Select Sands Corp. — Interim / Quarterly Report 2023

Nov 16, 2023

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CORP.

Condensed Consolidated Interim Financial Statements Nine Months Ended September 30, 2023 and 2022 (Unaudited)

(Expressed in United States Dollars)

NOTICE

No auditor review of these condensed consolidated interim financial statements

The accompanying unaudited condensed consolidated interim financial statements of Select Sands Corp. (“the Company”), for the nine months ended September 30, 2023, have been prepared by management and have not been the subject of a review by the Company’s external auditors.

Select Sands Corp. Consolidated Interim Statements of Financial Position (Expressed in United States Dollars) (Unaudited)

	September 30, December 31, 2023 2022
ASSETS Current Cash and cash equivalents Accounts receivable (Note 8 and 12a) Inventory (Note 4) Prepaid expenses Total Current Assets Deposits Right-of-use assets (Note 6) Property, plant and equipment (Notes 6 and 8) Total Assets	$ 286,540 $ 644,216 1,008,381 1,038,958 3,644,581 4,796,915 61,274 69,731
	5,000,776 6,549,820 300,101 300,101 2,093,414 2,462,840 10,648,345 11,595,009
	$ 18,042,636 $ 20,907,770
LIABILITIES Current Line of credit (Note 8) Accounts payable and accrued liabilities (Note 7) Deferred revenue Current portion of lease liability (Note 6) Current portion of long-term debt (Note 8) Total Current Liabilities Decommissioning liability Long-term lease liability (Note 6) Long-term debt (Note 8) Total Liabilities EQUITY Share capital (Note 9) Share-based payment reserve Accumulated other comprehensive loss Deficit Total Equity Total Liabilities and Equity	$ 2,360,034 $ 1,285,034 889,946 1,625,954 1,324,114 988,491 434,105 403,198 1,019,842 1,137,197
	6,028,041 5,439,874 78,100 78,100 1,728,610 2,059,642 6,686,008 7,278,714
	14,520,759 14,856,330
	34,803,135 34,803,135 5,734,350 5,734,350 (71,346) (70,465) (36,944,262) (34,415,580)
	3,521,877 6,051,440
	$ 18,042,636 $ 20,907,770

Note 1 - Corporate Information and Going Concern Note 5 - Investments

These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on November 16, 2023. They are signed on the Company’s behalf by:

/s/“Zigurds Vitols” Director	/s/“Wesley Harris”
	Director

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

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. Select Sands Corp

Consolidated Interim Statements of Operations and Comprehensive Loss (Expressed in United States Dollars) (Unaudited)

Revenue Cost of Goods Sold (excluding depreciation and depletion) Gross Margin (Loss) Operating Expenses Compensation and consulting (Note 7) Depreciation and depletion Interest expense Selling, general and administrative (Note 7) Share-based compensation Total Operating Expenses Operating Loss Other Income (Loss) Interest income Foreign exchange gain Loss on sale of equipment Total Other Income (Loss) Net Loss Other Comprehensive Loss Foreign currency translation adjustment Comprehensive Loss Basic and Diluted Loss per Share Basic and Diluted Weighted Average Number of Shares Outstanding(Note 13b)	Three months ended September 30, Nine months ended September 30,	Three months ended September 30, Nine months ended September 30,
	2023 2022 2023	2022
	$ 2,084,910 $ 5,397,797 $ 10,351,824 2,246,411 4,658,925 10,172,252	$ 16,854,837 14,377,543
	(161,501) 738,872 179,572	2,477,294
	179,944 176,420 529,772 427,578 505,855 1,296,881 178,028 132,804 530,006 91,265 82,019 351,743 - - -	552,744 1,311,460 425,723 331,885 24,483
	(876,815) (897,098) (2,708,402)	(2,646,295)
	(1,038,316) (158,226) ** (2,528,830)**	**(169,001) **
	143 199 872 1,408 12,178 223 - (2,733) (947)	402 41,401 (43,784)
	1,551 9,644 148	**(1,981) **
	$ (1,036,765) $(148,582) $ (2,528,682)	**$(170,982) **
	(1,840) (15,809) (881)	(48,380)
	$(1,038,605) $(164,391) $(2,529,563)	**$(219,362) **
	$(0.01) $(0.00) $(0.03)	**$(0.00) **
	88,563,316 88,563,316 88,563,316	88,563,316

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

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Select Sands Corp. Consolidated Interim Statements of Changes in Equity Nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars) (Unaudited)

Balance, January 1, 2023 Net loss for the period Other comprehensive loss	ACCUMULATED OTHER COMPREHENSIVE INCOME SHARE- BASED PAYMENT RESERVE SHARE CAPITAL TOTAL EQUITY NUMBER OF SHARES AMOUNT DEFICIT
	88,563,316 $ 34,803,135 $ 5,734,350 $ (70,465) $ (34,415,580) $ 6,051,440 - - - - (2,528,682) (2,528,682) - - - (881) - (880) 88,563,316 $ 34,803,135 $ 5,734,350 $ (71,346) $ (36,944,262) $ 3,521,877 88,563,316 $ 34,803,135 $ 5,709,867 $ (18,287) $ (33,547,450) $ 6,947,265 - - 24,483 - - 24,483 - - - - (170,982) (170,982) - - - (48,380) - (48,380) 88,563,316 $ 34,803,135 $ 5,734,350 $ (66,667) $ (33,718,432) $ 6,752,386
Balance, September 30, 2023
Balance, January 1, 2022 Share-based compensation Net loss for the period Other comprehensive loss
Balance, September 30, 2022

