MX Gold Corp.

Consolidated Financial Statements

Years ended December 31, 2019 and 2018

Expressed in Canadian dollars

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders and the Board of Directors of

MX Gold Corp.

Opinion on the Financial Statements

We have audited the accompanying consolidated financial statements of MX Gold Corp. (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2019 and December 31, 2018, and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the years ended December 31, 2019 and 2018, and the related notes, including a summary of significant accounting policies and other explanatory information (collectively referred to as the “financial statements”).

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

Basis for Opinion

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

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 2 in the consolidated financial statements which indicates the Company does not generate sufficient profits or cash flows from operations to cover its planned operating and capital expenditures, has a working capital deficit and relies on additional financing for its activities. As stated in Note 2, these matters and conditions indicate the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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INDEPENDENT AUDITORS’ REPORT (continued)

Other Information

Management is responsible for the other information, which comprises the information included in the Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions.

Our opinion on the consolidated financial statements does not cover the other information and do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit and remain alert for indicators that the other information appears to be materially misstated. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in the auditors’ report. We have nothing to report in this regard.

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

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

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

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

Identify and assess the risks of material misstatement of the financial statements,

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INDEPENDENT AUDITORS’ REPORT (continued)

obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditors’ report is Joseph Bonvillain.

MANNING ELLIOTT LLP

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CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, British Columbia

April 16, 2020

MX GOLD CORP.

Consolidated Statements of Financial Position Expressed in Canadian Dollars

MX GOLD CORP.	MX GOLD CORP.
Consolidated Statements of Financial Position
Expressed in Canadian Dollars

		As at December 31,	As at
			December 31,
		2019	2018
		$	$
ASSETS

Current assets
Cash and cash equivalents		12,126	10,092
Restricted cash(Note 6)		-	345
Marketable securities(Note 7)		39,000	-
Sales taxes receivables		25,097	52,194
Prepaid expenses		24,887	80,491
Assets held for sale (Note 8)		-	3,491,651
Total current assets		101,110	3,634,773
Property, plant and equipment, net (Note 9)		-	211,587

Total assets		101,110	3,846,360

LIABILITIES

Current liabilities
Accountspayable and accrued liabilities		608,551	356,381
Due to relatedparties(Note 10)		370,664	638,419
Currentportion of lease obligations(Note 12)		-	65,874
Liabilities associated with assets held for sale(Note 8)		-	2,494,965
Provisions (Note11)		457,233	499,252
Total current liabilities		1,436,448	4,054,891

Lease obligations (Note12)		-	56,246
		1,436,448	4,111,137

EQUITY
Share capital(Note 14)		38,501,106	38,501,106
Contributed surplus (Note 14)		3,983,931	3,983,931
Deficit		(43,820,375)	(42,749,814)
Total equity (deficit)		(1,335,338)	(264,777)

Total liabilities and equity		101,110	3,846,360

On behalfof the Board:
	“Dan Omeniuk”	“Robert Jeffery”
	Director	Director

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

MX GOLD CORP.

Consolidated Statements of Loss and Comprehensive Loss Expressed in Canadian Dollars

	Year ended	Year ended
	December 31	December 31
	2019	2018
	$	$
Revenue
Digitalassetsmined (Note 5)	-	321,305
General and Administrative Expenses
Professional, management and consulting fees	276,167	601,267
Insurance, office and other miscellaneous	209,225	481,871
Depreciation of property, plant and equipment (Note 9)	9,298	259,678
Salaries and benefits	-	60,238
Finance costs	7,616	9,924
Investor relations and public company costs	21,035	54,332
Lease expenses	-	11,368
Share-based payments (Note14(d))	-	5,939
	(523,341)	(1,484,617)
Loss before other items	(523,341)	(1,163,312)
Other Items
Loss on sale of digital assets	-	(22,567)
Impairment of property, plant, and equipment (Note 9)	-	(596,628)
Gain (loss) from disposal of equipment (Note 9 and 10)	5,640	(2,916)
Other expenses	-	(408)
Loss on sale of marketable securities (Note 7)	(86,110)	-
Revaluation loss on marketable securities (Note7)	(458,640)	-
	(539,110)	(622,519)
Loss and comprehensive loss from continuing operations	(1,062,451)	(1,758,831)
Discontinued Operations
Gain (loss) on assets held for sale (Note 8)	46,995	(13,827,648)
Loss from discontinued operations (Note 22)	(55,105)	(540,465)
Total loss and comprehensivelossfromdiscontinued operations	(8,110)	(14,368,113)
Net loss and comprehensive loss	(1,070,561)	(16,153,944)
Basic and diluted loss per share -continuing operations	(0.00)	(0.06)
Basic and diluted loss per share -discontinued operations	(0.00)	(0.00)
Basic and diluted lossper share - total	(0.00)	(0.06)
Weighted average number of common shares
-basic and diluted	285,447,252	284,887,271

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

MX GOLD CORP.

Consolidated Statements of Cash Flows Expressed in Canadian Dollars

	Year ended	Year ended
	December 31	December 31
	2019	2018
	$	$
Cash flows from (used in)
Operating activities
Net loss for the year	(1,070,561)	(16,153,944)
Adjustments for non-cash items:
Share-based payments	-	5,939
Impairment of property, plant and equipment	-	596,628
(Gain) loss from disposal of property, plant, and equipment	(5,640)	2,916
Loss on sale of marketable securities	86,110	-
Revaluation loss on marketable securities	458,640	-
Depreciation of property, plant and equipment	47,227	324,457
(Gain) loss on assets held for sale	(46,995)	13,828,056
Other expenses	3,076	70,000
	(528,143)	(1,325,948)
Changes in non-cash working capital:
Sales taxes receivables	27,097	117,911
Prepaid expenses	52,528	(111,593)
Accounts payable and accrued liabilities	252,247	486,314
Due to related parties	35,729	366,089
Provision	(42,019)	-
Operating cash flows	(202,561)	(467,227)
Decrease in restricted cash	345	136,165
Cash used inoperating activities	(202,216)	(331,062)
Investing activities
Purchase of equipment	-	(43,004)
Proceeds from disposal of assets held for sale	150,000	40,000
Proceeds from disposal of property, plant, and equipment	-	227,693
Proceedsfromdisposalof marketable securities	54,250	-
Cash provided by investing activities	204,250	224,689
Financing activities
Repayment of lease obligations	-	(95,268)
Cash used in financing activities	-	(95,268)
Increase (decrease) in cash and cash equivalents	2,034	(201,641)
Cash and cash equivalents, beginning ofyear	10,092	211,733
Cash and cash equivalents, end ofyear	12,126	10,092

Supplemental cash flow disclosures – Note 20 Cash flows from discontinued operations – Note 22

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

MX GOLD CORP.

