Oceanic Iron Ore : September/23 Financials

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2023 and 2022

Unaudited - Expressed in Canadian Dollars, unless otherwise noted

NOTICE OF DISCLOSURE OF NON-AUDITOR REVIEW OF THE CONDENSED INTERIM

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to National-Instrument51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities administrators, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of Oceanic Iron Ore Corp. (the "Company") for the interim period ended September 30, 2023, have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board applicable to the preparation of interim financial statements including International Accounting Standard 34 - Interim Financial Reporting and are the responsibility of the Company's management.

The Company's independent auditor, Saturna Group Chartered Professional Accountants LLP, has not performed a review of these condensed consolidated interim financial statements.

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Oceanic Iron Ore Corp.

Condensed Consolidated Interim Statements of Financial Position (Unaudited - expressed in Canadian Dollars)

		As at		As at
	Notes September 30, 2023		December 31, 2022
Assets
Current
Cash	$	367,710	$	662,818
Receivables		7,200		5,869
Prepaid expenses and deposits		8,404		6,976
		383,314		675,663
Mineral properties	3	44,340,533		44,178,442
Total assets	$	44,723,847	$	44,854,105
Liabilities
Current
Accounts payable and accrued liabilities	$	262,526	$	347,202
Due to related parties	7	388,205		196,598
Current portion of advance royalty payable	3	196,721		169,529
Current portion of convertible debentures	4	972,508		1,075,996
		1,819,960		1,789,325
Non-current portion of advance royalty payable	3	491,105		423,221
Non-current portion of convertible debentures	4	2,431,621		3,433,997
Total liabilities		4,742,686		5,646,543
Shareholders' equity
Share capital	5	62,200,038		61,886,678
Reserves	5	11,302,240		11,243,969
Deficit		(33,521,117)		(33,923,085)
Total shareholders' equity		39,981,161		39,207,562
Total liabilities and shareholders equity	$	44,723,847	$	44,854,105
Nature of operations and going concern	1
Commitments	6
Subsequent events	9
Approved by the Board:
" Steven Dean "	Director
" Gordon Keep "	Director

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

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Oceanic Iron Ore Corp.

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income (Loss) (Unaudited - Expressed in Canadian Dollars)

		Three months ended	Three months ended	Nine months ended	Nine months ended
	Notes		September 30, 2023	September 30, 2022	September 30, 2023 September 30, 2022
Expenses
Consulting and management fees	7	$	73,750	$	58,750	$	221,250	$	176,250
Directors' fees	7		7,500		7,500		22,500		22,500
License and insurance			6,527		7,162		18,954		24,154
Office and general			7,291		7,321		16,608		14,600
Professional fees expense			8,360		16,055		18,891		42,760
Rent	7		2,667		2,613		8,002		7,824
Share-based compensation	7		32,924		6,720		76,584		45,906
Transfer agent and regulatory			4,191		3,912		19,390		12,894
Wages and benefits	7		1,975		21,541		6,670		55,780
Loss from operations			(145,185)		(131,574)		(408,849)		(402,668)
Other income (expenses)
Gain (loss) on non-cash derivative liabilities	4		1,181,978		(325,725)		1,214,683		(349,875)
Convertible debenture accretion expense	4		(136,010)		(123,605)		(403,866)		(322,661)
Total other income (expenses)			1,045,968		(449,330)		810,817		(672,536)
Net income (loss) and comprehensive income (loss) for the period		$	900,783	$	(580,904)	$	401,968	$	(1,075,204)
Income (loss) per common share
Basic		$	0.01	$	(0.01)	$	0.00	$	(0.01)
Diluted		$	0.01	$	(0.01)	$	0.01	$	(0.01)
Weighted average number of common shares outstanding
Basic			103,790,663		96,768,302		102,485,919		96,740,365
Diluted			111,261,294		96,768,302		113,071,246		96,740,365

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

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Oceanic Iron Ore Corp.

