O2Gold Inc. — Interim / Quarterly Report 2021

Nov 27, 2021

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O2Gold Inc.

Condensed Interim Consolidated Financial Statements (unaudited)

For the three and nine months ended September 30, 2021 and 2020

(Expressed in Canadian dollars)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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O2Gold Inc. Condensed Interim Consolidated Statements of Financial Position

(In Canadian dollars- unaudited)

As at:		September 30,	September 30,	December 31,	December 31,
	Notes		2021		2020
ASSETS
Current assets:
Cash and cash equivalents		$	1,475,960	$	405,472
Amounts receivable			129,302		29,374
Prepaid expenses and advances			550,114		27,023
Total current assets			2,155,376		461,869
Non-current assets:
Property, plant and equipment	4		2,183		2,283
TOTAL ASSETS		$	2,157,559	$	464,152
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	6,11,12	$	3,162,229	$	221,425
Long-term liabilities:
Other liabilities	11		2,688,105		-
Total liabilities			5,850,334		221,425
Shareholders' equity/(deficiency):
Share capital	7		17,432,546		8,681,671
Contributed surplus	7		5,416,562		4,136,909
Deficit			(26,541,883)		(12,575,853)
Total shareholders' equity/(deficiency)			(3,692,775)		242,727
TOTAL LIABILITIES AND SHAREHOLDERS'	EQUITY/(DEFICIENCY)	$	2,157,559	$	464,152
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 condensed interim consolidated financial statements.

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O2Gold Inc.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (In Canadian dollars- unaudited)

		For the three	For the three	months ended	months ended		For the nine	months ended	months ended	months ended
			September		30,		September		30,
	Notes		2021		2020		2021		2020
Expenses:
Professional and consulting fees		$	126,321	$	94,821	$	342,345	$		338,243
Exploration and evaluation expenses	5		513,908		79,553		11,189,370			204,321
Shareholder communications and transfer agent fees			72,344		11,639		171,507			34,291
General and administrative expenses			282,900		15,330		523,571			34,828
Travel expenses			5,358		-		6,742			5,917
Share-based compensation	7		71,720		164,560		1,374,320			197,385
Foreign exchange(gain)/loss			4,145		3,999		14,724			4,446
Total expenses before the undernoted			1,076,696		369,902		13,622,579			819,431
Accretion expense	11		200,052		-		343,451			-
Othergains/(losses)			-		(10)		-			(228)
Net and comprehensive loss		$	1,276,748	$	369,892	$	13,966,030	$		819,203
Loss per share
Basic and diluted loss per share		$	(0.011)	$	(0.007)	$	(0.142)	$		(0.015)
Weighted average number of common shares outstanding:
Basic and diluted		119,425,407			55,487,984		98,225,961		55,487,984

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

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O2Gold Inc.

Condensed Interim Consolidated Statements of Changes in Equity

(In Canadian dollars- unaudited)

						Total
			Contributed	Accumulated other		shareholers'
	Share	capital	surplus	comprehensive loss	Deficit	equity
	No.	$	$	$	$	$
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)	-	(223,074)	223,074	-	-	-
Share-based payments (Note 7)	-	-	197,385	-	-	197,385
Warrants exercised (Note 7)	2,130,000	514,102	(194,602)	-	-	319,500
Options exercised (Note 7)	120,000	18,513	(6,513)	-	-	12,000
Net loss	-	-	-	-	(816,538)	(816,538)
Other comprehensive loss	-	-	-	(2,665)	-	(2,665)
Balance, September 30, 2020	63,840,191	8,458,211	4,025,850	(21,316)	(11,958,647)	504,098
Balance, December 31, 2020	64,780,191	8,681,671	4,136,909	-	(12,575,853)	242,727
Shares issued from private placement	17,390,000	3,478,000	-	-	-	3,478,000
Private placement - share issue costs	-	(197,975)	-	-	-	(197,975)
Black Scholes-w arrants (Note 7)	-	(626,794)	626,794	-	-	-
Share-based payments (Note 7)	-	-	1,374,320	-	-	1,374,320
Shares issued for property acquisition (Note 5,7)	18,807,206	3,761,441	-	-	-	3,761,441
Black Scholes-w arrants (Note 7)	-	(600,245)	600,245	-	-	-
Shares issued for debt settlement (Note 7)	800,323	176,071	-	-	-	176,071
Debt settlement- share issue costs (Note 7)	-	(1,380)	-	-	-	(1,380)
Restricted share units (Note 7)	3,775,000	981,500	(981,500)	-	-	-
Warrants exercised (Note 7)	13,317,000	1,573,820	(276,769)	-	-	1,297,051
Options exercised (Note 7)	1,430,000	206,437	(63,437)	-	-	143,000
Net loss	-	-	-	-	(13,966,030)	(13,966,030)
Balance, September 30, 2021	120,299,720	17,432,546	5,416,562	-	(26,541,883)	(3,692,775)

