Viscount Mining Corp. — Interim / Quarterly Report 2020

Jan 29, 2020

VISCOUNT MINING CORP.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2019 and 2018 (Unaudited)

(Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection, 4.3 (3)(a), if an auditor has not performed a review of the condensed interim consolidated 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 of Viscount Mining Corp. (the “Company”) 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 condensed interim consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review on condensed interim consolidated financial statements by an entity’s auditor

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

VISCOUNT MINING CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian dollars) (Unaudited)

		As at	As at
		November 30, 2019	August 31, 2019
	Notes	$	$
ASSETS
Current assets
Cash	3	16,128	24,432
Amounts receivable andprepaid expenses	4,7	29,233	19,232
		45,361	43,664
Reclamation bond		21,450	21,450
Exploration and evaluation properties	5	3,190,087	3,197,211
Total Assets		3,256,898	3,262,325
LIABILITIES
Current liabilities
Trade payables and accrued liabilities	6	355,315	321,461
Loans payable	7	250,000	250,000
Amounts due to relatedparties	8	332,544	306,084
Total Liabilities		937,859	877,545
SHAREHOLDERS’ EQUITY
Share capital	9	10,464,337	10,464,337
Reserves	9	1,668,839	1,668,839
Accumulated deficit		(9,814,137)	(9,748,396)
Total shareholders’ equity		2,319,039	2,384,780
Total Shareholders’ Equity and Liabilities		3,256,898	3,262,325

Nature and Continuance of Operations (Note 1) Commitments and Contingency (Note 10) Events Occurring After the Reporting Date (Note 13)

These condensed interim consolidated financial statements are authorized for issuance by the Board of Directors on January 29, 2020.

On behalf of the Board:

“Jim MacKenzie” Director “William Macdonald” Director

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

VISCOUNT MINING CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in Canadian dollars) (Unaudited)

(Expressed in Canadian dollars) (Unaudited)
		For the	For the
		Year Ended	Year Ended
		For the Three	For the Three
		Months Ended	Months Ended
	Notes	**November 30, 2019 **	November 30, 2018
		$	$
Expenses
Bank charges and fees		359	7,195
Consulting	8	32,574	125,638
Insurance		14,170	10,229
Legal and accounting	8	(4,752)	20,807
Office and miscellaneous		758	2,396
Promotion		23,151	26,929
Share-based payments	8,9	-	-
Transfer agent and filing fees		77	3,278
Travel		-	1,094
Total expenses		(66,337)	(197,566)
Foreign exchange gain (loss)		738	(6,274)
Interest income(expense)		(142)	-
Net loss and comprehensive loss for the
year		(65,741)	(203,840)
Lossper share, basic and diluted		(0.00)	(0.00)
Weighted average number of common
shares outstanding, basic and diluted		53,841,129	50,054,343

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

VISCOUNT MINING CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian dollars)

Cash flows used in operating activities Net loss for the year Adjustments for non-cash items: Share-based payments Changes in operating assets and liabilities: Decrease in amounts receivable and prepaid expenses Increase in due to related parties Increase(decrease)in tradepayables and accrued liabilities	For the Three For the Three Months Ended Months Ended November 30, 2019 November 30, 2018 $ $
	(65,741) (203,840)
	(14,084) - (10,001) (343) (33,729) 89,777 282,984 121,181
	159,429 6,775
Cash flows used in investing activities Exploration and evaluationproperties expenditures	(56,459) (76,287)
	(56,459) (76,287)
Cash flows from financing activities
Issuance of common shares (net)	(111,274) 35,000
Proceeds from loans	194,500 46,200
Loans repaid	(194,500) -
	(111,274) 81,200
Decrease in cash Cash, beginning of year	(8,304) 11,688 24,432 24,989
Cash, end ofyear	16,128 36,677

Supplemental Cash Flow Information (Note 9)

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

VISCOUNT MINING CORP.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED NOVEMBER 30, 2019

(Expressed in Canadian dollars)

(Unaudited)

