Orea Mining Corp. — Interim / Quarterly Report 2020

May 13, 2020

APHELION CAPITAL CORP.

Condensed Interim Financial Statements For the Three Months Ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited condensed interim financial statements of Aphelion Capital Corp. (the “Company”) have been prepared by and are the responsibility of the Company’s management.

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its independent auditors have not performed a review of these condensed interim financial statements.

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APHELION CAPITAL CORP. Condensed Interim Statements of Financial Position (Unaudited - Expressed in Canadian Dollars )

	March 31, 2020		December 31, 2019
Assets
Current
Cash	$	135,568	$ 27,316
Deferred financing costs		-	51,838
Total Assets	$	135,568	$79,154
Liabilities
Current
Accounts payable and accrued liabilities	$	9,089	$ 21,782
Shareholders’ Equity
Common Shares(note 3)		198,642	100,000
Reserves(note 3)		16,906	6,386
Deficit		(89,069)	(49,014)
		126,479	57,372
Total Liabilities and Shareholders’ Equity	$	135,568	$79,154

Approved by on behalf of the Board:

Seth Kay (signed)

Seth Kay, Director

Zayn Kalyan (signed)

Zayn Kalyan, Director

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

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APHELION CAPITAL CORP. Condensed Interim Statements of Comprehensive Loss (Unaudited - Expressed in Canadian Dollars )

		For the three	January 10, 2019
		months ended		(incorporation)
		March 31,			to
		2020		March	31,
Operating Expenses
Professional fees	$	27,754	$	-
Share-based payments		-		6,386
General and administrative		12,301		-
Net Loss and Comprehensive Loss for the Period	$	40,055	$	6,386
Basic and Diluted Loss per Share	$	0.2	$	-
Weighted Average Number of Common Shares
Outstanding		176,923		-

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

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APHELION CAPITAL CORP.

Condensed Interim Statement of Changes in Shareholders’ Equity (Unaudited - Expressed in Canadian Dollars )

	Number of				Total
	Outstanding	Common			Shareholders’
	Shares	Shares	Reserves	Deficit	Equity
		$	$	$	$
Balance, January 10, 2019 (incorporation)	1	-	-	-	-
Common share cancelled	(1)	-	-	-	-
Shares issued for cash	2,000,000	100,000	-	-	100,000
Share-based payments	-	-	6,386	-	6,386
Net loss for the period	-	-	-	(6,386)	(6,386)
Balance, March 31, 2019	2,000,000	100,000	6,386	(6,386)	100,000
Balance, December 31, 2019	2,000,000	100,000	6,386	(49,014)	57,372
Share issued for cash (note 3)	2,000,000	200,000	-	-	200,000
Share issuance costs (note 3)	-	(101,358)	10,520	-	(90,838)
Net loss for the period	-	-	-	(40,055)	(40,055)
Balance, March 31, 2020	4,000,000	198,642	16,906	(89,069)	126,479

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

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APHELION CAPITAL CORP. Condensed Interim Statements of Cash Flows (Unaudited - Expressed in Canadian Dollars )

	For the three	January 10, 2019
	months ended	(incorporation) to
	March 31,		March 31,
	2020		2019
Operating Activities
Net loss for the period	$ (40,055)	$	(6,386)
Item not involving cash:
Share-based payments	-		6,386
Changes in non-cash working capital item:
Accounts payable and accrued liabilities	(12,693)		2,923
Net cash flows provided by (used in) operating activities	(52,748)		2,923
Financing Activities
Proceeds from the issuance of common shares	200,000		100,000
Share issuance costs	(39,000)		-
Deferred Financing Costs	-		(7,480)
Net cash flows provided by financing activities	161,000		92,520
Net change in cash	108,252		95,443
Cash, beginning	27,316		-
Cash, ending	$ 135,568	$	95,443

There were no cash investing activities during the three-month period ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019.

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

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

1. NATURE OF OPERATIONS AND GOING CONCERN

Aphelion Capital Corp. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on January 10, 2019 and is a capital pool company (“CPC”), as defined in TSX Venture Exchange (“TSX-V”) Policy 2.4 (“Policy 2.4”). The Company has made an application to have its common shares listed and called for trading on the TSX-V through a prospectus dated November 27, 2019. On February 26, 2020, the Company’s common shares effectively commenced trading on TSX-V under the symbol “APHE.P”.

The Company’s registered office address is 2600-1055 West Hastings Street, Vancouver, BC V6E 3X1 and its principal place of business is located at 5479 Blueberry Lane, North Vancouver, British Columbia, V7R 4N5.

