Bonanza Mining Corporation — Audit Report / Information 2021

Jun 29, 2021

Bonanza Mining Corporation Financial Statements February 28, 2021 (Expressed in Canadian Dollars)

INDEPENDENT AUDITOR’S REPORT

To the Directors of Bonanza Mining Corporation

Opinion

We have audited the accompanying financial statements of Bonanza Mining Corporation (the “Company”), which comprise the statement of financial position as at February 28, 2021, and the statements of loss and comprehensive loss, changes in shareholders’ equity, and cash flows for the fourteen month period ended February 28, 2021, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at February 28, 2021, and its financial performance and its cash flows for the fourteen month period then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

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

Other Matters

The financial statements of Bonanza Mining Corporation for the year ended December 31, 2019 were audited by another auditor who expressed an unmodified opinion on those statements on January 28, 2021.

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

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

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

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

Auditor's Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

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

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Vancouver, Canada June 28, 2021

Chartered Professional Accountants

Bonanza Mining Corporation

Statements of Financial Position

As at February 28, 2021 and December 31, 2019

		February 28,	December 31,
		2021	2019
	Note	$	$
Assets
Current assets
Cash		145,759	4,438
Receivables	3,7	9,554	6,957
Deposit	3	-	20,000
		155,313	31,395
Non-current assets
Reclamation deposit	4	10,000	-
Mineralpropertyinterests	4	569,751	526,770
		579,751	526,770
Total assets		735,064	558,165
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities		44,161	38,061
Accounts payable to related parties	7	132,800	132,800
Flow-throughpremium liability	11	15,646	-
		192,607	170,861
Non-current liabilities
Deferred income tax liability	8	-	7,000
Total liabilities		192,607	177,861
Shareholders' equity
Share capital	5	641,727	430,509
Contributed surplus	5	-	16,063
Deficit		(99,270)	(66,268)
Total shareholders' equity		542,457	380,304
Total liabilities and shareholders' equity		735,064	558,165
Nature of operations and going concern	1
Commitment	11
Events after the reporting period	12

Approved on behalf of the Board of Directors on June 28, 2021:

“Andrew S. Burgess” Director “Christopher Graf”

Director

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

3

Bonanza Mining Corporation

Statement of Changes in Shareholders’ Equity

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

					Total
	Number	Share	Contributed		shareholders'
	of shares	capital	surplus	Deficit	equity
	#	$	$	$	$
January 1, 2019	6,495,001	380,509	16,063	(61,659)	334,913
Shares issued for mineral property option payments	500,000	50,000	-	-	50,000
Loss and comprehensive loss for theyear	-	-	-	(4,609)	(4,609)
December 31, 2019	6,995,001	430,509	16,063	(66,268)	380,304
January 1, 2020	6,995,001	430,509	16,063	(66,268)	380,304
Shares issued for mineral property option payments	200,000	30,000	-	-	30,000
Private placement shares issued	1,089,000	179,580	-	-	179,580
Flow-through premium liability	-	(16,230)	-	-	(16,230)
Share issue costs	-	(26,163)	-	-	(26,163)
Exercise of warrants	251,600	27,968	-	-	27,968
Re-allocated on exercise of warrants	-	16,063	(16,063)	-	-
Loss and comprehensive loss for theperiod	-	-	-	(33,002)	(33,002)
February 28, 2021	8,535,601	641,727	-	(99,270)	542,457

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

4

Bonanza Mining Corporation

Statements of Loss and Comprehensive loss

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

		February	28,	December 31,	December 31,
		2021		2019
	Note	$		$
Expenses
General and administrative expenses			1,386		609
Professional fees	7		39,200		15,000
Loss from operating expenses		(40,586)			(15,609)
Settlement of flow-throughpremium liability	11		584		8,000
Loss for the period/year before income taxes		(40,002)			(7,609)
Deferredincome tax recovery	8		7,000		3,000
Loss and comprehensive loss for theperiod/year		(33,002)			(4,609)
Loss per share
Weighted average number of common shares outstanding
- Basic #	6	7,812,829		6,747,604
- Diluted #	6	7,812,829		6,747,604
Basic loss per share $	6		(0.00)		(0.00)
Diluted lossper share$	6		(0.00)		(0.00)

