Alliance Mining Corp. — Audit Report / Information 2022

Apr 29, 2022

==> picture [232 x 87] intentionally omitted <==

December 31, 2021 and 2020

Financial Statements

(Expressed in Canadian Dollars)

• Independent Auditor’s Report

• Statements of Financial Position

• Statements of Changes in Shareholders’ Deficiency

• Statements of Comprehensive Loss

• Statements of Cash Flows

• Notes to the Financial Statements

Independent Auditor’s Report

To the Shareholders of: ALLIANCE MINING CORP.

Opinion

We have audited the financial statements of Alliance Mining Corp. (“the Company”), which comprise the statements of financial position as at December 31, 2021 and 2020 and the statements of changes in shareholders’ deficiency, comprehensive loss, and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 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 is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial statements, which indicates that the Company incurred a net loss of $856,397 during the year ended December 31, 2021, and as of that date, had accumulated losses since inception of $7,637,583. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, 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 comprises Management’s Discussion and Analysis. Our opinion on the financial statements does not cover the other information and will 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 identified above 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.

2

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 Mike Kao.

WDM

Chartered Professional Accountants

Vancouver, B.C. April 22, 2022

3

ALLIANCE MINING CORP.

Statements of Financial Position As at December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Note ASSETS CURRENT Cash Sales Taxes Recoverable LIABILITIES CURRENT Accounts Payable and Accrued Liabilities Advances Payable 4 Loan Payable 5 Payable to 1911 Gold Corporation 7(c) Convertible Debenture Payable 6 Due to Related Parties 10(a) SHAREHOLDERS’ DEFICIENCY Share Capital 8 Shares to be Returned 8 Equity Component of Convertible Debenture 6 Share Purchase Warrant Reserve Deficit	2021 2020 $ $ 1,040 762 4,618 3,858
	5,658 4,620
	263,956 488,671 8,000 30,200 24,806 43,733 250,000 - 165,625 147,156 1,406,216 1,230,440
	2,118,603 1,940,200
	6,016,240 4,837,208 (500,000) - 1,494 1,494 6,904 6,904 (7,637,583) (6,781,186)
	(2,112,945) (1,935,580)
	5,658 4,620

Nature of Operations and Ability to Continue as a Going Concern (Note 1) Exploration and Evaluation Assets (Note 7)

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

Approved on behalf of the Board:

“Allan Beaton” “Christopher Anderson” Allan Beaton, Director Christopher Anderson, Director

ALLIANCE MINING CORP.

Statements of Changes in Shareholders’ Deficiency For the Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Note Balance, December 31, 2019 Shares Issued for Exploration and Evaluation Assets 8(b)(i) Net Comprehensive Loss Balance, December 31, 2020 Shares Issued for Cash 8(b)(ii) Share Issuance Costs Shares Issued on Exercise of Warrants 8(b)(ii) Shares Issued for Exploration and Evaluation Assets 8(b)(ii) Net Comprehensive Loss Balance, December 31, 2021	Number of Class “A” Common Shares Share Capital Shares to be Returned Equity Component Convertible Debenture Share Purchase Warrant Reserve Deficit Total Shareholders’ Deficiency $ $ $ $ $ $
	2,884,316 4,737,208 - 1,494 6,904 (6,366,968) (1,621,362) 800,000 100,000 - - - - 100,000 - - - - - (414,218) (414,218)
	3,684,316 4,837,208 - 1,494 6,904 (6,781,186) (1,935,580) 2,100,000 393,750 - - - - 393,750 - (2,718) - - - - (2,718) 960,000 288,000 - - - - 288,000 500,000 500,000 (500,000) - - - - - - - - - (856,397) (856,397)
	7,244,316 6,016,240 (500,000) 1,494 6,904 (7,637,583) (2,112,945)

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

5

ALLIANCE MINING CORP.