Consolidated Statements of Changes in Equity

Expressed in Canadian Dollars

		Capital	Contributed	Subscriptions received
	Number	Amount	Surplus	in Advance	Deficit	Total
		$	$	$	$	$
Balance,December 31,2017	256,253,918	36,311,606	3,977,992	1,422,500	(26,595,870)	15,116,228

Shares issued for cash pursuant to non-brokered private placement (Note 14(b))	29,193,334	2,189,500	-	(1,422,500)	-	767,000
Share-based payments (Note 14(d))	-	-	5,939	-	-	5,939
Netloss and comprehensiveloss	-	-	-	-	(16,153,944)	(16,153,944)
Balance,December 31,2018	285,447,252	38,501,106	3,983,931	-	(42,749,814)	(264,777)

Net loss and comprehensive loss	-	-	-	-	(1,070,561)	(1,070,561)
Balance,December 31,2019	285,447,252	38,501,106	3,983,931	-	(43,820,375)	(1,335,338)

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

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

1. Nature of Operations

The Company was incorporated on October 13, 1999 under the laws of British Columbia. The Company has registered its operations in the Province of Manitoba under the operating name Winnipeg MX Gold. The head office and principal address of the Company is located at 1300 Redonda Street, Winnipeg, MB, R2C 3T7.

2. Basis of Preparation and Going Concern

a) Statement of compliance

These consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

These consolidated financial statements were approved and authorized for issue by the Board of Directors on April 16, 2020.

b) Going concern

These consolidated financial statements have been prepared on a going concern basis which contemplates that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

As at December 31, 2019, the Company had a working deficit of $1,335,338 and incurred a net loss $1,070,561 and used net cash in operating activities of $202,216 during the year ended December 31, 2019.

The ability of the Company to carry out its business objectives is dependent on its ability to secure continued financial support from related parties, to obtain public equity financing, or to ultimately attain profitable operations in the future. Whether and when the Company can attain profitability and positive cash flows is uncertain. While the Company has been successful in securing financing in the past, there is no assurance that financing will be available in the future on terms acceptable to the Company.

These factors form a material uncertainty that may cast significant doubt upon the Company’s ability to continue as a going concern. These consolidated financial statements do not give effect to adjustments to the carrying value and classification of assets and liabilities and related expense that would be necessary should the Company be unable to continue as a going concern. If the going concern assumption is not appropriate, material adjustments to the consolidated financial statements could be required.

c) Basis of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary FortyTwo Metals Inc. as follows:

	Ownership Interest	Ownership Interest
Subsidiary	December 31,2019	December 31,2018
FortyTwo Metals Inc.	N/A	100%

Up until the sale of FortyTwo Metals Inc. in March 2019 (see Note 8), the consolidated financial statements included the 100% ownership interest of FortyTwo Metals Inc., a mining and exploration company located in Canada.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

Intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.

The results of operations of FortyTwo Metals Inc. in 2019 and 2018 were presented as discontinued operations (Note 22).

d) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value.

e) Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars. The functional currency of the Company and its subsidiary, FortyTwo Metals Inc., is Canadian dollar.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

f) Use of estimates

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments and estimates and form assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and the reported amount of expenses for the periods reported. The estimates and associated assumptions are based on historical experience and various other factors that are considered to be relevant. Actual results could differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis, and may change if new information becomes available. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

3. Significant Accounting Policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Marketable Securities

The Company has classified all of its marketable securities as fair value through profit or loss, thus securities are recorded at fair market value and any associated unrealized gain of loss, are included in the net loss in the year in which they arise.

(b) Cash and cash equivalents

Cash equivalents include money market instruments that are readily convertible to cash. As at December 31, 2019, the Company has $Nil (2018: $8,000) in cashable Guaranteed Investment Certificates (“GIC”).

(c) Revenue Recognition

In 2018, the Company derived its income from digital currency received for providing “mining” services to a digital currency blockchain. During the year ended December 31, 2018, mining was the Company’s principal business activity. A miner is only able to validate transactions once their computer equipment has solved a computationally difficult mathematical problem. Revenue is measured based on the fair value of the digital currency received. The fair value is determined using the US dollar spot price translated to Canadian dollars at the time the Company receives the digital asset into its digital asset electronic account.

(d) Digital Currencies

Digital currencies consist of crypto currency denominated assets such as Bitcoin and are included in current assets. Digital currencies meet the definition of intangible assets in IAS 38 Intangible Assets as they are identifiable non-monetary assets without physical substance. They are initially recorded at cost and the revaluation method is used to measure the digital currencies subsequently. Under the revaluation method, increases in fair value are recorded in other comprehensive income, while decreases are recorded in profit or loss. There is no recycling of gains from other comprehensive income to profit or loss. However, to the extent that an increase in fair value reverses a previous decrease in fair value that has been recorded in profit or loss, that increases is recorded in profit or loss.

Digital assets are recoded as a current asset on the statements of financial position at their fair value at the time of receipt of the digital asset and re–measured at each reporting date. Revaluation gains or losses and gains or losses on the sale of coins for cash are recorded as part of other expenses in the statement of operations and comprehensive loss.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

(e) Foreign currency translation

Transactions denominated in foreign currencies are translated to the functional currency of the Company and its subsidiary at exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at the reporting date. Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date. Revenues and expenses are translated at exchange rates prevailing on the date of transactions. All exchange gains and losses are included in determination of profit or loss.

(f) Financial instruments

Financial assets are classified and measured based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. IFRS 9 contains three primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income and fair value through profit and loss. Financial assets are recognized in the statements of financial position if the Company has a contractual right to receive cash or other financial assets from another entity. Financial assets are derecognized when the rights to receive cash flows from the asset have expired or were transferred and the Company has transferred substantially all risks and rewards of ownership.

All financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instruments. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

Financial instruments are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

The Company has classified its cash and cash equivalents, restricted cash, and marketable securities as financial assets measured at fair value through profit and loss.

The Company has classified its accounts payable and due to related parties as financial liabilities measured at amortized cost. Such assets and liabilities are recognized initially at fair value inclusive of any directly attributable transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment losses.

Financial assets and financial liabilities are offset and the net amount presented in the statements of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost. Loss allowances for accounts receivables are always measured at an amount equal to lifetime expected credit losses if the amount is not considered fully recoverable. A financial asset carried at amortized cost is considered credit-impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

Individually significant financial assets are tested for credit-impairment on an individual basis. The remaining financial assets are assessed collectively.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.

In assessing collective impairment, the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management's judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

Losses are recognized in the statements of comprehensive loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the statements of comprehensive loss.

Fair value

Fair value estimates are made at the statement of financial position date based on relevant market information and other information about financial instruments. Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into a fair value evaluation hierarchy. This hierarchy groups financial assets and financial liabilities into three levels according to the significance of the inputs used in the fair value evaluation of the financial assets and financial liabilities. The fair value levels of the hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities at the financial reporting date;

Level 2 – Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 – Inputs for the assets or liabilities that are not based on observable market data.

The level within which the financial asset or financial liability is classified is determined based on the lowest level of significant input to the fair value measurement. The Company’s cash and cash equivalents, restricted cash and marketable securities are categorized as Level 1.

(g) Business combinations

Acquisitions of businesses are accounted for using the acquisition method. At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognized at their fair value, except deferred tax assets or liabilities, which are recognized and measured in accordance with IAS 12 – Income Taxes. Subsequent changes in fair values are adjusted against the cost of acquisition if they qualify as measurement year adjustments.

