Sarama Resources Ltd. - Interim / Quarterly Report 2020

SARAMA RESOURCES LTD .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS

For the three months (third quarter) and nine months ended September 30, 2020

Dated: November 27, 2020

(All amounts expressed in United States dollars, unless otherwise stated)

INTRODUCTION ................................................................................................................................. 1 FORWARD-LOOKING STATEMENTS .................................................................................................... 1 OVERVIEW......................................................................................................................................... 2 CORPORATE ...................................................................................................................................... 2 Treasury ........................................................................................................................................ 2 Share Issue in lieu of Salary ............................................................................................................ 2 Private Placement.......................................................................................................................... 2 Second Listing on the Australian Stock Exchange ........................................................................... 3 EXPLORATION AND EVALUATION EXPENDITURE ................................................................................ 4 PROPERTY INFORMATION, RECENTLY COMPLETED ACTIVITIES AND OUTLOOK .................................. 5 Burkina Faso .................................................................................................................................. 5 Sanutura Project ........................................................................................................................ 5 Koumandara Project .................................................................................................................. 8 Karankasso Project .................................................................................................................... 9 SELECTED UNAUDITED FINANCIAL INFORMATION ........................................................................... 10 RESULTS OF OPERATIONS ................................................................................................................ 11 Quarters ended September 30, 2020 and 2019 ............................................................................ 11 Nine Month Period ended September 30, 2020 and 2019 ............................................................ 13 SUMMARISED UNAUDITED QUARTERLY RESULTS ............................................................................ 14 LIQUIDITY AND CAPITAL RESOURCES ............................................................................................... 15 COMMON SHARE DATA (as at November 27, 2020) ......................................................................... 15 RISK AND UNCERTAINTIES ............................................................................................................... 15 OFF-BALANCE SHEET TRANSACTIONS .............................................................................................. 16 INTERNATIONAL FINANCIAL REPORTING STANDARDS...................................................................... 16 CHANGES IN ACCOUNTING STANDARDS .......................................................................................... 16 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS ................................................................ 16 ADDITIONAL INFORMATION ............................................................................................................ 17

INTRODUCTION

The following Management’s Discussion and Analysis (“ MD&A ”) is intended to supplement the condensed interim consolidated financial statements of Sarama Resources Ltd. (the “ Company ” or “ Sarama ”) and its subsidiaries for the three and nine month period ended September 30, 2020.

The condensed interim consolidated financial statements for the three and nine month period ended September 30, 2020 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All amounts are expressed in United States dollars, unless otherwise stated.

This MD&A is current as at November 27, 2020.

Additional information relating to the Company is available on SEDAR at www.sedar.com under the Company’s profile.

FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, information with respect to the Company’s planned exploration and development activities, costs and timing of future exploration, results of future exploration and drilling, timing and receipt of approvals, consents and permits under applicable legislation, and the adequacy of financial resources. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be forward-looking information. Wherever possible, words such as “plans”, “expects” or “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, have been used to identify forward-looking information.

Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking information, including, without limitation: our limited operating history, negative operating cash flow and need for additional financing; the early stage of our exploration and the fact that we have no mineral reserves; global economic conditions; our dependence on key management and qualified personnel; exploration, development and mining risks; title and property risks; risks related to the presence of artisanal miners; risks associated with operations in Africa; risks associated with pandemics and health, risks associated with maintaining a skilled workforce; risks relating to government regulations; environmental laws, regulations and risks; uncertainty regarding our ability to acquire necessary permits and comply with their terms; infrastructure risks; uninsurable risks; risks regarding our ability to enforce our legal rights; market factors and volatility of commodity prices; fluctuations in foreign exchange rates; competition; acquisition risks; conflicts of interest; price volatility in publicly traded securities; dilution; dividends and “passive foreign investment company” tax consequences to U.S. shareholders.

Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. The Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable.

Assumptions have been made regarding, among other things: our ability to carry on exploration and development activities, our ability to meet our obligations under our property agreements, the timing and results of drilling programs, the discovery of mineral resources and mineral reserves on our mineral properties, the timely receipt of required approvals, the price of gold, the costs of operating and exploration expenditures, our ability to operate in a safe, efficient and effective manner and our ability to obtain financing as and when required and on reasonable terms. You are cautioned that the foregoing list is not exhaustive of all factors and assumptions that may have been used.

Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. We cannot assure you that such information will prove to be accurate,

as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. We do not undertake to update any forward-looking information, except in accordance with applicable securities laws.

OVERVIEW

Sarama is a Canadian-incorporated mineral exploration and development company whose principal business objective is to explore for and develop gold deposits in West Africa.

The Company was incorporated on April 8, 2010 under the Business Corporations Act (British Columbia). The Company’s primary office is located in Perth, Western Australia. The Company’s common shares are listed on the TSX Venture Exchange (“ TSXV ”). The Company’s symbol is “SWA”.

