Meridian Mining — Interim / Quarterly Report 2020

Dec 1, 2020

MERIDIAN MINING SE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Expressed in United States dollars)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 (UNAUDITED)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

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

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

The Company's independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.

MERIDIAN MINING SE CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Expressed in United States dollars) (Unaudited)

	As at September	As at December
	30, 2020		31, 2019
ASSETS
Current
Cash	$1,778,006	$	530,322
Accounts receivable	-		822,246
Prepaid expenses and other assets (Note 4)	132,979		180,439
Inventory (Note 5)	10,160		249,917
	1,921,145		1,782,924
Prepaid expenses and other assets (Note 4)	13,729		122,073
Property, plant and equipment(Note 6)	230,265		455,065
Exploration and evaluation assets (Note 7)	5,553,404		7,700,032
Total assets	$7,718,543	$	10,060,094
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities (Note 9)	$588,337	$	1,431,830
Provisions (Note 10)	503,521		722,353
Loans payable (Note 11)	-		24,786,099
	1,091,858		26,940,282
Financial liability at FVTPL(Note 11)	1,156,539		-
Derivative liability (Note 12)	7,290,558		-
Provisions(Note 10)	142,350		189,375
Other long-term liabilities (Note9)	179,995		-
	9,861,300		27,129,657
Equity (Deficit)
Share capital (Note 12)	920,639		1,775,220
Share premium (Note 12)	9,445,729		58,493,031
Reserves (Note 11 and 12)	64,824,953		(9,459,919)
Deficit	(77,334,078)		(67,877,895)
Total equity (Deficit)	(2,142,757)		(17,069,563)
Total liabilities and equity	$7,718,543	$	10,060,094
Nature of business and going concern (Note 1)

Commitments and contingencies (Note 20)

On behalf of the Board on November 26, 2020:

"Charles Riopel" Director "Adrian McArthur" Director

MERIDIAN MINING SE

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND OTHER COMPREHENSIVE LOSS (Expressed in United States dollars)

(Unaudited)

	Three months ended September 30		Nine months ended September 30
	2020	2019		2020		2019
Revenues	$-	$1,755,322	$	245,346	$	3,780,748
Cost of sales (Note 14)	-	(1,997,641)		(257,701)		(4,825,283)
	-	(242,319)		(12,355)		(1,044,535)
Operating expenses
Exploration and evaluation expenses (Note 15)	91,644	307,653		333,363		830,760
General and administration expenses (Note 16)	347,192	509,212		978,216		1,305,566
Community relations		79,456		883		151,704
Professional fees	46,193	63,587		370,736		308,203
Re-commissioning and standby costs	-	7,124		-		24,865
Care and maintenance expenses	73,783	-		286,509		-
Gain on sale of property, plant and equipment (Note 6)	(35,789)	-		(220,338)		-
Share-based payments (Note 12)	-	-		49,266		-
Depreciation	12,344	-		50,803		-
Total operating expenses	(535,367)	(967,032)		(1,849,438)		(2,621,098)
Loss from operations	(535,367)	(1,209,351)		(1,861,793)		(3,665,333)
Finance items
Mark-to-market revaluation of warrants (Note 12)	-	-		(6,565,519)		30,090
Loss on extinguishment of debt	(200,100)	-		(200,100)		-
Gain on financial liability at FVTPL (Note 11)	235,777	-		235,777		-
Mark-to-market revaluation of warrants (Note 12)	(6,565,519)	-		-		-
Finance income	31,047	35		31,085		25,363
Finance expense (Note 11)	(133)	(508,296)		(537,077)		(1,400,110)
Foreign exchange	(501,894)	(151,381)		(558,556)		(65,447)
Total finance expenses	(7,000,820)	(659,642)		(7,594,390)		(1,410,104)
Loss for the period	(7,536,187)	(1,868,993)		(9,456,183)		(5,075,737)
Other comprehensive loss
Items that may be reclassified to loss
Foreign currency translation	(215,567)	(1,221,944)		(1,970,427)		(1,219,510)
Other comprehensive loss, net of taxes	$(7,751,754)	$ (3,090,937)		$ (11,426,610)	$	(6,295,247)
Basic and diluted loss per common share	$(0.08)	$(0.02)	$	(0.08)	$	(0.04)
Weighted average number of basic and diluted shares
outstanding	96,648,802	163,822,421		141,022,616		163,822,421

MERIDIAN MINING SE

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Expressed in United States dollars)

(Unaudited)

	Nine months ended September 30
		2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period	$	(9,456,183)	$	(5,075,737)
Items not affecting cash:
Accrued finance expense		473,189		1,323,799
Depreciation		50,803		706,447
Mark-to-market revaluation of warrants(Note 12)		6,565,519		(30,090)
Gain on sale of property, plant and equipment(Note 6)		(220,338)		-
Provisions		(6,278)		(17,282)
Unrealized foreign exchange		552,202		(115,251)
Share-based payments		49,266		-
Changes in tax credits		108,344		-
Changes in tax and fees payable (Note 9)		179,995		-
Loss on extinguishment of debt(Note 11)		200,100		-
Unrealized gain on financial liability (Note 11)		(235,777)		-
Changes in non-cash working capital items:
Accounts receivable		822,246		678,896
Prepaid expenses and other assets		47,460		22,205
Inventory		239,757		(876,912)
Accounts payable and accrued liabilities		(843,493)		151,808
Net cash used in operating activities		(1,473,186)		(3,232,117)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		-		(156,859)
Exploration and evaluation asset acquisition		(25,000)		(10,296)
Proceeds from sale of property, plant and equipment		285,341		-
Net cash provided by (used in)investing activities		260,341		(167,155)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan proceeds		-		3,450,000
Proceeds from private placement financing, net of costs		2,534,135		-
Proceeds from the exercise of options		36,574		-
Net cash provided by financing activities		2,643,899		3,450,000
Effect of foreign exchange on cash		(110,176)		(3,619)
Net change in cash		1,247,686		47,109
Cash, beginning of the period		530,322		201,712
Cash, end of the period	$	1,778,006	$	248,821

Significant non-cash financing and investment transactions are disclosed in Note 11.