The measurement year is the year between the date of the acquisition and the date where all significant information necessary to determine the fair values is available and cannot exceed 12 months. All other subsequent changes are recognized in the statements of loss and comprehensive loss.

The purchase price allocation process resulting from a business combination requires management to estimate the fair value of identifiable assets acquired including intangible assets and liabilities assumed including any contingently payable purchase price obligation due over time. The Company uses valuation techniques, which are generally based on forecasted future net cash flows discounted to present value.

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

These valuations are closely linked to the assumptions used by management on the future performance of the related assets and the discount rates applied. The determination of fair value involves making estimates relating to acquired intangibles assets, property and equipment and contingent consideration. In certain situations, goodwill or a bargain purchase gain may result from a business combination. Goodwill is measured as the excess of the consideration transferred over the net amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the excess is recognized immediately in the statements of comprehensive loss as a bargain purchase gain. Acquisition related costs are recognized in the statements of loss and comprehensive loss as incurred.

h) Goodwill

Goodwill represents the excess of the price paid for the acquisition of an entity over the fair value of the net identifiable tangible and intangible assets and liabilities acquired on the date of acquisition less any impairment losses. Goodwill is allocated to the Cash Generating Units (“CGU”) to which it relates. Goodwill is measured at historical cost and is evaluated for impairment annually and more often if events or circumstances indicate there may be impairment.

Impairment is determined for goodwill by assessing if the carrying value of a CGU, including the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs to sell and the value in use. Impairment losses recognized in respect of a CGU are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the CGU. Any goodwill impairment is recorded in income in the year in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed.

(i) Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses, except for land, which is not depreciated but tested annually for impairment. The Company starts to deprecate property, plant and equipment when assets are ready and available for use.

Depreciation of property, plant and equipment is calculated using the following method over their respective estimated useful life at the following annual rates:

Mining equipment	30% declining balance
Computer equipment	2 year straight-line
Digital asset mining equipment	2 year straight-line
Vehicles	7 year straight-line

Depreciation methods and useful lives are reviewed at each reporting date and adjusted if appropriate. Property, plant and equipment are written down to the net recoverable value when management determines there has been a change in circumstances which indicates its carrying amount may not be recoverable. Any gain or loss on disposal of an item of property and equipment is recognized in profit or loss.

(j) Exploration and evaluation assets

Expenditures incurred before the Company has obtained legal rights to explore an area are recognized in the statement of operation and comprehensive loss as exploration expenses.

Exploration and evaluation assets reflect expenditures for an area where technical feasibility and commercial viability have not yet been determined. Expenditures, including, but are not limited to, land acquisition, geological and geophysical studies, exploratory drilling and sampling and directly attributable employee salaries and benefits are capitalized and accumulated pending determination of technical feasibility and commercial viability.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

Exploration and evaluation assets are not depleted. When assets are determined to be technically feasible and commercially viable, the accumulated costs are tested for impairment and the recoverable amount is transferred to property, plant and equipment. Upon transfer of exploration and evaluation costs into property, plant and equipment, all subsequent expenditures on the construction, installation or completion of infrastructure facilities are capitalized within mine development. After production starts, all assets included in mine development costs are transferred to producing mines. At such time as commercial production commences, these expenditures will be charged to operations on a unit-ofproduction method based on proven and probable resources.

Exploration and evaluation assets are also assessed for impairment when facts and circumstances suggest that the carrying amount exceeds the recoverable amount. The aggregate costs related to abandoned exploration and evaluation assets are charged to operations at the time of any abandonment or when it has been determined that there is evidence of a permanent impairment.

(k) Assets held for sale

Non-current assets and disposal groups are classified as assets held for sale if it is highly probable that the value of these assets will be recovered primarily through sale rather than through continuing use. They are recorded at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains and losses on remeasurement are recognized in the income statement. Once classified as held for sale, property, plant and equipment are no longer amortized. The assets and liabilities are presented as held for sale in the balance sheet when the sale is highly probable, the asset or disposal group is available for immediate sale in its present condition and management is committed to the sale, which should be expected to be completed within one year from the date of classification.

(l) Leases

Leases where the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and not recognized in the statement of financial position.

Minimum lease payments made under finance leases are apportioned between finance expenses and the reduction of the outstanding liability. Finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Payments made under operating leases are recognized in the statement of operation on a straight-line basis over the term of the lease. Lease incentives received are recognized as a reduction to the lease expense over the term of the lease.

(m) Impairment

The carrying amounts of the Company’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated by reference to the higher of the value in use and fair value less costs to sell. Fair value less costs to sell is defined as the estimated price that would be received on the sale of the asset in an orderly transaction between market participants at the measurement date. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discounted rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other groups of assets.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

An impairment loss is recognized if the carrying amount of an asset or group of assets exceeds the estimated recoverable amount. Impairment losses are recognized in profit or loss.

When impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimated recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

(n) Decommissioning obligations

Decommissioning obligations arise from the legal obligation to abandon and reclaim property, plant and equipment incurred upon the acquisition, construction, development and use of the asset. The initial liability is measured at the discounted value of the estimated costs to reclaim and abandon using a pretax rate that reflects current market assessments of the time value of money and the risk specific to the obligation, subsequently adjusted for the accretion of discount and changes in expected costs. The decommissioning cost is capitalized in the relevant asset category. Costs capitalized to property, plant and equipment are depreciated into profit or loss based upon the unit-of-production method consistent with the underlying assets. Actual costs incurred upon settlement of the obligations are charged against the provision to the extent the provision was established.

(o) Provisions

Provisions for legal or constructive obligations are recognized when the Company has a present legal or constructive obligation that has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.

(p) Income taxes

Income tax expense comprises current and deferred tax. Income tax is recognized in the statements of operations and comprehensive loss except to the extent it relates to items recognized directly in equity.

Deferred taxes are the taxes expected to be payable or recoverable on the difference between the carrying amounts of assets in the statement of financial position and their corresponding tax bases used in the computation of taxable profit, and are accounted for using the liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets in a transaction that affects neither the taxable profit nor the accounting profit.

(q) Share issue costs

Professional, consulting, regulatory and other costs directly attributable to equity financing transactions are recorded as deferred share issue costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred share issue costs related to financing transactions that are not completed are charged to expenses.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

(r) Share purchase warrants

The Company bifurcates units consisting of common shares and share purchase warrants using the residual value approach whereby it first measures the common share component of the unit at fair value using quoted market prices as input values and then allocates any residual amount to the warrant component of the unit. The residual value of the warrant component is credited to contributed surplus. If the proceeds from the offering are less than or equal to the estimated fair market value of shares issued, a nil carrying amount is assigned to the warrants. When warrants are exercised, the corresponding assigned value of the warrants is reclassified to share capital. Warrants that are issued as payments for agency fee or other transactions costs are accounted for as share-based payments.