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

5

Bonanza Mining Corporation

Statements of Cash Flows

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

		February	28,	December 31,
		2021		2019
	Note	$		$
Operating activities
Loss for theperiod/year		(33,002)		(4,609)
Adjustments for:
Settlement of flow-throughpremium liability			(584)	(8,000)
Deferred income tax recovery			(7,000)	(3,000)
Net changein non-cash working capital items	9		2,864	12,678
		(37,722)		(2,931)
Financing activities
Shares issued for cash		207,548		-
Share issue costs			(6,163)	-
Funds advancedfrom related party			-	64,000
		201,385		64,000
Investing activities
Reclamation deposits		(10,000)		-
Mineralpropertyacquisition costs			(9,475)	(35,000)
Deferred explorationand evaluationexpenditures			(2,867)	(45,316)
		(22,342)		(80,316)
Increase (decrease) in cash		141,321		(19,247)
Cash, beginning ofperiod/year			4,438	23,685
Cash, end ofperiod/year		145,759		4,438
Supplemental cash flow information	9

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

6

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

1. Nature of operations and going concern

Bonanza Mining Corporation (the “Company” or “Bonanza”) is a private company incorporated under the Business Corporations Act (British Columbia) on February 10, 2017 and extra-provincially registered in Alberta pursuant to the Business Corporations Act (Alberta) on March 10, 2017. The Company’s registered and records office is located at 1710 - 1177 West Hastings Street, Vancouver, British Columbia, Canada, V6E 2L3. Its head office is located at 255, 339 – 50[th] Avenue S.E., Calgary, Alberta, T2G 2B3. Its main business activity is the acquisition, exploration and evaluation of mineral property interests located in British Columbia, Canada.

The Company is in the process of exploring its mineral property interests and has not yet determined whether its mineral property interests contain mineral reserves that are economically recoverable. The Company's continuing operations and the underlying value and recoverability of the amounts shown for mineral property interests are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of the mineral property interests, obtaining the necessary permits to mine, and on future profitable production or proceeds from the disposition of the mineral property interests.

On March 23, 2021, the Company closed a transaction pursuant to a definitive Share Purchase Agreement (the “Agreement”) signed on September 22, 2020 (which superseded a Letter of Intent signed on June 16, 2020) with Califfi Capital Corp., (“Califfi”). Pursuant to the Agreement, Califfi acquired 100% of the issued and outstanding common shares of the Company in exchange for the issuance of 17,071,202 common shares of Califfi to the shareholders of the Company (the “Transaction”). Concurrent with closing of the Transaction, Califfi completed a private placement of nonflow-through common shares, and flow-through common shares comprising the issuance of 5,000,000 non-flowthrough common shares at $0.13 per share, and 7,000,000 flow-through common shares at $0.15 per share, for aggregate gross proceeds of $1,700,000.

These financial statements are prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations. As an exploration stage company, the Company does not have traditional sources of revenue, and historically has relied on share capital and related party financing to cover its operating expenses. As at February 28, 2021, the Company had a working capital deficiency of $37,294 (December 31, 2019 – $139,466) and shareholders’ equity of $542,457 (December 31, 2019 - $380,304). Management has assessed that this working capital is sufficient for the Company to continue as a going concern beyond one year. If the going concern assumption were not appropriate for these financial statements, it could be necessary to restate the Company’s assets and liabilities on a liquidation basis.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s ability to raise capital or conduct exploration activities. There are various community travel restrictions and health and safety concerns that may prohibit or delay exploration programs from proceeding. Operations will depend on obtaining necessary field supplies, obtaining contractor services, and safeguarding all personnel during the outbreak, which may be prohibitive or too costly. Various government wage and loan subsidies are available to qualified companies to assist them with operating costs during the pandemic. To date, the Company has not qualified for assistance, but the various programs are constantly being expanded and relaxed, which may qualify the Company for assistance. The Company’s requirement to incur flow-through expenditures by the end of 2021 has been relaxed by the government allowing the Company an extension of one year (note 11). However, it may not be possible to complete these expenditures if the pandemic continues and access to its projects prove insurmountable.

7

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

2. Significant accounting policies

(a) Basis of presentation

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

These financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

All amounts on the financial statements are presented in Canadian dollars which is the functional currency of the Company.

Comparative figures

Certain comparative figures within current assets on the statement of financial position have been recategorized to conform to the current period’s presentation.

(b) Financial instruments

The Company classifies its financial instruments in the following categories: as fair value through profit or loss (“FVTPL”), financial assets at amortized cost and other financial liabilities at amortized cost. The classification depends on the purpose for which the financial assets or liabilities were acquired or incurred. Management determines the classification of financial assets and liabilities at initial recognition. The Company accounts for nonderivative financial assets and liabilities as follows:

Recognition

The Company recognizes financial assets and financial liabilities on the date the Company becomes a party to the contractual provisions of the instruments.

