Conquest Resources Limited — Annual Report 2022

Apr 24, 2023

CONQUEST RESOURCES LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

CONQUEST RESOURCES LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

INDEX	PAGE
Independent Auditor’s Report	1
Consolidated Statements of Financial Position	4
Consolidated Statements of Operations and Comprehensive Loss	5
Consolidated Statements of Changes in Equity	6
Consolidated Statements of Cash Flows	7
Notes to the Consolidated Financial Statements	8 – 21

chartered professional accountant Oakville, Ontario, Canada licensed public accountant

simone & company

Independent Auditor's Report

To the Shareholders of

• Conquest Resources Limited,

We have audited the financial statements of Conquest Resources Limited, which comprise the statement of consolidated financial position as at December 31, 2022 and 2021, and the consolidated statement of operations and comprehensive loss, consolidated statement of changes in equity and consolidated statement of cash flows as at and for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audits 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 is sufficient and appropriate to provide a basis for our opinion.

Financing Risk

We draw attention to Note 1 to these consolidated financial statements, which indicates that as at December 31, 2022 the Company has an accumulated deficit and expects to incur further losses in the development of its business. Note 1 also describes that the Company's ability to fund future operations and exploration activities is dependent upon its ability to obtain external financing. Our opinion is not modified in respect of this matter.

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information is comprised of the information included in Management's Discussion and Analysis.

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

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

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

chartered professional accountant Oakville, Ontario, Canada licensed public accountant

simone & company

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, 3 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 consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or 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 Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in 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 consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The 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.

chartered professional accountant Oakville, Ontario, Canada licensed public accountant

simone & company

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

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

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

The engagement executive on the audit resulting in this Independent Auditor's Report is Marco F. Simone.

April 20, 2023

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CONQUEST RESOURCES LIMITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at December 31, 2022 and 2021 Expressed in Canadian dollars

CONQUEST RESOURCES LIMITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at December 31, 2022 and 2021 Expressed in Canadian dollars
Notes ASSETS Current Cash and cash equivalents HST recoverable Prepaid expense Total assets LIABILITIES Current Amounts payable and accrued liabilities 4 Total liabilities SHAREHOLDERS' EQUITY Capital stock 6 Warrants 7 Share-based payment reserve 8 Deficit Total shareholders' equity Total liabilities and shareholders' equity	December 31, 2022 $ 1,188,794 17,713 15,664 1,222,171 66,244 66,244 24,002,178 - 1,010,375 (23,856,626) 1,155,927 1,222,171	December 31, 2021 $ 1,949,588 109,964 20,160
		2,079,712
		335,317
		335,317
		23,988,978 719,796 931,965 (23,896,344)
		1,744,395
		2,079,712

Nature of operations (Note 1) Commitments and contingencies (Notes 1, 5 and 10) Subsequent event (Note 14)

The financial statements were approved by the Board of Directors on April 20, 2023 and signed on its behalf by:

Signed “John F. Kearney” , Director Signed “Tom Obradovich” , Director

See accompanying notes to the consolidated financial statements

4

CONQUEST RESOURCES LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Expressed in Canadian dollars

2022 Notes $ Expenses Exploration and evaluation expenses 5 238,990 Share-based payment 8 240,523 Professional fees 9 285,887 Corporate expenses 62,140 Office and general 29,948 Loss before other items 857,488 Other items Interest income (15,297) Flow-through share premium - Gain on disposal of marketable securities - Net loss and comprehensive loss for the year 842,191 Net loss per common share - Basic and diluted 0.006 Weighted average common share outstanding - Basic and diluted 134,995,901	2021 $ 2,857,794 641,569 337,271 270,174 39,527
	4,146,335 (7,142) (102,507) (10,915)
	4,025,771
	0.030 134,170,257

See accompanying notes to the consolidated financial statements

5

CONQUEST RESOURCES LIMITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021

Expressed in Canadian dollars

		Number of			Share-Based
		Common	Capital		Payment
		Shares	Stock	Warrants	Reserve	Deficit	Total
		(Note 6)	$	$	$	$	$
Balance January 1, 2021	132,587,106		23,603,978	719,796	684,929	(20,265,106)	4,743,597
Stock options issued		-	-	-	641,569	-	641,569
Shares issued to acquire mineral rights		2,250,000	385,000	-	-	-	385,000
Stock options expired		-	-	-	(394,533)	394,533	-
Loss for the period		-	-	-	-	(4,025,771)	(4,025,771)
Balance December 31, 2021	134,837,106		23,988,978	719,796	931,965	(23,896,344)	1,744,395
Shares issued to acquire mineral rights		440,000	13,200	-	-	-	13,200
Warrants expired		-	-	(719,796)	-	719,796	-
Stock options issued		-	-	-	240,523	-	240,523
Stock options expired		-	-	-	(162,113)	162,113	-
Loss for the year		-	-	-	-	(842,191)	(842,191)
Balance December 31, 2022	135,277,106		24,002,178	-	1,010,375	(23,856,626)	1,155,927