MERIDIAN MINING SE CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Expressed in United States dollars) (Unaudited)

		Share Capital
	Shares	ShareCapital	SharePremium	Reserves	Share basedpayments	Warrantreserve	Otherreserves	Accumulatedothercomprehensiveloss	Deficit	Total Equity
Balance, December 31, 2018	163,822,421	$1,775,220	$58,493,031	$462,185	$1,641,992	$13,447	$–	$(11,344,014)	$(50,531,236)	$510,625
Comprehensive loss for theperiod	–	–	–	–	–	–	–	(1,219,510)	(5,075,737)	(6,295,247)
Balance, September 30, 2019	163,822,421	1,775,220	58,493,031	462,185	1,641,992	13,447	–	(12,563,524)	(55,606,973)	(5,784,622)
Balance, December 31, 2019	163,822,421	1,775,220	58,493,031	462,185	2,089,882	13,447	–	(12,025,433)	(67,877,895)	(17,069,563)
Share-based paymentsSharesissuedonprivate	–	–	–	–	49,266	–		–	–	49,266
placement	46,766,666	533,853	1,327,378	–	–		–	–	–	1,861,231
Share issuance costs	–	–	(160,658)	–	–	108,523	–	–	–	(52,135)
Exercise of options	700,000	8,110	49,091	–	(20,627)	–	–	–	–	36,574
Debt settlement transactions,SGRFIV(Note 11 and 12)	5,958,540	67,825	1,380,873	–	–	–	21,572,739	–	–	23,021,437
Debt settlement transactions,TSG (Note 11 and 12)	5,910,602	67,280	1,369,763	–	–	–	–			1,437,043
Share surrender (Note 12)	(141,011,304)	(1,531,649)	(53,013,749)	–	–	–	54,545,398	–	–	–
Comprehensive loss for theperiod	–	–	–	–	–	–	–	(1,970,427)	(9,456,183)	(11,426,610)
Balance, September 30, 2020	82,146,925	$920,639	$9,445,729	$462,185	$2,118,521	$121,970	$76,118,137	$(13,995,860)	$(77,334,078)	$(2,142,757)

1. NATURE OF BUSINESS AND GOING CONCERN

Meridian Mining S.E. (the "Company" or "Meridian") was formed in Amsterdam, Netherlands on December 16, 2013. The Company's shares are listed on the TSX Venture Exchange ("TSX-V") under the symbol MNO. The Company is currently engaged in the exploration, development and exploitation of mineral deposits in Brazil, through its subsidiary, Meridian Mineração Jaburi S.A. ("Jaburi"). The Company's head office is located at 6th Floor, 65 Gresham Street, London, SW1E 5RS, United Kingdom.

In December 2019, the Company put the Espigão d´Oeste Manganese operation in Rondônia, Brazil, on temporary care and maintenance ("C&M"), due to the continued depressed world manganese ore prices and refocused on the advancement of the exploration on the Espigão polymetallic and Mirante da Serra manganese exploration projects.

Going Concern

These condensed consolidated interim financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business as they come due into the foreseeable future. The Company incurred a loss of $11,426,610 during the nine-month period ended September 30, 2020 (2019 $6,295,247). The Company has a working capital of $829,287 at September 30, 2020 (December 31, deficit of 2019 $25,157,358). During the period the ended September 30, 2020, the Company raised $2,586,270 (CAD$3,507,500) pursuant to a private placement (Note 12) and extinguished loans payable of $25,259,288 (Note 11).

To continue as a going concern, the Company will need to secure new funding. The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions and exploration successes. There can be no assurance that these initiatives will be successful, or sufficient financing, will be available. These material uncertainties cast significant doubt as to the ability of the Company to meet its business plan and obligations as they come due and, accordingly, the appropriateness of the use of accounting principles applicable to a going concern.

These financial statements do not include adjustments to the recoverability and classifications of recorded assets and liabilities and related expenses that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

The recoverability of the amounts shown for mineral properties is dependent on the existence and economic extraction of resources, the capacity to obtain financing to complete the development of such resources, the ability to obtain the necessary licenses and permits and meet the Company's obligations under various agreements, stability or increases in future commodity prices, and the success of future operations or dispositions of the mineral properties.

On March 11, 2020, the World Health Organization (WHO) officially declared COVID-19 a pandemic, as a result, governments worldwide, including the Canadian, Brazilian and UK governments, enacted extraordinary acts and measures to limit spread of the virus. These measures included effective social distancing through a combination of national and local quarantines, implementation of travel bans and self-imposed quarantine periods. In this scenario an economic slowdown is expected globally. Governments and central banks have reacted with significant monetary and fiscal policy responses to stabilize economic conditions but the success of these interventions is not currently determinable since large-scale quarantines, travel restrictions, and social-distancing measures drive a sharp fall in consumer and business spending, producing a recession. The current challenging economic situation may lead to adverse changes in cash flows, working capital levels and/or debt balances, which may also have a direct impact on the Company's operating results and financial position in the future. The situation is dynamic and the ultimate duration and magnitude of the impact on the economy and our business are uncertain at this moment.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance and basis of presentation

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC"). The accounting policies applied in these condensed interim consolidated financial statements are consistent with those disclosed in the Company's audited consolidated financial statements for the year ended December 31, 2019.

These condensed consolidated interim financial statements do not include all disclosures required by International Financial Reporting Standards for annual audited consolidated financial statements and accordingly should be read in conjunction with the Company's annual audited consolidated financial statements for the year ended December 31, 2019 prepared in accordance with IFRS as issued by the International Accounting Standards board.

Basis of presentation

The condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments classified as financial instruments at fair value through profit or loss, which are stated at fair value. The financial statements of the Company are presented in United States dollars, which is the functional currency of the Company.

The preparation of these financial statements required management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements. Actual results could differ from these estimates. Critical estimates and judgments are discussed more fully in the Company's audited financial statements for the year end December 31, 2019.

Principles of consolidation

The condensed consolidated interim financial statements incorporate the assets and liabilities and revenues and expenses of the Company's subsidiaries. Subsidiaries are all entities controlled by the Company. Control exists when the Company is exposed, or has rights, to variable returns from its involvement with an investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the condensed consolidated interim financial statements from the date control is obtained until the date control ceases. All intercompany balances, transactions, income, expenses, profits and losses, including unrealized gains and losses have been eliminated on consolidation.

These condensed consolidated interim financial statements include the following 100% held entities as September 30, 2020 and December 31, 2019:

Name of subsidiary:	Jurisdiction of Incorporation	Functional Currency
(i)Ferrometals BV	Netherlands	USD
Ferrometals Management Services Canada Inc	Canada	USD
Ferrometals Serviços do Brasil Ltda	Brazil	BRL
Meridian Mineração Jaburi S.A.	Brazil	BRL
Cancana Resources Corp("Cancana").	Canada	CAD

(i) During the year ended December 31, 2019 the Company was dissolved (effective date as December 30, 2019)

Accounting policies of subsidiaries are updated where necessary to ensure consistency with the policies adopted by the consolidated group. Acquisitions of subsidiaries under common control before and after the transaction are recorded at historical carrying value. Subsidiaries under common control are consolidated from the date of acquisition by the ultimate controlling entity.

Recast of prior interim financial statements

The Company adjusted an immaterial adjustment in the three months ended September 30, 2020 to recognize the settlement of Cancana's debt owing to Sentient Global Resources Fund IV L.P. ("SGRFIV") on June 2, 2002, which was not previously recognized. As disclosed in Note 11, the adjustment resulted in reduction of debt of $3,166,027 and a credit to equity, other reserves, of $3,150,16 as at June 30, 2020, and accrued transaction costs $15,867.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of these condensed consolidated interim financial statements requires management to make judgments and estimates and form assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual outcomes may differ from these estimates.