Classification

The Company classifies its financial assets and financial liabilities using the following measurement categories:

• (a) Those to be measured subsequently at fair value (either through other comprehensive income (loss) or through profit or loss); and

• (b) Those to be measured at amortized cost.

The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at fair value through profit or loss (an irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and losses are either recorded in profit or loss or other comprehensive income (loss).

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

Cash is classified at amortized cost. Cash equivalents, if any, include highly liquid investments such as cashable investment certificates, which are redeemable on demand, and which are subject to an insignificant risk of change in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

• (i) Other financial liabilities

The Company has the following other financial liabilities: accounts payable and accrued liabilities and accounts payable to related parties.

Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Interest expense is recorded to profit or loss.

8

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

2. Significant accounting policies (continued)

(c) Mineral property interests

The acquisition costs of mineral property interests and any subsequent exploration and evaluation costs are capitalized until the properties to which they relate are placed into production, sold, allowed to lapse or abandoned. Exploration and evaluation costs incurred prior to obtaining ownership, or the right to explore a property, are expensed as incurred as property examination costs. Properties that have close proximity and have the possibility of being developed as a single mine are grouped as projects and are considered separate cash generating units (“CGU”) for the purpose of determining future mineral reserves and impairments.

The acquisition costs include the cash consideration paid and the fair market value of any shares issued for mineral property interests being acquired or optioned pursuant to the terms of relevant agreements.

Proceeds received from a partial sale or option of a mineral property interest are credited against the carrying value of the property. When the proceeds exceed the carrying costs the excess is recorded in profit or loss in the period the excess is received. When all the interest in a property is sold, subject only to any retained royalty interests which may exist, the accumulated property costs are written-off, with any gain or loss included in profit or loss in the period the transaction takes place. No initial value is assigned to any retained royalty interest. The royalty interest is subsequently assessed for value by reference to developments on the underlying mineral property.

Management reviews its mineral property interests at each reporting period for signs of impairment and annually after each exploration season to consider if there is impairment in value taking into consideration current period exploration results, or likely gains from the disposition or option of the property. If a property is abandoned, or inactive for a prolonged period, or considered to have no future economic potential, the acquisition and deferred exploration and evaluation costs are written-off to profit or loss.

Once an economically viable resource has been determined for an area and the decision to proceed with development has been approved, mineral property interests attributable to that area are first tested for impairment and then reclassified to property and equipment. Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project. Should a project be put into production, the costs of acquisition, exploration and evaluation will be amortized over the life of the project based on estimated economic reserves. If the carrying value of a project exceeds its estimated net realizable value or value in use, an impairment provision is recorded.

Exploration costs renounced to shareholders pursuant to flow-through share subscription agreements remain capitalized, however, for income tax purposes the Company has no right to claim these costs as tax deductible expenses.

When entitled, the Company records refundable mineral exploration tax credits or incentive grants on an accrual basis and as a reduction of the carrying value of the mineral property interest. When the Company is entitled to non-refundable exploration tax credits, and it is probable that they can be used to reduce future taxable income, a deferred income tax benefit is recognized.

(d) Mining tax credits

Mining tax credits are recorded in the financial statements when there is reasonable assurance that the Corporation has complied with, and will continue to comply with, all conditions needed to obtain the credits. These non-repayable mining tax credits are earned in respect of costs incurred in British Columbia, Canada and are recorded as a reduction of the related exploration and evaluation asset.

9

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

2. Significant accounting policies (continued)

(e) Impairment

• (i) Financial assets

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

• (ii) Non-financial assets

Non-financial assets are reviewed quarterly by management for indicators that carrying value is impaired and may not be recoverable. When indicators of impairment are present the recoverable amount of an asset is evaluated at the CGU level, which is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of a CGU is the greater of the CGU’s fair value less costs to sell and its value in use. An impairment loss is recognized in profit or loss to the extent that the carrying amount exceeds the recoverable amount. The Company’s mineral property interest impairment policy is more specifically discussed in note 2(c) above.

(f) Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares issued for consideration other than cash, are valued based on their trading value at the date the shares are issued.

When share capital recognized as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Share capital is reduced by the average per-common-share carrying amount, with the difference between this amount and the consideration paid, added to or deducted from contributed surplus.

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in a unit private placement to be the more easily measurable component. The balance, if any, is allocated to the attached warrants, except where there is a related flow-through share premium, as detailed in the next paragraph. Any value attributed to the warrants is recorded as contributed surplus.

