BCM Resources Corporation — Audit Report / Information 2020

Feb 4, 2021

BCM RESOURCES CORPORATION

FINANCIAL STATEMENTS

AUGUST 31, 2020 and 2019

(Expressed in Canadian Dollars)

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of BCM Resources Corporation

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of BCM Resources Corporation (the “Company”), which comprise the statements of financial position as at August 31, 2020 and 2019 and the statements of operations and comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2020 and 2019 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 Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial statements, which indicates that the Company has limited working capital as at August 31, 2020 and is dependent upon the ability of the Company to obtain financing and generate positive cash flows from its operations. These matters, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter

Other Information

Management is responsible for the other information. The other information comprises the information included in "Management's Discussion and Analysis" but does not include the financial statements and our auditor's report thereon.

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

In connection with our audit of the financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information; we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

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

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure, and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor’s report is James D. Gray.

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Chartered Professional Accountants

Vancouver, BC, Canada February 3, 2021

BCM Resources Corporation Statements of Financial Position As at August 31, 2020 and 2019 Expressed in Canadian dollars

		2020		2019
Assets
Current
Cash and cash equivalents	$	10,780	$	9,135
GST receivable		6,662		5,374
		17,442		14,509
Exploration and evaluation assets (Note 4)		830,575		804,420
Term deposits		14,332		14,191
	$	862,349	$	833,120
Liabilities
Current
Accounts payable and accrued liabilities	$	509,201	$	466,348
Due to relatedparties(Note 7)		194,932		196,295
		704,133		662,643
Shareholders’ Equity
Share capital (Note 5)		8,715,068		8,689,421
Subscription receipts (Note 5)		17,500		-
Reserves (Note 6)		1,532,137		1,522,893
Deficit		(10,106,489)		(10,041,837)
		158,216		170,477
	$	862,349	$	833,120

Nature of operations and going concern (Note 1) Subsequent events (Notes 4 and 10)

Approval on behalf of the Board of Directors:

“Scott Steeds” _____ Director	“Dale McClanaghan” ______ Director

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

BCM Resources Corporation Statements of Operations and Comprehensive Loss For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

		2020		2019
Expenses
Bank charges and interest	$	29	$	35,105
Filing and transfer fees		9,962		11,772
Management fees (Note 7)		9,975		30,000
Marketing		335		-
Office and miscellaneous		2,000		4,507
Professional fees		11,900		23,019
Property costs		-		21,488
Rent		5,560		27,770
Share-based compensation (Note 6)		24,891		-
Traveland promotion		-		821
Net loss and comprehensive loss for theyear	$	(64,652)	$	(154,482)
Basic and diluted lossper share	$	0.00	$	0.00
Weighted average number of common shares
outstanding		39,010,223		35,539,949

The accompanying notes are an integral part of these financial statements

BCM Resources Corporation

Statements of Changes in Equity For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

	Number of	Share	Subscription
	Shares	Capital	Receipts	Reserves	Deficit	Total
		$	$	$	$	$
Balance, August 31, 2018	38,093,511	8,568,038	-	1,550,276	(9,887,355)	230,959
Options exercised (Note 5)	350,000	44,883	-	(27,383)	-	17,500
Shares issued per option agreement (Note 4)	450,000	76,500	-	-	-	76,500
Net loss for theyear	-	-	-	-	(154,482)	(154,482)
Balance, August 31, 2019	38,893,511	8,689,421	-	1,522,893	(10,041,837)	170,477
Options exercised (Note 5)	200,000	25,647	-	(15,647)	-	10,000
Subscriptions received (Note 5)	-	-	17,500	-	-	17,500
Share-based compensation (Note 6)	-	-	-	24,891	-	24,891
Net loss for theyear	-	-	-	-	(64,652)	(64,652)
Balance, August 31, 2020	39,093,511	8,715,068	17,500	1,532,137	(10,106,489)	158,216

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

BCM Resources Corporation

Statements of Cash Flows For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

