BTU Metals Corp. — Interim / Quarterly Report 2022

Sep 29, 2021

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Three Months Ended July 31, 2021

Unaudited Interim Condensed Consolidated Financial Statements

(Expressed in Canadian Dollars)

(Prepared by Management)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANICAL STATEMENTS

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

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

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

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BTU Metals Corp. Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

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July 31, April 30,
Note
2021 2021
$ $
ASSETS
CURRENT
Cash and cash equivalent 1,165,094 1,667,763
Miscellaneous receivables - 4,000
Sales tax recoverable 45,924 78,541
Prepaids 10,722 16,873
Total Current Assets 1,221,740 1,767,177
NON-CURRENT
Exploration advance 6 - 68,029.00
Exploration and evaluation assets 6 8,540,965 8,164,391
TOTAL ASSETS 9,762,705 9,999,597
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 108,633 206,598
Total Current Liabilities 108,633 206,598
LONG TERM DEBT
Flow-through share premium liability 7 140,819 230,311
TOTAL LIABILITIES 249,452 436,909
SHAREHOLDERS’ EQUITY
Share capital 8 11,259,255 11,259,255
Reserves 8 3,048,669 2,993,269
Deficit (4,794,671) (4,689,836)
9,513,253 9,562,688
TOTAL LIABILITIES AND SHAREHOLER'S
9,762,705 9,999,597
EQUITY
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Basis of Preparation and Going Concern (Note 2)

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

Approved on behalf of the Board:

“ Paul Wood ” “ Michael England ”

Paul Wood, Director

Michael England, Director

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BTU Metals Corp. Consolidated Statements of Changes in Shareholders’ Equity (Deficiency) For the Three Months ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

Balance, April 30, 2020 Comprehensive loss for the year Private placement Share issuance costs - cash Share issued for property payments Share-based compensation Shares issued on exercise of options Fair value of options exercised Shares issued on exercise of warrants Fair value of warrants exercised Balance July 31, 2020 Comprehensive Loss For The Period Private Placement Finder's fee shares Share Issuance Costs -cash Share Issuance Costs - finder shares Share issued for property payments Share-Based Compensation Shares issued on option exercise Carrying value of options exercised Shares issued on exercise of warrants Carrying value of warrants exercised Balance, April 30, 2021	Number of Total Common Shareholders’ Shares Share Capital Reserves Deficit Equity $ $ $ $
	89,119,965 $ 9,219,107 $ 1,971,289 $ (3,169,099) $ 8,021,297 - - - (226,182) (226,182) 2,600,000 345,895 174,105 - 520,000 - (8,150) - - (8,150) 20,000 4,800 - - 4,800 - - 72,050 - 72,050 325,000 26,000 - - 26,000 - 16,486 (16,486) - - 950,604 128,842 - - 128,842 - 59,242(59,242) - -
	93,015,569 9,792,222 2,141,716 (3,395,281) 8,538,657 - - - (1,294,555) (1,294,555) 7,500,000 1,104,699 470,301 - 1,575,000 200,000 42,000 - - 42,000 - (11,339) - - (11,339) - (42,000) - - (42,000) 400,000 58,500 - - 58,500 - - 479,425 - 479,425 1,400,000 127,000 - - 127,000 - 80,019 (80,019) - - 600,000 90,000 - - 90,000 - 18,154(18,154) - -
	103,115,569 11,259,255 2,993,269 (4,689,836) 9,562,688
Comprehensive loss for the year Share-based Compensation Balance, July 31, 2021	- - - (104,835) (104,835) - - 55,400 - 55,400
	103,115,569 11,259,255 3,048,669(4,794,671) 9,513,253

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

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BTU Metals Corp. Consolidated Statements of Comprehensive Loss For the Three Months ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

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Three Months Three Months
Ended Ended
July 31, July 31,
2021 2020
Note $ $
Operating Expenses
Bank charges 119 413
Investor relations 9 21,328 20,915
Management and director fees 9 95,000 100,270
Office, rent , telephone and insurance 6,063 2,780
Professional fees 397 122
Share-based compensation 8 & 9 55,400 72,050
Transfer agent and filing fees 14,742 31,634
Travel, meals and entertainment 1,277 600
Exploration costs - 256
(194,326) (229,040)
Recovery of flow-through premium 7 (89,491) (2,858)
Loss and comprehensive loss ($104,835) ($226,182)
Loss per share for the year
Basic and diluted loss per share $0.00 $0.00
Weighted average number of shares outstanding - basic
and diluted 103,115,569 91,180,249
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The accompanying notes are an integral part of these consolidated financial statements.

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BTU Metals Corp. Consolidated Statements of Cash Flows For the Three Months ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

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Three Months Three Months
Ended Ended
July 31, July 31,
2021 2020
Operating activities Note $ $
Net loss for the year (104,835) (226,182)
Share based payments 8 & 9 55,400 72,050
Non-cash recovery of flow-through premium 7 (89,491) (2,858)
(138,926) (156,990)
Net changes in non-cash working capital items:
Miscellaneous receivables 4,000 -
Sales tax recoverable 32,617 65,257
Prepaids 6,151 (6,888)
Accounts payable and accrued liabilities (97,966) (75,649)
Cash used in operating activities (194,124) (174,270)
Investing activities
Evaluation and exploration expenditures (376,574) (299,681)
-
Exploration advance 68,029
Cash used in investing activities (308,545) (299,681)
Financing activities
Issuance of common shares and warrants for cash 8 - 520,000
Share issuance costs - cash 8 - (8,150)
Issuance of common shares from option exercise 8 - 26,000
Issuance of common shares from warrant exercise 8 - 128,842
-
Cash flow provided by financing activities 666,692
Net change in cash and cash
equivalents during the year (502,669) 192,741
Cash and cash equivalents at beginning of the year 1,667,763 1,203,061
Cash and cash equivalents at end of the period 1,165,094 1,395,802
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The accompanying notes are an integral part of these consolidated financial statements.

