Argenta Silver Corp. — Audit Report / Information 2021

Apr 26, 2022

Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Canadian dollars)

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Butte Energy Inc.

Opinion

We have audited the accompanying consolidated financial statements of Butte Energy Inc.(the "Company"), which comprise the consolidatedstatements of financial position as at December 31, 2021 and 2020, and the consolidated statements of net loss and comprehensive loss, shareholders' equity (deficiency), and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated 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 audit 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 ConsolidatedFinancial 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 consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has an accumulated deficit of $22,829,666 and working capital of $54,375as at December 31, 2021. As stated in Note 1,these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.

Our opinion on the consolidatedfinancial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidatedfinancial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated 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 ConsolidatedFinancial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated 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 ConsolidatedFinancial Statements

Our objectives are to obtain reasonable assurance about whether the consolidatedfinancial 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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'sreport is Glenn Parchomchuk.

April 26, 2022

Vancouver, Canada Chartered Professional Accountants

BUTTE ENERGY INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION EXPRESSED IN CANADIAN DOLLARS

	December 31, December 31,
	2021	2020
Assets
Current assets
Cash	$40,520	$246,299
Amounts receivable	7,899	5,793
Reclamation deposits (Note 4)	97,525	97,038
Prepaid expenses	3,684	-
	149,628	349,130
Total assets	$149,628	$349,130
Liabilities
Current liabilities
Amounts payable and accrued liabilities	$21,309	$52,100
Provision for environmental liabilities (Note 5)	73,944	80,870
Total liabilities	95,253	132,970
Shareholders' equity
Share capital (Note 6)	21,840,691	21,495,478
Equity reserve (Note 6)	1,043,350	1,188,563
Deficit	(22,829,666)	(22,467,881)
Total shareholders' equity	54,375	216,160
Total liabilities and shareholders' equity	$149,628	$349,130

Nature of operations and going concern (Note 1) Other events (Note 12) Subsequent events (Note 13)

Approved by the Board of Directors and authorized for issue on April 26, 2022

"Geir Liland" Director

"D. Jeffrey Harder" Director

BUTTE ENERGY INC. CONSOLIDATED STATEMENTS OF NET LOSS AND COMPREHENSIVE LOSS EXPRESSED IN CANADIAN DOLLARS

		Years ended December 31,
	2021	2020
Expenses
Advisory and consulting	$115,000	$30,000
Exploration expenses	-	232
Professional fees	237,035	50,264
Regulatory and transfer agent	2,329	45,491
Office and administration	14,873	11,114
Share-based compensation (Note 7(a))	-	798,670
	(369,237)	(935,771)
Finance expense (Note 7(b) and Note 7(c))	-	(57,033)
Finance income	526	909
Gain on write-off of liabilities (Note 8)	-	56,827
Gain on write-off of provision (Note 5)	6,926	-
	7,452	703
Net loss and comprehensive loss	$(361,785)	$(935,068)
Basic and diluted loss per share	$(0.00)	$(0.00)
Weighted average number of common shares
outstanding - basic and diluted	318,697,389	306,263,390

BUTTE ENERGY INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY) EXPRESSED IN CANADIAN DOLLARS

				Equity
	Share capital		Equity	component of		Total shareholders'
	Number	Amount	reserve	convertible loan	Deficit	equity (deficiency)
Balance at December 31, 2019	303,066,402	$ 20,612,174	$389,893	$92,085	$ (21,532,813)	$(438,661)
Conversion of convertible loan	7,158,900	473,208	-	(92,085)	-	381,123
Exercise of warrants	7,158,900	410,096	-	-	-	410,096
Share-based compensation	-	-	798,670	-	-	798,670
Net loss and comprehensive loss	-	-	-	-	(935,068)	(935,068)
Balance at December 31, 2020	317,384,202	21,495,478	1,188,563	-	(22,467,881)	216,160
Exercise of share options	2,000,000	345,213	(145,213)	-	-	200,000
Net loss and comprehensive loss	-	-	-	-	(361,785)	(361,785)
Balance at December 31, 2021	319,384,202	$ 21,840,691	$ 1,043,350	$-	$ (22,829,666)	$54,375

