O2Gold Inc. — Audit Report / Information 2020

May 1, 2021

O2Gold Inc. (formerly Origin Gold Corp.)

Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars)

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Independent Auditor’s Report

To the Shareholders of O2Gold Inc.

Opinion

We have audited the consolidated financial statements of O2Gold Inc. and its subsidiaries (the “Company”), which comprise the consolidated statement of financial position as at December 31, 2020, and the consolidated statement of loss and comprehensive loss, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2020 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”).

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 Auditor’s 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. 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.

Other matter

The consolidated financial statements of the Company for the year ended December 31, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on April 9, 2020.

Material uncertainty related to going concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss during the year ended December 31, 2020 and, as of that date, had accumulated losses. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis and the information, other than the consolidated financial statements and our auditor’s report thereon, included in the Annual Report.

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Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, 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 consolidated 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 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.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risks of not detecting a material misstatement

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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 auditor’s 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 auditor’s 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 of the audit resulting in this independent auditor’s report is Glen McFarland.

McGovern Hurley LLP

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Chartered Professional Accountants Licensed Public Accountants Toronto, Ontario April 29, 2021

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O2Gold Inc. (formerly Origin Gold Corporation) Consolidated Statements of Financial Position

(In Canadian dollars)

As at:		December 31,	December 31,	December 31,	December 31,
	Notes		2020		2019
ASSETS
Current assets:
Cash and cash equivalents	4	$	405,472	$	252,070
Amounts receivable			29,374		14,734
Prepaid expenses and advances			27,023		30,967
Total current assets			461,869		297,771
Non-current assets:
Property, plant and equipment	5		2,283		31,653
TOTAL ASSETS		$	464,152	$	329,424
LIABILITIES AND EQUITY
Current liabilities:
Accountspayable and accrued liabilities		$	221,425	$	31,758
Total liabilities			221,425		31,758
Shareholders' equity:
Share capital	7		8,681,671		7,651,920
Contributed surplus	7		4,136,909		3,806,506
Deficit			(12,575,853)		(11,142,109)
Accumulated other comprehensive loss			-		(18,651)
Total shareholders' equity			242,727		297,666
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	464,152	$	329,424
Nature of operations and going concern	1
Commitments and contingencies	12
Subsequent events	13

Approved by the Board of Directors

(s) Jaime Lalinde Jaime Lalinde, Director

(s) Algimantas Didziulis Algimantas Didziulis, Director

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

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O2Gold Inc. (formerly Origin Gold Corporation) Consolidated Statements of Loss and Comprehensive Loss

(In Canadian dollars)

		For the	year ended	year ended
		December 31,
	Notes	2020		2019
Expenses:
Professional and consulting fees	$	538,909	$	295,715
Exploration and evaluation expenses	6	312,520		413,639
Shareholder communications and transfer agent fees		50,701		101,591
General and administrative expenses		55,206		55,217
Travel expenses		5,917		27,157
Share-based compensation	7	437,905		125,600
Foreign exchange loss		26,284		-
Total expenses before the undernoted		1,427,442		1,018,919
Other(gains)/losses		6,302		(7,285)
Net loss		1,433,744		1,011,634
Other comprehensive loss
Currencytranslation of foreign subsidiary		(18,651)		18,651
Net and comprehensive loss	$	1,415,093	$	1,030,285
Loss per share Basic and diluted loss per share Weighted average number of common shares outstanding: Basic and diluted	$	(0.025) 57,631,824	$	(0.021) 48,308,339

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

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O2Gold Inc. (formerly Origin Gold Corporation) Consolidated Statements of Changes in Equity

(In Canadian dollars)

							Total
				Contributed	Accumulated other		shareholers'
	Share	capital		surplus	comprehensive loss	Deficit	equity
	No.		$	$	$	$	$
Balance, December 31, 2018	41,134,191	6,792,552		3,429,299	-	(9,983,940)	237,911
Shares issued from private placement	10,456,000	1,045,600		-	-	-	1,045,600
Private placement - share issue costs	-		-	-	-	(81,160)	(81,160)
Black Scholes- w arrants	-	(186,232)		186,232	-	-	-
Warrant revaluation (Note 7)	-		-	65,375	-	(65,375)	-
Share-based payments	-		-	125,600	-	-	125,600
Net loss	-		-	-	-	(1,011,634)	(1,011,634)
Other comprehensive loss	-		-	-	(18,651)	-	(18,651)
Balance, December 31, 2019	51,590,191	7,651,920		3,806,506	(18,651)	(11,142,109)	297,666
Shares issued from private placement	10,000,000		500,000	-	-	-	500,000
Private placement - share issue costs	-		(3,250)	-	-	-	(3,250)
Black Scholes-w arrants (Note 7)	-	(144,154)		144,154	-	-	-
Share-based payments (Note 7)	-		-	437,905	-	-	437,905
Warrants exercised (Note 7)	2,130,000		514,101	(194,602)	-	-	319,499
Options exercised (Note 7)	1,060,000		163,054	(57,054)	-	-	106,000
Net loss	-		-	-	-	(1,433,744)	(1,433,744)
Other comprehensive income	-		-	-	18,651	-	18,651
Balance, December 31, 2020	64,780,191	8,681,671		4,136,909	-	(12,575,853)	242,727

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

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O2Gold Inc. (formerly Origin Gold Corporation) Consolidated Statements of Cash Flows

(In Canadian dollars)

