Discovery Silver Corp. — Interim / Quarterly Report 2022

Nov 23, 2022

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UNAUDITED CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three and nine months ended September 30, 2022 and 2021

(expressed in Canadian dollars)

Discovery Silver Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

			September 30,		December 31,
As at	Notes		2022		2021
ASSETS
Current
Cash and cash equivalents	6	$	55,552,791	$	54,748,652
Short-term investments	6		-		15,000,000
Sales tax and other receivables	7		7,760,442		206,144
Prepaids and deposits	8		306,296		220,203
Investments	9		525,645		1,141,192
			64,145,174		71,316,191
Non-current
Property and Equipment	10		1,610,828		960,850
Value-added taxes receivable	7		2,029,881		2,879,866
Mineralproperties	11		33,422,248		32,633,848
TOTAL ASSETS		$	101,208,131	$	107,790,755
LIABILITIES
Current
Accounts payable and accrued liabilities	12	$	3,277,580	$	1,663,441
Currentportion of lease liabilities	13		102,804		41,089
		$	3,380,384	$	1,704,530
Non-current
Lease liabilities	13		408,537		-
TOTAL LIABILITIES		$	3,788,921	$	1,704,530
SHAREHOLDERS’ EQUITY
Share capital	14(b)	$	165,905,409	$	150,492,379
Contributed surplus			36,337,599		24,095,443
Warrants	14(e)		17,525,093		23,395,976
Accumulated other comprehensive loss			(156,888)		(389,494)
Accumulated deficit			(122,192,003)		(91,508,079)
TOTAL EQUITY		$	97,419,210	$	106,086,225
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	101,208,131	$	107,790,755

Approved on Behalf of the Board on November 23, 2022:

“Jeff Parr” “Murray John” Jeff Parr – Director Murray John – Director

See accompanying notes to the unaudited condensed interim consolidated financial statements

2

Discovery Silver Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND TOTAL COMPREHENSIVE LOSS

Unaudited - (Expressed in Canadian dollars, except per share and share information)

			Three	Three	Months Ended		Nine Months Ended	Nine Months Ended	Nine Months Ended
		September 30,			September 30,	September 30,			September 30,
	Notes		2022		2021		2022		2021
Expenses (income)
General office and other expenses	16	$	1,076,536	$	740,507	$	3,917,873	$	2,373,460
Interest income			(199,453)		(182,191)		(518,792)		(640,975)
Interest expense			193		956		1,125		2,625
Professional fees	17		380,501		202,912		906,969		411,082
Exploration and project evaluation
expenses	15		9,078,504		7,203,426		24,209,221		19,286,934
Share-based compensation	14(c)		1,672,190		1,122,332		7,763,023		5,665,442
Other income			-		-		-		(99,595)
Loss on fair value remeasurement
of investments	9		469,378		90,000		615,547		75,000
Provision for value-added taxes receivable	7(a)		(4,981,936)		(634,669)		(3,277,190)		1,175,072
Foreign exchange(gain)loss			(1,945,749)		209,493		(2,933,852)		118,540
Net loss		$	5,550,164	$	8,752,766	$	30,683,924	$	28,367,587
Other comprehensive(gain)loss		$	(556,187)	$	(13,459)	$	(232,606)	$	106,980
Net loss and total comprehensive
loss		$	4,993,977	$	8,739,307	$	30,451,318	$	28,474,567
Weighted average shares
outstanding
Basic and diluted	14(b)		349,402,721		325,155,725		340,101,973		322,629,505
Net loss per share
Basic and diluted		$	(0.02)	$	(0.03)	$	(0.10)	$	(0.09)

See accompanying notes to the unaudited condensed interim consolidated financial statements

