Lexington Gold : Annual Report YE 31 December 2021

LEXINGTON GOLD LTD

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

LEXINGTON GOLD LTD

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

Contents	Page No.
Corporate directory	1
Chairman's statement	2
Chief Executive's operational and financial review	3 - 6
Statement of directors' responsibilities	7
Report of the directors	8 - 18
Independent auditor's report	19 - 23
Consolidated statement of profit or loss and other comprehensive income	24
Consolidated statement of financial position	25
Consolidated statement of changes in equity	26
Consolidated statement of cash flows	27
Notes to the consolidated financial statements	28 - 55

LEXINGTON GOLD LTD
CORPORATE DIRECTORY
FOR THE YEAR ENDED 31 DECEMBER 2021
Directors:	Edward Nealon - Non-Executive Chairman
	Bernard Olivier - Chief Executive Officer
	Melissa Sturgess - Non-Executive Director
	Rhoderick Grivas - Non-Executive Director
Registered office:	Clarendon House, 2 Church Street,
	Hamilton, HM 11, Bermuda
	Email: [e-mail]
	Website: www.lexingtongold.co.uk
Transfer secretary:	Computershare Investor Services PLC
	The Pavilions,
	Bridgwater Road,
	Bristol, BS99 6ZY, United Kingdom
	Telephone: [phone]
	Facsimile: [phone]
	Website: www.computershare.com/uk
Nominated adviser:	Strand Hanson Limited
	26 Mount Row, London W1K 3SQ
	Telephone: [phone]
Broker:	Peterhouse Capital Limited
	3rd Floor 80 Cheapside,
	London EC2V 6EE
	Telephone: [phone]
Solicitors:	Joelson JD LLP
	30 Portland Place, London W1B 1LZ
Auditors:	BDO Audit (WA) Pty Ltd
	Level 9, Mia Yellagonga Tower 2,
	5 Spring Street,
	Perth,
	WA 6000, Australia
Financial PR:	Yellow Jersey PR Limited
	15-19 Bloomsbury Way
	London WC1A 2TH

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LEXINGTON GOLD LTD

CHAIRMAN'S STATEMENT

Dear Fellow Shareholder,

I am pleased to present Lexington Gold's second set of annual results, for its financial year ended 31 December 2021, and to report on the Company's ongoing activities to the date of this statement.

2021 was a year of further progress as we continued to deliver on our exploration programmes across our four gold projects: Carolina Belle, Jennings-Pioneer, Argo and Jones-Keystone-Loflin ("JKL"). Through extensive exploration work, including two drilling campaigns, the second involving the commencement of a 5,000m reverse circulation drilling programme across the Carolina Belle and JKL projects, we have made substantial progress with our projects and significantly increased our understanding of the nature and opportunities available in the Carolina Super Terrane region. We also announced our first independent JORC resource estimate of 65,000 oz of contained gold for the Loflin side of the JKL project. Based on the progress achieved we were confident in investing in additional leased acreage, with options to purchase, covering an additional 129 acres of mineral exploration rights at the JKL project, taking our total project acreage in the Carolinas to approximately 1,675 acres.

Further to obtaining a £335,000 unsecured convertible loan in late April 2022, post the reporting period end, the Group is now funded to continue with its exploration plans, with the intention of establishing a maiden JORC resource estimate for Jones-Keystone, to increase our current JORC resource and develop a thorough understanding of the total opportunity across all four gold projects in our portfolio. The conversion price was set at a level 30.6 per. cent. above the prevailing market share price, thereby serving to demonstrate the lenders, comprising two significant shareholders and three directors, belief in the Company's future potential.

Operating in a stable jurisdiction, the US, with transparent permitting, rules and regulations, reliable infrastructure, wide choice of contractors and in a region with recent and historic records of substantial million ounce plus producing gold mines, we have been able to focus all our attention on finding gold. Having made a good start with our exploration work, despite the challenges posed by COVID-19, we remain focused on implementing our remaining work programmes, and further scoping out the potential size of our gold assets. We look forward to an exciting period of discovery ahead.

