Sarama Resources Ltd. — Interim / Quarterly Report 2020

Aug 26, 2020

Sarama Resources Ltd.

(An Exploration Stage Company)

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months and six months ended June 30, 2020 (Unaudited)

(Expressed in United States Dollars)

Corporate Directory ................................................................................................... 2 Management’s Responsibility for Financial Information ............................................ 3 Consolidated Statement of Financial Position ............................................................. 4 Consolidated Statement of Loss and Other Comprehensive Loss ................................ 5 Consolidated Statement of Cash Flows ....................................................................... 6 Consolidated Statement of Changes in Equity ............................................................ 7 Notes to the Condensed Interim Consolidated Financial Statements ........................... 8

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Sarama Resources Ltd An Exploration Stage Company Corporate Directory

DIRECTORS

Simon Jackson (Chairman) Andrew Dinning (CEO) Adrian Byass (Non-executive Director) Steven Zaninovich (Non-executive Director)

REGISTERED OFFICE

Suite 2200, HSBC Building 885 West Georgia Street Vancouver BC, Canada, V6C 3E8

AUSTRALIAN BRANCH OFFICE

Unit 8, 245 Churchill Avenue Subiaco, Western Australia 6008 P: +61 8 9363 7600 F: +61 8 9382 4308

BURKINA FASO OFFICE

Sarama Mining Burkina SUARL Quartier Ouaga 2000, secteur 15 Zone B, Rue du Général Tiemoko Marc Garango, 13 B.P. 60 Ouagadougou 13, Ouagadougou, République du Burkina Faso

LEGAL ADVISORS

Cassels Brock & Blackwell LLP Suite 2200, HSBC Building 885 West Georgia Street Vancouver BC, Canada, V6C 3E8

AUDITORS

HLB Mann Judd Level 4, 130 Stirling Street Perth, Western Australia, Australia 6000

SHARE REGISTRY

TSX Trust Company 100 Adelaide Street West, Suite 301 Toronto, Ontario M5H4H1 Canada

TSX.V CODE

SWA

WEBSITE

www.saramaresources.com

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Sarama Resources Ltd An Exploration Stage Company Management’s Responsibility for Financial Information

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL INFORMATION

The accompanying condensed interim consolidated financial statements and all other financial information included in this report are the responsibility of management. The condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Financial statements include certain amounts based on estimates and judgments. When alternative methods exist, management has chosen those it deems most appropriate in the circumstances to ensure that the condensed interim consolidated financial statements are presented fairly, in all material respects.

Management maintains appropriate systems of internal control, consistent with reasonable cost, to give reasonable assurance that its assets are safeguarded, and the financial records are properly maintained.

The Board of Directors is responsible for ensuring that management fulfils its responsibilities for financial reporting and internal control. The Audit Committee, which is comprised of three Directors, all of whom are nonmanagement and independent, meets with management to review the consolidated financial statements to satisfy itself that management is properly discharging its responsibilities to the Directors, who approve the condensed interim consolidated financial statements.

Management recognizes its responsibility for conducting the Company’s affairs in compliance with established financial reporting standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

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

The accompanying unaudited condensed interim consolidated financial statements 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 financials statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

(signed) “Andrew Dinning” (signed) “Lui Evangelista” Director, President and CEO CFO August 26, 2020 August 26, 2020

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Sarama Resources Ltd An Exploration Stage Company Consolidated Statement of Financial Position (Unaudited) Expressed in United States Dollars

Note ASSETS Current assets Cash and cash equivalents 3 Security deposits Other receivables Prepayments Financial assets 8 Total current assets Non-current assets Plant and equipment 4 Investment in associate 5 Royalty Total non-current assets Total assets LIABILITIES Current liabilities Accounts payable and accrued liabilities Termination Agreement - Barrick 6 Total current liabilities Non-current liabilities Provision for employee entitlements Termination Agreement - Barrick 6 Total non-current liabilities Total liabilities Net Assets EQUITY Share capital 7(b) Share based payments reserve Foreign currency translation reserve Accumulated losses Total equity	As at June 30, 2020 $ As at December 31, 2019 $
	1,071,333 2,227,604 24,042 24,483 42,786 32,010 7,318 7,654 88,313 77,517
	1,233,792 2,369,268
	42,917 51,568 1,836,171 1,836,171 23,131 23,131
	1,902,219 1,910,870
	3,136,011 4,280,138
	130,040 278,741 - 1,000,000
	130,040 1,278,741
	198,323 193,387 1,000,000 -
	1,198,323 193,387
	1,328,363 1,472,128
	1,807,648 2,808,010
	50,179,666 50,162,722 4,019,624 3,659,411 (90,024) (93,399) (52,301,618) (50,920,724)
	1,807,648 2,808,010

These financial statements are authorised for issue by the Board of Directors on August 26, 2020.

