Altai Resources Inc. — Interim / Quarterly Report 2023

May 18, 2023

ALTAI RESOURCES INC. CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited condensed interim consolidated financial statements of Altai Resources Inc. for the three months ended March 31, 2023 and 2022 have been prepared by the management of the Company and approved by the Company's Audit Committee and the Board of Directors. Under National Instrument 51-102, Part 4, subsection 4.3 (3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that an auditor has not reviewed the financial statements.

The accompanying unaudited condensed interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's independent auditors have not performed a review of these financial statements.

ALTAI RESOURCES INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS AT MARCH 31, 2023 AND DECEMBER 31, 2022 (UNAUDITED) (EXPRESSED IN CANADIAN DOLLARS)

	Note	March 31, 2023$	December 31,2022$
ASSETS
Current assets
Cash and cash equivalentsMarketable securitiesAccounts receivablesPrepaid expenses	4	1,258,8712,363,06853,60747	1,239,0282,372,59490,51947
Total current assets		3,675,593	3,702,188
Non-current assetsExploration and evaluation assetsProperty and equipment	56	1,033,168244,889	1,033,168257,973
Total non-current assets		1,278,057	1,291,141
Total assets		4,953,650	4,993,329
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		122,973	174,417
Non-current liabilities
Decommissioning liabilities	7	120,288	116,796
Deferred tax liabilities	8	149,515	150,777
Total non-current liabilities		269,803	267,573
Total liabilities		392,776	441,990
SHAREHOLDERS' EQUITY
Share capitalContributed surplusAccumulated DeficitAccumulated other comprehensive income	9a	34,003,0203,251,391(33,652,208)958,671	34,003,0203,251,391(33,670,007)966,935
Total equity		4,560,874	4,551,339
Total liabilities and shareholders' equity		4,953,650	4,993,329

Commitments 13

ALTAI RESOURCES INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED) (EXPRESSED IN CANADIAN DOLLARS)

	Note	2023$	2022$
REVENUE
Oil salesRoyalties		39,565(1,771)	50,550(2,307)
Interest and dividend income		37,79445,014	48,24331,332
EXPENSES		82,808	79,575
ProductionGeneral and administrativeExpenses on Quebec oil and gas interestsAmortization	115ii6	14,48230,6216,82313,083	15,50627,53073,35814,636
		65,009	131,030
NET INCOME (LOSS)		17,799	(51,455)
OTHER COMPREHENSIVE (LOSS) INCOME
(Decrease) Increase in fair value of investment in marketable securities,net of taxes		(8,264)	143,946
COMPREHENSIVE INCOME		9,535	92,491
Basic and diluted income per share	10	0.00	0.00
Weighted Average Number of Common Shares Outstanding– basic– diluted		56,033,55256,033,552	56,033,55256,033,552

ALTAI RESOURCES INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED) (EXPRESSED IN CANADIAN DOLLARS)

	Share capital
	Number ofshares	Amount$	Contributedsurplus$	Accumulatedothercomprehensiveincome(net of tax)$	Deficit$	Total equity$
Balance, December 31, 2021	56,033,552	34,003,020	3,238,391	1,236,679	(33,626,779)	4,851,311
Net loss for the period	-	-	-	-	(51,455)	(51,455)
Increasein fair value of investment inmarketable securities	-	-	-	143,946	-	143,946
Balance, March 31, 2022	56,033,552	34,003,020	3,238,391	1,380,625	(33,678,234)	4,943,802
Net incomefor the period	-	-	-	-	8,227	8,227
Stock-based compensation			13,000			13,000
Decreasein fair value of investment inmarketable securities	-	-	-	(413,690)	-	(413,690)
Balance, December 31, 2022	56,033,552	34,003,020	3,251,391	966,935	(33,670,007)	4,551,339
Net incomefor the period	-	-	-	-	17,799	17,799
Decreasein fair value of investment inmarketable securities	-	-	-	(8,264)	-	(8,264)
Balance, March 31, 2023	56,033,552	34,003,020	3,251,391	958,671	(33,652,208)	4,560,874

ALTAI RESOURCES INC. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED) (EXPRESSED IN CANADIAN DOLLARS)

