Sarama Resources Ltd. — Interim / Quarterly Report 2022

Nov 14, 2022

Sarama Resources Ltd.

(An Exploration Stage Company)

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months and nine months ended September 30, 2022 (Unaudited)

(Expressed in United States Dollars)

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

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

Canada

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

Australia

Hamilton Locke Level 27, Central Park 152/158 St Georges Terrace Perth, Western Australia, Australia 6000

AUDITORS

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

SHARE REGISTRY

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

Australia

Computershare Investor Services Pty Limited Level 11, 158 St Georges Terrace Perth, Western Australia, Australia 6000

TSX.V CODE : SWA

ASX CODE : SRR

WEBSITE

www.saramaresources.com

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 properlymaintained.

The Board of Directors isresponsible 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 financial 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 November 14, 2022 November 14, 2022

	Note	As atSeptember 30,2022$	As atDecember 31,2021$
ASSETS
Current assets
Cash and cash equivalents	3	1,513,514	1,033,345
Security deposits		22,618	25,420
Other receivables		47,418	81,648
Prepayments	12	22,478	178,965
Total current assets		1,606,028	1,319,378
Non-current assets
Other Receivables		108,293	-
Plant and equipment	4	99,077	18,286
Investment in associate	5	1,836,171	1,836,171
Royalty		23,131	23,131
Total non-current assets		2,066,672	1,877,588
Total assets		3,672,700	3,196,966
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	13	321,920	205,668
Financial Liabilities		104,670	267,701
Termination Agreement - Barrick	6	-	1,140,183
Total current liabilities		426,590	1,613,552
Non-current liabilities
Provision for employee entitlements		347,344	339,213
Total non-current liabilities		347,344	339,213
Total liabilities		773,934	1,952,765
EQUITY
Share capital	7(b)	57,932,648	52,817,012
Share based payments reserve	7(d)	4,720,798	4,532,735
Deficit		(59,754,680)	(56,105,546)
Total equity		2,898,766	1,244,201
Total liabilities and equity		3,672,700	3,196,966

These financial statements are authorised for issue by the Board of Directors on November 14, 2022.

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.

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

		Three monthsendedSeptember 30,2022	Three monthsendedSeptember 30,2021	Nine monthsendedSeptember 30,2022	Nine monthsendedSeptember 30,2021
Income
Interest income		8,378	401	10,782	806
Foreign exchange gain		-	-	-	-
Fair value gain on warrants carried at fair
value through profit or loss		90,842	115,791	163,031	115,791
Total income		99,220	116,192	173,813	116,597
Expenses
Accounting and audit		4,524	5,032	15,123	16,173
Depreciation		1,197	584	2,726	1,753
Directors' fees		23,991	25,931	77,369	80,396
Exploration expenditure as incurred	2(f)	604,336	229,106	2,178,334	673,214
Finance charges		-	26,828	49,829	78,208
Foreign exchange loss		60,180	26,930	330,502	14,427
Insurance		22,989	16,890	56,694	54,318
Marketing and investor relations		27,762	19,739	155,199	65,239
Office and general		49,906	38,224	151,546	111,935
Professional advisory fees		69,589	8,841	83,899	20,473
Salaries		184,423	156,443	490,870	498,430
Stock–based compensation	7(d)	-	-	188,063	513,112
Travel		15,656	-	42,793	-
Total expenses		1,064,553	554,548	3,822,947	2,127,678
Loss before income tax		(965,333)	438,356	(3,649,134)	2,011,081
Income tax benefit		-	-	-	-
Loss for the period from continuingoperations		(965,333)	(438,356)	(3,649,134)	(2,011,081)
Exchange differences on translation of foreign
operationsTotal comprehensive loss for the period		-(965,333)	-(438,356)	-(3,649,134)	-(2,011,081)
Basic and diluted loss per share-Continuing operations		cents(0.7)	cents(0.5)	cents(3.0)	cents(2.2)
Weighted average number of sharesBasic and diluted		137,922,169	96,972,257	122,432,896	92,415,855

The ac0companying notes are an integral part of these financial statements.

