AI/ML Innovations Inc. — Audit Report / Information 2021

Jun 25, 2021

PLAYFAIR MINING LTD.

FINANCIAL STATEMENTS (Expressed in Canadian Dollars)

FOR THE YEAR ENDED FEBRUARY 28, 2021

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Playfair Mining Ltd.

Opinion

We have audited the accompanying financial statements of Playfair Mining Ltd. (the “Company”), which comprise the statements of financial position as at February 28, 2021 and February 29, 2020, and the statements of loss and comprehensive loss, cash flows, and changes in shareholders’ equity (deficiency) for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at February 28, 2021 and February 29, 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audits 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 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 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 audits 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 financial statements, which indicates that the continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future. As stated in Note 1, 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.

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.

Our opinion on the 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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 Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, 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 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 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 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 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 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 auditor’s report is Stephen Hawkshaw.

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Vancouver, Canada June 24, 2021

Chartered Professional Accountants

PLAYFAIR MINING LTD.

STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars) AS AT

	February 28, 2021	February 29, 2020
ASSETS Current Cash Receivables Prepaid expenses (Note 7) Advances receivable(Note 4) Equipment(Note 5) Exploration and evaluation assets(Note 6)	$ 32,330 21,335 25,000 78,665 81,889 167 1,118,108 $ 1,278,829	$ 10,123 5,271 68,805 84,199 88,751 210 511,825 $ 684,985
LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities (Note 7) Shareholders’ equity Share capital (Note 9) Subscriptions receivable (Note 9) Obligation to issue shares (Note 9) Reserves (Note 9) Deficit	$ 348,990 32,423,436 (308,900) 18,000 274,403 (31,477,100) 929,839 $ 1,278,829	$ 239,983 31,156,096 (180,000) - 395,778 (30,926,872) 445,002 $ 684,985

Nature and continuance of operations (Note 1) Subsequent events (Note 13)

Approved and authorized by the Board on June 24, 2021.

Donald G. Moore Director D. Neil Briggs Director

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

PLAYFAIR MINING LTD.

STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in Canadian Dollars) FOR THE YEAR ENDED

	February 28, 2021	February 29, 2020
GENERAL AND ADMINISTRATIVE EXPENSES Amortization (Note 5) Filing fees Investor relations Management fees (Note 7) Office and miscellaneous Professional fees (Note 7) Property exploration costs (Note 6) Rent Shareholder communication Share-based payments (Note 9) Telephone Transfer agent and regulatory fees Travel and trade shows **Loss and comprehensive loss for the year **	$ 43 11,480 500 60,000 27,456 27,262 346,416 9,048 36,001 20,402 12,638 5,832 3,427 $ (560,505)	$ 56 3,789 7,702 10,000 28,316 39,696 - 22,408 70,778 91,918 8,311 13,824 19,270 $ (316,068)
Basic and diluted lossper common share	$ (0.01)	$ (0.00)
Weighted average number of common shares outstanding – basic and diluted	86,250,231	66,578,314

.

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

PLAYFAIR MINING LTD.

STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars) FOR THE YEAR ENDED

	February 28, 2021	February 29, 2020
CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year Items not affecting cash: Amortization Share-based payments Changes in non-cash working capital items: Receivables Prepaid expenses Accounts payables and accrued liabilities Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Advance to related party Exploration and evaluation expenditures Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Issuance of common shares Share issuance costs Net cash provided by financing activities Change in cash for the year Cash, beginning of year Cash, end ofyear	$ (560,505) 43 20,402 (39,344) 23,805 290,735 (264,864) (265,999) (56,080) (322,079) 613,600 (4,450) 609,150 22,207 10,123 $ 32,330	$ (316,068) 56 91,918 (3,818) (65,844) 114,991 (178,765)
		(63,653) (205,371)
		(269,024)
		460,000 (6,886)
		453,114 5,325 4,798
		$ 10,123

Supplemental disclosure with respect to cash flows (Note 10)

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

PLAYFAIR MINING LTD.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) (Expressed in Canadian Dollars)