10

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

2. Significant accounting policies (continued)

(g) Flow-through share private placement

As an incentive to complete private placements the Company may issue common shares, which by agreement are designated as flow-through shares. Such agreements require the Company to spend the funds from these placements on qualified exploration expenditures and renounce the expenditures and income tax benefits to the flow-through shareholders, resulting in no exploration deductions to the Company.

The shares are usually issued at a premium to the trading value of the Company’s common shares. The premium reflects the value of the income tax benefits that the Company must pass on to the flow-through shareholders. On issue, share capital is increased only by the non-flow-through share equivalent value. Any premium is recorded as a flow-through share premium liability.

The deferred income tax liability and reversal of the flow-through share premium liability are recorded on a prorata basis as the required exploration expenditures are completed.

(h) Environmental rehabilitation

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. The estimated costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are determined, and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates, using a pre-tax rate that reflects the time value of money, are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or the straight-line method. The related liability is adjusted at each reporting date for the unwinding of the discount rate, for changes to the current marketbased discount rate, and for changes to the amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profit or loss as extraction progresses.

The Company has no known restoration, rehabilitation, or environmental costs, of any significance, related to its mineral property interests.

(i) Income taxes

Income tax expense is comprised of current and deferred income taxes. Current income tax and deferred income tax are recognized in profit or loss, except to the extent that they relate to items recognized directly in equity or equity investments.

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

Deferred income 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 income 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 income tax assets and liabilities are offset if there is a legally enforceable right to offset current income tax liabilities and assets, and they relate to income taxes levied by the same tax authority for the same taxable entity. A deferred income 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 income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related income tax benefit will be realized.

(j) Loss per share

The Company presents basic and diluted earnings (loss) per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period/year, adjusted for own shares held. Diluted EPS is determined by dividing the profit or loss attributable to common shareholders by the weighted average number of common shares outstanding, adjusted for own shares held, and for the effects of all potential dilutive common shares related to outstanding stock options and warrants issued by the Company for the periods presented, except if their inclusion proves to be anti-dilutive.

11

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

2. Significant accounting policies (continued)

• (k) Use of estimates and critical judgments

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates and judgments. Those areas requiring the use of management estimates and judgments include:

Estimates

• (ii) Recorded costs of flow-through share premium liabilities reflect the premium received by the Company on the issue of flow-through shares. The premium is subject to measurement uncertainly and requires the Company to assess the value of non-flow through shares. This determination is subjective and does not necessarily provide a reliable single measure of the fair value of the premium liability.

• (iii) The determination of the fair value of stock options or compensatory warrants using stock pricing models requires the input of highly subjective variables, including expected price volatility. Wide fluctuations in the variables could materially affect the fair value estimate; therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options and warrants.

Judgments

• (i) Recorded costs of mineral property interests and deferred exploration and evaluation costs are not intended to reflect present or future values of these properties. The recorded costs are subject to measurement uncertainty, and it is reasonably possible, based on existing knowledge, that changes in future conditions could require a material change in the recognized amount. Management is required, at each reporting period, to review its mineral property interests for signs of impairment. This is a highly subjective process taking into consideration exploration results, metal prices, economics, financing prospects and sale or option prospects. Management makes these judgments based on information available, but there is no certainty that a property is or is not impaired. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

• (ii) The determination of deferred income tax assets or liabilities requires subjective assumptions regarding future income tax rates and the likelihood of utilizing tax carry-forwards. Changes in these assumptions could materially affect the recorded amounts, and therefore do not necessarily provide certainty as to their recorded values.

• (iii) Mining tax credits are recognized when there is reasonable assurance that the Company has complied with all conditions needed to obtain the credits. The Company uses judgment in determining whether or not it has complied with these conditions.

(l) Standards issued but not yet effective

Certain pronouncements have been issued by the IASB or IFRIC that are effective for accounting periods beginning on or after January 1, 2021. The Company has reviewed these updates and determined that many of these updates are not applicable or consequential to the Company and have been excluded from discussion within these significant accounting policies.

12

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

3. Receivables and deposit

Receivables and deposit consist of the following:

	February 28,	December 31,
	2021	2019
	$	$
Receivable from related party	5,004	3,601
Exploration incentives receivable	2,292	2,292
Goods and services tax recoverable	2,258	1,064
	9,554	6,957
Deposit - deferred financing costs	-	20,000

4. Mineral property interests

The Company’s mineral property interests consist of exploration stage mineral properties located in British Columbia, Canada. Properties which are in close proximity and could be developed as a single economic unit are grouped into projects.