3

Discovery Silver Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

			Three	Three	Months Ended		Nine	Nine	Months Ended
			September 30,		September 30,	September 30,			September 30,
	Notes		2022		2021		2022		2021
Operating Activities
Net loss		$	(5,550,164)	$	(8,752,766)	$	(30,683,924)	$	(28,367,587)
Items not affecting cash:
Depreciation			42,041		96,356		195,650		184,824
Share-based compensation	14(c)		1,672,190		1,122,332		7,763,023		5,665,442
Adjustments to Provision for value- added taxes receivable	7		(4,981,936)		(634,669)		(3,277,190)		1,175,072
Loss on fair value remeasurement	9		469,378		90,000		615,547		75,000
Write-off of mineral property			-		-		267,711		-
Unrealized foreign exchange loss
(gain)			(2,199,316)		76,865		(2,623,062)		83,249
Changes in non-cash operating
working capital:
Sales tax and other receivables	7		(1,847,674)		(2,064,726)		(3,427,124)		(3,566,936)
Prepaids and deposits	8		61,469		30,254		(86,093)		(158,169)
Accounts payable and accrued
liabilities	12		758,273		(72,496)		1,614,140		769,615
Net cash used in operating activities		**$ **	(11,575,739)	$	(10,108,850)	**$ **	(29,641,322)	$	(24,139,490)
Investing Activities
Proceeds from sale of investment			-		-		15,000,000		-
Acquisition of mineral properties	11		-		(5,298,138)		-		(5,298,138)
Acquisition ofpropertyand equipment	10		(139,093)		(137,104)		(338,758)		(432,085)
Net cash from (used in) investing
activities		$	(139,093)	$	(5,435,242)	$	14,661,242	$	(5,730,223)
Financing Activities
Issuance of shares on exercise of
options	14(c)		1,495,000		4,794		1,832,753		551,527
Issuance of shares on exercise of
warrants	14(e)		-		-		12,188,527		19,185,246
Principalpayment on lease liability			(9,912)		(11,752)		(34,003)		(34,911)
Net cash provided (used) by financing
activities		$	1,485,088	$	(6,958)	$	13,987,277	$	19,701,862
Effect of exchange rates on cash and cash
equivalents			2,172,499		233,240		1,796,942		257,439
(Decrease) increase in cash and cash
equivalents			(8,057,245)		(15,317,810)		804,139		(9,910,412)
Cash and cash equivalents, beginning of
period	6		63,610,036		72,955,295		54,748,652		67,547,897
Cash and cash equivalents,
end ofperiod	6	$	55,552,791	$	57,637,485	$	55,552,791	$	57,637,485
Supplemental Cash Flow Information:
Income tax expense paid		$	-	$	-	$	-	$	-
Interestpaid		$	193	$	956	$	1,125	$	2,625

See accompanying notes to the unaudited condensed interim consolidated financial statements

4

Discovery Silver Corp. CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

Notes Number of Common Shares	Share Capital Warrants Contributed Surplus Accumulated Other Comprehensive Loss Accumulated Deficit Total Equity
At January 1, 2022 331,348,433	$ 150,492,379 $ 23,395,976 $ 24,095,443 $ (389,494) $ (91,508,079) $ 106,086,225
Share-based compensation 14c - Shares issued on exercise of options 14c 3,598,333 Shares issued on exercise of warrants 14e 15,869,814 Shares issued on exercise of RSU’s 14e 125,000 Net loss and total comprehensive loss for theperiod -	- - 7,763,023 - - 7,763,023 3,046,704 - (1,213,951) - - 1,832,753 12,188,527 (5,870,883) 5,870,883 - - 12,188,527 177,799 - (177,799) - - - - - - 232,606 (30,683,924) (30,451,318)
At September 30, 2022 350,941,580	$ 165,905,409 $ 17,525,093 $ 36,337,599 $ (156,888) $ (122,192,003 $ 97,419,210
Notes Number of Common Shares Share Capital Warrants Contributed Surplus Accumulated Other Comprehensive Loss Accumulated Deficit Total Equity At January1,2021 305,012,554 $ 125,570,547 $ 26,652,950 $ 14,710,821 $ (351,222) $ (56,041,564) $ 110,541,532 Share-based compensation 14c - - - 5,665,442 - - 5,665,442 Shares issued on exercise of options 14c 1,021,458 849,554 - (298,027) - - 551,527 Shares issued on exercise of warrants 14e 19,121,713 19,185,246 (1,323,029) 1,323,029 - - 19,185,246 Net loss and total comprehensive loss for theyear - - - - (106,980) (28,367,587) (28,474,567) At September 30,2021 325,155,725 $ 145,605,347 $ 25,329,921 $ 21,401,265 $ (458,203) $ (84,409,151) $ 107,469,179
Notes Number of Common Shares	Share Capital Warrants Contributed Surplus Accumulated Other Comprehensive Loss Accumulated Deficit Total Equity
At January1,2021 305,012,554	$ 125,570,547 $ 26,652,950 $ 14,710,821 $ (351,222) $ (56,041,564) $ 110,541,532
Share-based compensation 14c - Shares issued on exercise of options 14c 1,021,458 Shares issued on exercise of warrants 14e 19,121,713 Net loss and total comprehensive loss for theyear -	- - 5,665,442 - - 5,665,442 849,554 - (298,027) - - 551,527 19,185,246 (1,323,029) 1,323,029 - - 19,185,246 - - - (106,980) (28,367,587) (28,474,567)
At September 30,2021 325,155,725	$ 145,605,347 $ 25,329,921 $ 21,401,265 $ (458,203) $ (84,409,151) $ 107,469,179

See accompanying notes to the unaudited condensed interim consolidated financial statements

5

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

1. DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

Discovery Silver Corp. (“Discovery Silver” or the “Company”) is a mineral exploration company whose main objective is to identify and successfully define and develop mineral deposits, primarily in Mexico.