		Share Capital Number Amount	Share Capital Number Amount	Reserves	Subscriptions receivable	Obligation to issue shares	Deficit	Total
		Number
Balance at February 28, 2019 Issued for: Private placement Shares issued for property acquisition Exercise of stock options Share issue costs Expiry of options Share-based payments Loss for the year Balance at February 29, 2020 Issued for: Private placement Shares issued for property acquisition Exercise of stock options Share issue costs Obligation to issue shares Expiry of options Share-based payments Loss for the year Balance at February 28, 2021		61,350,095 8,700,000 6,000,000 500,000 - - - - 76,550,095 12,000,000 3,314,911 2,225,000 - - - - - 94,090,006	$ 30,440,491 435,000 240,000 47,491 (6,886) - - - 31,156,096 600,000 397,790 274,000 (4,450) - - - - $32,423,436	$ 327,488 - - (22,491) - (1,137) 91,918 - 395,778 - - (131,500) - - (10,277) 20,402 - $ 274,403	$ (180,000) - - - - - - - (180,000) (35,600) - (93,300) - - - - - $ (308,900)	$ - - - - - - - - - - - - - 18,000 - - - $ 18,000	$ (30,611,941) - - - - 1,137 - (316,068) (30,926,872) - - - - - 10,277 - (560,505) $ (31,477,100)	$ (23,962) 435,000 240,000 25,000 (6,886) - 91,918 (316,068) 445,002 564,400 397,790 49,200 (4,450) 18,000 - 20,402 (560,505) $ 929,839

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

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

1. NATURE AND CONTINUANCE OF OPERATIONS

Playfair Mining Ltd. (the “Company”) is an exploration stage company incorporated under the laws of the Province of British Columbia on August 26, 1988. The Company has not yet determined whether its exploration and evaluation assets contain economic ore reserves.

The Company’s registered and records office is 2900-595 Burrard Street, Vancouver, British Columbia, Canada.

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred ongoing losses, including $560,505 in fiscal 2021 resulting in a deficit of $31,477,100 as at February 28, 2021. A number of alternatives including, but not limited to completing a financing, are being evaluated with the objective of funding ongoing activities and obtaining additional working capital. As at February 28, 2021 the Company had a working capital deficiency of $270,325 (2020 - $155,784). The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future and repay its liabilities arising from normal business operations as they become due. These material uncertainties may cast significant doubt about the Company’s ability to continue as a going concern.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

2. BASIS OF PREPARATION

Statement of compliance

These financial statements, including comparatives have been prepared using accounting policies consistent with IFRS as issued by the International Accounting Standards Board (“IASB”) and Interpretation issued by the International Financial Reporting Interpretations Committee (“IFRIC”). The financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

Critical accounting estimates

The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the year. Actual results could differ from these estimates.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

• i) The carrying value and the recoverability of exploration and evaluation assets, which are included in the statements of financial position. The cost model is utilized and the value of the exploration and evaluation assets is based on the expenditures incurred. At every reporting period, management assesses the potential impairment which involves assessing whether or not facts or circumstances exist that suggest the carrying amount exceeds the recoverable amount.

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

2. BASIS OF PREPARATION (cont’d…)

Critical accounting estimates (cont’d…)

• ii) The valuation of shares issued in non-cash transactions, including shares issued for property option payments and in the settlement of debt. Generally, the valuation of non-cash transactions is based on the value of the goods or services received. When non-cash transactions are entered into with employees and those providing similar services, the non-cash transactions are measured at the fair value of the consideration given up using market prices.

• iii) The recognition of deferred tax assets. The Company consider whether the realization of deferred tax assets is probable in determining whether or not to recognize these deferred tax assets.

• iv) Share-based payments are subject to estimation of the value of the award at the date of grant using pricing models such as the Black-Scholes option valuation model. The option valuation model requires the input of highly subjective assumptions including the expected stock price volatility. Such value is subject to measurement uncertainty because the Company’s stock options have characteristics significantly different from those of traded options and the subjective input assumptions can materially affect the calculated fair value.