BUTTE ENERGY INC. COSNOLIDATED STATEMENTS OF CASH FLOW EXPRESSED IN CANADIAN DOLLARS

	Years ended December 31,
	2021	2020
Operating activities
Net loss	$(361,785)	$(935,068)
Items not involving cash:
Finance expense (Note 7(c))	-	57,033
Finance income	(487)	(909)
Gain on write-off of liabilities	-	(56,827)
Gain on write-off of provision	(6,926)	-
Share-based compensation	-	798,670
Changes in non-cash working capital items:
Amounts receivable	(2,106)	84
Prepaid expenses	(3,684)	-
Amounts payable and accrued liabilities	(30,791)	(38,153)
	(405,779)	(175,170)
Financing activities
Proceeds from the exercise of share options	200,000	-
Proceeds from the exercise of warrants	-	410,096
Proceeds received from promissory note (Note 7(b))	-	55,000
Repayment of promissory note	-	(55,000)
Promissory note interest paid	-	(2,640)
	200,000	407,456
Change in cash	(205,779)	232,286
Cash, beginning of year	246,299	14,013
Cash, end of year	$40,520	$246,299
Supplemental cash flow information:
Payments for interest (Note 7(b))	$-	$2,640
Payments for tax	$-	$-
Non-cash transactions:
Issuance of shares for conversion of convertible loan (Note 7(c))	$-	$381,123

1. NATURE OF OPERATIONS AND GOING CONCERN

Butte Energy Inc. ("Butte" or the "Company") is incorporated under the Business Corporations Act (British Columbia). The Company's head office and principal address is 3123-595 Burrard Street, Vancouver, British Columbia, Canada, V7X 1J1. The Company lists its common shares on the NEX board of the TSX Venture Exchange under the symbol BEN.H.

The Company had been engaged in the acquisition, exploration and development of petroleum and natural gas reserves in Western Canada. In 2017, the Company sold its last remaining asset and has no active operations other than the completion of reclamation activities on previously abandoned wells. In October 2020, there was a change of control of the Company with a new board and management team appointed.

These consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has an accumulated deficit of $22,829,666 and working capital of $54,375 as at December 31, 2021. The Company incurred a net loss and comprehensive loss of $361,785 for the year ended December 31, 2021.

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

These factors indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the going concern basis of accounting be inappropriate. In order to fund future operations or acquisitions, the Company will need to raise additional funds by way of equity or debt. There is no assurance that the Company will be able to raise such funds on terms acceptable to it.

2. BASIS OF PRESENTATION

(a) Statement of Compliance

These annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") and the Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

Significant accounting policies under IFRS are presented in Note 3.

(b) Basis of Measurement

The consolidated financial statements have been prepared on a historical cost basis except where noted in the accounting policies. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

(c) Functional and Presentation Currency

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

2. BASIS OF PRESENTATION (Continued)

(d) Basis of consolidation

These consolidated financial statements include the accounts of the Company and its whollyowned subsidiary, being 1289087 B.C. Ltd. (British Columbia). 1289087 B.C. Ltd. was incorporated under the BCBCA on February 16, 2021 for the purpose of the terminated Transaction (see Note 12).

Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries, including entities which the Company controls, are included in the consolidated financial statements from the date that control commences until the date that control ceases. All intercompany transactions and balances have been eliminated.

(e) Management Estimates and Judgments

The preparation of financial statements requires management to make estimates and use judgment regarding the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the year. By their nature, estimates are subject to measurement uncertainty and changes in such estimates in future years could require a material change in the financial statements.

Accordingly, actual results may differ from the estimated amounts as future confirming events occur. Significant estimates and judgments made by management in the preparation of these consolidated financial statements are as follows:

• (i) Amounts recorded for the provision of environmental liabilities require the use of estimates with respect to the amount and timing of reclamation expenditures. The ultimate amount and timing of the restoration expenses are uncertain and cost estimates can vary in response to many factors. Based on a review of the expected timing of future cash flows, it was management's judgment that the time value of money was not material and therefore did not need to present value the expenditures expected to be required to settle the obligation.
• (ii) Convertible debentures are accounted for in accordance with their substance and are presented in their component parts of debt and equity. The Company estimates the fair value of the debt component of convertible debentures by calculating the discounted cash flows of the debenture using an effective interest rate of a similar instrument but without the conversion feature. Similar instruments may have certain features that, while similar, may differ, such as the term, amount, security, and credit risk, and therefore management are required to exercise significant judgment or estimate in determining an appropriate discount rate.
• (iii) Tax interpretations, regulations and legislation are subject to change. As such, income taxes are subject to measurement uncertainty. Management assesses deferred income tax assets at the end of the reporting period to determine the likelihood that they will be realized from future taxable earnings.
• (iv) Going Concern presentation of the financial statements which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements, and have been applied consistently by the Company.