Changes in the project carrying amounts for the fourteen months ended February 28, 2021 and the year ended December 31, 2019, are summarized as follows:

	January 1,	Acqusition and Exploration and February 28,
	2020	assessments evaluation 2021
	$	$ $ $
MC 1 & 2	460,049	- 3,506 463,555
Shag	39,453	21,910 - 61,363
Frog	27,268	17,565 - 44,833
	526,770	39,475 3,506 569,751

	January 1,	Acqusition and	Exploration and December 31,
	2019	assessments	evaluation 2019
	$	$	$ $
MC 1 & 2	365,629	65,000	29,420 460,049
Shag	26,258	13,195	- 39,453
Frog	14,458	12,810	- 27,268
	406,345	91,005	29,420 526,770

Exploration and evaluation expenditures on the projects consisted of the following:

	February 28,	December 31,
Fourteen months ended February 28, 2021 and	2021	2019
year ended December 31, 2019	$	$
Assays	-	1,306
Field	-	11,335
Labour	1,188	-
Surveys and consulting	2,318	26,670
	3,506	39,311
Less: BCMETC	-	(9,891)
	3,506	29,420

13

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

4. Mineral property interests (continued)

(a) MC 1 & 2 Property (Rock of Ages/Dalhousie Property)

In March 2017, the Company entered into an agreement to acquire a 100% interest in certain mineral claims located in the Skeena Mining Division of Stewart, British Columbia (the “MC 1 & 2 Property”) (gold-silver-lead-zinc) from an optionor, by making cash payments and issuing common shares of the Company as detailed below and incurring minimum aggregate exploration expenditures of $100,000 (completed).

Cash payments of $75,000:

• $15,000 March 6, 2017 upon signing (paid);

• $25,000 by August 31, 2018 (paid); and

• $35,000 by August 31, 2019 (paid).

Issuing 475,000 common shares:

• 75,000 common shares in March 6, 2017 upon signing (issued);

• 100,000 common shares by March 6, 2018 (issued);

• 100,000 common shares by March 6, 2019 (issued); and

• 200,000 common shares by March 6, 2019 (issued).

During the year ended December 31, 2019, the Company issued 300,000 common shares as detailed above.

The optionor of the property retains a 2% NSR, of which 1% can be purchased by the Company for $1,000,000.

(b) Shag property

In February 2018 and as amended on September 22, 2020, and February 24, 2021, the Company entered into an agreement to acquire a 100% interest in certain mineral claims located in the Golden Mining District in British Columbia known as the Shag property (zinc-lead) from the optionor (whom is an Officer and Director of the Company), by making cash payments and issuing common shares of the Company as detailed below and incurring minimum aggregate exploration expenditures of $1,000,000.

Cash payments of $125,000:

• $15,000 on February 21, 2018 upon signing (paid);

• $25,000 upon completion of the Transaction with Califfi (note 1) (subsequently paid);

• $20,000 on or before July 1, 2021;

• $20,000 on or before July 1, 2022;

• $20,000 on or before July 1, 2023; and

• $25,000 on or before July 1, 2024.

Issuing 675,000 common shares:

• 75,000 common shares on February 21, 2018 upon signing (issued);

• 100,000 common shares on or before February 21, 2019 (issued);

• 100,000 common shares on or before June 19, 2020 (issued);

• 100,000 common shares on or before July 1, 2022;

• 100,000 common shares on or before July 1, 2023;

• 100,000 common shares on or before July 1, 2024; and

• 100,000 common shares on or before July 1, 2025.

14

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

4. Mineral property interests (continued)

• (b) Shag property (continued)

Incurring aggregate exploration expenditures of $1,000,000:

• $250,000 on or before December 31, 2022;

• Cumulative costs of $500,000 on or before December 31, 2023;

• Cumulative costs of $750,000 on or before December 31, 2024; and

• Cumulative costs of $1,000,000 on or before December 31, 2025.

The optionor of the property retains a 3% NSR, of which 1.5% can be purchased by the Company for $1,000,000.

(c) Frog property

In February 2018 and as amended on September 22, 2020, and February 24, 2021, the Company entered into an agreement to acquire a 100% interest in certain mineral claims located in the Liard Mining District in British Columbia known as the Frog property (zinc-lead-silver-copper) from the optionors, one of which is an Officer and Director of the Company, and the other is an arm’s length party (with 50% of the cash and common share consideration payable by the Company to each individual). The Company can acquire the property by making cash payments and issuing common shares of the Company as detailed below and incurring minimum aggregate exploration expenditures of $1,000,000.