They are signed on the Company’s behalf by:

(Signed) “Andrew Dinning” Andrew Dinning, Director

(Signed) “ Simon Jackson” Simon Jackson, Director

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

4

Sarama Resources Ltd An Exploration Stage Company Consolidated Statement of Loss and Other Comprehensive Loss (Unaudited) Expressed in United States Dollars

Note Income Interest income Foreign exchange gain Fair value gain on financial assets carried at fair value through profit or loss Other income Total income Expenses Accounting and audit Corporate development Depreciation Directors fees Exploration expenditure as incurred 2(d) Foreign exchange loss Insurance Marketing and investor relations Office and general Professional fees Salaries Stock–based compensation 7(d) Travel Total expenses Profit / (Loss) before income tax Income tax benefit Profit / (Loss) for the period from continuing operations Exchange differences on translation of foreign operations Total comprehensive gain / (loss) for the period Basic and diluted loss per share - Continuing operations Weighted average number of shares Basic and diluted	Three months ended June 30, 2020 Three months ended June 30, 2019 Six months ended June 30, 2020 Six months ended June 30, 2019
	1,044 929 4,133 1,400 71,549 14,564 - 20,412 32,947 - 55,723 - 44,338 - 49,529 5,128
	149,878 15,493 109,385 26,940
	3,883 4,922 8,345 10,044 - 2,376 - 5,359 584 510 1,111 1,037 8,422 13,756 21,177 28,721 173,039 2,831,377 629,034 3,074,300 - - 66,109 - 2,590 - 7,674 17,623 7,691 4,534 13,472 27,291 16,975 29,922 58,011 73,306 11,490 13,383 18,041 33,649 153,201 160,667 289,268 342,418 52,118 - 360,213 58,949 49 13,811 17,824 20,860
	430,042 3,075,258 1,490,279 3,693,557
	(280,164) (3,059,765) (1,380,894) (3,666,617)
	- - - -
	(280,164) (3,059,765) (1,380,894) (3,666,617) 3,375 - 3,375 -
	(276,789) (3,059,765) (1,377,519) (3,666,617)
	cents cents cents cents (0.1) (1.3) (0.6) (1.8) 250,745,561 229,444,730 250,702,774 205,709,429

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

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Sarama Resources Ltd An Exploration Stage Company Consolidated Statement of Cash Flows (Unaudited) Expressed in United States Dollars

Note Cash flows used in operating activities Payments to suppliers and employees Payments for exploration and evaluation Interest received Other income Net cash used in operating activities 11 Cash flows used in investing activities Purchase of plant and equipment 4 Proceeds on sale of plant and equipment 4 Proceeds on sale of financial assets Net cash generated in investing activities Cash flows from financing activities Common shares and warrants issued for cash Payment of share issue costs Net cash generated by financing activities Net increase in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period

Three months ended June 30, 2020 Three months ended June 30, 2019 Six months ended June 30, 2020 Six months ended June 30, 2019 (169,703) (370,486) (412,014) (559,451) (199,890) (391,867) (767,326) (587,985) 1,044 929 4,133 1,400 31,757 - 31,757 - (336,792) (761,424) (1,143,450) (1,146,036) (1,778) (5,221) (2,592) (5,221) 1,604 - 1,604 - 50,365 20,255 61,725 223,760 50,191 15,034 60,737 228,539 - 4,356,269 - 4,356,269 - (24,059) - (26,593) - 4,332,210 - 4,329,676 (286,601) 3,585,820 (1,082,713) 3,412,179 97,776 (33,085) (73,558) 33,644 1,260,158 225,878 2,227,604 398,960 1,071,333 3,844,783 1,071,333 3,844,783

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

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Sarama Resources Ltd An Exploration Stage Company Consolidated Statement of Changes in Equity (Unaudited) Expressed in United States Dollars