	2023$	2022$
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the period	17,799	(51,455)
Adjusted forAmortizationFinance expenseInterest incomeInterest received	13,0833,493(13,020)13,020	14,6361,306(1,010)1,010
	34,375	(35,513)
Changes in non-cash working capital balances:Accounts receivableAccounts payable and accrued liabilities	36,914(51,446)	(44,551)91,305
Cash provided by operating activities	19,843	11,241
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets	-	(2,370)
Cash used in investing activities	-	(2,370)
NET INCREASE IN CASH AND CASH EQUIVALENTS	19,843	8,871
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	1,239,028	1,384,339
CASH AND CASH EQUIVALENTS, END OF PERIOD	1,258,871	1,393,210

ALTAI RESOURCES INC. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED) (EXPRESSED IN CANADIAN DOLLARS)

1. Nature of Operations and Going Concern

Altai Resources Inc. ("Altai" or the "Company"), incorporated under the laws of the province of Ontario with a head-office location at 895 Don Mills Road, Two Morneau Shepell Centre, Suite 900, Toronto, Ontario, M3C 1W3. The Company is a resource company which at March 31, 2023 has an oil producing property and a gold property which it is in the process of exploring and has not yet determined whether the property contains reserves that are economically recoverable. Both properties are in Canada.

Altai's common shares are listed on the TSX Venture Exchange under the symbol ATI.

These condensed interim consolidated financial statements have been prepared by management with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Apart from an oil revenue producing property, the gold property is at an early stage of development. The Company has incurred losses in the past and currently has an accumulated deficit of $33,652,208.

The Company's ability to continue as a going concern is dependent upon the existence of economically recoverable resource reserves, the ability of the Company to obtain necessary financing to complete the exploration and the development of those properties, and upon future profitable production or proceeds from the disposition thereof.

The Company has cash and cash equivalents of $1,258,871 and believes this amount is sufficient to meet its planned exploration expenditures on its properties and to meet its corporate administrative expenses for the next 12 months. Long term, the Company may pursue opportunities to raise additional funds, and while the Company has been successful in raising funds in the past, there can be no assurance that adequate funding will be available in the future, all of which describe the material uncertainties that cast significant doubt upon the Company's ability to continue as a going concern. These condensed interim consolidated financial statements do not include the adjustments that would be necessary should the Company be unable to continue as a going concern, which could be material.

2. Basis of Presentation

Statement of compliance

These condensed interim consolidated financial statements are unaudited and have been prepared by management in accordance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB"). The accounting policies set out below have been applied to all periods presented in these consolidated financial statements.

These condensed interim consolidated financial statements were prepared under IFRS in accordance with IAS 34, Interim Financial Reporting. Certain information, in particular the accompanying notes, normally included in the consolidated annual financial statements prepared in accordance with IFRS, have been omitted or condensed. Accordingly, these condensed interim consolidated financial statements do not include all of the information required for full annual financial statements.

The condensed interim consolidated financial statements for the three months ended March 31, 2023 and 2022 were approved by the Board of Directors on May 18, 2023

Basis of measurement

The condensed interim consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value. These condensed interim consolidated financial statements have been prepared using IFRS principles applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due.

Functional and presentational currency

The consolidated financial statements are presented in Canadian dollars, which is the Company's presentation and functional currency.

Accounting judgments and estimation uncertainty

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates and underlying assumptions are reviewed annually

and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

In preparing these consolidated financial statements, the Company makes judgments regarding the application of its accounting policies.

The financial statement areas that require significant estimates and assumptions are included in the following notes:

Asset impairments

For impairment testing of property, plant and equipment and exploration and evaluation assets, the assessment of facts and circumstances is a subjective process that often involves a number of estimates and is subject to interpretation. One of the more significant policies adopted by the Company has been deciding the level at which assets are to be aggregated for assessing impairment. These groupings are referred to as Cash Generating Units ("CGU"). CGU is defined as the lowest levels for which there are separately identifiable independent cash inflows. Based on numerous factors, including the independence of cash inflows and production infrastructure, management considers the Company to have two CGUs, namely Malartic gold properties and Cessford oil properties. The testing of assets or CGU's for impairment, as well as the assessment of potential impairment reversals, requires estimates of an asset's or CGU's recoverable amount. The estimate of a recoverable amount requires a number of assumptions and estimates, including quantities of reserves, expected production volumes, future commodity prices, discount rates as well as future development and operating costs. These assumptions and estimates are subject to change as new information becomes available and changes in any of the assumptions, such as a downward revision in reserves, a decrease in commodity prices or an increase in costs, could result in an impairment of an asset's or CGU's carrying value.