The Company’s principal business activity is the identification and evaluation of assets, or businesses with the objective of completing a qualifying transaction (a “Qualifying Transaction”) as defined by the CPC Policy. Under these rules, a Qualifying Transaction must be entered into within 24 months of listing otherwise the Company will, subject to certain conditions, have its listing moved to the NEX board of the Exchange.

The proceeds raised from the issuance of share capital and from the initial public offering (the "Offering") may only be used to identify and evaluate assets or businesses for future investment, with the exception that up to the lesser of $210,000 or 30% of the gross proceeds may be used to cover prescribed costs of issuing the common shares or administrative and general expenses of the Company. These restrictions apply until the completion of a Qualifying Transaction by the Company as defined under Policy 2.4

These condensed interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. There are material uncertainties that may cast significant doubt about the appropriateness of the going concern assumption as the Company has not generated any revenues and incurred a net loss of $40,055 (December 31, 2019 - $49,014) for the three-month period ended March 31, 2020. The Company’s continuing operations as intended are dependent upon the Company’s ability to complete a Qualifying Transaction. Should the Company fail to complete a Qualifying Transaction, its ability to raise sufficient financing to maintain operations may be impaired, and accordingly, the Company may be unable to realize the carrying value of its net assets. These condensed interim financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

Since March 2020, several measures have been implemented in Canada and the rest of the world in response to the increased impact from novel coronavirus (COVID-19). The Company continues to operate its business at this time. While the impact of COVID-19 is expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on business operations cannot be reasonably estimated at this time. The Company anticipates this could have an adverse impact on its business, results of operations, financial position and cash flows in 2020.

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

(a) Statement of compliance

These condensed interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards (“IFRS"). Certain information and note disclosures normally included in the audited annual financial statements prepared in accordance with IFRS have been omitted or condensed. As a result, these condensed interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019.

These condensed interim financial statements are presented in Canadian dollars unless otherwise specified.

(b) Basis of presentation

These condensed interim financial statements have been prepared on a historical cost basis, except for some financial instruments classified in accordance with measurements under IFRS. In addition, these condensed interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

These condensed interim financial statements were authorized for issue by the Board of Directors on May 13, 2020.

Certain comparative figures have been reclassified to conform to the current year’s presentation.

• (c) Critical accounting estimates and judgements

The preparation of condensed interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may vary from these estimates.

Estimates and judgments 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. Accounting estimates will, by definition, seldom equal the actual results. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected.

Going concern

The assessment of whether the concern assumption is appropriate requires management to take into account all available information about the future, which is at least, but not limited to, 12 months from the end of the reporting period. The Company is aware that material uncertainties exist related to events or conditions that may cast significant doubt upon the Company’s ability to continue as a going concern.

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Continued)

• (c) Critical accounting estimates and judgements (continued)

Assumptions used in calculation of fair value assigned to share-based payments

The Company uses the Black-Scholes option pricing model for valuation of share-based payments. Option pricing models require the input of subjective assumptions, including expected price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's equity reserves.

• (d) New accounting policies

• (i) Financial Instruments

On January 1, 2020, the Company adopted all of the requirements under IFRS 9 Financial Instruments (“IFRS 9”). IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement (“IAS 39”). As a result of the adoption of IFRS 9, management has changed its accounting policy for financial instruments prospectively. The change did not impact the carrying value of the financial assets or liabilities on the transition date.

Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

The following table shows the classification under IFRS 9:

	Original	Subsequent
	Classification	Measurement
	IAS 9	IFRS 39
Financial Assets
Cash	FVTPL	FVTPL
Financial Liabilities
Accountspayable and accrued liabilities	Other financial liabilities	Amortized cost

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Continued)

• d) New accounting policies (continued)

  • (i) Financial Instruments (continued)

Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and are subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in the period in which they arise.

Debt investments at FVTOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income (“OCI”). On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVTOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If, at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Continued)

• d) New accounting policies (continued)

• (i) Financial Instruments (continued)

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of ownership to another entity.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and/or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. Gains and losses on derecognition are generally recognized in profit or loss.

(ii) Leases

On January 1, 2020, the Company adopted IFRS 16. IFRS 16 - Leases is a new standard which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both the lessee and the lessor. It introduces a single lessee accounting model that requires the recognition of all assets and liabilities arising from a lease. The adoption of this new standard did not have a material impact on the financial statements of the Company since the Company does not have any lease.

3. SHARE CAPITAL

• (a) Authorized

Unlimited number of common shares without par value.

• (b) Issued and outstanding

At March 31, 2020, there were 4,000,000 issued and fully paid common shares (March 31, 2019 – 2,000,000).