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 1 – NATURE OF OPERATIONS

BTU Metals Corp. (the “Company”) was incorporated under the Business Corporations Act (British Columbia) on August 28, 2008, and is currently listed on the TSX Venture Exchange, under the symbol BTU. The principal business of the Company is the exploration of mineral properties.

The address of the Company’s corporate office and principal place of business is 1240, 789 West Pender Street, Vancouver, British Columbia, Canada, V6C 1H2.

The unaudited interim condensed consolidated financial statements of the Company for the three months ended July 31, 2021, were approved and authorized for issue by the Board of Directors on September 29, 2021.

NOTE 2 – BASIS OF PREPARATION AND GOING CONCERN

The unaudited interim condensed consolidated financial statements have been prepared in accordance to IAS 34 Interim Financial Reporting using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

The consolidated financial statements are presented in Canadian Dollars, which is also the Company’s functional currency. The financial statements have been prepared on a historical cost basis. Cost is the fair value of the consideration given in exchange for net assets.

The consolidated financial statements were prepared on the basis that the Company is a going concern and will be able to meet its obligations and continue its operations for the next twelve months. The Company’s ability to continue as a going concern is dependent upon the ability of the Company to obtain financing and generate positive cash flows from its operations. The Company has incurred losses from inception and has an accumulated deficit of $4,794,671 as at July 31, 2021 (April 30, 2021 - $4,689,836).

Management of the Company anticipates that its cash on hand as at July 31, 2021, will be sufficient to cover all of its operating requirements, financial commitments, and business development priorities during the next twelve months as it relates to mineral exploration utilizing cash raised from flow-through financings. The Company does not expect that cash flows for the Company’s operations will be sufficient to cover non-exploration related expenditures Accordingly, the Company expects that it may need to obtain further financing in the form of debt, equity, or a combination thereof for the next twelve months. There can be no assurance that additional funding will be available to the Company, or, if available, that this funding will be on acceptable terms.

To date there has been no determination whether the Company's interests in mineral exploration properties contain mineral reserves which are economically recoverable. The business of exploring for minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The recoverability of the carrying value of exploration and evaluation assets and the Company's continued existence is dependent upon the preservation of its interest in the underlying properties, the discovery of economically recoverable reserves and the achievement of profitable operations; and the ability of the Company to raise alternative financing; or alternatively upon the Company’s ability to dispose of its interest on an advantageous basis. Changes in future conditions could require material write-downs of the carrying values.

These conditions cast uncertainties on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

The ongoing pandemic of the coronavirus, also known as "COVID-19", has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 2 – BASIS OF PREPARATION AND GOING CONCERN (Continued)

mitigation measures may have an adverse impact on global economic conditions as well as on the Company’s business activities. The extent to which the coronavirus may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time.

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Consolidation

These unaudited interim condensed consolidated financials incorporate the financial statements of the Company and its wholly controlled subsidiary, Gold Note Minerals Inc., a company incorporated in British Columbia. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The unaudited interim condensed consolidated financial statements include the accounts of the Company and its direct wholly owned subsidiary. All significant intercompany transactions and balances have been eliminated.

b) Foreign Currency Translation

The functional and reporting currencies of the Company are the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect at the date of the statement of financial position. Revenues and expenses denominated in foreign currencies are translated at rates of exchange prevailing on the transaction dates. All exchange gains or losses are recognized immediately in profit or loss in the period in which they are incurred.

c) Mineral Property

All expenditures related to the acquisition of mineral properties are capitalized on a property-by-property basis, net of recoveries, until such time as these mineral properties are placed into commercial production, sold, or abandoned. If commercial production is achieved from a mineral property, the related capitalized costs will be tested for impairment and reclassified to mineral property in production. If a mineral property is sold or abandoned, the related capitalized costs will be expensed to the statement of comprehensive loss in that period.

All expenditures related to the exploration and evaluation of mineral properties are expensed to the statement of comprehensive loss in the period in which they are incurred.

From time to time, the Company may acquire or dispose of all or part of its mineral property interests under the terms of property option agreements. Options are exercisable entirely at the discretion of the optionee and, accordingly, option payments are recorded as property costs or recoveries when paid or received. When recoveries exceed the carrying value of the mineral property, the excess is reflected in the statement of comprehensive loss.

d) Impairment of Non-Current Assets

At the end of each reporting period, the Company reviews the carrying amounts of its non-current assets to determine whether there is any indication that those assets have suffered an impairment loss. Individual assets are grouped together as a cash generating unit for impairment assessment purposes at the lowest level at which there are identifiable cash flows that are independent from other group assets.

If any such indication of impairment exists, the Company makes an estimate of its recoverable amount. The recoverable amount is the higher of fair value less costs to sell and value in use. Where the carrying amount of a cash generating

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

unit exceeds its recoverable amount, the cash generating unit is considered impaired and is written down to its recoverable amount. In assessing the value in use, the estimated future cash flows are adjusted for the risks specific to the cash generating unit and are discounted to their present value with a discount rate that reflects the current market indicators.