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

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O2Gold Inc. Condensed Interim Consolidated Statements of Cash Flows

(In Canadian dollars- unaudited)

			For the nine	months ended	months ended
			September		30,
	Notes		2021		2020
Cash flows used in operating activities
Net loss		$	(13,966,030)	$	(816,538)
Items not involving cash:
Depreciation			100		104
Share-based payments	7		1,374,320		197,385
Acquisition of exploration and evaluation property	5,7		3,761,441		-
Acquisition costs payable	5,11		2,344,654		-
Accretion expense	11		343,451		-
Working capital adjustments:
Change in amounts receivable			(99,928)		6,989
Change in prepaid expenses and advances			(523,091)		14,318
Change in accountspayable and accrued liabilities			3,116,876		29,918
Net cash(used in) operating activities			(3,648,207)		(567,824)
Cash flows from financing activities
Proceeds from private placement	7		3,478,000		500,000
Private placement- share issue costs	7		(199,355)		(3,250)
Exercise of options	7		143,000		12,000
Exercise of warrants	7		1,297,050		319,500
Net cashprovided by financing activities			4,718,695		828,250
Effect of foreign exchange rate changes on cash
and cash equivalents			-		(2,665)
Change in cash			1,070,488		257,761
Cash,beginningof theperiod			405,472		252,070
Cash, end of theperiod		$	1,475,960	$	509,831
Supplemental Information:
Shares issued for property acquisition	5,11	$	3,761,441	$	-
Shares issued for debt settlement	7	$	176,071	$	-
Broker warrants issued	7	$	71,780	$	-

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

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O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

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 “TSXV”) under the symbol OTGO. The address of its head office and principal place of business is 198 Davenport Road, Toronto (Ontario), Canada, M5R 1J2.

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 September 30, 2021, the Company has an accumulated deficit of $26,541,883 ($12,575,853 as at December 31, 2020) and a working capital deficit of $1,006,853 (working capital surplus of $240,444 as at December 31, 2020), 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.

These condensed interim 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 condensed interim 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 condensed interim 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. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

These condensed interim 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 interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting .

The condensed interim consolidated financial statements do not include all of the disclosure required for annual financial statements and therefore should be read in conjunction with the Company’s audited annual consolidated financial statements and notes thereto for the year ended December 31, 2020.

Basis of preparation and evaluation

The significant accounting policies followed in these condensed interim consolidated financial statements are consistent with those applied in the Company’s 2020 audited financial statements.

These condensed interim consolidated financial statements were approved and authorized for issue by the Company’s Board of Directors on November 26, 2021.

Basis of consolidation

The condensed interim consolidated financial statements include the accounts of O2Gold and those of its wholly owned subsidiaries: 11023926 Canada Inc., Trinité S.A.S., a Colombian company, and Buenaventura Gold Inc., a Panamanian company. 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.

New and future accounting policies

Certain pronouncements were issued by the IASB or the International Financial Reporting Interpretations Committee (“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:

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, 2023 and are to be applied retrospectively. Earlier adoption is permitted.

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O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New and future accounting policies (continued)

IAS 3 – Business Combinations (“IFRS 3”) was amended. The amendments introduce new exceptions to the recognition and measurement principles in IFRS 3 to ensure that the update in references to the revised conceptual framework does not change which assets and liabilities qualify for recognition in a business combination. An acquirer should apply the definition of a liability in IAS 37 – rather than the definition in the conceptual framework to determine whether a present obligation exists at the acquisition date as a result of past events. For a levy in the scope of IFRIC 21, the acquirer should apply the criteria in IFRIC 21 to determine whether the obligating event that gives rise to a liability to pay the levy has occurred by the acquisition date. In addition, the amendments clarify that the acquirer should not recognize a contingent asset at the acquisition date. The amendments are effective for annual periods beginning on January 1, 2022.