FOR THE THREE MONTHS ENDED NOVEMBER 30, 2019 (Expressed in Canadian dollars) (Unaudited)
						Share
						Subscriptions
		Number of	Share	Warrant	Option	Received in
	Notes	Shares	Capital	Reserve	Reserve	Advance	Deficit	Total
			$	$	$	$	$	$
Balance – August 31, 2018		49,993,629	9,726,932	228,633	1,246,587	-	(8,650,584)	2,551,568
Common shares issued for exploration and evaluation properties	5, 9	85,000	21,250	-	-	-	-	21,250
Share Subscriptions Received in Advance	9	-	-	-	-	35,000	-	35,000
Warrants issued for exploration and evaluation properties	9	-	-	6,108	-	-	-	6,108
Net loss for theyear		-	-	-	-	-	(203,840)	(203,840)
Balance -November 30, 2018		50,078,629	9,748,182	234,741	1,246,587	35,000	(8,854,424)	2,410,086
Balance – August 31, 2019		53,841,129	10,464,337	242,717	1,426,122	-	(9,748,396)	2,384,780
Net loss for theyear		-	-	-	-	-	(65,741)	(65,741)
Balance -November 30, 2019		53,841,129	10,464,337	242,717	1,426,122	-	(9,814,137)	2,319,039

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

1. Nature and Continuance of Operations

Viscount Mining Corp. (the “Company”) was incorporated under the British Columbia Business Corporations Act on October 26, 2011. The Company’s registered office is located at 409 - 221 W. Esplanade, North Vancouver BC V7M 3J3. The Company is listed on the TSX Venture Exchange (TSXV”) and trades under the symbol “VML”.

The Company is an exploration stage company and its principal business activity is natural resource exploration, focusing on resources located in the states of Nevada and Colorado in the USA. Mining and exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to conduct its planned exploration, meet its administrative overhead and maintain its resource interests.

The Company had cash of $16,128, at November 30, 2019 (August 31, 2019 - $24,432) and working capital deficit of $892,498 (August 31, 2019 deficit - $833,881), but management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. For the three months period ended November 30, 2019, the Company had no source of operating revenues, incurred an operating loss of $65,741 (2018 loss of - $203,846) and, as at that date, had an accumulated deficit of $9,814,137 (August 31, 2019 deficit of - $9,748,396).

Management has assessed that this working capital is not sufficient for the Company to continue as a going concern beyond one year. Accordingly, these material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern. If the going concern assumption were not appropriate for these condensed interim consolidated financial statements it would be necessary to restate the Company’s assets and liabilities on a liquidation basis.

The recoverability of the Company’s investment in and expenditures on resource properties is dependent on several factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these properties, and future profitable production or proceeds from disposition of resource interests.

2. Significant Accounting Policies

Statement of Compliance

The condensed interim consolidated financial statements of the Company, including comparatives, have been prepared in accordance with and using accounting policies in full compliance 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”), effective for the Company’s reporting for the three month period ended November 30, 2019.

Basis of Preparation

These condensed interim consolidated financial statements have been prepared on the historical cost basis except for financial instruments classified as fair value through profit and loss. In addition, these financial statements have been prepared using the accrual basis of accounting, except for the cash flow information. The presentation and functional currency of the Company and its subsidiaries is the Canadian dollar.

The preparation of condensed interim consolidated 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. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed below.

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

Basis of Consolidation

The Company’s consolidated interim financial statements include the accounts of the Company and its subsidiaries. A subsidiary is an entity (including special purpose entity) controlled by the Company, where control is achieved by the Company having the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. A subsidiary is fully consolidated from the date on which control is obtained by the Company, and is de-consolidated from the date that control ceases.

The following subsidiaries have been consolidated for all dates presented within these financial statements, and are wholly owned: Viscount Mining Resources Ltd., Viscount Nevada Holdings Ltd. (“Viscount Nevada”) and Viscount Colorado Holdings Ltd. (“Viscount Colorado”).

All significant inter-company transactions, balances, income and expenses are eliminated on consolidation.

Significant Accounting Judgments, Estimates and Assumptions

The preparation of the Company’s consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of income and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

Information about critical estimates and judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the consolidated financial statements within the next financial year are discussed below:

Recoverability of Capitalized Exploration and Evaluation Expenditures

The application of the Company’s accounting policy for exploration and evaluation expenditures requires judgment in determining whether it is likely that future economic benefits will flow to the Company and the maintenance of good standing of the mineral titles, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after the expenditures are capitalized, information becomes available suggesting that the recovery of the expenditures is unlikely, the amount capitalized is written off in profit or loss in the year the new information becomes available.

Share-based payments

The fair value of share options granted is measured using the Black-Scholes option pricing model. Measurement inputs include the share price on the measurement date, exercise price of the option, expected volatility, expected life of the options, expected dividends and the risk-free interest rate. These estimates will impact the amount of share-based payments recognized. When stock options are exercised, the cash proceeds along with the amount previously recorded as share-based payment reserves are recorded as share capital.