The Company was incorporated on October 10, 1986 under the laws of British Columbia and on June 13, 2017, the Company’s name was changed to Discovery Metals Corp. On April 14, 2021, the Company’s name was changed to Discovery Silver Corp. The Company is listed on the TSX Venture Exchange (the “Exchange” or “TSXV”) under the symbol “DSV”. The Company's head office is located at Suite 701 - 55 University Avenue, Toronto, Ontario, M5J 2H7.

The Company’s Board of Directors authorized the issuance of these unaudited condensed interim consolidated financial statements (the “interim financial statements”) on November 23, 2022.

COVID-19 Update

The Company remains focused on proactively addressing the health and safety risks resulting from the COVID-19 pandemic. The Company’s top priority remains the health and safety of its employees, contractors, vendors, and consultants. To-date, health and safety protocols and the efforts of employees and contractors to manage COVID-19 have been effective and the Company continues to progress the Phase 2 drill program with four diamond core rigs.

2. BASIS OF PREPARATION

These interim financial statements for the three and nine months ended September 30, 2022, and 2021, have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). As such, certain disclosures required by IFRS have been condensed or omitted. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto as at and for the years ended December 31, 2021 and 2020 (the “consolidated financial statements”). The Company’s interim results are not necessarily indicative of its results for a full year.

These interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. At September 30, 2022, the Company had working capital (defined as current assets less current liabilities) of $60,764,790 (December 31, 2021 – $69,611,661), shareholders’ equity of $97,419,210 (December 31, 2021 – $106,086,225) and an accumulated deficit of $122,192,003 (December 31, 2021 – $91,508,079).

6

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted by the Company in the preparation of its interim financial statements are set out below.

a) Basis of Measurement

The interim financial statements have been prepared using the same accounting policies and methods of application as those disclosed in note 3 to the Company’s consolidated financial statements except those disclosed in Note 4 below.

b) Basis of Consolidation

These interim financial statements are presented in Canadian dollars (“CAD”) unless otherwise noted. The interim financial statements include the accounts of the Company and its wholly owned subsidiaries.

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 consolidated from the date control is transferred to the Company and are de-consolidated from the date control ceases. The interim financial statements include all the assets, liabilities, expenses and cash flows of the Company and its subsidiaries after eliminating interentity balances and transactions. The interim financial statements include the financial condition and results of operations of the Company and its subsidiaries as outlined below.

The Company’s principal subsidiaries and their geographic locations as of September 30, 2022, were as follows:

		Ownership
Direct Parent Company	Location	**Percentage **	Properties
Discovery Metals S.A. de C.V.	Mexico	100%(1)	Puerto Rico
Minera Titán S.A. de C.V.	Mexico	100%	Cordero

(1) Discovery Metals S.A. de C.V. has entered into a contractual agreement that includes the option to purchase 100% of the Puerto Rico Property.

All intercompany assets, liabilities, equity, income, expenses, and cash flows arising from intercompany transactions have been eliminated on consolidation.

c) Currency of Presentation

The interim financial statements are presented in Canadian dollars (“CAD”) which is the functional and presentation currency of the Company. The functional currency for the entities through which the Company conducts its operations is determined depending upon the primary economic environment in which they operate. The functional currency of the Mexican subsidiaries is Mexican pesos (“MXP”).

7

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

d) Foreign currency translation

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in foreign currencies are not re-translated. Total foreign exchange gains and losses are recognized in the income statement and the unrealized portion is reported separately in the condensed interim consolidated statement of cash flows. The foreign exchange differences arising from the translation of the subsidiary with functional currency different than the consolidated functional currency are recognized as currency translation adjustments in other comprehensive loss in the condensed interim consolidated statement of loss and total comprehensive loss.

4. ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

The new standards, or amendments to standards and interpretations that were adopted by the Company, effective January 1, 2022, are as follows:

Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

The IASB has published Classification of Liabilities as Current or Non-Current (Amendments to IAS 1) which clarifies the guidance on whether a liability should be classified as either current or non-current. The amendments:

• clarify that the classification of liabilities as current or non-current should only be based on rights that are in place “at the end of the reporting period”;

• clarify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability; and

• make clear that settlement includes transfers to the counterparty of cash, equity instruments, other assets or services that result in extinguishment of the liability.

