Austin Resources Ltd. — Audit Report / Information 2022

Apr 19, 2022

AUSTIN RESOURCES LTD. CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2021 AND 2020 (EXPRESSED IN CANADIAN DOLLARS)

==> picture [145 x 113] intentionally omitted <==

Independent Auditor’s Report

To the Shareholders of Austin Resources Ltd.

Opinion

We have audited the consolidated financial statements of Austin Resources Ltd. and its subsidiary (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2021 and 2020, and the consolidated statements of loss and comprehensive loss, consolidated statements of cash flows, and consolidated statements of changes in equity (deficiency) for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2021 and 2020 and its consolidated financial performance and its consolidated 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 consolidated financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company had an accumulated net loss and working capital deficiency as of December 31, 2021. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

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

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

==> picture [109 x 55] intentionally omitted <==

Page 1

==> picture [145 x 76] intentionally omitted <==

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 consolidated financial 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 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 consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in 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 judgement 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 risks 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.

Page 2

==> picture [145 x 76] intentionally omitted <==

• 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.

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 of the audit resulting in this independent auditor’s report is Koko Yamamoto.

McGovern Hurley LLP

==> picture [148 x 41] intentionally omitted <==

Chartered Professional Accountants Licensed Public Accountants

Toronto, Ontario April 19, 2022

Page 3

Austin Resources Ltd. Consolidated Statements of Financial Position (Expressed in Canadian Dollars)

		As at		As at
	December 31,			December 31,
		2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	21,574	$	24,138
Amounts receivable		2,809		1,268
Total assets	$	24,383	$	25,406
EQUITY (DEFICIENCY) AND LIABILITIES
Current liabilities
Accounts payable and accrued liabilities (note 14)	$	32,685	$	17,799
Relatedpartyloan(note 10)		263,093		183,863
Total liabilities		295,778		201,662
Deficiency
Issued capital (note 11)		6,144,075		6,144,075
Deficit		(6,415,470)		(6,320,331)
Total deficiency		(271,395)		(176,256)
Total deficiency and liabilities	$	24,383	$	25,406

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

Nature of operations and going concern (note 1) Commitments and contingencies (note 17)

Approved on behalf of the Board:

"Weimin Fu", Director

"Dong Zheng", Director

• 1 -

Austin Resources Ltd. Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars)

		Year ended	Year ended	Year ended
	December 31,		December 31,
		2021		2020
Operating expenses
Consulting and management fees (note 14(a))	$	-	$	15,279
Professional fees (note 14(b))		53,953		81,429
Office expense		-		275
Interest expense (note 10)		19,230		11,452
Shareholder communication and filing fees		21,300		15,280
Bank charges		535		1,419
Loss for the year before other items		(95,018)		(125,134)
Foreign exchange(loss)		(121)		(3,451)
Net loss and comprehensive
loss for continuing operation for the year		(95,139)		(128,585)
Net loss and comprehensive
loss for discontinued operation
for theyear(note 8)		-		(4,103)
Total net loss and comprehensive
loss for theyear	$	(95,139)	$	(132,688)
Basic and diluted net loss
per share (note 15)	$	(0.00)	$	(0.01)
Weighted average number of common
shares outstanding - basic and diluted		21,346,618		21,346,618

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

• 2 -

Austin Resources Ltd. Consolidated Statements of Cash Flows (Expressed in Canadian Dollars)

		Year ended	Year ended	Year ended
	December 31,		December 31,
		2021		2020
Operating activities
Net loss for the year	$	(95,139)	$	(132,688)
Adjustments for:
Depreciation expense		-		44
Accrued interest expense		19,230		11,452
Gain on disposition of Minera Azul		-		(5,328)
Unrealized foreign exchange		-		(8,418)
Changes in non-cash working capital items:
Amounts receivable		(1,541)		331
Prepaid expenses and advances		-		45
Accountspayable and accrued liabilities		14,886		41,050
Net cash used in operating activities		(62,564)		(93,512)
Financing activities
Proceeds received from relatedpartyloan		60,000		35,036
Net cashprovided by financing activities		60,000		35,036
Net change in cash and cash equivalents		(2,564)		(58,476)
Cash and cash equivalents, beginning ofyear		24,138		82,614
Cash and cash equivalents, end ofyear	$	21,574	$	24,138
Supplemental information
Conversion of accountspayable into relatedpartyloan(note 10)	$	-	$	34,964

Cash flows from discontinued operations (note 8)

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

• 3 -

Austin Resources Ltd.