Cash payments of $125,000:

• $40,000 upon completion of the Transaction with Califfi (note 1) (subsequently paid);

• $15,000 on or before July 1, 2021;

• $20,000 on or before July 1, 2022;

• $20,000 on or before July 1, 2023; and

• $30,000 on or before July 1, 2024.

Issuing 675,000 common shares:

• 75,000 common shares on February 21, 2018 upon signing (issued);

• 100,000 common shares on or before April 30, 2019 (issued);

• 100,000 common shares on or before June 19, 2020 (issued);

• 100,000 common shares on or before July 1, 2022;

• 100,000 common shares on or before July 1, 2023;

• 100,000 common shares on or before July 1, 2024; and

• 100,000 common shares on or before July 1, 2025.

Incurring aggregate exploration expenditures of $1,000,000:

• $250,000 on or before December 31, 2022;

• Cumulative costs of $500,000 on or before December 31, 2023;

• Cumulative costs of $750,000 on or before December 31, 2024; and

• Cumulative costs of $1,000,000 on or before December 31, 2025.

The optionor of the property retains a 3% NSR, of which 1.5% can be purchased by the Company for $1,000,000.

Reclamation deposit

The reclamation deposit in the amount of $10,000 is comprised of a cashable guaranteed investment certificate with a one-year term. It is pledged to the Province of British Columbia to ensure specified properties are properly restored after exploration. Management has determined that the Company has no material reclamation work related to the properties requiring the deposits.

15

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

5. Share capital

The authorized share capital of the Company consists of unlimited common shares without par value. All issued shares are fully paid.

Transactions for the issue of share capital during the fourteen months ended February 28, 2021:

• 100,000 common shares were issued at a price of $0.15 each at a fair value of $15,000 in satisfaction of the mineral property option payment due on the Shag property (note 4(b)).

• 100,000 common shares were issued at a price of $0.15 each at a fair value of $15,000 in satisfaction of the mineral property option payment due on the Frog property (note 4(c)).

• In July 2020, the Company completed a flow-through private placement comprising the issuance of 541,000 flow-through common shares at a price of $0.18 each for gross proceeds of $97,380.

The flow-through shares were issued at a premium to the concurrent offering price of the Company’s common shares, which reflects the value of the income tax write-offs that the Company will renounce to the flow-through shareholders. The premium was determined to be $16,230 and was recorded as a reduction of share capital. An equivalent flow-through share premium liability was recorded, which will be reversed pro-rata as the required exploration expenditures are incurred (note 11).

• In July 2020, the Company completed a private placement comprising the issuance of 548,000 non-flowthrough common shares at a price of $0.15 each for gross proceeds of $82,200.

In connection with the placements, the Company paid cash finders’ fees of $26,163.

• On August 19, 2020, the Company issued 251,600 common shares upon exercise of warrants for proceeds of $27,968. In addition, $16,063 representing the fair value of these finders’ warrants issued was re-allocated from reserves to share capital.

Transactions for the issue of share capital during the during the year ended December 31, 2019:

• 500,000 common shares were issued at a price of $0.10 each at a fair value of $50,000 in satisfaction of mineral property option payments on the Shag and Frog properties (notes 4(b) and 4(c)).

Stock options

The Company has not adopted a stock option plan. Accordingly, there have been no stock options granted since inception of the Company.

Warrants

As an incentive to complete private placements, the Company may issue units which include common shares and common share purchase warrants. Using the residual value method, the Company determines whether a value should be allocated to the warrants attached to the units sold in completed private placements. Finders’ warrants may be issued as a private placement share issue cost and are valued using the Black-Scholes option pricing model.

A summary of the status of the Company’s warrants as at February 28, 2021 and December 31, 2019, and changes during the period/year then ended is as follows:

during the period/year then ended is as follows:
	Period ended		Year ended
	February 28, 2021		December 31, 2019
		Weighted average		Weighted average
	Warrants	exercise price	Warrants	exercise price
	#	$	#	$
Warrants outstanding, beginning of period/year	251,600	0.11	251,600	0.11
Exercised	(251,600)	0.11	-	-
Warrants outstanding, end ofperiod/year	-	-	251,600	0.11

As at February 28, 2021, there were no warrants outstanding.