	2020 2019
CASH FLOWS USED IN OPERATING ACTIVITIES: Net loss for the year Adjustments for items not affecting cash: Accrued interest Share-based compensation Changes in non-cash operating working capital: GST receivable Accounts payable and accrued liabilities Due to related parties	$(64,652) $ (154,482) (141) (43) 24,891 - (1,288) (1,933) 16,698 74,564 (1,363) 76,019
Net cash flows used in operating activities	(25,855) (5,875)
CASH FLOWS USED IN INVESTING ACTIVITIES: Exploration and evaluation assets	- (34,318)
Net cash flows used in investing activities	- (34,318)
CASH FLOWS FROM FINANCING ACTIVITIES: Stock options exercised Subscriptions received	10,000 17,500 17,500 -
Net cash flows from financing activities	27,500 17,500
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents, beginning of year	1,645 (22,693) 9,135 31,828
Cash and cash equivalents, end ofyear	$ 10,780 $ 9,135

The accompanying notes are an integral part of these financial statements

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

1. NATURE OF OPERATIONS AND GOING CONCERN

BCM Resources Corporation ("BCM" or the "Company") is a publicly listed company incorporated in British Columbia with limited liability under the legislation of the Province of British Columbia and its shares are listed on the Toronto Stock Exchange-Venture ("TSX-V"). The Company is principally engaged in the acquisition, exploration, development and mining of mineral properties.

The head office, principal address, and registered and records office of the Company are located at Suite 1780 - 400 Burrard Street, Vancouver, BC, V6C 3A6.

The Company is in the process of exploring its mineral property interests and has not yet determined whether its investment in the Carter Property contains mineral reserves that are economically recoverable. This investment is recorded on actual historical costs incurred to date and is not intended to be reflective of the current or future fair value of the property interest. The Company's continuing operations and the underlying value and recoverability of the costs incurred to date are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development, obtain the necessary permits to mine, and on future profitable production or proceeds from the disposition of this investment.

These financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. The Company's ability to continue as a going concern is dependent upon the ability of the Company to obtain financing and generate positive cash flows from its operations. Management of the Company does not expect that cash flows for the Company's operations will be sufficient to cover all of its operating requirements, financial commitments and business development priorities during the next twelve months. Accordingly, the Company expects that it will need to obtain further financing in the form of debt, equity, or a combination thereof for the next twelve months. There can be no assurance that additional funding will be available to the Company, or, if available, that this funding will be on acceptable terms. If adequate funds are not available, the Company may be required to delay or reduce the scope of any or all of its development projects. These conditions indicate the existence of material uncertainties that cast significant doubt that the Company will be able to continue on a going concern basis.

2. BASIS OF PRESENTATION

• a) Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). These financial statements have been prepared under the historical cost basis, except for certain financial instruments which are measured at fair value, as explained in the accounting policies set out in Note 3.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

2. BASIS OF PRESENTATION – continued

• b) Approval of the financial statements

The financial statements of BCM Resources Corporation for the year ended August 31, 2020 were approved and authorized for use by the Board of Directors on February 3, 2021.

• c) Adoption of new and revised standard and interpretation

IFRS 16 – Leases

On September 1, 2019, the Company adopted, on a modified retrospective basis, for the first time, IFRS 16 - Leases.

IFRS 16 introduces a single lessee accounting model and requires lessees to recognize assets and liabilities for all leases, except when the term is 12 months or less or when the underlying asset has a low value. The Company recognizes a right-of-use asset and a lease liability for its leases with lease terms greater than one year. The right-of-use asset is measured at cost and depreciated over its estimated useful life. At the commencement date, the lease liability is measured as the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease or if that rate cannot be easily determined, the Company’s incremental borrowing rate. If the lease terms are subsequently changed, the present value of the lease liability is re-measured using the revised lease terms and applying the appropriate discount rate to the remaining lease payments. The Company recognizes the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognizes any remaining amount of re-measurement in profit or loss.

The adoption of IFRS 16 did not have any impact on the Company’s financial statements.

• d) Significant accounting judgments and estimates

The preparation of these financial statements requires management to make judgments, estimates, and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.

The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

2. BASIS OF PRESENTATION – continued

• d) Significant accounting judgments and estimates - continued

In particular, significant areas of judgment and estimation uncertainty considered by management in preparing the financial statements include:

• i. Judgments

  • the determination that the Company will continue as a going concern for the next year; and

  • whether, and the extent to which, specific events have occurred which persuasively suggests that recovery of the carry value of the exploration and evaluation assets is unlikely.