The Company has built and advanced substantial exploration landholdings in prospective and underexplored areas in West Africa, with a central focus on south-west Burkina Faso. As at September 30, 2020, the Company has significant interests in three projects located principally in the Houndé and Banfora Belts, which are considered highly prospective for gold and remain under-explored.

Sarama’s main focus for exploration and development is the Sanutura Project, which is located in the southern Houndé Belt and which has a mineral resource estimate of 0.6Moz gold (indicated) and 1.9Moz (inferred)[(1)] for the Tankoro Deposit. In addition, the project also hosts the Bondi Deposit which has a historical estimate of mineral resources of 0.1Moz gold (indicated) and 0.3Moz gold (inferred)[(5)] .

The 600km² Koumandara Project is an early-stage, regional exploration project located within the Banfora Belt which has potential to host gold mineralisation of significance.

The Company holds an approximate 19% interest in the Karankasso Project (0.7Moz Au inferred mineral resources[2] ) which is operated by Endeavour Mining Corporation (“ Endeavour ”) under a joint-venture arrangement.

CORPORATE

Treasury

As at September 30, 2020, the Company had cash and cash equivalents of $2,234,675 .

Share Issue in lieu of Salary

In May 2020 the Company, in order to conserve cash, agreed with its executive officers (the “ Executives ”) to receive a portion of their salary in common shares. On July 3, 2020 it issued 252,809 common shares to its Executives on account of services rendered for the period June 1, 2020 to June 30, 2020 at an issue price of CAD$0.0937. On August 13, 2020 it issued 180,070 common shares to its Executives on account of services rendered for the period July 1, 2020 to July 31, 2020 at an issue price of CAD$0.1342. Since August 1, 2020 salaries to the Executives have been paid fully in cash.

Private Placement

On August 4, 2020 the Company announced that it had closed its private placement for 18,852,936 common 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 Sanutura Project, high value oxide focused exploration drilling, general technical work to support framing up of development options and general corporate purposes. Finders’ fees were paid to Cormark Securities Inc. (“Cormark”) in accordance with the policies of the TSXV, pursuant to a finder’s agreement between Cormark and the Company. The Company paid Cormark a 4% cash fee of C$24,400.

Second Listing on the Australian Stock Exchange

The Company is pursuing a second listing of its securities on the Australian Stock Exchange (“ ASX ”) in addition to the continued listing of its common shares on the TSXV. Sarama has engaged leading resources-focussed broker, Euroz Hartleys Securities Limited, to act as Lead Manager for its Australian listing. The proposed ASX listing will comprise the issuance of Chess Depositary Instruments (“ CDI ”) to participants in the ASX listing which will rank equally and will trade on a 1:1 basis with the Shares listed on the TSXV

The Company’s board of directors (the “ Board ”) considers this a natural progression given location of the Board and management team, the availability of equity capital, and the market’s support of Sarama’s peers engaged in gold exploration and development in West Africa.

Consolidation of shares - October 7, 2020

On October 7, 2020, in order to comply with Australian Stock Exchange (“ASX”) and Australian Securities and Investment Commission (“ASIC”) regulations, which require a certain minimum issuance price, Sarama undertook a consolidation of its issued and outstanding Shares on a 3:1 basis (the “ Consolidation ”). No fractional shares were issued as a result of the Consolidation. The Consolidation was approved by the Board pursuant to the new Articles of the Company approved by shareholders at the Company’s annual and special general meeting held on September 17, 2020.

Prior to the Consolidation, the Company had 270,299,769 Shares, 6,500,000 Warrants and 24,865,000 Options outstanding. Following the Consolidation, the Company had 90,099,894 Shares, 2,166,666 Warrants and 8,288,332 Options issued and outstanding. The Company’s name will remain unchanged post-Consolidation and the Shares will continue to trade on the TSXV under the SWA symbol.

EXPLORATION AND EVALUATION EXPENDITURE

During the quarter ended September 30, 2020, the Company incurred exploration expenditure of $276,039.

The costs per active project area for the current quarter ending September 30, 2020 and preceding four quarters is as follows;

	Three months ended September 30, 2020	Three months ended June 30, 2020	Three months ended March 31, 2020	Three months ended December 31, 2019	Three months ended September 30, 2019
Sanutura	224,536	157,336	426,565	389,307	206,766
Koumandara	49,206	10,385	24,461	117,462	298,550
Other – Burkina Faso **	2,297	1,943	4,969	-	-
Foreign Currency Translation	-	3,375	-	201,668	-
Total	276,039	173,039	455,995	709,037	505,316

** “Other – Burkina Faso” comprises properties within the Boromo and Bingo Projects

For the quarter ended September 30, 2020, the Company incurred exploration expenditure of $276k. Expenditure incurred at the Sanutura Project was $225k which included permit taxes and renewal fees ($50k), plus allocation of administration, camp and technical support ($175k). Costs at Koumandara project of $49k included permit taxes and renewal fees ($24k) plus allocation of administration, camp and technical support (25k).