Condensed Consolidated Interim Statements of Changes in Equity (Unaudited - Expressed in Canadian Dollars, except number of shares)

	Notes	Shares		Share capital		Reserves		Deficit		Total equity
Balance - January 1, 2023		99,727,021	$	61,886,678	$	11,243,969	$	(33,923,085)	$	39,207,562
Share-based payments - stock options	5c	-		-		76,584		-		76,584
Shares issued on settled restricted share units	5b	227,491		18,313		(18,313)		-		-
Shares issued on settled debenture interest	4	3,766,275		280,047		-		-		280,047
Shares issued on redemption of convertible debenture	4	214,285		15,000		-		-		15,000
Net income for the period		-		-		-		401,968		401,968
Balance - September 30, 2023		103,935,072	$	62,200,038	$	11,302,240	$	(33,521,117)	$	39,981,161
		Shares		Share capital		Reserves		Deficit		Total equity
Balance - January 1, 2022		96,672,967	$	61,633,048	$	11,205,166	$	(32,863,178)	$	39,975,036
Share-based payments - stock options	5c	-		-		45,907		-		45,907
Shares issued on settled restricted share units	5b	95,335		8,580		(8,580)		-		-
Shares issued on settled debenture interest	4	838,052		67,044		-		-		67,044
Net loss for the period		-		-		-		(1,075,204)		(1,075,204)
Balance - September 30, 2022		97,606,354	$	61,708,672	$	11,242,493	$	(33,938,382)	$	39,012,783

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

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Oceanic Iron Ore Corp.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - Expressed in Canadian Dollars)

	Notes	Three months ended	Three months ended	Nine months ended	Nine months ended
	September 30, 2023	September 30, 2022	September 30, 2023	September 30, 2022
Operating activities		$	900,783	$	(580,904)	$	401,968	$	(1,075,204)
Net income (loss)
Adjustments for:			32,924		6,720		76,584		45,906
Share-based payments
(Gain) loss on convertible debenture derivative liability	4		(1,181,978)		325,725		(1,214,683)		349,875
Convertible debenture accretion expense	4		136,010		123,605		403,866		322,661
Net changes in non-cash working capital balances:
Prepaid expenses and deposits			6,527		7,341		(2,061)		10,375
Receivables			(1,943)		(15,174)		(335)		(14,677)
Accounts payable and accrued liabilities			(57,621)		(143,357)		(76,728)		(98,611)
Due to related parties			67,227		(244,359)		191,056		(138,306)
Cash used in operating activities		$	(98,071)	$	(520,403)	$	(220,333)	$	(597,981)
Investing activities									(66,072)
Mineral property expenditures	3b		(42,273)		(36,022)		(74,775)
Cash used in investing activities			(42,273)		(36,022)		(74,775)		(66,072)
Financing activities
Interest paid on convertible debenture			-		-		-		(134,090)
Proceeds from convertible debentures	4		-		1,220,000		-		1,220,000
Transaction costs on convertible debentures	4		-		(9,424)		-		(9,424)
Cash provided by financing activities			-		1,210,576		-		1,076,486
Change in cash			(140,344)		654,151		(295,108)		412,433
Cash, beginning of period			508,054		51,444		662,818		293,162
Cash, end of period		$	367,710	$	705,595	$	367,710	$	705,595

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

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Oceanic Iron Ore Corp.

Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2023 and 2022 Unaudited - Expressed in Canadian Dollars - unless otherwise noted

1. NATURE OF OPERATIONS AND GOING CONCERN

Oceanic Iron Ore Corp. ("Oceanic" or the "Company") is an exploration-stage company engaged in the acquisition and exploration of iron ore properties in Québec, Canada. The Company was incorporated on March 8, 1986, under the British Columbia Business Corporations Act. The Company maintains its head office at 595 Burrard Street, Suite 3083, Vancouver, British Columbia. The Company's registered/records office is located at 1500 - 1055 West Georgia Street, Vancouver, British Columbia. Its common shares are traded on the TSX Venture Exchange under the symbol "FEO".

The Company acquired a 100% interest in certain mining claims (the "Property") located near Ungava Bay, Québec, Canada, in November 2010. The Company is currently conducting exploration activities on the Property. The Property comprises three project areas: Hopes Advance (also referred to as the "Hopes Advance Project" throughout), Morgan Lake and Roberts Lake, which cover over 36,039 hectares and 862 claim cells with iron ore formations and are located within 20 to 50 km from tidewater. The Company operates as a single reportable segment, being the exploration of the Property. All of the Company's non-current assets are located in Canada.

While these condensed consolidated interim financial statements ("Interim Financial Statements") have been prepared on the basis that the Company will continue as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due, certain conditions and events could result in a material uncertainty casting significant doubt on the validity of this assumption. As at September 30, 2023, the Company had an accumulated deficit of $33,521,117 and a working capital deficit of $1,436,646.

The Company's ability to continue on a going concern basis for and beyond the next twelve months depends on its ability to successfully raise additional financing for continued operations and for the necessary capital expenditures required to achieve planned principal operations. The Company continues to pursue a number of options to improve its financial capacity, including securing a strategic partner to further advance the Hopes Advance project. While the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms acceptable to the Company.