Balance at January 1, 2019 Loss attributed to shareholders of the Company Total comprehensive loss for the year Transactions with owners in their capacity as owners: Proceeds from share issue Share issuance costs Stock-based compensation - warrants Stock-based compensation - options Balance at June 30, 2019 Balance at January 1, 2020 Loss attributed to shareholders of the Company Exchange differences on translation of foreign operations Total comprehensive loss for the period Transactions with owners in their capacity as owners: Shares issued in lieu of salary Stock-based compensation - options (7(d)(i)) Balance at June 30, 2020	Number of common shares Share capital (note 5) $ Share based payments reserve $ Foreign currency translation reserve $ Accumulated losses $ Total $
	181,710,402 45,835,363 3,283,395 (295,067) (46,473,155) 2,350,536 - - - - (3,666,617) (3,666,617)
	- - - - (3,666,617) (3,666,617)
	68,949,585 4,356,269 - - - 4,356,269 - (26,593) - - - (26,593) - - 258,119 - - 258,119 - - 58,949 - - 58,949
	250,569,987 50,165,039 3,600,463 (295,067) (50,139,772) 3,330,663
	250,569,987 50,162,722 3,659,411 (93,399) (50,920,724) 2,808,010 - - - - (1,380,894) (1,380,894) - - - 3,375 - 3,375
	- - - 3,375 (1,380,894) (1,377,519)
	353,967 16,944 - - - 16,944 - - 360,213 - - 360,213
	251,013,954 50,179,666 4,019,624 (90,024) (52,301,618) 1,807,648

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

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

1. NATURE OF OPERATIONS

Sarama Resources Ltd (the “ Company ”) was incorporated under the laws of the Province of British Columbia, Canada on April 8, 2010.

Statement of compliance

These condensed interim consolidated financial statements have been prepared in United States Dollars.

The board of directors of the Company have approved these condensed interim consolidated financial statements on August 26, 2020.

Business Activities

The consolidated entity, consisting of Sarama Resources Ltd. and its subsidiaries is in the exploration stage and its principal business activity is the sourcing and exploration of mineral properties. As at June 30, 2020, the Company is in the process of exploring its principal mineral properties and has not yet determined whether the properties contain gold reserves that are economically recoverable.

The unaudited condensed interim consolidated financial statements for the three and six month period ended June 30, 2020, comprise the accounts of Sarama Resources Ltd and its subsidiaries and the Company’s interest in equity accounted investments.

Basis of Presentation

These condensed interim consolidated financial statements have been prepared under the historical cost convention except for financial assets and liabilities at fair value through profit or loss and in accordance with International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board (“ IASB ”) and Interpretations of the International Financial Reporting Interpretations Committee (“ IFRIC ”). These condensed consolidated interim financial statements have been prepared in accordance with IFRS applicable to the preparation of interim consolidated financial statements, including International Accounting Standard (“IAS”) 34, “ Interim Financial Reporting” , and have been prepared following the same accounting policies as the annual consolidated financial statements for the year ended December 31, 2019 except as described in Note 2.

The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2019, which have been prepared in accordance with IFRS.

Going Concern

For the period ended June 30, 2020, the consolidated entity recorded a net loss of $1,380,894 and had a net cash outflow from operating and investing activities of $1,082,713. As at June 30, 2020, the consolidated entity had available cash of $1,071,333 and surplus of current assets over current liabilities of $1,103,752.

The Directors have assessed the need to acquire additional funding to continue to operate as a going concern for the foreseeable future. The Directors believe such funding will be obtained and therefore consider it appropriate to prepare the financial report on a going concern basis, which assumes the realisation of the consolidated entity’s assets and the discharge of its liabilities in the normal course of business and at the amounts stated in the condensed interim consolidated financial statements.

Should additional funding be unable to be obtained, the Directors believe that the Company can remain a going concern by the further reduction of various operating expenditure. However, these circumstances indicate the existence of a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern.

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

2. SIGNIFICANT ACCOUNTING POLICIES

• a) Standards and Interpretations applicable to June 30, 2020

In the period ended June 30, 2020, there were no new and revised Standards and Interpretations issued by the IASB that are relevant to the Company and effective for the current annual reporting period.

b) Standards and Interpretations in issue not yet adopted

The Company has not early adopted any amendment, standard or interpretation that has been issued by the IASB but is not yet effective.

c) Basis of Consolidation

The condensed interim consolidated financial statements incorporate the assets and liabilities of the Company as at June 30, 2020 and the results of all subsidiaries for the three and six month period then ended.