For the Sorel-Trois Rivieres natural gas property in Quebec of which all its oil and gas licences had been revoked and expropriated by the Quebec Government on August 23, 2022 per the 2022 Act ending exploration for petroleum and underground reservoirs and production of petroleum and brine, CQLR c R-1.01 (the "Act"), in March 2022 the Company filed a claim in the Superior Court of Quebec against the Minister of Energy and Natural Resources of Quebec and the Quebec Government, as represented by the Attorney-General for Quebec (collectively the "Defendants") to defend the Company's rights and to seek compensation from the Defendants for the unlawful expropriation of its oil and gas licences by the Defendants by the enactment of the Petroleum Resources Act and its Regulations and the subsequent enactment of the Act. To date, the claim is ongoing.

At March 31, 2022 management assessed whether there were indicators that the two CGUs may be impaired. Management determined no such indicators are present and therefore no impairment exists.

Decommissioning liabilities

Decommissioning liabilities consist of asset retirement obligations that are based, in part, on estimates of future costs to settle the obligation, in addition to estimates of the useful life of the underlying assets, the rate of inflation and the risk-free interest rate. At each reporting date, management reviews the provision for decommissioning liabilities and adjusts it to reflect the current best estimate.

Depletion, depreciation and amortization

The Company's property, plant and equipment and exploration and evaluation assets are measured at cost less accumulated depletion, depreciation and amortization (DD&A) and accumulated impairment losses. The amount subject to DD&A is determined as the cost of the asset less its residual value and should be allocated on a systematic basis over the useful life of the assets. The estimate of useful life and residual value are determined annually by qualified independent oil properties specialists. If changed significantly, the changes will be accounted for in the consolidated statements of comprehensive income (loss) prospectively as a change in an accounting estimate in accordance with International Accounting Standards ("IAS") 8 "Accounting Policies, Changes in Accounting Estimates and Errors".

Valuation allowance for deferred income taxes

Each period, the Company evaluates the likelihood of whether some portion of each deferred tax asset will not be realized. This evaluation is based on historic and future expected levels of taxable income, the timing of reversals of taxable temporary timing differences that give rise to deferred tax liabilities, tax planning initiative, and deferred tax rates.

Fair value measurements

The Company's accounting policies and disclosures require the determination of fair value for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

The marketable securities have been designated as investments in equity instruments and carried at fair value with changes in fair value recognized in other comprehensive income. Where a decline in the fair value of an investment in equity instrument constitutes objective evidence of impairment other than temporary, the amount of the loss is removed from the other comprehensive income and reclassified directly to retained earnings.

The fair value of cash and cash equivalents, accounts receivables, accounts payable and accrued liabilities approximate their carrying value due to their short term to maturity.

The fair value of share-based compensation is estimated using the Black-Scholes Option Pricing valuation model. The inputs are based on factors including the share price on measurement date and the exercise price of the instrument, and based on assumptions for the risk-free interest rate (based on government bonds), the forfeiture rate and expected life of the instruments (based on historical experience and general option holder behavior), expected dividends, and the volatility of the share price (based on historic movements in the Company's share price).

3. Summary of Significant Accounting Policies

The significant accounting policies used in the presentation of these consolidated financial statements are described below:

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary: Petro St-Pierre Inc. All intercompany accounts and transactions have been eliminated upon consolidation.

Revenue recognition

Revenues from the sale of crude oil are recognized over time, which is when the performance obligation associated with the sale has been completed and the right to use is transferred to the customer. Revenue is presented net of production expenses and royalties.

Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date and when the right to receive the dividend has been established.

Cash and cash equivalents

Cash and cash equivalents include short term deposits with terms to maturity of ninety days or less when acquired.

Marketable securities

Marketable securities are classified and measured as financial assets at fair value through other comprehensive income. Unrealized gains and losses are recorded in other comprehensive income until the shares are sold or impaired at which time the realized gain or loss and impaired amounts would be reclassified directly from the fair value through other comprehensive income reserve to deficit.

Exploration and evaluation assets

The exploration and evaluation expenditures include the costs of acquiring licences and claims, exploratory drilling, geological and geophysical activities, acquisition of mineral and surface rights, directly attributable expenses and technical studies. Exploration and evaluation expenditures are capitalized as exploration and evaluation assets when the technical feasibility and commercial viability of extracting mineral and natural gas reserves have yet to be determined. Costs not directly attributable to exploration and evaluation activities, including general and administrative overhead costs, are expensed in the period in which they occur.