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

Certain estimates, such as those related to the recoverability of property, plant and equipment, and exploration and evaluation assets, deferred tax assets and liabilities, depreciation and remaining useful life of assets, and disclosure of contingencies depend on subjective or complex judgments about matters that may be uncertain. Changes in those estimates could materially impact these condensed consolidated interim financial statements.

Material sources of estimation uncertainty include:

Estimated Mineral Production

The Company's mine assets are depleted and amortized on a units of production basis, using the expected amount of future production. The Company does not have a National Instrument 43-101 compliant resource estimate and accordingly uses expected forecasts based on available geological and technical data as a basis for the expected amount of production. Changes to these estimates, which can be significant, could be caused by a variety of factors, including future production differing from current forecasts, development of mineral resources or factors that impact the expected life of the mining operation.

Deferred taxes

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. At the end of each reporting period, the Company reassesses unrecognized income tax assets.

The Company's operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with tax authorities in various jurisdictions and resolution of disputes arising from tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues based on its estimate of whether, and the extent to which, additional taxes will be due. The Company adjusts these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the tax liabilities. If the Company's estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If the estimate of tax liabilities proves to be greater than the ultimate assessment, a tax benefit would result.

Impairment of property, plant and equipment, and goodwill

The Company considers both external and internal sources of information in assessing whether there are any indications that its cash generating unit ("CGU") including property, plant and equipment, and goodwill is impaired. External sources of information the Company considers include changes in the market, and the economic and legal environment in which the Company operates and affect the recoverable amount of mining interests and goodwill. Internal sources of information the Company considers include the manner in which mining properties, plant, and equipment are being used or are expected to be used and indications of economic performance of the assets.

In determining the recoverable amounts of the Company's property, plant and equipment, and goodwill, the Company makes estimates of the discounted future after-tax cash flows expected to be derived from the Company's mining properties, costs to sell the assets and the appropriate discount rate. The projected cash flows are significantly affected by changes in assumptions related to future metal prices, changes in the amount of future production, and exploration potential, production cost estimates, future capital expenditures, discount rates and exchange rates.

Access to estimated future production and exploration potential of the Company's property, plant and equipment is a key assumption in determining their recoverable amounts. The ability to maintain existing or obtain necessary mining concessions, surface rights title, and water concessions is integral to the access of the production areas and exploration potential.

If the Company determines there has been an impairment because its prior estimates of discounted future cash flows have proven to be inaccurate, due to reductions in manganese prices or demand, increases in the costs of production, reductions in the amounts of production, or other factors, the Company would be required to write-down the recorded value of its property, plant and equipment or goodwill in profit and loss.

Share based compensation and mark-to-market revaluation of warrants and embedded derivatives

The Company utilizes the Black-Scholes Option Pricing Model ("Black-Scholes") to estimate the fair value of stock options granted to directors, officers, employees, and consultants and for the mark-to-market revaluation of share purchase warrants. The use of Black-Scholes requires management to make various estimates and assumptions that impact the value assigned to the stock options including the forecast future volatility of the stock price, the risk-free interest rate, dividend yield and the expected life of the stock options.

The Company's financial liability measured at fair value through profit and loss ("FVTPL") requires estimates of valuation inputs including extended hold period discounts, risk-free interest rates and the probability of and the timing of future financing transactions.

Any changes in these assumptions could have a material impact on the share-based compensation calculation value and mark-to-market valuation changes of derivatives and financial liabilities measured at FVTPL. The most significant estimates relate to volatility, hold period discounts and the assessment of the probability of future financing targets being met. Expected future volatility can be difficult to estimate as the Company has had limited history and historical volatility is not necessarily indicative of future volatility.

Critical management judgments:

Mineral Production, depreciation and depletion

The Company's mine assets are depleted and amortized on a units of production basis, using the expected amount of future production. Changes to these estimates, which can be significant, could be caused by a variety of factors, including future production differing from current forecasts, expansion of mineral resources through exploration activities, difference between estimated and actual cost of mining and other factors impacting production or the expected life of mine assets. The Company does not have a National Instrument 43-101 compliant resource estimate and accordingly uses expected forecasts based on available geological and technical data as a basis for the expected amount of production.

Recoverability of exploration and evaluation assets

The Company capitalizes the acquisition costs related to its exploration and evaluation assets. This policy requires management to make certain estimates and assumptions as to future events and circumstances. Any such estimates and assumptions may change as new information becomes available. If, after having capitalized the costs, a judgment is made that recovery of the costs is unlikely, the relevant capitalized amount will be written off to profit and loss.

The recoverability of amounts shown for exploration and evaluation assets is dependent on the existence of economically recoverable reserves, the ability to obtain financing to complete the development of such reserves and meet obligations under various agreements, and the success of future operations or dispositions. If a project does not prove viable, all unrecoverable costs associated with the project net of any related existing impairment provisions are written off.

4. PREPAID EXPENSES AND OTHER ASSETS

	September30, 2020			December 31, 2019
Current:
Tax credits	$	28,567	$	69,325
Prepaid expenses and advances		104,412		111,114
Total	$	132,979	$	180,439
Non-current:
Tax credits	$	13,729	$	122,073
Total	$	13,729	$	302,512

The Company is required to pay certain taxes in Brazil that are based on purchases of consumables and property, plant and equipment. These taxes are recoverable from the Brazilian tax authorities through various methods, including as a cash refund or as a credit against current taxes payable. During the year ended December 31, 2019 the Company put the plant into care and maintenance and as such, the recovery and timing of such recovery of tax credits is uncertain, therefore the Company wrote-off tax credits of $946,172.

5. INVENTORY

	September	30, 2020	December 31, 2019
Stockpiled ore	$	-	$	235,698
Consumables and stores		10,160		14,219
Total	$	10,160	$	249,917

During the nine-month period ended September 30, 2020, $189,005 (September 30, 2019 - $1,768,462) of costs were expensed that were directly attributable to the costs incurred during the production of inventory.