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

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Select Sands Corp. Consolidated Interim Statements of Cash Flows (Expressed in United States Dollars) (Unaudited)

Select Sands Corp. Consolidated Interim Statements of Cash Flows (Expressed in United States Dollars) (Unaudited)
	For the Nine Months Ended September 30,
	2023 2022
Operating Activities Net loss for the period Adjustments for non-cash items: Depreciation and depletion Accretion on finance leases Share-based compensation Loss on sale of equipment Changes in non-cash operating assets and liabilities: Accounts receivable Inventory Prepaid expenses Accounts payable and accrued liabilities Deferred revenue Total Cash (Used in) Received from Operating Activities Investing Activities Deposits Proceeds from sale of equipment Property, plant and equipment Total Cash Received from (Used in) Investing Activities Financing Activities Proceeds from line of credit Repayments of line of credit Proceeds from long-term debt Principal repayments of long-term debt Repayment of lease liability Total Cash (Used in) Received from Financing Activities Effect of Exchange Rate Changes on Cash Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning of Period Cash and Cash Equivalents, End of Period	$ (2,528,682) $ (170,982) 1,296,881 1,311,460 104,875 26,331 - 24,483 947 43,784 30,577 (379,723) 1,152,334 (1,275,458) 8,457 48,057 (736,008) 331,487 335,623 720,562
	(334,996) 680,001
	- (14,032) 56,000 141,066 (37,738) (1,051,605)
	18,262 (924,571)
	2,600,000 3,160,000 (1,525,000) (2,725,000) - 936,748 (710,061) (852,194) (405,000) (388,456)
	(40,061) 131,098
	(881) (48,380)
	(357,676) (161,852) 644,216 632,042
	$ 286,540 $ 470,190

Supplemental Cash Flow Information (Note 13c)

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

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

1. CORPORATE INFORMATION AND GOING CONCERN

Select Sands Corp. (the “Company”) was incorporated in Canada on July 31, 2006 pursuant to the Business Corporations Act (British Columbia) (the “Act”). The Company is a public company listed on the TSX Venture Exchange (the “TSX.V”), trading under the “SNS” symbol and on the OTCQB Market trading under the “SLSDF” symbol. The address of the Company’s corporate office is Suite 1200, 825 Town and Country Lane, Houston, Texas, USA, 77024. The Company’s mailing address in Canada is PO Box 30072, North Vancouver RPO Parkgate VLG, BC, Canada, V7H 2Y8. The Company’s registered and records office is 10[th] Floor, 595 Howe Street, Vancouver, British Columbia, Canada, V6C 2T5.

The Company’s primary business is an advanced stage silica sand quarry and production facilities located in Arkansas, USA and operational headquarters in Houston, Texas, USA. The Company is mining its 520-acre site in Arkansas named the Sandtown quarry. The Company is focused on developing this business to enable profitable commercial silica sand sales to industrial and energy customers.

These condensed consolidated interim financial statements (the “Financial Statements”) have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future. For the nine months ended September 30, 2023, the Company has continued to experience demand for its sand products below its full production capacity resulting in sales of $10,351,824 (2022 – $16,854,837), a gross margin of $179,572 (2022 – $2,477,294), negative cash flow from operating activities of $(334,996) (2022 – positive cash flow of $680,001), a net loss of $2,528,682 (2022 – $170,982) and as of that date, the Company’s deficit is $36,944,262 (December 31, 2022 - $34,415,580). The Company may not be able to continue to finance day-to-day activities through operations alone. The Company’s continuation as a going concern is dependent upon achieving higher levels of sales and gross margin to maintain profitable operations and generate funds therefrom and/or raising equity capital or borrowings sufficient to meet current and future obligations. These factors indicate the existence of material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Management intends to finance operating costs over the next twelve months with cash from operations, cash on hand, loans from financial institutions and if necessary, private placement of common shares. These Financial Statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

2. BASIS OF PRESENTATION

a) Statement of Compliance

These Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the International Accounting Standards Board (“IASB”), and its interpretations, using accounting policies consistent with International Financial Reporting Standards (“IFRS”) and accordingly, certain information and note disclosure included in the annual financial statements prepared in accordance with IFRS have been omitted or condensed. These Financial Statements should be read in conjunction with the Company’s December 31, 2022 audited annual consolidated financial statements.

b) Basis of Measurement and Presentation

These Financial Statements have been prepared on a historical cost basis, using the accrual basis of accounting, except for cash flow information. In the opinion of management, all adjustments (including normal recurring accruals), considered necessary for a fair presentation have been included. The accounting policies set out in Note 3 have been applied consistently to all periods presented in these Financial Statements.

c) Basis of Consolidation

These Financial Statements include the accounts of the Company and its wholly owned subsidiary, Select Sands America Corp. (the “Subsidiary”) incorporated in Delaware, USA. All intercompany transactions and balances have been eliminated on consolidation.

d) Foreign Currencies

These Financial Statements are presented in United States dollars. The Company’s functional currency is the Canadian dollar. The Subsidiary’s functional currency is the United States dollar. Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement of financial position. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Canadian dollar amounts are denoted by the symbol CAD$.

The functional currency of foreign subsidiaries is the currency of the primary economic environment in which the entity operates.