Exploration and evaluation assets are measured at cost and are not depleted or depreciated. Exploration and evaluation assets, net of any impairment loss, are transferred to property and equipment when proved and/or probable reserves are determined to exist.

When a project is deemed to no longer have commercial viable prospects to the Company, exploration and evaluation expenditures in respect of that project are deemed to be impaired. As a result, those exploration and evaluation expenditure costs, in excess of estimated recoveries, are written off to profit or loss. The Company assesses exploration and evaluation assets for impairment when facts or circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

Property and equipment

Property and equipment include oil properties and computer equipment.

The cost of oil properties include all costs directly associated with the acquisition of crude oil wells and adherent land. These expenditures include its purchase price, legal fees related to the acquisition, and the initial estimate of decommissioning liabilities. The oil properties include four wells and three pieces of adherent land. Since all four wells located within a single geographic unit and have same useful lives and depreciation methods, the four well components have been grouped together as one component. The Company does not currently have a reserve study to allow for depletion based on unit-of-production and therefore depletes the oil property over an estimated useful life using the straight line method.

Property and equipment are stated at cost less accumulated amortization and accumulated impairment. Amortization has been provided in the accounts on the straight line basis at the following rates:

Computer equipment – over 3 years Oil properties – over 15 years

Impairment

The Company assesses assets or groups of assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of its recoverable amount. The recoverable amount is the higher of its fair value less costs to sell and its value in use. Where the carrying amount of an asset group exceeds its recoverable amount, the asset or asset group is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are adjusted for the risks specific to the asset or the asset group and are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money. An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. Any previously recognized loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reverse is recognized in the consolidated statement of operations. After such reversal, the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

When an exploration and evaluation asset is determined to be technically feasible and commercially viable, the accumulated costs are transferred to property and equipment. Exploration and evaluation asset and property and equipment are accumulated on an area-by-area basis then grouped into CGU's on the basis of geographical area having regard to the operational infrastructure (such as facilities and sales points) of the area, and are the lowest level at which there are identifiable cash inflows that are largely independent of the cash flows of other groups of assets.

Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation estimated at the end of each reporting period, taking into account the risks and uncertainties surrounding the obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount receivable can be measured reliably.

Decommissioning liabilities

The Company provides for the costs of decommissioning associated with oil properties, including the abandonment of crude oil wells, related facilities, compressors, removal of equipment from leased acreage and returning such land in a condition as it is contractually obligated. The expected value of each asset's decommissioning liabilities is recorded in the period a well or related asset is drilled and evaluated, constructed or acquired. The decommissioning liabilities are measured in the consolidated statement of financial position at the expected value of the expenditures expected to be required to settle the obligation and discounted using a risk free rate. A corresponding amount is capitalized in the relevant asset category. Any further adjustment arising from a reassessment of estimated cost of the decommissioning liabilities or a change in the discount rate also has a corresponding amount capitalized, whilst the charge arising from the accretion of the discount applied to the decommissioning liabilities is treated as a component of finance costs in the consolidated statement of comprehensive income (loss).

Fair value of stock options

The Company uses the Black-Scholes Option Pricing model for valuation of share-based payments. Option pricing models require the input of subjective assumptions including expected share price volatility, interest rate and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company's profit and loss and contributed surplus.

Income taxes

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the end of the reporting period. Current tax assets and current tax liabilities are only offset if a legally enforceable right exists to set off the amounts, and the intention is to settle on a net basis, or to realize the asset and settle the liability simultaneously. Current income tax relating to items recognized directly in equity is recognized in equity and not through profit or loss.

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits, and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary difference and the carry forward of unused tax credits and unused tax losses can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the consolidated statement of financial position date. Deferred tax relating to items recognized directly in equity is also recognized in equity and not in the consolidated statement of comprehensive loss.

The carrying amount of deferred tax assets is reviewed at each consolidated statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each consolidated statement of financial position date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Company creates a valuation allowance to the extent that it considers deductible temporary differences, the carry-forward of unused tax credits, and unused tax losses cannot be utilized.

Stock-based compensation cost

The Company records compensation cost based on the fair value method of accounting for stock-based compensation. The fair value of stock options is determined using the Black-Scholes Option Pricing model. The fair value of the options is recognized over the vesting period as compensation expense and contributed surplus. When options are exercised, the proceeds received, together with any related amount in contributed surplus, will be credited to capital stock.

