Wescan Goldfields Inc. — Interim / Quarterly Report 2021

Aug 26, 2021

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Unaudited Condensed Interim Consolidated Financial Statements June 30, 2021

WESCAN GOLDFIELDS INC. Unaudited Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021

Notice to Reader

Management has compiled the unaudited condensed interim consolidated financial statements of Wescan Goldfields Inc. for the three and six months ended June 30, 2021 (along with the comparative interim periods in 2020). The Company’s external auditors have not reviewed these statements.

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Wescan Goldfields Inc.

Consolidated Statements of Financial Position

Assets Current assets: Cash and cash equivalents Receivables Prepaids Property and equipment Liabilities and Shareholders' Equity Current liabilities: Payables and accrued liabilities Environmental rehabilitation provision Shareholders' equity: Share capital Contributed surplus Deficit Going concern (note 3)	(In Canadian dollars)	(In Canadian dollars)
	June 30, 2021 15,445 $ 1,421 4,463 21,329 1,762 23,091 $ 14,283 $ 14,283 75,520 20,687,794 2,523,455 (23,277,961) (66,712) 23,091 $	December 31, 2020
		61,340 $ 353 -
		61,693 1,958
		63,651 $
		17,360 $
		17,360 75,520 20,687,794 2,523,455 (23,240,478)
		(29,229)
		63,651 $

See accompanying notes to consolidated financial statements

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Wescan Goldfields Inc.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss

(unaudited)

Income Interest and other Expenses Exploration and evaluation (note 7) Administration Corporate development Net loss and comprehensive loss Net loss and comprehensive loss per share Basic and diluted Weighted average number of shares outstanding	2021 2020 - $ - $ - 200 20,475 19,425 - 536 20,475 20,161 (20,475) $ (20,161) $ (0.00) $ (0.00) $ 45,084,320 45,084,320 June 30, Three Months Ended (In Canadian dollars)	(In Canadian dollars)	(In Canadian dollars)
		2021 2020 - $ 11 $ - 200 37,483 36,301 - 536 37,483 37,037 (37,483) $ (37,026) $ (0.00) $ (0.00) $ 45,084,320 45,084,320 June 30, Six Months Ended
			11 $ 200 36,301 536
			37,037
			(37,026) $
			(0.00) $ 45,084,320

See accompanying notes to consolidated financial statements

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Wescan Goldfields Inc.

Condensed Interim Consolidated Statements of Cash Flows

(unaudited)

Cash provided by (used in): Operations: Net loss and comprehensive loss Non-cash items: Amortization Net change in non-cash operating working capital items: Receivables Prepaids Payables and accrued liabilities Decrease in cash position Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Cash and cash equivalents consists of: Cash	2021 2020 (37,483) $ (37,026) $ 196 246 (1,068) 1,306 (4,463) (2,749) (3,077) (4,228) (45,895) (42,451) (45,895) (42,451) 61,340 115,320 15,445 $ 72,869 $ 15,445 $ 72,869 $ 15,445 $ 72,869 $ (In Canadian dollars) Six Months Ended June 30,	2021 2020 (37,483) $ (37,026) $ 196 246 (1,068) 1,306 (4,463) (2,749) (3,077) (4,228) (45,895) (42,451) (45,895) (42,451) 61,340 115,320 15,445 $ 72,869 $ 15,445 $ 72,869 $ 15,445 $ 72,869 $ (In Canadian dollars) Six Months Ended June 30,
		(37,026) $ 246 1,306 (2,749) (4,228)
		(42,451)
		(42,451) 115,320
		72,869 $
		72,869 $
		72,869 $

See accompanying notes to consolidated financial statements

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Wescan Goldfields Inc.

Condensed Interim Consolidated Statements of Changes in Equity

(unaudited)

Share capital (note 8) Balance, beginning of period Shares issued (net of costs) Balance, end of period Contributed surplus Balance, beginning of period Share-based payments Balance, end of period Equity (Deficit) Balance, beginning of period Net and comprehensive loss Balance, end of period Total shareholders' equity (deficit)	(In Canadian dollars)
	2021 2020 20,687,794 $ 20,687,794 $ - - 20,687,794 $ 20,687,794 $ 2,523,455 $ 2,523,455 $ - - 2,523,455 $ 2,523,455 $ (23,240,478) $ (23,181,922) $ (37,483) (37,026) (23,277,961) $ (23,218,948) $ (66,712) $ (7,699) $ June 30, Six Months Ended	Year Ended December 31, 2020
		20,687,794 $ -
		20,687,794 $
		2,523,455 $ -
		2,523,455 $
		(23,181,922) $ (58,556)
		(23,240,478) $
		(29,229) $

See accompanying notes to consolidated financial statements

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WESCAN GOLDFIELDS INC.