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

	Note	Three monthsendedSeptember 30,2022$	Three monthsendedSeptember 30,2021$	Nine monthsendedSeptember 30,2022$	Nine monthsendedSeptember 30,2021$
Cash flows used in operating
activitiesPayments to suppliers and employees		(287,831)	(293,274)	(1,004,186)	(844,648)
Payments for exploration andevaluation		(1,321,524)	(211,323)	(2,082,366)	(671,460)
Payment to Barrick – TerminationAgreement	6	-	-	(1,190,012)	-
Interest received		8,378	401	10,782	806
Net cash used in operating activities	10	(1,600,977)	(463,789)	(4,265,782)	(1,515,302)
Cash flows used in investing activities
Purchase of plant and equipment	4	(9,515)	-	(97,848)	-
Net cash generated in investing activities		(9,515)	-	(97,848)	-
Cash flows from financing activities
Common shares and warrants issuedfor cash		-	1,625,563	5,835,600	1,625,563
Payment of share issue costs		-	(76,947)	(616,629)	(76,946)
Net cash generated by financing activities		-	1,548,616	5,218,971	1,548,617
Net increase in cash and cash equivalents		(1,610,492)	1,044,421	855,341	33,315
Net foreign exchange differences		(72,270)	(42,091)	(375,172)	(36,039)
Cash and cash equivalents at beginning ofthe period		3,196,276	614,560	1,033,345	1,619,613
Cash and cash equivalents at end of theperiod		1,513,514	1,616,889	1,513,514	1,616,889

Supplemental cash flow information is provided in Note 11

.

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

	Numberof commonshares	Sharecapital(note 6)	Share basedpaymentsreserve	Deficit	Total
		$	$	$	$
Balance at January 1, 2021	90,099,894	51,715,494	4,019,623	(53,497,927)	2,237,190
Loss attributed to shareholders ofthe Company	-	-	-	(2,607,619)	(2,607,619)
Total comprehensive loss for theyear	-	-	-	(2,607,619)	(2,607,619)
Transactions with owners intheir capacity as owners:
Issue of shares	9,727,037	1,625,563	-	-	1,625,563
Share issuance costsFair value of share issue ascribed	-	(76,947)	-	-	(76,947)
to warrants and recorded asfinancial liability (7(b))Stock-based compensation -	-	(447,098)	-	-	(447,098)
options (7(d)(i))	-	-	513,112	-	513,112
Balance at December 31, 2021	99,826,931	52,817,012	4,532,735	(56,105,546)	1,244,201
Loss attributed to shareholders ofthe Company	-	-	-	(3,649,134)	(3,649,134)
Total comprehensive loss for theyear	-	-	-	(3,649,134)	(3,649,134)
Transactions with owners intheir capacity as owners:
Issue of shares	38,095,238	5,835,600	-	-	5,835,000
Share issuance costs	-	(719,964)	-	-	(719,964)
Stock-based compensation -options (7(d)(i))	-	-	188,063	-	188,063
Balance at September 30, 2022	137,922,169	57,932,648	4,720,798	(59,754,680)	2,898,766

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

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 November 14, 2022.

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 September 30, 2022, 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 period ended September 30, 2022, 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, 2021 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, 2021, which have been prepared in accordance with IFRS.

Going Concern

For the period ended September 30, 2022, the consolidated entity recorded a net loss of $3,649,134 and had a net cash outflow from operating and investing activities of $4,363,630. As at September 30, 2022, the consolidated entity had available cash of $1,513,134 and a surplus of current assets over current liabilities of $1,179,441.

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.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Standards and Interpretations applicable to September 30, 2022

In the period ended September 30, 2022, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the IASB that are relevant to the Company and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the consolidated entity and, therefore, no material change is necessary to the consolidated entity's accounting policies.

b) Standards and Interpretations in issue not yet adopted

The Directors have also reviewed all the new and revised Standards and Interpretations in issue not yet adopted for the period ended 30 September 2022. As a result of this review the Directors have determined that there is no material impact of the Standards and Interpretations in issue not yet adopted on the consolidated entity and, therefore, no change is necessary to the consolidated entity's accounting policies.

c) Basis of Consolidation

The condensed interim consolidated financial statements incorporate the assets and liabilities of the Company as at September 30, 2022 and the results of all subsidiaries for the 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) Foreign Currency Translation

(i) Functional and Presentation Currency

Items included in the financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The condensed interim consolidated financial statements are presented in United States dollars ("USD"), which is the Company's functional and presentation currency.

(ii) Transactions and Balances

Monetary assets and liabilities of the Company are translated into USD at the exchange rate in effect on the statement of financial position date while non-monetary assets and liabilities, revenues and expenses are translated using exchange rates in effect at the time of each transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

All foreign exchange gains and losses are presented separately in profit or loss for the financial year.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair-value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.