I would like to take this opportunity to thank our entire team for their commitment to delivering results in line with our exploration plans. Together with our highly experienced local joint venture partner in the Carolinas, Uwharrie Resources Inc., we have been able to undertake a high impact exploration campaign, spending over US$1.3 million on exploration during 2021 and generating significant value in the process.

Global uncertainty appears likely to continue to support a robust gold price and our focus is on delivering our exploration programmes and building long-term shareholder value regardless of wider economic and financial conditions. Finally, on behalf of the Board, I wish to express thanks for the support received from our various stakeholders, all of whom share our vision for the Carolina Super Terrane region of the US.

Edward Nealon

Non-Executive Chairman

8 June 2022

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LEXINGTON GOLD LTD

CHIEF EXECUTIVE'S OPERATIONAL AND FINANCIAL REVIEW

FOR THE YEAR ENDED 31 DECEMBER 2021

1. Overview

2021 has been an extremely productive and encouraging year for the Company, following a transformational 2020 during which the Company completed its acquisition of majority interests in four gold exploration projects in North and South Carolina in the United States (the "Projects") and was readmitted to trading on AIM on 25 November 2020. The reporting period has seen the Company build on such transformation, with both exciting and substantial exploration successes achieved during the year on our gold projects in the Carolinas.

During 2021, Lexington Gold conducted the following exploration activities on its portfolio projects:

Helicopter borne VTEM survey

A 207.3 line-kilometre survey was conducted by Ontario based Geotech Airborne Geophysical Surveys ("Geotech") utilising its helicopter-borne geophysical system which collects both VTEM and Horizontal Magnetic Gradiometer Survey data. The aim of the VTEM survey was to identify any conductors located within and surrounding the Jennings-Pioneer project area that could be associated with volcanic massive sulphide ("VMS") style mineralisation.

The interpretation and modelling of the VTEM geophysical survey data obtained over the Jennings- Pioneer project was also completed. The survey successfully identified two potential anomalies at Jennings-Pioneer that will be further investigated through soil sampling, trenching and potential drilling in 2022.

Fixed-wing geophysics survey

In April 2021, Questor Surveys Ltd completed a 937 line-kilometre magnetic, radiometric and very-low- frequency ("VLF") fixed-wing airborne geophysical survey over the JKL, Carolina Belle and Argo projects. The aim of the survey was to further define and delineate the known areas of mineralisation over the three projects as well as identifying new targets for geological studies and potential drilling.

Core Geophysics, based in Perth, Australia, subsequently conducted the modelling and interpretation of the geophysical data. The results, combined with the results of a rock and soil sampling programme in conjunction with the Company's existing database, were used to design a maiden drill programme for Carolina Belle and a Phase 2 drill campaign for JKL.

Phase 1 Drilling Campaign on Loflin (part of the JKL project)

The Phase 1 drilling campaign comprised six diamond drill holes for a total of 562m at the JKL project. The campaign sought to confirm and expand on the historical third-party drilling performed at Loflin as well as assisting in defining the 3-dimensional shape, continuity and orientation of the mineralisation. A primary goal was also to enable the estimation of a maiden JORC resource estimate for the JKL project.

On 26 May 2021 and 15 June 2021, we announced two batches of assay results from this drilling campaign. The results indicated the continuation of broad zones of shallow gold mineralisation and also demonstrated good correlation to the historical drilling. All six holes in the Phase 1 drilling campaign encountered intervals of gold mineralisation of over 1g/t Au above 100m depth.

Highlighted intersections included:

• 35.7m @ 1.15 g/t Au from surface to 35.7m including: o 18.9m @ 1.57 g/t Au from surface to 18.9m
• 32m @ 0.97 g/t Au from 53.9m to 85.9m including:

• • 6.1m @ 3.36 g/t Au from 79.9m to 86m
  • 1.5m @ 9.5 g/t Au from 79.9m to 81.4m
• 12.2m @ 1.39 g/t Au from 23.5m to 35.7m including:
• • 4.1m @ 2.57 g/t Au from 23.5m to 27.6m
• 35m @ 0.79 g/t Au from 9.8m to 44.8m including:
• • 6m @ 2.26 g/t Au from 9.8m to 15.8m;
  • 4.6m @ 1.43 g/t Au from 29.5m to 34.1m

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