Notes to the Condensed Interim Consolidated Financial Statements For the three and six months ended June 30, 2021 (In Canadian dollars)

1. Corporate information

Wescan Goldfields Inc. was originally incorporated as Shore Resources Inc. under the Business Corporations Act of Alberta on January 17, 2003 and by amended articles dated April 2, 2004 changed its name to Wescan Goldfields Inc. (“Wescan” or the “Company”). Substantially all of the Company’s efforts are directed to the exploration and future development of its current exploration properties. Wescan is located at 600 – 224 4[th] Avenue South, Saskatoon, Saskatchewan, Canada, S7K 5M5.

2. Basis of preparation

The condensed interim consolidated financial statements of Wescan for the three and six months ended June 30, 2021 were authorized for issue by the Company’s Audit Committee on August 26, 2021. These financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. The Company’s financial statements have been prepared on a historical cost basis, except as disclosed, using the Company’s functional currency of Canadian dollars.

3. Going Concern

These financial statements are prepared on the assumption that the Company will continue as a going concern and realize its assets and discharge its liabilities and commitments in the normal course of business. Management is aware, in making its going concern assessment, of material uncertainties related to events and conditions that cast significant doubt upon the Company’s ability to continue as a going concern. As at June 30, 2021, the Company had working capital of $7,046. Given that cash flows from operations are negative, the ability of the Company to continue as a going concern and fund general and administrative expenses in an orderly manner will require further equity issues or other forms of financings in 2021 and beyond. In March 2020, the World Health Organization declared a global pandemic related to the novel coronavirus known as COVID-19. The duration and magnitude of the impact on the economy and equity markets are not known at this time. An extended disruption to equity markets may affect the Company’s ability to obtain additional financing. There is no assurance that the Company will be successful in obtaining required financing on terms acceptable to the Company and when needed or at all. Failure to obtain additional financing on a timely basis may cause the Company to postpone exploration and/or evaluation plans, forfeit rights in its properties or reduce or terminate its operations.

These financial statements do not include any adjustments to carrying values and classification of asset amounts and liabilities, reported expenses and the statement of financial position classifications used, that would be necessary if the going concern assumption were not appropriate.

4. Summary of significant accounting policies

The accounting policies applied by the Company in these condensed interim consolidated financial statements are the same as those disclosed in Note 4 of the Company’s consolidated financial statements for the year ended December 31, 2020. Accordingly, the condensed interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020.

5. Use of estimates and judgment

In preparing these condensed interim consolidated financial statements, the significant judgments made by management applying the Company’s accounting policies and the key sources of estimation uncertainty are the same as those disclosed in note 5 of the Company’s consolidated financial statements for the year ended December 31, 2020. In particular, the significant areas of estimation uncertainty considered by management in preparing the consolidated financial statements are: reserve and resource estimation, environmental rehabilitation provisions and share-based payment transactions.

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6. IFRS standards, amendments and interpretations

• (a) IFRS standards issued but not yet effective

IAS 16 – Property, Plant and Equipment

On May 14, 2020, the IASB issued an amendment to IAS 16 Property, Plant and Equipment to prohibit deducting from the cost of an item of property, plant and equipment, any proceeds from selling items produced while bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The proceeds from selling such items, and the cost of producing those items are to be recognized in profit and loss. The amendments are effective for annual periods beginning on or after January 1, 2022 with early adoption permitted. The amendment is to be applied retrospectively only to items of property, plant and equipment that are brought to the location and in a condition necessary for them to be capable of operating in the manner intended by management on or after the earliest period presented in the financial statements in the year in which the amendments are first applied. The Company is currently assessing the financial impact of the amendment and expects to apply the amendment at the effective date.

IAS 37 – Provisions, Contingent Liabilities and Contingent Assets

On May 14, 2020, the IASB issued an amendment to IAS 37 Provisions, Contingent Liabilities and Contingent Assets to specify which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous. The amendment specifies that the cost of fulfilling a contract comprises the costs that relate directly to the contract. Costs that relate directly to the contract can either be incremental costs of fulfilling the contract or an allocation of other costs that relate directly to fulfilling contracts. The amendments are effective for contracts for which the Company has not yet fulfilled all its obligations on or after January 1, 2022 with early adoption permitted. The Company is currently assessing the financial impact of the amendment and expects to apply the amendment at the effective date.

At the date of authorization of these consolidated financial statements, there are no other IFRSs or IFRIC interpretations that have been issued and are not yet effective that are expected to have a material impact on the Company.

7. Exploration and evaluation expenses

The Company is assessing options for future work on its portfolio of gold properties. During the six months ended June 30, 2021, the Company did not incur exploration and evaluation expenditures (2020 – $200). Due to the global COVID-19 pandemic, during 2020 the Government of Saskatchewan waived expenditure requirements for the current term and subsequent twelve months for active mineral claims and leases. As a result, the Company is not required to incur expenditures on certain of the Company’s mineral properties during 2021 to keep such claims in good standing.