3. SIGNIFICANT ACCOUNTING POLICIES

Financial instruments

Financial assets

The Company recognizes a financial asset when it becomes a party to the contractual provisions of the instrument. The Company classifies financial assets at initial recognition as financial assets: measured at amortized cost, measured at fair value through other comprehensive income or measured at fair value through profit or loss.

Financial assets measured at amortized costs

A financial asset that meets both of the following conditions is classified as a financial asset measured at amortized cost.

• The Company’s business model for such financial assets is to hold the assets in order to collect contractual cash flows.

• The contractual terms of the financial asset gives rise on specified dates to cash flows that are solely payments of principal and interest on the amount outstanding.

A financial asset measured at amortized cost is initially recognized at fair value plus transaction costs directly attributable to the asset. After initial recognition, the carrying amount of the financial asset measured at amortized cost is determined using the effective interest method, net of impairment loss, if necessary.

Financial assets measured at fair value through other comprehensive income (“FVTOCI”)

A financial asset measured at fair value through other comprehensive income is recognized initially at fair value plus transaction cost directly attributable to the asset. After initial recognition, the asset is measured at fair value with changes in fair value included as “financial asset at fair value through other comprehensive income” in other comprehensive income.

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Financial instruments (cont’d...)

Financial assets (cont’d...)

Financial assets measured at fair value through profit or loss (“FVTPL”)

A financial asset measured at fair value through profit or loss is recognized initially at fair value with any associated transaction costs being recognized in profit or loss when incurred. Subsequently, the financial asset is re-measured at fair value, and a gain or loss is recognized in profit or loss in the reporting period in which it arises.

The Company derecognizes a financial asset if the contractual rights to the cash flows from the asset expire, or the Company transfers substantially all the risks and rewards of ownership of the financial asset. Any interests in transferred financial assets that are created or retained by the Company are recognized as a separate asset or liability. Gains and losses on derecognition are generally recognized in profit or loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss).

The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

For financial assets measured at amortized cost, and debt investments at FVTOCI, the Company applies the expected credit loss impairment model. On adoption of the expected credit loss model there was no material adjustment.

The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as the reporting date, with the risk of default as at the date of initial recognition, based on all information available, and reasonable and supportive forward-looking information.

Financial liabilities

Financial liabilities are classified as amortized cost, based on the purpose for which the liability was incurred. These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method. This ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. Interest expense in this context includes initial transaction costs and premiums payable on redemptions, as well as any interest or coupon payable while the liability is outstanding.

Accounts payable and accrued liabilities represent liabilities for goods and services provided to the Company prior to the end of the period, which are unpaid. Accounts payable and accrued liabilities are unsecured and are usually paid within 45 days of recognition.

The Company has made the following designations of its financial instruments:

Cash	FVTPL
Receivables	Amortized cost
Advances receivable	Amortized cost
Accounts payable and accrued liabilities	Amortized cost

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Financial instruments (cont’d...)

Financial liabilities (cont’d...)

Financial instruments measured at fair value are classified into one of the three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and Level 3 – Inputs that are not based on observable market data.

Exploration and evaluation assets

Exploration and evaluation assets include the costs of acquiring licenses, costs associated with exploration and evaluation activity, and the fair value (at acquisition date) of exploration and evaluation assets acquired in a business combination. All costs related to the acquisition, exploration and development of mineral properties are capitalized by property as an intangible asset. Costs incurred before the Company has obtained the legal rights to explore an area are recognized in profit or loss.

Exploration and evaluation assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility and commercial viability and (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment.

Recoverability of the carrying amount of the exploration and evaluation assets is dependent on successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

Equipment

Equipment is carried at cost, less accumulated amortization and accumulated impairment losses. Amortization is recognized using the declining balance method at the following annual rates:

Computer equipment 30% Office equipment 20%

Impairment

At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Impairment (cont’d...)

amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Provisions

a) Environmental rehabilitation provisions

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations, including those associated with the reclamation of exploration and evaluation assets and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. Initially, a liability for an environmental rehabilitation obligation is recognized at its fair value in the period in which it is incurred if a reasonable estimate of cost can be made. The Company records the present value of estimated future cash flows associated with reclamation as a liability when the liability is incurred and increases the carrying value of the related assets for that amount. Subsequently, these capitalized asset retirement costs are amortized over the life of the related assets. At the end of each period, the liability is increased to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying any initial estimates (additional rehabilitation costs). The Company recognizes its environmental liability on a site-by-site basis when it can be reliably estimated.

Environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible are charged to profit or loss. The Company had no rehabilitation obligations for the years presented.

b) Other provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) that has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the obligation. An amount equivalent to the discounted provision is capitalized and is amortized over the useful lives of the related assets. The increase in the provision due to passage of time is recognized as interest expense.

Foreign exchange

The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for the Company to be the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates .

Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the exchange rate at the reporting date, while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in the statement of loss and comprehensive loss in the period in which they arise.

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Warrants

As part of its private placements, the Company may issue warrants and brokers’ warrants. Any warrants that expire or are exercised during the year are transferred back to share capital, if originally determined to have a value. The Company values warrants as part of a private placement offering under the residual value approach.

Loss per share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during the year. Diluted loss per share is computed similar to basic loss per share as the assumed exercise of stock options and warrants would be anti-dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods.

Share-based payments

The Company grants stock options and compensatory warrants to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. Consideration paid for the shares on the exercise of stock options is credited to share capital.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.

If and when the stock options are exercised, the applicable amounts of reserves are transferred to share capital. When vested options are forfeited or not exercised at the expiry date the amount previously recognized in sharebased payments is transferred from reserves to deficit. When share purchase warrants are exercised or expire, any amount previously recognized in reserves is transferred to share capital.

Income taxes

Income tax on the profit or loss for the years presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded using the statement of financial position liability method, providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting or taxable loss; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Income taxes (cont’d...)

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Flow-through shares

Canadian Income Tax legislation permits an enterprise to issue securities referred to as flow-through shares, whereby the investor can claim the tax deductions arising from the renunciation of the related resource expenditures. The Company accounts for flow through shares whereby any premium paid for the flow through shares in excess of the market value of the shares without flow through features at the time of issue is credited to other liabilities and included in income at the same time the qualifying expenditures are made.

4. ADVANCES RECEIVABLE

The Company advances funds to a management company owned by a former officer. The management company incurs administration expenditures and settles certain exploration expenditures on behalf of the Company. At February 28, 2021 the Company had advanced $81,889 (February 29, 2020 - $88,751). The advances were unsecured and non-interest bearing.

5. EQUIPMENT

	Office equipment	Computer equipment	Total
Cost Balance, February 28, 2019, February 29, 2020 and February 28, 2021	$ 26,089	$ 33,173	$ 59,262
Accumulated amortization Balance, February 28, 2019 Amortization for the year Balance, February 29, 2020 Amortization for the year Balance, February 28, 2021	$ 25,846 49 25,895 38 $ 25,933	$ 33,150 7 33,157 5 $ 33,162	$ 58,996 56 59,952 43 $ 59,095
Carrying amounts As at February 28, 2021 As at February29,2020	$ 156 $ 194	$ 11 $ 16	$ 167 $ 210

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

6. EXPLORATION AND EVALUATION ASSETS

February 28, 2021	RKV Project
Acquisition costs: Balance, beginning of year Acquisition of exploration and evaluation assets Balance, end of year Exploration costs: Balance, beginning of year Assay Field expenses Metalurgy & geophysics Travel Balance, end of year Balance, February 28, 2021	$ 240,000 397,790 637,790 271,825 20,600 106,983 72,055 8,855 480,318 $1,118,108
February 29, 2020	RKV Project
Acquisition costs: Balance, beginning of year Acquisition of exploration and evaluation assets Balance, end of year Exploration costs: Balance, beginning of year Assay Drilling Fees & license Field expenses Geological consulting Travel Balance, end of year Balance, February 29, 2020	$ - 240,000 240,000 - 33,420 50,000 72,522 26,498 75,000 14,385 271,825 $511,825

Title to mineral properties

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing.