PROPERTY INFORMATION, RECENTLY COMPLETED ACTIVITIES AND OUTLOOK

Burkina Faso

As at September 30, 2020 the Company had interests, directly and indirectly, in mineral properties covering an area of approximately 3,000km[2] located principally within the southern Houndé and Banfora Greenstone Belts, in south-west Burkina Faso (refer Figure 1). The exploration activities are primarily focussed within 2 geographical areas:

1. The southern Houndé Belt project area hosting the

a. Sanutura Project; and
b. Karankasso Project and;

2. The northern Banfora Belt project area hosting the

a. Koumandara Project.

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Figure 1 – Location of Sarama’s Projects in South-West Burkina Faso

Sanutura Project

Property Information

The primary focus of the Company has been the advancement of its 100%-owned Sanutura Project, which is an advanced-stage, gold exploration project covering approximately 1,450km² (refer Figure 2) in south-west Burkina Faso. The project represents the consolidation of the Company’s previous contiguous South Houndé and ThreeBee Projects into a single, 100%-owned, advanced-stage exploration project that hosts a significant, well-defined mineral resource base and a suite of exploration targets.

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Figure 2 Sanutura Project – Tankoro and Bondi Deposits Within Sanutura Project

The project is located in the southern Houndé Belt, which hosts Endeavour ’s Mana and Houndé Gold Mines and Roxgold Inc.’s Yaramoko Gold Mine and recent +1Moz Au discoveries including Teranga’s Golden Hill deposit and Endeavour’s Kari Pump deposit. Recent exploration by Semafo, now Endeavour, has produced the Bantou Nord discovery approximately 5km from the mineral resource at Sarama’s Sanutura Project.

On September 8, 2020 the Company announced an updated mineral resource estimate for the Tankoro Deposit[1] of:

9.4Mt @ 1.9g/t Au for 0.6Moz gold (indicated); and
43.6Mt @ 1.4g/t Au for 1.9Moz gold (inferred).

The mineral resource contains a significant higher-grade component of 6.3Mt @ 2.5g/t Au for 0.5Moz gold (indicated) plus 24.7Mt @ 1.8g/t Au for 1.5Moz gold (inferred)[(2)] using a 1.0g/t Au cut-off. This highlights the presence of higher-grade zones within the greater mineralised system which will be the focal point for development. Infill drilling in certain higher-grade areas provides considerable geological confidence, allowing for the classification of a significant part of the mineral resources as ‘indicated’.

The combined oxide and transition component of the mineral resource totals 0.2Moz gold (indicated) plus 0.7Moz gold (inferred)[(3)] , representing a significant increase to the previous estimate of 0.6Moz gold(inferred)[(2)] for corresponding material types. This increase reflects the Company’s exploration focus on near-surface, oxide targets to provide early plant feed to support a potential staged development of the Project.

A supporting technical report titled “NI 43-101 Technical Report, Sanutura Project, South-West Burkina Faso”, dated October 20, 2020 is filed on SEDAR (www.sedar.com). There are no material differences in the technical information contained in the technical report compared to the disclosure in the September 8, 2020 news release.

In addition to the Tankoro Deposit, the Sanutura Project also hosts the Bondi Deposit , which has a historical estimate of mineral resources[(5)] of:

4.1Mt @ 2.1g/t Au for 0.3Moz gold (measured and indicated); and
2.5Mt @ 1.8g/t Au for 0.1Moz gold (inferred).

By virtue of the high-grade and free milling nature of the mineralisation, the deposit has potential to provide valuable satellite feed for a centralised processing facility that targets regional mineral resources.

Exploration by the Company has identified a number of targets within the Sanutura Project which have the potential to make meaningful additions to the mineral resource base of the project, namely:

an exploration target of 3.5-4.3Mt @ 1.2-1.4g/t Au for 135-190koz Au[(4)] , consisting of modelled and estimated (but unclassified) mineralisation contained within open pit shell and underground blockouts which constrain the mineral resource at the Tankoro Deposit;
the Zanawa Prospect, located approximately 4km north-east of the Bondi Deposit, which has returned 22m @ 3.85g/t Au from 5m in DJR0029, 29m @ 1.44g/t Au from 1m and 10m @ 1.24g/t Au from 67m in DJR0030 and 5m @ 4.54g/t Au from 15m in DJA0141;
a large area of current artisanal workings at the Bamako 2 Property, measuring approximately 3kmlong x 2km-wide, where numerous, subparallel gold-bearing quartz veins, extending for over 3km in strike length have been exposed. Gold-in-soil surveys returned peak values of 13.6g/t Au and drilling has returned a number of significant intercepts including 15m @ 6.17g/t Au from 9m in FRC384, 8m @ 18.4g/t Au from 42m in BAR004 and 18m @ 1.20g/t Au from 44m in BAR003; and
numerous extensional and additional targets throughout the project generated from soil geochemistry and geophysical surveys.