		For the	year ended	year ended	year ended
		December 31,
	Notes	2020		2019
Cash flows used in operating activities
Net loss	$	(1,433,744)	$	(1,011,634)
Items not involving cash:
Loss on sale of equipment		6,529			-
Depreciation		138			107
Share-based payments	7	437,905			125,600
Working capital adjustments:
Change in amounts receivable		(14,640)			(833)
Change in prepaid expenses and advances		3,944			(11,016)
Change in accountspayable and accrued liabilities		189,667			(11,915)
Net cash(used in) operating activities		(810,201)			(909,691)
Cash flows used in investing activities
Acquisition of property, plant and equipment		-			(29,690)
Proceeds on sale ofproperty, plant and equipment		22,702			-
Net cash(used in)/provided by investing activities		22,702			(29,690)
Cash flows from financing activities
Proceeds from private placements	7	500,000			1,045,600
Private placement- share issue costs	7	(3,250)			(81,160)
Exercise of options	7	106,000			-
Exercise of warrants	7	319,500			-
Net cashprovided by financing activities		922,250			964,440
Effect of foreign exchange rate changes on cash
and cash equivalents		18,651			(18,651)
Change in cash		153,402			6,408
Cash,beginningof theyear		252,070			245,662
Cash, end of the year	$	405,472	$		252,070

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

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

O2Gold Inc. (“O2Gold” or collectively with its subsidiaries the “Company”) was incorporated under the Canada Business Corporations Act on April 20, 2012. O2Gold’s common shares are listed on the TSX Venture Exchange (the “Exchange”) under the symbol OTGO. The address of its head office and principal place of business is 65 Queen Street West, 9[th] Floor, Toronto (Ontario), Canada, M5H 2M5.

The Company is engaged in the evaluation, acquisition and exploration of mineral properties in Colombia. It plans to explore the properties and, if warranted, develop the properties, bring them into production, option or lease the properties to third parties, or sell the properties outright. It has not determined whether these properties contain mineral reserves that are economically recoverable, and the Company is considered to be in the exploration stage.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

Given that the Company has not yet determined whether its mineral property contains mineral deposits that are economically recoverable, the Company has not yet generated income nor cash flows from its operations. As at December 31, 2020, the Company has an accumulated deficit of $12,575,853 ($11,142,109 as at December 31, 2019) and working capital of $240,444 ($266,013 as at December 31, 2019), which is not sufficient to meet the Company’s operating activities for the next twelve months. These material uncertainties cast significant doubt regarding the Company’s ability to continue as a going concern. Subsequent to December 31, 2020, the Company completed a private placement financing of 17,390,000 units at a price of $0.20 per unit for gross proceeds of $3,478,000. Refer to Note 13.

These consolidated financial statements have been prepared using International Financial Reporting Standards (“IFRS”) applicable to a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to raise additional financing, to meet its existing commitments, to further explore its mineral properties, to pay for general and administrative expenses and to continue to have the support from its suppliers and creditors. Even if the Company has been successful in the past in doing so, there is no assurance that it will manage to obtain additional financing in the future.

These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities, to the reported expenses and to the financial position classifications that would be necessary if the going concern assumption was inappropriate. These adjustments could be material.

While management has been successful in securing financing in the past, there can be no assurance that it will be able to do so in the future or that these sources of funding or initiatives will be available to the Company or that they will be available on terms which are acceptable to the Company. If management is unable to obtain new funding, the Company may be unable to continue its operations, and amounts eventually realized for assets might be less than amounts reflected in these consolidated financial statements.

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations. COVID-19 has had a minimal effect on the Company’s operations to date.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation and evaluation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations as approved by the International Accounting Standards Board (“IASB”) applicable to the preparation of financial statements. This requires the use of certain critical accounting estimates and requires that management exercise its judgment in the process of applying the Company’s accounting policies. 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 3.

These consolidated financial statements were approved and authorized for issue by the Company’s Board of Directors on April 29, 2021.

Basis of consolidation

The consolidated financial statements include the accounts of O2Gold and those of its wholly owned subsidiaries: Rio Moche Exploration Inc. until its dissolution in February 2019, 11023926 Canada Inc. and Trinité S.A.S., a Colombian subsidiary, entities incorporated in 2018. All intra-group transactions, balances, income and expenses are eliminated during consolidation. All subsidiaries have reporting dates of December 31.

A subsidiary is an entity controlled by the Company. O2Gold controls an entity when the group is exposed to or has the right to variable returns from involvement with the entity and has the ability to affect these returns through its power over the entity.

Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is the parent company’s functional currency. The functional currency of 11023926 Canada Inc. and Trinité S.A.S. is the Canadian dollar.

Monetary assets and liabilities denominated in a foreign currency are translated into the functional currency of the respective Company entity at the exchange rate in effect at the consolidated financial position date, whereas non-monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the transaction date. Revenue and expenses denominated in a foreign currency are translated at the average rate in effect during the period with the exception of depreciation that is translated at the historical rate. Gains and losses on exchange arising from such translation are recorded to profit and loss.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and bank balances which are subject to an insignificant risk of changes in value.

Property, plant and equipment

Property, plant and equipment items are stated at cost, less accumulated depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, and for qualifying assets, borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. Depreciation is recorded on a straight-line basis to at a rate of 20% per year. Depreciation is only recorded when the assets are available for use.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Exploration and evaluation expenses

Pre-exploration costs, which include costs prior to the Company’s obtaining rights to explore and evaluate a defined area are expensed as incurred.

Once the legal right to undertake exploration and evaluation activities has been obtained, all costs of acquiring mineral rights or options to acquire such rights and expenses related to the exploration and evaluation of mineral properties are also expensed as incurred.

Expenses related to exploration and evaluation expenses include topographical, geological, geochemical and geophysical studies, drilling, trenching, sampling and other costs related to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource.

Provisions

(a) General

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated statement of loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as finance expense in the consolidated statement of loss.

(b) Rehabilitation

The Company records the present value of estimated costs of legal and constructive obligations required to restore operating locations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.

The obligation generally arises when the asset is installed, or the ground / environment is disturbed at the production location. When the liability is initially recognized, the present value of the estimated cost is capitalized by increasing the carrying amount of the related mining assets to the extent that it was incurred prior to the production of related ore. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognized in operations as a finance cost. Additional disturbances or changes in rehabilitation costs will be recognized as additions or charges to the corresponding assets and rehabilitation liability when they occur. For closed sites and for exploration and evaluation assets, changes to estimated costs are recognized immediately in loss.