Income taxes

Related assets and liabilities are recognized for the estimated tax consequences between amounts included in the financial statements and their tax base using substantively enacted future income tax rates. Timing of future revenue streams and future capital spending changes can affect the timing of any temporary differences and, accordingly, affect the amount of the deferred tax asset or liability calculated at a point in time.

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Exploration and evaluation properties

Once a license to explore an area has been secured, all direct costs related to the acquisition, exploration and evaluation of mineral property interests are capitalized as exploration and evaluation properties on a property by property basis. At such time that technical feasibility and commercial viability of extracting a mineral resource has been determined for a property, the capitalized exploration and evaluation costs are transferred and capitalized into property, plant and equipment. The Company records expenditures on exploration and evaluation activities at cost.

Proceeds received from a partial sale or option of any interest in a property are credited against the carrying value of the property. When the proceeds exceed the carrying costs, the excess is recorded in profit or loss in the period the excess is received. When all of the interest in a property is sold, subject only to any retained royalty interests which may exist, the accumulated property costs are de-recognized, with any gain or loss included in profit or loss in the period the transfer takes place. No initial value is assigned to any retained royalty interest.

When entitled, the Company records mineral exploration tax credits or incentive grants on an accrual basis and as a reduction of the carrying value of the properties.

Management assesses the exploration and evaluation assets for impairment at least annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The assessment is based on the development program, the nature of the mineral deposit, commodity prices and the Company’s intentions and ability for development of the undeveloped property. If, after management review, it is determined that the carrying amount of a mineral property is impaired, that property is written down to its estimated recoverable amount. The recoverable amount of an asset is determined as the higher of its fair value less costs to sell and its value in use. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Provision for decommissioning and restoration

The Company recognizes provisions for statutory, contractual, constructive or legal obligations associated with the reclamation of mineral properties in the year in which it is probable that an outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can be made. Initially, a provision for a decommissioning liability is recognized based on expected cash flows required to settle the obligation and discounted at a pre-tax rate specific to the liability. The capitalized amount is depreciated on the same basis as the related asset. Following the initial recognition of the decommissioning liability, the carrying amount of the liability is increased for the passage of time and adjusted for changes to the current market-based discount rate and the amount or timing of the underlying cash flows needed to settle the obligation. The increase in the provision due to passage of time is recognized as interest expense. Significant judgments and estimates are involved in forming expectations of the amounts and timing of future closure and reclamation cash flows. As at November 30, 2019 the Company had no known restoration, rehabilitation or environmental liabilities related to its mineral properties.

Financial instruments

(i) Financial assets

The Company classifies its financial assets in the following categories: at fair value through profit or loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) and at amortized cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition. A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold assets and collect contractual

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

cash flows, its contractual terms give rise on specified dates that are solely payments of principle and interest on the principle amount outstanding, and it is not designated as FVTPL. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, the Company can make an irrevocable election (on an instrument by-instrument basis) on the day of acquisition to designate them as at FVTOCI.

Financial assets at FVTPL

Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the income statement. Realized and unrealized gains and losses arising from changes in the fair value of the financial asset held at FVTPL are included in the statement of loss and comprehensive loss in the period in which they arise. The Company’s cash is classified as FVTPL.

Financial assets at FVTOCI

Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. None of the Company’s financial assets are classified as FVTOCI.

Financial assets at amortized cost

Financial assets at amortized cost are initially recognized at fair value and subsequently carried at amortized cost less any impairment. They are classified as current assets or non-current assets based on their maturity date. The Company’s financial assets at amortized cost comprise reclamation bonds.

Financial assets are derecognized when they mature or are sold, and substantially all the risks and rewards of ownership have been transferred. Gains and losses on derecognition of financial assets classified as FVTPL or amortized cost are recognized in the statement of loss and comprehensive loss. Gains or losses on financial assets classified as FVTOCI remain within accumulated other comprehensive income.

(ii) Financial liabilities

The Company classifies its financial liabilities as subsequently measured at amortized cost which include trade payables and accrued liabilities, loans payable, and amounts due to related parties. The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or they expire.