Income (loss) per common share

Basic income (loss) per common share is determined by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is calculated in accordance with the treasury stock method and based on the weighted average number of common shares and dilutive common share equivalents outstanding.

Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date. It requires consideration as to whether the fulfilment of the arrangement is dependent on the use of a specific tangible asset or the arrangement conveys a right to use the tangible asset.

Lessees are required to recognize assets and liabilities for all leases unless the lease term is twelve months or less or the underlying asset has a low value.

Financial instruments

Financial assets

Recognition and initial measurement

The Company recognizes financial assets when it becomes party to the contractual provisions of the instrument. Financial assets are measured initially at their fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through profit or loss are expensed in profit or loss when incurred.

Classification and subsequent measurement

On initial recognition, financial assets are classified as subsequently measured at amortized cost ("AC"), fair value through comprehensive loss ("FVOCI") or fair value through profit or loss ("FVTPL"). The Company determines the classification of its financial assets, together with any embedded derivatives, based on the business model for managing the financial assets and their contractual cash flow characteristics.

Financial assets are classified as follows:

a) Amortized cost - Assets that are held for collection of contractual cash flows where those cash flows are solely payments of principal and interest are measured at amortized cost. Interest revenue is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss. Financial assets measured at amortized cost are comprised of trade and other receivables and receivables from related parties.

b) Fair value through comprehensive loss - Assets that are held for collection of contractual cash flows and for selling the financial assets, and for which the contractual cash flows are solely payments of principal and interest, are measured at fair value through comprehensive loss. Interest income is calculated using the effective interest method and gains or losses arising from impairment and foreign exchange are recognized in profit or loss. All other changes in the carrying amount of the financial assets are recognized in comprehensive loss. Upon derecognition, the cumulative gain or loss previously recognized in comprehensive loss is reclassified to profit or loss.

c) Mandatorily at fair value through profit or loss - Assets that do not meet the criteria to be measured at amortized cost, or fair value through comprehensive loss, are measured at fair value through profit or loss. All interest income and changes in the financial assets' carrying amount are recognized in profit or loss. Financial assets mandatorily measured at fair value through profit or loss are comprised of cash and cash equivalents.

d) Designated at fair value through profit or loss – On initial recognition, the Company may irrevocably designate a financial asset to be measured at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch that would otherwise arise from measuring assets or liabilities, or recognizing the gains and losses on them, on different bases. All interest income and changes in the financial assets' carrying amount are recognized in profit or loss.

Contractual cash flow assessment

The cash flows of financial assets are assessed as to whether they are solely payments of principal and interest based on their contractual terms. For this purpose, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending risks and costs. In performing this assessment, the Company considers factors that would alter the timing and amount of cash flows such as prepayment and extension features, terms that might limit the Company's claim to cash flows, and any features that modify consideration for the time value of money.

Impairment

The Company recognizes a loss allowance for the expected credit losses associated with its financial assets, other than financial assets measured at fair value through profit or loss. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions and forecasts of future economic conditions. For financial assets measured at amortized cost, loss allowances for expected credit losses are presented in the statement of financial position as a deduction from the gross carrying amount of the financial asset. Financial assets are written off when the Company has no reasonable expectations of recovering all or any portion thereof.

Derecognition of financial assets

The Company derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire.

Financial liabilities

Recognition and initial measurement

The Company recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, with the exception of financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss.

Where an instrument contains both a liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability component measured initially at fair value and the equity component assigned the residual amount.

Classification and subsequent measurement

Subsequent to initial recognition, all financial liabilities are measured at amortized cost using the effective interest rate method. Interest, gains and losses relating to a financial liability are recognized in profit or loss. Financial liabilities measured at amortized cost are comprised of trade and other payables and lease liabilities.

Derecognition of financial liabilities

The Company derecognizes a financial liability only when its contractual obligations are discharged, cancelled, or expire.

Changes in Accounting Policies

New Standards and Amendments Adopted

Certain new standards and amendments have been adopted by the Company as of January 1, 2023. Adoption of these new standards and amendments has no significant impact on the Company's consolidated financial statements.

New Standards and Interpretations Not Yet Adopted

All pronouncements relevant to the Company will be adopted in its accounting policies upon the effective dates of those pronouncements.

4. Marketable Securities

Marketable securities, classified and measured at fair value through other comprehensive income, consist of dividend/interest paying Canadian financial and utilities shares and shares of junior resource companies the Company received pursuant to option agreements. They are reported in their fair market values at the end of the reporting periods. The unrealized gain (the total fair market values less the total costs) is included in other comprehensive income.

