DFR Gold : December 31, 2023 – Annual Report (Financials)

DFR GOLD INC.

Consolidated financial statements

For the years ended December 31, 2023 and 2022

(All amounts are expressed in United States dollars, unless otherwise stated)

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of

DFR Gold Inc.

Opinion

We have audited the accompanying consolidated financial statements of DFR Gold Inc. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of loss and comprehensive loss, changes in equity (deficiency), and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS").

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 Auditor's Responsibilities for the Audit of the consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated 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 in our audit is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 2 of the consolidated financial statements, which indicates that the Company incurred a net loss of $4,214,394 during the year ended December 31, 2023 and, as of that date, had an accumulated deficit of $81,579,809 and a working capital deficiency of $2,093,043. As stated in Note 2, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Except for the matter described in the Material Uncertainty Related to Going Concern section, we have determined that there are no other key audit matters to communicate in our auditor's report.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Company'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 Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's 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 these consolidated 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 consolidated 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 Company'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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated 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 auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We 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.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Glenn Parchomchuk.

Vancouver, Canada

Chartered Professional Accountants

April 29, 2024

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DFR GOLD INC.

Consolidated statements of financial position As at December 31, 2023 and 2022

(All amounts are expressed in United States dollars)

			December 31,		December 31,
	Notes	2023	2022
			$		$
ASSETS
Current assets	7	122,961
Cash and cash equivalents	1,346,259
Other receivables and prepaids	8	181,171	365,084
		304,132	1,711,343
Non-current assets	9	33,640
Property, plant, and equipment	36,448
Total assets		337,772	1,747,791
LIABILITIES
Current liabilities	12	528,489
Accounts payable and accrued liabilities	271,807
Borrowings	13	1,868,686	5,797
Deferred consideration payable	14	-	110,000
		2,397,175	387,604
EQUITY AND RESERVES	15	72,504,412
Share capital	72,504,412
Contributed surplus	15	4,906,640	4,115,630
Accumulated deficit		(81,579,809)	(77,715,606)
Foreign currency translation reserve		1,827	(3,732)
Deficit		(4,166,930)	(1,099,296)
Non-controlling interests	16	2,107,527	2,459,483
Total (deficit)/equity		(2,059,403)	1,360,187
Total (deficit)/equity and liabilities		337,772	1,747,791

Nature and continuance of operation (Note 2)

Events after the reporting period (Note 25)

"Brian Kiernan"	"Bertrand Boulle"
Director	Director

The above consolidated statements of financial position should be read in conjunction with the accompanying notes on pages 9 to 45.

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DFR GOLD INC.

Consolidated statements of loss and comprehensive loss For the years ended December 31, 2023 and 2022 (All amounts are expressed in United States dollars)

			December 31,	December 31,
	Notes	2023	2022
CONTINUING OPERATIONS			$	$
Operating expenses	15(iii)	(791,010)
Share-based compensation	(284,038)
Exploration and evaluation:	17	(1,790,849)
- Exploration and evaluation expenses	(587,518)
- Acquisition costs	22	-	(14,562,694)
General and administrative expenses	18	(1,342,564)	(1,434,682)
		(3,924,423)	(16,868,932)
Gain on disposal of subsidiaries	11	100,000	142,389
Net interest (expense)/income		(144,816)	9,822
Share of loss of joint venture/associate	10	(222,086)	(500)
Foreign exchange (loss)/gain		(23,069)	24,141
		(289,971)	175,852
Net loss for the year from continuing operations		(4,214,394)	(16,693,080)
DISCONTINUED OPERATIONS
Loss from discontinued operations	11(i)	-	(45,666)
Net loss for the year		(4,214,394)	(16,738,746)
Other comprehensive loss
Exchange differences on translation of foreign operations		3,794	(18,597)
Total comprehensive loss for the year		(4,210,600)	(16,757,343)
Loss attributable to:		(3,864,203)
- Equity shareholders - Continuing operations		(16,571,602)
- Equity shareholders - Discontinued operations		-	(45,666)
- Non-controlling interest		(350,191)	(121,478)
		(4,214,394)	(16,738,746)
Total comprehensive loss attributable to:		(3,858,644)
- Equity shareholders - Continuing operations		(16,585,580)
- Equity shareholders - Discontinued operations		-	(45,666)
- Non-controlling interest		(351,956)	(126,097)
		(4,210,600)	(16,757,343)

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DFR GOLD INC.