• ii. Estimates

  • the inputs used in the determination of the fair value of share purchase options and warrants.

• e)

• Comparative amounts

Certain comparative amounts have been reclassified to conform with the current year’s financial statement presentation.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

• a) Foreign currency translation

The Company’s presentation currency and the functional currency of all of its operations is the Canadian dollar as this is the principal currency of the economic environment in which it operates.

Transactions in foreign currencies are initially recorded in the Company’s functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the end of each reporting period.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions and are not subsequently restated. Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value is determined.

All gains and losses on translation of these foreign currency transactions are included in profit or loss.

• b) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, deposits in banks and highly liquid investments with an original maturity of three months or less. There were no cash equivalents as at August 31, 2020 and 2019.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

3. SIGNIFICANT ACCOUNTING POLICIES - continued

• c) Short-term investments

Short-term investments are investments which are transitional or current in nature, with an original maturity greater than three months.

• d) Exploration and evaluation costs

Exploration and evaluation activities involve the search for minerals, the determination of technical feasibility, and the assessment of commercial viability of an identified resource.

Exploration and evaluation costs incurred prior to obtaining licenses are expensed in the period in which they are incurred. Once the legal right to explore has been acquired, exploration and evaluation costs incurred are initially capitalized. All capitalized exploration and evaluation costs are then monitored for indications of impairment. Where there are indications of a potential impairment, an assessment is performed for recoverability, with costs charged to the statement of comprehensive loss to the extent that they are not expected to be recovered.

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets are tested for impairment and transferred to “Mines under construction.” There is no amortization during the exploration and evaluation phase.

Recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation or, alternatively, the sale of all or a portion of the property interest.

e) Flow-through shares

The Company may, from time to time, issue flow-through common shares to finance its resource exploration activities. Canadian income tax law permits the Company to renounce to the flow-through shareholders the income tax attributes of resource exploration costs financed by such shares. Flowthrough common shares are recognized in equity based on the quoted price of the existing shares on the date of the issue. The difference between the amounts recognized in common shares and the amount the investor pays for the shares is recognized as an other liability and is converted to a deferred tax recovery as eligible expenditures are incurred. The deferred tax impact is also recorded prospectively upon renunciation of the related tax benefits, provided it is expected the Company will incur the required eligible expenditures.

When flow-through expenditures are renounced, a portion of the deferred income tax assets that were not previously recognized, due to the recording of a valuation allowance, can be recognized to offset any liability that would otherwise occur on renunciation.

Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures within a two-year period.

The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the “Look-back Rule”, in accordance with Government of Canada flow-through regulations. When applicable, this tax is accrued as a financial liability until paid.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

3. SIGNIFICANT ACCOUNTING POLICIES - continued

• f) Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of a financial instrument. On initial recognition, financial assets are classified and measured as at subsequently measured at amortized cost, fair value through profit or loss (“FVTPL”) or fair value through other comprehensive income (“FVOCI”).

A financial asset is measured as at subsequently measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: (i) it is held within a business model whose objective is to holds assets to collect contractual cash flows, and (ii) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A financial asset is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: (i) it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and (ii) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities classified as FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities classified as FVTPL are recognized immediately in the statement of operations and comprehensive loss.

The Company’s financial instruments are classified and subsequently measured as follows:

Cash and cash equivalents	Amortized cost
Accounts payable and accrued liabilities	Amortized cost
Due to relatedparties	Amortized cost

Impairment of financial instruments

The Company recognizes an allowance using the Expected Credit Loss (“ECL”) model on financial assets classified as amortized cost. The Company has elected to use the simplified approach for measuring ECL by using a lifetime expected loss allowance for all amounts recoverable. Under this model, impairment provisions are based on credit risk characteristics and days past due. When there is no reasonable expectation of collection, financial assets classified as amortized cost are written off. Indications of credit risk arise based on failure to pay and other factors. Should objective events occur after an impairment loss is recognized, a reversal of impairment is recognized in the statement of operations and comprehensive loss.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

3. SIGNIFICANT ACCOUNTING POLICIES - continued

• f) Financial instruments - continued

Assets measured at amortized cost

If there is objective evidence that an impairment loss on assets carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is then reduced by the amount of the impairment. The amount of the loss is recognized in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed to the extent that the carrying value of the asset does not exceed what the amortized cost would have been had the impairment not been recognized. Any subsequent reversal of an impairment loss is recognized in profit or loss.