(iii) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the loss allowance for the financial asset is measured 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 loss allowance is measured for the financial asset at an amount equal to twelve month expected credit losses. For trade receivables the Company applies the simplified approach to providing for expected credit losses, which allows the use of a lifetime expected loss provision. Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognized. Given the nature and balances of the Company’s receivables the Company has no material loss allowance as at November 30, and August 31, 2019.

Per Share Information

Basic income (loss) per share amounts are calculated by dividing the profit or loss attributable to shareholders of the Company by the weighted average number of shares outstanding during the period. Diluted income/loss per share amounts are determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares, which consist of warrants and stock options (Note 9).

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued.

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in a private placement to be the more easily measurable component and the common shares are valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as reserves.

Share-based Payments

Share-based payments to employees are measured at the fair value of the instruments issued and recognized over the vesting periods. Share-based payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The corresponding amount is recorded to the stock options reserve. The fair value of options is determined using the Black-Scholes Option Pricing Model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that will eventually vest. When options are cancelled or expire, the initial recorded value is left in reserves.

Related Party Transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control, related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Income Taxes

Income tax comprises current and deferred tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent that it relates to items recognized directly in equity or other comprehensive income (loss), in which case the income tax is also recognized directly in equity or other comprehensive income (loss).

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Current tax assets and current tax liabilities are only offset if a legally enforceable right exists to set off the amounts, and the Company intends to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Deferred tax is based on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the statement of financial position date.

Foreign Currencies

The Company’s reporting currency and the functional currency of all of its operations and its subsidiaries is the Canadian dollar as this is the principal currency of the economic environment in which it operates.

Foreign currency transactions are translated into the presentation currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in profit or loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

Accounting standards and interpretations adopted

During the Three Month Period ended November 31, 2019 2019, the Company adopted certain new accounting standards, interpretations, and amendments, none of which had material impact on the consolidated financial statements other than note disclosure regarding IFRS 9.

New Accounting Standards and Interpretations Not Yet Adopted

At the date of authorization of these consolidated financial statements, the IASB and IFRIC have issued the following new and revised standards, amendments and interpretations which are not yet effective for the Three Month Period ended November 31, 2019 :

• 5) IFRS 16 Leases specifies how to recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. Applicable to annual periods beginning on or after January 1, 2019.

The Company has not early adopted the above standards, amendments and interpretations and anticipates that the application of these standards, amendments and interpretations will not have a material impact on the financial position and financial performance of the Company, other than increased note disclosure.

3. Cash

	As at	As at
	November 30, 2019	August 31, 2019
	$	$
Denominated in Canadian dollars	7,636	22,866
Denominated in US dollars	8,492	1,566
	16,128	24,432

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

4. Amounts Receivable and Prepaid Expenses

Amounts receivable and prepaid expenses consist of the following:

unts receivable and prepaid expenses consist of the	following:
	As at	As at
	November 30, 2019 August 31, 2019
	$	$
Goods and Services Tax receivable	(109)	2,000
Other receivable	4,342	1,057
Prepaid insurance and travel expenses(Note 8)	25,000	16,175
	29,233	19,232

Amounts receivable are non-interest bearing, unsecured and have settlement dates within one year. Included in Prepaid Expenses are prepaid insurance and prepaid travel expenses for the CEO and a director and consultant to the Company (Note 7).

5. Exploration and Evaluation Properties

Exploration and evaluation expenditures by project as at November 30, 2019 and August 31, 2019 are as follows:

llows:
	For the Three	For the
	Months Ended	Year ended
	November 30, 2019	August 31, 2019
	$	$
Balance beginning of year	3,197,211	2,738,445
Property acquisitions	-	190,987
Staking new claims and claim maintenance	(7,124)	90,354
Consulting (Note 8)	-	76,369
Drilling	-	115,130
Recoveries	-	(14,074)
Total	3,190,087	3,197,211

The $7,124 credit resulting from recovers from sale of gravel on the Colorado property.

	As at	As at
	November 30, 2019	August 31, 2019
	$	$
Nevada Properties
Acquisition and exploration costs	2,056,268	2,056,268
Recoveries	(787,575)	(787,575)
Colorado properties
Acquisition and exploration costs	1,960,463	1,960,129
Recoveries	(39,069)	(31,611)
Total	3,190,087	3,197,211

A summary of the changes in the Company’s exploration and evaluation properties for three months period ended November 30 and the year ended August 31, 2019 are as follows:

• A. Nevada Properties , described collectively as our Cherry Creek Project, is focused on exploration in the immediate vicinity of an area commonly known as the Cherry Creek Mining District, located approximately 50 miles north of the town of Ely, in White Pine County, Nevada.