See accompanying notes to the consolidated financial statements

6

CONQUEST RESOURCES LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 Expressed in Canadian dollars

Cash flows from operating activities Net loss for the period Share-based payments Flow-through share premium Non-cash acquisition, exploration and evaluation expenditure Gain on disposal of marketable securities Movements in working capital Decrease in amounts receivable and prepaid expenses Decrease in accounts payable and accrued liabilities Net cash used in operating activities Cash flows from investing activities Proceeds from disposal of marketable securities Net cash used from investing activities Change in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year Supplemental information: Shares issued to acquire mineral rights	2022 $ (842,191) 240,523 - 13,200 - (588,468) 96,747 (269,073) (760,794) - - (760,794) 1,949,588 1,188,794 13,200	2021 $ (4,025,771) 641,569 (102,507) 385,000 (10,915)
		(3,112,624) 34,807 (182,823)
		(3,260,640)
		167,555
		167,555
		(3,093,085) 5,042,673
		1,949,588
		385,000

See accompanying notes to the consolidated financial statements

7

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

1. NATURE OF OPERATIONS

Conquest Resources Limited (the “Company” or “Conquest”) has interests in exploration and evaluation properties located in northern Ontario. Substantially all of the Company's efforts are devoted to acquiring, exploring and developing these properties. Conquest is a public company listed on the TSX Venture Exchange (“TSX-V”) and trades under the symbol “CQR.V”. The Company’s head office is located at 55 University Ave, Suite 1805, Toronto, Ontario, M5J 2H7.

There has been no determination whether the Company’s interests in its properties contain mineral resources which are economically recoverable. Major expenditures are required to locate and establish mineral deposits, to develop metallurgical processes and to construct mining and processing facilities. The Company’s continued existence is dependent upon discovery of economically recoverable reserves, the ability to obtain necessary financing to complete development and future profitable production or proceeds from disposition. The Company’s exploration operations are subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labour standards. In order for the Company to carry out its exploration and mining activities, the Company is required to hold certain permits. There is no assurance that the Company’s existing permits will be renewed or that new permits that have been applied for will be granted. The Company has taken steps to verify title to properties in which it has an interest in accordance with industry standards for the current stage of development of such properties, however, these procedures do not guarantee the Company’s title. Property title may be subject to government licensing requirements, social licensing requirements, unregistered prior agreements, unregistered claims, aboriginal claims and non-compliance with regulatory requirements. The Company’s properties may also be subject to increases in taxes and royalties, renegotiating contracts, and political uncertainty.

At December 31, 2022, the Company had not achieved profitable operations, had an accumulated deficit since inception and expects to incur further losses in the development of its business. These consolidated 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 meet its obligations and continue its operations for the next fiscal year at the minimum. The Company continues to evaluate its estimates and assumptions based on its historical performance and other factors including expectations of future events that are believed to be reasonable under the circumstances.

2. BASIS OF PREPARATION

These consolidated financial statements of the Company and its subsidiaries are prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The policies set out below were consistently applied to all the periods presented, unless otherwise noted.

These consolidated financial statements have been prepared on a historical cost. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except cash flow information.

These consolidated financial statements were approved by the Board of Directors on April 20, 2023.

8

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company, being its wholly owned subsidiaries Northern Nickel Mining Inc., Eaglerock Minerals Ltd. and Baobab Minerals Inc. (inactive). Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect those returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiaries after eliminating inter-entity balances and transactions.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of operations from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Company. All material intra-company transactions, balances, income, and expenses are eliminated on consolidation.

Effective January 31, 2021, the Company’s two wholly owned subsidiaries Northern Nickel Mining Inc. and Eaglerock Mineral Limited were amalgamated into Conquest. Consequently, these consolidated financial statements include the consolidated results of these two subsidiaries up to and including January 30, 2021.

(b) Acquisition, exploration, and evaluation expenditures

Costs incurred to acquire mineral properties, rights and claims together with exploration and evaluation costs are expensed as incurred and included in the consolidated statement of operations until technical feasibility and commercial viability of extraction of reserves are demonstrable. Once a mine development decision has been made by the Company, subsequent expenditures incurred to develop the mine will be capitalized to mineral properties. Exploration costs include an allocation of administration and salary costs (including share-based payments) as determined by management, where they directly relate to specific projects.