(a) Cash

Cash includes deposits held with banks that are available on demand.

(b) Financial instruments

Financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets and liabilities are not offset unless the Company has the current legal right to offset and intends to settle on a net basis or settle the asset and liability simultaneously.

Classification of Financial Assets and Financial Liabilities:

The initial classification of a financial asset depends upon the Company's business model for managing its financial assets and the contractual terms of the cash flows. There are three measurement categories into which the Company classified its financial assets:

• Amortized Cost: Includes assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that represent solely payments of principal and interest;
• Fair Value through Other Comprehensive Income ("FVOCI"): Includes assets that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets, where its contractual terms give rise on specified dates to cash flows that represent solely payments of principal and interest; or
• Fair Value Through Profit or Loss ("FVTPL"): Includes assets that do not meet the criteria for amortized cost or FVOCI and are measured at fair value through profit or loss. This includes all derivative financial instruments.

The following table shows the measurement categories under IFRS 9 for each class of the Company's financial assets and financial liabilities:

Financial Asset/Liability	IFRS 9 classification
Cash	FVTPL
Accounts receivable	Amortized cost
Accounts payables	Amortized cost

(b) Financial instruments (Continued)

Measurement:

Financial assets at FVOCI

Elected investments in equity instruments at FVOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income (loss).

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 net loss and 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 net loss and comprehensive loss in the period in which they arise. Where management has opted to recognize a financial liability at FVTPL, any changes associated with the Company's own credit risk will be recognized in other comprehensive income (loss).

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 twelve month expected credit losses. The Company applies the simplified method and measures a loss allowance equal to the lifetime expected credit losses for trade receivables.

The Company recognizes in the statements of net loss and 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.

(b) Financial instruments (Continued)

Fair value hierarchy

The Company characterizes its fair value measurements into a three-level hierarchy depending on the degree to which the inputs are observable, as follows:

• Level 1 inputs are quoted prices in active markets for identical assets and liabilities;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

The fair value of cash is measured based on level 1 inputs of the fair value hierarchy.

(c) Provisions

A provision is recognized if, due to a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Provisions are not recognized for future operating losses

(d) Asset retirement obligations (ARO)

The Company's activities give rise to dismantling, decommissioning and site disturbance remediation activities. Provision is made for the estimated cost of site restoration, and capitalized in the relevant asset category.

Asset retirement obligations are measured at the present value of management's best estimate of expenditures required to settle the present obligation at the statement of financial position date. Subsequent to the initial measurement, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation.

The increase in the provision due to the passage of time is recognized as finance costs in the statement of net loss and comprehensive loss whereas increases/decreases due to changes in the estimated future cash flows are capitalized. Actual costs incurred upon settlement of the asset retirement obligations are charged against the provision to the extent the provision was established.

(e) Convertible debentures

Convertible debentures and debenture units with detachable equity are accounted for in accordance with their substance and are presented in their component parts of debt and equity. The debt component is measured at the present value of the cash payments of interest and principal due over the term of the debentures using interest rates of comparable non-convertible debt. The difference between the face value of the debentures and the debt component value is allocated to the equity component, to the extent that the fair value of a detachable equity instrument does not exceed the fair value of the underlying common share. When the convertible debentures are distributed in conjunction with warrants, the fair value of the warrants and the conversion feature is estimated using the Black-Scholes option valuation model. The residual equity component is allocated pro rata between the conversion feature and the warrants based on their relative fair values.

Financing costs are allocated proportionally to the debt component and the equity component. The debt component, net of its proportional financing costs, is accreted to its face value through an interest charge over its term to maturity using the effective interest rate method. Upon conversion of the debentures, the debt portion related to the principal amount of debt converted is recognized as a charge to share capital.

(f) Share capital

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

(g) Share-based payments

The Company's share option plan allows Company employees, directors, officers, consultants and charitable organizations to acquire shares of the Company. The fair value of options granted is recognized as share-based compensation expense with a corresponding increase in equity reserve.

Fair value is measured at grant date, and each tranche is recognized using the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, sharebased payments are measured at the fair value of goods or services received.