Where an impairment loss subsequently reverses, the carrying amount of the cash generating unit is increased to the revised estimate of its recoverable amount, to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the cash generating unit in prior years. A reversal of an impairment loss is recognized as income immediately.

e) Share Capital

Share capital includes cash consideration received for share issuances, net of commissions and issue costs. Common shares issued for non-monetary consideration are recorded at their fair market value based upon the trading price of the Company’s shares on the Exchange on the date of the agreement.

The proceeds from the issue of units is allocated between common shares and common share purchase warrants on a prorated basis on relative fair values as follows: the fair value of common shares is based on the market close on the date the units are issued; and the fair value of the common share purchase warrants is determined using the BlackScholes pricing model.

f) Share-Based Payment

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

Upon the exercise of stock options and other share-based payments, consideration received on the exercise of these equity instruments is recorded as share capital and the related share-based payment reserve is transferred to share capital. The fair value of unexercised equity instruments are transferred from reserve to retained earnings upon expiry.

g) Flow-Through Shares

Under the Canadian Income Tax Act, an enterprise may issue securities referred to as flow-through shares, whereby the investor may claim the tax deductions arising from qualifying expenditures that the company made with the proceeds. The increase to share capital when flow-through shares are issued is measured based on the current market price of common shares. The incremental proceeds or “premium” are recorded as a deferred credit. When expenditures are renounced, a deferred tax liability is recognized and the deferred credit is reversed. The net amount is recognized as a deferred income tax recovery.

h) Loss Per Common Share

Basic loss per common share is calculated using the weighted average number of common shares issued and outstanding during the year. Diluted loss per share is the same as basic loss per share as the effect of issuance of shares on the exercise of stock options and warrants is anti-dilutive.

i) Income Taxes

Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity.

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

i) Current Income Tax

Current income tax assets and/or liabilities comprise those claims from, or obligations to, fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the consolidated financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

ii) Deferred Income Tax

Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full.

Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. Deferred tax assets and liabilities are offset only when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority.

Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

j) Financial Instruments

The Company adopted IFRS 9 in its consolidated financial statements on May 1, 2018. Due to the nature of its financial instruments, the adoption of IFRS 9 had no impact on the opening deficit balance on May 1, 2018. The impact on the classification and measurement of its financial instruments is set out below.

The following table summarizes the classification and measurement changes under IFRS 9 for each financial instrument:

Financial instrument	Original classification	New Classification
Cash and cash equivalents	Loans and receivables	FVTPL
Accounts payable and	Other liabilities	Amortized cost
Due to related parties	Other liabilities	Amortized cost

The original carrying value of the Company’s financial instruments under IAS 39 has not changed under IFRS 9.

Financial assets

The Company classifies its financial assets, as amortized cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit and loss (“FVTPL”). Financial assets are assessed at each reporting date to determine whether there is objective evidence of impairment.

Financial assets classified as amortized cost are initially measured at fair value and are subsequently measured at amortized cost. The Company has not classified any financial assets as amortized cost.

Financial assets classified as FVTPL are initially measured at fair value with unrealized gains and losses recognized through profit and loss. Regular way purchases and sales of FVTPL financial assets are accounted for at trade date, as opposed to settlement date. The Company’s cash and cash equivalents and accounts receivable are classified as FVTPL.

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (Continued)

Transactions costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset.

Financial liabilities

Management determines the classification of its financial liabilities at initial recognition.

Financial Liabilities at Fair Value through Profit or Loss

Financial liabilities are designated as FVTPV upon initial recognition. They are initially recorded at their fair market value. They are subsequently measured at their fair market value, with gains or losses recognized in the income statement. Transaction costs on financial liabilities classified as FVTPL are expensed as incurred. The net gain or loss recognized in profit or loss excludes any interest paid on the financial liabilities.

Financial Liabilities Measured at Amortized Cost

Financial liabilities are measured at amortized cost and are initially recorded at fair value, net of transaction costs, and are subsequently measured at amortized cost. Subsequent to initial measurement, financial liabilities measured at amortized cost are carried at amortized cost using the effective interest method.

Transaction costs on liabilities other than those classified as FVTPL are treated as part of the carrying value of the liability. Transaction costs for liabilities at FVTPL are expensed as incurred.

i) Comparative Figures

Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current period. These reclassifications have no effect on the net loss for the year ended April 30, 2019.

NOTE 4 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES, AND ASSUMPTIONS

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

Significant judgments, estimates and assumptions that have the most significant effect on the amounts recognized in the financial statements are described below.

a) Title to Mineral Property Interest

Although the Company has taken steps to verify title to mineral properties that it currently has under option, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfer and title may be affected by undetected defects.

b) Exploration and evaluation expenditures

• The application of the Company’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 4 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES, AND ASSUMPTIONS (continued)

becomes available. If, after an expenditure is capitalized, information becomes available suggesting that the recovery of the expenditure is unlikely, the amount capitalized is written off in the profit or loss in the period the new information becomes available.

c) Impairment of Non-Current Assets

An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each asset or cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows, management makes assumptions about future operating results. These assumptions relate to future events and circumstances. In addition, when determining the applicable discount rate, estimation is involved in determining the appropriate adjustments to market risk and assetspecific risk factors.