The Company does not currently have any such significant legal or constructive obligations and therefore, no rehabilitation provision has been recorded as at December 31, 2020 or 2019.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income taxes

Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized directly in equity.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the consolidated financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. However, since the Company is in an exploration phase and has no taxable income, tax expense, if any, recognized in profit or loss is currently comprised only of deferred tax.

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period.

Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be able to be utilized against future taxable income. This is assessed based on the Company’s forecast of future operating results, adjusted to significant nontaxable income and expenses and specific limits on the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full. Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as deferred income tax expense in profit or loss, except where they relate to items that are recognized in directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or in equity, respectively.

Basic and diluted loss per share

Loss per share is based on the weighted average number of common shares of the Company outstanding during the period. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding share options and warrants, in the weighted average number of common shares outstanding during the period, if dilutive. No exercise or conversion is assumed during periods in which a net loss is incurred as the effect is anti-dilutive. At December 31, 2020 and 2019, all of the Company’s stock options and warrants were anti-dilutive.

Share capital

Share capital represents the amount received on the issue of shares. If shares are issued when options and warrants are exercised, the share capital account also comprises the compensation costs previously recorded as contributed surplus.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Equity-settled share-based payments

The Company operates equity-settled share-based remuneration plans for its eligible directors, officers, employees and consultants. None of the Company’s plans feature any options for cash settlement.

All goods and services received in exchange for the grant of any share-based payments are measured at their fair values, unless that fair value cannot be estimated reliably. The fair value of options is determined using the Black-Scholes pricing model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest.

All equity-settled share-based payments (except agent’s compensation warrants) are recognized as an expense in the profit or loss with a corresponding credit to contributed surplus, in equity. Equitysettled share-based payments to agents, in respect of an equity financing are recognized as issuance cost of the equity instrument with a corresponding credit to contributed surplus, in equity.

Unit placements

Proceeds from unit placements are allocated between shares and warrants according to their respective fair value. The Company considers the value of the units issued, the quoted price of the share at the date of issuance and the Black-Scholes pricing model to determine the relative fair value of the shares and the warrants issued.

Other elements of equity

Contributed surplus includes charges related to options and warrants. When options and warrants are exercised, the related compensation costs are transferred to share capital.

Contributed surplus includes charges related to expired options and warrants.

Accumulated other comprehensive loss includes foreign currency translation differences arising from the translation of financial statements of the Company’s foreign entity into Canadian dollars.

Financial instruments

Financial assets

Initial recognition and measurement

Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either fair value through profit or loss (“FVPL”) or fair value through other comprehensive income (“FVOCI”), and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.

All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial instruments (continued)

Financial assets (continued)

Subsequent measurement- financial assets at amortized cost

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR. The EIR amortization is included in the statements of loss. The Company’s cash and amounts receivable are recorded at amortized cost.

Subsequent measurement- financial assets at FVPL

Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the statements of financial position with changes in fair value recognized in other income or expense in the statements of earnings (loss). The Company’s cash equivalents are measured at FVPL.

Subsequent measurement- financial assets at FVOCI

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI.

After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the statements of comprehensive income (loss). When the investment is sold, the cumulative gain or loss remains in accumulated other comprehensive income or loss and is not reclassified to profit or loss.

Dividends from such investments are recognized in other income in the statements of earnings (loss) when the right to receive payments is established.

Derecognition

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.

Impairment of financial assets

The Company’s only financial assets subject to impairment are amounts receivable, which are measured at amortized cost. The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, amounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases, and the decrease can be objectively related to an event occurring after the initial impairment was recognized.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial instruments (continued)

Financial liabilities

Initial recognition and measurement

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL. The Company’s financial liabilities include accounts payable and accrued liabilities, other liabilities, and loans payable, which are each measured at amortized cost. All financial liabilities are recognized initially at fair value and in the case of loans payable, net of directly attributable transaction costs.

Subsequent measurement- financial liabilities at amortized cost

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR. The EIR amortization is included in the statements of loss.

Derecognitions

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the statements of loss.

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

New and future accounting policies

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2020 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded.

New standards and amendments adopted:

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The adoption of this standard did not have any material effect on the Company’s financial statements.

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing on or after January 1, 2021. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the financial statements:

• 14 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New and future accounting policies (continued)

IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to (i) clarify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period; (ii) clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and (iii) make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services. The amendments are effective for annual reporting periods beginning on or after January 1, 2022 and are to be applied retrospectively. Earlier adoption is permitted.

IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) was amended in February 2021 to introduce the definition of an accounting estimate and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies. The amendments are effective for annual reporting periods beginning on or after January 1, 2023 and changes in accounting policies and changes in accounting estimates that occur on or after the start of that period. Earlier adoption is permitted.

IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended in September 2014 to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined; however, early adoption is permitted.

IAS 16 – Property, Plant and Equipment (“IAS 16”) was amended in May 2020 to prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss. The amendments are effective for annual periods beginning on or after January 1, 2022. Earlier adoption is permitted.

IAS 37 – Provisions, Contingent Liabilities, and Contingent Assets (“IAS 37”) was amended. The amendments clarify that when assessing if a contract is onerous, the cost of fulfilling the contract includes all costs that relate directly to the contract – i.e., a full-cost approach. Such costs include both the incremental costs of the contract (i.e., costs a company would avoid if it did not have the contract) and an allocation of other direct costs incurred on activities required to fulfill the contract – e.g., contract management and supervision, or depreciation of equipment used in fulfilling the contract. The amendments are effective for annual periods beginning on January 1, 2022.

3. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS

When preparing the consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses. The actual results are likely to differ from the judgments, estimates and assumptions made by management, and will seldom equal the estimated results. Information about the significant judgments, estimates and assumptions that have the most significant effect on the recognition and measurement of assets, liabilities, income and expenses are discussed below.