(iii) Functional Currency

The results and financial position of foreign operations that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that balance sheet,
• income and expenses for each statement of comprehensive income (loss) are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case, income and expenses are translated at the dates of the transactions), and
• all resulting exchange differences are recognised in other comprehensive income.

e) Financial Instruments

Cash and cash equivalents are classified as current assets and include short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. The Company places the majority of its cash holdings with an Australian financial institution which has a high credit rating.

Non-derivative financial assets and liabilities

The Company has the following non-derivative financial assets and liabilities:

i. Receivables

Receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are initially recognised at fair value, less any directly attributable transaction costs. Subsequent to initial recognition, receivables are measured at amortised cost using the effective interest method, less any impairment losses.

ii. Financial assets at fair value through profit or loss (FVTPL)

Financial assets that are held within a different business model other than 'hold to collect' or 'hold to collect and sell' are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.

iii. Amounts payable and other accrued liabilities Such financial liabilities are recognised initially at fair value, net of any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method if significant.

f) 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.

g) Stock-based Compensation

The fair value of share purchase options or warrants granted is determined by the Black-Scholes option pricing model using estimates for the volatility of the trading price of the Company's stock, the expected lives of share purchase options awarded, the fair value of the Company's shares and the risk-free interest rate.

For employees, the fair value of the options is measured at the date of the grant. For non-employees, the fair value of the options is measured on the earlier of the date on which the counterparty performance is complete or the date the performance commitment is reached or the date at which the equity instruments are granted if they are fully vested and non-forfeitable. The estimated fair value of awards of share purchase options is charged to expense over the vesting period, with offsetting amounts to equity. If the share purchase options are granted for past services, they are expensed immediately. If the share purchase options are forfeited prior to vesting, no amounts are charged to expense. If share purchase options are exercised, then the fair value of the options is reclassed from stock-based compensation reserve to share capital.

At each reporting date, the amount recognised as an expense is adjusted to reflect the actual number of share purchase options or warrants that are expected to vest. The corresponding entry is recognised in the stock-based compensation reserve.

h) Basic and Diluted Earnings per Share

The Company presents basic and diluted earnings per share data for its common shares, calculated by dividing the result attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share does not adjust the profit attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

i) Share Warrants

In accordance with IFRS, an obligation to issue shares for a price that is not fixed in the Company's functional currency, and that does not qualify as a rights offering, must be classified as a derivative liability and measured at fair value through profit or lossin accordance with the requirements of IAS 32 Financial Instruments: Presentation. The financial liability will be accounted for at fair value through profit or loss until such time that the warrants are exercised or lapse, at which point the liability will be transferred to equity.

j) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments.

k) Critical Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continually evaluated and are based on management experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Information about significant areas of estimation uncertainty considered by management in preparing the financial statements is described below.

(i) Measurement of warrants and stock options

The Company determines the fair value of both warrants and options classified as liabilities at fair value through profit or loss using the Black-Scholes Model. Note 7 provides detailed information about the key assumptions used in the determination of the fair value of warrants.

3. CASH AND CASH EQUIVALENTS

	September 30, 2022$	December 31, 2021$
Cash at bank and in hand	182,645	671,029
Deposits at Call	1,330,869	362,316
	1,513,514	1,033,345

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.

4. PLANT AND EQUIPMENT

	September 30, 2022
	Plant andEquipment	MotorVehicles	OfficeEquipment	Total
	$	$	$	$
Opening net book value	11,947	-	6,339	18,286
Additions	11,247	57,041	29,561	97,849
Depreciation	(4,462)	(6,088)	(6,508)	(17,058)
Closing net book value	18,732	50,953	29,392	99,077
Cost	253,030	215,347	316,640	785,017
Accumulated Depreciation	(234,298)	(164,394)	(287,248)	(685,940)
Closing net book value	18,732	50,953	29,392	99,077

	Plant andEquipment$	MotorVehicles$	OfficeEquipment$	Total$
Opening net book value	18,206	-	14,465	32,671
Additions	-	-	2,745	2,745
Depreciation	(6,259)	-	(10,871)	(17,130)
Closing net book value	11,947	-	6,339	18,286
Cost	241,783	158,306	287,079	687,168
Accumulated Depreciation	(229,836)	(158,306)	(280,740)	(668,882)
Closing net book value	11,947	-	6,339	18,286

December 31, 2021

5. INVESTMENT IN ASSOCIATE

The Company has determined that it has significant influence over Joint Venture BFI Inc., a joint venture focussed on the exploration and evaluation of the Karankasso Project ("the Project") in Burkina Faso, as it holds 17.51% as at September 30, 2022 (December 31, 2020: 17.52%) of the voting power as well as holding 2 out of the 4 Board positions. 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 consolidated financial statements are set out below. The Company has not made any additional contributions during the nine month period ended September 30, 2022.