In relation to trade receivables, a provision for impairment is made and an impairment loss is recognized in profit and loss when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Company will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are written off against the allowance account when they are assessed as uncollectible.

• g) Share-based payment transactions

The Company grants stock options to buy common shares of the Company to directors, officers and employees. The board of directors grants such options for periods of up to five years, which vest immediately and are priced at the previous day’s closing price.

The fair value of the options is measured at grant date, using the Black-Scholes option pricing model, and is recognized over the vesting period of the options. The fair value is recognized as an expense with a corresponding increase in equity. The amount recognized as expense is adjusted to reflect the number of share options expected to vest.

Where the terms of a stock option are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional expense is recognized for any modification which increases the total fair value of the stock-based compensation arrangement or is otherwise beneficial to the employee as measured at the date of modification over the remaining vesting period.

Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

3. SIGNIFICANT ACCOUNTING POLICIES - continued

• h) Income taxes

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive income or loss.

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

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit, nor differences relating to investments in subsidiaries, and associates to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date applicable to the period of expected realization or settlement.

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

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

i)

• Share Capital

The Company records proceeds from share issuances net of issue costs and any tax effects. Common shares issued for consideration other than cash, are valued based on their market value at the date the common shares are issued.

j) Earnings (loss) per share

The Company presents basic and diluted earnings/loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. The Company uses the treasury stock method for calculating diluted earnings (loss) per share. Under this method the dilutive effect on earnings per share is calculated on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to purchase common shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be antidilutive.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

3. SIGNIFICANT ACCOUNTING POLICIES - continued

• k) Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control, related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

• l) Decommissioning liabilities

A legal or constructive obligation to incur restoration, rehabilitation and environmental costs may arise when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. A pre-tax discount rate that reflects the time value of money and the risks specific to the liability are used to calculate the net present value of the expected future cash flows. These costs are charged to the statement of loss over the economic life of the related asset, through depreciation expense using either the unit-of-production or the straight-line method as appropriate. The related liability is progressively increased each period as the effect of discounting unwinds, creating an expense recognized in the statement of loss. The liability is assessed at each reporting date for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.

Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses.

The Company has no material restoration, rehabilitation and environmental costs as the disturbance to date at its current project is minimal.

• m) Future accounting pronouncement

Effective for annual periods beginning on or after January 1, 2020:

• IAS 1, Presentation of Financial Statements.

The Company has not early adopted this new standard to existing standards and does not expect the impact of this standard on the Company's financial statements to be material.

BCM Resources Corporation

Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

4. EXPLORATION AND EVALUATION ASSETS

August 31, 2018 Additions August 31, 2019	Additions August 31, 2020
Carter Property Acquisition costs $ 365,276 $ - $ 365,276 Assay 142,050 - 142,050 Camp and miscellaneous 258,272 - 258,272 Drilling 2,974,765 - 2,974,765 Geological 1,251,432 - 1,251,432 Reports and mapping 108,279 - 108,279 Survey 180,906 - 180,906 Travel and accommodation 906,546 - 906,546 Mining tax credits (665,489) - (665,489) Write-down of exploration and evaluation assets (5,522,036) - (5,522,036)	$ - $ 365,276 - 142,050 - 258,272 - 2,974,765 - 1,251,432 - 108,279 - 180,906 - 906,546 - (665,489) - (5,522,036)
Balance, end of period $ 1 $ - $ 1	$ - $ 1
Thompson Knolls Property Acquisition costs and claims maintenance $ 63,876 $ 126,500 $ 190,376 Drilling 580,074 - 580,074 Property expenses - 33,969 33,969	$ 26,155 $ 216,531 - 580,074 - 33,969
Balance, end of period $ 643,950 $ 160,469 $ 804,419	$ 26,155 $ 830,574
Total exploration and evaluation assets $643,951 $160,469 $804,420	$ 26,155 $ 830,575