• 15 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

3. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONTINUED)

Significant Judgments:

Going concern

The assessment of the Company’s ability to execute its strategy by funding future working capital and exploration and evaluation activities involves judgement. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Areas of significant judgement in assessing whether the going concern assumption is appropriate relate to the expected timing to secure its financing on a timely basis.

Rehabilitation provisions

The Company records management’s best estimate of the present value of the future cash requirements of any rehabilitation obligation as a long-term liability in the period in which the related environmental disturbance occurs based on the net present value of the estimated future costs. This obligation is adjusted at each period end to reflect the passage of time and any changes in the estimated future costs underlying the obligation. In determining this obligation, management must make a number of assumptions about the amount and timing of future cash flows and discount rate to be used. The actual future expenditures may differ from the amounts currently provided if the estimates made are significantly different than actual results or if there are significant changes in environmental and/or regulatory requirements in the future.

Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination in uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

Management continually evaluates the likelihood that its deferred tax assets could be realized. This requires management to assess whether it is probable that sufficient taxable income will exist in the future to utilize these losses within the carry-forward period. By its nature, this assessment requires significant judgment. To date, management has not recognized any deferred tax assets in excess of existing taxable temporary differences expected to reverse within the carry-forward period. (See Note 2).

Functional currency

Functional currency is the currency of the primary economic environment in which the Company and its subsidiaries operate. If indicators of the primary economic environment are mixed, then management uses its judgement to determine the functional currency that most faithfully represents the economic effect of underlying transactions, events and conditions.

• 16 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

3. CRITICAL ACCOUNTING ESTIMATES, JUDGMENTS AND ASSUMPTIONS (CONTINUED)

Significant estimates:

Share-based payments

The estimation of share-based payment costs and warrants requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has made estimates as to the volatility determined by reference to historical data of comparable entities or historical data of the Company’s shares over the expected average life of the options and warrants, the probable life of options and warrants granted and the time of exercise of those options and warrants. The model used by the Company is the Black-Scholes valuation model (see Note 7).

4. CASH AND CASH EQUIVALENTS

	December	31,	December 31,
	2020		2019
	$		$
Cash	405,472		45,358
Guaranteed investment certificates ("GIC")
bearing interest at 2.5%, redeemable		-	206,712
anytime and maturingin July2020
	405,472		252,070

5. PROPERTY, PLANT AND EQUIPMENT

		Office
	Land	equipment	Total
Cost	$	$	$
Balance: January 1, 2019	-	2,082	2,082
Additions	29,232	458	29,690
Balance: December 31, 2019	29,232	2,540	31,772
Additions	-	-	-
Disposals	(29,232)	-	(29,232)
Balance: December 31,2020	-	2,540	2,540

		Office
	Land	equipment	Total
Accumulated depreciation	$	$	$
Balance: January 1, 2019	-	12	12
Depreciation charge	-	107	107
Balance: December 31, 2019	-	119	119
Depreciation charge	-	138	138
Balance: December 31,2020	-	257	257
Net book value- December 31, 2019 Net book value- December 31, 2020	29,232 -	2,421 2,283	31,653 2,283

• 17 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

6. EXPLORATION AND EVALUATION PROPERTIES

During the years ended December 31, 2020 and 2019, the Company incurred the following exploration and evaluation expenditures:

	2020	2019
	$	$
Otú Central
Acquisition cost	31,830	-
La Pantera
Acquisition cost	-	33,898
Geology and mettallurgical studies	6,090	247,482
Permitting and claims	7,881	31,449
Logistics,travel and overhead	266,719	100,811
	312,520	413,639

Otú Central

On October 26, 2020, the Company entered into a definitive agreement with, inter alia , Bullet Holding Corp. (“ Bullet ”), a private company, pursuant to which the Company expects to acquire a 100% interest in a gold mining project in Colombia known as the Otú Central Project. The definitive agreement was amended on November 30, 2020 to satisfy a condition imposed by the TSXV of a minimum price of $0.18 per common share, converted to United States dollars (the “ Minimum Price ”) and then again on March 25, 2021 and April 5, 2021 to extend the drop dead date and to allow the Company additional flexibility to raise the funds required pursuant to the agreement, respectively.

The Otú Central Project consists of interests in mining claim titles and applications in the Segovia/Zaragosa regions of Antioquia in Colombia (the “ Assets ”) for total consideration of US$9,000,000 ($11,458,800), payable as US$1,000,000 ($1,273,200) in cash and the reminder payable as follows, in each case subject to approval of the TSXV:

• a) Following completion of a private placement of the Company’s common shares for proceeds of greater than US$3,000,000, that number of common shares equal to US$3,000,000 divided by the greater of (i) the share price of the financing, and (ii) the Minimum Price.

• b) On October 26, 2021, that number of common shares equal to US$2,500,000 divided by the greater of (i) the 30-day volume weighted average price (“ VWAP ”) of the common shares on the TSXV for the period immediately prior to the date such shares are issued, and (ii) the Minimum Price.

• c) On October 26, 2022, that number of common shares equal to US$2,500,000 divided by the greater of (i) the 30-day VWAP of the common shares on the TSXV for the period immediately prior to the date such shares are issued, and (ii) the Minimum Price.

At December 31, 2020, the Company had paid US$25,000 ($31,830) in cash to Bullet in relation to the definitive agreement. If at the time of payment, the Company’s share price is less than the Minimum Price, the Company shall pay any outstanding amounts in United States dollars.

The Company is acquiring the Assets free of debt and will also acquire the related infrastructure.

Bullet will retain a perpetual 2% net smelter return royalty affecting the entire Otú Central Project, with the exception of production from a certain mining title, which is already affected by a 5% net smelter return royalty payable to a third party. Bullet is also expected to contribute exploration expertise and community relationships developed during several years of grassroots exploration.