Statements of Comprehensive Loss For the Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Note EXPENSES Accounting, Audit and Legal Automotive and Travel Bank Charges and Interest Consulting 10(b) Exploration and Evaluation Expenditures 7(c) Insurance Office and Administration 10(b) Regulatory and Filing Fees Rent LOSS BEFORE OTHER ITEM Write-off of Accounts Payable NET LOSS AND COMPREHENSIVE LOSS FOR THE YEAR BASIC AND DILUTED LOSS PER SHARE WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	2021 2020 $ $ 61,273 22,661 3,000 3,000 26,072 21,476 180,000 180,000 512,750 102,707 6,874 7,033 39,660 17,518 22,268 24,099 42,000 42,000
	893,897 420,494
	(893,897) (420,494) 37,500 6,276
	(856,397) (414,218)
	(0.15) (0.12)
	5,719,961 3,486,502

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

6

For the Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

ALLIANCE MINING CORP. Statements of Cash Flows

CASH PROVIDED FROM (UTILIZED FOR): OPERATING ACTIVITIES Net Loss for the Year Non-Cash Items Write-off of Accounts Payable Shares issued for Evaluation and Exploration Assets Change in Non-Cash Working Capital Accounts Sales Taxes Recoverable Accounts Payable and Accrued Liabilities Advances Payable Loan Payable (Repayment) Advances Payable to 1911 Gold Corporation Convertible Debenture Payable Due to Related Parties FINANCING ACTIVITIES Shares Issued for Cash, Net of Issuance Costs Shares Issued on Exercise of Share Purchase Warrants INCREASE IN CASH Cash, Beginning of the Year CASH, END OF THE YEAR	2021 2020 $ $ (856,397) (414,218) (37,500) (6,276) - 100,000
	(893,897) (320,494) (760) 371 (187,215) 60,487 (22,200) 21,700 (18,927) 4,888 250,000 - 18,469 16,452 175,776 216,710
	(678,754) 114
	391,032 - 288,000 -
	679,032 -
	278 114 762 648
	1,040 762

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

7

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 1 – NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN

Alliance Mining Corp. (the “Company”) was incorporated on February 3, 2002, under the laws of the Canada Business Corporations Act and is involved in the acquisition, exploration, and development of mineral properties. The head office, principal address, and records office of the Company are located at 888 Dunsmuir Street, Suite 888, Vancouver, British Columbia, Canada, V6C 3K4.

These financial statements have been prepared in accordance with International Financial Reporting Standards on the basis that the Company is a going concern and will be able to meet its obligations and continue its operations for its next fiscal year. Several conditions as set out below cast uncertainties on the Company’s ability to continue as a going concern.

The Company’s ability to continue as a going concern is dependent upon the financial support from its shareholders and other related parties, its ability to obtain financing for the continuing exploration and development of its mineral properties, the existence of economically recoverable reserves, and the attainment of profitable operations or proceeds from disposition of these properties.

The Company has not yet achieved profitable operations, has incurred a net loss of $856,397 during the year ended December 31, 2021, and has accumulated losses of $7,637,583 since inception and a working capital deficiency of $2,112,945 as at December 31, 2021; accordingly, the Company will need to raise additional funds through future issuance of securities or debt financing. Although the Company has raised funds in the past, there can be no assurance the Company will be able to raise sufficient funds in the future, in which case the Company may be unable to meet its obligations as they come due in the normal course of business. It is not possible to predict whether financing efforts will be successful or if the Company will attain a profitable level of operations.

The current cash resources are not adequate to pay the Company’s accounts payable and to meet its minimum commitments at the date of these financial statements, including planned corporate and administrative expenses, and other project implementation costs, accordingly, there is significant doubt about the Company’s ability to continue as a going concern. These financial statements do not give effect to adjustments that would be necessary to the carrying amounts and classifications of assets and liabilities should the Company be unable to continue as a going concern.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

a) Statement of Compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).

These audited financial statements were approved and authorized for issue by the Board of Directors on April 22, 2022.

b) Basis of Preparation

These financial statements have been prepared on a historical cost basis except for financial instruments classified as available-for-sale that have been measured at fair value. Cost is the fair value of the consideration given in exchange for net assets.

c) Exploration and Evaluation Assets

Expenditures related to the acquisition, exploration, and development of exploration and evaluation assets are expensed and charged to earnings in the period in which they are incurred. Any option payments received by the Company from third parties or tax credits refunded to the Company are charged against exploration expenses in the statements of comprehensive loss.

