Bitterroot Resources Ltd. — Interim / Quarterly Report 2022

Mar 29, 2022

BITTERROOT RESOURCES LTD.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

January 31, 2022 and 2021

(Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

BITTERROOT RESOURCES LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

Note	January 31, 2022	October 31, 2021
ASSETS Current assets Cash Receivables 4 Prepaid expenses Total current assets Non-current assets Reclamation deposits Right-of-use asset 5 Exploration and evaluation assets 6 Total non-current assets TOTAL ASSETS	$ 689,288 6,031 3,214	$ 736,386 7,385 3,214
	698,533	746,985
	40,788 49,200 5,595,957	45,789 35,414 5,481,419
	5,685,945	5,562,622
	$ 6,384,478	$ 6,309,607
LIABILITIES Current liabilities Accounts payable and accrued liabilities Lease liability 5 Total current liabilities Non-current liabilities Lease liability 5 Total non-current liabilities Total liabilities SHAREHOLDERS’ EQUITY Share capital 8 Equity reserves 8 Deficit Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 195,129 13,892	$ 110,034 16,528
	209,021	126,562
	42,951	22,407
	42,951	22,407
	251,972	148,969
	29,440,005 4,740,516 (28,048,015)	29,418,271 4,746,550 (28,004,183)
	6,132,506	6,160,638
	$ 6,384,478	$ 6,309,607
Nature of operations(Note 1) Subsequent event(Note 13)

“ Michael S. Carr” “George W. Sanders”

Michael S. Carr, Director

George W. Sanders, Director

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

3

BITTERROOT RESOURCES LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS For the three months ended January 31, (Unaudited – Prepared by Management)

(Expressed in Canadian Dollars)

Note 2022	2021
EXPENSES Amortization 5 $ 4,557 Foreign exchange (30,445) Interest expense 5,7 5,445 Management fees 10 30,000 Office and printing 10,272 Professional fees 10 11,222 Share based compensation 8,10 - Shareholder information 11,037 Transfer agent and filing fees 1,744	$ 4,619 703 1,717 7,500 12,107 33,153 303,599 10,217 1,971
Loss and comprehensive loss for theperiod $ (43,832)	$ (375,586)
Basic and diluted loss per share $ (0.00) Weighted average number of common shares outstanding – basic and diluted 80,227,985	$ (0.01) 61,371,149

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

4

BITTERROOT RESOURCES LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS For the three months ended January 31, (Unaudited – Prepared by Management)

(Expressed in Canadian Dollars)

		2022			2021
Cash flows used in operating activities
Loss for the period	$	(43,832)	$		(375,586)
Items not involving cash:
Amortization		4,557			4,619
Interest expense		5,445			1,377
Share based compensation		-			303,599
Changes in non-cash working capital items:
Prepaid expenses		-			3,575
Receivables		1,354			(8,433)
Accounts payable and accrued liabilities		6,445			(80,431)
Due to related party		-			(25,819)
		(26,031)			(177,099)
Cash flows used in investing activities
Exploration and evaluation asset expenditures		(230,906)			(125,563)
Cost recoveries for exploration and evaluation assets		195,018			-
Reclamation deposit		5,001			-
		(30,887)			(125,563)
Cash flows from financing activities
Private placements		-			1,040,400
Share issuance costs		-			(29,655)
Stock options exercised		15,000			102,500
Warrants exercised		700			85,714
Lease payments		(5,880)			(5,602)
Loan from related party		-			(160,000)
		9,820			1,033,357
Change in cash		(47,098)			730,695
Cash, beginning		736,386			17,036
Cash, end	$	689,288		$	747,731

Supplemental disclosure with respect to cash flows (Note 9).