Activities Completed in Q3 2020

With restrictions and risk mitigation measures in place as a result of the COVID-19 pandemic, no fieldwork was undertaken during the quarter. The Company however continued to work on integration and review of recent and historical work on the project focussing on oxide and free-milling exploration targets in the main mineralised corridor and in certain regional areas.
The Company completed an update to the mineral resource for the Tankoro Deposit, announced on September 8, 2020. This was a major milestone and incorporated all exploration work undertaken since the last mineral resource estimate in January 2016. The update produced a significant increase on the previous estimate and extended the strike length of drill-defined mineralisation in the main Western Corridor to approximately 16km. The updated estimate also incorporated maiden mineral resources for the Eastern Corridor and has highlighted several areas where further exploration is anticipated to grow the mineral resource.
The Company continued to engage with relevant government authorities in an effort to progress the reissue of the exploration permit for the Djarkadougou Property (which hosts the Bondi Deposit and Zanawa Prospect), and continued its dialogue with senior members of the government to expedite this process. The Company has undertaken environmental impact assessments and set out impact mitigation measures for exploration activities to assist relevant government departments to move the dossier forward.
The Company continued to examine options for project configuration, including a review of tank-based and heap leaching alternatives, coupled with varying output ranges, construction approaches and funding models. The significant increase in the Sanutura Project oxide resource is expected to strongly influence the future development path and opens the way to establish a simple CIL mining operation.

Outlook

Exploration will recommence following the end of the rainy season with field activities modified as necessitated by the COVID-19 pandemic. The Company is taking reasonable steps to minimise in-country exposure to employees and local communities and to commence an orderly resumption of activities. The Company will continue to monitor in-country conditions and make operating adjustments as required.

The elevated gold price along with the significant increase in the oxide resource, has the potential to broaden the scope for development of the Project. These positive changes allow for alternate processing configurations to be considered and potentially allow the Company to leverage the significant resource base through a multistage, longer life and higher output project.

Sarama intends to continue to investigate potential development options with historical evaluation work identifying nominally a $1,500/oz gold price as being a major inflection point for a material step change in the mineable resource. Including the additional resource will result in a step change in the resource to reserve conversion ratio and related mining and processing economics.

The Company intends to undertake a resource development program aimed at firming up and increasing the oxide and free milling component of the mineral resource and upgrading a large percentage of the inferred mineral resource. Additional drilling is anticipated to further bolster the size and life of the first phase of the project prior to minor plant modifications to progress to stage two which will access a significant inventory of high-grade fresh material. Field activities will nominally include reconnaissance and mapping, AC and RC drilling and metallurgical testwork to better characterise transition zones and support feasibility work anticipated to commence in the latter part of 2021.

The Company will continue to work with the relevant government departments to progress the re-issue of the exploration permit for the Djarkadougou Property. The Company remains optimistic of a satisfactory outcome however timeframes for the resolution of the permit re-issue is indeterminate.

The Tankoro and Werinkera exploration permits are in the exceptional renewal phase and are due to commence the re-issue process in the month of December. Sarama is in discussion with government authorities to expedite this process to allow exploration activity to continue with limited disruption while the process is finalised.

Sarama has previously had a number of exploration permits re-issued however there is no assurance of the timing and prospects for the re-issuance of these exploration permits. As a matter of practice however, the application is typically granted providing work done by the holder is significant and the application is submitted in a timely manner, both of which Sarama is compliant.

Koumandara Project

Property Information

The Koumandara Project comprises four exploration properties covering an area of approximately 600 km[2] in the Banfora Belt and lies approximately 80km west of the South Houndé Project. Historical work conducted by the Company has resulted in the identification of significant zones of gold-in-soil anomalism and encouraging scout drilling results which are aligned with regional structural features, illustrating the region’s prospectivity.

Activities Completed in Q3 2020

The Company continued to compile historical exploration data for the constituent properties to facilitate a holistic exploration assessment of the project. This work included soil geochemistry and surface prospecting and auger, AC and RC drilling.
The Company continued to monitor the progress for the pending re-issue of the exploration permit for the Dabokuy 2 Property.
No fieldwork was undertaken in Q3 2020.

