Mako Mining : Q2 2023 FS

CONDENSED INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

For the three and six months ended June 30, 2023

(Expressed in United States dollars)

(Unaudited)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Expressed in thousands of United States dollars

(Unaudited)

As at	Note		June 30, 2023		December 31, 2022
ASSETS
Current
	Cash and cash equivalents		$	1,739	$	523
	Receivables	4		176		1,180
	Inventories	5		15,946		9,971
	Gold stream derivative asset	6		283		346
	Prepaid expenses, and other advances			811		884
Total current assets			18,955		12,904
Advances and other prepaid expenses			267		3
Exploration and evaluation assets	7		765		765
Mineral property, plant and equipment	8		24,584		31,499
TOTAL ASSETS		$	44,571	$	45,171
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable and accrued liabilities	9	$	12,607	$	12,678
	Term loans	10		4,404		2,771
	Derivative liability	10		15		18
	Provision for reclamation and rehabilitation	11		799		689
Total current liabilities			17,825		16,156
Accrued liabilities	9		944		1,131
Provision for reclamation and rehabilitation	11		2,121		1,944
Term loans	10		10,968		12,270
Total liabilities			31,858		31,501
Shareholders' equity
	Share capital	12		88,206		88,021
	Contributed surplus	12		12,177		12,087
	Accumulated other comprehensive income			1,414		1,402
	Deficit			(89,084)		(87,840)
Total shareholders' equity			12,713		13,670
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	44,571		45,171
Approved by the Audit Committee of the Board of Directors on August 22, 2023
	"John Hick", Audit Committee Chair			"Akiba Leisman", Director

Events after the reporting period (Note 19)

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

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

Expressed in thousands of United States dollars, except per share amounts (Unaudited)

			For the three months ended		For the six months ended
	Note		June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Revenue		$	12,772	$	16,222	$	28,587	$	33,439
Production services revenue	6 & 13(e)(ii)		81		151		184		213
			12,853		16,373		28,771		33,652
Cost of sales
Production costs			(6,693)		(7,761)		(13,605)		(15,393)
Write-down of inventories			(353)		-		(1,169)		-
Depreciation, depletion and amortization			(3,906)		(6,776)		(7,603)		(11,845)
			(10,952)		(14,537)		(22,377)		(27,238)
Mine operating profit			1,901		1,836		6,394		6,414
Exploration and evaluation expenses			(1,498)		(2,718)		(2,190)		(4,582)
General and administrative expenses	17		(2,235)		(1,599)		(3,726)		(3,340)
Other income (expense)
Accretion and interest expense	18		(251)		(335)		(695)		(1,472)
Change in provision for reclamation and rehabilitation	11		15		30		12		4
Change in fair value of derivative liability	10(b),(c)		(86)		5		(89)		88
Gain (loss) on gold stream derivative asset	6		8		(36)		46		35
Foreign exchange loss			(52)		224		(67)		(184)
Interest income			6		-		8		-
Loss before income taxes			(2,192)		(2,593)		(307)		(3,037)
Income tax expense			(438)		(610)		(937)		(1,152)
Loss for the period		$	(2,630)	$	(3,203)	$	(1,244)	$	(4,189)
Other comprehensive income (loss)
Loss for the period			(2,630)		(3,203)		(1,244)		(4,189)
Items subject to reclassification into statement of income (loss):
Foreign currency translation adjustment			9		(280)		12		(34)
Other comprehensive income (loss) for the period			9		(280)		12		(34)
Comprehensive loss for the period		$	(2,621)	$	(3,483)	$	(1,232)	$	(4,223)
Basic and diluted loss per common share		$	(0.04)	$	(0.05)	$	(0.02)	$	(0.06)
Weighted average common shares outstanding - basic (thousands)		65,819		65,813		65,788		65,863

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

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Expressed in thousands of United States dollars

(Unaudited)

	Number of			Contributed		Accumulated		Deficit
		Share capital		other
	shares						Total
	(000s)				surplus	comprehensive
						income (loss)
Balance at December 31, 2021	65,931	$	88,259	$	11,603	$	1,763	$	(75,657)	$	25,968
Shares cancelled (NCIB)	(140)		(195)		-		-		(182)		(377)
Share-based compensation	-		-		279		-		-		279
Net loss	-		-		-		-		(4,189)		(4,189)
Other comprehensive loss	-		-		-		(34)		-		(34)
Balance at June 30, 2022	65,791	$	88,064	$	11,882	$	1,729	$	(80,028)	$	21,647
Shares cancelled (NCIB)	(68)		(94)		-		-		(24)		(118)
Common shares issued on DSU vesting	20		51		(51)		-		-		-
Share-based compensation	-		-		256		-		-		256
Net loss	-		-		-		-		(7,788)		(7,788)
Other comprehensive loss	-		-		-		(327)		-		(327)
Balance at December 31, 2022	65,743	$	88,021	$	12,087	$	1,402	$	(87,840)	$	13,670
Common shares issued on RSU vesting	76		185		(185)		-		-		-
Share-based compensation	-		-		275		-		-		275
Net loss	-		-		-		-		(1,244)		(1,244)
Other comprehensive income	-		-		-		12		-		12
Balance at June 30, 2023	65,819	$	88,206	$	12,177	$	1,414	$	(89,084)	$	12,713

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

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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

Expressed in thousands of United States dollars

(Unaudited)

For the six months ended	Note	June 30, 2023		June 30, 2022
Operating activities
Loss for the period	$	(1,244)	$	(4,189)
Non-cash items:
Accretion and interest expense		684		1,194
Depreciation, depletion and amortization		7,686		11,850
Change in provision for reclamation and rehabilitation		(12)		15
Writedown of inventory		1,169		-
Lease interest		10		-
Change in fair value of derivative liability		88		-
Gain on gold stream derivative asset		63		81
Share-based payments		275		279
Unrealized foreign exchange loss		22		318
	$	8,741	$	9,548
Changes in non-cash working capital	16	(4,243)		2,626
Net cash provided by operating activities		4,498		12,174
Investing activities
Expenditures on mineral property, plant and equipment		(3,232)		(4,969)
Net cash used in investing activities	$	(3,232)	$	(4,969)
Financing activities
Purchase of common shares - NCIB		-		(377)
Sailfish Silver Loan		6,000		-
Repayment of Sailfish Loan and derivative liability		(2,033)		(2,294)
Repayment of Wexford Loan		(4,000)		(4,000)
Payments on lease liability		(49)		-
Net cash used in financing activates	$	(82)	$	(6,671)
Effect of foreign exchange on cash and cash equivalents		32		8
Change in cash and cash equivalents		1,216		542
Cash and cash equivalents, beginning of period		523		1,944
Cash and cash equivalents, end of period	$	1,739	$	2,486

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

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