Black Iron Inc.

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Consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

Consolidated financial statements (Expressed in U.S. dollars)

For the year ended December 31, 2020 and 2019

Consolidated statements of financial position .................................................................................................................. 5 Consolidated statements of loss and comprehensive loss ............................................................................................... 6 Consolidated statements of changes in shareholders’ (deficiency) ................................................................................ 7 Consolidated statements of cash flows ............................................................................................................................ 8 Notes to the consolidated financial statements ......................................................................................................... 9 - 33

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Independent Auditor’s Report

To the Shareholders of Black Iron Inc.

Opinion

We have audited the consolidated financial statements of Black Iron Inc. and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2020 and 2019, and the consolidated statements of loss and comprehensive loss, consolidated statements of changes in shareholders’ (deficiency) and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss during the year ended December 31, 2020 and, as of that date, the Company’s current liabilities exceeded its current assets. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matter described below to be the key audit matter to be communicated in our report.

Key audit matter	How	our audit addressed the key audit matter
Warrants–Note 10
During 2020, the Company issued 30,000,000	Our audit procedures included:
warrants for facilitating and supporting the	•	Reviewing the key terms and
negotiations of a non-binding financing from a		conditions of the warrants issued;
global investment bank. The warrants contain	•	Obtaining the valuation model
certain vesting conditions.		prepared by management and
		assessing whether the model was
Management has performed the valuation of		appropriate for valuing the warrants
the warrants using a valuation model. We		issued during the year;
considered the recognition of these warrants	•	Challenging the reasonableness of
in connection with the vesting requirements to		key assumptions used by
be a key audit matter as it involved		management in the model to calculate
management’s judgement in determining the		the fair value of the warrants;
timing and likelihood of the vesting conditions being met.	•	Challenging the reasonableness of key assumptions used by
		management in the assessment of the
		likelihood and timing of vesting
		requirements being met; and
	•	Assessing the adequacy of the
		disclosures in the financial report.

Other information

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

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Responsibilities of management and those charged with governance for the consolidated financial statements

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

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

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

Auditor’s responsibilities for the audit of the consolidated financial statements

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

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

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

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consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner of the audit resulting in this independent auditor’s report is Glen McFarland.

McGovern Hurley LLP

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Chartered Professional Accountants Licensed Public Accountants

Toronto, Ontario March 11, 2021

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BLACK IRON INC.

Consolidated statements of financial position (Expressed in U.S. dollars)

		December 31,		December 31,
		2020		2019
ASSETS
Current
Cash	$	1,665,600	$	988,844
Amounts receivable and prepaid expenses		83,084		102,641
Total current assets		1,748,684		1,091,485
Prepaid and other (Note 12)		41,619		297,500
Equipment		4,195		2,720
Total assets	$	1,794,498	$	1,391,705
LIABILITIES
Current
Accountspayable and accrued liabilities(Note 7 and Note 11)	$	611,218	$	403,864
Total current liabilities		611,218		403,864
Non-current
Warrant liability (Note 10)		6,521,549		1,227,878
Conversion option of convertible debenture (Note 12)		270,585		1,318,525
Liability component of convertible debenture (Note 12)		90,187		172,762
Loanpayable(Note 13)		31,417		-
Total liabilities		7,524,956		3,123,029
SHAREHOLDERS' (DEFICIENCY) EQUITY
Common shares (Note 8)		72,563,431		68,321,728
Share based payments reserve (Note 9)		1,259,540		548,791
Warrant reserve (Note 10)		2,288		3,020
Accumulated deficit		(79,555,717)		(70,604,863)
Total shareholders' deficiency		(5,730,458)		(1,731,324)
Total shareholders' deficiencyand liabilities	$	1,794,498	$	1,391,705

Nature of operations and going concern (Note 1) Commitments and contingencies (Note 11 and Note 14)

Approved by the Board of Directors on March 11, 2021

“BRUCE HUMPHREY”, Director “JOHN DETMOLD”, Director

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

BLACK IRON INC.

Consolidated statements of loss and comprehensive loss (Expressed in U.S. dollars)

	Year ended Year ended December 31, 2020 December 31, 2019
Expenses Consulting and management fees (Note 11) Professional fees expense General office expenses Net change in fair value of investment in warrants (Note 5) Exploration and evaluation expenses (Note 6) Share-based compensation (Note 9 and Note 11) Travel expenses Shareholder communications and filing fees Change in fair value of warrant liability (Note 10) Change in fair value of conversion option (Note 12) Finance costs (Note 12) Accretion (Note 12) Loss (gain) on foreign exchange Interest income Net loss for the year Other comprehensive loss Loss on sale of investment in equity securities (Note 5) Net change in fair value of investment in equity securities (Note 5) Total other comprehensive loss Comprehensive loss for the year	754,394 $ 903,115 $ 139,350 137,625 167,926 154,527 - 390 695,708 668,548 794,605 160,695 22,864 54,331 140,035 283,065 5,657,561 379,778 62,777 (65,455) 331,985 150,220 380,554 53,455 (65,205) 21,425 (4,709) (3,681)
	9,077,845 $ 2,898,038 $
	- 644,251 - (476,284)
	- 167,967
	9,077,845 $ 3,066,005 $
Basic and diluted loss per share (Note 15) Weighted average number of common shares outstanding - basic and diluted (Note 15)	(0.04) $ (0.02) $ 226,009,275 179,790,538

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

BLACK IRON INC.

Consolidated statements of changes in shareholders’ (deficiency) (Expressed in U.S. dollars)

	Common shares	Share based payments	Accumulated deficit	Warrants	Accumulated other comprehensive loss	Total shareholders' (deficiency)
	# $	$	$	$	$	$
Balance, December 31, 2018	159,740,519 67,457,612	750,184	(66,877,084)	-	(1,023,862)	306,850
						-
Net loss for the year	- -	-	(2,898,038)	-	-	(2,898,038)
Other comprehensive loss for the year	- -	-	-	-	(167,967)	(167,967)
Private placement (Note 8)	26,552,390 912,476	-	-	-	-	912,476
Share issuance costs (Note 8)	- (48,360)		-	3,020	-	(45,340)
Stock option plan (Note 9)	- -	76,594	-	-	-	76,594
Deferred share units (Note 9)	- -	84,101	-	-	-	84,101
Expiry of vested options (Note 9)		(362,088)	362,088	-	-	-
Derecognition of financial assets	- -	-	(1,191,829)		1,191,829	-
Balance,December 31,2019	186,292,909 68,321,728	548,791	(70,604,863)	3,020	-	(1,731,324)
Net loss for the year	- -	-	(9,077,845)	-	-	(9,077,845)
Expiry of vested options (Note 9)	- -	(68,705)	68,705	-	-	-
Stock option forfeiture (Note 9)	- -	(5,092)	5,092	-	-	-
Stock option plan (Note 9)	- -	528,095	-	-	-	528,095
Stock option exercise (Note 9)	750,000 37,785	(10,060)	-	-	-	27,725
Deferred share units (Note 9)	- -	266,511	-	-	-	266,511
Warrant exercise (Note 10)	10,936,193 1,341,712	-	-	(732)	-	1,340,980
Warrant expiry (Note 10)	- -	-	53,194	-	-	53,194
Conversion of debt to shares (Note 12)	25,419,816 1,851,798	-	-	-	-	1,851,798
Private placement (Note 8)	36,534,420 1,109,525					1,109,525
Share issuance costs (Note 8)	- (99,117)	-	-	-	-	(99,117)
Balance, December 31, 2020	259,939,588 72,563,431	1,259,540	(79,555,717)	2,288	-	(5,730,458)

The accompanying notes are an integral part of these consolidated financial statements. 7

BLACK IRON INC.