Outlook

The Company anticipates it will continue to develop more high-quality drill targets on the Koumandara Project following further surface prospecting, soil geochemistry surveys and remote image interpretation.

Karankasso Project

Property Information

The Karankasso Project (” Karankasso ”) is located approximately 400 kilometres southwest of Ouagadougou, in Burkina Faso. The project can be accessed by a paved highway with both rail and grid power coming within approximately 65 kilometres.

In September 2014 the Company completed joint venture (“ JV ”) negotiations and executed a binding agreement with Savary Gold Corp. (“ Savary ”) which resulted in the unified ownership of Sarama’s Sérakoro 1 Property and several of Savary’s contiguous exploration properties in the southern Houndé Belt. The resultant Karankasso JV was initially 65% owned by Savary and 35% owned by Sarama with Savary the operator as long as it controls a majority interest in the joint venture project.

On April 30, 2019, Semafo announced it had completed the acquisition of Savary, Sarama’s joint venture partner in the Karankasso Project.

On February 24, 2020, Semafo announced an updated inferred mineral resource estimate[2] of 12.74Mt @ 1.73g/t Au for 709,000 oz of contained gold of which Sarama’s equity interest is 141,000 oz gold.

As at September 30, 2020, the Company held an approximate 19% interest in the Karankasso JV and Endeavour is now the operator following the successful acquisition of Semafo which closed on July 1, 2020.

Exploration activities have been focussed on extending mineralised lodes as well as generating new exploration targets within the project area. This has involved additional drilling, soil geochemistry and geophysical surveys. Sarama considers the property to have potential to add satellite feed to a regional development scenario.

Activities Completed in Q3 2020

Fieldwork remained suspended by the operator for the duration of Q3 2020, however desktop assessment of targets and data integration continued.

Outlook

Endeavour are undertaking a systematic review of Semafo’s exploration data and are assessing exploration targets and potential exploration activities on the Karankasso Project. The Company does not anticipate any substantial field work to be undertaken on this project for the remainder of the year.

Sarama’s ongoing investment in the project will be reviewed on a periodic basis and be subject to exploration and technical results.

SELECTED UNAUDITED FINANCIAL INFORMATION

The following information has been extracted from the Company’s condensed interim consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), for each of the quarters ended September 30.

Please refer to Results of Operations for analysis of Operations for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

	Q3 2020 $	Q3 2019 $	Q3 2018 $
Interest income - quarter Net loss - quarter Net loss per share for the quarter - basic and diluted (cents) Total assets Total liabilities	518 470,637 (0.2) 4,261,969 1,387,990	1,390 86,140 0.0 5,092,869 1,619,433	36 (915,709) (0.5) 3,469,858 398,527

RESULTS OF OPERATIONS

Quarters ended September 30, 2020 and 2019

Q3 2020 $	Q3 2019 $	Variance $
518 27,294	1,390 -	(872) 27,294
27,812 4,977 - 26,656 - 6,253 33,327 17,153 159,541 1,169 (17,812)	1,390 4,689 - 13,658 2,554 14,307 32,155 22,165 158,546 22,958 79,443	26,422 (288) - (12,998) 2,554 8,054 (1,172) 5,012 (995) 21,789 97,255
231,264 276,034 - 585 - (9,434)	350,475 505,316 (1,000,000) 510 58,949 -	119,211 229,282 (1,000,000) (75) 58,949 9,434
470,637	(86,140)	(556,777)

The Company reported a loss of $470,637 ($0.2 per share) for the quarter ended September 30, 2020, compared to a gain of $86,140 ($0.0 per share) for the quarter ended September 30, 2019 (negative variance $556,777).

Exploration expenditure decreased this quarter by $229k compared to Q3 2019 due mainly to no field activity as a result of the onset of the rainy season. Other income in the current quarter included Australian state government grant assistance due to the COVID-19 pandemic (positive variance 27k). A fair value gain from the sale of the remaining shareholding in Oklo Resources of $9k was recorded in the current quarter. A credit of $1.0m was recognised in Q3 2019 resulting from renegotiated commercial terms in relation to the termination of the earn-in agreement with Acacia, now Barrick. The trailing reimbursement payable to Barrick was originally recorded as $2.0m in Q2 2019 (negative variance $1m). General and Administration costs were reduced in the current quarter compared to Q3 2019 due to restriction of movement and activity resulting from COVID-19 pandemic (positive variance $119k). Directors fees have increased due to changes in composition of the Board (refer news release of June 24, 2020). Foreign exchange gain for the current quarter of $18k compared to a foreign exchange loss in Q3 2019 of $79k (positive variance $97k) represented revaluation of cash held in Australian and Canadian dollars against a weakening US dollar during the current quarter. Stock-based compensation was less this quarter due to no options vesting in the current quarter