(s) Share-based payments

The Company’s Stock Option Plan allows directors, officers and consultants to acquire shares of the Company in exchange for the options exercised. The fair value of share options granted to employees is recognized as an expense over the vesting period using the graded vesting method with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company.

The fair value is measured at the grant date and recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option-pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

The compensation cost of stock options granted to consultants is initially measured at fair value of the awards at the grant date, periodically remeasured to fair value until the consultant’s performance is complete, and recognized over the periods during which the consultant become unconditionally entitled to the options. The compensation cost is charged to profit or loss with a corresponding increase to contributed surplus.

(t) Loss per share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury method. The treasury method assumes that proceeds received from the exercise of stock options and warrants are used to repurchase common shares at the prevailing market rate. Diluted loss per share is equal to the basic loss per share as the outstanding options and warrants are anti-dilutive.

(u) Mining Exploration Tax Credit (“METC”)

Mining exploration tax credits are recorded when there is reasonable assurance that the Company has complied with, and will continue to comply with, all conditions needed to obtain the credits. These nonrepayable mining exploration tax credits are earned with respect to qualified mining exploration costs incurred in British Columbia, Canada and are recorded as a reduction of the related exploration expenditures.

(v) New accounting standards adopted

IFRS 16 Leases (“IFRS 16”)

On January 1, 2019, the Company adopted the requirements of IFRS 16, Leases. On January 13, 2016, the IASB published a new standard, IFRS 16, Leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

Under the new standard, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly. The liability accrues interest. This will typically produce a front-loaded expense profile (whereas operating leases under IAS 17 would typically have had straight-line expenses). The standard is effective for annual periods beginning on or after January 1, 2019. There was no impact to the consolidated financial statements upon adopting IFRS 16 as upon adoption of leases were already classified and accounted for as finance leases.

4. Significant Accounting Estimates and Judgments

Significant assumptions about the future and key sources of estimation uncertainty that management has made at the financial position reporting date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Critical accounting judgments

a) Going concern

Management has applied judgements in the assessment of the Company's ability to continue as a going concern when preparing its consolidated financial statements for the year ended December 31, 2019. Management prepares the consolidated financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Please refer to note 2(b) for additional information.

b) Exploration and evaluation expenditures

The application of the Company’s accounting policy for exploration and evaluation expenditures capitalized requires judgment in determining which expenditures are recognized as exploration and evaluation assets and applying the policy consistently. In making this determination, the Company considers the degree to which the expenditure can be associated with finding specific mineral resources.

c) Revenues from bitcoin mining

The Company recognizes revenue from the provision of transaction verification services within digital currency networks, commonly described as “cryptocurrency mining”. As consideration for these services, the Company receives digital currency from each specific network in which it participates (“coins”). Revenue is measured based on the fair value of the coins received.

Significant accounting estimates

a) Impairment of long-lived assets

Determining the amount of impairment of long lived assets requires an estimation of the recoverable amount, which is defined as the higher of fair value less the cost of disposal or value in use. Many of factors used in assessing recoverable amounts are outside of the control of management and it is reasonably likely that assumptions and estimates will change from period to period. These changes may result in future impairments in the Company’ long-lived assets such as property, plant and equipment, exploration and evaluation assets and assets held for sale.

b) Depreciation

Depreciation of property, plant and equipment begins when it is available for use, which is defined as occurring when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by management. Significant assumptions are involved in the determination of useful

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

lives and residual values and no assurance can be given that actual useful lives and residual values will not differ significantly from current assumptions.

c) Current and deferred taxes

Accounting for income taxes is a complex process requiring management to interpret frequently changing laws and regulations and make judgments relating to the application of tax law, the estimated timing of temporary difference reversals, and the estimated realization of tax assets. All tax filings are subject to subsequent government audits and potential reassessment. These interpretations, judgments and changes related to them impact current and deferred tax provisions, deferred income tax assets and liabilities and results of operations.

d) Share-based payments

The fair value of stock options issued are subject to the limitations of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices, changes in subjective input assumptions can materially affect the fair value estimate.

e) Valuation of digital assets

The Company holds bitcoins as its digital assets. Bitcoins are considered to be an identifiable nonmonetary assets without physical substance and are treated as intangible assets not subjected to amortization, under the scope of IAS 38 Intangible Assets.

Digital Assets are measured at fair value using the quoted price. The Digital Assets are valued based on the closing price obtained from “blockchain.com” at the reporting period corresponding to the different Digital Assets mined by the Company. The Company is relying on the data available at “blockchain.com” to be an accurate representation of fair value.

5. Digital Currency Mining

During the year ended December 31, 2018, the Company commenced digital asset mining and earned revenues totalling $321,305 from 32 Bitcoins that were received for mining services. The Company had sold all Bitcoins for cash during 2018, and therefore held no Bitcoins at 2018 year-end. As at December 31, 2018, the Company had ceased digital asset mining due to low Bitcoin market value which would generate losses from mining and the Company wrote-off its digital mining equipment as fully impaired. A total of $401,599 was expensed for the write-off of digital currency mining equipment and included in the impairment expense amount for property, plant and equipment in 2018.

6. Restricted Cash

As at December 31, 2019, the Company had no restricted cash (2018: $345).

7. Marketable Securities

Marketable securities consist of 5,000,000 common shares of Cameo Industries Corp. (“Cameo”) (formerly Cameo Cobalt Corp.) that were received during the current fiscal year as described at Note 8. During the year ended December 31, 2019, the Company sold 1,100,000 common shares of Cameo for gross proceeds of $54,250 which resulted in a realized loss of $86,110 on sale.. The common shares are stated at their December 31, 2019 fair market value of $39,000.

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

The following summary is a continuity table of marketable securities:

The followingsummaryis a continuitytable of marketable securities:	The followingsummaryis a continuitytable of marketable securities:	The followingsummaryis a continuitytable of marketable securities:
Number of Shares Amount
	$
December 31, 2018	-	-
Acquired	5,000,000	638,000
Sold	1,100,000	(140,360)
Change in fair value,unrealized revaluation loss	-	(458,640)
December 31, 2019	3,900,000	39,000

8. Assets Held for Sale

Beginning in 2017 and continuing in the December 31, 2018 figures presented in these Financial Statements, the Company classified all mining claims, mineral properties, mining investments and equipment including the net assets of its then wholly owned subsidiary, FortyTwo Metals Inc. (the Subsidiary), as Assets Held for Sale given the Company’s decision to explore cryptocurrency opportunities and fully divest its portfolio of natural resource mining assets. Assets held for sale are measured at the lower of cost and fair value less costs to sell.