Although the Company has taken steps to verify the title to mineral properties in which it has an interest in accordance with general industry standards, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and, as such, title may be affected.

8

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

d) Impairment of Non-Current Assets

The carrying amounts of non-current assets are reviewed for impairment whenever facts and circumstances suggest that the carrying amounts may not be recoverable. If there are indications of impairment, then the recoverable amount of the asset is estimated in order to determine the extent of any impairment. Individual assets are grouped together as a cash generating unit for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are independent from other group assets.

The recoverable amount of an asset or cash generating unit is the higher of its fair value less costs to sell and its value in use. An impairment loss exists if the asset’s or cash generating unit’s carrying amount exceeds the recoverable amount and is recorded as an expense immediately. In assessing the value in use, the estimated future cash flows are adjusted for the risks specific to the cash generating unit and are discounted to their present value with a discount rate that reflects the current market indicators.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as income immediately.

e) Share Capital

Share capital includes cash consideration received for share issuances, net of commissions and issue costs.

Shares issued for other than cash consideration are valued at the quoted price on the TSX Venture Exchange (“TSX-V”) based on the earlier of: (i) the date the shares are issued, and (ii) the date the agreement to issue the shares is reached.

f) Stock-Based Compensation

The fair value method of accounting is used for stock-based compensation transactions. Under this method, the cost of stock options and other stock-based compensation is recorded based on the estimated fair value using the Black-Scholes option pricing model at the grant date and charged to profit over the vesting period. The amount recognized as an expense is adjusted to reflect the number of equity instruments expected to vest.

Upon the exercise of stock options and other stock-based compensation, consideration received on the exercise of these equity instruments is recorded as share capital and the related stock-based compensation reserve is transferred to share capital.

g) Loss per Share

Basic loss per share is calculated by dividing net loss by the weighted average number of common shares issued and outstanding during the reporting period. Diluted loss per share is the same as basic loss per share, as the issuance of shares on the exercise of stock options and share purchase warrants is anti-dilutive.

h) Leases

IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease term is 12 months or less or the underlying asset has a low value. Lessor accounting remains largely unchanged from IAS 17 “Leases”, and the distinction between operating and finance leases is retained. The standard is effective for annual periods beginning on or after January 1, 2019. The Company has determined that this standard has no material impact on its financial statements.

i) Income Taxes

Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income (“OCI”) or directly in equity.

9

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

i) Income Taxes (Continued)

i) Current Income Tax

Current income tax assets and/or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

ii) Deferred Income Tax

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.

Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

j) Financial Instruments

The following is the Company’s accounting policy for financial instruments under IFRS 9:

(i) Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

(ii) Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of comprehensive loss in the period in which they arise.

Equity investments at FVTOCI

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

10

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

j) Financial Instruments (Continued)

Debt investments at FVTOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

(iii) Impairment of financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

(iv) Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity.

Financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The Company also derecognizes a financial liability when the terms of the liability are modified such that the terms and / or cash flows of the modified instrument are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value. Gains and losses on derecognition are generally recognized in profit or loss.

NOTE 3 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

In the application of the Company’s accounting policies which are described in Note 2, management is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. Significant judgments, estimates, and assumptions that have the most significant effect on the amounts recognized in the financial statements are described below.

a) Deferred Tax Assets

Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

11

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 4 – ADVANCES PAYABLE

Advances Payable	2021 2020 $ $ 8,000 30,200

During the year ended December 31, 2021, the Company repaid $22,200 in funds advanced to the Company. Advances payable are non-interest bearing, unsecured and have no specific terms of repayment unless otherwise specified.

NOTE 5 – LOAN PAYABLE

NOTE 5 – LOAN PAYABLE
Loan Payable Accrued Interest	10,500 33,000 14,306 10,733
	24,806 43,733

On August 15, 2018, the Company entered into an agreement with an arm’s length individual for a loan of $33,000. The loan is unsecured, has a term of one year and is subject to an interest rate of 12% per annum. During the year ended December 31, 2021, the Company repaid $22,500 in loans.