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

	September 30, 2022$	December 31, 2021$
Current assets	333,097	564,088
Non-current assets	17,356,583	17,224,838
Current liabilities	-	-
Non-current liabilities	(5,457,224)	(5,556,469)
Equity	12,232,456	12,232,457
Reconciliation to carrying amount of investment
Company's share of equity	2,141,903	2,143,126
Plus additional contributions	1,365,851	1,365,851
	3,507,754	3,508,977
Notional premium on acquisition by JV	(1,671,583)	(1,672,806)
Karankasso Project Joint Venture– at cost	1,836,171	1,836,171

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 Agreement resulting in an immediate return to 100% ownership of the Project and the reduction of the trailing reimbursement payment. The Company agreed to waive certain closing conditions and, in return, Barrick TZ Ltd ("Barrick"), formerly Acacia, agreed to amend and reduce the total trailing reimbursement from $2 million to $1 million, payable 12 months from the date of the 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%. On November 18, 2021, Barrick agreed to further defer the $1 million payable by an additional year to January 15, 2023 ("Maturity date") inclusive of interest at an annual rate of 12.5% effective from November 18, 2021. The Company will be required to repay the liability, inclusive of accrued interest, if it completes any financing with gross proceeds of US$ 3.5 million or greater prior to the maturity date. Due to the Company completing its equity raising on April 22, 2022, in relation to its dual listing on the ASX, it paid Barrick $1,190,012 in May 2022.

7. SHARE CAPITAL

(a) Authorised Share Capital

At September 30, 2022, the authorised share capital comprised an unlimited number of common shares without par value.

(b) Issued Share Capital

	2022Number of	2022	2021Number of	2021
Details	shares	$	shares	$
Balance at January 1	99,826,931	52,817,012	90,099,894	51,715,494
Issue of shares under private placement	38,095,238	5,835,600	-	-
Share issuance costs	-	(719,964)	-	-
Balance September 30 (net of cost)	137,922,169	57,932,648	90,099,894	51,715,494
Issue of shares under private placement			9,727,037	1,625,563
Share issuance costs			-	(76,947)
Fair value warrants issued			-	(447,098)
Balance December 31(net of cost)			99,826,931	52,817,012

(i) Private Placement – Dual Listing on Australian Securities Exchange ("ASX")

On April 22, 2022 the Company announced that it had raised A$8,000,000 and issued 38,095,238 CHESS Depositary Interests ("CDIs") over common shares in the capital of the Company at an issue price of A$0.21 per CDI, in relation to its dual listing on the ASX. Underlying each CDI is a newly issued common share of the Company and each CDI therefore represents a beneficial interest in 1 common share of the Company. The Lead Manager for the ASX listing process, Euroz Hartleys Limited, received 2,500,000 Broker options at an exercise price of A$0.273 each and expiring three years from the date of issue. It also received a capital raising fee of 6% of total gross funds raised, excluding any funds subscribed for under an agreed Chairman's list, at a management fee of 2%, and a separate management fee of A$75,000. The Company commenced trading on the ASX on May 2, 2022.

(ii) Private Placement - 2021

On July 29, 2021 the Company announced that it had raised C$2,042,678 and issued 9,727,037 units (the "Units") at a price of C$0.21 per Unit. Each Unit is comprised of one common share of the Company and one-half of one common share purchase warrant (each full warrant, a "Warrant"), with each Warrant being exercisable to purchase one common share of the Company at an exercise price of C$0.28 until July 28, 2024. The Company issued an aggregate of 9,727,037 common shares and 4,863,517 Warrants

(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:

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

		Pre ShareConsolidation		Post ShareConsolidation (i)
		Exercise		Exercise	Expiry Date
Grant Date	No.	Price	No.	Price
January 16, 2020 (fully vested)	10,800,000	C$0.07	3,599,999	C$0.21	January 16, 2023
June 24, 2020 (fully vested)	1,500,000	C$0.08	500,000	C$0.24	June 23, 2023
	16,625,000		4,099,999
January 14, 2021 (fully vested)			3,158,336	C$0.35	January 14, 2024
January 19, 2022 (fully vested)			2,721,665	C$0.20	January 19, 2025
			9,980,000

On January 19, 2022, the Company issued 2,721,665 options to directors, officers and employees of the company, vesting immediately and exercisable at C$0.20 and expiring 3 years after issue.