When marketable securities are sold, the realized gains or losses are transferred directly from the fair value through other comprehensive income reserve to deficit.

Total fair market values and costs of the marketable securities at March 31, 2023 and 2022 are as follows:

	2023$	2022$
Total fair market values	2,363,068	2,849,470
Total costs	1,234,653	1,234,653

As at March 31, 2023, the Company has unrealized gain of $1,128,415 (2022 – $1,614,817) net of taxes of $149,515 (2022 – $213,963).

5. Exploration and Evaluation Assets

Exploration and evaluation assets consist of the interests in mining properties and oil and gas interests.

	Interests in miningproperties (i)$	Oil and gas interests (ii)$	Total$
Balance at December 31, 2021 and March 31, 2022	869,590	1	869,591
Exploration expenditure	163,577	-	163,577
Balance at December 31, 2022 and March 31, 2023	1,033,167	1	1,033,168
i) Interests in mining propertiesMalartic Township gold property, Quebec	Acquisition cost	Expenditure	Total
	$	$	$
Balance at December 31, 2021 and March 31, 2022	123,711	745,879	869,590
Exploration expenditure	-	163,577	2,402
Balance at December 31, 2022 and March 31, 2023	123,711	909,456	1,033,167

The Company owns 50% working interest in the Malartic Township gold property of six map designated claims (CDC). The other 50% working interest is owned by the property operator, Globex Mining Enterprises Inc., which names the project "Blackcliff gold property".

ii) Oil and gas interests

Sorel-Trois Rivieres natural gas property, Quebec

Altai's five oil and gas and reservoir exploration licences in the Sorel-Trois Rivieres area, St. Lawrence Lowlands covering 68,483 hectares (169,225 acres), along with all other issued Quebec oil and gas and reservoir licences of other licence holders, had been revoked and expropriated by the Quebec Government on August 23, 2022 with the enactment of the 2022 Act ending exploration for petroleum and underground reservoirs and production of petroleum and brine, CQLR c R-1.01 (the "Act").

The adjacent licence of 12,334 hectares (30,477 acres) that Talisman Energy Canada (now Repsol Canada Energy Partnership "Repsol") earned from Altai and assigned to Questerre Energy Corporation on February 1, 2020, in which Altai has a 15% gross production royalty, had been expropriated by the Quebec Government per the Act.

In view of the prolonged delay in the formation of a new energy policy since 2011 resulting in the uncertainty in the future Quebec shale gas

development, the Company had already written down the project to $1 as required by accounting standards at December 31, 2014.

Thereafter all exploration and other expenditures on the property are reported in the profit and loss. Total cumulative capital, exploration and other expenditures (including expenditures reported in the profit and loss) incurred on the expropriated natural gas interests to March 31, 2023 amounted to $25,221,062 (2022 - $25,128,257), with total cumulative write downs (including expenditures reported in the profit and loss) of $25,221,061 (2022 - $25,128,256).

In March 2022, the Company filed a claim in the Superior Court of Quebec against the Minister of Energy and Natural Resources of Quebec and the Quebec Government, as represented by the Attorney-General for Quebec (collectively the "Defendants") to defend the Company's rights and to seek compensation from the Defendants for the unlawful expropriation of its Quebec oil and gas licences by the Defendants by the enactment of the Petroleum Resources Act and its Regulations and the subsequent enactment of the Act. To date, the claim is ongoing.

6. Property and Equipment

		March 31, 2023		March31, 2022
	Cost$	AccumulatedAmortization$	Net$	Cost$	AccumulatedAmortization$	Net$
Computer equipment	26,947	25,564	1,383	26,947	24,774	2,173
Oil properties (1)	864,577	621,071	243,506	878,110	571,080	307,030
	891,524	646,635	244,889	905,057	595,854	309,203

(1) In 2012, the Company acquired a 50% (net 45%) working interest in Alberta Crown leases in the Cessford area of southern Alberta and production of light oil in four long-life oil producing wells. The cost of oil properties include all costs directly associated with the acquisition of crude oil and adherent land. These expenditures include its purchase price, legal fee related to acquisition, and the decommissioning liabilities. The two parties (together the "Parties") which provided technical support to Altai during the acquisition process, were paid a fee in kind by Altai, that is, each of the Parties held a 2.5% working interest in the property on the transaction closing. ConocoPhillips Canada Energy Partnership ("Conoco") of ConocoPhillips Canada Resources Corp., a fully owned subsidiary of ConocoPhillips, US, was the partner and operator of the property. In November 2015, Conoco assigned its interest in the property to Canadian Natural Resources Limited which becomes the partner and operator of the property.