Actual results may vary and may cause significant adjustments to the Company’s assets within the next financial year.

d) Decommissioning and Restoration Provision

The decommissioning and restoration provision is based on future cost estimates using information available at the reporting date. The decommissioning and restoration provision is adjusted at each reporting period for changes to factors such as the expected amount of cash flows required to discharge the liability, the timing of such cash flows, and the discount rate. The decommissioning and restoration provision requires other significant estimates and assumptions such as requirements of the relevant legal and regulatory framework, and the timing, extent, and costs of required decommissioning and restoration activities. Actual costs may differ from these estimates. As of January 31, 2021, and April 30, 2020, the Company has no material decommissioning and restoration provision.

e) Deferred Tax Assets

Deferred tax assets, including those arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable earnings in future periods in order to utilize recognized deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

The Company has recorded a full valuation allowance against its deferred tax assets due to the uncertainty in the realization of these assets.

f) Share-based transactions

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 8.

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 4 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES, AND ASSUMPTIONS (continued)

g) Flow-through shares

The Company determines the flow-through share premium by allocating the total funds received between common share and flow-through premium liability by first assessing the fair value of the common shares issued, based on market price at issuance, with any excess considered being allocated to warrants (if any) and the flow-through premium.

h) Going concern

The preparation of these financial statements requires management to make judgments regarding the ability of the Company to continue as a going concern, as disclosed in Note 1. The assumption made is that the Company is a going concern and will continue in operation for the foreseeable future and at least one year.

NOTE 5 –NEW ACCOUNTING PRONOUNCEMENTS

During the three months ended July 31, 2021, there were no new standards adopted in the period.

The following accounting standards interpretations have been issued but are not yet effective:

IAS 1 –Presentation of Financial Statements (“IAS 1”), has been amended to clarify how to classify debt and other liabilities as either current or non-current. The amendment to IAS 1 is effective for the years beginning on or after January 1, 2023, with early application permitted. The Company is currently assessing the impact of this amendment on its consolidated financial statements.

NOTE 6 – MINERAL PROPERTIES

Galway Gold Property

On July 5, 2017, the Company entered into a property option agreement for Galway Gold Property in County Galway, Republic of Ireland. In return for a 100% interest in the property, the Company must make the following payments:

On May 7, 2018, the Company acquired 100% of Gold Note Ltd. (the parent company that owns 100% of the Galway Gold Property). The property is subject to a 2% net smelter return ("NSR") with the option by the Company to purchase 1.5% of the NSR for $1,500,000 at any time.. During the year ended April 30, 2021, the Company recorded an impairment loss of $865,283 due to uncertainty on the renewal of the permits.

Dixie Halo East Project

On August 24, 2018, the Company announced that it was acquiring a 100% interest in the claims comprising the Dixie Halo property from an arms-length party through the payment of $85,000 in cash and the issuance of 750,000 shares over a 4-year period. The vendor retains a 1.5% Net Smelter Royalty (“NSR”), half of which is purchasable by BTU for $500,000 at any time.

• On September13, 2018, the Company issued 150,000 shares (valued at $5,250) in the first tranche of the share issuance commitment.

• The Company is scheduled to issue the balance of the 600,000 shares in tranches of 150,000 shares on the 1[st ] (shares have been issued), 2[nd ] (shares have been issued), 3[rd] and 4[th] anniversaries of the first tranche of share issuance that occurred on September 13, 2018.

• On September 25, 2018, the Company paid $10,000 in cash in the first installment of the $85,000 in total cash payable to the vendor.

• The Company is scheduled to make the remaining cash payments annually as follows: o $12,000 on or before September 25, 2019;(paid)

NOTE 6 – MINERAL PROPERTIES (continued)

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

• $16,000 on or before September 25, 2020; (paid)

• $22,000 on or before September 25, 2021; (paid subsequent to July 31, 2021and,

• $25,000 on or before September 25, 2022.

Dixie Halo South Project

On November 14, 2018, the Company announced that it had received TSX Venture Exchange approval of the Dixie Halo South Project (originally announced on October 17, 2018) and was acquiring a 100% interest in the claims comprising the Dixie Halo South property from two arms-length parties through the issuance of 8,000,000 common shares as follows:

• On November 14, 2018, the Company issued 4,000,000 shares (valued at $260,000) in the first tranche of the share issuance commitment; and,

• Issue an additional 4,000,000 common shares on or before a date that is 12 months from the TSX-Venture exchange approval date (issued and valued at $1,400,000).

The Company has also agreed to incur a total of $2,000,000 in exploration expenditures in or on the property as follows:

• The sum of $1,000,000 on or before the first anniversary of closing (incurred); and,

• The sum of $1,000,000 on or before the second anniversary of closing (incurred)

During the year ended April 30, 2020, the Company entered into extension agreements to extend the first expenditure time to June 11, 2020, in exchange for the issuance of 40,000 common shares of the Company. On March 20, 2020, the Company issued 20,000 common shares with a fair value of $2,600 and on May 1, 2020, the Company issued 20,000 common shares with a fair value of $4,800.

As at April 30, 2021, the Company had incurred a total of $2,072,422 in exploration expenditures on the property. The Company, having satisfied al the conditions under the property option agreement, now owns 100% of the interest in the claims comprising the Dixie Halo South property.

The vendors retains a 2.5% Net Smelter Royalty (“NSR”) on all minerals produced from the property. The Company has the right to acquire 1.0% NSR for cancellation at any time by paying $2,000,000. Advanced royalty payments in the amount of $4,000 per annum are payable on or before each anniversary date starting on the 5[th] anniversary date (November 14, 2023) and deducted from any royalty payments payable under the NSR.