(h) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of net loss and comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using enacted tax rates or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(i) Loss per share

Basic earnings per share is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of dilutive instruments such as options granted to employees. Diluted earnings per share does not adjust the earnings attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

(j) Segmented reporting

The Company operates in a single reportable operating segment, which historically has consisted of the acquisition of and exploration and development of oil and gas properties. The Company currently has no active operations other than the completion of reclamation activities on previously abandoned wells, and has been evaluating potential opportunities, including those outside of the oil and gas industry (Note 1).

(k) Recent accounting standards

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or IFRIC.

The following amendments are effective for the period beginning January 1, 2023:

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that 'settlement' includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument.

Definition of Accounting Estimates (Amendments to IAS 8)

In February 2021, the IASB issued amendments to IAS 8 Accounting Policies, Changes to Accounting Estimates and Errors, in which it introduces a new definition of 'accounting estimates'. The amendments are designed to clarify the distinction between changes in accounting estimates and changes in accounting policies and the correction of errors

The Company is currently assessing the impact of these accounting standards and amendments. The Company does not believe that these amendments will have a significant impact on its financial statements.

4. RECLAMATION DEPOSITS

In January 2018, the Company was required to provide a security deposit to the Alberta Energy Regulator in order for the Company to proceed with the finalization of the reclamation on previously abandoned wells. These deposits are refundable upon final acceptance of the reclamation certificates by the Alberta Energy Regulator.

The deposits are held in trust in an interest-bearing bank account. Interest income on the account is recorded in finance income in the statements of net loss and comprehensive loss.

5. PROVISION FOR ENVIRONMENTAL LIABILTIES

Notes to the Consolidated Financial Statements
PROVISION FOR ENVIRONMENTAL LIABILTIES
The Company recorded a provision for the completion of reclamation activities on previously
abandoned wells.
	Provision
Balance, December 31, 2019	$80,870
Additions	8,000
Settlement of liabilities	(8,000)
Balance, December 31, 2020	80,870
Additions	11,674
Settlement of liabilitiesBalance, December 31, 2021	$(18,600)73,944

6. SHARE CAPITAL

(a) Authorized

Authorized share capital consists of an unlimited number of common shares without nominal or par value and unlimited number of preferred shares without par value.

(b) Issued and fully paid common shares

During the year ended December 31, 2021, 2,000,000 shares were issued pursuant to the exercise of 2,000,000 share options for proceeds of $200,000.

As at December 31, 2021, there were 319,384,202 common shares issued and outstanding.

During the year ended December 31, 2020

Settlement of debt

On October 8, 2020, the Company issued 6,000,000 units of the Company at $0.05 per unit, with each unit consisting of one common share and one common share purchase warrant, exercisable at a price of $0.05 until October 8, 2021 to settle $300,000 principal debt of the convertible loan (Note 7(c)). The Company also issued 1,158,900 units of the Company at $0.07 per unit, with each unit consisting of one common share and one common share purchase warrant, exercisable at a price of $0.095 until October 8, 2021 to settle $81,123 of accrued interest relating to the debenture (Note 7(c)).

During the year ended December 31, 2020 (Continued)

Exercise of warrants

On October 13, 2020, 7,158,900 warrants or all of the warrants issued as per above were exercised for proceeds of $410,096.

6. SHARE CAPITAL (Continued)

(c) Share options

The Company has established a rolling Share Option Plan (the "Plan"). Under the Plan, the number of shares reserved for issuance may not exceed 10% of the total number of issued and outstanding shares and, to any one optionee, may not exceed 5% of the issued shares on a yearly basis. The maximum term of each option shall not be greater than ten years. The exercise price of each option shall not be less than the market price of the Company's shares at the date of grant. Options granted to consultants performing investor relations activities shall vest over a minimum of 12 months with no more than 1/4 of such Options vesting in any three month period. All other options vest at the discretion of the Board of Directors. Risk-free interest rate 0.51% Annualized volatility 75% Dividend rate 0.00%

During the year ended December 31, 2020

	2020
Expected life (years)	10 years

		There were no share options granted during the year ended December 31, 2021.
$200,000.		During the year ended December 31, 2021, 2,000,000 share options were exercised for proceeds of
During the year ended December 31, 2020
		On October 8, 2020, 11,000,000 share options were granted to directors, officers, consultants andcharitable organizations at a price of $0.10 per share, exercisable until October 8, 2030. Using theBlack-Scholes valuation model, the grant date fair value was $798,670, or $0.073 per option.
		The following weighted average assumptions were used for the valuation of the share options:
		2020
Expected life (years)		10 years
Annualized volatility		75%
Dividend rate		0.00%
		A summary of the changes in share options is presented below:
			Number ofoptions	Weighted averageexercise price
Balance, December 31, 2019			-	$-
Granted			11,000,000	0.10
Balance, December 31, 2020			11,000,000	0.10
Exercised			(2,000,000)	0.10
Balance, December 31, 2021			9,000,000	$0.10
December 31, 2021:Outstanding andexercisable	Exercise price	The following table summarizes information about the share options outstanding and exercisable atExpiry date
500,000	$0.10	August 6, 2022
8,500,000	0.10	October 8, 2030
9,000,000
				18