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.

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 condensed interim 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. These estimates and underlying assumptions are reviewed by management on an ongoing basis.

In preparing the financial statements, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the 2020 audited financial statements of the Company.

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O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

4. PROPERTY, PLANT AND EQUIPMENT

		Office
	Land	equipment	Total
Cost	$	$	$
Balance: December 31, 2019	29,232	2,540	31,772
Additions	-	-	-
Disposals	(29,232)	-	(29,232)
Balance: December 31,2020 and September 30,2021	-	2,540	2,540

			Office
	Land		equipment	Total
Accumulated depreciation	$		$	$
Balance: December 31, 2019		-	119	119
Depreciation charge		-	138	138
Balance: December 31,2020		-	257	257
Depreciation charge		-	100	100
Balance: September 30,2021		-	357	357
Net book value- December 31, 2020		-	2,283	2,283
Net book value- September 30, 2021		-	2,183	2,183

5. EXPLORATION AND EVALUATION PROPERTIES

During the nine months ended September 30, 2021 and 2020, the Company incurred the following exploration and evaluation expenditures:

	Nine months ended	Nine months ended
	September 30,
	2021	2020
	$	$
Acquisition cost (Note 11)	10,424,578	-
Geology and mettallurgical studies	176,071	9,479
Logistics,travel and overhead	588,721	194,842
	11,189,370	204,321

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 would 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 (approximately $11,430,000), payable as US$1,000,000 (approximately $1,270,000) in cash and the reminder payable as follows (see Note 11):

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O2Gold Inc.

Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

5. EXPLORATION AND EVALUATION PROPERTIES (CONTINUED)

• 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.

In accordance with the policies of the TSXV, no more than 57,777,778 common shares may be issued as consideration for the acquisition.

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 to which have been indirectly irrevocably transferred, 100% of the Assets. The Company paid US$975,000 (approximately $1,240,000) in cash and US$3,000,000 (approximately $3,810,000) satisfied by the issuance of 18,807,206 units of the Company, at a deemed price per unit of $0.20. See Note 7(b).

At September 30, 2021, the Company had paid US$1,000,000 (approximately $1,270,000) in cash and US$3,000,000 (approximately $3,810,000) in shares 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 acquired the assets free of debt.

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.

La Pantera

Under an option and assignment agreement with Mining Solutions S.A.S (“Mining Solutions”), 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.

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O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

5. EXPLORATION AND EVALUATION PROPERTIES (CONTINUED)

Pursuant to the option agreement, the optionor of the 50% interest was 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 was 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.

In June 2021, the option on the La Pantera Property was terminated, with the Company retaining no interest in La Pantera. Pursuant to the agreement with Mining Solutions, all of the information obtained during the contract period was forwarded to Mining Solutions.

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	**September 30, **	**September 30, **	December 31,	December 31,
		2021		2020
Current
Trade payables	$	28,539	$	189,425
Accruals		42,370		32,000
Acquisition feespayable(Note 11)		3,091,320		-
	$	3,162,229	$	221,425
Long term
Acquisition feespayable(Note 11)		2,688,105		-
	$	5,850,334	$	221,425

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, 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
Shares issued from private placement - April 2021	17,390,000	3,478,000
Black-Scholes warrant valuation	-	(626,794)
Cost of issue	-	(197,975)
Shares issued from property acquisition	18,807,206	3,761,441
Black-Scholes warrant valuation	-	(600,245)
Shares issued for settlement of debt	800,323	176,071
Cost of issue	-	(1,380)
Restricted share units issued	3,775,000	981,500
Exercise of options	1,430,000	206,437
Exercise of warrants	13,317,000	1,573,820
Balance, September 30, 2021	120,299,720	17,432,546

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O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

7. SHARE CAPITAL (CONTINUED)

b) Private placements (continued)

