March 13, 2021. The common shares were valued at CAD$0.39 per share for a total value of $151.3 million. See Note 3 for details on the full transaction.

11) Net Loss Per Share:

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For the three months ended March 31, 2021 March 31, 2020
Weighted Average Weighted Average
Number of Per share Number of Per share
Net loss shares amounts Net loss shares amounts
Basic earnings per share
Net loss attributable to common
shareholders $ (2,366) 1,395,333,039 $ (0.00) $ (1,991) 749,014,694 $ (0.00)
Effect of dilutive securities - - - - - -
Dilutive loss per share $ (2,366) 1,395,333,039 $ (0.00) $ (1,991) 749,014,694 $ (0.00)
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For the three months ended March 31, 2021, 42,780,000 options were anti-dilutive and were not included in the calculation of dilutive loss per share (three months ended March 31, 2020, 58,818,333).

12) Financial Instruments:

Assets and liabilities at March 31, 2021 that are measured at fair value are classified into levels reflecting the method used to make the measurements. Fair values of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Assets and liabilities in Level 2 include valuations using inputs other than quoted prices for which all significant inputs are observable, either directly or indirectly. Level 3 valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

The Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and leases payable are assessed on the fair value hierarchy described above. The Company’s cash and cash equivalents, receivables and accounts payable and accrued liabilities are classified as Level 2. The Company’s investments in associates and joint venture and financial assets are classified as Level 3. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy level. The fair value approximates the carrying value due to the short maturity. There were no transfers between levels in the fair value hierarchy in the period.

13) Commitments and Contingencies:

• a) PSA and Agreement Commitments

Block 2B

Under the terms of the Block 2B Exploration Right, the Company and its partners are currently in the Third Renewal Period, which is set to expire on November 16, 2022. The Third Renewal Period includes an obligation to drill a well.

Under the Thombo Share Purchase Agreement, the Company is obligated to the following:

1. At spud of the third well (the AJ-1 well drilled in 1988 being the first and only well drilled on Block 2B to date), pay $0.5 million in cash or common shares of the Company valued at that time;

2. At spud of the fourth well, pay $0.5 million in cash or common shares of the Company valued at that time; and

3. At declaration of commerciality by the joint operating committee, either;

4. a. pay $0.5 million in cash or common shares of the Company valued at that time; or

b. in the event that a predetermined level of reserves is achieved, issue up to 20 million common shares of the Company depending on the amount of reserves at that time.

At March 31, 2021, management has assessed the likelihood and timing of future drilling and has not accrued any material obligations related to the above contingent consideration.

Under the farmin agreement with a subsidiary of Crown Energy AB (“Crown”), the Company is obligated to fund Crown’s remaining 10% participating interest of costs associated with the drilling and testing of the next well on Block 2B. The Company expects that its obligation to fund Crown will be covered under the terms of the farmout agreements completed with Azinam and Panoro. For details on the farmout agreements and funding obligations, refer to Note 6.

Main Street 1549

Refer to Note 3 for details on commitments.

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AFRICA ENERGY CORP.

Notes to Consolidated Financial Statements For the three months ended March 31, 2021 and 2020 (Expressed in thousands of United States dollars unless otherwise indicated) (Unaudited)

14) Lease obligations:

The following table details the Company’s lease obligations:

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March 31, December 31,
2021 2020
Less than one year 13 20
Greater than one year - -
Total lease payments 13 20
Amounts representing interest (1) (1)
Present value of net lease payments 12 19
Current portion of lease obligations (12) (19)
Non-current portion of lease obligations - -
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The Company’s short-term leases and leases of low-value assets amounted to $ nil for the three months ended March 31, 2021 ($ nil for the year ended December 31, 2020) and are expensed accordingly. The Company’s lease obligations consist of rent and parking for its office in Cape Town, South Africa. The Company’s lease contract was effective beginning August 1, 2019 for a period of two years but may have extension options as described in Note 2(d) “Use of estimates and judgments”. Leases are negotiated on an individual basis and contain a wide range of different terms and conditions.

15) Supplementary information:

The following table reconciles the changes in non-cash working capital as disclosed in the consolidated statement of cash flows:

of cash flows:
For the three months ended		March 31,		March 31,
		2021		2020
Changes in non-cash working capital
Accounts receivable	$	(47)	$	5
Prepaid expenses		90		23
Accounts payable and accrued liabilities		353		1,277
	$	396	$	1,305
Relating to:
Operating activities	$	333	$	(120)
Investing activities		63		1,425
Changes in non-cash working capital	$	396	$	1,305

16) Subsequent event:

On April 19, 2021, the Company completed the two farmout agreements for the transfer of an aggregate 62.5% participating interest in the Exploration Right for Block 2B offshore the Republic of South Africa as detailed in Note 6.

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