RKV Project property, Norway

On February 28, 2019, the Company had entered into an option and exploration agreement to acquire a 100% interest in the Rostvangen and Vakkerlien properties in South Central Norway (“RKV Project”) from Eurasian Minerals Sweden AB (“EMX”). To acquire the properties, the Company issued 3,000,000 shares (valued at $135,000) and reimbursed EMX’s government fees and licensing costs of $49,994 with a condition to the exercise of the option that the Company must incur $250,000 in exploration expenditures within one year (incurred).

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

6. EXPLORATION AND EVALUATION ASSETS (cont’d...)

RKV Project property, Norway (cont’d...)

Furthermore, the Company had exercised their option and issued an additional 3,000,000 shares (valued at $105,000). EMX transferred 100% of the property to the Company (March 19, 2020) and EMX will receive a 3% net smelter royalty (“NSR”) on the property. Within 5 years, the Company will have the option to buy back up to 1% of the NSR for $3,000,000, leaving EMX with a 2% NSR. EMX will receive annual advance royalty (“AAR”) payments of $30,000 commencing on the second anniversary of the option exercise, with the AAR payments increasing by $5,000 per year until reaching $80,000 per year.

Following exercise of the option the Company undertakes to complete a minimum of 1,000 meters of drilling in the following year and a cumulative 2,000 meters within 2 years following the option exercise. During the fiscal 2021 the agreement was amended and the Company will be required to complete a minimum of 1,000 meters of drilling within 6 months following receipt of necessary permits, licenses or consents. In addition, the Company undertakes to use commercially reasonable efforts to raise an additional $2,750,000 for advancement of the RKV Project on or before the 5[th] anniversary of the agreement.

No later than 2 years after the signing the Company will issue sufficient shares to EMX to bring EMX’s ownership of the Company to 9.9% of issued and outstanding share capital. The Company will maintain EMX’s interest in the Company, at no additional cost to EMX until the Company has raised a cumulative $3,000,000 in equity to fund exploration and development on the properties or until 5 years after Exchange approval, whichever occurs first. Thereafter, EMX will have the right to participate pro-rata in future financings at its own cost to maintain its interest in the Company. During the fiscal 2021 the Company issued 3,314,911 shares (valued at $397,790) to bring EMX’s ownership of the Company to 9.9%.

Property Exploration Costs

Additional exploration and equipment costs of $340,615 incurred on the Ox Mountain Property (Ireland) were expensed. The agreement with Bowpark Exploration (Ireland) Ltd. has been terminated and the property licenses expired during the current fiscal year. Other exploration costs of $5,801 were also incurred during fiscal 2021. The aforementioned property was still held by the Company but was written down in prior fiscal years due to inactivity.

7.

RELATED PARTY TRANSACTIONS

The key management personnel of the Company are the Directors, Chief Executive Officer, and the Chief Financial Officer. Included in accounts payable at February 28, 2021 is $7,443 (February 29, 2020 - $18,143) due to directors of the Company. Included in advances receivable at February 28, 2021 is $81,889 (February 29, 2020 - $88,751) due from a company owned by a former officer of the Company. Included in prepaid expenses at February 28, 2021 is $20,000 (February 29, 2020 - $50,000) paid to a company owned by a former officer of the Company. Included in accounts payable and accrued liabilities at February 28, 2021 is $Nil (February 29, 2020 - $4,280) due to a company with common directors.

