MX Gold Corp. — Interim / Quarterly Report 2023

Aug 30, 2023

Condensed Interim Financial Statements

Six months ended June 30, 2023

Expressed in Canadian dollars

[Unaudited – prepared by management]

NOTICE OF NO AUDITOR REVIEW

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

The accompanying unaudited condensed interim financial statements of MX Gold Corp. (the" Company") have been prepared by and are the responsibility of the Company's management.

Condensed Interim Statements of Financial Position Expressed in Canadian Dollars

As at	June 30	December 31
	2023	2022
	$	$
ASSETS
Current assets
Cash and cash equivalents	164,531	202,533
Marketable securities (Note 4)	28,000	20,000
Sales taxes receivables	39,569	35,620
Prepaid expenses	-	2,284
Total current assets	232,100	260,437
Total assets	232,100	260,437
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	350,936	365,903
Due to related parties (Note 5)	947,198	884,198
Total current liabilities	1,298,134	1,250,101
EQUITY (DEFICIENCY)
Share capital (Note 7)	38,501,106	38,989,194
Contributed surplus (Note 7)	3,983,931	3,983,931
Deficit	(44,039,159)	(43,962,789)
Total deficit	(1,066,034)	(989,664)
Total liabilities and deficit	232,100	260,437

On behalf of the Board:

Director Director

"Dan Omeniuk""Robert Jeffery"

Condensed Interim Statements of Net Income (Loss) and Comprehensive Income (Loss) Expressed in Canadian Dollars

	Three months	Three months	Six months	Six months
	ended	ended	ended	ended
	June 30	June 30	June 30	June 30
	2023	2022	2023	2022
	$	$	$	$
General and Administrative Expenses
Professional, management and consulting fees	42,182	39,907	73,716	95,114
Insurance, office and miscellaneous	761	1,523	2,284	3,419
Investor relations and public company costs	2,462	(3,184)	7,643	8,902
Finance costs	363	351	728	772
	(45,768)	(38,597)	(84,370)	(108,207)
Other Items
Revaluation on marketable securities	(7,000)	(40,000)	8,000	(120,000)
Net income (loss) and comprehensive income (loss)	(52,768)	(78,597)	(76,370)	(228,207)
Basic and diluted gain (loss) per share	(0.01))	(0.01)	(0.01)	(0.02)
Weighted average number of common shares
- basic and diluted	24,272,362	14,272,362	24,272,362	14,272,362

Condensed Interim Statements of Cash Flows Expressed in Canadian Dollars

	Six months	Six months
	ended	ended
	June 30	June 30
	2023	2022
	$	$
Cash flows from (used in)
Operating activities
Net Income (loss) for the period	(76,370)	(228,207)
Adjustments:
Revaluation(gain)lossonmarketablesecurities	(8,000)	120,000
	(84,370)	(108,207)
Changes in non-cash working capital:
Sales taxes receivables	(3,949)	(5,038)
Prepaid expenses	2,284	3,045
Accounts payable and accrued liabilities	(14,967)	25,737
Due to related parties	63,000	63,000
Cash used in operating activities	(38,002)	(21,463)
Increase in cash and cash equivalents	(38,002)	(21,463)
Cash and cash equivalents, beginning of year	202,533	111,970
Cash and cash equivalents, end of year	164,531	90,507

Condensed Interim Statements of Changes in Equity Expressed in Canadian Dollars

	Share Capital		Contributed
	Number	Amount	Surplus	Deficit	Total
		$	$	$	$
Balance, December 31, 2021	14,272,362	38,501,106	3,983,931	(43,987,260)	(1,502,223)
Net loss and comprehensive loss	-	-	-	(228,207)	(228,207)
Balance, June 30, 2022	14,272,362	38,501,106	3,983,931	(44,215,467)	(1,730,430)
Units issued for cash pursuant to non-brokered private placement	10,000,000	500,000	-	-	500,000
Share issuance costs in cash	-	(11,912)	-	-	(11,912)
Net incomeand comprehensive income		-	-	174,081	174,081
Balance, December 31,2022	24,272,362	38,989,194	3,983,931	(43,962,789)	(989,664)
Net incomeandcomprehensive income	-	-	-	(76,370)	(76,370)
Balance, June 30, 2023	14,272,362	38,501,106	3,983,931	(44,039,159)	(1,066,034)

1. Nature of Operations

The Company was incorporated on October 13, 1999 under the laws of British Columbia. The Company 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. Statement of Compliance and Basis of Preparation

a) Statement of compliance

These condensed interim 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"). The condensed interim financial statements do not include all the information and disclosures required in the Company's annual financial statements and should be read in conjunction with the Company's annual financial statements for the year ended December 31, 2021.

These financial statements were approved and authorized for issue by the Board of Directors on August 29, 2023.

b) Going concern

These condensed interim 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 June 30, 2023 the Company had a working deficit of $1,066,034, incurred a net loss of $76,370 and used net cash in operating activities of $38,002 for the six months ended June 30, 2023.

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 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 financial statements could be required.

c) Basis of measurement

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

d) Functional and presentation currency

These condensed interim financial statements are presented in Canadian dollars which is the functional currency of the Company.

e) Use of estimates

The preparation of these condensed interim 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 financial statements are disclosed in Note 3.