6. PROPERTY, PLANT AND EQUIPMENT

			Vehicles,
		Land and	machinery and		Office furniture	Assets under
Cost:	Mine assets	buildings	equipment	Plant	and other	construction	Total
Balance, December
30, 2018	$6,832,146	$664,750	$2,215,757	$ 2,975,746	$164,870	$39,149	$ 12,892,418
Additions	6,669	-	9,510	-	30,270	145,925	192,374
Transfers	-	-	160,353	-	-	(160,353)	-
Impairment (Note 8)	(6,736,112)	(558,944)	(1,088,100)	(2,931,014)	-	(24,132)	(11,338,302)
Currency adjustment	(102,703)	(11,958)	(59,242)	(44,732)	(6,431)	(589)	(225,655)
Balance, December
31, 2019	-	93,848	1,238,278	-	188,709	-	1,520,835
Additions	-	-	-	-	-	-	-
Transfers	-	-	-	-	-	-	-
Disposals	-	-	(611,122)	-	-	-	(611,122)
Currency adjustment	-	(26,790)	(286,911)	-	(53,869)	-	(367,570)
Balance, September
30, 2020	$-	$67,058	$340,245	$-	$134,840	$-	$542,143

			Vehicles,
Accumulated		Land and	machinery and		Office furniture	Assets under
depreciation:	Mine assets	buildings	equipment	Plant	and other	construction	Total
Balance, December
30, 2018	$ (1,716,042)	$ (204,156)	$(1,263,307)	$ (272,301)	$(87,294)	$-	$ (3,543,100)
Additions	(285,247)	(50,391)	(238,688)	(293,101)	(47,710)	-	(915,137)
Impairment (Note 8)	1,975,493	251,478	528,596	561,309	-	-	3,316,876
Currency adjustment	25,796	3,069	38,578	4,093	4,055	-	75,591
Balance,December
31, 2019	-	-	$(934,821)	-	(130,949)	-	(1,065,770)
Additions	-	-	(40,729)	-	(10,074)	-	(50,803)
Disposals	-	-	555,426	-	-	-	555,426
Currency adjustment	-	-	210,790	-	38,479	-	249,269
Balance, September
30, 2020	$-	$-	$(209,334)	$-	$(102,544)	$-	$(311,878)

			Vehicles,
		Land and	machinery and		Office furniture	Assets under
Net book value:	Mine assets	buildings	equipment	Plant	and other	construction	Total
December 31, 2019	$-	$93,848	$303,457	$-	$57,760	$-	$455,065
September 30, 2020	$-	$67,058	$130,911	$-	$32,296	$-	$230,265

7. EXPLORATION AND EVALUATION ASSETS

Summary of exploration and evaluation assets:

Balance as at December 31, 2018Option payment –Mirante da SerraForeign currency adjustment	$7,977,93710,296(288,201)
Balance as at December 31, 2019Option payment –CabaçalProjectForeign currency adjustment	7,700,03225,000(2,171,628)
Balance as at September 30, 2020	$5,553,404

Title to mineral property interests

Title to mineral property interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral claims. Title to mineral properties is also subject to the laws and regulations in Brazil, which can be subject to change and may impact the Company's title to its mineral properties. Jaburi has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its interests are in good standing. However, this should not be construed as a guarantee of title. The concessions may be subject to prior claims, agreements or transfers and rights of ownership may be affected by undetected defects.

Espigão Project, Rondônia

In connection with the loan settlements described in Note 11, the Company issued a net smelter return royalty to SGRFIV, as follows:

• 3% on Espigão polymetallic;
• 3% Mirante da Serra manganese;
• 3% Ariquemes tin; and
• 100% of the royalty on each project can be bought back for $2,000,000 for each project or $6,000,000 for all 3 projects.

Mirante da Serra, Rondônia

On July 24, 2019 the Company entered into an option agreement to acquire a 100-per-cent interest in the Mirante da Serra manganese project, in Rondônia, Brazil. Following a sequential process related to project and administrative milestone achievements, the Company may at its election, acquire the project for a cumulative consideration of 1,140,000 Brazilian real (approximately $200,000 (U.S.)). The Company is required to make staged payments as follows:

• 40,000 Brazilian reals upon signing (paid $10,296);
• 75,000 Brazilian reals upon approval of the final report by the Brazilian National Mining Agency ("ANM") and title transfer to Meridian;
• 125,000 Brazilian reals on the Meridian board of directors' approval of a positive PEA (Plano de Aproveitamento Econômico ("PAE") or Economic Mining Plan);
• 150,000 Brazilian reals following the ANM (Agência Nacional de Mineração) approval of PAE;
• 250,000 Brazilian real one-year anniversary of ANM approval;
• 500,000 Brazilian reals upon grant and publication of a valid mining licence (Lavra);

The project is subject to a 0.5% NSR, which the Company may purchase back for one million Brazilian real.

Cabaçal Project, Mato Grosso

On August 25, 2020 the Company entered into a option agreement to acquire a 100% beneficial interest in the Cabaçal Copper-Gold Project ("Cabaçal"), comprised of 5 mineral rights tenements, in the state of Mato Grosso, Brazil, for a total consideration of $8,750,000 and 4,500,000 Meridian shares or CAD$1,350,000, as the option of the Vendors, from two private Brazilian companies, Prometálica Mineração Ltda. and IMS Engenharia Mineral Ltda (the "Vendors"). The Company is required to make staged payments based on milestones achieved as follows:

• $25,000 payable within 5 days of the execution of the option agreement; (paid)
• $275,000 payable within 30 days of the completion of satisfactory due diligence results and filing date of the transfer of the assignment of the mineral rights with the ANM;
• $1,750,000 payable within 12 months of the second payment provided completion of successful drilling program and historical geophysics database validation;
• 1,000,000 common shares in the capital of the Company or CAD$300,000, at the option of the Vendors, subject to completion of technical report on the estimate of the resource in accordance with National Instrument 43-101;
• $1,850,000 and 1,500,000 common shares in the capital of the Company or CAD$450,000, as the option of the Vendors, within 9 months of the fourth payment and subject to the successful completion of the positive economic feasibility study;
• $2,250,000 payable and 2,500,000 common shares in the capital of the Company or CAD$600,000, as the option of the Vendors, up to 30 days after the Installation License ("LI") of the Cabaçal Project plant is issued by the competent authorities; and
• $2,600,000 payable within 45 days after the signature by the Company of the definitive financing contracts for the construction of the Cabaçal Project plant.

There is one historical 1.5% NSR associated with the Santa Helena project, part of Cabaçal. Meridian is aware that Cabaçal is located within the buffer zone of Brazil's frontier and that the Company will comply with all applicable Brazilian Laws. The buffer zone is a political protection zone and not an economic exclusion zone. The terms of the proposed Agreement gives the Company the option, under certain conditions, to return the mineral rights to the Vendors on a "as is" basis, without any obligation to making any outstanding payments and to complying with other obligations.

Subsequent to September 30, 2020, the Company signed the Cabaçal definitive Purchase Agreement. See Note 21.

8. GOODWILL AND IMPAIRMENT

Goodwill was acquired pursuant to the acquisition of Jaburi. Management has allocated goodwill to its manganese operations which is considered a single CGU.

Balance as at December 31, 2018Foreign currency adjustmentImpairment adjustment	$932,350(14,006)(918,344)
Balance as at December 31, 2019 and September 30, 2020	$-

For the purposes of assessing impairment, the Company's assets are grouped and reviewed for impairment at the CGU level. In accordance with its accounting policy, the Company reviews and tests the carrying amounts of goodwill each year and when an indicator is considered to exist.