Translation of all assets and liabilities from the subsidiary’s functional currency to the presentation currency is performed using the rate prevailing at the statement of financial position date. Income and expenses are translated at average exchange rates. The difference arising from translation from the functional currency to the presentation currency are recorded as currency translation adjustments in other comprehensive income and are held within accumulated other comprehensive income until a disposal or partial disposal of a subsidiary. A disposal or partial disposal will then give rise to a realized foreign exchange gain (loss) which is recorded in profit or loss.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

2. BASIS OF PRESENTATION (Continued)

e) Significant Accounting Judgments and Estimates

The preparation of these Financial Statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. Actual outcomes could differ from these estimates. These Financial Statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the Financial Statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

• Management determines costs for share-based compensation using market-based valuation techniques. The fair value of the share awards was determined at the date of grant using the BlackScholes option pricing model. Assumptions were made, and judgment was used in applying the valuation model. The assumptions and judgments on the estimated future volatility of the Company’s stock price and the expected forfeiture rate may have a very high degree of estimation uncertainty. Such judgments and assumptions are inherently uncertain and as such the grant date fair value estimates of stock-based compensation can be materially different from the fair values of the stock options when the stock options are exercised or expire in the future.

• The Company uses significant judgment in its assessment of impairment indicators on its equityaccounted investment and its related estimate of the recoverable amount of the investment.

• The Company uses significant judgment in its allocation of costs between inventory and cost of goods sold. The Company measures its remaining inventory at the end of each quarter and uses drones to assist in estimating quantities.

• Estimates and judgments are inherent in the ongoing assessment of the recoverability of trade and accounts receivable and deposits. The Company is not able to predict changes in the financial conditions of its customers and note holders and the Company’s judgement related to the recoverability of trade and accounts receivable may be material.

• At the end of each reporting period, the Company reviews the carrying value of its long-lived assets to determine whether there is any indication that the carrying amount is not recoverable. The determination of whether any such indication exists requires significant management judgement. If such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

2. BASIS OF PRESENTATION (Continued)

• e) Significant Accounting Judgments and Estimates (Continued)

• Recoverable amount is the higher of fair value less costs of disposal and value in use. Fair value is determined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. Many factors are used in assessing recoverable amounts and are outside of the control of management and it is reasonably likely that assumptions and estimates will change from period to period. These changes may result in future impairments.

• The Company assesses its site closure and reclamation provisions at each reporting date. Significant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous factors that will affect the ultimate amount payable. These factors include estimates of the extent, cost, and timing of rehabilitation activities, technological changes, regulatory changes, cost increases as compared to the changes of inflation rate and discount rates. These uncertainties may result in future expenditure differing from the amounts currently provided. The provision at the reporting date represents management’s best estimate of the present value of the future reclamation costs required.

• The Company uses significant judgment in recognizing and derecognizing deferred income tax assets. Management performs a “more likely than not” test to see if there is a greater than 50% chance that the Company will realize its deferred income tax assets in the future.

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

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been adopted and applied consistently to all periods presented in these Financial Statements.

a) Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

b) Inventory

Sand inventory is stated at the lower of cost and net realizable value using the average cost method.

Inventory manufactured at the Company’s plant facilities includes direct excavation costs, processing costs, overhead allocation, and depreciation and depletion. Stockpile tonnages are estimated by measuring the area covered by stockpiles at the Company’s facilities. Costs are calculated on a per ton basis and are applied to the stockpiles based on the number of tons in the stockpile and the percentage of completion in the production process.

Inventory transported for sale at the Company’s terminal facilities includes the cost of manufactured sand, plus transportation and handling related charges. External freight costs to transport product to the end consumer are expensed and not included in the costs of inventory.

c) Investment in Associate

Associates are those entities where the Company has the ability to exercise significant influence, but not control, over the financial and operating policies of the Associate. Significant influence is presumed to exist when the Company holds between 20 and 50 percent of the voting power of another entity.

Investments in associates are accounted for using the equity method and are recognized initially at fair value. The Financial Statements include the Company’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of the Company, from the date that significant influence commences until the date that significant influence ceases.

When the Company’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest is reduced to $Nil and the recognition of further losses is discontinued except to the extent that the Company has an obligation to make, or has made, payments on behalf of the investee.

At each statement of financial position date, the investment in associate is assessed for indicators of impairment. An impairment loss in respect of an equity-method accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognized in profit or loss and is reversed if there is a favourable change in the estimates used to determine the recoverable amount.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

• d) Property, Plant, Equipment

Property, plant and equipment are recorded at cost. Cost includes expenditures that are directly attributable to the acquisition of the asset. This includes the purchase price, any other costs directly attributable to bringing the assets to a working condition for intended use and the costs of dismantling and removing the items and restoring the site on which they are located.

Mining property and development includes mineral deposits and mine exploration and development costs. Mineral deposits are initially recognized at cost, which approximates the estimated fair value on the date of purchase. Mine exploration and development costs include engineering and mineral studies, drilling and other related costs to delineate an ore body, and the removal of overburden to initially expose an ore body for production.

The cost of removing overburden and waste materials to access the ore body at an open pit mine prior to the commercial production phase are referred to as “pre-stripping costs.” Pre-stripping costs are capitalized during the development of an open pit mine. The production phase of an open pit mine commences when saleable minerals, beyond a ‘de minimis’ amount, are produced. Stripping costs incurred during the production phase of a mine are variable production costs that are included as a component of inventory to be recognized in costs applicable to sales.

Depletion and amortization of mineral deposits and mine development costs are recorded as the minerals are extracted, based on units of production and engineering estimates of mineable resources or reserves. The impact of revisions to resource and reserve estimates is recognized on a prospective basis.

Where an item of plant and equipment comprises significant parts with useful lives that are significantly different from that of the asset as a whole, the parts are accounted for as separate items of plant and equipment and depreciated accordingly. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from derecognizing an asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized through profit or loss.