The Company entered into two agreements dated January 11, 2019, namely the FortyTwo Metals Inc. Share Purchase Agreement and the Willa Property Purchase, Sale and Assignment Agreement (“the Agreements”), to sell its remaining mining assets. The sale was closed on March 6, 2019. Under the terms of the Agreements, the Company agreed to sell all of the outstanding shares of its wholly-owned subsidiary for aggregate consideration of $578,982 consisting of $53,982 to renew certain mineral claims of the MAX property owned by the subsidiary, $150,000 in cash and 5,000,000 common shares of the Purchaser (Cameo Cobalt Corp.) at a deemed issue price of $0.075 per share (estimated fair value at the closing date of $0.13 per share). The Purchaser agreed to grant a 50% net profit interest on gross cash income from the MAX property to the Company (less all expenses incurred to produce such income which is payable only once the Purchaser has recouped from net profits its capital investment in the MAX property and all preproduction costs) and the advanced stage Willa Property in British Columbia for a purchase price of $1 and assign certain legacy obligations associated with the Willa Property, including a net smelter royalty, advance royalty payments, and the requirement to retransfer the property back to the original optionors if the property is not in commercial production on or prior to September 28, 2020 with the underlying mineral claims in good standing for a period of not less than three years. The Purchaser also agreed to grant a 50% net profit interest on gross cash income from the Willa property to the Company (less all expenses incurred to produce such income which is payable only once the Purchaser has recouped from net profits its capital investment in ‐ the Willa property and all pre production costs).

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

	Grouping of Assets Held for Sale Net of Losses	Gain (Loss) on Assets Held for Sale	Gain (Loss) on Assets Held for Sale
	December 31, 2019 $ December 31, 2018 $	Year ended December 31, 2019 $	Year ended December 31, 2018 $
(a) Investment in Mexican Projects	- -	-	(10,071,856)
(b)MidasProperty	- -	-	(1,543,792)
(c) Willa and other FortyTwo Metals properties, reclamation bond, cash, receivables, and equipment	- 3,282,965 - 208,685 - $3,491,651	3,329 28,814	(2,212,000)
(d)Equipment			-
Total		$32,143	(13,827,648)

(a) Investment in Mexican Projects

The Company invested a total of $10,218,117 in projects in Mexico as described in (i) and (ii) below. During 2018, the projects were written down to $Nil and a loss on assets held for sale of $10,071,856 was recorded.

On September 11, 2018, the Company received a Complaint dated September 9, 2018 that was filed in the United States District Court for the District of Nevada naming GracePoint Mining Corp., a Nevada corporation (“GracePoint”), as plaintiff, and the Company as one of the defendants. The Complaint alleged breach of contract and breach of the implied covenant of good faith and fair dealing and sought, among other things, general damages of US$12 million. The Complaint related to an Initial Purchase Agreement dated October 21, 2016, as amended, among the Company, Gracepoint, American Metal Mining, S.A. de C.V., a Mexican corporation (“AMM”), and Proyecto Magistral, S. de R.L. de C.V., a Mexican corporation (“Projecto Magistral”), whereby the Company agreed to pay US$2.5M to purchase a 50% participating ownership interest and a 45% net profit participating interest under a joint venture with respect to the Magistral Project located in Santa Maria Del Oro, Mexico (the “Project”). Both AMM and Projecto Magistral are affiliates of Gracepoint with Projecto Magistral the registered owner of the Project. The Company encountered cost overruns and financing difficulties with respect to the Project. These issues combined with the current Cease Trade Order imposed by the British Columbia Securities Commission and receipt of the Complaint resulted in the Company’s decision to enter into a mutual release dated November 24, 2018 (the “Release”) among the Company, Gracepoint, AMM and Proyecto Magistral. In addition to a mutual release of all claims, the Company agreed to relinquish its interest in the Project. The related assets were written-off to $Nil at December 31, 2018.

(i) On October 21, 2016, the Company had entered into an Initial Purchase Agreement (as amended on November 22, 2016 and December 20, 2016, collectively, the “IPA Agreement”) with GracePoint Mining Corp. (“GP”), American Metal Mining, S.A. de C.V. (“AMM”), and Proyecto Magistral, S. de R. L. de C.V. (the “Owner”) with respect to the Magistral Project (the “Project”) in Mexico. Pursuant to the terms of the IPA Agreement, the Company may earn a 50% participating ownership interest and a 45% net profit participating interest in the Project upon completing installment payments.

The Company has completed all installment payments required pursuant to the IPA Agreement and earned a 50% participating ownership interest and 45% net profit participating interest in the Project. As at

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

December 31, 2017, the Company made a total of installment payments of $3,373,225 to GP and incurred $4,643,534 on the construction of the plant and transaction costs; thus recording a total of $8,016,759 as long term investment. This amount was written-down to $Nil at December 31, 2018 due to the Company’s decision to relinquish its rights to the project (see above).

(ii) On February 6, 2017, the Company signed a binding option agreement with American Metal Mining S.A. de C.V. (“AMM”), whereby, upon certain scheduled payments totalling US$1,525,000, the Company will acquire 50% of the shares of a private Mexican corporation that holds the IDS Project. The IDS Project consists of a past producing gold smelter, three acres of land situate around the smelter, and various equipment and permits associated therewith. The Company entered into an unsecured non-interest bearing loan agreement to borrow US$650,000, which has been fully repaid, from a lender and advanced the initial payment of US$650,000, and was granted a 49.5% net profit participating interest in the IDS Project that will remain until option exercise, provided that all payments are made by the Company in accordance with the option agreement. As at December 31, 2017, the Company has paid all required installments of $2,070,330 (US$1,525,000) and incurred $131,028 transaction costs, thus recording a total of $2,201,358 as long- term investment. This amount was written-down to $Nil at December 31, 2018 due to the Company’s decision to relinquish its rights to the project (see above).

(b) Midas Property

On August 24, 2018, the Company closed the sale to an arm’s length purchaser 12 mineral claims that comprise the Midas Property (the “Claims”) in British Columbia for cash consideration of $40,000 and the purchaser’s assumption of a net smelter royalty on the Claims. The Company agreed to the sale terms due to the fact that the Claims were to expire shortly after the date of the agreement. The related assets were written-down to the estimated recoverable amount of $40,000 at December 31, 2018.

(c) Willa Property and net assets of FortyTwo Metals Inc.

On September 28, 2018, the Company announced that it had entered into a binding letter of intent dated September 21, 2018 (the “LOI” with an arm’s length private British Columbia corporation (the “Purchaser”). Under the terms of the LOI, the Company agreed to grant the Purchaser an exclusive 90 day period to finalize and enter into a definite agreement, whereby the Company agrees to sell all the shares in the capital of FortyTwo Metals Inc., and a 100% interest in the Willa Property consisting of 5,662 hectares located in the Slocan Mining Division, British Columbia, subject to a net smelter return (the “Willa Property”). In March 2019, the sale was closed. At December 31, 2018 the net assets related to the subsidiary previously classified as held for sale and sold in March 2019 were written-down to the estimated recoverable amount of $788,000 (including $150,000 in cash and $650,000 in estimated fair value of 5,000,000 shares of Purchaser less estimated costs to sell of $12,000), and the Willa Property was writtendown to $Nil. At December 31, 2018, $788,000 is the recoverable amount of the net of the $3,174,966 of assets held for sale and the $2,444,965 liabilities held for sale which relates to this asset grouping. In 2019, the net assets held was sale were adjusted by $23,329 in additional payables related to FortyTwo Metals, offset by $20,000 in additional legal costs to sell. This resulted in a gain on sale of $3,329 recorded in fiscal 2019.