Subsidiaries are all entities (including special purpose entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company.

d) Exploration and Evaluation Assets

Mineral exploration and evaluation costs are expensed as incurred based upon each area of interest. Acquisition costs will normally be expensed but will be assessed on a case by case basis and if appropriate may be capitalised. These acquisition costs are only carried forward to the extent that they are expected to be recouped through the successful development or sale of the tenement. Accumulated acquisition costs in relation to an abandoned tenement are written off in full against profit or loss in the year in which the decision to abandon the tenement is made. Where a decision has been made to proceed with development in respect of a particular area of interest, all future costs are recorded as a development asset.

3. CASH AND CASH EQUIVALENTS

. CASH AND CASH EQUIVALENTS
Cash at bank and in hand Deposits at Call	June 30, 2020 $ December 31, 2019 $
	327,798 25,382 743,535 2,202,222
	1,071,333 2,227,604

Cash at bank earns interest at floating rates based on daily bank deposit rates.

Short-term deposits are made on a rolling overnight basis, and earn interest at the respective short-term deposit rates.

The Company’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are disclosed in note 8.

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

4. PLANT AND EQUIPMENT

Opening net book value Additions Disposals - Cost Disposals - Accum Depn Depreciation Closing net book value Cost Accumulated Depreciation Closing net book value Opening net book value Additions Disposals - Cost Disposals - Accum Depn Depreciation Closing net book value Cost Accumulated Depreciation Closing net book value	June 30, 2020 Plant and Equipment $ Motor Vehicles $ Office Equipment $ Total $
	24,933 - 26,635 51,568 - - 2,592 2,592 - - (1,673) (1,673) - - 1,044 1,043 (3,473) - (7,141) (10,615)
	21,460 - 21,457 42,917
	241,783 158,306 284,052 684,141 (220,323) (158,306) (262,595) (641,224)
	21,460 - 21,457 42,917
	December 31, 2019 Plant and Equipment $ Motor Vehicles $ Office Equipment $ Total $ 28,962 1,035 43,863 73,860 5,209 - 320 5,529 - (30,948) - (30,948) - 30,948 - 30,948 (9,238) (1,035) (17,548) (27,821) 24,933 - 26,635 51,568 241,783 158,306 283,133 683,222 (216,850) (158,306) (256,498) (631,654) 24,933 - 26,635 51,568

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

5. INVESTMENT IN ASSOCIATE

The Company has a 19.02% (2019: 19.91%) interest in Joint Venture BF1 Inc., a joint venture focussed on the exploration and evaluation of the Karankasso Project in Burkina Faso. The Company’s interest is accounted for using the equity method in the consolidated financial statements. Summarised financial information of the joint venture, based on IFRS financial statements, and reconciliation with the carrying amount of the investment in the condensed interim consolidated financial statements are set out below. The Company has not made any additional contributions during the period ended June 30, 2020.

Summarised statement of financial position of Joint Venture BF1 Inc.:

Current assets Non-current assets Current liabilities Non-current liabilities Equity Reconciliation to carrying amount of investment Company’s share of equity Plus additional contributions Notional premium on acquisition by JV Karankasso Project Joint Venture– at cost	June 30, 2020 $ December 31, 2019 $
	92,006 224,238 16,296,311 15,701,695 (8,900) (273,353) (4,150,347) (4,787,912)
	12,229,070 10,864,668 2,325,969 2,163,155 1,365,851 1,365,851
	3,691,820 3,529,006 (1,855,649) (1,692,835)
	1,836,171 1,836,171

The notional premium is due to the joint venture recording a higher value of the equity contributed by the Company upon transfer to the joint venture.

6. TERMINATION AGREEMENT – BARRICK

On May 14, 2019, the Company announced that it had executed a definitive agreement (the “Agreement”) with Acacia Mining plc (“Acacia”) that provides for the termination of the 2014 earn-in agreement between the two companies in respect of the South Houndé Project (or the “Project”) in south-western Burkina Faso. The Agreement provides for Sarama to resume operatorship and regain a 100% interest in the Project.