Land is not depreciated. Land improvements, plant and equipment are depreciated over their estimated useful lives. Interest incurred during construction of facilities is capitalized and depreciated over the life of the asset. Costs for normal repairs and maintenance that do not extend economic life or improve service potential are expensed as incurred. Costs of improvements that extend economic life or improve service potential are capitalized and depreciated over the estimated remaining useful life.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

d) Property, Plant, Equipment (Continued)

The Company commences recording depreciation when the assets are in a working condition ready for use using the straight-line method at the following rates:

Land improvements	Mine life up to 20 years
Leased assets	Lease term
Plants and buildings	10–20 years
Machinery	5–20 years
Vehicles	3–20 years
Office	5-10 years

The Company’s sand properties are depreciated on a units of production basis. The sand properties are depreciated based on total tonnes of sand shipped as a percentage of estimated total tonnes available. 41,980,000 tonnes of sand were estimated to be available at the commencement of operations.

Leased assets

Leases where the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Minimum lease payments made under finance leases are apportioned between finance expenses and the reduction of the outstanding liability using the effective interest method, so as to produce a constant periodic rate of interest on the remaining balance of the liability. Material operating leases, including land lease agreements are recognized on the Company’s statement of financial position as right of use assets under IFRS 16 Leases . Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Provisions for mine reclamation and decommissioning obligations

The Company recognizes the fair value of any liability for mine reclamation and decommissioning obligations, including environmental remediation liabilities when incurred, which is generally upon acquisition, construction or development, and/or through the normal operation of the asset, if sufficient information exists to reasonably estimate the fair value of the liability. These obligations generally include the estimated net future costs of dismantling, restoring and reclaiming operating mines and related mine sites, in accordance with government, regulatory and land lease agreement requirements. The liability is accreted over time through periodic charges to earnings. In addition, the mine reclamation and decommissioning costs are capitalized as part of the asset’s carrying value and amortized over the life of the related asset. Reclamation costs are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and decommissioning costs.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

• e) Impairment of Non-Financial Assets

Impairment tests on intangible assets with indefinite useful economic lives are undertaken annually at the financial period-end. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets.

An impairment loss is recognized in the statement of operations, except to the extent they reverse gains previously recognized.

• f) Share Capital

• i) Non-monetary consideration

Agent’s warrants issued as purchase consideration in non-monetary transactions are recorded at fair value determined by management using the Black-Scholes option pricing model. Proceeds from unit placements are allocated between shares and warrants issued using the residual method. Under this method, the proceeds are allocated first to share capital based on the fair value of the shares at the time the units are priced, and any residual value is allocated to reserve.

ii) Share-based payments

The share option plan allows Company employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as an employee or consultant expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

The fair value is measured at grant date, and each tranche is recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of operations and comprehensive loss over the remaining vesting period.

‐ In situations where equity instruments are issued to non employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured indirectly at the fair value of the share‐based payment. Otherwise, share‐based payments are measured at the fair value of goods or services received.

iii) Share issuance costs

Costs directly identifiable with the raising of share capital financing are charged against share capital. Share issuance costs incurred in advance of share subscriptions are recorded as noncurrent deferred assets. Share issuance costs related to uncompleted share subscriptions are charged to operations.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

g) Income Taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in net income except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive income or loss.

Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current period and any adjustment to income taxes payable in respect of previous periods. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the period-end date.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.

Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting period the Company reassesses unrecognized deferred tax assets. Deferred income tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority.

h) (Loss) Earnings Per Share

Basic (loss) earnings per share is computed by dividing the Company’s earnings applicable to common shares by the weighted average number of shares outstanding for the relevant period.

Diluted (loss) earnings per share is computed by dividing the Company’s earnings applicable to common shares, by the sum of the weighted average number of common shares outstanding and all additional common shares that would have been outstanding if potentially dilutive instruments were converted at the beginning of the period unless the result is anti-dilutive.

i) Revenue Recognition

Revenue is recognized when the earnings process is complete, as evidenced by an agreement between the customer and the Company, when delivery has occurred, when the fee is fixed or determinable and when collection is reasonably assured. Amounts received from customers in advance of revenue recognition are deferred as deferred revenue liabilities. The Company presents revenues net of taxes collected from customers at the time of sale to be remitted to governmental authorities, including sales and use taxes. No element of financing is deemed present as the sales are made with credit terms standard for the market.

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Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

j) Financial Instruments

i) Classification

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

ii) Measurement

Financial assets and liabilities at amortized cost

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

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the consolidated statements of operations and comprehensive income (loss). Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the consolidated statements of operations and comprehensive income (loss) in the period in which they arise.

iii) Impairment of financial assets at amortized cost

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

iv) Derecognition of financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the consolidated statements of operations and comprehensive loss.

16

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

3. SIGNIFICANT ACCOUNTING POLICIES (Continued)

• j) Financial Instruments (Continued)

• v) Derecognition of financial liabilities

The Company derecognizes a financial liability when the financial liability is discharged, cancelled or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the consolidated statement of operations and comprehensive loss.

• k) Future accounting standards

The Company has performed an assessment of new standards issued by the IASB that are not yet effective. The Company has assessed that the impact of adopting these accounting standards on its Financial Statements would not be significant.

4. INVENTORY

Inventory includes the following:

		September 30,		December 31,
		2023		2022
Raw Materials	$	226,429	$	238,475
Work-in-process		2,659,759		2,927,483
Finished Goods		758,393		1,630,957
	$	3,644,581	$	4,796,915

17

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

5. INVESTMENTS

Investment in Comstock Metals Ltd.