Consolidated Statements of Changes in Equity (Deficiency) (Expressed in Canadian Dollars)

	Number of		Issued
	shares		capital	Deficit	Total
Balance, December 31, 2019	21,346,618	$	6,144,075	$ (6,187,643) $	(43,568)
Net loss and comprehensive loss for theyear	-		-	(132,688)	(132,688)
Balance, December 31, 2020	21,346,618	$	6,144,075	$ (6,320,331) $	(176,256)
Net loss and comprehensive loss for theyear	-		-	(95,139)	(95,139)
Balance, December 31, 2021	21,346,618	$	6,144,075	$ (6,415,470) $	(271,395)

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

• 4 -

Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Austin Resources Ltd.

1. Nature of operations and going concern

Austin Resources Ltd. (individually, or collectively with its subsidiary, as applicable, “Austin Resources”, or the “Company”) completed the sale of all of its properties in Chile during the year ended December 31, 2020 and as a result of the transaction, the Company did not maintain the requirements for a TSX Venture Tier 2 company and its listing was transferred to the NEX board of the TSX Venture Exchange (the "NEX"). While the Company currently holds no mineral properties, it retains its classification as a ‘Mineral Exploration/Development’ company.

The Company’s head office and principal address in Canada is The Canadian Venture Building, 82 Richmond St East, Suite 204, Toronto, Ontario, M5C 1P1.

On February 27, 2020, the Company transferred all of its interest in the mineral exploration properties in Chile held by Minera Azul Ventures Limitada ("Minera Azul"), the Company's wholly owned Chilean subsidiary. The Company retained a 1% net smelter royalty on its interest transferred with 50% of such royalty retained being able to be acquired for US$63,166. As a result of the completion of the agreement with Bluerock Resources SPA, Minera Azul no longer had any assets. On May 14, 2020, the Company wound up operations in Chile and disposed of its interest in Minera Azul (note 8).

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from the carrying values as shown. As at December 31, 2021, the Company had not yet achieved profitable operations, had accumulated losses of $6,415,470 (December 31, 2020 - accumulated losses of $6,320,331) since inception, had a working capital deficiency of $271,395 (December 31, 2020 - working capital deficiency of $176,256) and expects to incur further losses in the search for a new business, all of which constitutes a material uncertainty which casts significant doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There is no assurance that these funds will be available on terms acceptable to the Company or at all. These consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments could be material.

Since December 31, 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

• 5 -

Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Austin Resources Ltd.

2. Principles of consolidation and basis of presentation

The consolidated financial statements comprise of the financial statements of Austin Resources Ltd. and its whollyowned Chilean subsidiary, Minera Azul to the date of disposition.

Subsidiaries

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from the date control ceases. The financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

3. Significant accounting policies

The Company applies International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). These consolidated financial statements are prepared on the historical cost basis and accrual basis except for cash flows.

The policies applied in these consolidated financial statements are based on IFRSs issued and in effect as of December 31, 2021. The Board of Directors approved these financial statements on April 19, 2022.

Cash and cash equivalents

Cash and cash equivalents include cash on hand and balances with banks and investment-grade deposit certificates with original maturities of three months or less. As at December 31, 2021 and December 31, 2020, the Company did not hold any cash equivalents.