This amendment is effective for annual periods beginning on or after January 1, 2022. The adoption of this amendment did not have a material impact on the Company’s condensed interim consolidated financial statements.

Property, Plant and Equipment - Proceeds Before Intended Use (Amendments to IAS 16)

The International Accounting Standards Board (IASB) has published ‘Property, plant and equipment ’Proceeds Before Intended Use (Amendments to IAS 16)’ regarding proceeds from selling items produced while bringing an asset into the location and condition necessary for it to be capable of operating in the manner intended by management. Amendment to IAS 16 amends the standard to prohibit deducting from cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the

8

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Unaudited - (Expressed in Canadian dollars, except where otherwise noted) For the Three and Nine Months Ended September 30, 2022 and 2021

manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the cost of producing those items, in profit or loss. Amendment to IAS 16 is effective for annual periods beginning on or after January 1, 2022. The adoption of this amendment did not have a material impact on the Company’s condensed interim consolidated financial statements.

5. CRITICAL JUDGMENTS AND ESTIMATES IN APPLYING ACCOUNTING POLICIES

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments and estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, contingent liabilities, income, and expenses. Actual results could differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and applied prospectively.

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the interim financial statements for the three and nine months ended September 30, 2022, are consistent with those applied and disclosed in note 5 of the annual consolidated financial statements. The Company's interim results are not necessarily indicative of its results for a full year.

6. CASH AND CASH EQUIVALENTS

		September 30,		December 31,
		2022		2021
Cash	$	55,327,791	$	54,638,652
Cash equivalents(a)		225,000		110,000
	$	55,552,791	$	54,748,652

a) Cash Equivalents

Cash equivalents include marketable securities with short-term maturities and no restrictions on redemption.

7. SALES TAX AND OTHER RECEIVABLES

		September 30,		December 31,
		2022		2021
Sales and value-added tax receivable	$	8,942,516	$	3,510,276
Accumulated provision for value-added tax receivable		(1,219,076)		(3,478,644)
Other receivables		37,002		174,512
	$	7,760,442	$	206,144

9

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

a) Value-added tax receivable provision

The Company’s Mexican subsidiaries pay value-added tax, Impuesto al Valor Agregado (“IVA”) on the purchase of goods and services. The amount of IVA paid is recoverable but is subject to review and assessment by the Mexican tax authorities (the “Tax Authorities”). The complex application process can impact the collectability and timing of refunds from the Tax Authorities. As a result, the Company recognizes a provision for 100% of the IVA incurred during a reporting period. Once the IVA return has been prepared and filed with the Tax Authorities, the Company expects to recover the IVA filed in full.

At September 30, 2022, the accumulated provision was fully reversed due to the Company successfully filing all the outstanding IVA returns relating to prior years, previously included in the provision. The cumulative IVA return filed during the quarter has a net value of approximately $7.7 million CAD. The Company has provided the supporting documentation required to substantiate and validate the cumulative IVA claim, has been in frequent communication with the Tax Authorities, and expects to collect the cumulative IVA filing during 2023. However, the Company continued to recognize a provision against the IVA incurred, and not filed, during the period in the amount of $1,219,076.

b) Current and non-current value-added tax receivables

During the last two years the Company has been successful in recovering amounts owed to both of its operating Mexican subsidiaries. Due to the increased confidence in collectability, during 2021 and 2022 the Company has recorded IVA receivables related to IVA returns that are pending review by the Tax Authorities. The Company recorded the portion of the reversal expected to be collected within twelve months as a current asset on the Condensed Interim Consolidated Statement of Financial Position, and a credit to the original provision recognized on the Condensed Interim Consolidated Statements of Loss and Other Comprehensive Loss. The portion of the reversal not expected to be collected within twelve months is recorded as a long-term receivable.

During the three and nine months ended September 30, 2022, the Company collected total IVA refunds of $196,908. This cash received is recognized as a reduction of the non-current IVA receivable balance.