Carter Property, Terrace, British Columbia, Canada

The Company earned a 100% interest in 10 mineral claims subject to a 1.5% net smelter return ("NSR") royalty by paying $90,000 and issuing 350,000 common shares prior to September 27, 2010. In respect to the NSR, the agreement calls for advance royalty payments of $5,000 on June 15, 2009 (paid), $10,000 on June 15, 2010 (paid), $15,000 on June 15, 2011 (paid), $20,000 on June 15, 2012 (paid), $25,000 on June 15, 2013 (paid), $25,000 on June 15, 2014 (settled with issuance of shares), and a final payment of $50,000 due June 15, 2015 (settled with issuance of shares), for an aggregate of $150,000 in total. The agreement also allows the Company to buy-out 0.75% of the NSR at any time for $750,000.

The Company has also staked and dropped additional claims continuous to the original 10 claims. The Company currently owns 20 claims, all of which are subject to the NSR pursuant to the above noted option agreement.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

4. EXPLORATION AND EVALUATION ASSETS - continued

Thompson Knolls Property, Millard County, Utah, USA

On September 28, 2018, the Company entered into an option agreement (the “Agreement”) with Inland Explorations Ltd. ("Inland"), a company related by two directors in common, for an option to acquire up to 60% interest in Inland's Thompson Knolls Property ("TK Property") located in central Utah's Great Basin. The TK Property is located in Millard County, Utah and consists of 120 federal unpatented mineral claims, plus an additional 28 newly-staked lode claims which are unregistered.

Under the terms of the Agreement, the Company has the option to earn a 51% interest within four years by incurring total property expenditures of $3.5 million, issuing to Inland a total of 2.6 million shares in the Company, and making total cash payments of $250,000, as well as posting any required exploration bonds and paying all annual property and permit related expenses.

Consideration of $50,000 (accrued) and 450,000 shares (issued) was due on closing, with the balance of property expenditures, cash and share payments*, as follows:

				Annual Property	Annual Property
Due Date		Cash payments	Share issuance		expenditures
On closing of the Agreement	$	50,000(accrued)	450,000(issued)	$	-
September 30, 2021		50,000	450,000		250,000
September 30, 2022		50,000	475,000		750,000
September 30, 2023		50,000	500,000		1,500,000
September 30, 2024		50,000	725,000		1,000,000
	$	250,000	2,600,000	$	3,500,000

*reflects the effect of amending agreements in October 2019 and September 2020 to extend the due dates.

Upon earning a 51% interest, the Company shall have the option to increase its interest in the TK Property by an additional 9%, for a total of 60%, by spending an additional $5 million on the TK Property and delivering a pre-feasibility level study on the property within 2 years.

The transaction is non-arm's length as Inland, a non-reporting issuer, is related to the Company by way of two common directors, both of whom also hold shares in Inland and are officers of both companies. (See Note 7)

5. SHARE CAPITAL

• a) Authorized: Unlimited common shares with no par value.

• b) Issued:

During the year ended August 31, 2020

On February 21, 2020, 200,000 stock options priced at $0.05 were exercised for gross proceeds of $10,000 (see Note 6). Upon exercise, $15,647 of previously recognized share-based payments was reclassified from Reserves to Share Capital.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

5. SHARE CAPITAL - continued

• b) Issued - continued:

On August 19, 2020, the Company received $17,500 related to the exercise of 350,000 stock options. The common shares related to this exercise had not been issued as at August 31, 2020, therefore the proceeds of $17,500 were recorded in Subscription receipts. The 350,000 common shares were issued subsequent to year-end (see Note 10).

During the year ended August 31, 2019

On August 1, 2019, 350,000 stock options priced at $0.05 were exercised for gross proceeds of $17,500 (see Note 6). Upon exercise, $27,383 of previously recognized share-based payments was reclassified from Reserves to Share Capital.

On September 28, 2018, 450,000 shares, valued at $0.17 per share, were issued to Inland upon the closing of the formal option agreement to acquire up to 60% interest in Inland’s TK Property (Note 4).