For the year ended December 31, 2021, the Company recorded interest expense of $3,573 (2020 - $4,889).

NOTE 6 – CONVERTIBLE DEBENTURE PAYABLE

Convertible Debenture Payable Accrued Interest	85,000 85,000 80,625 62,156
	165,625 147,156

On May 5, 2015, the Company issued a $75,000 convertible debenture (the “Debenture”). At the option of the holder, the principal amount of the Debenture is to be converted into 1,500,000 units (60,000 post consolidated). One unit consists of one common share and one share purchase warrant. Each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of five cents per share for 60 months following the date of issuance of the units. The Debenture had a maturity date of October 5, 2015 and was subject to an interest rate of 10% over the term of the Debenture.

The Debenture is recorded in part as a liability and in part as shareholders’ equity. The Company uses the “residual valuation” method to determine the debt and equity components of the convertible debenture. Under the residual valuation method, the liability component is determined by estimating the present value of the future cash payments discounted at a rate of interest which the Company would be charged by the market for similar debt without the conversion option. The difference between the net proceeds of the debenture and the liability component is recorded as a separate component of shareholders’ equity.

The Debenture has been accreted to its face value at maturity through a charge to operations. For the year ended December 31, 2015, the Company recorded accretion expense in the amount of $1,494.

On February 5, 2016, the Company and the lender entered into an agreement to extend the term of the debenture to an open ended maturity date, by agreeing to an extension fee of $10,000 and to increase the interest rate on the debenture to 12% per annum.

For the year ended December 31, 2021, the Company recorded interest expense of $18,469 (2020 - $16,452).

12

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 7 – EXPLORATION AND EVALUATION ASSETS

a) Red Rice Lake Property, Bisset, Manitoba, Canada

In January 2017, the Company signed an option agreement with Tiberius Gold Corp. (“Tiberius”) a private company, under which the Company may acquire 100% of the Red Rice Lake property (the “Property”) located in the Bissett Gold Mine Camp in Manitoba (the “Transaction”). Under the terms of the agreement, the Company may earn-in a 100% interest in the Property by making certain staged cash payments and/or share payments of common shares of the Company to Tiberius totalling $1,250,000 ($250,000 annually over a five-year period).

On November 21, 2017, the Transaction was approved by the TSX-V. Pursuant to the terms of the Agreement, the Company issued 20,000 common shares with a value of $25,000 to an arm’s length party as finder’s fee.

The Company made the first payment by issuing 200,000 common shares to Tiberius on February 09, 2018. The fair value recognized of $200,000 was based on the closing quoted market price of the Company’s shares at the date of issuance.

In March 2018, the Company entered into three agreements to acquire the net smelter rights (NSR) regarding the Red Rice Lake property. Pursuant to the terms of the agreements, the Company issued a total of 24,000 common shares valued at $30,000 and made two cash payments totaling $50,000.

On February 27, 2020 and May 4, 2020, the Company made the remaining four payments of $250,000 each by issuing 800,000 common shares of its capital to Tiberius Gold Corp. The Company has completed all payments to acquire 100% of Tiberius’ property located in the Bisset Gold Mine Camp in Manitoba. The fair value recognized of $100,000 was based on the closing quoted market price of the Company’s shares at the date of issuance.

As of December 31, 2021, Tiberius has not transferred the 14 mineral claims comprising the Property to the Company.

b) Moose Gold Property, Bisset Gold Mining Camp, Manitoba, Canada

In June 2021, the Company entered into an option agreement to purchase the Moose claim, in the BissettRice Lake district of Southern Manitoba. The Moose claim lies eight kilometers southeast of San Antonio/True North mine-mill complex operated by 1911 Gold Corporation. The Company has the right to purchase a 100% interest in the Moose claims by making cash payments totaling $100,000 over a five year period (annual payments of $5,000 payable by June 11, 2021 to 2025 and $75,000 payable by June 11, 2026) subject to a 1% net smelter return royalty. The Company made the June 2021 cash payment of $5,000.

c) Greenbelt Property, Manitoba, Canada

In June 2021, the Company entered into a purchase agreement with 1911 Gold Corporation (“1911 Gold”) to acquire 1911 Gold’s 50% interest in 27 contiguous mining claims totalling 410 hectares (collectively known as the “Greenbelt Property”) located south of Bissett, Manitoba, for total consideration of $500,000, payable in cash or shares. On June 24, 2021, the Company issued 500,000 common shares with a fair value of $500,000 to 1911 Gold.