On November 18, 2019, the Company announced that it had renegotiated certain terms of the definitive agreement (the “Agreement”) with Barrick TZ Ltd. (“Barrick”), formerly Acacia, originally executed on May 14, 2019, that provided for the termination of the 2014 earn-in agreement between the two companies in respect of the South Houndé Project (or the “Project”) in south-western Burkina Faso. The renegotiated terms resulted in an immediate return to 100% ownership of the Project and the reduction of the trailing reimbursement payment. The Company has agreed to waive certain closing conditions and, in return, Barrick, has agreed to amend and reduce the trailing reimbursement from $2 million to $1 million, which is now payable in 12 months from the date of this amendment.

On June 24, 2020, the Company announced that Barrick agreed to defer the $1 million payable on November 18, 2020 to January 15, 2022 inclusive of interest at an annual rate of 10%. The total payable will be up to $1.12 million. Refer to Note 12 for further information.

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

7. SHARE CAPITAL

(a) Authorised Share Capital

At June 30, 2020, the authorised share capital comprised an unlimited number of common shares without par value.

• (b) Issued Share Capital

b) Issued Share Capital
	2020	2020	2019	2019
	Number of		Number of
Details	shares	$	shares	$
Balance at January 1	250,659,987	50,162,722	181,710,402	45,853,363
Issue of shares under private placement	-	-	68,949,585	4,329,676
Issue of shares in lieu of salary	353,967	16,954	-	-
Balance June 30 (net of cost)	251,013,954	50,179,666	250,659,987	50,165,039

• (c) Company Stock Option Plan

The Company has a stock option plan (the “ Plan ”) that provides for the issuance of up to 10% of the issued and outstanding shares of the Company. The board of directors is authorised to set the exercise price, expiry date, and vesting provisions for each grant, subject to the policies of the TSX Venture Exchange. The plan provides for a maximum grant period of ten years. Options can be exercised at any time prior to their expiry date. Details are as follows:

Grant Date January 8, 2018 (fully vested) January 18, 2019 (fully vested) January 16, 2020 (fully vested) June 24, 2020 (fully vested)	No. Exercise Price Expiry Date
	7,390,000 C$0.11 January 8, 2021 4,635,000 C$0.06 January 18, 2022 11,340,000 C$0.07 January 16, 2023 1,500,000 C$0.08 June 23, 2023 24,865,000

On January 16, 2020 the Company issued 11,340,000 options to directors, officers and employees of the company, exercisable at C$0.07 and expire 3 years after issue.

On June 24, 2020 the Company issued 1,500,000 options to directors, officers and employees of the company, exercisable at C$0.08 and expire 3 years after issue.

No options were exercised in the period ended June 30, 2020 (period ended June 30, 2019: Nil).

4,995,000 options expired in the period ended June 30, 2020 at a weighted average exercise price and life of C$0.20 and 3 years respectively (period ended June 30, 2019: 1,075,000 options expired at a weighted average exercise price and life of C$0.10 and 3 years respectively).

(d) Stock-Based Compensation

(i) Options

For the six month period ended June 30, 2020, the expense incurred relating to stock-based compensation on the grant of options was $360,213 (June 30, 2019: $58,949).

For the six month period ended June 30, 2020, the Company granted stock options to its directors, officers, employees and consultants and estimated the stock based compensation as follows:

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

Total options granted Exercise price Estimated fair value of compensation recognised Balance to be recognised over remaining vesting period Estimated fair value per option	January 16, 2020 June 24, 2020 11,340,000 1,500,000 C$0.07 C$0.08 $308,095 $52,118 $nil $nil $0.04 $0.05

The fair value of the stock-based compensation recognised in the accounts has been estimated using the BlackSchöles Option-Pricing Model with the following assumptions:

Share price of underlying security on date of grant Risk-free interest rate Expected dividend yield Expected stock price volatility Expected option life in years	January 16, 2020 June 24, 2020
	C$0.06 1.64% C$0.08 0.32% 0% 0% 93.1% 99.4% 3 years 3 years

The share price volatility is based on historical data and reflects the assumption that historical volatility over a period similar to the life of the option is indicative of future trends, which may not necessarily be indicative of exercise patterns that may occur.

(ii) Warrants

The Company has issued warrants as part of its capital raising and exploration programs. The details of all warrants still on issue are detailed below.