Dixie Halo Southeast Project

On November 27, 2018, the Company entered into an option agreement to acquire a 100% interest in 44 claims comprising the Dixie Halo Southeast property from an arms-length party through the issuance of 4,000,000 common shares as follows:

• Issue 2,000,000 common shares on November 27, 2018 (issued with a fair value of $130,000); and

• Issue an additional 2,000,000 common shares on or before November 27, 2019 (issued with a fair value of $210,000).

In addition, the Company was to incur a total of $500,000 in exploration expenditures in or on the property as follows:

• The sum of $250,000 on or before November 27, 2019; and

• The sum of $250,000 on or before November 27, 2020.

NOTE 6 – MINERAL PROPERTIES (continued)

As of April 30, 2021, the Company had incurred $903,076 in exploration expenditures on the property. The Company, having satisfied al the conditions under the property option agreement, now owns 100% of the interest in the claims comprising the Dixie Halo Southeast property.

14

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

The vendors will retain a 2.5% NSR Royalty on all minerals produced from the property. The Company has the right to acquire 1.0% of the NSR for cancellation at any time by paying $2,000,000. Advanced royalty payments in the amount of $2,000 per annum are payable on or before each anniversary date starting on the 5[th] anniversary date (November 27, 2023) and deducted from any royalty payments payable under the NSR.

Dixie Halo Southwest (Burgundy Exploration Corp.) Project

On December 7, 2018, the Company announced that it had received TSX Venture Exchange approval of the Dixie Halo Southwest Project (originally announced on November 23, 2018) through the acquisition of 100% of Burgundy Exploration Corp. in exchange for the issuance of 3,600,000 shares as follows:

• On December 7, 2018, the Company issued 1,800,000 shares (valued at $144,000) in the first tranche of the share issuance commitment; and,

• Issue an additional 1,800,000 shares on or before a date that is 12 months from the TSX-Venture exchange approval date (issued on December 6, 2019, and valued at $594,000).

The Company now owns 100% of Burgundy Exploration Corp. and the interest in the claims comprising the Dixie Halo Southwest property. A pre-existing 2% gross smelter royalty is applicable on the tenure being acquired under the Burgundy acquisition. On September 2, 2021, the Company completed a vertical amalgamation between the Company and Burgundy Exploration Corp. and the amalgamated entity continued under the name BTU Metals Corp.

Dixie Halo Southeast Extension Project

On November 6, 2019, the Company received TSX Venture Exchange approval of the Dixie Halo Southeast Extension Project (originally announced on October 28, 2019) and that it was acquiring a 100% interest in the claims comprising the Dixie Halo Southeast Extension property from an arms-length party through the issuance of million BTU common shares as follows:

• On closing issue 600,000 common shares (issued on November 6, 2019, and valued at $72,000) in the first tranche of the share issuance commitment; and,

• Issue an additional 1,200,000 shares on or before a date that is 12 months from the TSX-Venture exchange approval date. (Issued on January 6, 2020, and valued at $384,000)

• The Company has also agreed to incur a total of $38,000 in exploration expenditures in or on the property as follows:  The sum of $38,000 on or before May 1, 2020 (Incurred)

The vendors retain a 2.0% Gross Smelter Royalty (GSR) on non-base metals. The Vendors have also been granted a 2% GSR on base metals, 1% of which may be bought down for $1,000,000 within the first 7 years of closing at the option of the Company.

The Company owns 100% of the claims comprising the Dixie Halo Southeast Extension property.

Dixie Halo New Claims

On December 5, 2019, the Company announced that it has been building its overall property position in the Dixie Creek area and that it expanded its Dixie Halo Property position by 238 claims covering 4,853 hectares. These claims are royalty free and not subject to any agreement. Total cost incurred to obtain the claims was $11,900 and the Company has spent an additional $32,436 in exploration expenditures on the claims up to July 31, 2021.

15

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 6 – MINERAL PROPERTIES (continued)

Pakwash North, Canada

On March 22, 2021, the Company entered into an agreement to earn up to an 80% interest in the Pakwash North property in exchange for cash payments of $75,000 and the issuance of 1,400,000 common shares of the Company as well as incurring $1,000,000 in exploration expenditures on the property over 36 months from entering into the agreement. The Company may, at its discretion, elect to stay at certain fixed percentages of ownership interest over the course of the option period. To earn its interest options in the property, the Company will incur the following:

• Initial option 25% interest: Make a cash payment of $10,000 (paid) on closing and issue 250,000 common shares of the Company (issued with a fair value of $30,000) and incur $30,000 in exploration expenditures on the property before June 1, 2021 (incurred $56,443). Make a cash payment of $25,000, issue 350,000 common shares of the Company and incur $170,000 in exploration expenditures on the property on or before June 1, 2022.

• Additional option for 35%: make a cash payment of $40,000, issue 400,000 common shares of the Company and incur an additional $300,000 in exploration expenditures on the property on or before June 1, 2023.

• Additional option for 20%: issue 400,000 common shares of the Company and incur an additional $500,000 in exploration expenditures on or before June 1, 2024.

The parties will enter into a definitive joint venture agreement upon the expiration of the option periods. The interest in the joint venture will vary depending on the percentage of interest the Company has elected to earn in the property and will be determined at such time the joint venture agreement is signed.

