Superior Gold : Consolidated Financial Statements December 31, 2021 and 2020

Consolidated Financial Statements

December 31, 2021 and 2020

(Expressed in thousands of United States dollars)

KPMG LLP

Bay Adelaide Centre

333 Bay Street, Suite 4600

Toronto, ON M5H 2S5

Canada

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Independent Auditors' Report

To the Shareholders of Superior Gold Inc.

Opinion

We have audited the consolidated financial statements of Superior Gold Inc. (the Entity), which comprise:

• the consolidated statements of financial position as at December 31, 2021, and December 31, 2020
• the consolidated statements of income (loss) and comprehensive income (loss) for the years then ended
• the consolidated statements of changes in equity for the years then ended
• the consolidated statements of cash flows for the years then ended
• and notes to the consolidated financial statements, including a summary of significant accounting policies

(Hereinafter referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at December 31, 2021 and December 31, 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the "Auditors' Responsibilities for the Audit of the Financial Statements" section of our auditors' report.

We are independent of the Entity in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

• 2021 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Other Information

Management is responsible for the other information. Other information comprises:

• the information included in Management's Discussion and Analysis filed with the relevant Canadian Securities Commissions.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit and remain alert for indications that the other information appears to be materially misstated.

We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Entity's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Entity's financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure, and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
• Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

Chartered Professional Accountants, Licensed Public Accountants

The engagement partner on the audit resulting in this auditors' report is Pieter Fourie.

Toronto, Canada March 7, 2022

SUPERIOR GOLD INC.

Consolidated Statements of Financial Position (Expressed in thousands of United States Dollars)

	December 31, 2021	December 31, 2020
ASSETS
Current assets	$	23,789	$	17,294
Cash and cash equivalents
Receivables and other assets (note 6)		3,929		4,275
Inventories (note 7)		8,380		8,797
Total current assets		36,098		30,366
Non-current assets
Mining interests; and property,		74,792		78,800
plant and equipment (note 8)
TOTAL ASSETS	$	110,890	$	109,166
LIABILITIES
Current liabilities	$	15,575	$	15,583
Accounts payable and accrued liabilities
Current portion of deferred revenue (note 10)		-		3,919
Current portion of derivative financial instruments (note 11)		-		2,156
Short-term loan (note 9)		1,381		1,194
Current portion of lease obligation (note 20)		2,754		3,085
Current portion of provisions (note 12)		5,976		5,818
Total current liabilities		25,686		31,755
Non-current liabilities		8,021		10,548
Lease obligation (note 20)
Provisions (note 12)		27,328		29,216
Deferred share units liability (note 15 (d))		77		-
Deferred tax liability (note 19)		4,234		515
Total non-current liabilities		39,660		40,279
TOTAL LIABILITIES	$	65,346	$	72,034
SHAREHOLDERS' EQUITY	$	62,493	$	62,008
Share capital (note 15(a and b))
Contributed Surplus		6,687		6,484
Accumulated other comprehensive loss		(3,144)		(931)
Retained deficit		(20,492)		(30,429)
TOTAL EQUITY	$	45,544	$	37,132
TOTAL EQUITY AND LIABILITIES	$	110,890	$	109,166
Commitments and contingencies note 13
The accompanying notes are an integral part of these consolidated financial statements.
Approved by the Board of Directors
/s/ Chris Jordaan		/s/ René Marion
Chris Jordaan, Director		René Marion, Director

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