The Company may occasionally enter into transfer-out arrangements, whereby the Company transfers part of a mineral interest, as consideration, for an agreement by the transferee to meet certain exploration and evaluation expenditures that would have otherwise been undertaken by the Company. The Company does not record any expenditures made by the transferee on its behalf. Any cash consideration received from the agreement is recorded to reduce the amount of acquisition, exploration and evaluation expenses reported in the consolidated statement of operations.

(c) Rehabilitation provisions

The Company will record a liability for the estimated future costs associated with legal and constructive obligations relating to the reclamation and closure of its exploration assets. This amount will be initially recorded at its discounted present value with subsequent annual recognition of an accretion expense on the discounted liability. Management is currently not aware of any existing significant legal or constructive obligations relating to the reclamation of its mineral property interests, therefore no such liability is recorded at December 31, 2022 and 2021.

(d) Impairment of non-financial assets

At the end of each reporting period, non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly. Any impairment is recognized in operations.

(e) Cash and cash equivalents Cash and cash equivalents are comprised of cash on hand, deposits in banks and highly liquid investments having original terms to maturity of 90 days or less when acquired.

9

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

(f) Financial instruments

Financial assets

Initial recognition and measurement

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

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

Subsequent measurement – financial assets at amortized cost

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

Subsequent measurement – financial assets at FVPL

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

Subsequent measurement – financial assets at FVOCI

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI.

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

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

Derecognition

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

Impairment of financial assets

The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, amounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases, and the decrease can be objectively related to an event occurring after the initial impairment was recognized. The Company has no financial assets subject to impairment at December 31, 2022 and 2021.

10

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f) Financial instruments (continued)

Financial liabilities

Initial recognition and measurement

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

Subsequent measurement – financial liabilities at amortized cost

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

Derecognition

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

(g) Flow-through financing

From time-to-time, the Company finances a portion of its project exploration activity through the issuance of flowthrough shares.

Under the terms of the flow-through share issues, the tax attributes of the related expenditures are renounced to investors and deferred income tax expense and income tax liabilities are increased by the estimated income tax benefits renounced by the Company to the investors. On the date of issuance of the flow-through shares, the premium relating to the proceeds received in excess of the closing market price of the Company’s shares is allocated to liabilities as share premium liability. The share premium liability is reduced pro-rata based on the percentage of flow-through expenditures renounced in comparison to renunciations required under the terms of the flow-through share agreement. The reduction to the premium liability in the period of renunciation is recognized through profit or loss.

Where the Company has unused tax benefits on loss carry forwards and tax pools in excess of book value available for deduction which have not been previously accounted for as deferred tax assets, the Company records a deferred tax asset to offset the increase in deferred tax liabilities resulting in an offsetting recovery of deferred income taxes being recognized through profit or loss in the reporting period.

(h) Share-based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The Company records these compensation costs using the fair value method of accounting for share-based payments. The fair value of stock options is determined using the Black-Scholes option pricing model. The fair value of the options is recognized over the vesting period as share-based payments expense and share-based payment reserve.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

When options are exercised, the proceeds received, together with any related amount in share-based payment reserve, is credited to capital stock. On expiry, any related amount in share-based payment or warrant reserve is credited to deficit.

11

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(i) Critical accounting judgements and key sources of estimation uncertainty

In the process of applying the Company’s accounting policies above, management has identified the judgemental areas that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations), which are dealt with below:

Key sources of estimation uncertainty

Preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for revenues and expenses during the period. The nature of estimation means that actual outcomes could differ from those estimates. The key sources of estimation uncertainty are discussed below:

Mineral resource estimates

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

Share-based payments

Estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has made estimates as to the volatility of its own shares, the probable life of options granted and the time of exercise of those options. The model used by the Company is the Black-Scholes valuation model.

Income, sales, withholding and other taxes

The Company is subject to income, sales, withholding and other taxes. Significant judgment is required in determining the Company’s provisions for taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. The determination of the Company’s income, sales, withholding and other tax liabilities requires interpretation of complex laws and regulations. The Company’s interpretation of taxation law as applied to transactions and activities may not coincide with the interpretation of the tax authorities. All tax related filings are subject to government audit and potential reassessment subsequent to the financial statement reporting period. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax related accruals and deferred income tax provisions in the period in which such determination is made.

Assets’ carrying values and impairment charges

In the determination of carrying values and impairment charges, management looks at the higher of recoverable amount or fair value less costs to sell in the case of assets and at objective evidence, significant or prolonged decline of fair value on financial assets indicating impairment. These determinations and their individual assumptions require that management make a decision based on the best available information at each reporting period.