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

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BITTERROOT RESOURCES LTD.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited – Prepared by Management)

(Expressed in Canadian Dollars)

(Unaudited – Prepared by Management) (Expressed in Canadian Dollars)
Number of shares	Share capital Equity reserves Deficit Total
Balance – October 31, 2020 47,456,985 Private placements 17,340,000 Share issuance costs - Shares issued for warrants exercised 1,428,571 Shares issued for stock options exercised 1,050,000 Share based payments - Lossforthe period -	$ 26,938,050 $ 4,222,566 $ (27,120,259) $ 4,040,357 1,040,400 - - 1,040,400 (59,266) 29,611 - (29,655) 85,714 - - 85,714 131,575 (29,075) - 102,500 - 303,599 - 303,599 - - (375,586) (375,586)
Balance –January 31, 2021 67,275,556	$ 28,136,473 $ 4,526,701 $(27,495,845) $5,167,329
Balance – October 31, 2021 80,184,556 Shares issued for warrants exercised 14,000 Shares issued for stock options exercised 150,000 Loss for the period -	$ 29,418,271 $ 4,746,550 $ (28,004,183) $ 6,160,638 1,004 (304) - 700 20,730 (5,730) - 15,000 - - (43,832) (43,832)
Balance – January 31, 2022 80,348,556	$ 29,440,005 $ 4,740,516 $ (28,048,015) $ 6,132,506

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

6

BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS

Bitterroot Resources Ltd. (the “Company”) is in the exploration stage and its principal business activity is the sourcing and exploration of resource properties.

The Company was incorporated on March 13, 1951 under the Laws of British Columbia, Canada. The Company’s head office address is Suite 206-B – 1571 Bellevue Avenue, West Vancouver, BC, V7V 1A6, Canada and its registered office address is Suite 1130 – 400 Burrard Street, Vancouver, BC, V6C 3A6, Canada. The Company is listed on the TSX Venture Exchange (“Exchange”) under the symbol “BTT”.

These condensed consolidated interim financial statements have been prepared assuming the Company will continue on a going concern basis. The Company has incurred losses since its inception and the ability of the Company to continue as a going concern depends on its ability to raise adequate financing and to develop profitable operations. The Company had working capital of $489,512 at January 31, 2022 (October 31, 2021 – $620,423). As of January 31, 2022, the Company had accumulated deficit of $28,048,015.

Management is actively targeting sources of additional financing through alliances with financial, exploration and mining entities, and other business and financial transactions which would assure continuation of the Company’s operations and exploration programs. In addition, management closely monitors commodity prices of precious metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company if favorable or adverse market conditions occur.

As the Company is in the exploration and evaluation stage, the Company has not identified a known body of commercial grade mineral on any of its properties. The ability of the Company to realize the costs it has incurred to date on these properties is dependent upon the Company identifying a commercial mineral body, to finance its development costs and to resolve any environmental, regulatory or other constraints, which may hinder the successful development of the property. To date, the Company has not earned any revenues. The Company expects to incur further losses in the development of its business. These circumstances comprise a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern.

The condensed consolidated interim financial statements of the Company are presented in Canadian dollars, which is the functional currency, unless otherwise indicated.

2. BASIS OF PREPARATION

Statement of compliance and basis of measurement

These unaudited condensed consolidated interim financial statements, including comparatives have been prepared using accounting policies consistent with International Accounting Standards (“IAS”) 34, Interim Financial Reporting.

The condensed consolidated interim financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

The condensed consolidated interim financial statements were approved for issuance by the Board of Directors on March 28, 2022.

Use of estimates and judgments

The preparation of the condensed consolidated interim financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (cont’d)

Use of estimates and judgments (cont’d)

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

(i) Critical accounting estimates

Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and include, but are not limited to, the following:

Share based payments

The fair value of stock options issued are subject to the limitation of the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices, changes in subjective input assumptions can materially affect the fair value estimate.

Exploration and evaluation assets

Recorded costs of exploration and evaluation assets are not intended to reflect present or future values of these properties. The recorded costs are subject to measurement uncertainty and it is reasonably possible, based on existing knowledge, that change in future conditions could require a material change in the recognized amount.

(ii) Critical accounting judgments

There are currently no critical accounting judgements.

Going concern

These condensed consolidated interim 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 its assets and discharge its liabilities in the ordinary course of operations. These condensed consolidated interim financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and thus be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these condensed consolidated interim financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

The condensed consolidated interim financial statements include the accounts of the Company, and its wholly owned subsidiaries Trans Superior Resources, Inc. and Voyageur Lands Corporation, both of which are holding companies incorporated in Michigan, USA. All significant inter-company balances and transactions have been eliminated upon consolidation.

The preparation of financial data is based on accounting principles and practices consistent with those used in the preparation of the audited annual consolidated financial statements as at October 31, 2021. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended October 31, 2021.