Financial instruments

Recognition

The Company recognizes a financial asset or financial liability on the statement of financial position when it becomes party to the contractual provisions of the financial instrument. Financial assets are initially measured at fair value, and are derecognized either when the Company has transferred substantially all the risks and rewards of ownership of the financial asset, or when cash flows expire. Financial liabilities are initially measured at fair value and are derecognized when the obligation specified in the contract is discharged, cancelled or expired.

A write-off of a financial asset (or a portion thereof) constitutes a derecognition event. Write-off occurs when the Company has no reasonable expectations of recovering the contractual cash flows on a financial asset.

• 6 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. Significant accounting policies (continued)

Financial instruments (continued)

Classification and Measurement

The Company determines the classification of its financial instruments at initial recognition. Financial assets and financial liabilities are classified according to the following measurement categories:

• i) those to be measured subsequently at fair value, either through profit or loss (“FVTPL”) or through other comprehensive income (“FVTOCI”); and

• ii) those to be measured subsequently at amortized cost.

The classification and measurement of financial assets after initial recognition at fair value depends on the business model for managing the financial asset and the contractual terms of the cash flows. Financial assets that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding, are generally measured at amortized cost at each subsequent reporting period. All other financial assets are measured at their fair values at each subsequent reporting period, with any changes recorded through profit or loss or through other comprehensive income (which designation is made as an irrevocable election at the time of recognition).

After initial recognition at fair value, financial liabilities are classified and measured at either:

• i) amortized cost;

• ii) FVTPL, if the Company has made an irrevocable election at the time of recognition, or when required (for items such as instruments held for trading or derivatives); or,

• iii) FVTOCI, when the change in fair value is attributable to changes in the Company’s credit risk.

The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified.

Transaction costs that are directly attributable to the acquisition or issuance of a financial asset or financial liability classified as subsequently measured at amortized cost are included in the fair value of the instrument on initial recognition. Transaction costs for financial assets and financial liabilities classified at fair value through profit or loss are expensed in profit or loss.

The Company’s financial instruments consist of the following:

Financial assets:	Classification:
Cash and cash equivalents	Amortized cost
Amounts receivable	Amortized cost
Financial liabilities:	Classification:
Accounts payable and accrued liabilities	Amortized cost
Relatedpartyloan	Amortized cost

• 7 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. Significant accounting policies (continued)

Financial instruments (continued)

Impairment

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

Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm’s length market transactions; reference to the current fair value of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.

Exploration and evaluation properties and expenditures

All acquisition and exploration costs, net of incidental revenues, are charged to profit or loss in the period incurred until such time as it has been determined that a property is commercially viable and technically feasible, in which case subsequent exploration costs and the costs incurred to develop a property are capitalized into “mines under construction”. On the commencement of commercial production, all assets included in “mines under construction” are transferred to “producing mines” and depletion of each mining property will be provided on a unit-of-production basis using estimated resources as the depletion base.

Discontinued operation

A non-current asset or a group of assets and liabilities is held for sale when its carrying amount will be recovered principally through its divestiture and not by continuing utilization. To meet this definition, the asset must be available for immediate sale, and divestiture must be highly probable. These assets and liabilities are recognized as assets held for sale and liabilities associated with assets held for sale, without offset. The related assets recorded as assets held for sale are valued at the lower of fair value, net of divestiture fees, and cost less accumulated depreciation and impairment losses, and are no longer depreciated.

An operation is qualified as discontinued when it represents a separate major line of business and the criteria for classification as an asset held for sale have been met, when the Company has sold the asset, or when the Company has abandoned the asset or ceased the operation.

Discontinued operations are presented on a single line of the statement of loss for the periods reported, comprising the earnings after tax of discontinued operations until divestiture and the gain or loss after tax on sale or fair value measurement, less costs to sell the assets and liabilities making up the discontinued operations. In addition, the cash flows generated by the discontinued operations are presented on one separate line of the statement of consolidated cash flows for the periods presented.

Assets held for sale are reflected at the lower of their carrying amount or fair value less costs to sell and are not depreciated while classified as held for sale. Assets held for sale are classified within this category if their carrying amounts will be recovered through a sale transaction rather than through continuing use, and they are subject to impairment testing.