• c) Warrants:

The Company did not issue any warrants during the years ended August 31, 2020 and 2019.

The following is a summary of the changes in the Company’s outstanding warrants:

	August	31,	2020	August 31,	2019
			Weighted		Weighted
	Number of		Average	Number of	Average
	Warrants		Exercise	Warrants	Exercise
			Price		Price
			$		$
Balance at the beginning of the year	11,020,000		0.15	11,870,000	0.15
Expired	(11,020,000)		0.15	(850,000))	0.20
Outstanding,end of theyear		-	-	11,020,000)	0.15

The following share purchase warrants were outstanding as at August 31, 2020 and 2019:

			August 31, 2020	August 31, 2019
		Exercise	Number of	Number of
Expiry Date		Price	Warrants	Warrants
December 5,2019	$	0.15	-	11,020,000
	$	0.15	-	11,020,000
Weighted average remaininglife			-	0.26years

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

6. SHARE-BASED PAYMENTS

The Company has a stock option plan in place under which it is authorized to grant options of up to 10% of its outstanding shares to officers, directors, employees and consultants. The exercise price of each option is to be determined by the Board of Directors, but shall not be less than the discounted market price as defined by the TSX-V. Under the stock option plan, the terms of all options granted are for a maximum of five years.

During the year ended August 31, 2020

On February 21, 2020, 200,000 stock options were exercised for gross proceeds of $10,000 (see Note 5 b)).

On February 18, 2020, the Company granted 650,000 stock options, exercisable at $0.05 per common share, and expiring on February 25, 2025. The Company recognized share-based compensation of $24,891 related to these options. The fair value of the stock options was calculated based on the following Black-Scholes variables: volatility – 130.14%; risk-free interest rate – 1.19%; expected life – 5 years; and expected dividends - $nil.

During the year ended August 31, 2019

On August 1, 2019, 350,000 stock options were exercised for gross proceeds of $17,500 (See Note 5 b)).

The following is a summary of the changes in the Company’s outstanding stock options:

	_August 31, 2020	_August 31, 2020	August 31,	2019
		Weighted		Weighted
		Average		Average
	Number of	Exercise	Number of	Exercise
	Options	Price	Options	Price
		$		$
Balance at the beginning of the year	3,285,000	0.13	3,635,000	0.12
Granted	650,000	0.05	-	-
Exercised	(200,000)	0.05	(350,000)	0.05
Outstanding,end of theyear	3,735,000	0.12	3,285,000)	0.13

BCM Resources Corporation

Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

6. SHARE-BASED PAYMENTS - continued

The following stock options are outstanding and exercisable as at August 31, 2020 and 2019:

			August 31, 2020	August 31, 2019
		Exercise	Number of	Number of
Expiry Date		Price	Options	Options
December 24, 2020*	$	0.05	1,200,000	1,400,000
March 2, 2021	$	0.15	95,000	95,000
May 16, 2021	$	0.28	690,000	690,000
December 13, 2022	$	0.14	1,100,000	1,100,000
February25,2025	$	0.05	650,000	-
	$	0.15	3,735,000	3,285,000
Weighted average remaininglife			1.70years	2.07years

* 350,000 of these stock options were exercised subsequent to year-end, and the remaining 850,000 stock options expired unexercised.

7. RELATED PARTY TRANSACTIONS

During the years ended August 31, 2020 and 2019, the Company incurred the following transactions with officers and directors of the Company or companies with common directors:

Key Management	Type of		August 31,		August 31,
Compensation	Fees Paid		2020		2019
Dale McClanaghan(a)	Management Fees	$	9,975	$	30,000
Total		$	9,975	$	30,000

		August 31,		August 31,
Due to (from) Related Parties:		2020		2019
Dale McClanaghan	$	139,352	$	140,715
Inland Explorations Ltd. (c)		63,218		63,218
Scott Steeds(b)		(7,638)		(7,638)
Total	$	194,932	$	196,295

(a) Dale McClanaghan is the President, CEO, Corporate Secretary, and a director of the Company.