Subsequent to the share issuance, the Company and 1911 Gold amended the terms of the original purchase agreement such that the $500,000 was to be paid in cash only – in equal monthly payments of $100,000 payable by the 23[rd] of every month from October 2021 to February 2022. As of December 31, 2021, the Company paid $250,000 to 1911 Gold.

Subsequent to year end, the Company paid the remaining balance of $250,000, and 1911 Gold is expected to return the 500,000 shares to the Company.

TSX-V has approved the Greenbelt Property acquisition.

13

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 8 – SHARE CAPITAL

a) Authorized Share Capital

Unlimited Number of Class “A” Common Shares, Voting, Without Par Value. Unlimited Number of Class “B” Common Shares, Non-Voting, Without Par Value.

As at December 31, 2021 there were 7,244,316 common shares issued and outstanding (2020 – 3,684,316).

On October 14, 2020, the Company consolidated its share capital, options, and warrants at a ratio of twentyfive old common shares to one new common share. These financial statements reflect the retroactive application of this share consolidation.

b) Issued and Outstanding Common Shares

i) Shares issued in 2020:

On February 27, 2020 and May 4, 2020, the Company made the remaining four payments of $250,000 each by issuing 20 million (800,000 post consolidated) common shares of its capital to Tiberius Gold Corp. The Company has now completed all payments to acquire 100 per cent of Tiberius's property located in the Bissett gold mine camp in Manitoba (Note 7(a)). The fair value recognized of $100,000 was based on the closing quoted market price of the Company’s shares at the date of issuance.

• ii) Shares issued in 2021:

On April 23, 2021, the Company issued 2,100,000 units at $0.1875 per unit for total proceeds of $393,750. One unit consists of one common share and one share purchase warrant exercisable at $0.30 per share for 18 months from date of issuance.

On June 24, 2021, the Company issued 500,000 shares, fair valued at $500,000 to acquire the Greenbelt Property (Note 7(c)). These shares are expected to be returned to the Company in 2022.

During the period ended December 31, 2021, the Company issued 960,000 shares upon the exercise of share purchase warrants for gross cash proceeds of $288,000.

c) Share Purchase Warrants

The continuity of share purchase warrants for the years ended December 31, 2021 and 2020, is summarized below.

As at December 31, 2021, the Company has 1,380,000 outstanding share purchase warrants at a weighted average price of $0.57.

	Exercise	December 31,			Expired/	December 31,
ExpiryDate	Price	2020	Issued	Exercised	Cancelled	2021
May 18, 2021	$1.25	300,000	-	-	(300,000)	-
October 23, 2022	$0.30	-	2,100,000	(960,000)	-	1,140,000
November 10,2022	$1.88	240,000	-	-	-	240,000
Total		540,000	2,100,000	(960,000)	(300,000)	1,380,000

14

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 8 – SHARE CAPITAL (Continued)

c) Share Purchase Warrants (Continued)

As at December 31, 2020, the Company had 540,000 outstanding share purchase warrants at a weighted average price of $1.53.

average price of $1.53.
	Exercise	December 31,			Expired/	December 31,
ExpiryDate	Price	2019	Issued	Exercised	Cancelled	2020
April 22, 2020	$1.25	215,520	-	-	(215,520)	-
May 18, 2021	$1.25	300,000	-	-	-	300,000
November 10,2022	$1.88	240,000	-	-	-	240,000
Total		755,520	-	-	(215,520)	540,000

d) Finders’ Warrants

The continuity of finders’ warrants for the years ended December 31, 2021 and 2020, is summarized below.

As at December 31, 2021 and 2020, the Company has 9,120 outstanding finders’ warrants at a weighted average price of $1.88.