8. PREPAIDS AND DEPOSITS

		September 30,		December 31,
		2022		2021
Insurance	$	205,061	$	107,839
Office and otherprepaid deposits		101,235		112,364
	$	306,296	$	220,203

10

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

9. INVESTMENTS

During 2020 and 2021, as consideration for the sale and transfer of certain non-core properties, the Company received common shares in Talisker Resources Ltd. and Monumental Minerals Corp. At September 30, 2022, the fair value of the investments was $525,645 and is comprised of the following:

Investment in common shares of Talisker Resources Ltd.		Amount
At January1,2022	$	310,000
Net unrealized loss on fair value remeasurement		(200,000)
At September 30, 2022	$	110,000
**Investment in common shares of Monumental Minerals Corp. **		Amount
At January1,2022	$	831,191
Net unrealizedgain on fair value remeasurement		(415,546)
At September 30, 2022	$	415,645

10. PROPERTY AND EQUIPMENT

	Equipment Vehicles Office & Furniture Computer Total
Cost
Balance at January 1, 2022	$ 765,456 $ 268,195 $ 212,635 $ 207,574 $ 1,453,861
Additions Currency translation adjustment	163,430 93,919 517,105 70,874 845,328 7,344 7,340 3,105 3,328 21,117
Balance at September 30, 2022	$ 936,230 $ 369,454 $ 732,845 $ 281,776 $ 2,320,306
Accumulated depreciation
Balance at January 1, 2022	$ (66,985) $ (128,624) $ (177,250) $ (120,152) $ (493,011)
Additions Currency translation adjustment	(65,731) (51,159) (40,219) (38,542) (195,651) (4,200) (7,311) (5,744) (3,560) (20,815)
Balance at September 30, 2022	$ (137,306) $ (186,284) $ (223,213) $ (162,254) $ (709,477)
Carrying amount	Equipment Vehicles Office & Furniture Computer Total
At January1,2022	$ 698,471 $ 139,571 $ 35,385 $ 87,422 $ 960,850
At September 30, 2022	$ 799,314 $ 182,360 $ 509,632 $ 119,522 $ 1,610,828

11

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

						Office &
		Equipment		Vehicles		Furniture		Computer		Total
Cost
Balance at January1,2021	$	262,137	$	247,354	$	211,744	$	146,573	$	867,809
Additions		503,054		25,951		1,502		57,409		587,916
Disposals		-		(7,129)		(651)		-		(7,780)
Currency translation
adjustment		265		2,019		40		3,592		5,916
Balance at December 31,2021	$	765,456	$	268,195	$	212,635	$	207,574	$	1,453,861
Accumulated depreciation
Balance at January1,2021	$	(23,303)	$	(66,389)	$	(125,953)	$	(78,859)	$	(294,504)
Additions		(42,421)		(55,963)		(51,730)		(41,631)		(191,745)
Disposals		-		(4,810)		-		-		(4,810)
Currency translation
adjustment		(1,261)		(1,462)		433		338		(1,952)
Balance at December 31,2021	$	(66,985)	$	(128,624)	$	(177,250)	$	(120,152)	$	(493,011)
						Office &
Carryingamount		Equipment		Vehicles		Furniture		Computer		Total
At January1,2021	$	238,834	$	180,965	$	85,792	$	67,714	$	573,305
At December 31,2021	$	698,471	$	139,571	$	35,385	$	87,422	$	960,850

11. MINERAL PROPERTIES

At January1,2021	$	27,574,270
Acquisition and cancellation of net smelter royalty(1)		5,298,138
Currencytranslation adjustment		(238,560)
At December 31,2021	$	32,633,848
Currency translation adjustment		1,056,111
Disposition of mineralproperties(2)		(267,711)
At September 30, 2022	$	33,422,248

(1) During the year ended December 31, 2021, the Company acquired and cancelled a 2% net smelter royalty payable on production from the Cordero Project.

(2) During the nine months ended September 30, 2022, the option agreements associated with the Minerva, and La Kika properties expired, and were not renewed.

The carrying value of each of the Company’s mineral properties is as follows:

		September 30,		December 31,
		2022		2021
Cordero	$	32,524,362	$	32,524,362
Puerto Rico		856,687		856,687
Minerva		-		174,580
La Kika		-		93,131
		33,381,049		33,648,760
Cumulative Translation Adjustment		41,199		(1,014,912)
	$	33,422,248	$	32,633,848

12

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

		September 30,		December 31,
		2022		2021
Trade and other payables(1)	$	2,470,722	$	554,564
Salaries and benefits payable		699,514		925,769
Accrued liabilities		107,344		183,108
	$	3,277,580	$	1,663,441

(1) At September 30, 2022, trade and other payables were comprised primarily of amounts payable for contract drilling and related services.