(d) Equipment

As at December 31, 2018, the Company had committed to sell equipment, which was closed as a sale in January 2019. In 2019 the Company sold certain mining equipment to 3409377 MB Ltd., a company controlled by the Company’s CEO, for $237,500 (Note 10). This equipment was included in the assets held for sale at December 31, 2018 and carried at the estimated fair value less costs to sell of $208,686. The Company recorded a gain on sale of $28,814 in 2019. The proceeds receivable by the Company from sale of this equipment were netted against the amount payable by the Company to 3409377 MB Ltd. In addition, $14,852 of the remaining outstanding balance payable by 3409377 MB Ltd. was settled for the

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

Company by Trappers Transport Ltd. which is also controlled by the Company’s CEO. This resulted in an additional gain on sale of $14,536 realized by the Company.

A combined gain on sale of $46,995 was recorded in the Statements of Loss and Comprehensive Loss related to the disposition of Assets Held for Sale.

Details of Assets and Liabilities Held for Sale		December 31, 2019 $ December 31, 2018 $

Assets: Investment in Mexican projects Equipment Mining properties Reclamation bond Cash Accounts receivable Sale of Midas Property Equipment transferred to assets held for sale Loss on assets held for sale Total assets held for sale		- 10,071,856 - 2,233,822 - 4,490,535 - 322,886 - 5,256 - 26,257 - (40,000) - 208,687 - (13,827,648)
		- 3,491,651
Liabilities: Asset retirement obligation Accounts payable Total liabilities held for sale		- (1,322,454) - (1,172,511)
		- (2,494,965)

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

9. Property, Plant and Equipment

	Cost	Digital Currency Mining Equipment	Equipment & Vehicles	Total
		$	$	$
December	31,2017	537,893	1,278,135	1,816,028
Additions		43,004	-	43,004
Disposals		-	(295,956)	(295,956)
Impairment		(401,599)	(195,029)	(596,628)
Transfer to	assetsheldforsale (Note 8)	-	(386,069)	(386,069)
December	31,2018	179,298	401,081	580,379
Disposal		-	(354,005)	(354,005)
December	31,2019	179,298	47,076	226,374

Accumulated Depreciation	Accumulated Depreciation	Digital Currency Mining Equipment	Equipment & Vehicles	Total
		$	$	$
December	31,2017	-	287,102	287,102
Additions		179,298	145,159	324,457
Disposals			(65,383)	(65,383)
Transfer to	assetsheldforsale (Note 8)	-	(177,384)	(177,384)
December	31, 2018	179,298	189,494	368,792
Additions		-	47,227	47,227
Disposals		-	(189,645)	(189,645)
December	31,2019	179,298	47,076	226,374
	Carrying Amount	Digital Currency Mining Equipment	Equipment	Total
		$	$	$
December	31,2018	-	211,587	211,587
December	31,2019	-	-	-

Total vehicles under finance lease were $Nil as at December 31, 2019 (2018: $202,288).

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

10. Related Party Transactions

a) Related party transactions:

During the year ended December 31, 2019, Trappers Transport Ltd. which is controlled by the Company’s CEO, charged the following amounts to the Company for services provided and office rent.

	2019	2018
	$	$
Fuel costs	5,879	5,722
Supplies	46	9,908
Equipment and equipment repairs	-	4,419
Equipment, office, and premisesrent	12,000	339,369
	17,925	359,418

The Company has also sold two vehicles with a combined net book value of $164,359 to Trappers Transport Ltd. for $170,000 and recognized a gain on sale of equipment of $5,640. In connection with the sale, Trappers Transport Ltd. assumed the lease obligation of MX Gold Corp. for both vehicles of $73,050. The remaining amount of proceeds receivable from Trappers was netted against the amount payable owed by the Company. to Trappers Transport Ltd.

In addition, in 2019 the Company sold certain mining equipment to 3409377 MB Ltd., a company controlled by the Company’s CEO, for $237,500. This equipment was included in the assets held for sale at December 31, 2018 (see Note 8) and carried at the estimated fair value less costs to sell of $208,686. This equipment was included in the assets held for sale at December 31, 2018 and carried at the estimated fair value less costs to sell of $208,686. The Company recorded a gain on sale of $28,814 in 2019. The proceeds receivable by the Company from sale of this equipment were netted against the amount payable by the Company to 3409377 MB Ltd. In addition, $14,852 of the remaining outstanding balance payable by 3409377 MB Ltd. was settled for the Company by Trappers Transport Ltd. which is also controlled by the Company’s CEO. This resulted in an additional gain on sale of $14,536 realized by the Company.

These transactions are in the normal course of operations and have been measured in these consolidated financial statements at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

b) Due to related parties

	2019	2018
	$	$
Due to the Company’s directors and officers	-	31,932
Due to companies controlled by anofficer	370,664	606,487
	370,664	638,419

The amounts due to related parties are non-interest bearing, unsecured and due on demand.

During the year ended December 31, 2018, the Company issued 8,893,334 common shares to related parties to settle amounts payable of $767,000. The shares were issued as part of the January 3, 2018 private placement of units (Note 14). No gain or loss was recorded on the debt settlement as it is considered to be a capital transaction involving shareholders whom are related parties.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

c) Key management compensation

Key management includes directors (executive and non-executive), senior officers and financial consultants of the Company.

	2019 2018
	$ $
Salaries and benefits Professional, management and consulting fees	- 120,000 60,000 268,273
	120,000 328,273

11. Provisions and Obligations

The Company raised capital through the issuance of flow-through shares in 2015 and 2016, which provided indemnity to the shareholders for additional taxes payable if the Company was unable to, or failed to, renounce the qualifying expenditures as agreed, without limiting the recourse of the subscriber. The Company was not able to spend $625,349 of the flow-through funds raised on qualifying expenditures. The Company is exposed to costs for the indemnification of the shareholders, and is being reassessed by the Canada Revenue Agency (“CRA”) for Part XII.6 tax liability and a liability to repay BC METC for ineligible expenditures.

The accrued amounts are subject to measurement uncertainty due to the tax filing positions of the subscribers, their tax rates and the amount of personal taxes that may be payable and the, interpretation of the indemnity agreements, which will not be known until potentially affected subscribers are reassessed for their tax positions by the CRA and these amounts become known to the Company. The Company estimated the potential shareholder indemnification liability and Part XII.6 tax liability at $457,233 at December 31, 2019 (2018: $499,252).

Included in accounts payable at December 31, 2019 is the amount payable to CRA of $162,281 for the BC METC claim that was submitted for the 2016 year end that was reassessed by the CRA with a denial of expenditures claimed by the Company. The amount payable includes the amount of the denied BC METC claim and interest accrued up to December 31, 2019.

12. Lease Obligations

The Company leased certain assets under finance lease arrangements. The finance lease has imputed interest rates ranging from 5.14% to 5.54% per annum and expire between September 2020 and October 2020. During the year ended December 31, 2019, the lease obligations were settled upon disposal of the related equipment to a related party (see Note 10).