As a result of decreasing manganese prices during 2019, the Company's manganese operation was operating at a significant loss culminating in the Company putting the plant into care and maintenance during December 2019.

During the fourth quarter of 2019, the carrying value of the net assets in its manganese operation CGU were written down to its net realizable value. The manganese operation CGU included the goodwill acquired pursuant to the acquisition of Jaburi and the Company's property, plant and equipment (Note 6).

The impairment test was performed effective December 31, 2019 and used the Fair Value Less Costs of Disposal ("FVLCD") methodology. Specifically, the net asset value ("NAV") of the Manganese Operation CGU was determined. As the operation was in care and maintenance with no forecasted operations there were no operating cash inflows and therefore the value in use ("VIU") approximated the fair value less cost of disposal. The operating assets recoverable amount, FVLCD, was assessed at the individual asset level, with certain assets having a recoverable amount.

The impairment test concluded that based on the current manganese prices it is unlikely that it will restart the mine and as a result the recoverable amount of the manganese operation CGU was lower than the carrying value as at December 31, 2019. As a result, the Company recorded an impairment charge of $8,939,770 in the Statement of Loss, including the write-down of goodwill of $918,344 and plant and equipment of $8,021,426.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	September	30, 2020	December 31, 2019
Current:
Trade payables	$	213,885	$697,019
Payroll liabilities		85,052	454,375
Taxes and fees payable		287,484	245,872
Other liabilities		1,916	34,564
Total:	$	588,337	$1,431,830
Non-Current:
Taxes and fees payable		179,995	-
Total	$	179,995	$-

Restructuring of Brazilian taxes and fees liabilities

During the nine months ended September 30, 2020, the Company enrolled into an instalment payment program on certain unpaid taxes and fees related to the year ended December 31, 2019. Under the program the Company will pay the outstanding taxes and fees, plus accrued penalties and interests, in equal instalments over a period of 36 to 60 months.

The terms of each instalment program can be summarized as follow:

• a) Brazilian social security taxes. The total taxes payable of $173,417 will be repaid in equal monthly instalments over 56 months, adjusted for inflation.
• b) Brazilian ANM fees. The total fees payable of $80,223 will be repaid in equal monthly instalments over 31 months, adjusted for inflation.

As a result the Company reclassified as long-term liabilities the amount of $179,995.

10. PROVISIONS

	Environmental provision	(i)	Other	provisions(ii)	Total
Balance, January 1, 2019	$	551,605	$	341,717	$893,322
Spent during the year		(47,290)		-	(47,290)
Accretion		15,078		-	15,078
Accrued during the year		36,582		45,608	82,190
Foreign currency adjustment		(19,529)		(12,043)	(31,572)
Balance, December 31, 2019		536,446		375,282	911,728
Spent during the period		(14,173)		-	(14,173)
Accretion		7,895		-	7,895
Foreign currency adjustment		(152,450)		(107,129)	(259,579)
Balance, September 30, 2020	$	377,718	$	268,153	$645,871
Represented by:
Long-term portion	$	142,350	$	-	$142,350
Current portion	$	235,368	$	268,153	$503,521

(i) Environmental provision

Pursuant to Jaburi's operations in Brazil, the Company is required to rehabilitate its plant and colluvial mining sites, as well as remove all plant and equipment. A provision has been recognized for the requirements to rehabilitate these sites environmentally and decommission the plant and equipment. Environmental liabilities required to rehabilitate sites are considered short term in nature and is included in production costs in the period recognized. Long term environmental liabilities related to decommissioning the plants are recorded at the present value of the estimated costs, assuming riskfree discount rates of 6.5% (2019 – 6,5%) and are expected to be incurred in 2022.

(ii) Other provisions

Various legal and regulatory matters are outstanding from time to time due to the nature of the Company's operations. In the event that management's estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its condensed consolidated interim financial statements on the date such charges occur. As at September 30, 2020, the Company has recognized a provision of $268,153 (2019 - $375,282) representing management's best estimates of expenditures required to settle present obligations. The ultimate outcome or actual cost of settlement may vary materially from management estimates due to the inherent uncertainty regarding the Company's estimates.

11. LOANS PAYABLES

	September30, 2020			December 31, 2019
Balance, beginning of period	$	24,786,099	$	17,712,401
Borrowings (b.(iv), b.(v))		-		5,250,000
Interest expense		473,189		1,823,698
Debt settlement		25,259,288		-
Balance, end ofperiod	$	-	$	24,786,099

a. Standstill Agreement and Debt Settlements:

In March 2020, the Company signed amendment and stand-still agreements with Sentient Global Resources Fund IV L.P. ("SGRFIV") and The Sentient Group Limited ("TSG") extending the maturity date of all loans from March 31, 2020 to July 30, 2020 and reducing the interest rates to 0% effective April 1, 2020. The Company settled all loans with SGRFIV and TSG as follows:

	Carrying Value ofLoan Extinguished	Form ofconsiderationgiven	Valuation ofconsideration andtransaction costs	Equity – Otherreserves (1)	Gain (loss)Settlement	on
SGRFIV:
a.(i)	$10,343,397	Financial liability	$1,440,495	$9,421,220	$	-
a.(ii)	10,500,000	Common shares	1,498,641	9,001,359		-
a.(iii)	3,166,027	Royalty rights	(15,867)	3,150,160		-
	24,009,424		2,923,269	21,572,739		-
TSG
a.(iv)	1,249,863	Common shares	1,449,963			(200,100)

(1) Debt settlement gains related to SGRFIV above were recognized as a capital contribution in equity since SGRFIV owned in excess of 87% of the Company's voting common shares at the time of the settlement transactions and was viewed to be acting in the interests of a shareholder rather than a creditor.

(i) Pursuant to a Consolidated Facility Agreement with SGRFIV , effective on the closing of the July 15, 2020 private placement, the Company replaced debt of $10,343,397 in exchange for a non-interest bearing loan facility of CAD $14,674,177 which matures on March 31, 2022. The loan outstanding at maturity is converted to common shares of Meridian at a conversion rate of CAD $2.50 per common share. The Company can elect to settle the loan in cash at any time without premium and has the option to convert the loan to common shares at the same conversion rate prior to maturity if and when the Company meets a financing target of CAD $7,093,500. The Consolidated Facility Agreement is secured against certain inter-company loans between Meridian and its subsidiary Jaburi and all the shares of Jaburi.

The replacement facility was determined to be a financial liability containing an embedded derivative asset related to the Company's contingent share conversion option. The Company elected to measure the hybrid instrument at fair value through profit and loss. On initial recognition, the financial liability was recognizes at fair value of $1,392,316, and the difference from the carrying amount of the debt extinguished, net of transaction costs and foreign exchange loss, was recognized a capital contribution to other reserves, totalling $9,421,220.