Nine Month Period ended September 30, 2020 and 2019

YTD 2020 $	YTD 2019 $	Variance $
4,651 60,025	2,790 5,128	1,861 54,897
64,676 13,322 - 47,833 7,674 19,725 91,339 35,194 448,809 18,993 48,297	7,918 14,733 5,359 42,378 20,177 41,599 105,461 55,815 500,963 43,818 59,030	56,758 1,411 5,359 (5,455) 12,503 21,874 14,122 20,621 52,154 24,825 10,733
731,186	889,333	158,147
905,068	2,579,616	674,548
- 1,696 360,212 (81,955)	(1,000,000) 1,547 117,897 -	1,000,000 (149) (242,315) 81,955
1,851,531	3,580,475	1,728,944

The Company reported a loss of $1,851,531 ($0.007 per share) for the nine month period ended September 30, 2020, compared to a loss of $3,580,475 ($0.016per share) in the nine month period ended September 30, 2019 (positive variance $1.7million).

Exploration expenditure was less in the current nine month period compared to the nine month period to September 2019 (positive variance $675) due mainly to no drilling programmes this year as a result of the COVID-19 pandemic restrictions. Other income was $60k in the current nine month period compared to $5k in the nine month period to September 2019 (positive variance $55k) which represented Australian state government grant assistance due to the COVID-19 pandemic. Fair value gains from the sale of Oklo Resources shareholding were 82k this year. General and Administration costs were reduced in the current nine month period compared to the nine month period to September 2019 due to restriction of movement and activity resulting from COVID-19 pandemic (positive variance $158k). Foreign exchange loss for the current nine month period of $48k compared to a foreign exchange gain in the nine month period to September 30, 2019 of $59k (positive variance $11k) represented revaluation of cash held in Australian and Canadian dollars against a strengthening US dollar in Q1 2020 from a market decline as a result of the COVID-19 pandemic, offset by weakening in the US dollar in Q2 and Q3 2020. Stock-based compensation was greater in the current nine month period compared to the nine month period to September 30, 2019 (negative variance $242k) due to a greater number of options being granted this year. In addition options were granted to new directors appointed in June 2020. A trailing reimbursement of $1.0 million payable to Barrick for the termination of the earn-in agreement relating to the South Houndé project (now consolidated into the Sanutura project) was recorded in 2019.

SUMMARISED UNAUDITED QUARTERLY RESULTS

Summarised unaudited quarterly results for the past eight quarters are:

Quarter ended	Interest income ($)	Net profit/(loss) for the period ($)	Basic earnings/(loss) per share (cents)	Diluted earnings/(loss) per share (cents)
September 30, 2020	518	(470,637)	(0.2)	(0.2)
June 30, 2020	1,044	(280,164)	(0.1)	(0.1)
March 31, 2020	3,089	(1,100,730)	(0.4)	(0.4)
December 31, 2019	5,319	(867,096)	(0.3)	(0.3)
September 30, 2019	1,390	86,140	0.0	0.0
June 30, 2019	929	(3,059,765)	(1.3)	(1.3)
March 31, 2019	471	(606,852)	(0.3)	(0.3)
December 31, 2018	350	(629,844)	(0.3)	(0.3)

The primary driver for the variance in net profit and loss across multiple quarterly periods is due to the expensing of exploration expenditure programs and the revaluation of warrants carried at fair value through profit or loss.

Other components within the net profit/loss are general and administrative costs of running the Perth office, foreign exchange gains and losses, stock-based compensation costs and depreciation.

LIQUIDITY AND CAPITAL RESOURCES

At this point in time, the Company does not generate cash from mining operations. In order to fund its exploration and administrative activities, the Company is dependent upon raising capital through the issue of shares and warrants. The Company continues to believe such financing will be available, as and when required and on acceptable terms but there is no guarantee that is the case.

As at September 30, 2020 the Company had working capital surplus of $2,195,109 (December 31, 2019: $1,090,527 surplus). Working capital is defined as current assets less current liabilities.

COMMON SHARE DATA (as at November 27, 2020)

Common shares outstanding Options issued to directors, executive officers, and a consultant Warrants issued to shareholders and agents Common shares outstanding assuming exercise of all options and warrants	90,099,894 8,288,332 2,166,666
	100,554,892

RISK AND UNCERTAINTIES

The Company’s operations and results are subject to a number of different risks at any given time. These risk factors include, but are not limited to:

exploration and development risk;
market factors and volatility of commodity prices;
negative operating cash flow and the need for additional financing;
limited operating history;
global economic conditions;
price volatility in publicly traded securities;
title and property risks;
dependence on key management and qualified personnel;
risks associated with operations in Africa;
risks associated with maintaining a skilled workforce;
risks relating to government regulations;
environmental laws, regulations and risks;
uncertainty of acquiring necessary permits and compliance with terms;
infrastructure risks;
uninsurable risks;
enforcement of legal rights;
risks relating to the presence of artisanal miners;
fluctuations in foreign exchange rates;
competition;
acquisition risks;
conflicts of interest;
dilution;
dividends;
PFIC classification;
Renewal and reissue of exploration permits
pandemic risks;
geopolitical and security risks

For a detailed explanation of each of these risks number 1 to 24, please refer to page 9 of the Company’s Annual Information Form dated September 1, 2016. The Company’s Annual Information Form is published at www.sedar.com .