(b) Scott Steeds is the CFO and a director of the Company.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

7. RELATED PARTY TRANSACTIONS - continued

• (c) Inland Explorations Ltd. ("Inland"), a non-reporting issuer, is related to the Company by way of two common officers and directors, both of whom are officers of both companies, as follows:

Name & Title (with BCM)	Position with Inland	% of Inland shares
Dale McClanaghan – President & CEO	Director & CFO	9.4%
Scott Steeds–CFO	Director & President	0.0%

Inland shares certain overhead costs in common with the Company. In prior years, substantially all of the balance due from Inland related to costs incurred by the Company on behalf of Inland for the Thompson Knolls Drill Program. All exploration expenditures previously incurred which had been classified as an advance to Inland were subsequently applied towards exploration expenditures under the Formal Option Agreement.

These transactions are in the normal course of operations and have been valued in these financial statements at the exchange amount which is the amount of consideration established and agreed to by the related parties.

Also see Note 4.

8. FINANCIAL RISK MANAGEMENT

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is on its cash held in bank accounts. The Company’s cash is deposited in bank accounts held with major banks in Canada. As most of the Company’s cash is held by two banks there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies. The Company’s secondary exposure to risk is on its receivables. This risk is minimal as receivables consist primarily of refundable government goods and services taxes.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

8. FINANCIAL RISK MANAGEMENT - continued

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to minimal interest rate risk.

Capital management

The Company's policy is to maintain a strong capital base so as to maintain investor and creditor confidence and to sustain future development of the business. The capital structure of the Company consists of equity, comprising share capital, net of accumulated deficit. There were no changes in the Company’s approach to capital management during the year. The Company is not subject to any externally imposed capital requirements.

Fair value

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

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

• Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

• Level 3 – Inputs that are not based on observable market data.

The Company does not have any financial instruments measured at fair value.

9. INCOME TAXES

A reconciliation of income taxes at statutory rates as follows:

		2020		2019
Net loss for the year before income taxes	$	(64,652)	$	(154,482)
Statutory tax rate		27.00%		27.00%
Expected income tax recovery		(17,456)		(41,710)
Net adjustment for deductible/non-deductible amounts		6,607		5,589
Unrecognized benefit of current non-capital losses		10,849		36,121)
Total deferred income tax recovery	$	-	$	-

BCM Resources Corporation Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

9. INCOME TAXES - continued

The significant components of the Company’s deferred income tax assets are as follows:

		2020		2019
Deferred income tax assets
Exploration and evaluation assets	$	702,402	$	708,204
Equipment		132		245
Unamortized share issuance costs		3,312		5,099
Non-capital loss carry-forwards		1,057,320		1,038,690
Valuation allowance		(1,763,166)		(1,752,238)
Net deferred income tax assets	$	-	$	-

At August 31, 2020, the Company has available for deduction against future taxable income non-capital losses from Canadian operations of approximately $3,916,000 (2019 - $3,847,000), which expire through to the year 2040. Future tax benefits which may arise as a result of these non-capital losses and other income tax pools are used to offset any future income tax liabilities as they arise.

The Company’s accumulated non-capital losses and years of expiry are as follows:

Year of Expiry		Amount
2026	$	227,000
2027		493,000
2028		449,000
2029		428,000
2030		341,000
2031		374,000
2032		329,000
2033		221,000
2034		181,000
2035		70,000
2036		213,000
2037		180,000
2038		201,000
2039		162,000
2040		47,000
	$	3,916,000

10. SUBSEQUENT EVENTS

On September 15, 2020, 350,000 common shares were issued pursuant to the exercise of stock options, for gross proceeds of $17,500. This amount was in Subscription receipts as at August 31, 2020.

On December 28, 2020, the Company granted 1,650,000 stock options, exercisable at $0.06 per common share, and expiring on December 28, 2025.

BCM Resources Corporation

Notes to the Financial Statements For the years ended August 31, 2020 and 2019 Expressed in Canadian dollars

10. SUBSEQUENT EVENTS - continued

In January 2021, the Company completed a non-brokered private placement for gross proceeds of $325,000 through the issuance of 6,500,000 units, priced at $0.05 per unit. Each unit is comprised of one common share of the Company and one share purchase warrant. Each warrant entitles the holder to purchase one common share of the Company at a price of $0.10 for two years from the date of issue.