Consolidated statements of loss and comprehensive loss For the years ended December 31, 2023 and 2022 (All amounts are expressed in United States dollars)

			December 31,	December 31,
	Notes	2023	2022
			$	$
Loss per share from continuing operations:	(0.02)
- Basic and diluted	(0.13)
Loss per share from discontinued operations:	-
- Basic and diluted	(0.00)
Total loss per share:	(0.02)
- Basic and diluted	(0.13)
Weighted average number of common shares
outstanding:	181,670,852
- Basic and diluted	131,303,835

The above consolidated statements of loss and comprehensive loss should be read in conjunction with the accompanying notes on pages 9 to 45.

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DFR GOLD INC.

Consolidated statements of changes in equity (deficiency) For the years ended December 31, 2023 and 2022

(All amounts are expressed in United States dollars)

					Foreign
					currency	Non-
	Number of	Share	Contributed	Accumulated	translation	controlling
	shares	capital	surplus	deficit	reserve	interest	Total
		$	$	$	$	$	$
Balance at January 1, 2022	79,562,329	56,848,151	4,175,556	(61,098,338)	10,246	-	(64,385)
Issuance of shares on exercise of
Stock Options	3,430,631	382,739	-	-	-	-	382,739
Financing	20,081,875	3,162,500	-	-	-	-	3,162,500
Past services	555,625	87,500	-	-	-	-	87,500
Founders Investments	6,160,072	1,336,736	-	-	-	-	1,336,736
Consideration for the acquisition
of Moydow Holdings Limited	71,880,320	10,342,822	-	-	-	2,585,580	12,928,402
Fair value adjustment on exercise
of Stock Options	-	343,964	(343,964)	-	-	-	-
Loss for the year	-	-	-	(16,617,268)	-	(121,478)	(16,738,746)
Other comprehensive income -
Translation adjustment	-	-	-	-	(13,978)	(4,619)	(18,597)
Stock Options granted	-	-	284,038	-	-	-	284,038
Balance at December 31, 2022	181,670,852	72,504,412	4,115,630	(77,715,606)	(3,732)	2,459,483	1,360,187
Balance at January 1, 2023	181,670,852	72,504,412	4,115,630	(77,715,606)	(3,732)	2,459,483	1,360,187
Loss for the year	-	-	-	(3,864,203)	-	(350,191)	(4,214,394)
Other comprehensive income -
Translation adjustment	-	-	-	-	5,559	(1,765)	3,794
Stock Options granted	-	-	791,010	-	-	-	791,010
Balance at December 31, 2023	181,670,852	72,504,412	4,906,640	(81,579,809)	1,827	2,107,527	(2,059,403)

The above consolidated statements of changes in equity (deficiency) should be read in conjunction with the accompanying notes on pages 9 to 45.

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DFR GOLD INC.

Consolidated statements of cash flows

For the years ended December 31, 2023 and 2022 (All amounts are expressed in United States dollars)