In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in Wuhan, China. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. In response to the outbreak, governmental authorities in Canada, Australia, Burkina Faso and internationally have introduced various recommendations and measures to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing. This has resulted in the Company temporarily suspending its field exploration activity. Non-essential expenditure has been curtailed including reduction in personnel and administration to preserve cash where possible. Due to the uncertainty of the magnitude, outcome and duration of COVID-19, it is not possible to estimate its impact on the Company’s business, operations or financial results; however, the impact could affect the Company’s ability to raise capital in a timely manner.

OFF-BALANCE SHEET TRANSACTIONS

During the period ended September 30, 2020, and up to the date of this report, the Company had no off-balance sheet transactions.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

The condensed interim consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”), effective as of September 30, 2020. The Company’s significant accounting policies are described in note 2 of the Company’s consolidated financial statements for the years ended December 31, 2019 and 2018, and note 2 of the Company’s condensed interim consolidated financial statements for the three and nine month period ended September 30, 2020 and 2019.

CHANGES IN ACCOUNTING STANDARDS

There were no new and revised Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) that are relevant to the Company and effective for the current annual reporting period.

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

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

ADDITIONAL INFORMATION

Additional information relating to the Company is available on SEDAR at www.sedar.com.

Footnotes

1. Sanutura Project, Tankoro Deposit mineral resource - 9.4Mt @ 1.9g/t Au for 0.6Moz Au (indicated) plus 43.6Mt @ 1.4g/t Au for 1.9Moz (inferred), reported at cut-off grades ranging 0.2-1.6g/t Au, reflecting the mining methods and processing flowsheets assumed to assess the likelihood of the mineral resources to have reasonable prospects for eventual economic extraction. The effective date of the Company’s inferred mineral resource estimate is September 8, 2020. For further information regarding the mineral resource estimate please refer to the technical report titled “NI 43-101 Technical Report, Sanutura Project, South-West Burkina Faso”, dated October 20, 2020 (effective date: September 8, 2020) and prepared by Paul Schmiede, Adrian Shepherd & Fred Kock. The technical report is available under Sarama’s profile on SEDAR at www.sedar.com.

2. Sanutura Project, Tankoro Deposit mineral resource (higher-grade component) - 6.3Mt @ 2.5g/t Au for 0.5Moz Au (indicated) plus 24.7Mt @ 1.8g/t Au for 1.5Moz (inferred) reported at a cut-off grade of 1.0g/t Au for all material types.

3. Sanutura Project, Tankoro Deposit mineral resource (oxide & transition component) - 3.2Mt @ 1.6g/t Au for 0.2Moz Au (indicated) plus 20.1Mt @ 1.0g/t Au for 0.7Moz Au (inferred), reported above cut-off grades of 0.2g/t Au and 0.3g/t Au for oxide and transition material respectively.

4. Sanutura Project, Tankoro Deposit exploration target expressed as a +/-10% range of modelled and estimated mineralisation of 3.1Mt @ 1.1g/t Au for 113koz Au (open pit) and 0.8Mt @ 2.0g/t Au for 53koz Au (underground) reported at cut-off grades of 0.5g/t Au and 1.6g/t Au respectively. This material has low geological, spatial and estimate confidence and cannot be considered as a mineral resource, but is contained within the open pit and undergound mining shapes used to constrain the reported mineral resource.

5. Sanutura Project, Bondi Deposit historical estimate of mineral resources - 4.1Mt @ 2.1g/t Au for 282,000 oz Au (measured and indicated) and 2.5Mt @ 1.8g/t Au for 149,700 oz Au (inferred), reported at a 0.5 g/t Au cut-off.