Consolidated statements of cash flows

(Expressed in U.S. dollars)

		Year ended		Year ended
	December 31,		December 31,
		2020		2019
OPERATING ACTIVITIES
Net loss for the year	$	(9,077,845)	$	(2,898,038)
Adjustment for:
Change in value of warrant investment (Note 5)		-		390
Share-based compensation (Note 9)		794,605		160,695
Interest income		4,709		(3,681)
Change in fair value of warrant liability (Note 10)		5,657,561		379,778
Change in fair value of conversion option of the convertible debenture (Note 12)		62,777		(65,455)
Accretion (Note 12)		380,554		53,455
Non-cash financing costs (Note 12)		139,792		150,220
Depreciation		3,282		4,112
Net cash outflow before working capital changes		(2,034,565)		(2,218,524)
Net change in non‑cash workingcapital		319,767		(11,503)
Cash used in operatingactivities		(1,714,798)		(2,230,027)
FINANCING ACTIVITIES
Private placement (Note 8 and Note 10)		1,306,546		1,191,476
Share issuance costs (Note 8 and Note 10)		(99,117)		(45,340)
Convertible debenture (Note 12)		353,442		2,037,890
Convertible debenture issuance costs (Note 12)		(69,115)		(442,827)
Warrant exercise (Note 10)		737,450		-
Option exercise (Note 9)		27,725
Loanpayable(Note 13)		31,417		-
Cashprovided byfinancingactivities		2,288,348		2,741,199
INVESTING ACTIVITIES
Purchase of equipment		(4,757)		(4,437)
Interest received		4,709		3,681
Sale of assets classified as FVOCI (Note 5)		-		338,753
Cash(used in)/provided byinvestingactivities		(48)		337,997
Effect of exchange rate changes on cash		103,254		27,470
CHANGE IN CASH		676,756		876,639
CASH,beginningofyear		988,844		112,205
CASH,end ofyear	$	1,665,600	$	988,844
SUPPLEMENTAL INFORMATION:
Finder warrants issued	$	-	$	3,020

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

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

1. Nature of operations and going concern

Black Iron Inc. (the "Company") was incorporated under the laws of the Province of Ontario, Canada by Articles of Incorporation dated June 29, 2010. The principal activity of the Company is the exploration and development of ferrous metals in Ukraine, namely the Shymanivske iron ore project located in Kryvyi Rih, Ukraine. The head office of the Company is located at 65 Queen Street West, Suite 805, Toronto, Ontario, M5H 2M5, Canada.

As at December 31, 2020, Black Iron Inc. held 100% of the shares of Black Iron (Cyprus) Limited which in turn holds a 100% interest in Shymanivske Steel LLC.

The consolidated financial statements include the financial statements of the Company and its subsidiaries which are listed in the following table:

Country of incorporation	Percentage of equity interest
	December 31, 2020 December 31, 2019
Black Iron (Cyprus) Limited Cyprus Shymanivske Steel LLC Ukraine	100 100 100 100

These consolidated financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. For the year ended December 31, 2020, the Company incurred a net loss of $9,077,845 and as at December 31, 2020, reported an accumulated deficit of $79,555,717 and working capital of $1,137,466, including $1,665,600 in cash. The Company has no current source of operating cash flow, and there can be no assurances that sufficient funding, including adequate financing, will be available to explore and develop its property and to cover general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the issuance of equity or debt. These matters represent material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

These consolidated financial statements do not reflect adjustments to the carrying value of assets and liabilities or reported expenses and consolidated statement of financial position classifications that would be necessary if the going concern assumption was not appropriate. These adjustments could be material.

The business of exploring for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish ore reserves, to develop metallurgical processes, to acquire construction and operating permits and to construct mining and processing facilities. The recoverability of the amounts shown as assets of the Company is dependent upon the Company obtaining the necessary financing to complete the exploration of its property, the discovery of economically recoverable reserves and future profitable operations.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of operations of such properties, these procedures do not guarantee the Company's title. Property title may be subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims, indigenous claims, and non-compliance with regulatory, social and environmental requirements. The Company’s assets may also be subject to increases in taxes and royalties, renegotiation of contracts, political uncertainty and currency exchange fluctuations and restrictions.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

2. Basis of presentation

Statement of compliance

The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standard Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The consolidated financial statements were authorized for issue by the Board of Directors on March 11, 2021.

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, unless otherwise disclosed. The consolidated financial statements have been prepared on an accrual basis except for cash flow information.

3. Significant accounting policies

Consolidation

The consolidated financial statements comprise the financial statements of Black Iron Inc. and its subsidiaries for the years ended December 31, 2020 and 2019.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases.

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-Company balances, income and expenses and unrealized gains and losses resulting from intra-Company transactions are eliminated in full upon consolidation.

Functional currency and foreign currency transactions

The consolidated financial statements are presented in U.S. dollars, which is the Company's and its subsidiaries’ functional currency. All amounts have been rounded to the nearest dollar, unless otherwise indicated.

Transactions in foreign currencies are translated into the entities’ functional currency at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the consolidated statement of financial position dates. Non-monetary items in a foreign currency are measured in terms of historical cost and are translated using the exchange rates on the dates of the initial transactions. All differences are taken to the consolidated statements of loss in the periods in which they arise.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

Financial instruments

Financial assets

Initial recognition and measurement

Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either FVPL or FVOCI, and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.

Amounts receivable are initially recognized when they are originated. All other financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

Financial assets with embedded derivatives are considered in their entirety when determining their classification at FVPL or at amortized cost.

Subsequent measurement – Financial assets at amortized cost

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the consolidated statements of loss. The Company has classified cash and amounts receivable as financial assets measured at amortized cost.

Subsequent measurement – Financial assets at FVPL

Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the consolidated statements of financial position with changes in fair value recognized in other income or expense in the consolidated statements of loss.

Subsequent measurement – Financial assets at FVOCI

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company’s investment in shares of Euro Sun Mining Inc. prior to disposal was classified as a financial asset at FVOCI.

After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the consolidated statements of comprehensive loss. When the investment is sold, the cumulative gain or loss is not reclassified to profit or loss.

Dividends from such investments are recognized in other income in the consolidated statements of loss when the right to receive payments is established.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

Derecognition

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.

Impairment of financial assets

The Company’s only financial assets subject to impairment are amounts receivable, which are measured at amortized cost. The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, amounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases and the decrease can be objectively related to an event occurring after the initial impairment was recognized.