	Exercise	December 31,			Expired/	December 31,
Expiry Date	Price	2019	Issued	Exercised	Cancelled	2021
May 11, 2022	$1.88	9,120	-	-	-	9,120
Total		9,120	-	-	-	9,120

e) Restricted Share Unit (“RSU”) Plan

During the year ended December 31, 2018, the board of directors and the shareholders approved the adoption of a new Restricted Share Unit Plan (“RSU Plan”). The RSU Plan allows an eligible person to acquire restricted share units of the Company and is designed to provide the Company with an additional tool to compensate certain directors, officers, consultants and other key employees of the Company. The aggregate number of shares available for issuance from treasury under the RSU Plan is 2,163,249 shares and together with any other share compensation arrangement is not to exceed 10% of the issued and outstanding Class “A” common shares of the Company at the grant date. As at December 31, 2021, no RSUs have been issued.

NOTE 9 – INCOME TAX

a) Income Tax Expense

The income tax expense of the Company is reconciled to the net loss for the year as reported in the statements of comprehensive loss as follows:

Loss before Income Tax Recovery of Income Tax Calculated at the Statutory Rate of 27% (2020 – 27%) Deferred Tax Assets Not Recognized Other Income Tax Expense	2021 2020 $ $ (856,397) (414,218)
	(231,227) (111,838) 231,961 129,578 (734) (17,740)
	- -

15

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 9 – INCOME TAX (Continued)

b) Deferred Tax Assets and Liabilities

Deferred tax assets have not been recognized with respect to the following items:

Non-Capital Losses Carried Forward Intangible Mineral Properties Share Issue Costs Net Deferred Tax Assets Not Recognized	2021 2020 $ $ 1,633,697 1,540,150 7,375 7,375 290,948 152,505 587 616
	1,932,607 1,700,646

As at December 31, 2021, the Company has non-capital losses of approximately $6,053,000 which may be applied to reduce Canadian taxable income of future years. The non-capital losses expire as follows:

2027 2028 2029 2030 2031 2032 to 2041	$ 298,000 155,000 124,000 164,000 661,000 4,651,000
	6,053,000

The Company has cumulative resource pools of $1,077,585 which can be carried forward indefinitely to offset future taxable income in Canada, unamortized capital cost allowance of $27,313 and unamortized share issue costs of $2,175 available to reduce taxable income in Canada for the years 2022 and onwards.

NOTE 10 – RELATED PARTY TRANSACTIONS

Details of transactions between the Company and other related parties, in addition to those transactions disclosed elsewhere in these financial statements, are described below.

a) Related Party Balances

The Company has the following amounts owed to related parties:

Due to a Director (also an Officer) for consulting services and other expenses Due to companies with a common Director Loans due to persons related to a Director	1,361,016 1,185,240 40,200 40,200 5,000 5,000
	1,406,216 1,230,440

b) Compensation of Key Management Personnel and Other Related Parties

The Company incurred consulting and administration fees for services provided by key management personnel for the years ended December 31, 2021 and 2020, as described below. All related party transactions were in the ordinary course of business and were measured at their exchange amount.

Consulting Fees and Allowances Office and Administration Reimbursement	186,600 186,600 3,611 9,739
	190,211 196,339

16

ALLIANCE MINING CORP. Notes to the Financial Statements

December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 10 – RELATED PARTY TRANSACTIONS

c) During the year ended December 31, 2021, the Company received loan proceeds from a Director and Officer in the amount of $250,000. The loans bear interest at 12% with no terms for repayment. The Company recorded interest payable of $3,605 for the year ended December 31, 2021.

NOTE 11 – COMMITMENTS

On August 01, 2015, the Company renewed the consulting agreement (initially signed August 2012) with a Director of the Company to provide consulting services for a monthly fee of $10,000 for a period of three years. The agreement may be terminated by either party on one hundred eighty days written notice. On August 01, 2018, the consulting agreement was renewed for a period of five years at a rate of $15,000 per month.

NOTE 12 – CAPITAL MANAGEMENT

The Company manages its share capital as capital, which as at December 31, 2021, was $6,016,240 (2020 - $4,837,208). The Company’s objectives when managing capital are:

• i) to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide return for shareholders and benefits for other stakeholders; and

• ii) to ensure the entity has the capital and capacity to support a long-term growth strategy.