On January 29, 2013, the Company entered into a mining lease and agreement to purchase for

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

certain unpatented mining claims located in White Pine County, Nevada (the “Ticup Property”). The terms of the agreement call for the Company to make lease payments totaling US$32,500. On January 29, 2017 the final payment was made fully satisfying the terms under the contract.

B. Colorado Properties , described collectively as Silver Cliff.

On August 13, 2014, the Company entered into an option agreement (the “Silver Cliff Agreement”) with David C. and Debra J. Knight Living Trust (the “Owner”), whereby the Owner has agreed to grant an option to the Company to acquire an undivided 100% interest in the Silver Cliff project (the “Silver Cliff Property”), effective on the date of TSX-V approval (the “Effective Date”). On September 15, 2014, the Company received approval from the TSX-V. Pursuant to the agreement, the Company agreed to the following:

• 1) Issuing to the Owner 200,000 shares and 200,000 warrants (issued)

• 2) Payments made on behalf of the Owner for claim rental fees due to the U.S. Bureau of Land Management;

• 3) Making payments to the Owner in the aggregate amount of US$3,000,000 as follows:

  • a. US$15,000 on the second anniversary, September 15, 2016 (paid);

  • b. US$20,000 on the third anniversary, September 15, 2017; (paid)

  • c. US$30,000 on the fourth anniversary, September 15, 2018 (paid);

  • d. US$50,000 on the fifth anniversary, September 15, 2019;

  • e. US$75,000 on the sixth anniversary, September 15, 2020;

  • f. US$100,000 on the seventh anniversary, September 15, 2021;

  • g. US$100,000 on the eight anniversary, September 15, 2022;

  • h. US$100,000 on the ninth anniversary, September 15, 2023;

  • i. US$100,000 on the tenth anniversary, September 15, 2024;

  • j. US$150,000 on the eleventh anniversary, September 15, 2025;

  • k. US$200,000 on the twelfth anniversary, September 15, 2026; and

  • l. Paying the remaining outstanding balance of the required US$3,000,000 plus Cost of Living Increase adjustment on the thirteenth anniversary, September 15, 2027.

• 4) Royalty payments to the Owner of 2% of the net smelter returns (“NSR”) and issuance of an additional 550,000 shares and 550,000 warrants upon the commencement of commercial production.

• 5) The Company, agreed to issue Kingsmere Mining Ltd a finder’s fee of 500,000 shares, which shall be issued as follows:

  • a. 70,000 shares between September 2015 and September 2017 (issued):

  • b. 35,000 shares on the fourth anniversary, September 15, 2018 (issued);

  • c. 45,000 shares on the fifth anniversary, September 15, 2019 (issued);

  • d. 50,000 shares on the sixth anniversary, September 15, 2020;

  • e. 50,000 shares on the seventh anniversary, September 15, 2021;

  • f. 75,000 shares on the eighth anniversary, September 15, 2022;

  • g. 75,000 shares on the ninth anniversary, September 15, 2023;

  • h. 100,000 shares on the tenth anniversary, September 15, 2024.

• 6) In fiscal 2017 the Company increased its land holding at the Silver Cliff project by signing a series of mineral lease agreements, resulting in the following commitments:

a. US$73,800 on the effective dates, between May 12 and June 5, 2017 (paid)

• b. US$74,300 on the first anniversary, between May 12 and June 5, 2018 (paid); c. US$70,000 on the second anniversary, between May 12 and June 5, 2019 (paid);

• d. US$74,500 on the third anniversary, between May 12 and June 5, 2020;

• e. US$87,500 on the fourth anniversary, between May 12 and June 5, 2021;

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

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VISCOUNT MINING CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

f. US$91,500 on the fifth anniversary, between May 12 and June 5, 2022; g. US$96,000 on the sixth anniversary, between May 12 and June 5, 2023; h. US$111,500 on the seventh anniversary, between May 12 and June 5, 2024; i. US$146,730 on the eighth anniversary, between May 12 and June 5, 2025; j. US$198,040 on the ninth anniversary, between May 12 and June 5, 2026; k. US$1,208,000 on the tenth anniversary, between May 12 and June 5, 2027.

The Company is attempting to resolve a dispute with the Owner regarding access to geological data. The Company maintains that it is fully compliant with the terms of the option agreement.