A Summary of the Company’s exploration and evaluation assets is as follows:

	Dixie Halo East Dixie Halo South Dixie Halo Southeast Dixie Halo Souteast extension Dixie Halo Southwest Dixie Halo new claims staked Pakwash North Galway Total
Carrying value Balance April 30, 2020 $ Additions for cash Additions for shares issued Costs capitalized Assays Drilling Field & Admin Geological and Geophysical services Prospecting Write-down of mineral property Balance April 30, 2021 $ Costs capitalized Assays Drilling Field & Admin Geological and Geophysical services Prospecting Balance July 31, 2021 $	993,687 2,623,892 944,684 889,072 754,464 11,900 - 865,284 7,082,983 16,000 - - - - - 15,512 - 31,512 28,500 4,800 - - - - 30,000 - 63,300 23,778 135,944 31,471 39,442 885 - - - 231,520 - 433,205 213,261 61,019 - - - - 707,485 3,680 7,880 4,280 750 250 1,579 - - 18,419 73,842 443,437 47,727 115,501 54,698 2,592 50,931 - 788,728 5,592 90,664 1,653 4,458 3,360 - - - 105,727
	106,892 1,111,130 298,392 221,170 59,193 4,171 50,931 - 1,851,879 - - - - - - (865,283) (865,283)
	1,145,079 3,739,822 1,243,076 1,110,242 813,657 16,071 96,443 1 8,164,391 - 158 26,691 8,825 4,020 - - - - 39,694 - 110,558 158 80,611 - - - - 191,327 1,700 3,945 600 1,060 - - - - 7,305 - 23,485 4,373 1,680 5,555 16,373 3,381 - 54,847 5,372 31,817 8,942 11,012 8,589 11,892 5,777 - 83,401
	7,230 196,496 22,898 98,383 14,144 28,265 9,158 - 376,574 -
	1,152,309 3,936,318 1,265,974 1,208,625 827,801 44,336 105,601 1 8,540,965

16

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 7 – FLOW THROUGH SHARE PREMIUM LIABILITY

A summary of the changes in the Company’s flow-through share premium liability is as follows:

Flow-Through Share Premium Liability
Opening balance Flow-through share premium on the issuance of flow-through common share units (Note 8) Settlement of flow-through share premium liability on expenditures incurred Ending balance	Three Months Ended Year Ended July 31, April 30, 2021 2021
	$ 230,311 268,111 - 487,500 (89,492) (525,300)
	$ 140,819 $ 230,311

As of July 31, 2021, the Company must spend an additional $595,777 in order to satisfy its remaining flow-through obligations.

NOTE 8 – SHARE CAPITAL

a) Authorized Capital

Unlimited number of common shares without par value.

b) Issued and Outstanding Common Shares

As of July 31, 2021, the Company had 103,115,569 common shares issued and outstanding as presented in the statements of changes in shareholders’ equity.

During the three months ended July 31, 2021

The Company did not issue any common shares.

During the year ended April 30, 2021, the Company:

• i) On May 1, 2020, the Company issued 20,000 common shares with a fair value of $4,800 under the terms of its extension agreement on the Dixie Halo South property acquisition agreement (Note 6).

• ii) On June 10, 2020, the Company completed a non-brokered private placement of 2,600,000 units for gross proceeds of $520,000. Each unit consists of one common share, and one-half of a common share purchase warrant. Each whole common share purchase warrant may be exercised by the holder to purchase one common share at a price of $0.30 for a period of 36 months from closing. Finder’s fees and other share issuance costs totalling $8,150 in cash were paid to third parties. The shares and warrants comprising the units are subject to a 4 month hold period expiring October 11, 2020.

Gross proceeds from this non-brokered private placement were allocated between shares and warrants using a prorata method based on the fair values of shares and warrants on the date of issuance. The fair value of warrants was estimated at $261,740 using the Black-Scholes pricing model, therefore $345,895 of gross proceeds from this financing was allocated to common shares and $174,105 was allocated to reserves.

17

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 8 – SHARE CAPITAL (continued)

• iii) On October 8, 2020, the Company completed a non-brokered private placement of 7,500,000 flow through units for gross proceeds of $2,062,500. Each flow through unit was comprised of one flow through common share in the capital of the Company and one-half of one common share purchase warrant on a non-flow-through basis. Each whole warrant entitles the holder to acquire one common share at a price of $0.30 for a period of 36 months from closing. The Company issued 200,000 common shares in the capital of the Company with a fair value of $42,000 in lieu of finders’ fees and incurred share issuance costs of $11,338.

Gross proceeds from this non-brokered private placement were allocated between shares and warrants using a prorata method based on the fair values of shares and warrants on the date of issuance. The fair value of warrants was estimated at $609,218 using the Black-Scholes pricing model, therefore $1,592,199 of gross proceeds from this financing was allocated to common shares and $470,301 was allocated to reserves. In addition, a value of $487,500 was attributed to the flow-through premium liability in connection with the flow-through shares (Note 7).

• iv) On August 19, 2020, the Company issued 150,000 common shares with a fair value of $28,500 under the terms of the Dixie Halo East property option agreement (Note 6).

• v) On April 29, 2021, the Company issued 250,000 common shares with a fair value of $30,000 under the terms of the Dixie Pakwash North option agreement (Note 6).

• vi) The Company issued 1,725,000 common shares for the exercise of options at $0.08-$0.11 per share for gross proceeds of $153,000. The fair value of options exercised of $96,505 was reclassified to share capital from reserves.

• iv) The Company issued 1,550,604 common shares for the exercise of warrants at a range of $0.10 - $0.18 per share for gross proceeds of $218,842. The fair value of warrants exercised $77,396 was reclassified to share capital from reserves.

c) Stock Options

As of July 31, 2021, the Company had 7,300,000 options outstanding (April 30, 2021 – 7,700,000).