As at September 30, 2020, a gain of $235,777 was recognized due to change in the fair value of the financial liability measured at FVTPL.

• (ii) Pursuant to a Debt Conversion Agreement with SGRFIV, the Company issued 5,958,540 common shares on July 16, 2020 to SGRFIV to settle debt of $10,500,000. The transaction was accounted for as a debt extinguishment and the Company's common shares were valued based upon the closing trading price of Meridian's common shares on July 16, 2020, the date of debt extinguishment. The difference between the fair value of consideration, net of transaction costs, and the carrying amount of the debt extinguished is recognized as a capital contribution to other reserves, totalling $9,001,359.
• (iii) Pursuant to a Royalty Purchase and Debt Settlement Agreement and Net Smelter Royalty Agreement between Cancana and SGRFIV, Cancana issued to SGRFIV a 2% net smelter returns royalty ("Royalty") to settle the debt of $3,166,027. The effective date of the extinguishment was June 2, 2020, the date Cancana received approval from TSX-V. The royalty obligation is a contingent liability that will be remeasured each reporting period. The fair value of the Royalty valued at inception was Nil and the difference from the carrying amount of the debt extinguished, net of transaction costs, was recognized as a capital contribution to other reserves, totalling $3,150,160. As at September 30, 2020, the royalty obligation was estimated to be Nil.

The 2% net smelter returns royalty is over the following projects:

• 2% on Espigão polymetallic;
• 2% Mirante da Serra manganese;
• 2% Ariquemes tin; and
• 100% of the royalty on each project can be bought back for $2,000,000 for each project or $6,000,000 for all 3 projects.

Certain conditions and restrictions apply to be followed by Jaburi and Cancana regarding the title maintenance and assignment of the projects contemplated in the Royalty Agreement.

In June 2020, the Company agreed to increase the Royalty from 2% to 3%. TSX-V approval for the increase was received on September 22, 2020.

(iv) Pursuant to a Debt Conversion Agreement with TSG, the Company issued 5,910,602 common shares to The Sentient Group's nominees to settle debt of $1,249,863, on July 16, 2020. The transaction was accounted for as a debt extinguishment, resulting in a loss on extinguishment of $200,100.

The common shares issued in respect of the debt settlements were subject to a four month hold period expiring on November 17, 2020.

• b. SGRFIV Loan Facilities and Balances Prior to Settlement:
• (i) In October 2016, the Company entered into a non-arm's length loan agreement with Sentient Global Resources Fund IV LP for $7,000,000, available in tranches, which was amended and increased to $7,500,000 in August 2017, and to $8,500,000 in December 2017. The loan bears interest at a rate of 10% per annum and is for a term of 1.5 years. On December 31, 2018 the Company negotiated an extension of the maturity date to March 31, 2020. During the nine month period ended September, 30, 2020, the Company entered into standstill, conversion agreements and amendment as described above. Principal and interest outstanding prior to the loan's consolidation and settlement in July 2020 was $11,112,945.
• (ii) In December 2017, the Company entered into a non-arm's length loan agreement with Sentient Global Resources Fund IV LP for $1,500,000. The loan bears interest at a rate of 10% per annum. On September 30, 2018 the Company negotiated an extension of the maturity date to March 31, 2020. During the nine month period ended September, 30, 2020, the Company entered into a standstill, conversion agreements and amendment as described above. Principal and interest outstanding prior to the loan's consolidation and settlement in June 2020 was $1,841,096.
• (iii) In 2016, prior to the closing of the share exchange the outstanding loan balance of $1,000,000 which Cancana had borrowed from Ferrometals BV was restructured such that Sentient Global Resources Fund IV L.P. became the counterparty of the loan facility. The interest rate was amended to 10% effective January 1, 2017. On September 30, 2018 the Company negotiated an extension of the maturity date to March 31, 2020. During the nine month period

MERIDIAN MINING SE

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Expressed in United States dollars) (Unaudited)

ended September, 30, 2020, the Company entered into a standstill, conversion agreements and amendment as described above. Principal and interest outstanding prior to the loan's consolidation and settlement in June 2020 was $1,324,932.

• (iv) In June 2018, the Company entered into a $2,000,000 unsecured loan facility with Sentient Global Resources Fund IV LP. The loan bears interest at 10% per annum and was due to mature on September 30, 2019 but was subsequently extended to March 31, 2020. During the nine month period ended September, 30, 2020, the Company entered into a standstill, conversion agreements and amendment as described above. Principal and interest outstanding prior to the loan's consolidation and settlement in July 2020 was $2,360,000.
• (v) In August 2018, the Company entered into a $1,500,000 unsecured loan facility with Sentient Global Resources Fund IV LP. The Company entered into agreements to increase the facility from $1,500,000 to $3,000,000 on January 24, 2019, from $3,000,000 to $4,500,000 on April 18, 2019 from $4,500,000 to $5,200,000 on August 28, 2019 and from $5,200,000 to $6,750,000 on December 4, 2019. The loan bears interest at 10% per annum and was due on March 31, 2020. During the nine month period ended September, 30, 2020, the Company entered into a standstill, conversion agreements and amendment as described above. Principal and interest outstanding prior to the loan's consolidation and settlement in July 2020 was $7,370,452.
• c. TSG Loan Facilities Prior to Settlement:
• (i) In October 2017, the Company entered into a $1,000,000 non-arm's length unsecured short-term loan facility with The Sentient Group Limited. The loan bears interest at 10% per annum. On September 30, 2018 the Company negotiated an extension of the maturity date to March 31, 2020. During the nine month period ended September, 30, 2020, the Company entered into standstill, conversion agreements and amendment as described above. Principal and interest outstanding prior to the loan's consolidation and settlement in July 2020 was $1,249,863.

12. SHAREHOLDERS' EQUITY

Authorized Capital

As at September 30, 2020 the Company had authorized capital of €5,000,000 and is authorized to issue 500,000,000 common shares with a par value of €0.01.

Issued Capital

The Company has 82,146,925 (2019 - 163,822,421) issued and fully paid shares.

Share capital

Share capital comprises the amount subscribed for at the par value.

Share premium

Share premium comprises the amount subscribed for share capital in excess of par value.