The transaction was closed subsequent to December 31, 2020. Refer to Note 13.

• 18 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

6. EXPLORATION AND EVALUATION PROPERTIES (CONTINUED)

La Pantera

Under an option and assignment agreement dated July 14, 2018, the Company secured the ownership of an interest of 50% of the mining title 0-561 (“La Pantera property”) in consideration for US$115,000 in cash and the issuance of 1,000,000 of its common shares under the following terms:

• a) A cash payment of $$53,917 (US$40,000) paid as of December 31, 2018;

• b) A cash payment of $33,898 (US$25,000) paid in August 2019, at the date of issue of the administrative act before the competent mining authority which declares the execution of the title transfer ;

• c) The issuance of 1,000,000 common shares of the Company and a cash payment of US$50,000 (Canadian equivalent of $65,000 converted at the appropriate exchange rate on December 31, 2020) on the date the transfer of the mining title is completed before the National Mining Registry (not complete at December 31, 2020), and;

• d) The execution of an exploration program on the La Pantera property, according to the recommendation made in the National Instrument 43-101 technical report of 2018, also considering subsequent reviews within a period of 6 years.

Pursuant to the option agreement, the optionor of the 50% interest is also expected to receive US$8 as royalties for each ounce of gold recognized as measured and indicated resource (as defined by National Instrument 43-101) identified during a 6-year exploration program. A royalty of 2% net smelter is payable by the Company on the ounces of gold produced, after deducting the quantity of ounces on which royalties were paid pursuant to the $US8 royalty as defined.

As at December 31, 2020, the terms of the option have not yet been met.

7. SHARE CAPITAL

a) Authorized

An unlimited number of voting common shares without par value.

b) Private placements

	Number of Shares	Amount
	#	$
Balance, December 31, 2018	41,134,191	6,792,552
Shares issued from private placement - March 2019	6,090,000	609,000
Black-Scholes warrant valuation	-	(111,369)
Shares issued from private placement- May 2019	3,566,000	356,600
Black-Scholes warrant valuation	-	(64,181)
Shares issued from private placement - October 2019	800,000	80,000
Black-Scholes warrant valuation	-	(10,682)
Balance, December 31, 2019	51,590,191	7,651,920
Shares issued from private placement - June 2020	10,000,000	496,750
Black-Scholes warrant valuation	-	(144,154)
Exercise of options	1,060,000	163,054
Exercise of warrants	2,130,000	514,101
Balance, December 31, 2020	64,780,191	8,681,671

• 19 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

7. SHARE CAPITAL (CONTINUED)

b) Private placements (continued)

On June 24, 2020, the Company closed a non-brokered private placement consisting of 10,000,000 units at a price of $0.05 per unit for aggregate gross proceeds to the Company of $500,000. Each unit consists of one common share in the capital of the Company and one common share purchase warrant. Each warrant shall be exercisable into one additional common share of the Company at an exercise price of $0.075 until June 24, 2022. The fair value of the warrants issued was estimated at $144,154 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.035; expected dividend yield of 0%; expected volatility of 112% based on the Company’s historical share price voltility; risk-free interest rate of 0.30% and an expected life of 2 years. Directors and officers subscribed for 9,340,000 common shares of this private placement for proceeds of $467,000.

On March 15, 2019, the Company closed a non-brokered private placement consisting of 3,530,000 units at a price of $0.10 per unit for aggregate gross proceeds to the Company of $353,000. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant shall be exercisable into one additional common share of the Company at an exercise price of $0.15 until March 15, 2021. The fair value of the warrants issued was estimated at $63,868 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.08; expected dividend yield of 0%; expected volatility of 105% based on the Company’s historical share price volatility; risk-free interest rate of 1.62% and an expected life of 2 years.

On March 29, 2019, the Company closed a non-brokered private placement consisting of 2,560,000 units at a price of $0.10 per unit for aggregate gross proceeds to the Company of $256,000. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant shall be exercisable into one additional common share of the Company at an exercise price of $0.15 until March 29, 2021. The fair value of the warrants issued was estimated at $47,501 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.08; expected dividend yield of 0%; expected volatility of 105% based on the Company’s historical share price volatility; risk-free interest rate of 1.55% and an expected life of 2 years.

On May 16, 2019, the Company closed a non-brokered private placement consisting of 3,566,000 units at a price of $0.10 per unit for aggregate gross proceeds to the Company of $356,600. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant shall be exercisable into one additional common share of the Company at an exercise price of $0.15 until May 16, 2021. The fair value of the warrants issued was estimated at $64,181 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.08; expected dividend yield of 0%; expected volatility of 106% based on the Company’s historical share price volatility; risk-free interest rate of 1.59% and an expected life of 2 years.

On October 10, 2019, the Company closed a non-brokered private placement consisting of 800,000 units at a price of $0.10 per unit for aggregate gross proceeds to the Company of $80,000. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant shall be exercisable into one additional common share of the Company at an exercise price of $0.15 until October 10, 2021. The fair value of the warrants issued was estimated at $10,682 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.08; expected dividend yield of 0%; expected volatility of 74% based on the Company’s historical share price volatility; risk-free interest rate of 1.53% and an expected life of 2 years.

• 20 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

7. SHARE CAPITAL (CONTINUED)

c) Escrowed shares

8,435,454 common shares of the Company were subject to a surplus security escrow agreement, whereby a 36-month escrow period applies, with 5% having been released on receipt of final approval of the Exchange (September 7, 2017), 5% been releasable on the date that is 6 months from the final Exchange approval, 10% being releasable on the dates that are 12 months and 18 months from final Exchange approval, 15% being releasable on the dates that are 24 months and 30 months from final Exchange approval and 40% being releasable on the date that is 36 months from final Exchange approval. As at December 31, 2020, all of the escrowed shares have been released.