13. LEASE LIABILITIES

		September 30,		December 31,
		2022		2021
Lease liabilities	$	511,341	$	41,089
Less: currentportion		102,804		41,089
Non-currentportion	$	408,537	$	-

14. SHARE CAPITAL AND WARRANTS

a) Authorized

• i. Unlimited common shares with no par value; and

• ii. Unlimited preferred voting shares with no par value.

b) Shares issued and outstanding

	Note	Common Shares	Amount
At December 31,2021		331,348,433	$150,492,379
Shares issued on exercise of options	12c	3,598,333	3,046,704
Shares issued on exercise of warrants	12e	15,869,814	12,188,527
Shares issued on exercise of RSU’s	12e	125,000	177,799
At September 30, 2022		350,941,580	$ 165,905,409

c) Stock Options

The Company has adopted rolling 10% stock option plan (the “Option Plan”) which provides that the directors of the Company may grant options to purchase common shares of the Company to directors, officers, employees and service providers, with the number of options being limited to 10% of the issued common shares at the time of granting of options.

The Board in its sole discretion may determine any vesting provisions for options. The exercise price shall be determined by the directors of the Company at the time of grant in accordance with the provisions of the Plan. The expiry date for an option shall not be more than ten years from the grant date.

13

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted) For the Three and Nine Months Ended September 30, 2022 and 2021

There were 8,450,000 stock options granted during the nine months ended September 30, 2022, with a weighted average exercise price of $2.01 and a five-year term to expiry (nine months ended September 30, 2021 – 6,250,000 options granted with a weighted-average exercise price of $1.90 and five-year term to expiry). One third of options granted to management and employees vested immediately, and 1/3[rd] will vest on each subsequent anniversary of grant date. One half of the options granted to Directors of the Company vested immediately, and the other half will vest on the subsequent anniversary. Options issued to consultants have a vesting schedule of 1/8[th] each quarter beginning three months after grant date.

Option transactions and the number of options outstanding are summarized as follows:

		Weighted Average	Weighted Average
	Outstanding		Exercise Price
At January1,2021	13,559,808	$	0.52
Optionsgranted	6,450,000		1.90
Options exercised	(1,830,833)		0.57
At December 31,2021	18,178,975	$	1.01
Optionsgranted	8,450,000		2.01
Options exercised	(3,598,333)		0.53
Options forfeited	(150,000)		2.05
At September 30, 2022	22,880,642	$	1.45

The non-cash share-based compensation expense for the three and nine months ended September 30, 2022, was $1,672,190 and $7,763,023, respectively (three and nine months ended September 30, 2021 - $1,122,332 and $5,665,442, respectively).

As at September 30, 2022, the options outstanding and exercisable are as follows:

	Options Outstanding	Options Exercisable
Exercise Price	Number Weighted average remaining life Weighted average exerciseprice	Number Weighted average remaining life Weighted average exerciseprice
$0.48 $0.53 $0.50 $0.48 $0.65 $0.47 $1.84 $1.89 $1.85 $2.08 $2.06 $1.77 $2.05 $1.93 $1.76 $1.38	300,000 0.13 $0.48 300,000 0.27 $0.53 372,100 0.77 $0.50 2,843,750 1.88 $0.48 360,000 2.27 $0.65 3,801,250 2.58 $0.47 200,000 3.04 $1.84 5,496,875 3.29 $1.89 206,667 3.34 $1.85 300,000 3.45 $2.08 200,000 3.79 $2.06 200,000 4.09 $1.77 6,800,000 4.27 $2.05 1,000,000 4.45 $1.93 400,000 4.53 $1.76 100,000 4.65 $1.38	300,000 0.13 $0.48 300,000 0.27 $0.53 372,100 0.77 $0.50 2,843,750 1.88 $0.48 360,000 2.27 $0.65 3,801,250 2.58 $0.47 133,333 3.04 $1.84 4,471,875 3.29 $1.89 123,334 3.34 $1.85 300,000 3.45 $2.08 66,667 3.79 $2.06 66,667 4.09 $1.77 2,629,167 4.27 $2.05 0 4.45 $1.93 200,000 4.53 $1.76 33,333 4.65 $1.38
	22,880,642 2.10 $1.45	16,001,476 2.22 $1.22

14

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

The fair value of the option grants issued during the three and nine months ended September 30, 2022, have been estimated using the Black-Scholes option-pricing model with the following assumptions:

Grant date	January 5, 2022		March 14, 2022		April 11, 2022
Numbergranted	6,950,000		1,000,000		400,000
Exercise price	2.05	$	1.93	$	1.76
Share price	2.05	$	1.93	$	1.76
Expected life (years)	3.32		4.23		2.84
Risk free interest rate	1.18%		1.87%		2.43%
Expected volatility	93.0%		90.5%		92.0%
Expected forfeiture rate	5.4%		4.9%		5.3%
Dividendyield	-		-		-
Fair Value	1.24	$	1.27	$	1.01

Black-Scholes pricing models require the input of highly subjective assumptions. Volatility was estimated based on average daily volatility based on historical share price observations over the expected term of the option grant.

d) Deferred Share Units and Restricted Share Units

At the Company’s Annual General Meeting held on June 25, 2022, shareholders of the Company reapproved the Company’s Deferred Share Unit (“DSU”) and Restricted Share Unit (“RSU”) plans (together referred to as the “DSU and RSU Plans”). The DSU and RSU Plans are rolling 10% plans, with the 10% threshold being shared with the Option Plan so the combined aggregate total Options, DSUs and RSUs granted cannot exceed 10% of the issued and outstanding common shares of the Company.