Financial liabilities

Initial recognition and measurement

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL on initial recognition. The Company’s financial liabilities include accounts payable and accrued liabilities, warrant liability, liability component of convertible debenture and the conversion option of the convertible debenture. Accounts payable and accrued liabilities, the liability component of convertible debenture, and the loan payable are each measured at amortized cost, while the warrant liability and conversion option of the convertible debenture are measured at FVPL. All financial liabilities are recognized initially at fair value and in the case of long-term debt, net of directly attributable transaction costs.

Subsequent measurement – Financial liabilities at amortized cost

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

Subsequent measurement – Financial liabilities at FVPL

Financial liabilities measured at FVPL include financial liabilities management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial liabilities measured at FVPL are carried at fair value in the consolidated statements of financial position with changes in fair value recognized in other income or expense in the consolidated statements of loss.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the consolidated statements of loss.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

Provisions

General

Provisions are recognized when (a), the Company has a present obligation (legal or constructive) as a result of a past event, and (b), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the consolidated statement of operations, net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Rehabilitation provision

The Company records the present value of estimated costs of legal and constructive obligations required to restore operating locations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.

The obligation generally arises when the asset is installed or the ground / environment is disturbed at the production location. When the liability is initially recognized, the present value of the estimated cost is capitalized by increasing the carrying amount of the related mining assets to the extent that it was incurred prior to the production of related ore. Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognized in the consolidated statement of operations as a finance cost. Additional disturbances or changes in rehabilitation costs will be recognized as additions or charges to the corresponding assets and rehabilitation liability when they occur. For closed sites, changes to estimated costs are recognized immediately in the consolidated statement of operations.

Cash

Cash in the consolidated statements of financial position comprises cash at banks.

Operating segments

The Company has concluded that it has only one material operating segment (the development of its Ukrainian mining and exploration permits) for financial reporting purposes.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

Exploration and evaluation expenditures

Exploration and evaluation expenditures comprise costs of initial search for mineral deposits and performing a detailed assessment of deposits that have been identified as having economic potential.

Exploration and evaluation costs are expensed as incurred and included in the consolidated statement of loss and until technical feasibility and commercial viability of extraction of reserves are demonstrable. Once a mine development decision has been made by the Company, subsequent expenditures incurred to develop the mine are capitalized to mine development assets. Exploration and evaluation costs include an allocation of administration and salary costs as determined by management.

Common shares

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

Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are 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.

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

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

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

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

Share-based payment transactions

Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of 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.

The Company has established a stock option plan to grant non-transferable equity settled options to purchase Common Shares to directors, officers, employees of and consultants to the Company. The number of Common Shares reserved for issuance will not exceed 10% of the total issued and outstanding Common Shares of the Company. The Company has the ability to grant for a maximum period of ten years from the date of grant.

Stock options vest over periods ranging from immediate to two years. The fair value of each option is measured at the date of grant using the Black-Scholes option pricing model and recorded as a compensation expense in the period the options are vested, or the performance is complete. The number of awards expected to vest is reviewed at least annually, with any impact being recognized immediately.

Any consideration paid on exercise of stock options is credited to share capital. On expiry, any amount related to the initial value of the stock option is recorded to deficit.

Warrant liabilities

Certain warrants issued outside the scope of IFRS 2 have an exercise price denominated in Canadian dollars, and therefore, do not qualify for classification as equity as their exercise price is not in the Company’s functional currency of the US dollar. These warrants have been recorded as warrant liabilities and are recorded at the estimated fair value at each reporting date, computed using the Black-Scholes valuation method. Changes in fair value of each period are included in income or loss for the period.

Compound financial instruments (debentures)

Compound financial instruments issued by the Company comprise convertible notes that can be converted to share capital at the option of the holder.

The number of shares to be issued changes in response to the fair value of the shares and are valued in a currency that is not the Company’s functional currency of US dollars. Therefore, the conversion feature of the compound financial instrument does not qualify for classification as equity. The conversion feature of the compound financial instrument is considered a derivative liability and is measured at fair value using the Black-Scholes valuation method with changes in value being recorded in profit or loss. The liability component of the compound financial instrument is recognized initially at the difference between the fair value of a similar liability that does not have a conversion feature and the fair value of the conversion feature.

Subsequent to initial recognition, the conversion feature is revalued at each period end with changes in fair value included in income or loss for the period. The liability component is measured at amortized cost using the EIR method.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

3. Significant accounting policies (continued)

Accounting pronouncements not yet adopted

Certain new standards, interpretations, amendments and improvements to existing standards were issued by the IASB or IFRIC that are mandatory for accounting periods beginning on or after January 1, 2020 or later periods. Updates that are not applicable or are not consequential to the Company have been excluded thereof.

IAS 1 – Presentation of Financial Statements (“IAS 1”) and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”) were amended in October 2018 to refine the definition of materiality and clarify its characteristics. The revised definition focuses on the idea that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The amendments are effective for annual reporting periods beginning on or after January 1, 2020.

IAS 37 – Provisions, Contingent Liabilities, and Contingent Assets (“IAS 37”) was amended. The amendments clarify when assessing if a contract is onerous, the cost of fulfilling the contract includes all costs that relate directly to the contract – i.e. a full-cost approach. Such costs include both the incremental costs of the contract (i.e. – costs a company would avoid if it did not have the contract) and an allocation of other direct costs incurred on activities required to fulfill the contract – e.g. contract management and supervision, or depreciation of equipment used in fulfilling the contract. The amendments are effective for annual periods beginning on January 1, 2022.

There are no other standards/amendments or interpretations that are expected to have a significant effect on the consolidated financial statements of the Company.

4. Critical judgements and estimation uncertainties

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

Notes to the consolidated financial statements (Expressed in U.S. dollars)

BLACK IRON INC.

For the years ended December 31, 2020 and 2019

4. Critical judgements and estimation uncertainties (continued)

Significant judgments in applying accounting policies and accounting estimates and judgements

The areas which require management to make significant judgments in applying the Company’s accounting policies and accounting estimates and judgements in determining carrying values include, but are not limited to:

(i) Income taxes and recoverability of potential deferred tax assets

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The Company considers whether relevant tax planning opportunities are within the Company’s control, are feasible and are within management’s ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period.

(ii) Contingencies and estimates

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events (see note 14).

(iii) Mineral resource estimates

The figures for mineral resources are determined in accordance with National Instrument 43-101, “Standards of Disclosure for Mineral Projects”, issued by the Canadian Securities Administrators. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Differences between management’s assumptions including economic assumptions such as metal prices and market conditions could have a material effect in the future on the Company’s financial position and results of operation.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

BLACK IRON INC.

For the years ended December 31, 2020 and 2019

4. Critical judgements and estimation uncertainties (continued)

Significant judgments in applying accounting policies and accounting estimates and judgements (continued)

(iv) Share-based payments and warrants

Management determines costs for share-based payments using market-based valuation techniques. The fair value of the market-based and performance-based share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Similar calculations are made in order to value warrants. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

(v) Estimation of decommissioning and restoration costs and the timing of expenditure

The cost estimates are updated annually during the life of a mine to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations) and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company’s interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities.