Contingencies

See note 10

Estimation of rehabilitation provisions and asset retirement obligations and the timing of expenditure

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

12

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Loss per share Basic loss per share is calculated using the weighted average number of shares outstanding. Diluted loss per share assumes that any proceeds from the exercise of dilutive stock options and warrants would be used to repurchase common shares at the average market price during the period, with the incremental number of shares being included in the denominator of the diluted loss per share calculation. The diluted loss per share calculation excludes any potential conversion of options and warrants that would decrease loss per share. As a result, all outstanding convertible securities during the years ended December 31, 2022 and 2021 have been excluded from diluted loss per share.

(k) Income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets also result from unused loss carry forwards, resource related pools and other deductions. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(l) Changes in Accounting Policies

During the year ended December 31, 2022, the Company reviewed the impact of revisions to IFRS standards, interpretations, amendments and improvements of existing standards that became effective during the fiscal year. These included IAS 1 – Presentation of Financial Statements affecting both the disclosure of accounting policies, IFRS 3 – Business Combinations, IFRS 10 – Consolidated Financial Statements, and IAS 37 Provisions, Contingent Liabilities and Contingent Assets affecting the cost of fulfilling onerous contracts. These revisions to the standards did not have a material impact on the Company’s financial statements.

(m) New standards and interpretations not yet adopted Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods commencing after January 1, 2022. Many are neither applicable nor have a material impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.

IFRS 10 – Consolidated Financial Statements (“IFRS 10”) and IAS 28 – Investments in Associates and Joint Ventures (“IAS 28”) were amended to address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture, the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. The effective date of these amendments is yet to be determined. If an entity applies these amendments earlier, it shall disclose that fact.

IAS 1 – Presentation of Financial Statements (“IAS 1”) was amended in January 2020 to provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments clarify that the classification of liabilities as current or noncurrent is based solely on a company’s right to defer settlement at the reporting date. The right needs to be unconditional and must have substance. The amendments also clarify that the transfer of a company’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument. The amendments are effective for annual periods beginning on or after January 1, 2023.

13

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(n) New standards and interpretations not yet adopted (continued)

IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors was amended to revise the definition of accounting estimates. These changes clarify both the definition of accounting estimates and the fact that estimates involve measurement uncertainty. An entity uses measurement techniques and inputs to develop an accounting estimate. Measurement techniques include estimation techniques (for example, techniques used to measure a loss allowance for expected credit losses applying IFRS 9) and valuation techniques.

IAS 12 – Income Taxes amends deferred tax related to assets and liabilities arising from a single transaction. A transaction that is not a business combination may lead to the initial recognition of an asset and a liability and, at the time of the transaction, affect neither accounting profit nor taxable profit. For example, at the commencement date of a lease, a lessee typically recognises a lease liability and the corresponding amount as part of the cost of a right-of-use asset. Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial recognition of the asset and liability in such a transaction.

4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Trade payables Payable to related parties (Note 9) Accrued liabilities Total amounts payable and accrued liabilities	December 31, December 31, 2022 2021 $ $
	24,482 279,504 20,792 27,593 20,970 28,220
	66,244 335,317

5. MINERAL PROPERTIES – EXPLORATION AND EVALUATION EXPENDITURES

The following table shows the Company’s cumulative exploration and evaluation expenditures which have been expensed according to the Company’s accounting policy:

Belfast-TeckMag Alexander Smith Lake King Bay Lake Nipigon Basin Marr Lake Project Generation Other Total	December 31, Additions December 31, Additions December 31, 2022 2022 2021 2021 2020 $ $ $ $ $
	8,486,880 164,585 8,322,295 2,839,357 5,482,938 6,252,144 1,792 6,250,352 1,792 6,248,560 1,270,649 455 1,270,194 645 1,269,549 1,003,189 - 1,003,189 - 1,003,189 22,000 6,000 16,000 16,000 - 61,559 61,559 - - - 3,350 3,350 - - - 1,249 1,249 - - -
	17,101,020 238,990 16,862,030 2,857,794 14,004,236

Belfast-TeckMag, Emerald Lake, Ontario

The Belfast-TeckMag Project is comprised of multiple properties evolved from the Company’s original Golden Rose Property. In 2017, the Company acquired certain mining leases, staked mining claims and adjacent claim blocks, collectively known as the Golden Rose Property, situated in Afton and Scholes townships at Emerald Lake approximately 65 km northeast of Sudbury, Ontario. A portion of the Golden Rose property comprising unpatented staked claims is subject to a 1.5% net smelter return (“NSR”) in favour of Osisko Gold Royalties Ltd., and the patented claims and leases are subject to a 2% NSR in favour of EnerMark Inc.