• 8 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. Significant accounting policies (continued)

Income taxes

Income tax included in profit or loss for the years presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recorded by providing for temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date.

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

Foreign currencies

The presentation and functional currency of the Company and its subsidiary is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the reporting date. Exchange differences are recognized in profit or loss in the period in which they arise.

Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a graded vesting basis over the period during which the employee becomes unconditionally entitled to equity instruments, based on the Company’s estimate of equity instruments that will eventually vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share-based payments reserve.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

When share purchase options are exercised, the cash proceeds and their fair value previously recorded in equity reserves are recorded as issued capital. When share purchase options expire unexercised, their fair value as previously recorded, is recorded to deficit.

• 9 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

3. Significant accounting policies (continued)

Share purchase warrants

The fair values of warrants issued by the Company are determined on their issuance date, using the Black-Scholes option pricing model, and are recorded as a component of equity reserves. When the warrants are granted as compensation for the receipt of goods or services, they are recorded either as an expense or as a cost, capitalized to issued capital or assets, on the same basis as equivalent cash payments.

When share purchase warrants are exercised, the cash proceeds and their fair value previously recorded in warrant reserves are recorded as issued capital. When share purchase warrants expire unexercised, their fair value as previously recorded, is recorded to deficit.

Loss per share

Loss per share is based on the weighted average number of common shares of the Company outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, such as outstanding stock options and warrants, in the weighted average number of common shares outstanding during the period, if dilutive. In the Company’s case, diluted loss per share is the same as basic loss per share as the effects of including all outstanding stock options and warrants would be anti-dilutive.

New standards adopted

During the year ended December 31, 2021, the Company adopted a number of amendments and improvements to existing standards. These new standards and changes did not have any material impact on the Company's financial statements.

New standards not yet adopted and interpretations issued but not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards are not expected to have a material impact on the Company in the current or future reporting periods.

4. Critical judgments and estimation uncertainties

The preparation of consolidated financial statements in conformity with IFRS requires the Company’s management to make judgments, estimates and assumptions about future events that affect the amounts reported in the financial statements and related notes to the financial statements. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may differ from those estimates.

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements include, but are not limited to:

• 10 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

4. Critical judgments and estimation uncertainties (continued)

Income, value added, withholding and other taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, value added, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

Contingencies

Refer to note 17.

5. Capital risk management

The Company manages and adjusts its capital structure based on available funds in order to support the acquisition, exploration and development of exploration and evaluation assets. The Board does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The capital of the Company consists of common shares of the Company.

The Company is dependent on external financing to fund its activities. In order to carry out planned operations, and pay for administrative costs, the Company must raise additional amounts. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There were no changes to the Company's approach to capital management during the years ended December 31, 2021 and 2020.

6. Financial instruments

		As at		As at
	December 31,			December 31,
		2021		2020
Financial assets at amortized cost
Cash and cash equivalents	$	21,574	$	24,138
Amounts receivable		2,809		1,268
Financial liabilities at amortized cost
Accounts payable and accrued liabilities	$	32,685	$	17,799
Relatedpartyloan		263,093		183,863

• 11 -

Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Austin Resources Ltd.

6. Financial instruments (continued)

Financial risk factors

The nature of the exploration process and the location of the Company’s assets exposed the Company to risks associated with fluctuations in commodity prices and foreign currency exchange rates. To date, the Company has not used derivative financial instruments to manage these risks.

Credit risk

Credit risk is the risk of loss associated with a counter-party’s inability to fulfil its payment obligations. The Company's credit risk is primarily attributable to cash. The Company has no significant concentration of credit risk arising from operations. Cash is held with reputable financial institutions, from which management believes the risk of loss to be minimal.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company. The Company expects to generate cash flow primarily from financing activities. As of December 31, 2021, the Company had net working capital deficiency of $271,395, which included cash balance of $21,574 and amounts receivable of $2,809 offset by accounts payable and accrued liabilities of $32,685 and related party loan of $263,093. The Company's financial liabilities generally have contractual maturities of less than 30 days and are subject to normal trade terms.