A further 3,345,000 common shares were held under a CPC escrow agreement, with 10% having been released on receipt of final Exchange approval, and a further 15% being releasable every six months thereafter. As at December 31, 2020, all of the escrowed shares have been released.

d) Share-based payments

The Company has a stock option plan whereby the Company may grant to directors, officers, employees and consultants of the Company options to purchase shares of the Company. Options granted under the plan will be for a term not to exceed five years.

The Company also has a Restricted Share Unit Incentive Plan (“RSU Plan”) whereby the Company is authorized to grant Restricted Share Units (“RSU’s”) under the plan to directors, officers and employees. An RSU represents the right to receive one common share of the Company on the vesting date. As the RSU’s are to be settled in common shares, the value of outstanding RSU’s will be included in share-based payment reserve within equity. As at December 31, 2020, no RSU’s had been granted. Refer to Note 13.

The number of common shares reserved for issuance pursuant to the stock option plan and the RSU plan and all other security-based compensation arrangements shal, in aggregate, not exceed 10% of the Company’s issued and outstanding capital.

A summary of changes of the Company’s options is presented below:

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==> picture [401 x 104] intentionally omitted <==

• 21 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

7. SHARE CAPITAL (CONTINUED)

d) Share-based payments (continued)

Options outstanding and exercisable as at December 31, 2020 are as follows:

										Expected	Risk-free
No.	No.			Exercise		Fair value at		Expected	Expected	dividend	interest
outstanding	exercisable	Grant date	Expirydate		price		grant date	volatility	life(yrs)	yield	rate
250,000	250,000	8-Jan-19	8-Jan-21	$	0.10	$	13,569	103%	2.00	0%	1.88%
850,000	850,000	2-Jul-19	2-Jul-21	$	0.10	$	43,425	80%	2.00	0%	1.53%
430,000	430,000	5-Dec-19	5-Dec-21	$	0.10	$	11,552	81%	2.00	0%	1.66%
650,000	650,000	27-May-20	27-May-25	$	0.055	$	32,825	89%	5.00	0%	0.40%
800,000	800,000	26-Aug-20	26-Aug-25	$	0.29	$	164,560	94%	5.00	0%	0.41%
1,400,000	1,400,000	11-Nov-20	11-Nov-25	$	0.24	$	240,520	95%	5.00	0%	0.48%
4,380,000	4,380,000					$	506,451

On May 27, 2020, the Company issued an aggregate of 650,000 stock options to certain consultants and a director of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.055 per option for a period of five years from the date of grant. A director of the Company was granted 400,000 options, at a fair value of $20,200.

On August 26, 2020, the Company granted an aggregate of 800,000 stock options to certain consultants, a director and an officer of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.29 per option for a period of five years from the date of grant. Directors and officers were granted 600,000 options, with a fair value of $123,420.

On November 11, 2020, the Company granted an aggregate of 1,400,000 stock options to certain consultants, a director and an officer of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.24 per option for a period of five years from the date of grant. Directors and officers were granted 600,000 options, with a fair value of $103,080.

On January 8, 2019, the Company granted an aggregate of 1,160,000 stock options to certain consultants, directors and officers of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.10 per option for a period of two years from the date of grant. During 2020, 910,000 of these options were exercised, generating proceeds of $91,000.

On July 2, 2019, the Company granted an aggregate of 1,000,000 stock options to certain consultants, directors and officers of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.10 per option for a period of two years from the date of grant. During 2020, 150,000 of these options were exercised, generating proceeds of $15,000.

On December 5, 2019, the Company granted 430,000 stock options to a director and officer of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.10 per option for a period of two years from the date of grant.

During the year ended December 31, 2020, an aggregate of 1,060,000 of the Company’s stock options were exercised at an average price of $0.10 per share, for gross proceeds of $106,000 (year ended December 31, 2019- no options exercised).

During the year ended December 31, 2020, 434,783 of the Company’s options expired unexercised (year ended December 31, 2019- 2,394,782 options expired unexercised).

• 22 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

7. SHARE CAPITAL (CONTINUED)

d) Share-based payments (continued)

At December 31, 2020, the weighted-average remaining contractual life of the Company’s exercisable options was 3.25 years (December 31, 2019 – 1.23 years).

For the options granted in January and July 2019, the underlying expected volatility was determined by reference to historical data of comparable entities.

For the options granted in December 2019, May 2020, August 2020, and November 2020, the underlying expected volatility was determined by reference to historical data of the Company’s shares over the expected average life of the options.

e) Warrants

A summary of changes of the Company’s warrants is presented below:

		Weighted
	No. of	Average	Value of
	warrants	Exercise Price	warrants
	#	$	$
December 31, 2018	6,385,261	0.22	551,316
Granted	5,228,000	0.15	186,232
Amended, initial exercice price (*)	(2,392,000)	0.25	-
Amended, new exercise price (*)	2,392,000	0.15	65,375
Expired	(357,000)	0.10	(24,990)
December 31, 2019	11,256,261	0.17	777,933
Granted, June 2020	10,000,000	0.08	144,154
Exercised	(2,130,000)	0.15	(194,602)
Expired	(3,915,261)	0.19	(389,910)
December 31, 2020	15,211,000	0.10	337,576

(*) An aggregate number of 2,550,000 warrants were initially issued at an exercise price of $0.25 and with an expiry date of August 25, 2019. On May 29, 2019, the Company amended the expiry date and the exercise price of these warrants as follows:

• a) The Company amended for 2,392,000 warrants the exercise price to $0.15 and extended the expiry date to February 25, 2021. If the closing price of the Company’s common shares is $0.1875 or more for a period of 10 consecutive trading days, then those warrant holders will have 30 days to exercise their warrants; and

• b) the Company extended the expiry date for 158,000 warrants to February 25, 2021.

Jean Depatie, a former insider of the Company, owns 412,500 of the amended warrants; 254,500 of the insider warrants were repriced and the expiry date was amended and 158,000 of the insider warrants were amended as to the expiry date.