Warrant issue Broker Warrants issued March 16, 2018 Acquisition Warrants issued May 23, 2019 Acquisition Warrants issued May 23, 2019 Total	Total Warrants Issued Exercise Price (C$) Estimated fair value of warrants Estimated fair value per warrant Expiry Date
	1,500,000 $0.14 91,669 $0.061 December 31, 2021 2,500,000 $0.10 137,162 $0.074 May 23, 2024 2,500,000 $0.20 120,957 $0.065 May 23, 2024
	6,500,000 349,788 $0.067

No warrants expired in the six month period ended June 30, 2020 (six month period ended June 30, 2019: 3,615,040)

The fair value of broker and acquisition warrants are recognised within share based payments reserve, within the equity section of the financial statements, in accordance with IFRS 2.

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

• (i) The fair value of the warrants recognised in the financial statements has been estimated using the BlackSchöles Option-Pricing Model at inception with the following assumptions:

Warrant issue Broker Warrants issued March 16, 2018 Acquisition Warrants issued May 23, 2019	Price of Security on issue date Risk – free interest rate Expected dividend yield Expected stock price volatility Remaining warrant life
	C$0.10 0.73% 0% 105% 18 months C$0.10 1.55% 0% 105% 47 months

8. FINANCIAL INSTRUMENTS

The Company is exposed to financial risks through the normal course of its business operations. The key risks impacting the Company’s financial instruments are considered to be foreign currency risk, interest rate risk, liquidity risk, credit risk and equity price risk. The Company’s financial instruments exposed to these risks are cash and short-term deposits, receivables, trade payables and investments in foreign operations.

The executive management team monitors the financial instrument risk to which it is exposed and assesses the impact and likelihood of those risks on an ongoing basis. Where material, these risks are reported and reviewed by the board of directors.

(a) Fair Values

The fair value of the Company’s financial instruments approximates their carrying values due to the immediate or short-term maturity of these financial instruments. The Company’s financial assets and liabilities are measured and recognised at fair value as at June 30, 2020 according to the following fair value measurement hierarchy:

• (a) quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities (level 1),

• (b) quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability (level 2), and

• (c) prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity) (level 3).

At June 30, 2020, the Company has a financial asset recognised at fair value through its shareholding in Oklo Resources Limited. The level 1 financial asset is recognised at fair value through the profit or loss carried at fair value of $88,313 (Period ended June 30, 2019: $Nil).

(b) Financial Instrument Risk Exposure

Foreign currency risk

The Company has international operations in West Africa, namely Burkina Faso, Mali and Liberia and an administrative office in Western Australia. The multiple locations expose the Company to foreign exchange risk as detailed below:

• Canadian dollar (CAD) – primary source of Company funding and its corporate and regulatory costs.

• Australian dollar (AUD) – administrative costs in Western Australia.

• Euro and Communauté Financiére Africaine Francs (CFA) – funding of African operations.

Management’s policy is to actively manage foreign exchange risk. Management mitigates foreign exchange risk by continuously monitoring forecasts and spot prices of foreign currency and holding foreign currency based on expected future expenditure commitments.

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

9. SEGMENT REPORTING

The Company consider the Board of Directors to be the chief decision maker.

The Company has one business segment, being the acquisition, exploration and potential development of mineral properties. The Company has operations in one geographic area, being Burkina Faso.

As at and for the six month period ending June 30, 2020

Segment current assets Segment non-current assets Plant and equipment Investment in Associate Royalty Segment total assets Segment liabilities Segment Loss Loss for the six month period from continuing operations	Burkina Faso Other Total $ $ $
	42,832 1,190,960 1,233,792 38,478 4,439 42,917 1,836,171 - 1,836,171 - 23,131 23,131
	1,874,649 27,570 1,902,219
	1,917,481 1,218,530 3,136,011
	19,585 1,308,778 1,328,363
	629,034 751,860 1,380,894

As at and for the six month period ending June 30, 2019

Segment current assets Segment non-current assets Plant and equipment Investment in Associate Royalty Segment total assets Segment liabilities Segment Loss Loss for the six month period from continuing operations		Burkina Faso Other Total $ $ $
		77,504 3,825,180 3,902,684 57,777 4,608 62,385 1,836,171 - 1,836,171 - 23,131 23,131
		1,893,948 27,739 1,921,687
		1,971,452 3,852,919 5,824,371
		203,599 2,290,109 2,493,708
		3,074,300 592,317 3,666,617

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

10. BASIC AND DILUTED LOSS PER SHARE

0. BASIC AND DILUTED LOSS PER	SHARE
Basic and diluted loss per share - Continuing operations Net loss used in calculating basic/diluted loss per share - Continuing operations Weighted average number of shares on issue during the period used in the calculation of basic profit/(loss) per share	Three months ended June 30, 2020 Three months ended June 30, 2019 Six months ended June 30, 2020 Six months ended June 30, 2019 Cents per share Cents per share Cents per share Cents per share
	0.1 1.3 0.6 1.8 $ $ $ $
	280,164 3,059,765 1,380,894 3,666,617 250,745,561 229,444,730 250,702,774 205,709,429

Diluted loss per share for the three and six month period ended June 30, 2020 is the same as basic loss per share as it is unlikely that the warrants will be converted into common shares.