(vi) Functional currency

Functional currency is the currency of the primary economic environment in which the Company and its subsidiaries operate. If indicators of the primary economic environment are mixed, then management uses its judgement to determine the functional currency that most faithfully represents the economic effect of underlying transactions, events and conditions.

(vii) Fair value of financial instruments

Certain financial instruments, such as investment in Euro Sun Mining Inc. (both equity securities and warrants), warrant liability and conversion option of convertible debentures, are measured at fair value. The estimated fair value of financial instruments, by their very nature, are subject to measurement uncertainty. The Company estimates fair value using valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable input.

(viii) Allowance for credit losses

The allowance for credit losses has been assessed by the Company’s management based on the age of the amounts uncollected as at the end of the reporting period and management’s experiences regarding the Company’s customers’ likelihood of payment. The allowance is assessed at the end of each reporting period and adjusted so that the net amounts receivable reflects the expected future collection of accounts.On January 1, 2020, amendments to refine the definition of materiality in IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors came into effect. These amendments did not have a significant impact on the consolidated financial statements.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

5. Investment in Euro Sun Mining Inc.

Changes in the investment in Euro Sun Mining Inc. (“Euro Sun”) during the periods presented were as follows:

	Equity Securities	Equity Securities	Warrants		Total
	#	$	#	$	$
Balance, December 31, 2018	1,440,140	506,720	786,485	390	507,110
Net change in fair value of warrants recorded in the
consolidated statement of loss and comprehensive loss	-	-	-	(390)	(390)
Net change in fair value of equity securities recorded in
other comprehensive loss (i)	-	476,284	-	-	476,284
Sale of common shares of Euro Sun (ii)	(1,440,140)	(983,004)	-	-	(983,004)
Expiration of Euro Sun warrants(iii)	-	-	(786,485)	-	-
Balance,December 31,2019 and December 31,2020	-	-	-	-	-

(i) As at December 31, 2020 and 2019, all Euro Sun shares had been sold.

(ii) During the year ended December 31, 2019, the Company sold 1,440,140 common shares of Euro Sun for total proceeds of CAD$448,136 ($338,753), resulting in a loss on sale of CAD$851,243 ($644,251).
(iii) On May 7, 2018, Euro Sun announced that it had extended the expiry date of its outstanding common share purchase warrants to November 19, 2018, from their original expiry of May 19, 2018. At Euro Sun’s discretion, expiry could be accelerated if the trading price of Euro Sun’s common shares on the TSX exceeds $2.72 for a period of 20 consecutive trading days. Under this circumstance, Euro Sun had the right, but not the obligation, to accelerate the expiry date of the warrants to a date which is not less than 30 days after the date on which Euro Sun notifies warrant holders of such accelerated expiry date.

On October 22, 2018, Euro Sun announced that it had further extended the expiry date of its outstanding common share purchase warrants to May 19, 2019. The conditions of extension remained unchanged from the previous extension to November 19, 2018 (announced on May 7, 2018).

On May 19, 2019, 786,485 warrants expired.

BLACK IRON INC.

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

6. Exploration and evaluation expenditures

Exploration and evaluation expenditures for the periods presented were as follows:

	Year ended	Year ended
	December 31,	December 31,
	2020	2019
Consulting and technical	$ 503,312	$ 485,701
Surface rights and consulting	103,436	67,259
Field office support and administration	63,442	72,655
Travel	6,228	42,933
Professional fees	19,290	-
	$ 695,708	$668,548

The Company’s principal activity is the exploration and development of its Shymanivske project.

7. Accounts payable and accrued liabilities

	December	31, 2020		December 31,2019
Trade payables	$	555,630	$	369,217
Accruals		55,588		34,647
	$	611,218	$	403,864

Trade payables and accruals are non-interest bearing.

BLACK IRON INC.

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

8. Share capital

Authorized

Unlimited number of common shares without par value.

	Number of Common shares		Amount
Balance,December 31,2018	159,746,769	$	67,457,612
Private placement	26,552,390		912,476
Cost of issue	-		(48,360)
Balance,December 31,2019	186,299,159	$	68,321,728
Warrant exercise	10,936,193		737,450
Warrant valuation	-		604,262
Option exercise	750,000		27,725
Option valuation	-		10,060
Debenture conversion	25,419,816		1,851,798
Private placement	36,534,420		1,109,525
Cost of issue	-		(99,117)
Balance,December 31,2020	259,939,588	$	72,563,431

On March 29, 2019, the Company closed a non-brokered private placement financing of 17,508,440 units at a price of CAD$0.06 per unit for gross proceeds of $786,100 (CAD$1,050,506). Each unit is comprised of one common share and one half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share at a price of CAD$0.09 for a period of three years from the date of issue (see Note 10). The Company paid cash and noncash commissions and other expenses of $12,798 (CAD$17,178) in relation to this private placement. Directors and officers of the Company participated in the private placement and acquired a total of 3,008,908 units of this private placement for gross proceeds of $135,000 (CAD$180,534).

On April 5, 2019, the Company closed a non-brokered private placement financing of 9,043,950 units at a price of CAD$0.06 per unit for gross proceeds of $405,376 (CAD$542,637). Each unit is comprised of one common share and one half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share at a price of CAD$0.09 for a period of three years from the date of issue (see Note 10). The Company paid cash and noncash commissions and other expenses of $35,562 (CAD$47,584) in relation to this private placement.

On May 8, 2020, the Company closed a non-brokered private placement financing of 36,534,420 units at a price of CAD$0.05 per unit for gross proceeds of $1,151,546 (CAD$1,826,721). Each unit is comprised of one common share and one-third of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share at a price of CAD$0.06 for a period of three years from the date of issue (see Note 10). The Company paid cash and non-cash commissions and other expenses of $80,768 (CAD$113,602) in relation to this private placement.

During the year ended December 31, 2020, the Company issued 25,419,816 shares on conversion for a portion of the outstanding convertible debenture. Subsequent to year end, the remainder of the outstanding balance of the convertible debenture was converted to 2,590,627 shares (Note 12).

BLACK IRON INC.