3. Significant Accounting Policies, Estimates and Judgments

The accounting policies applied in the preparation of the condensed interim financial statements have been applied consistently with those followed in the preparation of the Company's December 31, 2022 audited financial statements, except for the adoption of new standards and interpretations as of January 1, 2023.

Critical accounting 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

a) Going concern

Management has applied judgements in the assessment of the Company's ability to continue as a going concern when preparing its financial statements for the six months ended June 30, 2023. Management prepares the 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.

4. Marketable Securities

Marketable securities consist of 1,000,000 common shares of Metallica Metals Corp. ("Metallica") that were received during the prior fiscal year as described in Note 5.

The following summary is a continuity table of marketable securities:

	Number ofShares	Amount
		$
June 30, 2022	1,000,000	30,000
Changein fair value, unrealized revaluation lossShare Consolidation	-(800,000)	(2,000)-
June 30, 2023	200,000	28,000

5. Related Party Transactions

a) Due to related parties

	June30,	December31,
	2023	2022
	$	$
Due to companies controlled byan officer	947,198	884,198

b) Key management compensation

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

	June 30,2023	December31,2022
	$	$
Professional, management andconsulting fees	60,000	120,000

6. Provisions

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 settled the matter with the indemnified shareholders by way of a release and settlement agreement signed on August 24, 2022, for a cash payment of $250,000 resulting in a gain on settlement of $350,000 which was recorded in the statement of income and comprehensive income.

7. Share Capital

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

a) Issued and outstanding:

As at June 30, 2023, the Company had total issued and outstanding common shares of 24,272,362 (2022: 14,272,362).

• b) During the three months ended June 30, 2023 the Company had no share transactions.
• c) Transactions incurred during the year ended December 31, 2022:
  • a. On October 7, 2022, the Company completed a private placement of 10,000,000 units at $0.05 per unit for gross proceeds of $500,000. Each unit consists of one common share of the Company and one non-transferable common share purchase warrant, entitling the holder to purchase one share at $0.10 for one year from the closing date. Issuance costs to complete the transaction were $11,912.
• d) 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.

There were no stock options issued in 2023, 2022 or 2021.

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 six months ended June 30, 2023 the Company recorded a total of share-based compensation expense of $Nil (2021: $Nil) for the vesting of options in the statement of loss and comprehensive loss.

e) Warrants

A summary of warrant activities is as follows:

	Number of Warrants	Weighted Average Exercise Price
		$
Balance, December 31, 2020
& 2021	3,459,667	3.58
Expired	(2,000,000)	4.00
Granted	10,000,000	0.10
Balance, December 31, 2022	11,459,667	0.47
Expired	(1,459,667)	3.00
Balance June 30, 2023	10,000,000	0.10

As at June 30, 2023, the warrants outstanding and exercisable were as follows:

Expiry Date	Weighted AverageRemainingContractual Life(Years)	Weighted AverageExercise Price ($)	Number of Warrants
October 7, 2023	0.27	0.10	10,000,000

8. 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).

The Company's financial instruments include cash and cash equivalents, marketable securities, accounts payable and due to related parties. The carrying amounts of cash and cash equivalents, marketable securities, accounts payable and due to related parties approximate their fair values because of the shortterm nature of these instruments.

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

	June 30,2023	December 31,2022
	$	$
Financial assets at FVTPL (i)	192,531	222,533
Other financial liabilities (ii)	1,298,134	1,143,257

(i) 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:

Cashand cash equivalents&Marketablesecurities	Level 1	Level2	Level 3	Total
	$	$	$	$
As at June 30, 2023	192,531	-	-	192,531
As atDecember 31, 2022	222,533	-	-	222,533

9. 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 and marketable securities are subject to credit risk for a maximum of the amounts shown on the condensed interim statements of financial position. The Company limits its exposure to credit risk on cash and cash equivalents and marketable securities 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.

Significant commitments in years subsequent to June 30, 2022 are as follows:

	Carryingvalue	Contractual Cashflows	Within 1year	1-5Years
	$	$	$	$
Accounts payableand accruedliabilities	350,936	350,936	350,936	-
Due to related parties	947,198	947,198	947,198	-
	1,298,134	1,298,134	1,298,134	-

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.

10. 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 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 its ability to compete for investor support of its projects. There were no changes in the Company's approach to capital management during the year.

11. 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 believes the claim has no merit and no provision was recorded as at any period presented.

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.

On November 26, 2021, Oberon Capital Corporation, Christopher Seip and John Budreski (the "Plaintiffs") commenced an action by way of Notice of Civil Claim against the Company and its various current and former directors and officers. In the action, the Plaintiffs were seeking damages of $600,000 against the Company for breaches of the indemnity provisions of the Subscription Agreement (pursuant to which in 2016 the Plaintiffs purchased shares in the Company). The Company settled the matter with the indemnified shareholders by way of a release and settlement agreement signed on August 24, 2022, for an cash amount of $250,000 resulting in a gain on settlement of $350,000 which is recorded in other income.