	Future minimum	Interests	Present value
	lease payments		of minimum
			lease
At December 31, 2018			payments
	$	$	$
Less than one year	70,892	5,018	65,874
Betweenone andfive years	57,631	1,386	56,246
	128,523	6,404	122,120

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

13. Decommissioning Obligations

The Company’s decommissioning obligations relate to future site restoration and abandonment costs of the MAX Mine and Mill. The expected timing of the cash flows in respect of the provision is based on the estimated life of the mining operations.

As at December 31, 2018, the Company estimated that the total undiscounted cash flows required to settle its decommissioning obligations was approximately $1,313,403. Decommissioning liabilities of $1,322,454 as at December 31, 2018 have been calculated using an inflation rate of 2% per annum and discounted using a risk-free rate of 1.86%.

As at December 31, 2018, the amount was recorded as liabilities associated with assets held for sale (Note 8). In 2019, the liability was derecognized upon the sale of shares of FortyTwo Metals Inc. as this obligation relates to the net assets of FortyTwo Metals Inc.

14. Share Capital

Authorized: Unlimited number of common shares with no par value.

a) Issued and outstanding:

As at December 31, 2019, the Company had a total issued and outstanding common shares of 285,447,252 common shares (2018: 285,447,252).

b) During the year ended December 31, 2019 the Company had no share transactions.
c) Transactions during the year ended December 31, 2018:

On January 3, 2018, the Company completed a private placement of 29,193,334 units at $0.075 per unit for $2,189,500. Each unit consists of one common share of the Company and one common share purchase warrant, entitling the holder to purchase one share at $0.15 for five years from the closing date. The Common Shares acquired by the subscribers are subject to a hold period of four months plus one day from the closing date. 8,893,334 units were issued to related parties to settle the amounts payable of $767,000 (Note 10).

d) Stock Options

The Company has a stock option plan whereby it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common shares of the Company. The exercise price of each option granted under the Plan is determined at the discretion of the Board. Options granted under the Plan generally expire no later than the fifth anniversary of the date the options were granted and vesting provisions for issued options are determined at the discretion of the Board.

During the year, the Company did not grant any stock options in accordance with the stock option plan as described above.

A summary of stock option activities for the years is as follows:

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

		Weighted-
		average
	Number of	exercise
	options	price
Balance,December 31,2017	17,651,999	0.15
Forfeited	(11,851,999)	0.15
Cancelled	(800,000)	0.21
Balance,December 31,2018 and 2019	5,000,000	0.13

As at December 31, 2019, the Company has the following options outstanding and exercisable:

Outstanding as at December 31, 2019 Exercisable as at December 31, 2019

			Weighted			Weighted
		Weighted	Average		Weighted	Average
		Average	Remaining		Average	Remaining
Exercise	Number of	Exercise	Contractual	Number of	Exercise	Contractual
Prices	Options	Price	Life(years)	Options	Price	Life(years)
$		$			$
0.13	5,000,000	0.13	2.33	5,000,000	0.13	2.33

There were no stock options issued in 2019 or 2018.

The following weighted average assumptions used in the Black-Scholes model to determine the fair value of the options vested were as follows:

For the year ended December 31, 2019 the Company recorded a total of share-based compensation expense of $Nil (2018: $5,939) for the vesting of options in the statement of loss and comprehensive loss.

e) Warrants

A summary of warrant activities for the years is as follows:

	Number of Warrants	Weighted Average Exercise Price
Balance,December31,2017	142,205,320	0.23
Expired	(7,247,220)	0.21
Issued	29,193,334	0.15
Balance,December 31,2018	164,151,434	0.22
Expired	(17,227,433)	0.45
Balance,December 31,2019	146,924,001	0.19

As at December 31, 2019, the warrants outstanding and exercisable were as follows:

MX GOLD CORP.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

	Number of Warrants Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Life (Years) Expiry Date 0.76 October 5, 2020 0.95 December 11, 2020 0.48 June 22, 2020
	3,000,000 0.15 8,020,000 0.20 30,910,667 0.20
	20,800,000 0.20		0.02 January 9,2020
	15,000,000 0.20		0.35 May 5, 2020
	40,000,000 0.20		2.76 October 3, 2022
	29,193,334 0.15		3.01 January 3, 2023
	146,924,001 0.19		1.56

MX GOLD CORP. Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

15. Income Taxes

The following table reconciles the expected income tax expense (recovery) at the Canadian statutory income tax rates to the amounts recognized in the statements of operations and comprehensive loss for the years ended December 31, 2019 and 2018.

	December 31, 2019	December 31, 2019	December 31,
			2018
Net loss before tax $ Statutory tax rate	(1,070,561) 27.00%	$	(16,153,944)
			27.00%
Expected income tax expense (recovery) Changes due to change in tax rate Non-deductible items Net tax assets lost due to sale of Forty Two Metals Change in deferred tax asset not recognized	(289,051) - (275,618) 12,529,700 (11,965,031)		(4,361,565)
			(540,308)
			32,824
			-
			4,869,049
Total income tax expense(recovery) $	-	$	-

Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax values. The unrecognized deferred tax assets (liabilities) at December 31, 2019 and 2018 are comprised of the following:

	December 31, 2019	December 31,
		2018
Non-capital loss carryforwards $ Exploration and evaluation assets Capital loss carryforwards Investments Property, plant and equipment Lease obligations Financing costs	3,303,847 $ 3,144,339 263,493 229,449 - - 10,884	15,340,883 2,273,695 - - 1,247,725 32,972 21,769
Total unrecognized deductible temporarydifferences $	6,952,012 $	18,917,044

As at December 31, 2019, the Company has not recognized a deferred tax asset in respect of non-capital loss carryforwards of approximately $12,236,469 which may be carried forward to apply against future income for Canadian income tax purposes, subject to the final determination by taxation authorities, which begin to expire in 2026 and through 2039. The Company also had $975,900 in allowable capital losses, which can be claimed against capital gains and will expire in 2029.

16. Financial Instruments

The Company classifies its fair value measurements in accordance with the three level fair value hierarchies as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted 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); and

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

MX GOLD CORP. Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

The Company’s financial instruments include cash and cash equivalents, restricted cash, marketable securities, accounts payable, and due to related parties. The carrying amounts of cash and cash equivalents, restricted cash, marketable securities, reclamation bonds, accounts payable, and due to related parties approximate their fair values because of the short-term nature of these instruments.