This operation was treated as an exchange of the original warrant for a new warrant. The incremental value of $65,375 recorded in equity was measured as the difference in the fair value of the new and the original warrant at the amendment date.

On August 4, 2020, the automatic expiry acceleration clause in respect of the 2,392,000 amended warrants was triggered. 1,955,000 of the Company’s warrants were exercised at a price of $0.15 per share, for gross proceeds of $293,250. The remaining 437,000 warrants subject to the acceleration clause expired unexercised on September 3, 2020.

• 23 -

O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

7. SHARE CAPITAL (CONTINUED)

e) Warrants (continued)

On September 3, 2020, an additional 175,000 of the Company’s warrants were exercised at a price of $0.15 per share, for gross proceeds of $26,250.

On September 29, 2020, an additional 3,478,261 of the Company’s warrants expired unexercised.

Warrants outstanding at December 31, 2020 are as follows:

										Expected	Risk-free
No.	No.			Exercise		Fair value at		Expected	Expected	dividend	interest
outstanding	exercisable	Grant date	Expirydate		price		grant date	volatility	life(yrs)	yield	rate
158,000	158,000	25-Aug-17	25-Feb-21	$	0.25	$	13,525	85%	1.75	0%	1.53%
1,590,000	1,590,000	15-Mar-19	15-Mar-21	$	0.15	$	57,533	105%	2.00	0%	1.62%
1,280,000	1,280,000	29-Mar-19	29-Mar-21	$	0.15	$	47,501	105%	2.00	0%	1.55%
1,783,000	1,783,000	16-May-19	16-May-21	$	0.15	$	64,181	106%	2.00	0%	1.59%
400,000	400,000	10-Oct-19	10-Oct-21	$	0.15	$	10,682	74%	2.00	0%	1.53%
10,000,000	10,000,000	24-Jun-20	24-Jun-22	$	0.075	$	144,154	112%	2.00	0%	0.30%
15,211,000	15,211,000					$	337,576

At December 31, 2020, the weighted-average remaining contractual life of the Company’s warrants was 1.08 years (December 31, 2019 – 1.04 years).

For the warrants granted in March and May 2019, the underlying expected volatility was determined by reference to historical data of comparable entities.

For the warrants granted in October 2019 and June 2020, the underlying expected volatility was determined by reference to historical data of the Company’s shares over the expected average life of the warrants.

8. RELATED PARTY TRANSACTIONS

Key management includes directors and officers. The compensation paid or payable to key management is presented below:

	Year ended	Year ended	December 31,
	2020		2019
	$		$
Consulting fees		169,942	194,506
Share-based compensation		246,700	65,100
Unit issue expenses		-	24,281
		416,642	283,887

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

Details of related party transaction with the directors and officers of the Company and companies controlled by the directors and officers not otherwise disclosed in these consolidated financial statements are as follows:

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

8. RELATED PARTY TRANSACTIONS (CONTINUED)

• a) In the year ended December 31, 2020, the remuneration of the President and CEO totaled $130,000 (year ended December 31, 2019 - $120,000), including a $50,000 bonus.

• b) In the year ended December 31, 2020, the Chief Financial Officer and Secretary charged professional fees of $87,584 (year ended December 31, 2019 - $129,660).

As at December 31, 2020, the balance due to officers and directors amounted to $nil (December 31, 2019 - $1,160). Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”, included in accounts payable and accrued liabilities.

These related party transactions were initially recorded at fair value. Unless otherwise stated, none of the transactions incorporated special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash.

9. FINANCIAL INSTRUMENTS

Objectives and politics concerning financial risk management

The Company considers managing risk as being an integral part of its development and diversification strategies. The Company uses a proactive and rigorous approach for the management of the financial risks to which it is exposed. The Company’s management manages financial risks. The Company focuses on actively securing short to medium term cash flows by minimizing the exposures to financial markets.

The Company does not enter into financial instrument agreements including derivative financial instruments for speculative purposes.

Fair value

The Company presents fair value information of its financial assets and liabilities in the consolidated statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on significance of inputs used in measuring the fair value of the financial assets and liabilities.

The Company defines the fair value hierarchy under which its financial instruments are valued as follows:

• Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities at the reporting date;

• Level 2 includes inputs other than quoted prices in Level 1 that are observable for assets or liability, either directly or indirectly; and

• Level 3 includes inputs for the asset or liability that are not based on observable market data.

The carrying value of accounts payable and accrued liabilities are considered to be a reasonable approximation of their fair value because of the short-term maturity and contractual terms of these instruments.

Financial risks

The Company’s most significant financial risk exposure and its financial risk management policies are as follows:

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

9. FINANCIAL INSTRUMENTS (CONTINUED)

Financial risks (continued)

Credit risk

Credit risk relates to the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

The Company maintains substantially all of its cash and cash equivalents with a Canadian chartered bank, which reduces credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company.

Historically, the Company has generated cash flow from private placement financing. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one year.

As at December 31, 2020, the Company had working capital of $240,444 (December 31, 2019$266,013), which included cash and cash equivalents of $405,472 (December 31, 2019- $252,070), amounts receivable of $29,374 (December 31, 2019- $14,734) and prepaid expenses of $27,023 (December 31, 2019- $30,967), offset by current liabilities of $221,425 (December 31, 2019- $31,758). The Company expects to raise additional net working capital to finance its planned activities. Subsequent to December 31, 2020, the Company completed a private placement financing of 17,390,000 units at a price of $0.20 per unit for gross proceeds of $3,478,000. Refer to Note 13.

Foreign currency risk

Some of the Company’s purchases are denominated in foreign currencies, primarily in Colombian pesos. Consequently, certain assets and liabilities, namely cash, and accounts payable and accrued liabilities, include amounts in Colombian pesos that are exposed to currency fluctuations.