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

4. RECEIVABLES

The Company’s receivables arise from goods and services tax (“GST”) receivable due from the Canadian taxation authorities.

	**January **	31, 2022	**October **	31, 2021
GST receivable	$	6,031	$	7,385

5. RIGHT-OF-USE ASSET AND LEASE LIABILITY

The Company has entered a contractual arrangement to lease an office for 4 years starting November 1, 2019. The terms of the lease call for minimum monthly lease payments of $1,867. The Company adopted IFRS 16 on November 1, 2019. On initial adoption, the Company record a right-of use asset based on the corresponding lease obligation. A right-of use asset and lease obligation of $72,369 were recorded as of November 1, 2019 with no impact on deficit. During the period ended January 31, 2022, the lease agreement was extended by one year. The right-of-use asset and lease obligation were increased by $18,343 to accommodate the extension of the lease period without any impact on deficit. The new terms of the lease call for minimum monthly lease payments of $1,960, starting from October 2021. When measuring the present value of lease obligations, the Company uses a discount rate of 10%.

The change in the right-of-use asset during the period ended January 31, 2022 was as follows:

Balance – October 31, 2020	$	53,891
Amortization		(18,477)
Balance – October 31, 2021		35,414
Additions		18,343
Amortization		(4,557)
Balance –January 31, 2022	$	49,200

The change in the lease liability during the period ended January 31, 2022 was as follows:

Balance – October 31, 2020	$	56,484
Lease payments made		(22,407)
Interest expense		4,858
Balance – October 31, 2021		38,935
Additions		18,343
Lease payments made		(5,880)
Interest expense		5,445
		56,843
Less: current portion		(13,892)
Balance –January 31, 2022	$	42,951

Future lease payments are as follows for the years ending October 31:

2022	$17,701
2023	$24,316
2024	$23,104

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS

Michigan Lands, Michigan, USA	Coyote Sinter Property, Nevada, USA	Castle West, Nevada, USA Total
Balance – October 31, 2020 $ 4,240,687	$ 42,045	$ 67,804 $ 4,350,536
Acquisition costs - cash 58,661 Acquisition costs - shares 20,000 Claims, leases and permits 10,594 Consulting and professional 122,661 Drilling 1,168,269 Field supplies 3,167 Geochemistry 1,710 Geophysics 23,036 Ground transportation 11,271 Other 2,441 Room and board 13,125 Travelandfreight 6,623	50,432 13,000 9,323 18,825 - - 706 92,532 2,722 1,046 3,077 -	38,299 147,392 - 33,000 7,581 27,498 5,132 146,618 - 1,168,269 - 3,167 - 2,416 - 115,568 548 14,541 30 3,517 467 16,669 583 7,206
Expenditures during the year 1,441,558	191,663	52,640 1,685,861
Recovery ofcosts (554,978)	-	- (554,978)
Balance –October 31, 2021 5,127,267	233,708	120,444 5,481,419
Acquisition costs - cash 5,823 Claims, leases and permits - Consulting and professional 16,084 Drilling 212,084 Field supplies 143 Geophysics 820 Ground transportation 1,512 Other 301 Room and board 1,115 Travelandfreight 1,703	- 148 - - - - - - - -	69,609 75,432 148 296 - 16,084 - 212,084 66 209 - 820 - 1,512 - 301 - 1,115 - 1,703
Expenditures during the period 239,585	148	69,823 309,556
Recovery ofcosts (195,018)	-	- (195,018)
Balance –January 31, 2022 $ 5,171,834	$ 233,856	$ 190,267 $ 5,595,957

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d)

Title to exploration and evaluation assets involves certain inherent risks due to difficulties of determining the validity of certain claims, as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many exploration and evaluation assets. The Company has investigated title to its exploration and evaluation assets and to the best of its knowledge, title to its exploration and evaluation assets are in good standing.

Michigan Lands, Michigan, U.S.A.