Shares issued

During the period ended September 30, 2020:

On July 15, 2020, the Company completed a non‐brokered private placement of 46,766,666 units at a price of CAD$0.075 per Unit, for gross proceeds of CAD$3,507,500 ($2,586,270). Each unit consists of one common share and one non‐ transferable common share purchase warrant. Each share purchase warrant is exercisable at a price of C$0.11 for a period of 24 months, until July 15, 2022. The Company determined that the fair value of the warrants issued was CAD$983,293 ($725,039). The fair value was determined by using Black-Scholes to perform an iterative calculation to allocate the actual proceeds received between the common shares and the warrants. The assumptions in the Black-Scholes pricing

model used to calculate the fair value of the warrants were: an expected life of 2 years; annualized volatility of 106.94%; a risk free interest rate of 0.27%; and zero expected dividend yield. The Company paid finders fees of CAD$ 118,732 ($87,548) and issued 1,962,060 agent warrants valued at CAD$147,155 ($108,523) as finder's fees in connection with this private placement. Each agent warrant entitles the holder to purchase a unit at a price of CAD$0.075 per unit expiring July 15, 2022. Each unit has features consistent with the private placement. The Company incurred other share issuance costs of $34,962 on this private placement. Total transactions costs were $231,033 of which $160,658 were allocated to share premium and $70,375 were recognized through profit and loss.

Treasury share cancellation

On July 16, 2020, pursuant to the Share Surrender and Cancellation agreement with SGRFIV entered in June 2020 and after completion of the transactions described in the Debt Conversion Agreement described in the Note 11, SGRIV has surrendered 141,011,304 common shares in the capital of the Company. Upon cancellation of the shares, the carrying value of $ $54,545,397 (par of $1,531,648 and share premium of $ $53,013,749) of the cancelled shares was eliminated and a corresponding entry was credited to Other Reserves.

The Company did not complete any share transactions during the year ended December 31, 2019

Reserves - Stock options and warrants

Stock option and share purchase warrant transactions are summarized as follows:

	Warrants				Stock Options
			Weighted			Weighted
			Average			Average
	Number	Exercise	Price	Number	Exercise	Price
Outstanding December 31, 2018	12,794,500	CAD$	0.65	1,050,000	CAD$	0.44
Expired / cancelled	(12,794,500)		-	(30,000)		0.44
Granted	-		-	15,200,000		0.07
Outstanding December 31, 2019	-		-	16,220,000		0.09
Expired / cancelled	-		-	(1,401,437)		0.14
Granted	46,766,666		0.11	700,000		0.10
Exercised	-		-	(700,000)		0.07
Amended	-			(7,545,031)		0.09
Outstanding September30, 2020	46,766,666	CAD$	0.11	7,273,532	CAD$	0.09
Number currently exercisable	46,766,666	CAD$	0.11	7,273,532	CAD$	0.09

	Numberof Shares	ExercisePrice(CAD)	Expiry Date	Remaining ContractualLife (years)
Stock options	397,7326,527,784348,016	$ 0.440.070.10	May 17, 2022October 22, 2024June 2, 2025	1.634.064.67
Warrants	46,766,666	0.075	July 15, 2022	1.79
Agent warrants	1,962,060	0.075	July 15, 2022	1.79

As at September 30, 2020 the following incentive stock options were outstanding:

The Company has a stock option plan under which it is authorized to grant options to directors, employees and consultants to acquire up to 10% of the issued and outstanding common shares. The exercise price of each option is based on the market price of the Company's shares for a period preceding the date of grant. The options can be granted for a maximum term of 10 years and vest as determined by the board of directors.

In October 2019, the Company granted 15,200,000 options that vested immediately to directors, employees and consultants. Total share-based payments recognized in the statement of operations for the year ended December 31, 2019 was $447,890 for incentive options granted and vested.

In June 2020, the Company granted 700,000 options that vested immediately to an officer. Total share-based payments recognized in the statement of operations for the period ended September 30, 2020 was $49,266 (September 30, 2019 – $nil) for incentive options granted and vested.

The following weighted average assumptions were used for the Black-Scholes option-pricing model valuation of stock options granted during the year:

	September30, 2019	December 31, 2019
Risk-free interest rate	0.39%	1.53%
Expectedlife of options	5years	5years
Expected annualized volatility	175.84%	65.11%
Dividend yield	0.0%	0.0%
Forfeiture rate	0.0%	0.0%

In August 2020, the number of stock options issued were amended and updated to reflect a reduction of 50.28% in the Company's common shares issued and outstanding after the transactions listed above in the Treasury share cancellation section and note 11.

Warrants – Derivative Liability

The Company's detachable warrants related to the units issued in the July 15, 2020, private placement have an exercise price denominated in foreign currency (Canadian dollars) and are classified and accounted for as a derivative liability at fair value with changes in fair value included in profit or loss. The Company issued 46,766,666 warrants and initially allocated $725,039 to the warrant derivative liability. During the period ended September 30, 2020, there was a derivative loss of $6,565,519 from the mark-to-market measurement of the warrant derivative liability. The assumptions used in the Black-Scholes pricing model to calculate the fair value of the warrant derivative liability were: an expected life of 1.8 years; annualized volatility of 106.58%; a risk free interest rate of 0.25%; and zero expected dividend yield

The Company's warrants, which were attached to the units issued in the May 16, 2017, private placement were denominated in Canadian dollars and were classified and accounted for as a derivative liability at fair value with changes in fair value included in profit or loss. The Company issued 12,734,500 warrants and initially allocated $763,269 to the warrant derivative liability. All warrants expired in the year ended in 2019. During the period ended September 30, 2019 there was a derivative gain of $30,020 from the mark-to-market of the warrant derivative liability.

13. RELATED PARTIES

a)Key management compensation

	September30, 2020	September30, 2019
Salaries, consulting and directors' fees	$381,427	$441,959
Share-based payments	49,266	-
	$430,693	$441,959

As at September 30, 2020 the Company had the following balances due to/from entities related by way of common directors and/or management. These amounts, unless otherwise noted, were unsecured and non-interest bearing.

	September30, 2020	December 31, 2019
Accounts payable and accrued liabilities	$72,147	$44,479

14. COST OF SALES

	September30, 2020	September30, 2019
Inventory costs	$189,005	$2,991,515
Royalties and taxes	60,433	580,029
Depreciation and depletion	-	706,447
Export costs and freight expenses	8,263	547,292
Total	$257,701	$4,825,283

15. EXPLORATION AND EVALUATION EXPENSES

	September30, 2020	September30, 2019
Assays	$411	$1,133
Consulting –geological and other	55,274	99,643
Equipment and maintenance	966	59,664
Fees and licenses	153,557	214,986
Field expenditures and road construction	3,739	24,963
Other	5,778	20,712
Payroll	103,350	340,318
Room and boarding	4,508	69,341
Vehicle expenses	5,780	-
Total	$333,363	$830,760

16. GENERAL AND ADMINISTRATION EXPENSES

	September30, 2020	September30, 2019
Consulting	$82,683	$126,687
Investor relations and shareholder communication	5,837	12,727
Insurance	85,210	97,583
Management and director fees (Note 13)	271,270	322,654
Office and miscellaneous	190,840	146,957
Payroll	167,044	343,475
Rent	50,237	50,527
Subscriptions and licenses	9,635	38,854
Telephone and information technology	55,658	83,567
Travel	13,188	74,480
Other	39,153	8,055
Total	$978,216	$1,305,566

17. CAPITAL MANAGEMENT

The capital structure of the Company consists of equity attributable to common shareholders deficit totaling $2,142,757 (2019 – deficit of $17,069,563) comprising of share capital of $920,639 (2019 - $1,775,220), share premium of $9,445,729 (2019 - $58,493,031), reserves of $64,824,953 (2019 – $(9,459,919)), and deficit totaling $(77,334,078) (2019 - $(67,877,895)). The Company's objectives when managing capital are to: (i) preserve capital, (ii) obtain the best available net return, and (iii) maintain liquidity.