On September 13, 2016, the Company sold its La Ronge and Old Cabin mineral properties to Comstock Metals Ltd. (“Comstock”) in exchange for 20,000,000 common shares of Comstock. Comstock’s principal place of business activity is in Canada. On July 3, 2018, the Company participated in a private placement for Comstock and purchased 2,635,400 common shares for $100,000. On May 26, 2020, Comstock consolidated its common shares on a 5 for 1 basis. As of June 30, 2023, the Company held 4,527,080 common shares (2022 – 4,527,080) equal to a 15.3% stake (2022 – 15.3%) in the issued and outstanding shares of Comstock and accounted for its investment using the equity method due to the Company having significant influence over Comstock. During the year ended December 31, 2019, the Company’s share of Comstock’s loss exceeded the carrying value of the investment and the Company reduced the investment carrying value to zero. For the six months ended June 30, 2023 (Comstock’s September 30, 2023 financial information not yet available), the unrecognized share of losses for which the Company ceased to recognize when applying the equity method was $64,777 (2022 - $111,382). As of June 30, 2023, the cumulative unrecognized share of losses was $946,210 (December 31, 2022 - $881,433).

Displayed below is the most recently available unaudited summary financial information available for Comstock as of June 30, 2023 (Comstock’s September 30, 2023 financial information not yet available) and December 31, 2022:

	Six	months ended		Year ended
		June 30,		December 31,
		2023		2022
Cash	$	11,526	$	22,672
Receivables and prepaids		4,171		7,490
Investments		419,184		819,551
Non-current assets		1		1
Current liabilities		200,341		197,965
Comprehensiveloss		424,572		1,460,799

18

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

6. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS

											TOTAL
		PLANTS		MACHINERY							PROPERTY,
		AND		AND				SAND			PLANT AND
		BUILDINGS		VEHICLES		OFFICE		PROPERTIES			EQUIPMENT
Costs
Balance,
December 31, 2021	$	7,552,804	$	6,382,185	$	31,563	$	2,807,075	$		16,773,627
Additions		-		1,051,604		-		-			1,051,604
Impairments		(89,213)		(642,868)		-		-			(732,081)
Disposals		(105,819)		(359,472)		(26,562)		(247,833)			(739,686)
Balance,
December 31, 2022	$	7,357,772	$	6,431,449	$	5,001	$	2,559,242	$		16,353,464
Additions		36,071		1,667		-		-			37,738
Disposals		(75,904)		(25,068)		-		-			(100,972)
Balance,
September 30, 2023	$	7,317,939	$	6,408,048	$	5,001	$	2,559,242	$		16,290,230
											TOTAL
		PLANTS		MACHINERY							PROPERTY,
		AND		AND				SAND			PLANT AND
		BUILDINGS		VEHICLES		OFFICE		PROPERTIES			EQUIPMENT
Accumulated Depreciation
Balance,
December 31, 2021	$	(1,307,898)	$	(2,685,285)	$	(19,934)	$	(98,826)	$		(4,111,943)
Depreciation		(425,177)		(846,455)		(3,560)		-			(1,275,192)
Depletion		-		-		-		(14,975)			(14,975)
Impairments		39,426		363,671		-		-			403,097
Disposals		45,226		175,534		19,798		-			240,556
Balance,
December 31, 2022	$	(1,648,423)	$	(2,992,535)	$	(3,696)	$	(113,801)	$		(4,758,455)
Depreciation		(297,599)		(625,498)		(536)		-			(923,633)
Depletion		-		-		-		(3,822)			(3,822)
Disposals		25,405		18,620		-		-			44,025
Balance,
September 30, 2023	$	(1,920,617)	$	(3,599,413)	$	(4,232)	$	(117,623)	$		(5,641,885)
											TOTAL
		PLANTS		MACHINERY							PROPERTY,
		AND		AND				SAND			PLANT AND
		BUILDINGS		VEHICLES		OFFICE		PROPERTIES			EQUIPMENT
Carrying Value
Balance,
December 31, 2022	$	5,709,349	$	3,438,914	$	1,305	$	2,445,441		$	11,595,009
Balance,
September 30, 2023	$	5,397,322	$	2,808,635	$	769	$	2,441,619		$	10,648,345

19

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

6. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS (Continued)

Right-of-use assets

Value of right-of-use assets as of December 31, 2021	$	451,570
Depreciation		(451,570)
Renewal of lease		2,462,840
Value of right-of-use assets as of December 31, 2022	$	2,462,840
Depreciation		(369,426)
Value of right-of-use assets as of September 30, 2023	$	2,093,414

Lease liability

Lease liability recognized as of December 31, 2021	$	474,398
Lease payments		(502,463)
Lease interest		28,065
Renewal of lease		2,462,840
Lease liability recognized as of December 31, 2022	$	2,462,840
Lease payments		(405,000)
Lease interest		104,875
Lease liability recognized as of September 30, 2023	$	2,162,715

		September 30,		December 31,
		2023		2022
Current portion	$	434,105	$	403,198
Non-currentportion		1,728,610		2,059,642
	$	2,162,715	$	2,462,840

In accordance with IFRS 16, the Company capitalized an office lease and a lease on a transload shipping facility. On December 31, 2022, the lease on the transload shipping facility was renewed for a five-year term and the lease on the office was not renewed. The transload shipping facility lease renewal was given a present value of $2,462,840 using an incremental borrowing rate of 6.00%.