During the year ended October 31, 2015, a subsidiary of Altius Minerals Corporation acquired a 50.1% interest in the Company’s Michigan Lands by funding $600,000 of exploration expenditures. Altius had the right to acquire an additional 19.9% of the properties by completing $2.5 million in exploration spending by September 29, 2021, plus the right to acquire an additional 10% of the properties by completing exploration spending of a further $5,000,000 or completing an NI 43-101 compliant pre-feasibility study on a mineral resource on the properties, before September 29, 2025. Altius failed to complete the additional expenditures required prior to September 29, 2021 and both options have expired. The Company (49.9%) and Altius (50.1%) are effectively joint venture partners, although a formal joint venture agreement has not yet been entered into. The Company also granted to Altius a 2% net smelter returns royalty (“NSR”) on the Voyageur Lands (covering approximately 250 square miles of mineral rights) and assigned to Altius its right to repurchase a 1% NSR held by a third party on the Copper Range Lands by paying $1,000,000 U.S. to the third party before December 31, 2048.

Mineral Rights Leased from the State of Michigan

During the year ended October 31, 2016, the Company (49.9%) and Altius (50.1%) acquired State of Michigan metallic minerals leases covering 3,051 acres. A cash bond of US$30,000 has been posted by a subsidiary of Altius.

LM Property

The Company’s Michigan subsidiary, Trans Superior Resources, Inc., leases 40 acres of minerals rights in Baraga County, Michigan, known as the LM Property. The lessors have granted the Company the option to reduce the current 3% NSR to a 2% NSR by paying US$1,000,000 prior to December 31, 2064. The 2021 advance royalty payment is US$160/acre (paid). The advance royalty payments increase by $10/acre/year. The LM Property is not subject to the joint venture with Altius.

During the year ended October 31, 2020, the Company, through its US subsidiary Trans Superior Resources, Inc., entered into an option/joint venture agreement whereby Below Exploration, Inc., (“Below”) a private Michigan corporation, could earn a 49% joint venture interest in the Company’s 100%-leased LM nickel-copper-platinumpalladium property in Baraga County, Michigan. During the year ended October 31, 2020, Below funded $370,061 (US$285,000) of exploration expenditures prior to the first anniversary of the agreement and earned a 49% joint venture interest. The Company is the project operator, regardless of its ownership level, and retains a right of first refusal over Below’s property interest. Following vesting of its 49% interest, Below had a 90-day option to convert its interest in the project into the Company’s shares. Below did not exercise the share conversion option and the joint venture is continuing.

In February 2021, the Company entered into a minerals lease and purchase option with a privately-held corporation (“MPC”) covering 80 acres of mineral rights adjacent to the LM Property. MPC leases the mineral rights exclusively to the Company for a term of forty years. Under the term of the agreement the Company is required to make the following payments and share issuances:

(i) US$15,000 (paid) and issuance of 100,000 common shares within 10 days of the TSX-V approval date, February 25, 2021 (the “Approval Date”) (issued);

(ii) US$15,000 (paid subsequently) and issuance of 100,000 (issued subsequently) common shares on the first anniversary of the Approval Date;

(iii) US$16,000 and issuance of 100,000 common shares on the second anniversary of the Approval Date;

(iv) an amount equal to the rental payment of the preceding year, plus an additional $20,000 per acre of the mineral rights, on or before each anniversary of the Approval Date commencing on the third anniversary and continuing so long as the agreement is in effect.

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d)

At any time while the agreement remains in effect, the Company has the exclusive right and option to purchase the mineral rights from MPC for US$1,000/acre for the first five years of the agreement, US$2,500/acre in years 6 through 10, and then escalating US$2,500/acre for each subsequent five years for the first 20 years. MPC will retain a 2% net smelter royalty (“NSR”) for products from the mineral rights generated from underground mining and a 3% NSR for products from the mineral rights generated from open-pit mining. The Company will have the option to purchase 1% of each of the NSRs from US$1,000,000 and a further option to purchase an additional 1% of the NSR from open-pit mining for an additional US$1,000,000.

Coyote Sinter Property, Nevada, U.S.A.

During the year ended October 31, 2020, the Company, through its US subsidiary Trans Superior Resources, Inc., entered into a mining lease, with an option to purchase, with Geological Services, Inc on the 13- claim Coyote Sinter gold/silver project in Elko County, Nevada. In the year ended October 31, 2021, and prior to sale of Geologic Services, Inc. to a third party, the vendor’s claims were transferred to a new company, GoldPlay LLC (“GoldPlay”), which is controlled by the original vendor. The Company is required to make the following advance minimum royalty (“AMR”) payments and share issuances to GoldPlay:

(i) US$10,000 (paid) and the issuance of 100,000 common shares within 10 days of the TSX-V approval date, August 4, 2020 (the “Approval Date”) (issued).