6. Trade Payables and Accrued Liabilities

Trade payables and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

7. Loans payable

During the year ended August 31, 2019, the Company borrowed $250,000 from a third party. The loan is due on demand, unsecured and bears no interest.

During the fiscal year ending August 31, 2018 the Company borrowed $62,000 from the Company’s Chairman. The loan was due on demand, unsecured and bore no interest and was repaid during fiscal year 2019.

8. Related Party Transactions

As at November 30, 2019, the balance due to related parties, who are officers, directors and/or shareholders, was $332,544 (August 31, 2019 - $306,084). Amounts owing relate to consulting services provide by the related parties or by companies controlled by the related parties and for expense reimbursements.

As at November 30, 2019, loans from related parties, who are directors of the Company totalled $108,200. The loans are due on demand, are unsecured and bears no interest.

As at November 30, 2019, $10,000 is included in prepaid expenses to a director and consultant (2018 - $10,000).

The key management personnel compensation for the three months period ended November 30, 2019 and the year ended August 31, 2019 are summarized as follows:

	For the	For the
	Three months	Three months
	**November 30, 2019 **	November 30, 2018
	$	$
Chief Financial Officer	18,000	18,000
Chief Executive Officer, Director and
an immediate family member	63,900	61,500
Chairman/Director	-	18,000
Director/Consulting	22,500	22,500
Director/Chief Geologist	-	32,466
Director/Legal fees	7,930	782
	112,330	153,248

During the three months period ended November 30 $32,466 (2017 - 15,000) related to consulting fees are capitalized in exploration and evaluation properties (Note 5).

No options were granted to related parties for three months period ended November 30, 2019 (August 31, 2018 - $Nil).

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

9. Share Capital

• A. Authorized

At November 30, 2019, the authorized share capital consists of an unlimited number of common shares without par value and without special rights or restrictions attached and an unlimited number of preferred shares without par value and with special rights or restrictions.

B. Issued and Outstanding

As at November 30, 2019, the total issued and outstanding share capital was 53,841,129 common shares with no par value (August 31, 2019 – 53,481,129).

Share capital transactions of the Company during the three months period ended November 30 and the year ended August 31, 2019 are summarized as follows:

• a) No shares were issued in the three months ending November 31, 2019.

• b) On January 22, 2019, the Company closed a non brokered private placement raising gross proceeds of $752,500 from the issuance and sale of 3,762,500 units at a price of $0.20 per unit of which $98,000 was for accounts payable. Each unit consists of one common share of the Company and one share purchase warrant. Each warrant will entitle the holder thereof to purchase one additional common share of the Company for a period of 2 years from the closing date at an exercise price of $0.35 per share. The Company paid finders fees of $19,600 and issued 73,500 finders warrants related to the private placement valued at $7,976. The warrants were valued using the Black Scholes valuation methodology with the warrants having the terms described above and assuming a risk free interest rate of 1.5% per annum, an expected life of 2 years, volatility of 86.55%, and no expected dividend.

C. Escrow Shares

As at November 30, 2019 no common shares of the Company are held in escrow.

D. Warrants

The following is a summary of the changes in the Company’s share purchase warrants for the three months period ended November 30, 2019 and the year ended August 31, 2019:

	November	30, 2019	August 31, 2019	August 31, 2019
	Number of	Weighted	Number of	Weighted
	Warrants	average	Warrants	average
	Outstanding	exercise price	Outstanding	exercise price
		$		$
Outstanding, beginning of year	8,986,000	0.35	5,150,000	0.35
Expired warrants	(50,000)	0.40	(50,000)	0.40
Warrants issued	-	-	3,886,000	0.35
Outstanding,end ofyear	8,936,000	0.35	8,986,000	0.35

The following table summarizes information regarding share purchase warrants outstanding as at November 30, 2019 and August 31, 2019:

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

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VISCOUNT MINING CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

		November 30, 2019		August 31, 2019
		Number of		Number of
		Warrants		Warrants
	Exercise	Outstanding and	Exercise	Outstanding
Expiry Date	Price	Exercisable	Price	and Exercisable
	$		$
August 29, 2020	0.35	5,000,000	0.35	5,000,000
September 15, 2019	0.59	-	0.59	50,000
September 15, 2020	0.28	50,000	0.28	50,000
September 15, 2023	0.25	50,000	-	50,000
January 22, 2021	0.35	3,836,000	-	3,836,000
	0.35	8,936,000	0.20	8,986,000

E. Stock Option Plan

On April 4, 2012, the Company adopted a stock option plan (the “Plan”) that allows the Company to issue options to certain directors, officers, employees and consultants of the Company. Options issued under the Plan shall not exceed 10% of the shares issued and outstanding at the time of granting of the options. Options granted under the Plan may have a maximum term of ten years. Stock options granted under the Plan may be subject to vesting terms, which may be imposed at the discretion of the directors.

