Canadian Palladium Resources : Annual Report

CANADIAN PALLADIUM RESOURCES INC.

Consolidated Financial Statements

(Expressed in Canadian dollars)

Years Ended

September 30, 2021 and 2020

INDEPENDENT AUDITORS' REPORT

To the Shareholders and Directors Canadian Palladium Resources Inc.

Opinion

We have audited the consolidated financial statements of Canadian Palladium Resources Inc. and its subsidiaries (the "Company") which comprise the consolidated statements of financial position as at September 30, 2021 and 2020, and the consolidated statements of loss and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended September 30, 2021 and 2020, and the related notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards 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 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 is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying consolidated financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information, which comprises the information included in the Company's Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

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 identified above 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.

If, based on the work we have performed on this other information, 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 International Financial Reporting Standards as issued by the International Accounting Standards Board, 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.

Auditors' 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 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 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 auditors' 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 auditors' 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.
• 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.

The engagement partner on the audit resulting in this independent auditors' report is Fernando J. Costa.

CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, Canada

January 28, 2022

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Canadian Palladium Resources Inc.

Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

September 30,	September 30,
2021	2020
($)	($)

ASSETS	597,443	586,938
Current assets
Cash
Receivables (Note 5)	133,175	68,558
Short‐term investments (Note 6)	871,622	693,648
Prepaid expenses	153,598	16,940
Restricted deposits (Note 7)	1,755,838	1,366,084
15,000	15,000
Exploration and evaluation assets (Note 9)	2,426,332	1,707,582
Equipment (Note 8)	‐	15,055
LIABILITIES AND SHAREHOLDERS' EQUITY	4,197,170	3,103,721
Current liabilities	665,643	729,643
Accounts payable and accrued liabilities (Note 10 and 13)
Notes payable (Note 11 and 13)	81,757	‐
Flow‐through liability (Note 12)	113,854	‐
	861,254	729,643
Shareholders' equity	35,883,790	31,534,974
Share capital (Note 12)
Share‐based payments reserve (Note 12)	4,178,578	3,559,260
Accumulated other comprehensive income	(11,597)	6,249
Deficit	(36,714,855)	(32,726,405)
	3,335,916	2,374,078
	4,197,170	3,103,721
Nature of operations and going concern (Note 1)
Commitments (Note 17)

These consolidated financial statements were authorized for issue by the Board

of Directors on January 28, 2022. They are signed on behalf of the Board of Directors by:

"Michelle Gahagan"	"Wayne Tisdale"
Director	Director

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

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Canadian Palladium Resources Inc.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in Canadian Dollars)

		Year Ended	Year Ended
		September 30,	September 30,
		2021	2020
		($)	($)
EXPENSES		3,807	5,316
Depreciation (Note 8)
Consulting fees (Note 13)	400,594	653,413
Exploration and evaluation (Note 9)	2,950,618	1,781,993
Foreign exchange (gain) loss (Note 9)	(17,073)	13,629
Insurance	9,547	16,121
Investor relations	510,636	482,579
Management fees (Note 13)	210,000	210,000
Office and miscellaneous (Note 13)	191,863	229,491
Professional fees	69,586	80,459
Share‐based compensation (Note 12 and 13)	438,115	525,951
Transfer agent and filing fees	49,262	46,092
Travel	perations	28,408	110,102
Loss from o	(4,845,363)	(4,155,146)
Interest income	‐	112
Unrealized gain (loss) on short‐term investments (Note 6)	178,423	(33,135)
Realized gain (loss) on short‐term investments (Note 6)	153,415	(33,043)
Gain on write‐off of accounts payables	25,324	‐
Gain on sale of mineral property (Note 9)	‐	64,780
Other income (Note 12)	499,751	‐
Net loss		856,913	(1,286)
Other Comprehensive Income	(3,988,450)	(4,156,432)
Foreign currency translation differences	(17,846)	6,249
Total Comprehensive Loss	(4,006,296)	(4,150,183)
Basic and diluted loss per common share	(0.03)	(0.05)
Weighted average common shares outstanding:	133,890,304	89,439,742

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

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