The following table summarizes the carrying values of the Company’s financial instruments:

	December 31,	December 31,
	2019	2018
	$	$
Financial assets at FVTPL (i)	51,126	10,437
Other financial liabilities(ii)	979,215	994,800

(i) Cash and cash equivalents, restricted cash, and marketable securities

(ii) Accounts payable and due to related parties

The following table sets forth the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy as follows:

*Cash and cash equivalents*
*& Restricted cash*	Level 1	Level 2	Level 3	Total
	$	$	$	$
As at December 31, 2019	51,126	-	-	51,126
As at December 31,2018	10,437	-	-	10,437

17. Financial Risk Management Objectives and Policies

The risks associated with financial instruments and the policies on how to mitigate these risks are set out below. Management monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.

a) Credit risk

Credit risk is the risk of financial loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s cash and cash equivalents, restricted cash and reclamation bonds are subject to credit risk for a maximum of the amounts shown on the statements of financial position. The Company limits its exposure to credit risk on cash and cash equivalents and reclamation bonds by depositing only with reputable financial institutions.

b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's objective to managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company uses cash to settle its financial obligations as they fall due. The ability to do this relies on the Company maintaining sufficient cash on hand through debt or equity financing. The Company has a working capital deficit and requires additional funds to be raised by financing to meet its short-term obligations.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

Significant commitments in years subsequent to December 31, 2019 are as follows:

		Contractual Cash		1 - 5
	Carrying value	flows	Within 1 year	Years
	$	$	$	$
Accounts payable and accrued
liabilities	608,551	608,551	608,551	-
Due torelated parties	370,664	370,664	370,664	-
	979,215	979,215	979,215	-

c) Interest rate risk

Interest rate risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s credit facilities bear a fixed interest rate; therefore, is not exposed to significant interest risk.

18. Capital Management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of its business and to maintain flexible capital structure which optimizes the cost of capital within a framework of acceptable risk.

The Company manages the capital structure and makes adjustments to it in light of changes in the economic conditions 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, and/or dispose of assets. To meet these objectives, the Company monitors its financial position on an ongoing basis.

The Company is dependent on the capital markets and debt as its source of operating capital and the Company’s capital resources are largely determined by the strength of the markets and by the status of the Company’s opportunities in relation to these markets, and its ability to compete for investor support of its opportunities. There were no changes in the Company's approach to capital management during the year. The Company is not subject to externally imposed capital requirements.

19. Legal Actions

In 2007, Gladiator Equipment Inc. (“Gladiator”) took legal action against the Company, seeking rental and repair payments for a generator that was used on the Company’s property for total amount of $34,272. The Company defended by making a statement that all required payments had been made and no liability was owing to Gladiator. The last legal step taken was an affidavit sworn in response to interrogatories delivered by Gladiator on May 20, 2009. No meaningful steps have been taken by both parties since then, leaving the litigation dormant. The Company believe the claim has no merit and no provision was recorded as at December 31, 2019 and 2018.

A Notice of Claim dated December 11, 2012 was filed by United Rentals of Canada Inc. (“United Rentals”) against the Company and numerous other defendants in the Nelson Registry of the BC Supreme Court whereby United Rentals seeks $26,841 for equipment rentals and other relief. Judgment was granted in United Rental’s favour on June 1, 2015. The judgment amount of $26,841, plus pre-judgment interest in the amount of 24% per year from October 15, 2011 to the date of judgement and costs in the amount of $3,526 were registered on title of the Company’s properties on June 11, 2015. As at December 31, 2019, the judgment amount of $26,841 and interests and costs in amount of $52,543 has not been paid and has been recorded as accounts payable.

Notes to Consolidated Financial Statements Years Ended December 31, 2019 and 2018 As expressed in Canadian dollars

MX GOLD CORP.

During the years ended December 31, 2019 and 2018, no new legal actions were commenced against the Company.

20. Supplemental Disclosure with Respect to Cash Flows

During the years ended December 31, 2019 and 2018, the Company paid $Nil in interest and income taxes.

21. Subsequent Events

a) On January 9, 2020, 20,800,000 share purchase warrants exercisable at $0.20 expired unexercised.
b) On January 28, 2020, the British Columbia Securities Commission has revoked the cease trade order issued against the Company on January 10, 2018.
c) On March 12, 2020, the TSX Venture Exchange issued a Bulletin announcing the reinstatement of trading of the Company’s common shares on NEX effective at the opening on Monday, March 16, 2020.

22. Discontinued Operations

Losses and cash flows from discontinued operations are presented separately for comparative periods. As the operations and cash flows can be clearly distinguished from the rest of the Company, the components of net loss and cash flows have been presented separately as discontinued operations as below:

Depreciation of property plant and equipment Insurance, office and miscellaneous Professional, consulting fees and investor relations Lease expenses Finance costs Interest on tax liabilities Net loss from discontinued operations Cash flow from discontinued operations Net cash inflows (outflows) from operating activities Net cash inflows (outflows) from investing activities Net cash outflows	2019 2018
	$ 37,929 $ 64,779 13,076 15,023 - 10,964 4,100 8,975 - 433,005 - 7,719
	$ (55,105) $ (540,465)

	2019 2018
	$(17,176) $(526,626) 788,000 -
	$770,824 $(526,626)

AI assistant

MX Gold Corp. — Audit Report / Information 2019

46454_rns_2020-04-22_8bc962e0-a301-410e-8739-def62826bd31.pdf

MX GOLD CORP.

Consolidated Financial Statements

INDEPENDENT AUDITORS’ REPORT

Opinion on the Financial Statements

Basis for Opinion

Emphasis of Matter - Material Uncertainty Related to Going Concern

INDEPENDENT AUDITORS’ REPORT (continued)

Other Information

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

Auditors’ Responsibilities for the Audit of the Financial Statements

INDEPENDENT AUDITORS’ REPORT (continued)

MX GOLD CORP.

MX GOLD CORP.

MX GOLD CORP.

Consolidated Statements of Cash Flows Expressed in Canadian Dollars

MX GOLD CORP.

Consolidated Statements of Changes in Equity

MX GOLD CORP.

1. Nature of Operations

2. Basis of Preparation and Going Concern

a) Statement of compliance

b) Going concern

c) Basis of consolidation

MX GOLD CORP.

MX GOLD CORP.

f) Use of estimates

3. Significant Accounting Policies

(a) Marketable Securities

(c) Revenue Recognition

(d) Digital Currencies

MX GOLD CORP.

(e) Foreign currency translation

(f) Financial instruments

Impairment of financial assets

MX GOLD CORP.

Fair value

(g) Business combinations

MX GOLD CORP.

h) Goodwill

(i) Property, plant and equipment

(j) Exploration and evaluation assets

MX GOLD CORP.

(k) Assets held for sale

(l) Leases

(m) Impairment

MX GOLD CORP.

(n) Decommissioning obligations

(o) Provisions

(p) Income taxes

(q) Share issue costs

MX GOLD CORP.

(r) Share purchase warrants

(s) Share-based payments

(t) Loss per share

(u) Mining Exploration Tax Credit (“METC”)

(v) New accounting standards adopted

MX GOLD CORP.

4. Significant Accounting Estimates and Judgments

Critical accounting judgments

a) Going concern

c) Revenues from bitcoin mining

Significant accounting estimates

b) Depreciation

MX GOLD CORP.

c) Current and deferred taxes

d) Share-based payments

e) Valuation of digital assets

5. Digital Currency Mining

6. Restricted Cash

7. Marketable Securities

MX GOLD CORP.

8. Assets Held for Sale

MX GOLD CORP.

MX GOLD CORP.

(b) Midas Property

(c) Willa Property and net assets of FortyTwo Metals Inc.

(d) Equipment

MX Gold Corp. Audit Report / Information 2019