• a) No stock options were issued during the three months ended November 30, 2019.

• a) On October 28, 2019, 200,000, three year options with an exercise price of $0.57 expired unexercised.

• b) On January 22, 2019, 971,000 five year options were issued at an exercise price of $0.22 to officers, directors and consultants. The options were valued at $163,875, using the Black Scholes valuation methodology assuming a risk free interest rate of 1.89% per annum, an expected life of 5 years, volatility of 99.67%, and no expected dividend.

• c) On June 15, 2018, 200,000, three year options with an exercise price of $0.30 were issued to a consultant, vesting over 12 months. The options were valued at $27,852, of which $12,190 was recorded as share-based compensation in fiscal 2018, using the Black Scholes valuation methodology assuming a risk free interest rate of 1.10% per annum, an expected life of 3 years, volatility of 79.03%, and no expected dividend.

The following is a summary of the changes in the Company’s stock options three month period ended November 30, 2019 and for the year ended August 31, 2019:

	August 31, 2019 November 30, 2019
	Number of Options Outstanding Weighted average exerciseprice Number of Options Outstanding Weighted average exerciseprice
Outstanding, beginning of year Cancelled/Expired Exercised Granted	$ $ 4,210,800 0.30 3,495,000 0.32 (200,000) 0.57 (255,200) 0.20 - - - - - - 971,000 0.22
Outstanding,end ofyear	4,010,800 0.29 4,210,800 0.30

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

The following table summarizes information regarding stock options outstanding and exercisable as at November 30:

ovember 30:
		November 30, 2019		August 31, 2019
		Number of		Number of
	Exercise	Options	Exercise	Options
Expiry Date	Price	Outstanding	Price	Outstanding
October 28, 2019	-	-	$ 0.57	200,000
December 1, 2019	$ 0.20	300,000	$ 0.20	300,000
January 5, 2020	$ 0.20	1,125,000	$ 0.20	1,125,000
July 7, 2020	$ 0.20	100,000	$ 0.20	100,000
July 21, 2020	$ 0.20	45,000	$ 0.20	45,000
November 12, 2020	$ 0.50	40,000	$ 0.50	40,000
December 15, 2020	$ 0.50	75,000	$ 0.50	75,000
February 9, 2021	$ 0.53	100,000	$ 0.53	100,000
April 27, 2021	$ 0.51	50,000	$ 0.51	50,000
August 8, 2021	$ 0.62	255,000	$ 0.62	255,000
September 8, 2021	$ 0.57	180,000	$ 0.57	180,000
April 17, 2022	$ 0.36	50,000	$ 0.36	50,000
October 26, 2022	$ 0.20	19,800	$ 0.20	19,800
March 15, 2023	$ 0.32	500,000	$ 0.32	500,000
June 15, 2023	$ 0.30	200,000	$ 0.30	200,000
January 22, 2024	$ 0.22	971,000	$ 0.22	971,000
sable options	$0.29	4,010,800	$0.30	4,210,800

9. Supplemental Cash Flow Information

Included in trade payables and accrued liabilities at November 30, 2019 $164,091 (August 31, 2019 - $139,796) incurred on exploration and evaluation expenditures.

During three months period ended November 30, 2019, no common shares were issued for exploration and evaluation properties (year August 31, 2019 – 85,000 value at $21,250) and no warrants were issued for exploration and evaluation properties (2018 – 50,000 valued at $6,108).

No options or warrants were exercised during three months period ended November 30, 2019 and 2018 and no reclassified from reserves to share capital were made.

10. Commitments and Contingency

The Company is committed to making cash payments, incurring exploration expenditures and/or issuing common shares pursuant to its exploration and evaluation property agreements (Note 5).

11. Financial Risk Management

• (a) Overview

The Company has exposure to credit risk, liquidity risk, foreign currency risk, and market risk from its use of financial instruments.

This note presents information about the Company’s exposure to each of these risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital.

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework.