During the three months ended July 31, 2021, the Company:

• i) granted 600,000 stock options to Officers, Directors, and consultants of the Company , exercisable at a price of $0.22 per option expiring on May 12, 2024. The estimated fair value of the options was $55,400.

• ii) 1,000,000 stock options with a strike price of $0.18 expired unexercised on July 16, 2021.

During the year ended April 30, 2021, the Company:

• i) granted 200,000 stock options to a consultant of the Company, exercisable at a price of $0.25 per option expiring on June 11, 2022. The estimated fair value of the options was $34,800.

• ii) granted 200,000 stock options to a consultant of the Company, exercisable at a price of $0.30 per option expiring on January 06, 2022. The estimated fair value of the options was $33,400.

• iii) Granted 2,750,000 stock options to Officers, Directors, and consultants of the Company, exercisable at a price of $0.22 per option, expiring on September 28, 2023. The estimated fair value of the options was $477,800.

18

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 8 – SHARE CAPITAL (continued)

A summary of the Company’s stock option activity is as follows:

	July 31,	Weighted	April 30,	Weighted
	2021	Average	2021	Average
Stock option activity		Exerciseprice	Exerciseprice
		$		$
Balance – beginning of period	7,700,000	0.21	6,500,000	0.16
Granted	600,000	0.22	3,150,000	0.23
Exercised	-	-	(1,725,000)	0.09
Expired	(1,000,000)	0.18	(225,000)	0.11
Forfeited	-	-	-	-
Balance – end of period	7,300,000	0.21	7,700,000	0.21

As July 31, 2021, the Company had the following stock options outstanding:

	Exercise	July 31,	July 31,
	Price	2021	2021
Expiry date		Outstanding	Exercisable
October-28-2021	$0.10	1,000,000	1,000,000
February-28-2022	$0.25	2,350,000	2,350,000
June-11-2022	$0.25	200,000	200,000
June-16-2022	$0.05	200,000	200,000
January-6-2022	$0.30	200,000	200,000
September-28-2023	$0.22	2,750,000	2,750,000
May-12-2024	$0.22	600,000	600,000
	$0.21	7,300,000	7,300,000
			July 31, 2021
The outstanding options have a weighted-average exercise price of: The weighted average remaining life in years of the outstanding options is:			$0.21 1.32

The following weighted average assumptions were used for the Black-Scholes valuation of stock options granted during the three months ended July 31, 2021, and the year ended April 30, 2021:

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----- Start of picture text -----

Assumption May 12, 2021 September 28, 2020 July 6, 2020 June 11, 2020
Share price $0.130 $0.215 $0.260 $0.240
Exercise price $0.22 $0.22 $0.30 $0.25
Risk-free rate 0.53% 0.26% 0.29% 0.27%
Expected dividend yield 0.00% 0.00% 0.00% 0.00%
Expected volatility 139.19% 151.20% 157.32% 155.94%
Option life in years 3.00 3.00 1.50 2.00
----- End of picture text -----

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BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 8 – SHARE CAPITAL (continued)

d) Warrants

A summary of the Company’s warrant activity is as follows:

Warrant activity	July 31, Weighted April 30, Weighted 2021 Average 2021 Average Exercise price Exercise price
Balance – beginning of period Issued on private placements Exercised Expired Balance – end ofperiod	$ $ 13,441,312 0.27 12,521,916 0.22 - - 5,050,000 0.30 - - (1,550,604) 0.14 (5,480,812) 0.18 (2,580,000) 0.15
	7,960,500 0.33 13,441,312 0.27

As of July 31, 2021, the Company had the following warrants outstanding:

s of July 31, 2021, the Company had the following warrants outstanding:	s of July 31, 2021, the Company had the following warrants outstanding:
July 31, Exercise 2021
Date of Issuance Date of Expiry Price Outstanding
28-February-2020 28-February-2022 $0.30 198,000 28-February-2020 28-February-2022 $0.40 2,712,500 10-June-2020 10-June-2023 $0.30 1,300,000 8-October-2020 8-October-2023 $0.30 3,750,000 7,960,500
	7,960,500
	July 31, 2021
The outstanding warrants have a weighted-average exercise price of: The weighted average remaining life in years of the outstanding warrants is:	$0.33 1.55

The following weighted average assumptions were used for the Black-Scholes valuation of warrants issued during the year ended April 30, 2021, (no warrants were issued during the three months ended July 31, 2021):

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----- Start of picture text -----

Assumption Oct 8, 2020 Jun 10, 2020
Share price $0.21 $0.24
Exercise price $0.30 $0.30
Risk-free rate 0.26% 0.27%
Expected dividend yield 0.00% 0.00%
Expected volatility 150.93% 168.32%
Warrant life in years 3.00 3.00
----- End of picture text -----

20

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 9 – RELATED PARTY TRANSACTIONS

Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers and Board of Director members.

The aggregate value of transactions relating to key management personnel for the three months ended July 31, 2021, and 2020 were as follows:

As of July 31, 2021, $ nil (April 30, 2021 - $40,306) was owing to key management personnel or to a company controlled by a director or key management personnel and the amounts were included in accounts payable. The amounts payable are non-interest bearing, are unsecured, and have no specific terms of repayment.