On June 24, 2020, the Company completed a 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 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 BlackScholes 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 volatility; riskfree 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 April 16, 2021, the Company completed a private placement financing consisting of 17,390,000 units at a price of $0.20 per unit for aggregate gross proceeds to the Company of $3,478,000. Each unit consists of one common share 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 $0.30 until April 16, 2023. The fair value of the 8,695,000 warrants issued was estimated at $555,014 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.168; expected dividend yield of 0%; expected volatility of 99% based on the Company’s historical share price volatility; risk-free interest rate of 0.29% and an expected life of 2 years. Finder’s fees were paid to eligible finders in accordance with the policies of the TSXV consisting of cash commissions of $175,000 and 894,250 finder warrants. Each finder warrant will entitle the holder thereof to purchase one common share at a price of $0.20 until April 16, 2023. The fair value of the finder warrants issued was estimated at $71,780 using the Black-Scholes option pricing model with identical assumptions as the warrants issued with the private placement units.

On April 23, 2021, the Company issued 18,807,206 units of the Company at a deemed price of $0.20 per unit as consideration for the acquisition of the Otú Central Project (see Note 5). Each unit consists of one common share 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 $0.30 until April 16, 2023. The fair value of the 9,403,603 warrants issued was estimated at $600,245 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.168; expected dividend yield of 0%; expected volatility of 99% based on the Company’s historical share price volatility; risk-free interest rate of 0.29% and an expected life of 2 years.

On September 21, 2021, the Company issued 800,323 common shares, at a deemed price per share of $0.22 based on the closing price of the Company’s common shares on the TSXV on the date of agreement, to Geominas Serviminas JV (“Geominas”) to settle approximately $176,000 of the Company’s cash indebtedness owing to Geominas in connection with the Company’s exploratory drill program at its Otú Central Project.

c) 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.

• 13 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

7. SHARE CAPITAL (CONTINUED)

c) Share-based payments (continued)

On April 30, 2021, the Company granted 3,775,000 RSU’s to certain directors, officers and consultants of the Company pursuant to the RSU plan. Each RSU vested immediately and represented the right of the grantee to receive one common share of the Company. On May 18, 2021, the RSU’s were converted to common shares of the Company at a deemed price of $0.26 per share, and $981,500 was recorded in share-based compensation. A director and officers of the Company received an aggregate of 2,933,333 common shares, valued at $762,667.

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 shall, 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:

		Weighted
	No. of	Average	Value of
	options	Exercise Price	options
	#	$	$
December 31, 2019	3,024,783	0.11	165,600
Granted, May 2020	650,000	0.06	32,825
Expired, June 2020	(434,783)	0.20	(40,000)
Granted, August 2020	800,000	0.29	164,560
Granted, November 2020	1,400,000	0.24	240,520
Exercised	(1,060,000)	0.12	(57,054)
December 31, 2020	4,380,000	0.17	506,451
Granted, April 2021	1,400,000	0.31	321,100
Expired, May 2021	(100,000)	0.10	(5,109)
Granted, August 2021	400,000	0.24	71,720
Exercised	(1,430,000)	0.10	(63,437)
September 30, 2021	4,650,000	0.24	830,725

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, at 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, at a fair value of $103,080.

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. The options were granted at a fair value of $76,600.

• 14 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

7. SHARE CAPITAL (CONTINUED)

c) Share-based payments (continued)

On April 30, 2021, the Company granted an aggregate of 1,000,000 stock options to certain consultants 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 August 16, 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 $0.24 per option for a period of five years from the date of grant. The options were granted at a fair value of $71,720.

During the nine months ended September 30, 2021, an aggregate of 1,430,000 of the Company’s stock options were exercised at an average price of $0.10 per share, for gross proceeds of $143,000 (nine months ended September 30, 2020- 120,000 options exercised for gross proceeds of $120,000).

During the nine months ended September 30, 2021, 100,000 of the Company’s options expired unexercised (nine months ended September 30, 2020- 434,783 options expired).