In October 2020, through the acquisition of Canadian Continental Exploration Corp. (“CCEC”), the Company acquired the TeckMag Property comprised of a large package of mining claims which surrounds the Golden Rose Property.

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CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

5. MINERAL PROPERTIES – EXPLORATION AND EVALUATION EXPENDITURES (CONTINUED)

In November 2020, the Company acquired the Belfast Property by staking and acquisition of certain mining claim cells adjacent to the TeckMag Property. In addition, certain mining claim cells were purchased in the Belfast area from a third party for $10,000 and the issuance of 100,000 shares of Conquest valued at $18,000 at the date of their issuance. On November 2, 2020, the Board of Directors awarded an incentive bonus to the initiators of the Belfast Property in the form of the grant of a total NSR of 1.5 % on the Belfast Project to certain management of the Company.

In March 2021, Conquest acquired the JPC property in Clement Township, Ontario from a private individual. The Company paid $13,000 cash and issued 250,000 common shares for a 100% interest in the JPC property, which is located to the southeast of the Golden Rose Property, subject to a 1% NSR. Conquest may purchase half of the NSR royalty for $500,000 at any time and holds a Right of First Refusal on the balance of the royalty.

In March 2021, pursuant to a purchase and sale agreement dated March 12, 2021 with Teck Resources Limited (“Teck”), Conquest acquired a 100% interest in the DGC Ni-Cu-PGE property located in Afton Township, Ontario by issuing 1,800,000 common shares to Teck subject to a 2% NSR retained by Teck.

On July 19, 2022, Conquest entered into an agreement granting an option to Atha Energy Corp. (“Atha”) to acquire up to 100% undivided interest in four mineral leases representing a portion of the Golden Rose Property, a segment of the Belfast TeckMag Property. To fully exercise the option, Atha must issue an aggregate of 1,500,000 shares and make cash payments to the total of $1,000,000 to Conquest over a period of 36 months. Atha has also agreed to grant Conquest a 1% NSR on the optioned mineral leases. On August 24, 2022, the company received from Atha the initial cash payment of $100,000 and $10,000 to cover the cost of a technical report on the property optioned. The amount has been recorded as a reduction to the Company’s exploration and evaluation expenses during the year ended December 31, 2022 (note 14).

Alexander Property, Red Lake, Ontario

The Company has earned a 100% interest in the Alexander Property, a group of patented mining claims situated in Balmer Township, Red Lake Mining District, Ontario, subject to a 2% NSR in favour of Energold Minerals Inc. (“Energold”). Energold is controlled by a director of the Company.

Smith Lake Property, Missinabie, Ontario

The Company holds certain patented mining leases and mining claims in the Missinabie area of Northern Ontario, in Leeson, Stover and Rennie Townships, Sault Ste. Marie Mining Division.

King Bay Property, Sturgeon Lake, Ontario

The King Bay property comprises a mining Lease and certain patented mining claims at Sturgeon Lake, in northwestern Ontario.

LNB Property, Lake Nipigon Basin, Ontario

Effective September 22, 2021, Conquest entered into an agreement to purchase 100% of the LNB property that is considered to be prospective for uranium mineralization associated with veins and faults at or near the ArcheanProterozoic unconformity, Ni-Cu-PGE mineralization associated with Proterozoic rift mafic intrusive rocks located at the unconformity south of Black Sturgeon Lake in the Lake Nipigon Basin (the “LNB” property).

Under the terms of the agreement, Conquest can earn 100% interest in the LNB property by issuing 800,000 common shares over the course of four years, subject to a 2% NSR with a buy-back of 1% at any time for $1,000,000. Conquest issued an initial 200,000 shares to the vendor of the property in November 2021 and an additional 200,000 shares in September 2022. The remaining 400,000 shares are to be issued in two tranches, i.e., 200,000 common shares issued on each of the third and fourth anniversaries of the agreement. Conquest has committed to spending $400,000 in exploration costs on the LNB property.

Marr Lake Property, Redhorse Lake, Ontario, Ontario

Effective June 1, 2022, Conquest entered into an option agreement (the “Agreement”) to acquire 100% of the Marr Lake Copper-Nickel-Palladium Group of Elements (“Cu-Ni-PGE”) property (the “Marr Lake” property”). The property is comprised of 87 claims totalling 1,885 hactares, and is prospective for Cu-Ni-PGE and lithium mineralization. Under the terms of the option agreement, Conquest may earn a 100% interest in the Marr Lake Project by making cash payments of $92,000.00 and issuing 940,000 shares over a period of two years. The property is subject to a 2% NSR which the Company has a right to buy back 1% at any time for $1 million.