Market risk

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate significantly due to changes in market prices. The value of the financial instruments can be affected by changes in interest rates, prices and foreign exchange rates. Management believes the risk of loss related to market risk to be remote.

Currency risk

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company is affected by changes in exchange rates between the Canadian Dollar and foreign currencies. As at December 31, 2021, the Company held no net assets in Chilean Pesos and a 10% strengthening (weakening) of the Canadian Dollar against the Chilean Peso would not have a significant effect based on foreign currency balances at December 31, 2021.

• 12 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

6. Financial instruments (continued)

Fair value hierarchy

Cash and cash equivalents and amounts receivable are measured at amortized cost. Accounts payable and accrued liabilities and related party loan are measured at amortized cost.

IFRS 7 Financial Instruments: Disclosures requires classification of fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: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 for the asset or liability that are not based on observable market data

As at December 31, 2021 and December 31, 2020, none of the Company's financial instruments were held at fair value.

The fair value of the Company's assets and liabilities approximate their carrying value, due to their short-term nature.

7. Exploration and evaluation properties and expenditures

On February 27, 2020, the Company received approval from its shareholders and the TSX Venture Exchange for the transfer of all of its interest in the mineral exploration properties in Chile held by Minera Azul (see note 8).

8. Discontinued operation

Subsequent to the transfer of all of its interest in the mineral exploration properties in Chile held by Minera Azul, on May 14, 2020, the Company disposed of its interest in Minera Azul for $39,037, resulting in a gain on disposition of $5,328.

Pursuant to IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations, the consolidated financial statements of the Company have been reclassified to reflect discontinued operation of Minera Azul. Accordingly, net loss of discontinued operation have been segregated in the consolidated statements of loss and comprehensive loss.

• 13 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

8. Discontinued operation (continued)

The following tables present summarized financial information related to discontinued operations in Minera Azul:

Consolidated statements of loss and comprehensive loss of discontinued operations for the years ended December 31, 2021 and 2020:

		Year ended	Year ended	Year ended
	December 31,		December 31,
		2021		2020
Exploration and evaluation expenditures	$	-	$	-
Professional fees		-		8,837
Office expenses		-		41
Bank charges		-		509
Depreciation		-		44
Loss before other items		-		9,431
Foreign exchange loss		-		(5,328)
Net loss and comprehensive loss	$	-	$	4,103

Statements of cash flows of the discontinued operation for the years ended December 31, 2021 and 2020:

Year ended December 31, 2021,		2021		2020
Net cash flows provided by operating activities for discontinued operation	$	-	$	(7,385)
Cash and cash equivalents, beginning of the year
for discontinued operation		-		7,385
Cash and cash equivalents, end of the year
for discontinued operation	$	-	$	-

9. Equipment

			**Accumulated **	**Accumulated **		Net book
		Cost	depreciation			value
Balance, December 31, 2019	$	8,768	$	(8,697)	$	71
Depreciation		-		(44)		(44)
Transferred on sale of Minera Azul(note 4)		(8,768)		8,741		(27)
Balance, December 31, 2020 and December 31, 2021	$	-	$	-	$	-

The Company’s equipment was located in Chile.

• 14 -

Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Austin Resources Ltd.

10. Related party loan

During the year ended December 31, 2019, the Company entered into a loan agreement with a shareholder of the Company in the amount of $100,000 at an interest rate of 10% per annum. During the year ended December 31, 2020, the Company incurred an additional loan from the shareholder in the amount of $70,000 which is comprised of $35,036 cash proceeds and $34,964 converted from accounts payable settled by the shareholder. During the year ended December 31, 2021, the Company incurred an additional loan from the shareholder in the amount of $60,000. During the year ended December 31, 2021, the Company accrued interest expense of $19,230 (year ended December 31, 2020 - $11,452). As at December 31, 2021, the Company owes $263,093 (December 31, 2020 - $183,863) including accrued interest.