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

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VISCOUNT MINING CORP. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

(b) Credit Risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash. The Company limits its exposure to credit risk on liquid financial assets through investing its cash with high-credit quality financial institutions.

The carrying value of the Company’s financial instruments represent the maximum exposure to credit risk.

(c) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company endeavors to ensure that there is sufficient capital in order to meet short term business requirements, after taking into account cash flows from operations and the Company's holdings of cash. The Company’s cash is currently invested in business and savings accounts with high-credit quality financial institutions which are available on demand by the Company for its programs. As at November 30, 2019, the Company had a cash balance of 16,128, to settle current liabilities of $937,859. All of the Company’s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

(d) Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

(e) Interest Rate Risk

The Company is subject to interest rate risk with respect to its investments in cash. However, the Company does not hold any interest-bearing debt. The Company’s current policy is to invest cash at floating rates of interest and cash reserves are to be maintained in cash in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates when cash balances mature impact interest income earned.

(f) Foreign Currency Risk

As at November 30, 2019, the Company’s expenditures are in Canadian dollars and US dollars, any future equity raised is expected to be predominantly in Canadian dollars. The Company’s foreign currency risk relates to cash of US$3,362 denominated in US dollars and accounts payable in US dollars of US$171,076. As at November 30, 2019, assuming that all other variables remain constant, a 1% depreciation or appreciation of the Canadian dollar against the US dollar would result in an increase/decrease of approximately $1,744 in the Company’s pre-tax income or loss.

(g) Capital Management

The Company’s policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. The Company manages the capital structure and makes adjustments to it in light of changes in the economic conditions and the risk characteristics of the underlying assets. The Company manages its capital structure through the issuance of new shares, acquisition or disposition of assets or adjustment of cash. The Company does not have any major capital expenditures committed for the coming year. Management reviews the capital structure on a regular basis to ensure that the above-noted objectives are met. There were no changes in the Company’s approach to capital management during the year. The Company is not subject to any externally imposed capital requirements.

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

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VISCOUNT MINING CORP.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

(h) Fair Value

The Company considers that the carrying amount of all its financial assets and financial liabilities in the condensed interim consolidated financial statements approximates their fair value due to the demand nature or short term maturity of these instruments.

The following table provides an analysis of the Company’s financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to 3 based on the degree to which the inputs used to determine the fair value are observable.

• Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1, that are observable either directly or indirectly.

• Level 3 fair value measurements are those derived from valuation techniques that include inputs that are not based on observable market data.

November 30, 2019	Level 1	Level 2	Level 3
	$	$	$
Financial assets at fair value
Cash	16,128	-	-
Total	16,128	-	-
August 31, 2019	Level 1	Level 2	Level 3
	$	$	$
Financial assets at fair value
Cash	24,432	-	-
Total	24,432	-	-

12. Segmented Information

The Company’s only business activity is exploration and evaluation of exploration and evaluation properties. This activity is carried out in the USA.

The breakdown of geographic area for the three months period ended November 30, 2019 and the year ended August 31, 2019 is as follows:

The breakdown of geographic area for thethree year endedAugust 31, 2019 is as follows:	months period ended	November 3	0, 2019 and
Year ended November 30, 2019	Canada	USA	Total
	$	$	$
Net loss	65,741	-	65,741
Current assets	45,361	-	45,361
Reclamation bond	-	21,450	21,450
Exploration and evaluationproperties	-	3,190,087	3,190,087
Total assets	45,361	3,211,537	3,256,898
Year ended August 31, 2019	Canada	USA	Total
	$	$	$
Net loss	1,097,812	-	1,097,812
Current assets	43,664	-	43,664
Reclamation bond	-	21,450	21,450
Exploration and evaluationproperties	-	3,197,211	3,197,211
Total assets	43,664	3,218,661	3,262,325

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

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NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS November 30, 2019 (Unaudited)

VISCOUNT MINING CORP.

13. Events Occurring after the Reporting Date

14. The Company entered into extension agreements with David C. and Debra J. Knight Living Trust (“Knight”) whereby the Company issued 600,000 common shares and will issue an additional 250,000 shares to Knight on or before February 15, 2020 to extend the US$50,000 fifth anniversary payment to February 15, 2020.

The Company issued 45,000 common shares to Kingsmere Mining Ltd. in accordance with the Finders Fees agreement between the Company and Kingsmere (Note 5).

Following the quarter end 1,425,000 warrants with an exercise price of $0.20 expired unexercised.

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

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