8. Share capital and reserves

The authorized share capital of the Company consists of an unlimited number of common shares. As at June 30, 2021 the Company had 45,084,320 shares outstanding (December 31, 2020 – 45,084,320). No common shares were issued during the six months ended June 30, 2021 and June 30, 2020.

Nature and purpose of reserves

Warrant reserve

On certain issues of common shares, the Company has issued warrants entitling the holder to acquire additional common shares of the Company. The warrant reserve is used to recognize the fair value of outstanding warrants. If the warrant is exercised or expires the fair value is transferred to share capital or contributed surplus, respectively. During the six months ended June 30, 2021 and June 30, 2020 no warrants were issued or expired.

Contributed surplus

Contributed surplus is used to recognize the fair value of equity-settled share-based payment transactions. The fair value of these securities is added to contributed surplus over the vesting period of the securities. Upon exercise, the corresponding fair value related to the security is removed from contributed surplus and added to share capital. Should the security go unexercised, the fair value will remain in contributed surplus. The fair value

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of warrants and broker warrants related to securities that go unexercised is transferred out of the respective reserves into contributed surplus in the year of expiry.

9. Share-based payments

The Company has established a share option plan, as approved by the shareholders, whereby each option may be granted to directors, officers, employees and service providers to purchase one common share of the Company. Options granted have an exercise price of not less than the closing price quoted on the TSX Venture exchange for the common shares of the Company on the trading day prior to the date on which the options were granted. Certain options vest immediately while others vest up to twenty-four months after grant date and all options granted under the plan expire five years from the date of the grant of the options. All options are to be settled by physical delivery of shares. During the six months ended June 30, 2021 no options were issued or expired.

At June 30, 2021, total options outstanding were 4,190,000 (2020 – 4,190,000 at a weighted average exercise price of $0.06 (2020 – $0.06). Options outstanding at June 30, 2021 have exercise prices that range from $0.05 to $0.08 (2020 – $0.05 to $0.08) and a weighted average contractual life of 1.6 years (2020 – 1.6 years). The Company recently extended the expiry date of an aggregate of 2,100,000 stock options (collectively, the “Options”) issued during the month of May 2016 with exercise prices of $0.05 per option, to the date that is seven years from grant date of the Options. As a result, as at June 30, 2021, the Company’s outstanding options expire between the dates of May 2022 and June 2023.

10. Related party transactions

Related party transactions with key management personnel

Key management personnel are persons responsible for planning, directing, and controlling the activities of an entity, and include executive and non-executive directors. The Company pays certain of its key management personnel through companies owned by certain executive officers and directors. Those companies are as follows:

MacNeill Brothers Oil and Gas Ltd.

During the six months ended June 30, 2021, key management personnel waived their management and consulting fees. Total compensation paid to key management personnel, including amounts paid or payable to related parties owned by key management personnel, executive officers and directors, was $0 (2020 - $0).

11. Financial instruments

Fair values have been determined for measurement and/or disclosure purposes based on the fair value hierarchy for financial instruments that require fair value measurement after initial recognition. The classification of each financial instrument is described in note 4 of the December 31, 2020 consolidated financial statements.

The carrying amounts for cash and cash equivalents, receivables, and payables and accrued liabilities approximate their fair value due to the short-term nature of these instruments. These financial instruments are carried at amortized costs.

The Company does not have any financial instruments measured at fair value.

Risk management

Certain financial instruments are exposed to the following financial risks:

(a) Credit risk

Credit risk is the risk of an unexpected loss by the Company if a customer or third-party to a financial instrument fails to meet its contractual obligations. The Company’s financial instruments that may have credit risk consist primarily of cash and cash equivalents and receivables. The Company’s cash and cash equivalents are held by a financial institution with an A (low) credit rating. The Company may invest excess cash, if any, in guaranteed investment certificates until it is required. The Company’s receivables are mainly comprised of GST receivable and therefore credit risk is minimal. The Company has gross credit exposure at June 30, 2021 relating to cash and cash equivalents and receivables of $16,866 (December 31, 2020 - $61,693).

(b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.

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As at June 30, 2021, the Company is committed to current liabilities of $14,283, with working capital of $7,046. Based on the above, the Company does not have sufficient resources to fund ongoing operational expenses through 2021 and beyond.

The further exploration, evaluation and/or development of exploration and evaluation properties in which the Company holds interests or which the Company acquires may depend upon the Company's ability to obtain financing through equity issues or other forms of financing. Although the Company has been successful in the past in obtaining financing, there can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favorable. Failure to obtain additional financing on a timely basis may cause the Company to postpone exploration plans, forfeit rights in its properties or reduce or terminate its operations.

(c) Market risk

Market risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices. Market process are comprised of four types of risk: foreign currency risk, interest rate risk, commodity price risk and equity risk. The Company currently does not have significant exposure to any market risks.

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