No options were exercised in the nine month period ended September 30, 2022 (period ended September 30, 2021: Nil).

1,441,665 options expired in the nine month period ended September 30, 2022 at a weighted average exercise price and life of C$0.18 and 3 years respectively (period ended September 30, 2021: 2,746,666 options expired at a weighted average exercise price and life of C$0.32 and 2.5 years respectively).

(i) Share Consolidation:

On October 7, 2020, Sarama implemented a consolidation of its issued and outstanding Shares on a 3 old for 1 new share basis (the "Share Consolidation"). No fractional shares were issued as a result of the Share 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.

(d) Stock-Based Compensation

(i) Options

For the nine month period ended September 30, 2022, the expense incurred relating to stock-based compensation on the grant of options was $188,063 (September 30, 2021: $513,112).

For the nine month period ended September 30, 2022, the Company granted stock options to its directors, officers, employees and consultants and estimated the stock-based compensation as follows:

	January 19,
	2022
Total options granted	2,721,665
Exercise price	C$0.20
Estimated fair value of compensation recognised	$188,063
Balance to be recognised over remaining vesting period	$nil
Estimated fair value per option	$0.08

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

	January 19,
	2022
Share price of underlying security on date of grant	C$0.17
Risk-free interest rate	1.38%
Expected dividend yield	0%
Expected stock price volatility	91.3%
Expected option life in 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.

Pre Share Consolidation

Warrant issue	TotalWarrantsIssued	ExercisePrice(C$)	Estimatedfair value ofwarrants(C$)	Estimatedfair valueper warrant(C$)	Expiry Date
Acquisition Warrants issuedMay 23, 2019	2,500,000	$0.10	137,162	$0.074	May 23, 2024
Acquisition Warrants issuedMay 23, 2019	2,500,000	$0.20	120,957	$0.065	May 23, 2024
Total	5,000,000		258,119	$0.052

Post Share Consolidation

Warrant issue	TotalWarrantsIssued	ExercisePrice	Estimatedfair value ofwarrants	Estimatedfair valueper warrant	Expiry Date
		(C$)	(C$)	(C$)
Acquisition Warrants issuedMay 23, 2019	833,333	$0.30	137,162	$0.222	May 23, 2024
Acquisition Warrants issuedMay 23, 2019	833,333	$0.60	120,957	$0.175	May 23, 2024
Broker Warrants issued April22, 2022	2,500,000	$A0.273	303,345	$0.121	April 22, 2025
Sub total	4,166,666		561,464	$0.135
Shareholder Warrants issuedJuly 28, 2021	4,863,517	$0.28	561,822	$0.115	July 28, 2024
Total	9,030,183		907,918	$0.139

5,000,000 warrants were issued to Acacia on May 23, 2019 as part consideration of definitive agreement executed by the Company and Acacia on May 14, 2019, that provides for the termination of the 2014 earn-in agreement between the two companies in respect of the South Houndé Project. 2,500,000 warrants were issued at an exercise price of C$0.10 and 2,500,000 warrants were issued at an exercise price of C$0.20, expiring on May 23, 2024. Post Share Consolidation the warrants have been converted to 833,333 warrants at exercise price of C$0.30 and 833,333 warrants at exercise price of C$0.60, respectively.

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.

The fair value of the warrants recognised in the financial statements has been estimated using the Black-Scholes Option-Pricing Model at inception with the following assumptions:

Warrant issue	Price ofSecurity onissue date	Risk –freeinterestrate	Expecteddividendyield	Expectedstockpricevolatility	Remainingwarrantlife
Acquisition Warrants issued May 23,2019	C$0.10	1.55%	0%	105%	20 months
Broker Warrants issued April 22, 2022	C$0.18	2.70%	0%	76%	31 months

No warrants expired in the period ended September 30, 2022 (period ended September 30, 2021: Nil)

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.