(ii) US$10,000 (paid) on the 6-month anniversary of the Approval Date;

(iii) US$30,000 (paid) and the issuance of 100,000 common shares (issued) in the capital of the Company on or before the first annual anniversary of the Approval Date;

(iv) US$40,000 and the issuance of 50,000 common shares in the capital of the Company on or before the second annual anniversary of the Approval Date;

(v) US$60,000 and the issuance of 50,000 common shares in the capital of the Company on or before the third annual anniversary of the Approval Date;

(vi) US$100,000 on or before the fourth annual anniversary of the Approval Date;

(vii) US$125,000 on or before the fifth annual anniversary of the Approval Date;

(viii) US$125,000 on or before each annual anniversary of the Approval Date after the fifth anniversary as long as the agreement remains in effect, adjusted for inflation from that date.

At any time while the agreement remains in effect, the Company has the exclusive right and option to purchase the Coyote Sinter property from GoldPlay by paying US $2,000,000, less the sum of all AMR payments already paid to GoldPlay, up to the date of exercise. GoldPlay will retain a 2% NSR, less previous AMR payments, on the Coyote Sinter property and on any Company-located federal mining claims within a 1 mile area of interest (“AOI”). They Company has the option to purchase 1% of the NSR for US$2,000,000. GoldPlay will also retain a 1% NSR on any mineral rights acquired from 3rd parties within the AOI. The Company has the option to purchase 0.5% of this 1% NSR for US$500,000. The royalty purchase options are exercisable at any time prior to commercial production.

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d)

Castle West Property, Nevada, U.S.A.

During the year ended October 31, 2019, the Company, through its US subsidiary Trans Superior Resources, Inc., entered into an option agreement with Ely Gold Royalties Inc. and its subsidiary Nevada Select Royalty Inc. (“Ely Gold”), to purchase a 100% interest in the Castle West gold/silver property in Esmeralda County, Nevada. The Castle West property is comprised of 34 unpatented mining claims and three leased unpatented claims. Under the terms of the agreement, the Company has paid Ely Gold US$1,000. During the year ended October 31, 2020, the terms of the option agreement were changed due to the Company’s inability to access and explore the Castle West property due to the State of Nevada’s COVID-19 related legislation. Under the amended option terms, the Company paid Ely Gold US$15,000 on December 11, 2020. On, or prior to each of the second, third and fourth anniversaries of December 11, 2020 the Company will pay US$40,000 (the second payment was made on December 10, 2021 at a Canadian equivalent of $50,829). A final payment of US$105,000 will be made on the fifth anniversary for the conveyance of the 100% interest in the property. Following exercise of the option agreement with Ely Gold, the Company will make minimum advance royalty payments of US$5,000 on the first and second anniversaries of exercising the option and US$10,000 on subsequent anniversaries. Ely Gold will retain a 3% NSR on the 34 claims it staked. The Company has the right to buy down 1% of this NSR for a payment of US$1,000,000. The Company also makes annual payments of US$15,000 to the lessor of the three unpatented claims (annual payment made on January 12, 2022 at a Canadian equivalent of $18,780). Upon the exercise of the option, the Company will be assigned the three-claim lease and Ely Gold will retain a 1% NSR on these claims.

7. LOAN PAYABLE TO RELATED PARTY

During the year ended October 31, 2021, the Company repaid loans of $160,000 from a non-arm’s length party.

8. SHARE CAPITAL AND EQUITY RESERVES

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

As at January 31, 2022, the Company had 80,348,556 shares issued and outstanding.

During the period ended January 31, 2022, the Company:

• (i) issued 14,000 shares for brokers’ warrants exercised for total proceeds of $700 and

• (ii) Issued 150,000 shares for stock options exercised for total proceeds of $15,000.

During the year ended October 31, 2021, the Company:

• (i) closed a private placement of 17,340,000 units priced at $0.06 per unit for gross proceeds of $1,040,400. Each unit consists of one common share and one-half share purchase warrant, exercisable at $0.12 for two years from the date of issuance. Finder’s fees and other share issuance costs paid in conjunction with the private placement consisted of $29,655 and the issuance of 329,400 finders’ warrants at a fair value of $29,611, exercisable at $0.12 for two years from the date of issuance.