Notes to the consolidated financial statements

(Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

9. Share-based payments reserve

Number of stock options Weighted average exercise price CAD Carrying amount of options Number of DSU Weighted average exercise price CAD Carrying amount of DSU Total carrying amount	Number of stock options Weighted average exercise price CAD Carrying amount of options Number of DSU Weighted average exercise price CAD Carrying amount of DSU Total carrying amount	Number of stock options Weighted average exercise price CAD Carrying amount of options Number of DSU Weighted average exercise price CAD Carrying amount of DSU Total carrying amount	Number of stock options Weighted average exercise price CAD Carrying amount of options Number of DSU Weighted average exercise price CAD Carrying amount of DSU Total carrying amount	Number of stock options Weighted average exercise price CAD Carrying amount of options Number of DSU Weighted average exercise price CAD Carrying amount of DSU Total carrying amount
Balance, December 31, 2018 10,507,500 $ 0.12 Granted 3,150,000 0.06 Expired (3,750,000) 0.10	$ 620,490 76,594 (362,088)	3,514,844 $ 0.05 1,959,637 0.06 - -	$ 129,694 84,101 -	$ 750,184 160,695 (362,088)
Balance,December 31,2019 9,907,500 $ 0.07	$ 334,996	5,474,481 $ 0.05	$ 213,795	$ 548,791
Granted 9,042,500 0.07 Expired (3,395,000) - Forfeited (187,500) 0.08 Exercised (750,000) -	528,095 (68,705) (5,092) (10,060)	3,566,367 $ 0.09 - - - - - -	266,511 - - -	794,606 (68,705) (5,092) (10,060)
Balance, December 31, 2020 14,617,500 $ 0.07	$ 779,234	9,040,848 $ 0.07	$ 480,306	$ 1,259,540

Option Plan

The Company maintains a stock option plan pursuant to which the Company may grant stock options up to 10% of the number of issued and outstanding common shares of the Company at the time of the stock option grant. The 10% limit includes both the stock option plan and any other share compensation plan, including the Deferred Share Units (“DSU”) plan. The terms and conditions of each option granted under the Plan are determined by the Board upon the recommendations of the Compensation Committee.

During the year ended December 31, 2020, the Company granted 9,042,500 stock options (3,150,000 granted for the year ended December 31, 2019) and options vested with a total value of $528,095 ($76,594 for the year ended December 31, 2019).

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

9. Share-based payments reserve (continued)

The weighted average grant date fair value of options granted during the year ended December 31, 2020 was measured using the Black-Scholes option pricing model. The following inputs were used in the measurement of fair values at grant date: expected dividend yield of 0% (2019 - 0%), expected volatility of 134% based on the historical volatility of the Company (2019 – 127%), weighted average risk - free interest rate of 0.35% (2019 – 1.79%), an expected forfeiture rate of 4.7% (2019 – 4.7%), weighted average share price of CAD$0.11, and a weighted average expected life of 2.7 years (2019 – 2.9 years). The weighted average grant-date fair value of options granted during the year ended December 31, 2020 was $0.05 per option (2019 - $0.03). 2,932,500 of the options granted by the Company during the year ended December 31, 2020 vest in eight equal quarterly instalments commencing on the date of grant and 6,110,000 options granted by the Company during the year ended December 31, 2020 vested immediately (2019 – 2,900,000 options vest in eight equal quarterly installments).

At December 31, 2020, outstanding options to acquire common shares of the Company were as follows:

Expiry date	Options exercise price (CAD$)	Options outstanding (#)	Options exercisable (#)	Grant date estimated fair value vested ($)	Grant date estimated fair value vested ($)
February 16, 2022	0.12	2,425,000	2,425,000		161,467
May 31, 2022	0.11	200,000	200,000		11,866
October 31, 2023	0.08	300,000	-		14,987
December 5, 2023	0.06	250,000	250,000		7,992
January 9, 2024	0.05	1,950,000	2,700,000		52,960
March 4, 2024	0.07	200,000	200,000		7,648
October 18, 2024	0.08	250,000	156,250		9,051
March 11, 2025	0.07	150,000	75,000		4,957
June 15, 2025	0.10	6,110,000	6,110,000		369,166
August 7, 2025	0.15	2,782,500	695,625		139,140
		14,617,500	12,811,875	$	779,234

DSU Plan

On June 23, 2015, the Company adopted a DSU plan for the benefit of non-executive directors which provided the Company with the ability to issue DSUs from treasury and reserve for issuance of common shares of the Company up to a maximum of 3,000,000 DSUs. On June 27, 2018, shareholders approved an amendment to the DSU plan pursuant to which the maximum number of DSUs granted cannot exceed 5% of the number of issued and outstanding common shares of the Company at the date of grant, subject to an aggregate maximum number of common shares issuable from all share-based compensation plans of 10%.

The DSUs are deferred and will be redeemed in the form of one common share for each DSU held on the date the participant ceases to be an eligible director. During the year ended December 31, 2020, the Company granted 3,566,367 DSUs with a fair value of $266,511 based on the quoted market price of the Company’s common shares at the date of grant (1,959,637 DSUs with a grant date fair value of $129,694 during the year ended December 31, 2019). As the DSUs will be settled in shares, the value of the DSUs is recorded in share-based payments reserve at the time of issue.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

10. Warrants and warrant liability

At December 31, 2020, outstanding warrants to acquire common shares of the Company were as follows:

Number outstanding	Number exercisable	Grant date	Expiry date	Exercise price (CAD)	Fair value at grant date	Grant date share price	Expected volatility	Expected life (yrs)	Expected dividend yield	Risk- free interest rate
80,000	80,000	29-Mar-19	29-Mar-22	$ 0.09	$ 2,288	$ 0.06	122%	3	0%	1.45%
13,081,395	13,081,395	27-Sep-19	27-Sep-23	$ 0.11	$ 569,100	$ 0.08	116%	4	0%	1.47%
3,384,991	3,384,991	24-Apr-20	24-Apr-24	$ 0.08	$ 95,813	$ 0.06	117%	4	0%	0.38%
12,011,474	12,011,474	8-May-20	8-May-23	$ 0.06	$ 194,325	$ 0.08	110%	3	0%	0.26%
30,000,000	-	22-Dec-20	22-Dec-25	$ 0.31	$6,883,852	$ 0.35	129%	5	0%	0.20%
58,557,860	28,557,860				7,745,378 $

Based on management’s assessment, the vesting conditions for the 30,000,000 warrants granted on December 22, 2020 and included in the table above have not yet been met. As such, management has estimated the fair value of these warrants based on information available on the grant date. No value was recorded in the consolidated financial statements for these warrants at December 31, 2020, as vesting is not foreseeable as at the date of these consolidated financial statements. See also Note 14.

Warrant liability

Warrants that have their exercise prices denominated in currencies other than the Company’s functional currency of the US dollar, and are non-compensatory, are accounted for as financial liabilities in the consolidated statements of financial position. The changes in fair value are recorded in the consolidated statements of loss for the period.

Warrant liability transactions during the periods presented were as follows:

	Number of Warrants	Fair value ($)
Balance,December 31,2018	-	-
Granted	26,357,590	848,100
Change in fair value duringtheyear	-	379,778
Balance,December 31,2019	26,357,590	1,227,878
Granted	15,563,131	292,834
Exercised	(10,911,195)	(603,530)
Expired	(2,531,666)	(53,194)
Change in fair value duringtheyear	-	5,657,561
Balance, December 31, 2020	28,477,860	6,521,549

On March 29, 2019, the Company issued 8,754,220 warrants as part of a private placement which entitles the holder to purchase one common share of the Company at an exercise price of CAD$0.09 until March 29, 2022 (see Note 8). The fair value of these warrants of $184,000 was estimated using the Black-Scholes option pricing model using the following assumptions: expected dividend yield of 0%, expected volatility of 122%, risk-free rate of 1.45%, share price of CAD$0.09 and expected life of three years.