The four wells are subject to various royalty payments, some of which are 1.25-3% of gross revenue on certain wells and another which is based on barrels of oil produced. Reserve life of the four wells is estimated at 15 years. There have been no reserve studies performed to accurately estimate the reserves of these properties.

In April 2022 the civil claim filed by the Parties in 2020 for a payment of $10,481 for their share of the property revenue to a certain date and the counterclaim by the Company were resolved with Altai and the Parties signing a Settlement Agreement and Mutual Release and the Company purchasing the Parties' combined 5% net working interest in the property, Thereafter the Company owns 50% net working interest in the property.

7. Decommissioning Liabilities

The decommissioning liability was estimated based on the Company's net ownership interest in all wells and facilities, the estimated cost to abandon and reclaim the wells and facilities and the estimated timing of the costs to be incurred in future periods. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statement could be significant. The total undiscounted amount of the estimated cash flows required to settle the asset retirement obligation is approximately $135,566 (March 31, 2022 – $122,000) which will be incurred in 4 years. A nominal risk free rate of 9.65% (March 31, 2022 – 4.08%), and an inflation rate of 6.90% (March 31, 2022 – 3.15%), was used to calculate the fair value of the decommissioning liabilities. Changes to the liability were as follows:

	March 31, 2023	March 31, 2022
	$		$
Decommissioning liability, beginning of period	116,796	$	133,879
Accretion	3,492		1,306
Decommissioning liability, end of period	120,288	$	135,185

8. Income Taxes

Future income tax liabilities as at March 31, 2023 and 2022 are:-

	2023	2022
	$	$
Marketable securities –unrealized gains	149,515	213,963

9. Share Capital

a) Share capital

Authorized

An unlimited number of common shares of no par value.

Issued and outstanding common shares	No. of shares	Amount
Balance at March 31, 2023, December 31, 2022, and March 31, 2022	56,033,552	$34,003,020

b) Share purchase warrants

There is no share purchase warrants outstanding at March 31, 2023 and to date.

c) Stock options

The 2010 Stock Option Plan permits the grant of up to 4,950,000 option shares to directors, officers and employees of the Company or of its subsidiaries. Options granted are generally exercisable for up to five years from the date of grant.

The prices of all stock options granted are greater than or equal to the closing fair market value of each common share on the days prior to the options being granted.

At March 31, 2023, there were 2,830,000 (2022 - 2,950,000) option shares available for future grants.

During the period ended March 31, 2023, the Company did not grant any stock options.

A summary of the status of the Company's stock options as at March 31, 2023 and 2022 is presented below:

		2023		2022
Stock options	No. ofOptions	Weightedaverageexerciseprice	No. ofoptions	Weightedaverageexerciseprice
Outstanding and exercisable at beginning ofperiod and at end of period	1,200,000	$0.100	1,080,000	$0.100

The following table summarizes information on outstanding and exercisable stock options as at March 31, 2023:

Number ofoptionsoutstanding andexercisable	Exerciseprice$	Remainingcontractuallife (years)	Expiry date
1,000,000	0.100	0.41	August 29, 2023
200,000	0.100	4.73	December 22, 2027
1,200,000	0.100	1.13

10. Income (Loss) Per Share

The following table sets forth the computation of basic and diluted loss per share for the periods ended March 31, 2023 and 2022:

	2023	2022
Net income (loss) for the period	$17,799	$(51,455)
Weighted average number of shares – basic	56,033,552	56,033,552
– diluted	56,033,552	56,033,552
Basic and diluted net income (loss) per share (1)	$0.00	$(0.00)

(1) Due to the loss in the period of 2022, the diluted weighted average number of shares used to calculate the diluted net loss per share is the same as the basic weighted average number of shares as the inclusion of dilutive shares would be anti-dilutive.