These Interim Financial Statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate, and these adjustments could be material.

2. BASIS OF PRESENTATION

These Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to the preparation of Interim Financial Statements, including International Auditing Standard 34, Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board and interpretations by the International Financial Reporting Interpretations Committee. These Interim Financial Statements do not include all disclosures required for annual audited financial statements. Accordingly, they should be read in conjunction with the notes to the Company's audited annual consolidated financial statements (the "Annual Financial Statements") for the year ended December 31, 2022. The accounting policies followed in these Interim Financial Statements are the same as those applied in Note 3 of the Company's annual consolidated financial statements, except as described below.

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Oceanic Iron Ore Corp.

Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2023 and 2022 Unaudited - Expressed in Canadian Dollars - unless otherwise noted

2. BASIS OF PRESENTATION (continued)

A number of amendments to standards were effective for annual periods beginning on or after January 1, 2023, including amendments to IAS 1, Presentation of Financial Statements, IFRS Practice Statement 2 and IAS 12, Income Taxes. There were no material impacts on the Company's Interim Financial Statements from the adoption of these amendments.

These Interim Financial Statements have been prepared on a historical cost basis, except for certain financial instruments which have been measured at fair value. In addition, these Interim Financial Statements have been prepared using the accrual basis of accounting, except for cash flow information. These Interim Financial Statements are presented in Canadian dollars, which is the Company's functional currency.

These Interim Financial Statements were approved by the board of directors on November 23, 2023.

3. MINERAL PROPERTIES - UNGAVA BAY

1. Acquisition costs

Acquisition costs - beginning of period

Additions during the period

Additional advance royalty payable

Accretion of advance royalty payable

Acquisition costs - end of period

	Nine months ended		Year ended
	September 30, 2023		December 31, 2022
$	20,066,674	$	19,869,499
	-		76,678
	95,076		120,497
$	20,161,750	$	20,066,674

b) Exploration costs

			Nine months ended		Year ended
Cumulative exploration costs - beginning of period			September 30, 2023		December 31, 2022
	$	24,111,768	$	24,041,146
Expenditures during the period
Permitting and claims			60,295		45,620
Fieldwork and geology			-		13,398
Consultants			-		2,963
Equipment, supplies & rentals			6,000		6,480
Office and accommodation			720		2,161
Exploration expenditures for the period			67,015		70,622
Cumulative exploration costs - end of period		$	24,178,783	$	24,111,768
Grand total - mineral properties
	$	44,340,533	$	44,178,442

Under the terms of the acquisition of the Property, the Company must pay advance net smelter royalty ("NSR") payments of $200,000 per year until the commencement of commercial production. The aggregate advance NSR payments will then be credited against all future NSR payments payable from production. The advance NSR payments included in the Company's liabilities represent the

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Oceanic Iron Ore Corp.

Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2023 and 2022 Unaudited - Expressed in Canadian Dollars - unless otherwise noted

1. MINERAL PROPERTIES - UNGAVA BAY (continued)
   present value of advance payments to the royalty holders until the estimated date of commencement of commercial production.
   A 1% NSR is payable to 154619 Canada Inc. ("154619") and a 1% NSR is payable to SPG Royalties Inc. ("SPG"). The Company discounted the advance NSR payments using a discount rate of 20%, representing the estimated rate of return of similar investments. The advance royalty liability will be accreted up to the date of ultimate NSR advance payment, resulting in an increase to mineral property acquisition costs and the advance royalty payable.
   The total estimated future undiscounted NSR payments as at September 30, 2023 total $1,000,000 (December 31, 2022: $1,000,000).
2. CONVERTIBLE DEBENTURES