The Company’s capital structure reflects the requirements of a company focused on significant growth in a capital-intensive industry. The Company faces lengthy development lead times, as well as risks associated with rising capital costs and timing of project completion because of the availability of resources, permits and other factors beyond the Company’s control. The Company’s operations are also affected by potentially significant volatility of the metals and materials cycles.

Management continually assesses the adequacy of the Company’s capital structure and makes adjustments within the context of its strategy, the base metal mining industry, economic conditions, and the risk characteristics of the Company’s assets. To adjust or maintain its capital structure, the Company may enter into new credit facilities or issue new shares.

The Company has several key policy guidelines for managing its capital structure:

• i) maintain a liquidity cushion that allows the Company to address operational and/or industry disruptions or downturns;

• ii) ensure the Company has enough funding to complete its development programs at or around the time a definitive decision is made to move forward with a project; and

• iii) maintain a conservative level of debt relative to total capital and earnings within the context of financial forecasts for pricing, costs and production.

The Company’s share capital is not subject to external restrictions. The Company has not paid or declared any dividends since the date of incorporation, nor are any contemplated in the foreseeable future. There were no changes in the Company’s approach to capital management during the year ended December 31, 2021.

NOTE 13 – FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company is exposed to various risks in relation to financial instruments. The Company’s financial assets and liabilities by category are summarized in Note 2(j). The Company’s risk management is coordinated in close cooperation with the board of directors and focuses on actively securing the Company’s short to medium-term cash flows and raising finances for the Company’s capital expenditure program. The Company does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Company is exposed are described below.

17

ALLIANCE MINING CORP. Notes to the Financial Statements December 31, 2021 and 2020 (Expressed in Canadian Dollars)

NOTE 13 – FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

a) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a working capital deficiency of $2,112,945 as at December 31, 2021. The Company is dependent upon the availability of credit from its suppliers and its ability to generate sufficient funds from equity and debt financing to meet current and future obligations. There can be no assurance that such financing will be available on terms acceptable to the Company.

b) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Management considers that risk related to interest is not significant to the Company at this time as the Company has limited short term investments.

c) Credit Risk

Credit risk is the risk of loss associated with a counter party’s inability to fulfill its payment obligations. The Company is in the exploration stage and has not yet commenced commercial production or sales. The Company is not exposed to credit risk.

d) Commodity Price Risk

Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in commodity prices. The ability of the Company to develop its mineral properties and the future profitability of the Company are directly related to the market price of gold.

The Company has not hedged any of its future gold sales. The Company’s input costs are also affected by the price of fuel. The Company closely monitors gold and fuel prices to determine the appropriate course of action to be taken.

e) Fair Values

The Company uses the following hierarchy for determining fair value measurements:

• Level 1: Quoted prices in active markets for identical assets or liabilities.

• Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

• Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. The Company’s financial instruments measured at fair value use Level 1 valuation techniques during the years ended December 31, 2021 and 2020. The carrying values of the Company’s financial assets and liabilities approximate their fair values as at December 31, 2021 and 2020.

NOTE 14 – 2020 COVID-19 PANDEMIC

The outbreak of the COVID-19 virus and the worldwide pandemic has impacted the Company’s plans and activities. The Company may face disruption to operations, supply chain delays, travel and trade restrictions, and impacts on economic activity in affected countries or regions can be expected and are difficult to quantify. Regional disease outbreaks and pandemics represent a serious threat to hiring and maintaining a skilled workforce and could be a major health-care challenge for the Company. There can be no assurance that the Company’s personnel will not be impacted by these regional disease outbreaks and pandemics.

In addition, the pandemic has created a dramatic slowdown in the global economy. The duration of the outbreak and the resulting travel restrictions, social distancing recommendations, government response actions, business disruptions and business closures may have an impact on the Company’s exploration operations and access to capital. There can be no assurance that the Company will not be impacted by adverse consequences that may be brought about by the pandemic’s impact on global industrial and financial markets which may reduce metal prices, share prices and financial liquidity thereby severely limiting access to essential capital.

18