20

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

7. DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

The Company incurred the following related party transactions for the nine months ended September 30, 2023 and 2022 and had the following balances with related parties outstanding as at September 30, 2023 and December 31, 2022:

• a) Remuneration of key management and directors were as follows:

	Nine months	Nine months
	ended	ended
	September 30,	September 30,
	2023	2022
Short-term compensation and consulting	$ 231,049	$ 226,933
Total compensation of
key management and directors	$ 231,049	$ 226,933

• b) The Company shared office space with Comstock which has a common director and officer. Effective January 1, 2023, the Company is no longer sharing office space with Comstock. During the nine months ended September 30, 2022, the Company recovered $11,851 in shared office costs.

• c) As at September 30, 2023, the Company had accounts payable and accrued liabilities to directors and officers in the amount of $156,847 (December 31, 2022 - $109,803) for salary, consulting fees and reimbursement of expenses.

The above transactions were in the normal course of operations and have been recorded at amounts agreed to by the related parties. All amounts either due from or due to related parties are non-interest bearing, unsecured and have no fixed terms of repayment.

21

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

8. LONG-TERM DEBT

Details of the Company’s long-term debt are as follows:

Note payable, dated October 26, 2018, payable in monthly installments of $6,010, including interest at 5.99%, outstanding amounts on this note are due in full on October 26, 2023, secured by equipment. Note payable, dated November 28, 2018, payable in monthly installments of $5,705, including interest at 5.99%, outstanding amounts on this note are due in full on November 28, 2023, secured by equipment. Note payable, dated May 16, 2018, payable in monthly installments of $2,660, including interest at 7.79%, outstanding amounts on this note are due in full on February 16, 2023, secured by equipment. Note payable, dated February 28, 2020, payable in monthly installments of $4,873, including interest at 4.74%, outstanding amounts on this note are due in full on March 1, 2025, secured by equipment. Note payable, dated November 12, 2020, payable in monthly installments of $7,968, including interest at 5.54%, outstanding amounts on this note are due in full on October 9, 2023, secured by equipment. Note payable, dated December 17, 2020, payable in monthly installments of $3,853, including interest at 4.99%, outstanding amounts on this note are due in full on June 17, 2025, secured by equipment. Note payable, dated August 27, 2021, payable in monthly installments of $2,020, including interest at 4.499%, outstanding amounts on this note are due in full on August 27, 2026, secured by equipment. Note payable, dated March 11, 2022, payable in monthly installments of $1,813, including interest at 6.39%, outstanding amounts on this note are due in full on March 11, 2027, secured by equipment. Note payable, dated March 11, 2022, payable in monthly installments of $8,599, including interest at 5.29%, outstanding amounts on this note are due in full on March 11, 2027, secured by equipment.

September 30, 2023 December 31, 2022

$ - $ 36,666 - 39,836 - 5,268 84,508 124,565 7,931 77,645 77,320 108,450 66,140 81,792 68,062 80,775 329,024 391,963

22

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

8. LONG-TERM DEBT (Continued)

Note payable, dated June 8, 2022, payable in monthly installments of $7,693, including interest at 6.69%, outstanding amounts on this note are due in full on June 8, 2027, secured by equipment. Construction loan payable secured by property, plant, and equipment starting August 4, 2021, at 4.75%, with monthly payments due in the amount of $85,199 per month for 120 months. Total Less current maturities Long-term debt	September 30, 2023 December 31, 2022
	305,426 357,866 6,767,439 7,111,085
	7,705,850 8,415,911 (1,019,842) (1,137,197)
	$6,686,008 $ 7,278,714

In addition to the long-term debt instruments, the Company maintains a revolving line of credit which provides for maximum borrowings of $5,000,000. Outstanding borrowings on the revolving line of credit were $2,360,034 and $1,285,034 at September 30, 2023 and December 31, 2022 respectively. On February 17, 2023, the Company renewed its $5,000,000 line of credit until February 20, 2024. Interest payable on the line of credit was fixed at 8.25% for the new term. The line of credit requires interestonly payments during the next 12 months, after which the balance outstanding will be converted into a loan. The line of credit is secured by the Company’s accounts receivable from customers.

Annual aggregate repayments of the long-term debt and revolving line of credit are as follows:

2023 2024 2025 2026 2027	$ 256,599 3,384,673 1,010,256 5,338,133 76,223
	$ 10,065,884

See also Note 12d.

23

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

9. SHARE CAPITAL AND RESERVES

• a) Authorized

Unlimited number of common shares without par value

b) Issued

As of September 30, 2023 and December 31, 2022, there are 88,563,316 common shares issued and outstanding. The Company did not issue any common shares during the nine months ended September 30, 2023 and year ended December 31, 2022.

c) Warrants

There are no warrants outstanding at September 30, 2023 and December 31, 2022.

d) Stock Options

The Company has adopted an incentive stock option plan (the “Plan”). The essential elements of the Plan provide that the aggregate number of shares of the Company exercisable pursuant to options granted under the Plan may not exceed ten percent of the issued and outstanding shares of the Company at the grant date. Options granted under the Plan may have a maximum term of ten years. The exercise price of options granted under the Plan will not be less than the discounted market price of the shares (defined as the last closing market price of the Company’s shares immediately preceding the grant date, less the maximum discount permitted by TSX.V policy), or such other price as may be agreed to by the Company and accepted by the TSX.V. Stock options granted to consultants providing investor relations activities under the Plan are subject to minimum vesting restrictions such that one-quarter of the option shall vest on each of the date grant and three, six and twelve months after the date of grant.