Outstanding and
500,000	$0.10	August 6, 2022
9,000,000

6. SHARE CAPITAL (Continued)

(d) Warrants

Notes to the Consolidated Financial Statements
SHARE CAPITAL (Continued)
(d) Warrants
A summary of the changes in warrants is presented below:
	Warrants	Weighted average
			exercise price
	outstanding
Balance, December 31, 2019	-	$	-
Issued (Note 6(b))	7,158,900		0.06
Exercised (Note 6(b))Balance, December 31, 2020 and 2021	(7,158,900)-	$	0.06-

7. RELATED PARTY TRANSACTIONS

(a) Compensation of key management personnel

(b) Demand promissory note due to a related party

(a)	Compensation of key management personnel
	Key management personnel are those persons who have authority and responsibility for planning,directing, and controlling the activities of the Company, directly or indirectly. Senior managementpersonnel include the Company's executive officers and members of the Board of Directors.
2021.	There was no compensation to key management personnel during the year ended December 31,
	During the year ended December 31, 2020, key management personnel compensation includedshare-based compensation of $145,213 (Note 6(c)).
(b)	Demand promissory note due to a related party
	On May 7, 2020, the Company borrowed the principal amount of $55,000 from a former majorityshareholder, Stone's Throw Capital Inc. ("Stone's Throw"), which bore interest at 12% per annum andwas due on demand. Interest expense was included in finance expense in the statements of net lossand comprehensive loss. In October 2020, the Company repaid $57,640 of promissory notes andaccrued interest. The promissory note is presented in the financial statements as follows:
		Promissory note
	Balance, December 31, 2019	$-
	Proceeds received from issue of demand promissory note	55,000
	Finance expense	2,640
	Settlement	(57,640)

7. RELATED PARTY TRANSACTIONS (Continued)

(c) Convertible loan due to a related party

On January 3, 2018, the Company borrowed the principal amount of $300,000 from Stone's Throw, which bore interest at 10% per annum and was repayable on the date that is 12 months from the date of issuance. In January 2019, the term of the convertible loan was extended to January 4, 2021 from January 3, 2019.

In October 2020, the debt owing on the principal amount and accrued interest was assumed by a third party and settled by the Company.

On October 8, 2020, the Company issued 6,000,000 units of the Company at $0.05 per unit, with each unit consisting of one common share and one common share purchase warrant, exercisable at a price of $0.05 until October 8, 2021 to settle $300,000 principal debt. The Company also issued 1,158,900 units of the Company at $0.07 per unit, with each unit consisting of one common share and one common share purchase warrant, exercisable at a price of $0.095 until October 8, 2021 to settle $81,123 of accrued interest (Note 6(b)).

The convertible loan was classified as debt with the residual value allocated to shareholders' equity. The initial fair value of the liability portion of the convertible loan was determined using a market interest rate of 13% for an equivalent non-convertible loan at the issue date. The liability is subsequently recognized on an amortized cost basis until extinguished on conversion or maturity of the convertible loan. The remainder of the proceeds is allocated to the conversion option and recognized in shareholders' equity and not subsequently re-measured. At conversion, during the year ended December 31, 2020, $92,085 of equity portion of convertible loan was reclassified to share capital. Balance, December 31, 2019 326,730 $ Finance expense 54,393 Conversion to common shares (381,123) Balance, December 31, 2020 and 2021 - $

Interest expense was calculated by applying the effective interest rate of 13% to the liability component and was included in finance expense in the statements of net loss and comprehensive loss.

The convertible loan is presented in the financial statements as follows:

	Convertible note

(d) Advance from a related party

On September 11, 2020, Stone's Throw advanced $32,000 to the Company. This loan was noninterest bearing and payable on demand. In October 2020, the Company repaid $32,000 of advances.