16

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

5. Share capital (continued)

Contributed surplus

Contributed surplus includes the fair value of finders’ warrants issued on private placements. Contributed surplus is increased by the fair value of these items on vesting and/or issuance and is reduced by corresponding amounts when the warrants expire or are exercised or cancelled.

	Warrants	Total
	$	$
January1,2019	16,063	16,063
December 31,2019	16,063	16,063
January 1, 2020	16,063	16,063
Warrants exercised	(16,063)	(16,063)
February 28, 2021	-	-

6. Loss per share

The calculation of basic and diluted loss per share for the fourteen months ended February 28, 2021 was based on the loss attributable to common shareholders of $33,002 (2019 – $4,609) and a weighted average number of common shares outstanding of 7,812,829 (2019 – 6,747,604).

All warrants were excluded from the diluted weighted average number of common shares calculation, as their effect would have been anti-dilutive.

7. Related party payables and transactions

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Corporation, directly or indirectly. Key management personnel include the Corporation’s executive officers and Board of Director members. There were no loans to management personnel or Directors, or entities over which they have control or significant influence, during the fourteen months ended February 28, 2021 and the year ended December 31, 2019.

The Company transacted with the following related parties:

• (a) Andrew Burgess was the Company’s CFO until March 23, 2021, and continues to serve as a Director of the Company. He provides the Company with accounting and taxation services which are recorded within professional fees.

• (b) Chris Graf is the Company’s President and CEO and a Director. There were no fees rendered or salaries paid during the fourteen months ended February 28, 2021 and the year ended December 31, 2019.

The aggregate value of transactions and outstanding balances with key management personnel and Directors and entities over which they have control or significant influence were as follows:

				Balances	Balances	Balances
	Transactions	Transactions		payable (receivable)		payable (receivable)
	fourteen months ended	year ended		outstanding		outstanding
	February 28,	December 31,		February	28,	December 31,
	2021	2019		2021		2019
	$	$		$		$
Chris Graf	-		-		(5,004)	(3,601)
Andrew Burgess	5,000		-		132,800	132,800
	5,000		-		127,796	129,199

All related party balances are unsecured and are due within thirty days without interest.

17

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

8. Income taxes

Income tax recovery varies from the amount that would be computed from applying the combined federal and provincial income tax rate to loss before income taxes as follows:

	February 28,	December 31
	2021	2019
	$	$
Loss for the period/year before income taxes	(40,002)	(7,609)
StatutoryCanadian corporate tax rate	27.00%	27.00%
Anticipated income tax recovery	(11,000)	(2,000)
Change in tax resulting from:
Unrecognized items for tax purposes and other	10,000	(1,000)
Impact of flow-through shares	1,000	-
Share issue costs	(7,000)	-
Net deferred income tax recovery	(7,000)	(3,000)

The significant components of the Company’s unrecognized deferred income tax asset (recognized deferred income tax liability) are as follows:

tax liability) are as follows:
	February	28,	December 31,
	2021		2019
	$		$
Mineral property interests	(26,000)		(22,000)
Non-capital loss carry forwards	28,000		11,000
Share issue and other costs		6,000	4,000
		8,000	(7,000)
Tax benefits unrecognized	(8,000)		-
Net deferred income tax asset(liability)		-	(7,000)

As at February 28, 2021, the Company has non-capital loss carry forwards of approximately $105,000 which expire between 2037 and 2041.

As at February 28, 2021, the Company has unclaimed resource and other deductions in the amount of approximately $472,000 (December 31, 2019 - $433,000), which may be deducted against future taxable income.

As at February 28, 2021, the Company has share issue costs totaling approximately $23,000 (December 31, 2019 - $18,000), which have not been claimed for income tax purposes.

Income tax attributes are subject to review and potential adjustments by tax authorities.

9. Supplemental cash flow information

Changes in non-cash operating working capital during the fourteen months ended February 28, 2021 and the year ended December 31, 2019 were comprised of the following:

ended December 31, 2019 were comprised of the following:
	February	28,	December 31,
	2021		2019
	$		$
Receivables		2,407	11,184
Accounts payable and accrued liabilities		5,461	1,494
Accountspayable to relatedparties	(5,004)		-
Net change		2,864	12,678

18

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

9. Supplemental cash flow information (continued)

The Company incurred non-cash financing and investing activities during the fourteen months ended February 28, 2021 and the year ended December 31, 2019, as follows:

2021 and the year ended December 31, 2019, as follows:
	February 28,	December	31,
	2021	2019
	$	$
Non-cash financing activities:
Share capital reduced by flow-through share premium	16,230		-
Deposit reclassified to share issue costs upon completion ofprivateplacement	20,000		-
	36,230		-
Non-cash investing activities:
Deferred exploration expenditures included within accounts payable and accrued liabilities	639		-
Mineral exploration tax credits included within mineral property interests	-	9,891
Shares issued for mineralpropertyacquisition costs	30,000	50,000
	30,639	59,891

During the fourteen months ended February 28, 2021 and the year ended December 31, 2019, no amounts were paid on account of interest or income taxes.