On February 26, 2020, the Company successfully completed its initial public offering of 2,000,000 common shares at a price of $0.10 per share for total proceeds of $200,000. Pursuant to an agency agreement between the Company and Canaccord Genuity Corp. (the “Agent”), the Agent received a cash commission equal to 10% of the gross proceeds and an administration fee.

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

3. SHARE CAPITAL (Continued)

• (b) Issued and outstanding (continued)

In addition, the Company granted the Agent an option to purchase up to 200,000 common shares at a price of $0.10 per share for a period of 2 years. The Agent also received a corporate finance fee of $15,000 plus taxes and was reimbursed for certain Agent’s expenses, including legal fees, incurred pursuant to the Offering.

The Company recognized $101,358 in issuance costs in connection with the initial public offering.

(c) Agent’s Warrants

In connection with the February 26, 2020 initial public offering, 200,000 of Agent’s warrants were issued. Each warrant gives the Agent the right to acquire a further common share of the Company at a price of $0.10 for a term of 2 years. The Agent’s warrants were valued at $10,520 using the Black-Scholes pricing model with the following assumptions: risk-free rate of 1.15%, volatility of 100%, dividends of nil and expected life of 2 years.

The following is a summary of agent’s warrants as at March 31, 2020.

			Weighted
			Average
			Remaining	Weighted
	Exercise	Number of	Contractual Life	Average
Expiry Date	Price	Warrants	(Years)	Fair Value
February26, 2022	$0.10	200,000	1.9	$0.10

(d) Stock options

The Company implemented an Incentive Stock Option Plan (the “Plan”) on February 1, 2019. Pursuant to the Plan, the Company grants stock options to directors, officers, employees and consultants for services, provided that the number of common shares reserved for issuance shall not exceed 10% of the issued and outstanding common shares exercisable for a period of up to 10 years. The exercise price and vesting terms of the options granted under the Plan will be determined by the Board of Directors. Until the completion of Qualifying Transaction, options granted to a director or officer individually may not exceed 5% of the common shares outstanding as at the closing of the Offering; options granted to all technical consultants may not exceed 2% of the common shares outstanding as at the closing of the Offering. No options may be granted to investor relations service provider; and the exercise price cannot be less than the greater of the Offering share price and the Discounted Market Price.

Stock options outstanding and exercisable at March 31, 2020 as follows:

Number of options	Number of options	Exercise	Expiry
outstanding	exercisable	Price	Date
200,000	200,000	$0.10	February1,2024

The remaining contractual life for options outstanding at March 31, 2020 is 3.83 years.

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Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

APHELION CAPITAL CORP.

4. RELATED PARTY TRANSACTIONS

Related parties include the Board of Directors, officers, close family members and enterprises which are controlled by these individuals.

During the three-month ended March 31, 2020, share-based payments of $Nil (March 31, 2019 - $6,386) were incurred for officers and directors of the Company. There was no other remuneration paid to related parties during the period.

5. FINANCIAL INSTRUMENTS

Fair value

The Company’s financial instruments consists of cash and accounts payable and accrued liabilities. The fair value of these financial instruments approximates their carrying values due to the shortterm nature of these investments. All financial instruments are classified as Level 1.

Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

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

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

Level 3 - Inputs for assets or liabilities that are not based on observable market data. The carrying value of cash held in trust and accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of these instruments.

Credit risk

The Company is not exposed to credit risk. The Company’s cash is held in large Canadian financial institutions. The Company has not experienced nor is exposed to any significant credit losses.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Company is not exposed to significant liquidity risk. Accounts payable at March 31, 2020 are due within 3 months of that date.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk. The Company is not exposed to significant market risk.

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APHELION CAPITAL CORP. Notes to the Condensed Interim Financial Statements For the three months ended March 31, 2020 and for the period from January 10, 2019 (incorporation) to March 31, 2019 (Unaudited - Expressed in Canadian Dollars )

5. FINANCIAL INSTRUMENTS (Continued)

Capital Management

The Company is actively looking to acquire an interest in a business or assets and this involves a high degree of risk. The Company has not determined whether it will be successful in its endeavours and does not generate cash flows from operations. The Company’s primary source of funds comes from the issuance of common shares. The Company does not use other sources of financing that require fixed payments of interest and principal due to lack of cash flow from current operations and is not subject to any externally imposed capital requirements.

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern.

The Company defines its capital as shareholders’ equity. Capital requirements are driven by the Company’s general operations. To effectively manage the Company’s capital requirements, the Company monitors expenses and overhead to ensure costs and commitments are being paid.

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