On April 5, 2019, the Company issued 4,521,975 warrants as part of a private placement which entitles the holder to purchase one common share of the Company at an exercise price of CAD$0.09 until April 5, 2022 (see Note 8). The fair value of these warrants of $95,000 was estimated using the Black-Scholes option pricing model using the following assumptions: expected dividend yield of 0%, expected volatility of 122%, risk-free rate of 1.51%, share price of CAD$0.09 and expected life of three years.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

10. Warrants and warrant liability (continued)

Warrant liability (continued)

On September 27, 2019, the Company issued 13,081,395 warrants as part of the convertible debenture which entitles the holder to purchase one common share of the Company at an exercise price of CAD$0.11 until September 27, 2023 (see Note 12). The fair value of these warrants of $2,869,934 was estimated using the Black-Scholes option pricing model using the following assumptions: expected dividend yield of 0%, expected volatility of 114%, risk-free rate of 0.25%, share price of CAD$0.34 and expected life of four years.

On April 24, 2020, the Company issued 3,384,991 warrants as part of the convertible debenture which entitles the holder to purchase one common share of the Company at an exercise price of CAD$0.08 until April 24, 2024 (see Note 12). The fair value of these warrants of $783,422 was estimated using the Black-Scholes option pricing model using the following assumptions: expected dividend yield of 0%, expected volatility of 110%, risk-free rate of 0.32%, share price of CAD$0.34 and expected life of four years.

On May 8, 2020, the Company issued 12,178,140 warrants as part of a private placement which entitles the holder to purchase one common share of the Company at an exercise price of CAD$0.06 until May 8, 2023 (see Note 8). The fair value of these warrants of $2,796,400 was estimated using the Black-Scholes option pricing model using the following assumptions: expected dividend yield of 0%, expected volatility of 118%, risk-free rate of 0.25%, share price of CAD$0.34 and expected life of three years.

On July 30, 2020, the Company announced that it had elected to accelerate the expiry date of the warrants issued on March 29, 2019 and April 5, 2019 in connection with the private placement units issued on these dates. The warrants were subject to the right of the Company to accelerate the expiry date of the warrants if the Company’s common shares close at or above $0.15 per share for more than 10 consecutive trading days on the Toronto Stock Exchange. As such, the warrants expiry date was accelerated to August 31, 2020. As a result of this acceleration, 10,444,529 warrants were exercised and 2,531,666 warrants expired, unexercised.

Warrants - equity

Warrant transactions during the periods presented were as follows:

	Number of Warrants	Fair value ($)
Balance, December 31, 2018	-	-
Granted	105,000	3,020
Balance, December 31, 2019	105,000	3,020
Exercised	(25,000)	(732)
Granted	30,000,000	-
Balance, December 31, 2020	30,080,000	2,288

On March 29, 2019, the Company issued 105,000 finder’s warrants as part of a private placement which entitles the holder to purchase one common share of the Company at an exercise price of CAD$0.09 until March 29, 2022. The fair value of these warrants of $3,020 was estimated using the Black-Scholes option pricing model using the following assumptions: expected dividend yield of 0%, expected volatility of 122%, risk-free rate of 1.45%, share price of CAD$0.09 and expected life of three years.

See Note 14.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

11. Related party transactions

Key management personnel compensation

In addition to their contracted fees, executive officers participate in the Company’s stock option program (Note 9) and are entitled to participate in the share compensation plan. The Company also has a DSU plan which provides nonexecutive directors with the ability to redeem annual director compensation through the issuance of common shares of the Company. Certain executive officers are subject to mutual termination notices ranging from three to twelve months. Key management personnel compensation paid comprised:

		Year ended		Year ended
	December 31, 2020		December 31,2019
Short term employee benefits	$	737,654	$	738,546
Share-basedpayments		690,279		108,055
	$	1,427,933	$	846,601

Included in the above amounts is $224,585 ($225,297 for the year ended December 31, 2019) paid according to a contract for business and operational consulting services with Forbes & Manhattan, Inc., which has common executives with the Company. Officers and directors had 6,913,500 options vest during the year ended December 31, 2020 (525,000 for the year ended December 31, 2019).

The Company is party to certain management contracts. These contracts require payments of approximately $2.4 million upon the occurrence of a change in control of the Company, as defined by each officer’s respective consulting agreement. The Company is also committed to payments upon termination of approximately $677,000 pursuant to the terms of these contracts. As triggering events have not yet taken place, no amounts have been provided for these items.

As at December 31, 2020, the Company had $434,375 (December 31, 2019 - $141,250) of consulting fees and travel expenses owing to its key management personnel. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment and are due on demand.

These transactions, occurring in the normal course of operations, are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

12. Convertible debenture

On September 18, 2019, the Company executed a convertible security funding agreement (the “Agreement”) with Lind Global Macro Fund, LP (“Lind”) providing for a secured convertible debenture financing for gross proceeds of up to CAD$11,000,000 ($8,306,275).

Pursuant to the Agreement, the Company issued to Lind a convertible security with a face value of CAD$2,700,000 ($2,037,890) (the “Convertible Security”) on September 27, 2019, representing a principal amount of CAD$2,250,000 ($1,698,241) and a prepaid interest amount of CAD$450,000 ($339,649).

The Convertible Security is secured by all of the assets of the Company and bears interest at 10% per annum and matures on September 26, 2021. The Convertible Security includes covenants typical and customary for secured convertible securities of this nature. The Company must comply with the covenants on a regular basis.

The Company issued to Lind 13,081,395 warrants exercisable for a term of 48 months at an exercise price of CAD$0.11 per share, valued at $569,100 on the date of issue (see Note 10).

The Company paid Lind a commitment fee of CAD$78,750 ($59,438) and legal fees associated with the Convertible Security of CAD$57,571 ($43,740).

The Company issued to Lind a second convertible security (the “Second Tranche”) under the Agreement with a face value of CAD$498,000 ($353,639) on April 24, 2020, representing a principal amount of CAD$400,475 ($284,327) and a prepaid interest amount of CAD$83,000 ($59,000).

The Company issued Lind 3,384,991 warrants related to the Second Tranche. These warrants are exercisable for a term of 48 months at an exercise price of CAD$0.08 per share, valued at $95,813 on the date of issue (see Note 10).

The Company paid Lind closing costs of CAD$14,525 ($10,312) associated with the Second Tranche.

The Second Tranche is secured by all of the assets of the Company and bears interest at 10% per annum and matures on April 23, 2022. The Second Tranche includes covenants typical and customary for secured convertible securities of this nature. The Company must comply with the covenants on a regular basis.

The Convertible Security and the Second Tranche are accounted for as a compound financial instrument with a liability component and conversion option component classified as two separate liabilities, as well as the warrant liability component (Note 10).

The Convertible Security and the Second Tranche may be converted to common shares of the Company at a rate of no more than 1/20[th] of the face value of the Convertible Security and the Second Tranche in any given month and at a price per share equal to 85% of the volume weighted average price per share for the five consecutive trading days immediately prior to the conversion date. Lind reserves the right at any time to increase the conversion limit from 1/20[th] of the face value of the first closing to CAD$500,000 per month, providing that increased amount does not exceed 15% of the aggregate trading volume of the shares for the immediately proceeding 20 days. During the year ended December 31, 2020, the Company issued 25,419,816 shares as settlement for a portion of the outstanding convertible debenture (Note 10), converting CAD$2,584,600 ($1,926,649) of the face value of the convertible security to shares.