• (ii) closed a private placement of 11,195,000 units priced at $0.10 per unit for gross proceeds of $1,119,500. Each unit consists of one common share and one-half share purchase warrant, exercisable at $0.20 for two years from the date of issuance. Finder’s fees and other share issuance costs paid in conjunction with the private placement consisted of $24,095 and the issuance of 124,000 finders’ warrants at a fair value of $12,093, exercisable at $0.20 for two years from the date of issuance.

(iii) issued 2,742,571 shares for warrants exercised for total proceeds of $231,754;

• (iv) issued 1,250,000 shares for stock options exercised for total proceeds of $112,500 and

• (v) issued 200,000 shares for a property option payment and recorded at a fair value of $33,000.

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

8. SHARE CAPITAL AND EQUITY RESERVES (cont’d…)

Warrants

Warrant transactions are summarized as follows:

Warrant transactions are summarized as follows:
		Weighted
	Number of	Average
	Warrants	Exercise Price
Balance – October 31, 2020	2,613,171	$ 0.08
Issued	14,721,100	0.15
Exercised	(2,742,571)	0.08
Expired	(6,600)	0.11
Balance – October 31, 2021	14,585,100	0.15
Exercised	(14,000)	0.05
Balance – January 31, 2022	14,571,100	$0.15

As at January 31, 2022, the following share purchase warrants were issued and outstanding:

	Number of
Expiry Date	Warrants	Exercise Price
December 3, 2022	8,849,400	$ 0.12
May4,2023	5,721,700	0.20
	14,571,100	$0.15

The weighted average fair value of each finders’ warrant issued during the period ended January 31, 2022 was $nil (year ended October 31, 2021 - $0.14), calculated using the Black-Scholes option-pricing model on the issue date using the following weighted average assumptions:

	Three	months	Year
		ended	ended
	**January **	31, 2022October 31, 2021
Volatility		-	183.34%
Risk-free interest rate		-	0.27%
Expected life		-	2years

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

8. SHARE CAPITAL AND EQUITY RESERVES (cont’d…)

Stock options

The Company, in accordance with the policies of the Exchange, has a stock option plan in place under which it is authorized to grant options to directors, employees, and consultants, to acquire up to 10% of the issued and outstanding common shares. Under the plan, the exercise price of each option equals the market price of the Company’s stock as calculated on the date of grant. The options can be granted for a maximum term of five years. Pursuant to the stock option plan, vesting restrictions may be applied to certain other options grants, at the discretion of the directors.

Stock option transactions and the number of stock options outstanding are summarized as follows:

		Weighted
	Number	Average
	Of Options	Exercise Price
Balance – October 31, 2020	4,270,000	$ 0.11
Expired	(200,000)	0.10
Exercised	(1,250,000)	0.09
Granted	3,350,000	0.16
Balance – October 31, 2021	6,170,000	0.15
Exercised	(150,000)	0.10
Balance –January 31, 2022	6,020,000	$ 0.15

As at January 31, 2022, the following stock options were outstanding and exercisable:

Number of Options	Exercise Price ($)	Expiry Date
670,000	0.32	April 20, 2022
900,000	0.08	March 1, 2023
1,100,000	0.05	May 19, 2025
2,000,000	0.16	January 4, 2026
1,350,000	0.17	June 1, 2026
6,020,000

The weighted average fair value of each stock option granted during the period was $nil (year ended October 31, 2021 - $0.16), calculated using the Black-Scholes option-pricing model on the grant date using the following weighted average assumptions:

	Three months	Year
	ended	ended
	January 31, 2022October 31, 2021
Volatility	-	173.90%
Risk-free interest rate	-	0.42%
Dividend yield	-	-
Forfeiture rate	-	-
Expected life	-	5 years

Share based compensation

Total share-based payments recognized for stock options granted during the period ended January 31, 2022, was $nil (2021 - $303,599).

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Significant non-cash transactions during the period ended January 31, 2022 included:

• (a) Included in exploration and evaluation assets of $173,266 which relates to accounts payable and accrued liabilities.

• (b) Transferred $304 to share capital from reserves for 14,000 brokers’ warrants exercised.

• (c) Transferred $5,730 to share capital from reserves for 150,000 stock options exercised.

Significant non-cash transactions during the year ended October 31, 2021 included:

• (d) Included in exploration and evaluation assets is $94,616 which relates to accounts payable and accrued liabilities.