10. Financial risk management

Capital management

The Company is a junior exploration company and considers items included in shareholders' equity as capital. The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of underlying assets. The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern, to maintain appropriate cash reserves on hand to meet ongoing operating costs, and to invest excess cash in highly liquid financial instruments such as guaranteed investment certificates. In order to maintain or adjust its capital structure, the Company may issue new shares. The Company is not subject to any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital. As at February 28, 2021, the Company’s capital structure is comprised of shareholders’ equity of $542,457 (December 31, 2019 - $380,304).

The Company currently has no source of revenues. In order to fund future projects and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. The Company's ability to continue as a going concern on a long-term basis and realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation is primarily dependent upon its ability to sell or option its mineral properties and its ability to borrow or raise additional financing from equity markets.

Financial instruments - fair value

The Company’s financial instruments consist of cash, receivable from related party, deposit, reclamation deposit, accounts payable and accrued liabilities, and accounts payable to related parties.

The carrying value of cash, receivable from related party, deposit, reclamation deposit, accounts payable and accrued liabilities and accounts payable to related parties approximates their fair value because of the short-term nature of these instruments.

There are no financial instruments measured at fair value on the statements of financial position.

19

Bonanza Mining Corporation Notes to the Financial Statements

For the fourteen months ended February 28, 2021 and the year ended December 31, 2019

10. Financial risk management (continued)

Financial instruments - risk

The Company’s financial instruments are exposed to certain financial risks, including credit risk, interest rate risk, and liquidity risk.

a) Credit risk

The Company is exposed to credit risk by holding cash, receivables, deposit, and reclamation deposit. This risk is minimized by holding cash in a Canadian bank. The Company’s exposure on its receivable from related party is equal to its carrying amount. The Company’s exposure on its reclamation deposit is minimal as it is due from the Canadian government.

b) Interest rate risk

The Company is exposed to interest rate risk because of fluctuating interest rates. Fluctuations in market rates do not impact the Company’s operations as it does not hold any interest-bearing financial instruments.

c) Liquidity risk

Liquidity risk is the risk that the Company is unable to meet its financial obligations as they come due. The Company manages this risk by careful management of its working capital to ensure its expenditures will not exceed available resources.

11. Commitment

Flow-through premium liability:

In 2018, the Company completed a private placement of flow-through shares for gross proceeds of $36,800. The funds were spent in full during the year ended December 31, 2019.

In July 2020, the Company completed a private placement of flow-through shares for gross proceeds of $97,380. The Company is required to spend the funds on qualified exploration programs no later than December 31, 2022 (inclusive of the COVID-19 extension discussed below). As at February 28, 2021, approximately $3,500 of the funds had been spent.

In July 2020, the Canadian government provided relief with respect to COVID-19 by providing companies with an additional 12 months in which they can spend eligible flow-through expenditures and provided interest relief on unspent funds.

Under the Income Tax Act flow-through look-back rules, the Company now has until December 31, 2022 to spend the remaining amount of flow-through funds. Amounts spent after February 1, 2021, continue to be subject to a floating rate interest tax of 2% per annum.

A summary of the Company’s flow-through premium liability as at February 28, 2021 and December 31, 2019, and changes during the period/year then ended is as follows:

changes during the period/year then ended is as follows:
	February 28,	December 31,
	2021	2019
	$	$
Balance, beginning of period/year	-	8,000
Addition - July 2020 private placement	16,230	-
Reduction -pro rata based on eligible expenditures	(584)	(8,000)
Balance, end ofperiod/year	15,646	-

12. Events after the reporting period

• (a) On March 23, 2021, the Company completed the Transaction with Califfi whereby all common shares of the Company (8,535,601 common shares) were acquired by Califfi. Accordingly, the Company became a wholly-owned legal subsidiary of Califfi (note 1).

• (b) On March 23, 2021, concurrent with completion of the Transaction with Califfi, the Company entered into a Subscription and Renunciation Agreement with Califfi and issued 1,050,000 flow-through common shares to Califfi in connection with completion of the Transaction with Califfi.

20