The fair value of the conversion features was estimated using a Binomial option pricing model using the following assumptions: expected dividend yield of 0%, weighted average expected volatility of 109% based on historical volatility of the Company’s common shares, risk-free rate of 0.15%, and weighted average expected life of 0.75 years.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

12. Convertible debenture (continued)

The fair value of the liability components was estimated using a weighted average discount rate of 157% based on the estimated discount rate of comparable debt. The discount on the liability components is being accreted over the term of the Convertible Security and the Second Tranche, utilizing effective interest rate method at a 157% weighted average discount rate. For the year ended December 31, 2020, accretion of the discount totaled $380,554 ($1,426 for year ended December 31, 2019).

On bifurcation of the various components of the compound financial instrument, it was determined that a loss arose on the transaction in the amount of $399,000. The Company has deferred this amount as prepaid and other asset and will realize the loss over the term of the Convertible Security. As at December 31, 2020, the balance of this prepaid and other asset is $41,619.

Liability component as at December 31, 2018	$	-
Issuance		1,358,378
Change in fair value		(65,455)
Effect of foreignexchange currency difference		25,602
Liability component as at December 31, 2019		1,318,525
Issuance		177,247
Change in fair value		62,777
Conversion		(1,368,992)
Effect of foreign exchange currency difference		81,028
Conversion option as at December 31, 2020	$	270,585

Liability component as at December 31, 2018	$	-
Issuance		116,208
Accretion		53,455
Effect of foreign exchange currency difference		3,099
Liability component as at December 31, 2019		172,762
Issuance		11,267
Accretion		380,554
Conversion		(482,806)
Effect of foreign exchange currency difference		8,410
Liability component as at December 31, 2020	$	90,187

At December 31, 2020, the fair value of the conversion option component was $270,585 and the carrying amount of the liability component was $90,187. All debentures were converted subsequent to December 31, 2020 and the liability component and conversion option were reduced to zero (see Note 8).

13. Loan payable

In April 2020, the Company received a CAD$40,000 ($31,417) Canadian Emergency Business Account (“CEBA”) loan. The CEBA loan is from the Government of Canada and is interest free through December 31, 2022, after which any unpaid balance is converted to a five-year interest-bearing term loan. Repaying the loan balance in full on or before December 31, 2022 will result in loan forgiveness of 25% (up to CAD$10,000).

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

14. Commitments and contingencies

Legal

A former officer of the Company has initiated a legal action seeking approximately CAD$1.1 million for a change of control payment in connection with Metinvest’s investment in the Company’s subsidiary in 2014. The Company does not believe the change of control payment is due to the former officer and the Company intends to defend the matter vigorously as it believes the former officer’s claim is without merit.

Environmental

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

Contracts

See Note 11.

Perpetual Iron

On December 22, 2020, the Company issued 30,000,000 non-transferrable warrants to Perpetual Iron Inc. for facilitating and supporting the negotiations of a non-binding financing from a global investment bank. The warrants do not vest until certain conditions are met. 10,000,000 warrants vest upon entering a binding definitive agreement with the investor and the remaining 20,000,000 warrants vest upon the Company’s initial draw on the financing facility. If no binding definitive agreement is reached within two years, all warrants will be voided. Additionally, the Company will make a $4.0 million dollar payment to Perpetual Iron contingent on the Company entering a binding agreement and making an initial draw on the financing facility. Neither the warrants nor the fee have been included in the consolidated financial statements at December 31, 2020 as management has estimated that the vesting conditions have not been met and is not foreseeable as at the date of these consolidated financial statements.

Novel Coronavirus

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

15. Loss per share

Basic loss per share amounts are calculated by dividing the net loss for the year by the weighted average number of common shares outstanding during the year. Basic and diluted weighted average number of shares for the year ended December 31, 2020 was 226,009,275 (179,790,538 for the year ended December 31, 2019).

The diluted loss per share for the year ended December 31, 2020 excludes share purchase options, DSUs, warrants, and the conversion option of debenture of the Company as they were determined to be anti-dilutive. For the year ended December 31, 2020, basic and diluted loss per share was $0.04 ($0.02 for the year ended December 31, 2019).

16. Income taxes

(i) Provision for income taxes

Major items causing the Company’s effective tax rate to differ from the combined Canadian federal and provincial statutory rate of 26.5% (2019 – 26.5%) were as follows:

		2020		2019
Accounting loss before income tax	$	9,077,845	$	2,898,038
Canadian StatutoryTax Rate		26.50%		26.50%
Expected income tax recovery based on statutory rate	$	(2,406,000)	$	(768,000)
Adjustment to expected income tax benefit:
Stock based compensation		211,000		43,000
Expenses not deducted for tax purposes		1,617,000		72,000
Other		61,000		(284,000)
Change in benefit of tax assets not recognized		517,000		937,000
Deferred income taxprovision(recovery)	$	-	$	-

(ii) Temporary differences

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

		2020		2019
Non-capital loss carry-forwards - Canada	$	45,462,000	$	44,428,000
Other - Canada		108,000		45,000
Mineral property costs - Ukraine		2,403,000		2,380,000
Non-capital loss carry-forwards - Cyprus		1,110,000		558,000
Non-capital loss carry-forwards - Ukraine		1,640,000		1,512,000
Total	$	50,723,000	$	48,923,000

Deferred tax assets have not been recognized in respect of these items because it is not probably that future taxable profit will be available against which the Company can use the benefits.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

16. Income taxes (continued)

(iii) Tax loss carry-forwards

The non-capital losses for Canadian income tax purposes of approximately $45,462,000 expire between 2031 to 2040.

The non-capital losses for Cyprus can be carried forward for five years.

The Company carries on most of its operations in Ukraine. The Ukrainian tax system is characterized by numerous taxes; frequently changing legislation which may be applied retroactively; contradictory and wide interpretation of the law, and uncertain administrative practices of the tax authorities. All assessments of tax received by the Company have been accrued in these consolidated financial statements. While management believes that it has provided adequately for tax liabilities, based on its interpretations of applicable tax legislation, official pronouncements and court decisions, the relevant tax authorities could disagree and assess additional tax, the effect of which could be material to these consolidated financial statements.

17. Financial risk management objectives and policies

The Company's financial instruments comprise cash, amounts receivable, accounts payable and accrued liabilities, warrant liability, liability component of convertible debenture, conversion option of convertible debenture, and loan payable.

The main risks that could adversely affect the Company's financial assets, liabilities or future cash flows are credit risk, liquidity risk and market risk.

Management reviews policies for managing each of these risks, which are summarized below.

The following discussion also includes a sensitivity analysis that is intended to illustrate the sensitivity to changes in market variables on the Company's financial instruments and show the impact on income or loss and shareholders' equity, where applicable. The sensitivity has been prepared for the year ended December 31, 2020 using the amounts of other financial assets and liabilities held as at the consolidated statement of financial position date.