The DSU Plan provides that the directors of the Company may grant DSUs to non-executive directors of the Company, to be settled in cash or the purchase of common shares of the Company. The RSU Plan provides that the directors of the Company may grant RSUs to eligible officers, employees, and service providers, to be settled in cash or the purchase of common shares of the Company.

The Board in its sole discretion may determine any vesting provisions for DSUs and RSUs. The exercise price shall be determined by the directors of the Company at the time of grant in accordance with the provisions of the Plan. The expiry date for DSUs or RSUs shall not be more than ten years from the grant date.

There were no DSUs granted, 250,000 RSUs granted, and 125,000 RSUs redeemed during the nine months ended September 30, 2022, and no DSU’s or RSU’s granted during the nine months ended September 30, 2021.

e) Warrants

The Company has issued warrants as part of certain subscription agreements and also as finders’ fees for certain non-brokered private placements which closed in 2017, 2019 and 2020. The warrants

15

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

are exchangeable for Common Shares of the Company at a ratio and an exercise price determined at the time of the individual private placement. Warrants are classified as equity, separately from common shares and are valued at their fair value on grant date using the Black-Scholes pricing model. There were no warrants issued during the three and nine months ended September 30, 2022.

Warrant transactions and the number of warrants outstanding at September 30, 2022 are summarized as follows:

Issue date	5/29/2020	6/8/2020	5/29/2020	6/8/2020	8/6/2020
Expiry	5/29/2022	6/8/2022	5/29/2022	6/8/2022	8/6/2022
Price	$0.77	$0.77	$0.55	$0.55	$1.75	TOTAL
December 31,2021	13,480,330	2,181,800	146,318	65,455	12,499,500	28,373,403
Exercised	(13,480,330)	(2,181,800)	(146,318)	(65,455)	-	(15,873,903)
Expired	-	-	-	-	(12,499,500)	(12,499,500)
September 30, 2022	-	-	-	-	-	-

15. EXPLORATION AND PROJECT EVALUATION

						Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2022	Nine Months Ended September 30, 2022
	Puerto Rico			La Kika		Minerva		Monclova		Cordero		Other		Total
Permitting	$	-	$	-	$	-	$	-	$	483,731	$	-	$	483,731
Mining duties		66,866		30,109		9,439		22,259		546,986		859		676,518
Surface access		-		-		-		-		273,170		-		273,170
Site access		-		-		-		-		5,674		-		5,674
Drilling		-		-		-		-		11,622,276		-		11,622,276
Mapping, Sampling & Assays		-		-		-		-		3,905,604		-		3,905,604
Geophysics		-		-		-		-		253,950		-		253,950
Salaries and benefits		9,684		-		3,235		3,235		2,409,741		-		2,425,895
Travel		6,054		-		-		-		513,270		-		519,324
Administrative and other		14,564		-		43,866				1,417,121		-		1,475,551
Project Evaluation		-		-		-		-		2,567,528		-		2,567,528
Total	$	97,168	$	30,109	$	56,540	$	25,494	$	23,999,051	$	859	$	24,209,221

16

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

						Nine Months Ended September 30,2021	Nine Months Ended September 30,2021	Nine Months Ended September 30,2021	Nine Months Ended September 30,2021	Nine Months Ended September 30,2021
	Puerto Rico			La Kika		Minerva		Monclova		Cordero		Other		Total
Permitting	$	-	$	-	$	-	$	-	$	678,177	$	-	$	678,177
Mining duties		44,945		7,155		12,309		29,146		359,761		6,958		460,275
Surface access		-		-		-		-		-		-		-
Site access		-		-		-		-		6,540		-		6,540
Drilling		-		-		-		-		13,601,526		-		13,601,526
Mapping, Sampling & Assays		-		-		-		-		821,712		-		821,712
Geophysics		-		-		-		-		12,331		-		12,331
Salaries and benefits		20,008		-		13,645		13,464		1,853,692		-		1,900,811
Travel		6,344		-		-		-		107,095		-		113,439
Administrative and other		19,352		-		31,853		2,588		1,293,435		-		1,347,229
Project Evaluation		-		-		-		-		344,895		-		344,895
Total	$	90,650	$	7,155	$	57,807	$	45,200	$	19,079,164	$	6,958	$	19,286,934