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CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

6. SHARE CAPITAL

The Company’s authorized share capital consists of an unlimited number of common shares.

The following table summarizes the Company’s share capital transactions for the year ended December 31, 2022 and 2021.

Balance at December 31, 2020 Shares issued to acquire mineral rights Balance at December 31, 2021 Shares issued to acquire mineral rights Balance at December 31, 2022	Number of Shares $
	132,587,106 23,603,978 2,250,000 385,000
	134,837,106 23,988,978 440,000 13,200
	135,277,106 24,002,178

On March 29, 2021, Conquest issued 1,800,000 common shares to Teck Resources Limited pursuant to a purchase and sales agreement to acquire a 100% interest in the DGC Ni-Cu-PGE property. In addition, on the same day, Conquest issued 250,000 common shares to acquire the JPC property in a separate transaction. The DGC Ni-Cu-PGE property and JPC property comprised parts of the Company’s Belfast TeckMag Project (note 5).

On November 11, 2021, Conquest issued an initial 200,000 shares to the vendor of the LNB property pursuant to an agreement dated September 22, 2021 to purchase the LNB Property (note 5).

On July 20, 2022, Conquest issued the initial tranche of 240,000 shares at the value of $0.03 per share, in addition to the initial cash payment of $12,000, pursuant to the option agreement to acquire 100% of the Marr Lake Cu-Ni-PGE property (note 5).

On September 29, 2022, Conquest issued the second tranche of 200,000 shares at the value of $0.03 per share to the vendor of the LNB property pursuant to the agreement to purchase the LNB property dated September 22, 2021 (note 5).

7. WARRANTS

There were no warrants outstanding as at December 31, 2022. The following table summarizes the warrants transactions for the year ended December 31, 2022 and 2021:

Balance at December 31, 2020 Warrants exercised Balance at December 31, 2021 Warrants expired Balance at December 31, 2022	Weighted Number of Average Warrants Exercise Price $
	13,252,632 0.185 (200,000) 0.188
	13,052,632 0.180 (13,052,632) 0.180
	- -

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CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

8. STOCK OPTIONS

The board of directors has approved a stock option plan for directors, officers, management, employees and other persons who perform ongoing services for the Company or any of its subsidiaries. The purpose of the plan is to attract, retain and motivate these parties by providing them with the opportunity, through stock options, to acquire a proprietary interest in the Company and to benefit from its growth.

The maximum number of common shares reserved for issuance upon the exercise of options is not to exceed ten percent of the total number of common shares outstanding immediately prior to such an issuance. The maximum number of common shares reserved for issuance to any one participant upon the exercise of options is not to exceed five percent of the total number of common shares outstanding immediately prior to such an issuance. The options are non-assignable and may be granted for a term not exceeding ten years. The exercise price of the options is fixed by the board of directors at the market price of the shares at the time of grant, subject to all applicable regulatory requirements.

There were nil (2021 – 6,575,000) options granted during year ended December 31, 2022. The total share-based compensation cost arising from vested options during the year ended December 31, 2022 was $240,523 (2021 - $641,569). A total of 1,250,000 (2021 – 2,950,000) options expired unexercised in the year ended December 31, 2022 and the fair value of these expired options of $162,113 (2021 – $394,533) were transferred from the reserve for stock options to deficit.

The following table summarizes the stock option transactions for the years ended December 31, 2022 and 2021:

Balance at December 31, 2020 Stock options issued Stock options expired Stock options cancelled Balance at December 31, 2021 Stock options expired Balance at December 31, 2022	Weighted Number of Average Options Exercise Price $
	6,050,000 0.138 6,575,000 0.186 (2,950,000) 0.150 (50,000) 0.200
	9,625,000 0.167 (1,250,000) 0.158
	8,375,000 0.168

On February 9, 2021, the Company granted 4,175,000 stock options at an exercisable price of $0.20 per share, for a term of five years, all vesting quarterly over a period of two years commencing on April 1, 2021, to directors, officers and consultants. Amongst the total stock options granted, 3,400,000 were awarded to directors and officers of the Company. The total grant date fair value of the options was estimated at $662,961. The estimated fair value was calculated using the Black-Scholes option pricing model with the following assumptions: share price of $0.16, expected dividend yield of 0%; expected volatility of 242%; risk free interest rate of 0.49% and expected life of 5 years.