Credit risk

Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets. With respect to credit risk arising from financial assets of the Company, which comprise cash and minimal amounts receivable, the Company's exposure to credit risk arises from default of counterparty, with a maximum exposure equal to the carrying amount of these instruments. Cash balances are held with high credit quality financial institutions. The credit risk of the Company is considered minimal.

Liquidity risk

Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. The Company has procedures with the objective of managing such risk, such as monitoring cash flow on a continuous basis through short and medium-term cash planning and maintaining sufficient cash. The Company expects to complete future equity financings, as required and available.

The Company's financial liabilities at December 31, 2020 and 2019 include accounts payable and accrued liabilities that were based on contractual undiscounted payments that are all due in less than one year, the convertible debenture (Note 12) and the loan payable, The warrant liability related to unexercised warrants will be settled in equity, if exercised.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

17. Financial risk management objectives and policies (continued)

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rate and equity prices will affect the Company's income or the value of its holdings of financial instruments. The Company is exposed to foreign currency risk and equity price risk.

Foreign currency risk is created by fluctuations in the fair value or cash flows of financial instruments due to changes in foreign exchange rates and exposure as a result of investment in its subsidiaries.

A portion of the Company’s transactions are carried out in other transactional currencies including the Canadian dollar and Ukrainian Hryvnia (“UAH”) which are subject to currency fluctuations. The following summarizes the US dollar amounts of assets and liabilities denominated in other currencies at December 31, 2020:

	CAD	UAH
Cash	$ 1,087,589 $	6,660
Amounts receivable	35,105	126
Accounts payable and accrued liabilities	(583,685)	(12,283)
Warrant liability	(6,521,549)	-
Conversion option of convertible debenture	(90,187)	-
Liability component of convertible debenture	(270,585)	-
	$ (6,343,312) $	(5,497)

A $0.01 strengthening or weakening of the US dollar against the Canadian dollar at December 31, 2020 would result in an increase or decrease in the operating loss of $79,650. A $0.01 strengthening or weakening of the US dollar against the UAH would result in an increase or decrease in operating loss of approximately $1,554.

The Company has no interest rate risk as there are no outstanding bank borrowings and no interest rate exposure, as the Company finances its operations primarily through share offerings.

Capital management

The capital of the Company consists of shareholders’ (deficiency) equity.

The Company's capital management objectives, policies and processes have remained unchanged during the years ended December 31, 2020 and 2019.

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than of the Toronto Stock Exchange (“TSX”) which requires adequate working capital or financial resources such that, in the opinion of TSX, the listed issuer will be able to continue as a going concern. TSX will consider, among other things, the listed issuer's ability to meet its obligations as they come due, as well as its working capital position, quick asset position, total assets, capitalization, cash flow and earnings as well as disclosures in the consolidated financial statements regarding the listed issuer's ability to continue as a going concern.

BLACK IRON INC.

Notes to the consolidated financial statements (Expressed in U.S. dollars)

For the years ended December 31, 2020 and 2019

18. Financial instruments

		December 31, 2020	December 31, 2020	December 31, 2020		December	31,2019	31,2019
	Hierarchy level	Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities:
Warrant liability	2	6,521,549 $	$	6,521,549	$	1,227,878	$	12,127,878
Conversion option of convertible debentures	3	270,585		270,585		1,318,525		1,318,525

A fair value hierarchy prioritizes the methods and assumptions used to develop fair value measurements for those financial assets where fair value is recognized on the consolidated statements of financial position. These have been prioritized into three levels.

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly
Level 3 – Inputs for the asset or liability that are not based on observable market data.

Fair value amounts represent point-in-time estimates and may not reflect fair value in the future. The measurements are subjective in nature, involve uncertainties and are a matter of significant judgement.

The fair values of other short-term financial instruments, including cash, amounts receivable, accounts payable and accrued liabilities, approximate their carrying values due to the short period of time to maturity. The investment in shares in Euro Sun is classified as level 1 as the price is quoted in an active market (see Note 5). The investment in warrants of Euro Sun (see Note 5), the warrant liability (see Note 10) and the conversion option of the convertible debenture (see Note 12) have been classified as level two within the fair value hierarchy and include inputs that are observable other than quoted prices.

During the years ended December 31, 2020 and 2019, there were no transfers between the levels within the fair value hierarchy.

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Black Iron Inc. — Annual Report 2020

42457_rns_2021-03-11_ce8a4d5d-37c5-4315-9f89-e8b75477f7f8.pdf

BLACK IRON INC.

Independent Auditor’s Report

Opinion

Basis for opinion

Material uncertainty related to going concern

Key audit matters

Other information

Responsibilities of management and those charged with governance for the consolidated financial statements

Auditor’s responsibilities for the audit of the consolidated financial statements

McGovern Hurley LLP

Chartered Professional Accountants Licensed Public Accountants

BLACK IRON INC.

BLACK IRON INC.

BLACK IRON INC.

BLACK IRON INC.

Consolidated statements of cash flows

BLACK IRON INC.

1. Nature of operations and going concern

BLACK IRON INC.

2. Basis of presentation

Statement of compliance

Basis of measurement

3. Significant accounting policies

Consolidation

Functional currency and foreign currency transactions

BLACK IRON INC.

3. Significant accounting policies (continued)

Financial instruments

Financial assets

Initial recognition and measurement

Subsequent measurement – Financial assets at amortized cost

Subsequent measurement – Financial assets at FVPL

Subsequent measurement – Financial assets at FVOCI

BLACK IRON INC.

3. Significant accounting policies (continued)

Derecognition

Impairment of financial assets

Financial liabilities

Initial recognition and measurement

Subsequent measurement – Financial liabilities at amortized cost

Subsequent measurement – Financial liabilities at FVPL

Derecognition

BLACK IRON INC.

3. Significant accounting policies (continued)

Provisions

General

Rehabilitation provision

Cash

Operating segments

BLACK IRON INC.

3. Significant accounting policies (continued)

Exploration and evaluation expenditures

Common shares

Income taxes

BLACK IRON INC.

3. Significant accounting policies (continued)

Share-based payment transactions

Warrant liabilities

Compound financial instruments (debentures)

BLACK IRON INC.

3. Significant accounting policies (continued)

Accounting pronouncements not yet adopted

4. Critical judgements and estimation uncertainties

BLACK IRON INC.

4. Critical judgements and estimation uncertainties (continued)

Significant judgments in applying accounting policies and accounting estimates and judgements

(i) Income taxes and recoverability of potential deferred tax assets

(ii) Contingencies and estimates

(iii) Mineral resource estimates

BLACK IRON INC.

4. Critical judgements and estimation uncertainties (continued)

Significant judgments in applying accounting policies and accounting estimates and judgements (continued)

(iv) Share-based payments and warrants

(v) Estimation of decommissioning and restoration costs and the timing of expenditure

(vi) Functional currency

(vii) Fair value of financial instruments

(viii) Allowance for credit losses

Black Iron Inc. Annual Report 2020