The following balance sheet items included amounts in foreign currencies at December 31, 2020 and 2019:

	December 31, December 31, 2020 2019 Columbian Pesos
Cash Accounts payable and accrued liabilities Net balance	71,751,002 7,285,290 (14,321,758) (18,553,384)
	57,429,244 (11,268,094)
Equivalent in Canadian dollars	21,414 $ (4,451) $

A 10% strengthening (weakening) of the Canadian dollar against the Columbian peso would decrease (increase) net loss by approximately $2,100. (2019- ($400) net loss).

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

10. CAPITAL MANAGEMENT

The Company considers its capital structure to consist of shareholders’ equity and current liabilities. The Company manages its capital structure and makes adjustments based on the funds available to support the development of its operations. The Board of Directors has not established quantitative return on capital criteria for management and relies on the expertise of management and the board of directors to sustain future development of the business.

The Company is dependent upon external financing to fund its activities. To continue to carry out the Company’s planned development and funding of ongoing administrative expenses, the Company will utilize its existing working capital and will raise additional capital as appropriate.

The Company’s management reviews its capital management approach on an ongoing basis and believes that it reflects a reasonable approach given the relative size of the Company. There were no changes to the approach to capital management for the years ended December 31, 2020 and 2019.

The Company and its subsidiaries are not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the TSX Venture Exchange (“TSXV”) which requires adequate working capital or financial resources of the greater of (i) $50,000 and (ii) an amount required to maintain operations and cover general and administrative expenses for a period of 6 months. As at December 31, 2020, the Company may not be compliant with the policies of the TSXV. The impact of this violation is not known and is ultimately dependent on the discretion of the TSXV.

11. INCOME TAXES

a) Provision for Income Taxes

The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% (2019- 26.5%) to the effective tax rate is as follows:

	2020	2019
	$	$
(Loss)before income taxes	(1,433,744)	(1,011,634)
Expected income tax recovery based on statutory rate	(380,000)	(269,000)
Adjustment to expected income tax recovery:
Share based compensation	116,000	35,000
Non-deductible and other	57,000	1,000
Change in benefit of tax assets not recognized	207,000	233,000
Deferred income taxprovision(recovery)	-	-

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

11. INCOME TAXES (CONTINUED)

b) Deferred Income Tax

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:

	2020	2019
	$	$
Non-capital loss carry-forwards	3,179,000	2,488,000
Capital losses carried forward	167,000	167,000
Equity instrument issuance costs	71,000	115,000
Exploration and evaluation expenditures	1,213,000	997,000
Total	4,630,000	3,767,000

Deferred income tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the Company can use the benefits.

c) Non-capital losses carried forward

The Company has approximately $3,179,000 (2019- $2,488,000) of non-capital losses as at December 31, 2020 available to be carried forward against future taxable income. These non-capital losses will expire as follows:

Year	Non-Capital Loss $
2032 2033 2034 2035 2036 2037 2038 2039 2040	75,000 276,000 303,000 45,000 150,000 664,000 472,000 502,000 692,000
	3,179,000

12. COMMITMENTS AND CONTINGENCIES

Management contracts

The Company is party to certain management contracts. These contracts contain clauses requiring additional payments of up to approximately $156,000 to be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Additional minimum management contract commitments remaining under these contracts approximate $91,000, due within one year.

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O2Gold Inc. (formerly Origin Gold Corporation) Notes to the Consolidated Financial Statements For the years ended December 31, 2020 and 2019 (In Canadian dollars)

12. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Environmental

The Company’s exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company expects to make expenditures to comply with such laws and regulations.

Litigation

The Company is subject to various claims, lawsuits and other complaints arising in the ordinary course of business. The Company records provisions for losses when claims become probable, and the amounts are estimable. Although the outcome of such matters cannot be determined, it is the opinion of management that the final resolution of these matters will not have a material adverse effect on the Company’s financial condition, operations or liquidity.

13. SUBSEQUENT EVENTS

On April 8, 2021, the Company granted 400,000 stock options to a director of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.26 per option for a period of five years from the date of grant.

On April 16, 2021, the Company completed a private placement financing of 17,390,000 units at a price of $0.20 per unit for gross proceeds of $3,478,000. Each unit will consist of one common share of the Company and one half of one common share purchase warrant, with each whole warrant entitling the holder to acquire one additional common share at an exercise price of $0.30 per common share for a period of 24 months following the closing date of the offering. Finder’s fees were paid to eligible finders in accordance with the policies of the TSXV consisting of cash commissions of $175,000 and 875,000 finder warrants. Each finder warrant will entitle the holder thereof to purchase one common share at a price of $0.20 for a period of 24 months following the closing date of the offering.

On April 23, 2021, the Company closed the acquisition of the Otú Central Project. Pursuant to the terms of the amended share purchase agreement, the Company acquired all of the issued and outstanding shares of Buenaventura Gold, Inc., a company that indirectly owns, or has been indirectly irrevocably transferred, 100% of the assets. Subsequent to the year end, the Company paid US$975,000 (approximately $1,220,000) in cash and US$3,000,000 (approximately $3,750,000) satisfied by the issuance of 18,807,206 units of the Company, at a deemed price per unit of $0.20.

On April 29, 2021, the Company granted 1,000,000 stock options to a consultant of the Company pursuant to the Company’s stock option plan. The stock options vest immediately and may be exercised at a price of $0.26 per option for a period of five years from the date of grant.

On April 29, 2021, the Company granted 3,775,000 registered share units to certain directors, officers and consultants of the Company pursuant to the Company’s RSU Incentive plan. Each RSU vests immediately and represents the right of the grantee to receive one common share of the Company.

Subsequent to December 31, 2020, 1,330,000 of the Company’s stock options and 12,826,500 of the Company’s warrants were exercised, generating proceeds of $1,356,476.

Subsequent to December 31, 2020, 948,000 of the Company’s warrants expired unexercised.

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