Also on February 9, 2021, the Company granted 100,000 stock options to a service provider at an exercisable price of $0.20 per share with an expiry date of December 31, 2021, with half of the options vesting immediately and the other half vesting on July 1, 2021. The total grant date fair value of the options was estimated at $8,966. The estimated fair value was calculated using the Black-Scholes option pricing model with the following assumptions: share price of $0.16, expected dividend yield of 0%; expected volatility of 180%; risk free interest rate of 0.12% and expected life of 0.89 year. The 50,000 options vesting on July 1, 2021 were cancelled in May 2021 following the Company’s termination of the optionee’s service. The fair value related to the cancelled options were reversed at the time of their cancellation.

On March 1, 2021, the Company granted 500,000 stock options to a consultant at an exercisable price of $0.20 per share for a term of one year, all vesting immediately. The total grant date fair value of the options was estimated at $35,363. The estimated fair value was calculated using the Black-Scholes option pricing model with the following assumptions: share price of $0.13, expected dividend yield of 0%; expected volatility of 178%; risk free interest rate of 0.19% and expected life of 1 year. These options expired unexercised on March 1, 2022.

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CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

8. STOCK OPTIONS (CONTINUED)

On August 2, 2021, a total of 2,900,000 stock options previously granted to former directors, officers, and consultants of CCEC in August 2020 expired unexercised. On August 19, 2021, the Company granted 1,800,000 stock options to certain former directors, officers and consultants of CCEC at an exercise price of $0.15 per share, for a term of five years, all vesting quarterly over a period of two years commencing on September 1, 2021. The total grant date fair value of the options was estimated at $159,797. The estimated fair value was calculated using the Black-Scholes option pricing model with the following assumptions: share price of $0.09, expected dividend yield of 0%; expected volatility of 228%; risk free interest rate of 0.81% and expected life of 5 years.

The following table summarizes the stock options outstanding as at December 31, 2022:

Exercise Price $	Options Outstanding	Options Exercisable	Expiry date	Remaining Life to Expiry (Years)
0.125	2,400,000	2,400,000	December 31, 2024	2.0
0.150	1,800,000	1,125,000	August 19, 2026	3.6
0.200	4,175,000	3,131,250	February9,2026	3.1
	8,375,000	6,656,250

The options outstanding have a weighted average remaining life of 2.91 years at a weighted average exercise price of $0.168 at December 31, 2022.

9. RELATED PARTY TRANSACTIONS

Transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed.

Other than the granting of stock options, no fees were paid by the Company to its directors for their services as directors of the Company in the years ended December 31, 2022 or 2021.

During the year ended December 31, 2022, a total expense of $276,146 (2021 - $310,702) were charged by related parties, including $180,000 (2021 - $180,000) by Tom J. Obradovich, Director, President and Chief Executive Officer of the Company for management fees; $24,000 (2021 - $24,000) by Energold Minerals Inc., an affiliate of John Kearney, the Chairman of the Company, for executive consulting services; $40,050 (2021 - $71,170) by Intega Advisors, a company controlled by Tong Yin, Chief Financial Officer of the Company for professional services; $ 20,096 (2021 - $33,894) by Janice Malmholt, Secretary of the Company, for corporate secretary services; and $12,000 (2021 - $12,000) for office rent by Buchans Resources Limited, a company with common directors.

Included in accounts payable and accrued liabilities at December 31, 2022 is $20,792 (2021 - $27,593) due to related parties. Such amounts were due on demand, unsecured and non-interest bearing.

10. COMMITMENTS AND CONTINGENCIES

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

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CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

11. INCOME TAXES

(a) Provision for income taxes

Major items causing the Company’s income tax rate to differ from the combined Canadian federal and provincial statutory rate of approximately 26.5% (2021 – 26.5%) were as follows:

(Loss) before income taxes Expected income taxes based on statutory rate Adjustment to expected income tax benefit: Share based compensation Exploration and evaluation expenditures expensed Flow-through renunciation Share issue costs Other Change in benefit of tax assets not recognized Deferred income tax provision (recovery)	2022 $ (842,191)	2021 $ (4,025,771)
	(223,200) 63,700 63,300 - (9,900) 300 105,800 -	(1,066,800) 170,000 - (27,200) (29,500) (1,800) 955,300
		-

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

Non-capital loss carry-forwards Mineral property costs - Canada Mineral property costs - Foreign Capital losses Share issue costs	2022 $ 9,172,500 12,378,500 4,342,100 3,751,100 73,600 29,717,800	2021 $ 8,773,900 12,140,200 4,342,100 3,751,100 110,800
		29,118,100

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

(c) Tax loss carry-forwards

The Company has approximately $10,862,944 (2021 – $10,562,381) of Canadian exploration expenditures which, under certain circumstances, may be utilized to reduce taxable income of future years.