11. Share capital

a) Authorized share capital

The authorized share capital consisted of an unlimited number of common shares without par value.

b) Common shares issued

								Number of
								common
								shares	Amount
Balance,December	31,	2019,December	31,	2020	and December	31,	2021	21,346,618 $	6,144,075

12. Warrants

The Company had no warrants outstanding as at December 31, 2021 and December 31, 2020.

13. Stock options

The Company has adopted a stock option plan (the “Plan"), to be administered by the Directors of the Company. Under the Plan, the Company may grant options to directors, officers, employees and consultants to purchase shares of the Company. The Plan provides for the issuance of stock options to acquire up to 10% of the Company's issued and outstanding capital. The plan is a rolling plan as the number of shares reserved for issuance pursuant to the grant of stock options will increase as the Company’s issued and outstanding share capital increases. Options granted under the Plan will be for a term not to exceed five years. The plan provides that it is solely within the discretion of the Board to determine who should receive stock options, in what amounts, and determine vesting terms. The exercise price for any stock option shall not be lower than the market price of the underlying common shares at the time of grant.

Each stock option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The Company settles stock options exercised through the issuance of common shares from treasury.

The Company had no stock options outstanding as at December 31, 2021 and December 31, 2020.

• 15 -

Austin Resources Ltd. Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

14. Related party transactions

(a) Compensation of key management personnel of the Company

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of the Board of Directors, corporate officers, including the Chief Executive Officer and the Chief Financial Officer, as well the Country Manager.

		Year ended	Year ended
	December 31,		December 31,
		2021	2020
Salaries and benefits	$	-	$ 10,279

(b) Transactions with related parties

The Chief Financial Officer is an employee of Marrelli Support Services Inc. ("MSSI"), a firm providing accounting services. During the year ended December 31, 2021, the Company incurred $38,193(year ended December 31, 2020 - $31,898) for accounting services (included in professional fees) rendered by MSSI. As at December 31, 2021, MSSI was owed $1,784 (December 31, 2020 - $1,784) and this amount was included in accounts payable and accrued liabilities. The amount is unsecured, non-interest bearing and due on demand.

Refer to note 10.

15. Loss per share

For the year ended December 31, 2021, basic and diluted loss per share has been calculated based on the loss attributable to common shareholders of $95,139 (year ended December 31, 2020 - $132,688) and the weighted average number of common shares outstanding of 21,346,618 (year ended December 31, 2020 - 21,346,618).

• 16 -

Notes to Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in Canadian Dollars)

Austin Resources Ltd.

16. Income taxes

(a) Provision for income taxes

Major items causing the Company’s income tax rate to differ from the combined Canadian federal and provincial statutory rate of 26.5% (2020 – 26.5%) were as follows:

		Year ended	Year ended	Year ended
	December 31,		December 31,
		2021		2020
Loss before income taxes	$	(95,139)	$	(132,688)
Expected income tax recovery based on statutory rate		(25,000)		(35,000)
Adjustment to expected income tax benefit:
Other		25,000		35,000
Deferred income taxprovision(recovery)	$	-	$	-

(b) Deferred income tax

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences:

	As	at		As at
	December 31,		December 31,
	2021			2020
Non-capital loss carry-forwards	$	1,434,000	$	1,332,000
Share issue costs		22,000		32,000
Resource property costs		300,000		300,000
Other		112,000		112,000
Capital loss		5,415,000		5,415,000
Total	$	7,283,000	$	7,191,000

As at December 31, 2021, the Company has approximately $1,434,000 of non-capital losses in Canada, which under certain circumstances can be used to reduce the taxable income of future years. The Canadian losses expire starting 2031 through to 2041.

Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profits will be available against which the Company and its subsidiary will be able to utilize the benefits.

17. Commitments and contingencies

The Company’s activities were subject to various laws and regulations. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

• 17 -