Compensation of the Company’s key management personnel is comprised of the following:

		February 28,		February 29,
		2021		2020
Professional fees	$	10,190	$	19,762
Management fees	$	60,000	$	10,000
Share-based payments	$	-	$	86,811

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

8. INCOME TAXES

A reconciliation of current income taxes at statutory rates with the reported taxes is as follows:

	2021	2020
Loss before income taxes	$ (560,505)	$ (316,068)
Combined Canadian federal and provincial statutory rate Expected income tax recovery at statutory tax rates Change in statutory rates and others Permanent differences Share issuance cost Change in unrecognized deductible temporary differences Total deferred tax recovery	27% $ (151,000) (1,000) 6,000 (1,000) 147,000 $ -	27% $ (85,000) - 25,000 (2,000) 62,000 $ -

The significant components of the Company’s deferred tax assets (liabilities) are as follows:

	2021	2020
Deferred tax assets: Exploration and evaluation assets Non-capital losses available for future periods Equipment Share issue costs Allowable capital losses Net unrecognized deferred tax assets	$ 2,310,000 1,561,000 10,000 2,000 820,000 $ 4,703,000	$ 2,216,000 1,507,000 10,000 3,000 820,000 $ 4,556,000

Significant components of deductible and taxable temporary differences, unused tax losses and unused tax credits that have not been included on the statements of financial position are as follows:

	2021	Expiry dates	2020
Non-capital losses	$5,282,000	2028 to 2041	$5,583,000
Allowable capital losses	$3,037,000	No expiry	$3,037,000
Exploration and evaluation assets	$8,023,000	No expiry	$8,017,000
Other items	$ 117,000	Various	$ 117,000

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

9. SHARE CAPITAL AND RESERVES

Authorized share capital

As at February 28, 2021, the authorized share capital of the Company is an unlimited number of common shares without par value.

Issued share capital

As at February 28, 2021, the Company had 94,090,006 common shares issued and outstanding.

Share issuances

During the year ended February 28, 2021 the Company issued 12,000,000 common shares at $0.05 per share for gross proceeds of $600,000, of which $35,600 is in subscriptions receivable. The Company incurred share issuance costs of $4,450. During the year ended February 28, 2021 the Company issued 3,314,911 shares (valued at $397,790) to EMX as part of the acquisition of the RKV project. During the year ended February 28, 2021 the Company has an obligation to issue 150,000 common shares (valued at $18,000) in exchange for exploration services rendered.

During the year ended February 29, 2020, the Company issued 8,700,000 common shares at $0.05 per share for gross proceeds of $435,000. The Company incurred share issuance costs of $6,886. During the year ended February 29, 2020 the Company issued 6,000,000 common shares valued at $240,000 for the acquisition of the RKV project.

Stock options

Stock option transactions are summarized as follows:

		Stock Options
		Number Weighted Average Exercise Price
Outstanding and exercisable, February 28, 2019 Granted Exercised Expired Outstanding and exercisable, February 29, 2020 Granted Exercised Expired Outstandingand exercisable,February28,2021		4,630,000 $ 0.08 2,700,000 0.05 (500,000) 0.05 (30,000) 0.10 6,800,000 $ 0.07 450,000 0.12 (2,225,000) 0.06 (175,000) 0.07 4,850,000 $ 0.07

The following stock options were outstanding at February 28, 2021:

	Number	Exercise
	of Shares	Price	ExpiryDate
Options	1,700,000*	$0.10	August 22, 2021
	250,000*	$0.12	July 6, 2022
	200,000*	$0.12	September 23, 2022
	2,700,000*	$0.05	December 20, 2024

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

9. SHARE CAPITAL AND RESERVES (cont’d…)

Share-based payments

The Company has an incentive stock options plan in place under which it is authorized to grant options to directors and employees to acquire up to 10% of the Company’s issued and outstanding common shares. Under the plan, the exercise price of each option may not be less than the market price of the Company’s stock as calculated on the date of grant less the applicable discount. The options can be granted for a maximum term of 5 years and vesting periods are determined by the Board of Directors.