Options outstanding and exercisable as at September 30, 2021 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
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%
400,000	400,000	8-Apr-21	8-Apr-26	$	0.26	$	76,600	99%	5.00	0%	0.92%
1,000,000	1,000,000	30-Apr-21	30-Apr-26	$	0.33	$	244,500	100%	5.00	0%	0.93%
400,000	400,000	16-Aug-21	16-Aug-26	$	0.24	$	71,720	101%	5.00	0%	0.81%
4,650,000	4,650,000					$	830,725

At September 30, 2021, the weighted-average remaining contractual life of the Company’s exercisable options was 4.22 years (December 31, 2020 – 3.25 years).

The underlying expected volatility to the Company’s stock options was determined by reference to historical data of the Company’s shares over the expected average life of the options.

d) 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, 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	0.29	337,576
Granted, April 2021	18,992,853	0.30	1,227,039
Exercised	(13,317,000)	0.10	(276,770)
Expired	(1,119,000)	0.16	(48,221)
September 30, 2021	19,767,853	0.29	1,239,624

• 15 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

7. SHARE CAPITAL (CONTINUED)

d) Warrants (continued)

(*) 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.

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.

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.

During the nine months ended September 30, 2021, 13,317,000 of the Company’s warrants were exercised at a weighted-average price of $0.10 per share, for gross proceeds of $1,297,050 (nine months ended September 30, 2020- 2,130,000 warrants exercised for gross proceeds of $319,500). A director and officer of the Company exercised 1,000,000 warrants, generating proceeds of $75,000.

During the nine months ended September 30, 2021, 1,119,000 of the Company’s warrants expired unexercised (nine months ended September 30, 2020- 3,915,261 warrants expired).

Warrants outstanding at September 30, 2021 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
115,000	115,000	10-Oct-19	10-Oct-21	$	0.15	$	3,071	74%	2.00	0%	1.53%
660,000	660,000	24-Jun-20	24-Jun-22	$	0.075	$	9,514	112%	2.00	0%	0.30%
8,695,000	8,695,000	16-Apr-21	16-Apr-23	$	0.30	$	555,014	99%	2.00	0%	0.29%
894,250	894,250	16-Apr-21	16-Apr-23	$	0.20	$	71,780	99%	2.00	0%	0.29%
9,403,603	9,403,603	23-Apr-21	23-Apr-23	$	0.30	$	600,245	99%	2.00	0%	0.29%
19,767,853	19,767,853					$	1,239,624

At September 30, 2021, the weighted-average remaining contractual life of the Company’s warrants was 1.52 years (December 31, 2020 – 1.08 years).

For the warrants granted 2020 and 2021, the underlying expected volatility was determined by reference to historical data of the Company’s shares over the expected average life of the warrants.

• 16 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

8. RELATED PARTY TRANSACTIONS

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

	Three months ended	Three months ended	Three months ended	September 30,	Nine months ended	September 30,
		2021		2020	2021	2020
					$	$
Consulting fees	$	51,000	$	35,941	141,000	154,584
Share-based compensation		71,720		123,420	910,987	143,620
	$	122,720	$	159,361	1,051,987	298,204

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:

• a) In the nine months ended September 30, 2021, the remuneration of the President and CEO totaled $90,000 (nine months ended September 30, 2020 - $95,000).

• b) In the nine months ended September 30, 2021, the Chief Financial Officer and Secretary charged professional fees of $51,000 (nine months ended September 30, 2020 - $59,584).

As at September 30, 2021, there were no amounts owed to officers and directors of the Company (December 31, 2020 – no amounts owed). Any amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand” and are 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 policies 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.

• 17 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

9. FINANCIAL INSTRUMENTS (CONTINUED)

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:

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.

As at September 30, 2021, the Company had a working capital deficit of $1,006,853 (December 31, 2020- working capital of $240,444), which included cash and cash equivalents of $1,475,960 (December 31, 2020- $405,472), amounts receivable of $129,302 (December 31, 2020- $29,374) and prepaid expenses of $550,114 (December 31, 2020- $27,023), offset by current liabilities of $3,162,229 (December 31, 2020- $221,425). The Company expects to raise additional net working capital to finance its planned activities.

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.