11. NOTES TO THE CASH FLOW STATEMENT

Reconciliation of loss after tax to net cash flows from operations

Loss for the period Depreciation Fair value loss/(gain) on financial assets held for sale Loss/(gain) on sale of financial assets Loss/(gain) on sale of plant and equipment Stock–based compensation Non cash exploration expenditure Issue of shares in lieu of salary Movements in provisions, salary benefits Net exchange and translation differences – loss/(gain) Net cash outflows used in operating activities before change in working capital Change in working capital Net cash outflows used in operating activities	Three months ended June 30, 2020 $ Three months ended June 30, 2019 $ Six months ended June 30, 2020 $ Six months ended June 30, 2019 $
	(280,164) (3,059,765) (1,380,894) (3,666,617) 5,353 510 10,614 1,037 (32,947) - (55,723) - (11,607) - (16,798) (5,128) (974) - (974) 52,117 - 360,212 58,949 3,375 2,495,165 3,375 2,501,404 16,944 - 16,944 - 33,389 64,081 4,936 64,081 (73,261) (14,564) 69,918 (20,412)
	(287,775) (514,573) (988,390) (1,066,686) (49,017) (246,851) (155,060) (79,350)
	(336,792) (761,424) (1,143,450) (1,146,036)

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Sarama Resources Ltd An Exploration Stage Company Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) Expressed in United States Dollars unless otherwise stated

12. CONTINGENT LIABILITY : DEFINITIVE AGREEMENT WITH BARRICK TO REGAIN 100% OWNERSHIP OF SOUTH HOUNDE PROJECT

On May 14, 2019, the Company announced that it had executed a definitive agreement (the “Agreement”) with Acacia Mining plc (“Acacia”) that provides for the termination of the 2014 earn-in agreement between the two companies in respect of the South Houndé Project (or the “Project”) in south-western Burkina Faso. The Agreement provides for Sarama to resume operatorship and regain a 100% interest in the Project.

On November 18, 2019, the Company announced that it had renegotiated certain terms of the Agreement resulting in an immediate return to 100% ownership of the Project and the reduction of the trailing reimbursement payment. The Company has agreed to waive certain closing conditions and, in return, Barrick TZ Ltd (“Barrick”), formerly Acacia, has agreed to amend and reduce the total trailing reimbursement from $2 million to $1 million, which is now payable in 12 months from the date of this amendment. This is recorded as a current liability within the Statement of Financial Position.

On June 24, 2020, the Company announced that Barrick agreed to defer the $1 million payable on November 18, 2020 to January 15, 2022 inclusive of interest at an annual rate of 10%. The total payable will now be $1.12 million.

Other key commercial terms to this Agreement that are considered a contingent liability are that Sarama will grant Barrick the right to commercial production-based payments consisting of:

• US$1,000,000 on production of 10,000 oz gold;

• US$1,000,000 on production of a further 5,000 oz gold;

• royalty payments, capped at gold production of 1Moz Au, according to sliding-scale royalty rates of:

• 1.0% for gold price ≤US$1300/oz;

 1.5% for gold prices >US$1300/oz and ≤US$1500/oz; and

• 2.0% for gold prices >US$1500/oz;

As the Company cannot be certain whether it will enter into commercial production, the obligation to pay commercial production-based payments to Barrick is not recorded in the financial statements and is presented as a contingent liability.

13. SUBSEQUENT EVENTS

On August 4, 2020 the Company announced that it had closed its partly brokered private placement for 18,852,936 Shares at a price of C$0.11 per Share raising aggregate gross proceeds of C$2,073,823. The proceeds from the Private Placement will be used to advance the Company’s projects in Burkina Faso, including a mineral resource update on the South Houndé Project, high value oxide focused exploration drilling, general technical work to support framing up of development options and general corporate purposes.

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