During the year ended February 28, 2021, the Company granted 450,000 (February 29, 2020 – 2,700,000) options with a weighted-average fair value of $0.05 per option (February 29, 2020 - $0.03) to directors and consultants. Accordingly, using the Black-Scholes option pricing model, the stock options are recorded at fair value in the statement of loss and comprehensive loss. Total share-based payments recognized in the statement of loss and comprehensive loss during the year ended February 28, 2021 was $20,402 (February 29, 2020 – $91,918) for incentive options granted, vested and amended. This amount was also recorded as reserves on the statement of financial position. The following weighted average assumptions were used for the Black-Scholes option pricing model for the year ended February 28, 2021:

	February 28, 2021	February 29, 2020
Risk free rate	1.64%	1.64%
Expected life of options	1.00	3.75
Annualized volatility	129.64%	121.82%
Dividend rate	Nil	Nil
Forfeiture rate	Nil	Nil

10. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

During the year ended February 28, 2021, the Company applied receivables, prepaid expenses, and advances of $316,141 through accounts payable and accrued liabilities. The significant non-cash transactions for fiscal 2021 consisted of the Company incurring exploration and evaluation expenditures of $226,771 through accounts payable and accrued liabilities, issuing $397,790 worth of shares and obligation to issue 150,000 valued at $18,000 for exploration and evaluation assets.

During the year ended February 29, 2020, the Company applied advances of $137,180 through accounts payable and accrued liabilities. The significant non-cash transactions for fiscal 2020 consisted of the Company incurring exploration and evaluation expenditures of $92,358 through accounts payable and accrued liabilities, and issuing $240,000 worth of shares for exploration and evaluation assets.

11. SEGMENTED INFORMATION

The Company operates in one reportable operating segment, being the acquisition and exploration of mineral properties in Norway. Geographic information is disclosed in Note 6.

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

12. FINANCIAL AND CAPITAL RISK MANAGEMENT

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values.

The fair value of the Company’s receivables, advances receivable, and accounts payable and accrued liabilities approximate their carrying values due to their short-term nature. The Company’s other financial instrument, being cash, is measured at fair value using Level 1 inputs.

The Company is exposed to varying degrees to a variety of financial instrument related risks:

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company’s cash is held at a large Canadian financial institution in interest bearing accounts. The Company has no investment in asset backed commercial paper. Receivables consist of receivables due from the government of Canada and amounts due from related parties. Advances receivable are due from a company owned by a former officer of the Company.

Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when they come due. As at February 28, 2021, the Company had a cash balance of $32,330 to settle current liabilities of $348,990. To maintain liquidity, the Company is currently investigating financing opportunities and new exploration projects. Current market conditions make the present environment for raising additional equity financing unfavourable and there can be no assurance these efforts will be successful in the future. All of the Company’s financial liabilities are subject to normal trade terms. The Company is exposed to liquidity risk.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. These fluctuations may be significant.

• a) Interest rate risk

The Company has a limited exposure to interest rate risk.

b) Foreign currency risk

The Company does not have any balances denominated in a foreign currency and believes it has no significant foreign currency risk.

• c) Price risk

The Company is exposed to price risk with respect to commodity prices. Changes in commodity prices will impact the economics of development of the Company’s mineral properties. The Company closely monitors commodity prices to determine the appropriate course of action to be taken.

Capital management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company defines capital that it manages as shareholders’ equity.

PLAYFAIR MINING LTD. NOTES TO THE FINANCIAL STATEMENTS (Expressed in Canadian Dollars) FOR THE YEAR ENDED FEBRUARY 28, 2021

12. FINANCIAL AND CAPITAL RISK MANAGEMENT (cont’d...)

Capital Management (cont’d…)

The properties in which the Company currently has an interest are in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. There is no certainty with respect to the Company’s ability to raise capital. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

The Company currently is not subject to externally imposed capital requirements. There were no changes in the Company’s approach to capital management.

13. SUBSEQUENT EVENTS

Subsequent to the year ended February 28, 2021, the Company:

• a) closed a non-brokered private placement and issued 10,906,670 common shares at $0.15 per share for gross proceeds of $1,636,000, of which $1,451,000 has been received subsequent and $3,465 finder’s fee paid,

• b) $180,000 of subscription receivable was received,

• c) Settled its obligation to issue shares, by issuing of 150,000 common shares,

• d) grant of 5,600,000 incentive stock options to various directors, officers and consultants of the Company pursuant to its Stock Option Plan. The options are exercisable at $0.20 per share for terms of up to 5 years following the date of grant. The option grant is subject to TSX Venture Exchange acceptance.