8. WRITE-OFF OF LIABILITIES

During the year ended December 31, 2020, the Company wrote off $56,827 of accounts payable related to legal fees from 2019, resulting in a gain on write-off of liabilities in the statement of net loss and comprehensive loss.

9. FINANCIAL INSTRUMENTS

Financial Risk Management and Fair Value Measurement

The Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's financial instruments consist of cash, amounts receivable, reclamation deposits and amounts payable and accrued liabilities. Their carrying values approximate fair value due to the short-term nature of these instruments. Cash is carried at fair value.

Financial Instrument Risk Exposure

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes.

Credit Risk

Credit risk arises from the potential for non-performance by counterparties of contractual financial obligations. The Company is exposed to credit risk on cash. The Company reduces its credit risk on cash by maintaining its bank account with a large international financial institution. The maximum exposure to credit risk is equal to the carrying value of its cash.

Liquidity Risk

The Company's cash is invested in bank accounts which are available on demand. As at December 31, 2021, the Company had working capital of $54,375 and requires additional funding to continue operations for the next twelve months (Note 1).

Market Risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign currency and price risk.

a) Interest Rate Risk

The Company is nominally exposed to interest rate risk. The Company's cash earns interest at variable rates. Interest rate exposure is considered to be insignificant.

b) Foreign Currency Risk

The Company is nominally exposed to material currency risk.

c) Price Risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

10. INCOME TAX

Notes to the Consolidated Financial Statements
Reconciliation of effective tax rate:
	2021	2020
Loss for the year	$(361,785)	$(935,068)
Expected income tax (recovery)	(98,000)	(252,000)
Permanent differences	-	216,000
Adjustment to prior years provision versus statutory tax returns and expiry of non-capital losses	26,000	-
Change in unrecognized deductible temporary differences	72,000	36,000
Total income tax expense (recovery)	$-	$-
There is no recognition of deferred tax assets in respect of the following items:
	2021	2020
Deferred tax assets (liabilities)
Exploration and evaluation assets	$1,628,000	$1,628,000
Non-capital losses available for future period	3,329,000	3,257,000
	4,957,000	4,885,000
Unrecognized deferred tax assetsNet deferred tax assets (liabilities)	(4,957,000)	(4,885,000)
	$-	$-

	2021	2020
Deferred tax assets (liabilities)
Exploration and evaluation assets	$1,628,000$	1,628,000
Non-capital losses available for future period	3,329,000	3,257,000
	4,957,000	4,885,000
Unrecognized deferred tax assets	(4,957,000)	(4,885,000)

	2021	Expiry Date Range	2020	Expiry Date Range
Temporary Differences
Exploration and evaluation assets	$6,030,000	No expiry date	$6,030,000	No expiry date
Non-capital losses available for future periods	12,331,000	2024 to 2041	12,023,000	2024 to 2040

11. MANAGEMENT OF CAPITAL

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern such that it can continue to provide returns for shareholders and benefits for other stakeholders.

The Company considers the items included in equity as capital. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions, business opportunity and the risk characteristics of the underlying assets. In order to maintain or adjust its capital structure, the Company may issue new shares or return capital to its shareholders. The Company is not subject to externally imposed capital requirements.

Management reviews its capital management approach on an ongoing basis. There was no change in the Company's management of capital policies during the year ended December 31, 2021.

12. OTHER EVENTS

In February 2021, the Company announced a business combination transaction (the "Transaction") with Genesis Group Limited ("Genesis Mining Group"). In connection with the Transaction, the Company announced a non-brokered private placement (the "Private Placement") of 55,000,000 subscription receipts ("Subscription Receipts") at a price of $1.00 per Subscription Receipt for gross proceeds of $55,000,000. Each Subscription Receipt was to convert into one common share of the Company immediately prior to the completion of the Transaction. The Company learned of circumstances which lead it to believe that Genesis Mining Group had breached its agreement with the Company entered in February 2021. In March 2021 and as at the date of this report, the Transaction was terminated and all funds received from subscribers to the Private Placement were returned to the subscribers.

13. SUBSEQUENT EVENTS

In March 2022, the Company announced a non-brokered private placement of 1,500,000 units (each, a "Unit") at a price of $0.07 per Unit for gross proceeds of $105,000. Each Unit consists of one common share of the Company, and one common share purchase warrant (each, a "Warrant"). Each whole Warrant entitles the holder to acquire an additional common share of the Company at a price of $0.10 per share for 1 year from the date of the closing of the offering. The private placement is subject to regulatory approval.