During the three months ended July 31, 2021, the Company granted a total of 600,000 stock options (July 31, 2020 – ) to Officers, Directors, and insiders of the Company, of which the fair market value was estimated at $55,400 (July 31, 2020 - $72,050)

NOTE 10 – CAPITAL RISK MANAGEMENT

The Company manages its share capital as capital, which as of July 31, 2021, was $11,259,255 (April 30, 2021 – $11,259,255). The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

The Company manages the capital structure and makes adjustments to it in light of operating results, changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, warrants or options, issue new debt, acquire or dispose of assets, or adjust the amount of cash and cash equivalents.

In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in liquid short-term interest-bearing investments, selected with regards to the expected timing of expenditures from continuing operations.

The Company’s share capital is not subject to external restrictions. There were no changes in the Company’s approach to capital management during the three months ended July 31, 2021.

NOTE 11 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company is exposed to various risks in relation to financial instruments. The Company’s financial assets and liabilities by category are summarized in Note 3(j). The Company’s risk management is coordinated in close co-operation with the board of directors and focuses on actively securing the Company’s short to medium-term cash flows and raising finances for the Company’s capital expenditure program. The Company does not actively engage in the trading of financial assets for speculative purposes. The most significant financial risks to which the Company is exposed are described below.

21

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 11 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

a) Fair Values

The Company uses the following hierarchy for determining fair value measurements:

Level 1: Quoted prices in active markets for identical assets or liabilities.

• Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

• Level 3: Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

observable market data.
	Level 1	Level 2	Level 3	July 31, 2021
Held for Trading Financial Assets
Cash and equivalents	$1,165,094	-	-	$1,165,094
Total Financial Assets at Fair Value	$1,165,094	-	-	$1,165,094

The fair values of the Company’s cash, accounts payable and accrued liabilities approximate their carrying values due to their short-term nature. The carrying amounts of the amount due to related party and loans payable are measured at amortized cost and approximate their fair values.

b) Credit Risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. The Company is in the exploration stage and has not yet commenced commercial production or sales. Therefore, the Company is not exposed to significant credit risk.

c) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company is dependent upon the availability of credit from its suppliers and its ability to generate sufficient funds from equity and debt financing to meet current and future obligations. There can be no assurance that such financing will be available on terms acceptable to the Company. The Company has a working capital balance of $1,113,107 as of July 31, 2021 (April 30, 2021, working capital – $1,330,268) and a cash balance of $1,165,094 (April 30, 2021 - $1,667,763). The Company cautions that current global uncertainty with respect to the spread of the COVID-19 virus (the “coronavirus”) and its effect on the broader global economy may have a significant negative effect on the Company. While the precise impact of the COVID-19 virus on the Company remain unknown, rapid spread of the COVID-19 virus may have a material adverse effect on global economic activity and can result in volatility and disruption to global supply chains, operations, mobility of people and the financial markets, which could affect interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company.

d) Interest Rate Risk

The Company’s policy is to invest excess cash in guaranteed investment certificates (GIC) at fixed or floating rates of interest and cash equivalents are to be maintained in floating rates of interest in order to maintain liquidity, while achieving a satisfactory return for shareholders. As of July 31, 2021, the Company held $ nil in a redeemable GIC. There were no other interest-bearing deposits as of July 31, 2021. Fluctuations in interest rates impact the value of cash and cash equivalents. The Company manages risk by monitoring changes in interest rates in comparison to prevailing market rates.

22

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 11 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

e) Foreign Exchange Risk

Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is exposed to foreign exchange risk on fluctuations related to cash and accounts payable and accrued liabilities that are denominated in US Dollars. The Company does not hedge its exposure to fluctuations in the related foreign exchange rates. The Company’s exposure to currency risk is currently considered insignificant.

f) Equity Price Risk

The Company is exposed to price risk with respect to equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statement of cash flows.

During the three months ended July 31, 2021, and the year ended April 30, 2021, the Company paid $ nil in interest and income taxes.

During the year ended April 30, 2021:

• i) The Company transferred $77,396 from reserves to share capital pursuant to the exercise of 1,550,604 common share purchase warrants.

• ii) The Company transferred $96,505 from reserves to share capital pursuant to the exercise of 1,725,000 common share purchase options.

• iii) The Company issued 420,000 common shares at a fair value of $63,300 pursuant to the acquisition of various property option agreements (Note 6).

• iv) The Company issued 200,000 common shares at a fair value of $42,000 in lieu of a cash finders’ fees.

• v) Fair value of warrants issued in private placement of $644,406 was allocated to reserves.

• vi) The Company transferred $487,500 from share capital to flow-through share premium liability in connection with the flow-through shares.

NOTE 13 – SEGMENTED OPERATIONS

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

During the year ended April 30, 2021, the Company had $1 (April 30, 2020 - $865,284) in exploration and evaluation assets capitalized in Ireland. During the year ended April 30, 2021, the Company recorded an impairment charge against the property of $865,283 (April 30, 2020 - $nil) and incurred $nil (April 30, 2020 - $nil) in operating expenditures in Ireland. All other assets and expenditures are held and incurred in Canada.

23

BTU Metals Corp. Notes to the Unaudited Interim Condensed Consolidated Financial Statements For The Three Months Ended July 31, 2021, and 2020 (Expressed in Canadian Dollars)

NOTE 14 – SUBSEQUENT EVENTS

Subsequent to July 31, 2021, the following occurred:

• i) the Company granted a total of 2,125,000 options to Directors, Officers and Consultants of the Company. The options are for a three-year term and exercisable at a strike price of $0.10 per share.

24