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 September 30, 2022 according to the following fair value measurement hierarchy:

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

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 nine month period ending September 30, 2022
	Burkina Faso	Other	Total
	$	$	$
Segment current assets	288,129	1,426,192	1,714,321
Segment non-current assets
Plant and equipment	87,304	11,773	99,077
Investment in Associate	1,836,171	-	1,836,171
Royalty	-	23,131	23,131
	1,923,475	34,904	1,958,379
Segment total assets	2,211,604	1,461,096	3,672,700
Segment liabilities	190,977	582,957	773,934
Segment Loss
Loss for the period from continuingoperations	2,178,334	1,470,800	3,649,134

As at and for the nine month period ending September 30, 2021

	Burkina Faso$	Other$	Total$
Segment current assets	105,412	1,768,302	1,873,714
Segment non-current assets
Plant and equipment	17,682	1,516	19,198
Investment in Associate	1,836,171	-	1,836,171
Royalty	-	23,131	23,131
	1,853,853	24,647	1,878,500
Segment total assets	1,959,265	1,792,949	3,752,214
Segment liabilities	26,413	1,885,062	1,911,475
Segment Loss
Loss for the period from continuingoperations	673,214	1,337,867	2,011,081

10. BASIC AND DILUTED LOSS PER SHARE

	Three monthsendedSeptember 30,2022	Three monthsendedSeptember 30,2021	Nine monthsendedSeptember 30,2022	Nine monthsendedSeptember 30,2021
	Cents pershare	Cents pershare	Cents pershare	Cents pershare
Basic and diluted loss per share-Continuing operations	0.7	0.5	3.0	2.2
	$	$	$	$
Net loss used in calculatingbasic/diluted loss per share-Continuing operations	965,333	438,356	3,649,134	2,011,081
Weighted average number of shares onissue during the period used in thecalculation of basic loss per share	137,922,169	96,972,257	122,432,896	92,415,855

Diluted loss per share at September 30, 2022 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

	Three	Three	Nine	Nine
	months	months	months	months
	ended	ended	ended	ended
	September	September	September	September
	30, 2022	30, 2021	30, 2022	30, 2021
	$	$	$	$
Loss for the period	(965,333)	(438,356)	(3,649,134)	(2,011,081)
Depreciation	8,599	4,184	17,058	13,474
Fair value gain on warrants carried at fair value	(90,842)	(115,791)	(163,031)	(115,791)
through profit or lossFinance charges	-	26,828	49,829	78,208
Stock–based compensation	-	-	188,063	513,112
Movements in provisions, salary benefits	49,001	(7,375)	48,528	7,652
Net exchange and translation differences –loss/(gain)	24,013	29,423	337,079	15,265
Net cash outflows used in operating activitiesbefore change in working capital	(975,462)	(501,086)	(3,171,608)	(1,499,161)
Change in working capital	(625,515)	(3,110)	(1,094,174)	(16,141)
Net cash outflows used in operating activities	(1,600,977)	(504,196)	(4,625,782)	(1,515,302)

12. PREPAYMENTS

	December 31, 2021
$	$
-	103,336
22,161	55,168
317	20,461
22,478	178,965
	September 30, 2022

13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	September 30, 2022$	December 31, 2021$
Burkina Faso	190,977	41,407
Corporate	130,943	164,261
	321,920	205,668

14. 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.

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:

• o US$1,000,000 on production of 10,000 oz gold;
• o US$1,000,000 on production of a further 5,000 oz gold;
• o 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.

15. CONTINGENT LIABILITY: TAX ASSESSMENT – BURKINA FASO

The Company is subjected to a tri-annual taxation audit pursuant to Burkina Faso taxation laws and regulations. The Company's most recent audit was undertaken in the fourth quarter of 2021. As a result of this audit, the Burkina Faso taxation authorities have identified several matters as potentially attracting additional tax liabilities which have not been accounted for by the Company. The Company disputes the basis for, or quantum of, the related tax claims and has commenced the process for this to be reviewed. The review process requires filing of dispute materials with the relevant government authorities which was filed on May 6, 2022. The Company has yet to receive any further communication since the filing. Should that review process resolve in an outcome considered unsatisfactory by the Company, the Company may challenge the outcome by commencing court proceedings in Burkina Faso. The Company considers that the above process is common in Burkina Faso and the Company has been through a similar process in its previous tri-annual audits. The Board has assessed the likely outcomes of the process and concluded that the likely outcome is not considered to be material to the Company's financial position.