• (e) Issued 453,400 brokers’ warrants with a fair value of $41,704.

• (f) Issued 200,000 shares for a property option payment, recorded at a fair value of $33,000.

• (g) Transferred $38,521 to share capital from reserves for 1,250,000 stock options exercised.

10. RELATED PARTY TRANSACTIONS

Key management personnel are the persons responsible for the planning, directing and controlling the activities of the Company and include both executive and non-executive directors, and entities controlled by such persons. The Company considers all Directors and Officers of the Company to be key management personnel.

The following is a summary of related party transactions and balances during the three months ended January 31, 2022, not disclosed elsewhere in the condensed consolidated interim financial statements:

• (a) Management fees of $30,000 (2021 - $7,500) and professional fees of $1,575 (2021 - $nil) were incurred from a company controlled by a director of the Company.

• (b) Share based compensation include stock options granted to directors and officers recorded at a fair value of $nil (2021 - $220,109).

11.

SEGMENTED INFORMATION

Industry information

The Company operates in one reportable operating segment, being the acquisition, exploration and development of exploration and evaluation assets.

Geographic information

The Company operated in both Canada and the United States. The Company’s reclamation deposits and exploration and evaluation assets are located in Canada and the United States.

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

12. FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT

Capital management

The Company manages its capital to safeguard the Company’s ability to continue as a going concern, so that it can continue to provide adequate returns to shareholders and benefits to other stakeholders, and to have sufficient funds on hand for business opportunities as they arise.

The Company considers the items included in share capital as capital. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares through short-term prospectuses and private placements or return capital to shareholders. As at January 31, 2022, the Company is not subject to externally imposed capital requirements.

The Company is exposed to various financial instrument risks and assesses the impact and likelihood of this exposure. These risks include liquidity risk, credit risk, currency risk, interest rate risk and price risk. Where material, these risks are reviewed and monitored by the Board of Directors.

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 is considered to be in the exploration stage. Thus, it is dependent on obtaining regular financings in order to continue its exploration programs. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings. The Company's cash consists of cash deposited in business accounts and redeemable guaranteed investment certificates held by high credit quality financial institutions. The Company is not invested in any asset backed commercial paper.

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its cash, receivables and reclamation deposits. The Company limits exposure to credit risk by maintaining its cash and reclamation deposits with high-credit quality financial institutions. Deposits held with these institutions may exceed the amount of insurance provided on such deposits. The receivables balance consists mainly of GST recoverable. There is ongoing review to evaluate the credit worthiness of these counterparties. The Company’s maximum exposure to credit risk at the reporting date is the carrying value of cash, receivables and reclamation deposits

Currency risk

The Company's operations are in Canada and the United States. The international nature of the Company's operations results in foreign exchange risk as transactions are denominated in a foreign currency. The operating results and the financial position of the Company are reported in Canadian dollars. The fluctuations of the operating currencies in relation to the Canadian dollar will, consequently, have an impact upon the reported results of the Company and may also affect the value of the Company's assets and liabilities. The Company has not entered into any agreements or purchased any instruments to hedge possible currency risks at this time. A strengthening (weakening) of the Canadian dollar against the US dollar of 10% would not have a significant effect on net loss.

Interest rate risk

The Company's exposure to interest rate risk arises from the interest rate impact on its cash. The Company's practice has been to invest cash at floating rates of interest in order to maintain liquidity, while achieving a satisfactory return for shareholders. There is minimal risk that the Company would recognize any loss as a result of a decrease in the fair value of any guaranteed bank investment certificates included in cash as they are generally held with large financial institutions. The Company does not have any variable interest-bearing debt.

Price risk

The Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors the commodity prices of precious metals and the stock market to determine the appropriate course of action to be taken by the Company.

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BITTERROOT RESOURCES LTD. NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended January 31, 2022 and 2021 (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

12. FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT (cont’d)

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 fair value of cash is measured based on level 1 inputs of the fair value hierarchy. The estimated fair value of accounts payable and accrued liabilities, due to related party and loan payable to related party is equal to their carrying values due to the short-term nature of these instruments.

13. Subsequent event

Subsequent to the period ended January 31, 2022, US$15,000 was paid and 100,000 shares were issued for a mineral property option payment.

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