All of the Company’s currently issued stock options are denominated in Canadian dollars. No stock options were exercised during the nine months ended September 30, 2023 and year ended December 31, 2022. A summary of the changes in stock options follows:

		WEIGHTED AVERAGE
	NUMBER OF OPTIONS	EXERCISE PRICE CAD$
Balance, December 31, 2021	8,345,000	0.36
Granted	350,000	0.095
Expired/Cancelled	(1,625,000)	1.25
Balance, December 31, 2022	7,070,000	0.15
Granted	-	-
Expired/Cancelled	(1,870,000)	0.39
Balance, September 30, 2023	5,200,000	0.06

24

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

9. SHARE CAPITAL AND RESERVES (Continued)

d) Stock Options (Continued)

The following summarizes the stock options outstanding and exercisable as at September 30, 2023:

EXPIRY	EXERCISE	OPTIONS	OPTIONS
DATE	PRICE CAD$	OUTSTANDING	EXERCISABLE
November 22, 2026	0.055	4,850,000	4,850,000
March 4, 2027	0.095	350,000	350,000
		5,200,000	5,200,000

Share-based compensation recognized during the nine months ended September 30, 2023 was $Nil (2022 - $24,483). As at September 30, 2023, the weighted average remaining contractual life of the share purchase options is 3.17 years and the weighted average exercise price is CAD$0.06 (December 31, 2022 – 2.95 years and CAD$0.15).

No stock options were granted during the nine months ended September 30, 2023. On March 4, 2022, the Company granted 350,000 stock options to employees with an exercise price of CAD$0.095 and life of 5 years. All of the stock options vested on grant. The stock options were given a fair value of $24,483 using the Black-Scholes Option Valuation Model and a closing share price of CAD$0.095, volatility of 168.14%, discount rate of 1.46%, Nil dividend rate and assumed life of 5 years.

e) Escrow

As of September 30, 2023 and December 31, 2022, there were 625 common shares held in escrow.

f) Nature and Purpose of Reserve

The reserve recorded in equity on the Company’s Statements of Financial Position includes Sharebased Payment Reserve which is used to recognize the fair value of stock option grants prior to exercise, expiry or cancellation and the fair value of other share-based consideration recorded at the date of issuance.

10. COMMITMENTS

The Company, in the ordinary course of business, enters into supply agreements with various customers. These agreements typically contain certain supply commitments, pricing arrangements, provision for nonperformance and have various expiration terms.

The Company has a supply agreement with a natural gas company for the supply of natural gas to its sand processing plants in Arkansas. The supply agreement stipulates that the Company will be charged for a minimum usage at market rates each billing period, even if the Company does not consume the minimum usage.

25

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

11. MANAGEMENT OF CAPITAL

The Company manages its cash, common shares, stock options and warrants as capital. The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Board of Directors does not establish a quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management team to sustain the future development of the business.

To facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. To maximize ongoing operations, the Company does not pay out dividends. The Company’s investment policy is to keep its cash treasury on deposit in an interestbearing US or Canadian bank account.

The Company manages the capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents. There were no changes in the Company’s approach to capital management during the nine months ended September 30, 2023.

12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Financial assets and financial liabilities are measured on an ongoing basis at fair value or amortized cost. The disclosures in the notes to these Financial Statements describe how the categories of financial instruments are measured and how income and expenses, including fair value gains and losses, are recognized.

As of September 30, 2023, the classification of the financial instruments, as well as their carrying values and fair values, are shown in the table below:

					TOTAL
	LEVEL		FVTPL	**AMORTIZEDCOST **	**FAIR VALUE **
Financial assets
Cash and cash equivalents	1	$	286,540	$ -	$ 286,540
Accounts receivable	2	$	-	$ 1,008,381	$ 1,008,381
Deposits	2	$	300,101	$-	$300,101
Financial liabilities
Line of credit	2	$	-	$ 2,360,034	$ 2,360,034
Accounts payable and accrued liabilities	2	$	-	$ 889,946	$ 889,946
Current portion of lease liability	2	$	-	$ 434,105	$ 434,105
Current portion of long-term debt	2	$	-	$ 1,019,842	$ 1,019,842
Long-term lease liability	2	$	-	$ 1,728,610	$ 1,728,610
Long-term debt	2	$	-	$6,686,008	$6,686,008

At September 30, 2023, the Company’s financial instruments which are measured at fair value on a recurring basis are cash and cash equivalents, deposits and investments. The carrying values of the Company’s financial investments at amortized cost were a reasonable approximation of fair value due to the short-term nature of their maturities.

The Company is exposed to potential loss from various risks including commodity price risk, interest rate risk, currency risk, credit risk and liquidity risk. Based on the Company’s operations the liquidity risk and commodity price risk are considered the most significant. There have been no substantive changes in the Company’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in the note.

26

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

There have been no transfers between levels for the nine months ended September 30, 2023.

a) Credit Risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Financial instruments which are potentially subject to credit risk for the Company consist of cash and cash equivalents and accounts receivable. Cash and cash equivalents are maintained with financial institutions of reputable credit and may be redeemed on demand.

Accounts receivable are subject to counter-party risk of not being collected. The Company manages credit risk of accounts receivable through its credit and collection policies and established allowances for doubtful accounts as required at each reporting period.

The Company has sales to three major customers of approximately 63% of total sales (2022 – 72% to two major customers) for the nine months ended September 30, 2023. Approximately 37% of sales are to the first major customer, 18% of sales are to the second major customer and 8% of sales were to the third major customer (2022 – 48% of sales were to the first major customer, 24% of sales were to the second major customer). Approximately 0% of outstanding accounts receivable is owing from the first major customer and 13% is owing from the second major customer and 3% is from the third major customer at September 30, 2023 (92% of outstanding accounts receivable is from the first major customer at September 30, 2022).

b) Liquidity Risk

The liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk through careful management of its financial obligations in relation to its cash position. Using budgeting processes, the Company manages its liquidity requirements based on expected cash flow to ensure there are adequate funds to meet the short-term obligations during the year.