The Company manages the capital structure and makes adjustments to it in light of changes in economic condition and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and investments.

The Company's policy is to invest its excess cash in highly liquid, fully guaranteed, bank sponsored instruments. The Company is not subject to externally imposed capital requirements and does not have exposure to asset-backed commercial paper or similar products.

18. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Financial instruments

The Company is required to disclose the fair value of each class of financial assets and liabilities in the financial statements. Financial assets and liabilities are classified in the fair value hierarchy according to the lowest level of input that is significant to the fair value measurement. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. The hierarchy is as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quotes prices included in Level 1 that are observable for the asset or liability. either directly (i.e., as prices) or indirectly (i.e., derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The carrying value of receivables and advances, accounts payable and accrued liabilities, and loan payable approximates fair value due to the short-term nature of the financial instruments. Cash is carried at its fair value using level 1 inputs.

Risk management

The Company is exposed to various financial instrument risks and assesses the impact and likelihood of this exposure. These risks include, credit risk, currency risk, interest rate risk and liquidity risk. Where material, these risks are reviewed and monitored by the Board of Directors.

Credit risk

Financial instruments that potentially subject the Company to credit risk consist of cash and receivables. The Company deposits cash with high credit quality financial institutions as determined by rating agencies, Receivables and advances are mostly due from suppliers and contractors. Trade receivables are due from well-known customers, and the carrying amount of the financial assets represents the maximum credit exposure.

Currency risk

The international nature of the Company's operations results in foreign exchange risk. The Company's operating costs are primarily in US dollars, Canadian dollars, Brazilian reals and Euro, while revenues were received in either US dollars or Brazilian real. Hence, any fluctuation of the US dollar in relation to these currencies may affect the profitability of the Company and the value of the Company's assets and liabilities.

As at September 30, 2020 the Company is exposed to foreign exchange risk through the following financial assets and liabilities denominated in currencies other than the function currency of the applicable company:

	US dollar	Canadian dollar	Brazilian real
Cash	$112,275	$1,598,719	$67,012
Prepaid expenses and other assets	50,775	7,615	74,589
Total Assets	163,050	1,606,334	141,601
Accounts payable and accrued liabilities	(301,353)	(44,457)	(242,527)
Net Assets	$(138,303)	$1,561,877	$(100,926)

Based on the above net exposures as at September 30, 2020, a 10% appreciation in the US dollar against the Brazilian Real would not result in a significant impact to the Company's earnings before taxes. A 10% appreciation in the Canadian dollar against the US dollar would result in an approximate $158,400 increase to the Company's earnings before income taxes.

The Company does not use derivative instruments to reduce its exposure to foreign currency risk nor has it entered into foreign exchange contracts to hedge against gains or losses from foreign exchange.

Interest rate risk

The Company's financial assets exposed to interest rate risk consist of cash balances. None of the Company's debt is subject to floating interest rates. The Company does not believe its interest rate risk is significant.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with its financial liabilities.

The Company has historically relied upon capital contributions and related party debt financing to maintain an adequate level of cash to satisfy its capital requirements and will continue to depend heavily upon these financing activities. All of the Company's accounts payable and accrued liabilities are subject to normal trade terms. The Company is exposed to risk that it will encounter difficulty in satisfying liabilities on maturity.

There can be no assurance the Company will be able to obtain required financing in the future on acceptable terms. The Company will need additional capital in the future to finance ongoing exploration of its properties, such capital is expected to be derived from the completion of equity financings. The Company has limited financial resources, has minimal source of operating income and has no assurance that additional funding will be available to it for future exploration and development of its projects, although the Company has been successful in the past in financing its activities through the previously mentioned financing activities.

The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions as well as exploration success. In recent years, the securities markets have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur. Any quoted market for the common shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating revenue, cash flows or earnings.

The Company cannot estimate the extent of COVID-19 pandemic outbreak, and its potential impact on the ability to obtain financing and maintain necessary liquidity.

As at September 30, 2020, the Company's liabilities that have contractual maturities are as follows:

	September 30,	1 Year	2 Years	Total
	2020
Accounts payable and accrued liabilities	$334,697$	73,645$	179,995	$588,337
Provisions	503,521	-	142,350	645,871
Financial liability at FVTPL	-	-	1,156,539	1,156,539
	$838,218$	73,645$	1,478,884	$2,390,747

The fair value of the Company's loans payable is approximated by the carrying values as the contractual interest rates are comparable to current market interest rates.

19. SEGMENTED INFORMATION

The Company's sole operation is the Jaburi mine in Rondônia, Brazil. Accordingly, the chief decision makers consider Meridian to currently have one segment and, therefore, segmented information is not presented.

20. COMMITMENTS AND CONTINGENCIES

A significant portion of the Company's operations are located in Brazil. From time to time various legal, labour, environmental and tax matters are outstanding due to the nature of both current and historical operations. The Company has taken and continues to take all necessary and available steps to comply with relevant laws and regulations, however there is no assurance such steps will be successful.

Royalties

The Company pays royalties to landowners as well as the Brazilian government. Royalties to landowners are determined based on individual negotiated agreements, usually at a rate of 1.5% of net sales proceeds on the sale of manganese oxide material, while royalties of approximately 3% of sale proceeds on the sale of manganese oxide material are paid to the Brazilian government,

Buffer Zone

The Company has been advised that due to certain Jaburi tenements being in close proximity to indigenous title land, Jaburi could be affected by a civil public action between two Brazilian government departments.

Jaburi currently owns several tenements, which border the Povo Cinta Larga indigenous land. Due to illegal diamond mining activities by third parties within the Povo Cinta Larga indigenous land and surrounding areas, the Brazilian Federal Prosecutor's Office (the "FPO") has filed a civil public action against the ANM. The FPO is requesting the ANM to withdraw all existent research applications and mining authorizations within the indigenous land of Povo Cinta Larga and surrounding area adjacent to the indigenous land (buffer zone). The ANM has filed appeals to block the FPO civil public action and the final ruling is pending.

If there is an eventual imposition of a buffer zone, this would have a material impact on Jaburi's tenements as some of Jaburi's tenements straddle or are wholly within the proposed buffer zone.

Jaburi has retained legal counsel to represent them in this issue who are filing various legal actions to defend their interests. At this point in time, management has determined it is more likely than not that there will be no amount owing, and therefore no liability has been accrued.