As at December 31, 2022, the Company has approximately $9,172,500 (2021 - $8,773,900) of non-capital losses in Canada, which expire as follows:

$ 2027 1,157,200 2035 2028 1,400 2036 2029 3,700 2037 2030 8,900 2038 2031 2,500 2039 2032 213,400 2040 2033 65,400 2041 2034 219,100 2042	$ 214,000 138,400 313,200 1,176,200 139,900 4,278,300 842,200 398,700
	9,172,500

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CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

12. FINANCIAL INSTRUMENTS

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below. There have been no changes in the risks, objectives, policies, and procedures.

Interest rate risk

The Company has cash balances and no interest-bearing debt. The Company’s current policy is to invest excess cash in investment-grade short-term deposit certificates issued by major Canadian banks. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Credit risk

Credit risk is the risk that a counterparty will be unable to pay amounts owing to the Company. Management’s assessment of the Company’s risk is low as it is primarily attributable to funds held in Canadian banks.

Commodity price risk

The ability of the Company to develop its properties and the future profitability of the Company is directly related to the market price of certain minerals, particularly gold.

Fair value hierarchy and liquidity risk disclosure

The fair value hierarchy has the following levels: (a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); (b) inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (Level 2); and (c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Marketable securities are classified and subsequently measured as Level 1 in the fair value hierarchy. The Company has no financial instruments to classify within the fair value hierarchy at December 31, 2022 and 2021.

The carrying amounts for cash and cash equivalents, accounts payable and accrued liabilities on the consolidated statements of financial position approximate fair value because of the limited term of these instruments.

Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. At December 31, 2022, the Company had cash and cash equivalents of $1,188,794 (2021 - $1,949,588) to settle accounts payable and accrued liabilities of $66,244 (2021 - $335,317), including $20,792 (December 31, 2021 - $27,593) liabilities due to related parties. All the Company’s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

Market risk

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices. The Company does not have significant exposure to market risk at December 31, 2022.

Price volatility of publicly traded securities

Securities of exploration companies have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments in North America and globally, and market perceptions of the relative attractiveness of particular industries. The Company’s share price is also likely to be significantly affected by short-term changes in metal prices or in the Company’s financial condition or results of operations.

Capital risk

The Company manages its capital to ensure that there are adequate capital resources for the Company to maintain and explore its exploration assets. The capital structure of the Company consists of shareholders’ equity.

Sensitivity analysis

Cash is invested in investment-grade short-term deposit certificates. At December 31, 2022, the Company held $1,000,000 (2021 – $1,800,247) in short-term deposit certificates. Based on management’s knowledge and experience in the financial markets, sensitivity to a plus or minus 1% change in rates, based on the current balance of cash at December 31, 2022, would affect the net loss by plus or minus $10,000 (2021 – $18,000) during a one-year period.

As at December 31, 2022 and 2021, the Company did not hold any material balances in foreign currencies that would give rise to exposure to foreign exchange risk.

20

CONQUEST RESOURCES LIMITED Notes to the Consolidated Financial Statements For the years ended December 31, 2022 and 2021 Expressed in Canadian dollars

13. CAPITAL MANAGEMENT

The capital of the Company consists primarily of its shareholders’ equity.

The Company’s objective when managing capital is to maintain adequate levels of funding to support the acquisition, development and exploration of mineral properties and maintain the necessary corporate and administrative functions to facilitate these activities. This is done primarily through equity financing. Future financings are dependent on market conditions and there can be no assurance the Company will be able to raise funds in the future. All equity financings require the approval of the Board of Directors.

The Company invests all capital that is surplus to its immediate operational needs in short term, highly liquid financial instruments, such as short term guaranteed investment certificates, held with a major Canadian financial institution.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

The Company’s capital management objectives, policies and processes have remained unchanged during the year ended December 31, 2022. The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than Policy 2.5 of the TSXV which requires adequate working capital or financial resources of the greater of (i) CDN$50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months.

14. SUBSEQUENT EVENT

Effective on March 31, 2023, upon Atha’s common shares being approved for listing on the Canadian Securities Exchange (the “CSE”), the Company received 200,000 common shares issued by Atha (note 5). The shares were issued as a consideration for the option granted by the Company to Atha to acquire an undivided interest in four mineral leases representing a portion of the Golden Rose Property. The Atha shares commenced trading on the CSE under the trading symbol "SASK" on April 11, 2023. The Company must not sell the Atha shares until July 31, 2023, when a four-month restriction period ends.

21