During the nine months ended September 30, 2023 and year ended December 31, 2022, the Company was able to maintain its liquidity position through cash flow from operations and cash on hand, as well as bank loans. As of September 30, 2023, the Company had a cash balance of $286,540 (December 31, 2022 - $644,216) to settle current liabilities of $6,028,041 (December 31, 2022 - $5,439,874). The Company’s accounts payable and accrued liabilities generally have maturities of less than 90 days.

c) Commodity Price Risk

Market prices for silica sand products historically have fluctuated widely and are affected by numerous factors outside of the Company’s control, including but not limited to, levels of worldwide production, short-term changes in supply and demand, industrial and retail demand, central bank lending, and forward sales by producers and speculators.

d) Interest Rate Risk

The Company’s exposure to the risk of changes in market interest rates relates primarily to the $5million line of credit, which bears a floating interest rate of 8.25% per annum. As a result, the Company is subject to a moderate level of interest rate risk. All other financial assets and liabilities are non-interest bearing or bear interest at fixed rates.

27

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

13. SUPPLEMENTARY DISCLOSURES

• a) For the nine months ended September 30, 2023, employee compensation included in cost of goods sold amounted to $1,518,577 (2022 - $1,516,586).

• b) The Company calculates the basic and diluted loss per common share using the weighted average number of common shares outstanding during each period and diluted (loss) earnings per share assumes that the outstanding vested stock options and share purchase warrants had been exercised at the beginning of the period unless they are anti-dilutive. For the nine months ended September 30, 2023, diluted loss per share does not include the effect of 5,200,000 vested stock options (2022 – 7,070,000) as the effect would be anti-dilutive.

Issued common shares beginning of year Weighted average issuances Basic weighted average common shares	Nine Months Ended September 30, 2023 Nine Months Ended September 30, 2022
	88,563,316 88,563,316 - -
	88,563,316 88,563,316

c) Supplemental Cash Flow Information and Non-Cash Investing and Financing Transactions:

		Nine Months		Nine Months
		Ended		Ended
		September 30,		September 30,
		2023		2022
Cash received for interest	$	872	$	402
Cash paid for interest	$	425,131	$	399,392
Cash paid for income taxes	$	-	$	-

28

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

14. SEGMENTED DISCLOSURE

All of the Company’s assets, liabilities, revenues and comprehensive loss are located in Canada and the USA as follows:

the USA as follows:
	September 30, 2023
Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Deposits Right-of-use assets Property, plant and equipment Total non-current assets Total assets Line of credit Accounts payable and accrued liabilities Deferred revenue Current portion of lease liability Current portion of long-term debt Decommissioning liability Long-term lease liability Long-term debt Total liabilities Revenue for the nine months ended September 30, 2023 Comprehensive loss for the nine months ended September 30, 2023	Canada USA Total
	$ 13,140 $ 273,400 $ 286,540 1,293 1,007,088 1,008,381 - 3,644,581 3,644,581 11,110 50,164 61,274
	$ 25,543 $ 4,975,233 $ 5,000,776
	$ - $ 300,101 $ 300,101 - 2,093,414 2,093,414 - 10,648,345 10,648,345
	$- $ 13,041,860 $ 13,041,860
	$ 25,543 $ 18,017,093 $ 18,042,636
	$ - $ 2,360,034 $ 2,360,034 3,943 886,003 889,946 - 1,324,114 1,324,114 - 434,105 434,105 - 1,019,842 1,019,842 - 78,100 78,100 - 1,728,610 1,728,610 - 6,686,008 6,686,008
	$ 3,943 $ 14,516,816 $ 14,520,759
	$- $ 10,351,824 $ 10,351,824
	$(176,931) $(2,352,632) $ (2,529,563)

29

Select Sands Corp. Notes to the Condensed Consolidated Interim Financial Statements For the nine months ended September 30, 2023 and 2022 (Expressed in United States Dollars Unless Otherwise Noted) (Unaudited)

14. SEGMENTED DISCLOSURE (Continued)

	December 31, 2022
Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Deposits Right-of-use assets Property, plant and equipment Total non-current assets Total assets Line of credit Accounts payable and accrued liabilities Deferred revenue Current portion of lease liability Current portion of long-term debt Decommissioning liability Long-term lease liability Long-term debt Total liabilities Revenue for the year ended December 31, 2022 Comprehensive loss for the year ended December 31, 2022	Canada USA Total
	$ 22,101 $ 622,115 $ 644,216 6,770 1,032,188 1,038,958 - 4,796,915 4,796,915 24,713 45,018 69,731
	$ 53,584 $ 6,496,236 $ 6,549,820
	$ - $ 300,101 $ 300,101 - 2,462,840 2,462,840 - 11,595,009 11,595,009
	$- $ 14,357,950 $ 14,357,950
	$53,584 $ 20,854,186 $ 20,907,770
	$ - $ 1,285,034 $ 1,285,034 9,666 1,616,288 1,625,954 - 988,491 988,491 - 403,198 403,198 - 1,137,197 1,137,197 - 78,100 78,100 - 2,059,642 2,059,642 - 7,278,714 7,278,714
	$ 9,666 $ 14,846,664 $ 14,856,330
	$- $ 22,297,548 $ 22,297,548
	$(262,561) $(657,747) $(920,308)

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