			Series A		Series B		Series C		Series D
Opening balance - January 1, 2022		Debentures	Debenture	Debentures	Debentures		Total
	$	1,164,238	$	1,402,324	$	538,435	$	-	$	3,104,997
Proceeds received			-		-		-		1,220,000		1,220,000
Transaction costs			-		-		-		(92,882)		(92,882)
Interest expense and accretion			141,459		109,716		130,955		51,852		433,982
Amortization of transaction costs			2,419		4,199		7,663		6,192		20,473
Interest settlements			(48,450)		(53,391)		(99,294)		-		(201,135)
Loss (gain) due to fair value adjustment on derivative liability			435,688		(386,852)		222,887		(247,165)		24,558
Balance - December 31, 2022			1,695,354		1,075,996		800,646		937,997		4,509,993
Less: current portion			-	(1,075,996)		-		-		(1,075,996)
Non-current portion - December 31, 2022	$	1,695,354	$	-	$	800,646	$	937,997	$	3,433,997
Interest expense and accretion			75,499		86,019		98,136		121,385		381,039
Amortization of transaction costs			-		3,148		5,747		13,932		22,827
Interest settlements			(48,450)		(53,391)		(99,295)		(78,911)		(280,047)
Principal settlements			-		-		-		(15,000)		(15,000)
(Gain) loss due to fair value adjustment on derivative liability			(502,596)		(139,264)		12,073		(584,896)		(1,214,683)
Balance - September 30, 2023			1,219,807		972,508		817,307		394,507		3,404,129
Less: current portion			-		(972,508)		-		-		(972,508)
Non-current portion - September 30, 2023	$	1,219,807	$	-	$	817,307	$	394,507	$	2,431,621

The convertible debentures are secured with a first ranking charge at any time against the assets of the Company, ranking pari-passu with the current secured debenture holders.

The Series A Debentures were convertible into units at a conversion price of $0.07 per unit during the first year of their term, following which (on September 26, 2023) the conversion price increased to $0.10 per unit. Each unit will be comprised of one common share and one share purchase warrant exercisable into one common share of the Company at a price of $0.07 per common share. The Series A Debentures bear interest at 8.5% per annum over a five-year term and mature on September 26, 2027.

The Series B Debenture is convertible into units at a conversion price of $0.10 per unit. Each unit will be comprised of one common share and one share purchase warrant exercisable into one common share of the Company at a price of $0.05 per common share. The Series B Debenture bears interest at 8.5% per annum over a five-year term and matures on November 29, 2023.

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Oceanic Iron Ore Corp.

Notes to the Condensed Consolidated Interim Financial Statements For the three and nine months ended September 30, 2023 and 2022 Unaudited - Expressed in Canadian Dollars - unless otherwise noted

4. CONVERTIBLE DEBENTURES (continued)

The Series C Debentures are convertible into units at a conversion price of $0.19 per unit. Each unit will be comprised of one common share and one share purchase warrant exercisable into one common share of the Company at a price of $0.19 per common share. The Series C Debentures bear interest at 8.5% per annum over a five-year term and mature on March 10, 2026.

The Series D Debentures were convertible into units at a conversion price of $0.07 per unit during the first year of their term, following which the conversion price would increase to $0.10 per unit. Each unit will be comprised of one common share and one share purchase warrant exercisable into one common share of the Company at a price of $0.07 per common share. The Series D Debentures bear interest at 8.5% per annum over a five-year term and mature on September 26, 2027.

During the three months ended September 30, 2023, there was a partial conversion of the Series D Debentures, whereby one of the holders converted $15,000 of convertible debentures into units comprising 214,285 common shares and 214,285 warrants.

As of September 26, 2023, the conversion price of the remaining Series D Debentures increased to $0.10 per unit.

In accordance with IFRS 9 - Financial Instruments ("IFRS 9"), it has been determined that the respective convertible debentures are, for IFRS purposes, hybrid debt instruments which contain non- cash embedded derivative liabilities associated with the conversion features of the debentures into Units. IFRS 9 further determines that the debenture is to be measured at amortized cost and the non- cash embedded derivative is to be measured at fair value.

The Company uses a binomial option pricing model to fair value the derivative liability components contained in the Series A Debentures, Series B Debenture, Series C Debentures and Series D Debentures.

The inputs in the option pricing model as at September 30, 2023 are as follows:

		Series A		Series B		Series C		Series D
Volatility		Debentures		Debenture		Debentures		Debentures
	106.26%		80.86%		87.07%		106.26%
Stock price	$	0.065	$	0.065	$	0.065	$	0.065
Exercise price of units	$	0.10	$	0.10	$	0.19	$	0.10
Exercise price of warrants	$	0.07	$	0.05	$	0.19	$	0.07
Interest rate		4.25%		5.15%		4.64%		4.25%
Time to maturity (years)		4.0		0.2		2.4		4.0
Dividend yield		0.00%		0.00%		0.00%		0.00%

5. SHARE CAPITAL

1. Share capital
   Unlimited common and preferred shares without par value.
2. Restricted Share Units ("RSUs")
   During the nine months ended September 30, 2023, the Company settled its remaining 227,491 RSUs outstanding in exchange for 227,491 common shares.

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