			December 31,	December 31,
	Notes	2023	2022
Cash flows from operating activities			$	$
	(4,214,394)
Net loss for the year from continuing operations		(16,693,080)
Adjustments for non-cash items:	11	(100,000)
Gain on disposal of subsidiaries	(142,389)
Share-based compensation	15(iii)	791,010	284,038
Exploration and evaluation expenses	22	-	14,562,694
Foreign exchange losses/(gains)		3,794	(23,095)
Interest on debentures	13	157,139	-
Interest income		(12,323)	(9,822)
Depreciation charge	9	10,759	7,005
Share of loss of joint venture/associate	10	222,086	500
Changes in working capital:		73,913
Decrease/(increase) in other receivables		(31,022)
(Decrease)/increase in accounts payable and		256,682
accrued liabilities		(1,961,610)
Net cash used in operating activities		(2,811,334)	(4,006,781)
Cash flows from investing activities	22	-
Acquisition of subsidiaries, net of cash acquired	96,742
Addition to interest in joint venture	10	(222,086)	-
Disposal of subsidiaries, net of cash disposed	11	100,000	148,845
Acquisition of plant and equipment	9	(7,951)	(3,855)
Interest received		12,323	9,822
Net cash (used in)/generated from investing activities		(117,714)	251,554
Cash flows from financing activities		-
Proceeds from issue of shares (net)		4,881,975
Proceeds from issue of debentures	13	1,705,750	-
Net cash generated from financing activities		1,705,750	4,881,975
Net cash flows from discontinued operations		-	(45,666)
Net movement in cash and cash equivalents		(1,223,298)	1,081,082
Cash and cash equivalents at beginning of the year		1,346,259	265,177
Cash and cash equivalents at end of the year	7	122,961	1,346,259

Supplemental cash flow information (Note 7)

The above consolidated statements of cash flows should be read in conjunction with the accompanying notes on pages 9 to 45.

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DFR GOLD INC.

Notes to the consolidated financial statements For the years ended December 31, 2023 and 2022 (All amounts are expressed in United States dollars)

1. CORPORATE INFORMATION

DFR Gold Inc.'s ("DFR" or the "Company") business activity is the exploration and evaluation of mineral properties and mine development in West Africa and Madagascar. The Company was incorporated under the Canada Business Corporations Act on May 28, 2000 and is currently a temporary tax resident of the United Kingdom. The Company is listed on the TSX Venture Exchange ("TSX-V"), having the symbol DFR, as a Tier 2 mining issuer and is in the process of exploring its mineral properties.

On August 25, 2021, DFR announced that it executed definitive agreements to enter into certain transactions (the ''Transaction'') as disclosed under Note 22. Trading of DFR shares on the stock exchange was halted at the request of the Company to ensure a fair and orderly market. The Transaction received shareholder approval on June 9, 2022 and all closing conditions were satisfied. On July 11, 2022, the Company received final approval from the TSX-V for the Transaction. The Company's common shares resumed trading on the TSX-V on July 13, 2022.

The Transaction had a material impact on the Company's business as summarized below:

• DFR acquired an 80% interest in the Cascades gold project in Burkina Faso and significant interests in other gold projects in West Africa;
• DFR issued an aggregate of 88,707,059 new common shares ("Shares") of which 10,666,667 shares were issued to Spirit Resources SARL ("Spirit") following the exercise of 10,666,667 share purchase warrants during year 2021;
• Equity funding in DFR and Moydow Holdings Limited (''Moydow'') totalling $2,750,000 was used to eliminate existing debt in DFR ($1,000,000 loan from Spirit eliminated upon the exercise of Spirit's warrants in 2021), fund exploration and for working capital purposes. Under this item, 6,160,072 shares at $0.217 per share for cash proceeds of $1,336,736 per share were issued to Brian Kiernan and Spirit on completion of the transaction; and
• New equity financing, for cash of $3,162,500 and in settlement for past services of $87,500 announced on March 11, 2022, through the issuance of 20,637,500 common shares at C$0.20 per share on closing of the transaction.

The issued and outstanding number of shares at the end of the reporting period were 181,670,852 common shares.

The address of the Company's corporate office is Suite 2900, 550 Burrard Street, Vancouver, British Columbia V6C 0A3, Canada.

2. NATURE AND CONTINUANCE OF OPERATIONS

These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they become due.

To date, the Company has financed its activities through the issuance of equity securities and debt financing, primarily from significant shareholders of the Company. The Company expects to use similar financing techniques in the future and is pursuing such additional sources of financing as estimated to be required to sufficiently support its operations until such time that its operations become self-sustaining. Although the Company has been successful in raising funds to date, there can be no assurance that adequate or sufficient funding will be available in the future.

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