11. Related Party Transactions

Consulting services were provided by management personnel who are officers of the Company and companies owned by officers of the

Company. The directors of the Company did not receive any cash compensation in their capacity as directors during the periods ended March 31, 2023 and 2022. The remuneration of directors and officers of the Company for the periods ended March 31, 2023 and 2022 are as follows:

	2023		2022
	CashCompensation$	Fair value ofstock-basedcompensation$	TotalCompensation$	CashCompensation$	Fair value ofstock-basedcompensation$	TotalCompensation$
Directors	-	-	-	-	-	-
Officers
Niyazi Kacira – Chairman andPresident	- (1)	-	-	-	-	-
MariaAu–SecretaryTreasurer	13,500	-	13,500	13,500	-	13,500
	13,500 (2)	-	13,500	13,500	-	13,500
Total–DirectorsandOfficers	13,500	-	13,500	13,500	-	13,500

(1) Niyazi Kacira, Chairman and President of the Company, voluntarily offered to provide his professional services to the Company without any cash compensation effective January 1, 2015, to help the Company to reduce its expenses.

(2) These fees have been allocated all to administrative expenses (2022 - $13,500).

The Company did not pay any other benefits, apart from the compensation reported above, to the directors and officers during the periods ended March 31, 2023 and 2022.

12. Key Management Personnel Compensation

The Company recognized the professional fees of $13,500 (2022 - $13,500) for its key management personnel for the period ended March 31, 2023.

13. Commitments

a) In October 2010 the Company signed an agreement to pay $50,000 as termination fee to Maria Au, an officer of the Company, when her service to the Company terminates in the future.

b) The Company is committed to certain royalty payments on its oil production assets, the cost of which cannot be reasonably estimated.

14. Management of Capital

The Company includes the following in its capital as at March 31, 2023 and 2022:

	2023$	2022$
Shareholders' equity comprised of
Share capital	34,003,020	34,003,020
Contributed surplus	3,251,391	3,238,391
Deficit	(33,652,208)	(33,678,234)
Accumulated other comprehensive income	958,671	1,380,625
	4,560,874	4,943,802

The Company's objectives when managing capital are:

• (a) to ensure that the Company maintains the level of capital necessary to meet the requirements of its exploration programs and current operating expenditures;
• (b) to allow the Company to respond to changes in economic and/or marketplace conditions;
• (c) to give shareholders sustained growth in shareholder value by increasing shareholders' equity; and
• (d) to maintain a flexible capital structure which optimizes the cost of capital at acceptable levels of risk.

The Company manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its underlying assets. The Company maintains or adjusts its capital level to enable it to meet its objectives by:

• (a) realizing proceeds from the disposition of its investments; and
• (b) raising capital through equity financings.

The Company is not subject to any capital requirements imposed by a regulator.

The payment of cash dividends does not form part of Altai's current capital management program and, to date, the Company has not declared any cash dividends on its shares. The Company's management is responsible for the management of capital. The Company expects that its current capital resources will be sufficient to discharge its liabilities for the next 12 months.

15. Financial Instruments

The Company has designated its cash and cash equivalents as fair value through profit or loss and marketable securities as investments in equity instruments measured at fair value through other comprehensive income. Accounts receivable is classified as loans and receivable, which is measured at amortized cost. Accounts payable and accrued liabilities are classified as financial liabilities measured at amortized cost.

The Company is exposed in varying degrees to a number of risks arising from financial instruments. The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. Management's close involvment in the operations allows for the identification of risks and variances from expectations. The Board approves and monitors the risk management process.

The types of risk exposure and the way in which such exposures are managed as follows:

a) Credit risk

Credit risk is the risk of financial loss to the Company if counterparty to a financial instrument fails to meet its payment obligations. The Company's exposure to credit risk includes cash and cash equivalents. The risk exposure is limited to their carrying amounts at the date of the financial position statement.

Cash and cash equivalents are maintained with financial institutions. The risk is mitigated because the financial institutions are major institutions with high credit ratings.

b) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by actively forecasting, planning, reviewing and monitoring expenditures and commitments and anticipated financial requirements.

Cash and cash equivalents on hand at March 31, 2023 and to date are expected to be sufficient to fund the Company's ongoing operational needs for the next 12 months.

c) Market risk

Market risk is the risk that changes in market prices, such as oil, natural gas and mineral prices, foreign exchange rates and interest rates will affect the Company's income. The object of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.

1) Commodity risk

The ability of the Company to develop its properties and the future profitability of the Company is directly related to the market price of certain minerals and oil and gas prices. The Company does not use derivative financial instruments to reduce its exposure to commodity price risk.

2) Currency risk

The Company is not exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company operates mainly in Canada and all of its expenses are incurred in Canadian dollars.

3) Interest rate risk

The Company is not exposed to significant interest rate risks since all of its financial instruments can be quickly turned into cash, thus avoiding additional risks.