i. The historical estimate of the Bondi Deposit reflects a mineral resource estimate compiled by Orezone Gold Corporation (“Orezone”) which has an effective date of February 20, 2009. The historical estimate is contained in a technical report titled “Technical Report on the Mineral Resource of the Bondigui Gold Project”, dated date of February 20, 2009 and prepared by Yves Buro (the “Bondi Technical Report”). Yves Buro is an employee of Met-Chem Canada Inc and is considered to be independent of Orezone and Sarama. The technical report is available under Orezone’s profile on SEDAR at www.sedar.com .
ii. Sarama believes that the historical estimate is relevant to investors’ understanding of the property, as it reflects the most recent technical work undertaken in respect of the Bondi Deposit.
iii. The historical estimate was informed by 886 drillholes, assayed for gold by cyanidation methods, were used to interpret mineralised envelopes and geological zones over the area of the historical estimate. Gold grade interpolation was undertaken using ID² methodology based on input parameters derived from geostatistical and geological analyses assessments. Field measurements and geological logging of drillholes were used to determine weathering boundaries and bulk densities for modelled blocks.
iv. The historical estimate uses the mineral resource reporting categories required under National Instrument 43-101.
v. No more recent estimates of the mineral resource or other data are available.
vi. Sarama is currently undertaking the necessary verification work in the field and on the desktop that may support the future reclassification of the historical estimate to a mineral resource.
vii. A qualified person engaged by Sarama has not undertaken sufficient work to verify the historical estimate as a current mineral resource and Sarama is therefore not treating the historical estimate as a current mineral resource.

6. Karankasso Project mineral resource - 12.74Mt @ 1.73g/t Au for 709koz Au (effective date of December 31, 2019). The mineral resource estimate was disclosed on February 24, 2020 by Semafo Inc (“ Semafo ”) and is presented in combination with the mineral resource estimate for the adjacent Bantou Property

(owned 100% by Semafo). For further information regarding the mineral resource estimate please refer to the technical report titled “Bantou Project NI 43-101 Technical Report – Mineral Resource Estimate”, dated April 3, 2020 and prepared by Patrik Perez, Claude Bisaillon, Jordan Zampini, Francois Thibert and Richard Roy. Messers Perez, Bisaillon and Zampini are employees of Met-Chem (DRA Americas Inc) and are independent of Sarama and Semafo. Messers Thibert and Roy are employees of Semafo Inc and are independent of Sarama only. The technical report is available under Semafo’s profile on SEDAR at www.sedar.com Sarama has not independently verified Semafo’s mineral resource estimate and takes no responsibility for its accuracy. Endeavour acquired Semafo on July 1, 2020 and is now the operator of the Karankasso Project JV and Sarama is relying on their Qualified Persons’ assurance of the validity of the mineral resource estimate

Qualified Persons’ Statement

Scientific or technical information in this disclosure that relates to the Company’s exploration activities in Burkina Faso is based on information compiled or approved by Guy Scherrer. Guy Scherrer is an employee of Sarama Resources Ltd and is a member in good standing of the Ordre des Géologues du Québec and has sufficient experience which is relevant to the commodity, style of mineralisation under consideration and activity which he is undertaking to qualify as a Qualified Person under National Instrument 43-101. Guy Scherrer consents to the inclusion in this disclosure of the information, in the form and context in which it appears.

Scientific or technical information in this disclosure that relates to the preparation of the Company’s mineral resource estimate for the Tankoro Deposit within the Sanutura Project is based on information compiled or approved by Adrian Shepherd. Adrian Shepherd is an employee of Cube Consulting Pty Ltd and is considered to be independent of Sarama Resources Ltd. Adrian Shepherd is a Chartered Professional Member in good standing of the Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the commodity, style of mineralisation under consideration and activity which he is undertaking to qualify as a Qualified Person under National Instrument 43-101. Adrian Shepherd consents to the inclusion in this news release of the information, in the form and context in which it appears.

Scientific or technical information in this disclosure, in respect of the Bondi Deposit relating to mineral resource and exploration information drawn from the Technical Report prepared for Orezone on that deposit has been approved by Guy Scherrer. Guy Scherrer is an employee of Sarama Resources Ltd and is a member in good standing of the Ordre des Géologues du Québec and has sufficient experience which is relevant to the commodity, style of mineralisation under consideration and activity which he is undertaking to qualify as a Qualified Person under National Instrument 43-101. Guy Scherrer consents to the inclusion in this disclosure of the information, in the form and context in which it appears.

Scientific or technical information in this disclosure that relates to the quotation of the Karankasso Project’s mineral resource estimate and exploration activities is based on information compiled by Paul Schmiede. Paul Schmiede is an employee of Sarama Resources Ltd and is a Fellow in good standing of the Australasian Institute of Mining and Metallurgy. Paul Schmiede has sufficient experience which is relevant to the commodity, style of mineralisation under consideration and activity which he is undertaking to qualify as a Qualified Person under National Instrument 43-101. Paul Schmiede consents to the inclusion in this disclosure of the information, in the form and context in which it appears. Paul Schmiede and Sarama have not independently verified Semafo’s (now Endeavour’s) mineral resource estimate and take no responsibility for its accuracy.

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Sarama Resources Ltd. — Interim / Quarterly Report 2020

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