• 18 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

9. FINANCIAL INSTRUMENTS (CONTINUED)

The following balance sheet items included amounts in foreign currencies at September 30, 2021 and December 31, 2020:

	September 30, December 31, 2021 2020 Columbian Pesos
Cash Accounts payable and accrued liabilities Net balance	73,263,838 71,751,002 (22,280,964) (14,321,758)
	50,982,874 57,429,244
Equivalent in Canadian dollars	16,943 $ 21,414 $

A 10% strengthening (weakening) of the Canadian dollar against the Columbian peso would decrease (increase) net loss by approximately $1,700 (December 31, 2020- $2,100).

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 nine months ended September 30, 2021.

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 September 30, 2021, 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. ACQUISITION OF EXPLORATION AND EVALUATION PROPERTIES

On April 23, 2021, the Company completed the acquisition of a 100% equity interest in Buenaventura Gold Inc. (“Buenaventura”), which owns a 100% interest in the Otú Central Project in Columbia.

Terms of the Transaction

Under the terms of the Definitive Agreement, the Company acquired a 100% equity interest in Buenaventura for consideration detailed below:

US$9,000,000 (approximately $11.24 million), paid as US$1,000,000 (approximately $1.25 million) in cash and the reminder payable as follows:

• 19 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

11. ACQUISITION OF EXPLORATION AND EVALUATION PROPERTIES (CONTINUED)

Terms of the Transaction (continued)

• a) On April 23, 2021, US$3,000,000 (approximately $3.75 million) of the Company’s common shares satisfied by 18,807,206 units of the Company, at a deemed price per unit of $0.20.

• b) On October 26, 2021, that number of common shares equal to US$2,500,000 (approximately $3.12 million) 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 of $0.18.

• c) On October 26, 2022, that number of common shares equal to US$2,500,000 (approximately $3.12 million) 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 of $0.18.

Purchase price consideration

The acquisition is being treated as an asset acquisition for accounting purposes as Buenaventura does not meet the definition of a business, as defined in IFRS 3, Business Combinations. The preliminary allocation of the purchase price of the assets acquired and liabilities assumed were recorded at their estimated fair market values, which are based on management estimates.

Purchase price:
Cash consideration	$	1,227,163
Share consideration		3,761,441
Future obligations		5,435,974
Totalpurchaseprice	$	10,424,578
Fair value of assets acquired and liabilties assumed:
Amounts receivable and prepaid	$	-
Fixed assets		-
Accounts payable and accrued liabilties		-
Cash		-
Total net asset acquired	$	-
Excess of purchase price over
fair value of assets acquired	$	10,424,578

The Company acquired was incorporated for the sole purpose of holding the Otú Central Project assets.

The future obligations are the net present value of the future payments, discounted at 15%. As of September 30, 2021, the future obligations are adjusted to $5,779,425 (April 23, 2021- $5,435,974) and $200,052 of accretion expenses were charged to the Company’s statement of loss and comprehensive loss. The current portion of the future obligations of $3,091,320 is due within a year and is included in accounts payable and accrued liabilities. See Note 13. The long-term portion of the future obligation of $2,688,105 is due within 2 years and included in non-current accounts payable and accrued liabilities.

• 20 -

O2Gold Inc. Notes to the Condensed Interim Consolidated Financial Statements For the three and nine months ended September 30, 2021 and 2020 - (In Canadian dollars unaudited)

12. COMMITMENTS AND CONTINGENCIES

Exploration

The Company has countersigned documents that transforms some of its claims into a concessionary title. As a result, the Company will need to meet production obligations, among others, to keep the title in good standing; these obligations include recovery of a minimum of 2,229 oz Au in 2022. The minimum recovery sum increases year over year for the first six years of the title’s 30-year extension.

Management contracts

The Company is party to certain management contracts. These contracts contain clauses requiring additional payments of up to approximately $180,000 to be made upon the occurrence of certain events such as a change of control, and management bonus payments of approximately $5,360,000 to be made upon the achievement of certain performance benchmarks. 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 $96,000, due within one year.

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

Subsequent to September 30, 2021, 115,000 of the Company’s outstanding warrants were exercised, generating aggregate proceeds of $17,250.

On October 26, 2021, the Company issued 13,981,150 common shares at a deemed price of $0.22 per share pursuant to the terms of the transaction to acquire the Otú Central Project. See Note 5.

• 21 -