						Three Months Ended September 30, 2022	Three Months Ended September 30, 2022	Three Months Ended September 30, 2022	Three Months Ended September 30, 2022	Three Months Ended September 30, 2022
	Puerto Rico			La Kika		Minerva		Monclova		Cordero	Project	Eval		Total
Permitting	$	-	$	-	$	-	$	-	$	8,539	$	-	$	8,539
Mining duties		32,600		-		-		-		295,891		-		328,491
Surface access		-		-		-		-		14,020		-		14,020
Site access		-		-		-		-		97,197		-		97,197
Drilling		-		-		-		-		3,638,896		-		3,638,896
Mapping, Sampling & Assays		-		-		-		-		1,660,192		-		1,660,192
Geophysics		-		-		-		-		202,237		-		202,237
Salaries and benefits		6,449		-		-		-		755,528		-		761,977
Travel		3,662		-		-		-		192,091		-		195,753
Administrative and other		10,447		-		-				979,702		-		990,149
Project Evaluation		-		-		-		-		1,278,250		-		1,278,250
Total	$	53,158	$	-	$	-	$	-	$	9,025,346	$	-	$	9,078,504

						Three	Months Ended September 30,2021	Months Ended September 30,2021	Months Ended September 30,2021	Months Ended September 30,2021
	Puerto Rico			La Kika		Minerva		Monclova		Cordero		Other		Total
Permitting	$	-	$	-	$	-	$	-	$	136,888	$	-	$	136,888
Mining duties		18,226		2,906		4,974		11,839		146,462		2,755		187,163
Surface access		-		-		-		-		-		-		-
Site access		-		-		-		-		-		-		-
Drilling		-		-		-		-		5,895,164		-		5,895,164
Mapping, Sampling & Assays		-		-		-		-		39,154		-		39,154
Geophysics		-		-		-		-		12,331		-		12,331
Salaries and benefits		3,019		-		3,019		3,019		420,533		-		429,590
Travel		1,006		-		-		-		32,179		-		33,185
Administrative and other		11,323		-		-		455		428,043		-		439,820
Project Evaluation		-		-		-		-		30,132		-		30,132
Total	$	33,574	$	2,906	$	7,993	$	15,313	$	7,140,886	$	2,755	$	7,203,426

17

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

16. GENERAL OFFICE AND OTHER EXPENSES

		Three	Months Ended	Months Ended		Nine	Months Ended	Months Ended
			September 30,				September 30,
		2022		2021		2022		2021
Travel	$	66,629	$	14,455	$	182,132	$	31,796
Salaries and benefits		652,215		398,914		2,115,909		1,158,544
Shareholder communication and
investor relations		67,930		71,895		311,993		227,586
Filing and transfer agent fees		22,523		34,563		296,311		198,070
Business development		-		281		1,955		2,131
Rent		16,195		10,265		54,228		41,968
Depreciation		15,850		27,017		48,881		74,212
General office,insurance and other		235,194		183,117		906,464		639,153
	$	1,076,536	$	740,507	$	3,917,873	$	2,373,460

17. PROFESSIONAL FEES

		Three	Months Ended	Months Ended		Nine	Months Ended	Months Ended
			September 30,				September 30,
		2022		2021		2022		2021
Legal	$	66,787	$	45,729	$	175,804	$	138,310
Audit, tax and accounting		23,242		42,862		118,615		99,426
Consultingand other		290,472		114,321		612,550		173,346
	$	380,501	$	202,912	$	906,969	$	411,082

18. INCOME TAXES

		Three	Months Ended	Months Ended		Nine Months	Ended	September
			September 30,					30,
		2022		2021		2022		2021
Loss before tax at statutory rate of 28%
(2021 – 28%)	$	1,398,313	$	2,447,006	$	8,526,369	$	7,982,399
Effect on taxes of:
Non-deductible expenses		(468,791)		(314,876)		(2,177,741)		(1,587,175)
Change in deductible temporary
differences		(929,522)		(2,132,130)		(6,348,628)		(6,395,224)
Income tax expense	$	-	$	-	$	-	$	-

18

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

19. CAPITAL MANAGEMENT

The Company defines capital as its shareholder’s equity (comprised of issued share capital, contributed surplus and deficit). The Company’s objectives when managing capital are to support the Company’s main activities of identifying, defining, and developing mineral deposits, with the goal of creating shareholder value, as well ensuring that the Company will be able to meet its financial obligations as they become due.

The Company manages its capital structure to maximize its financial flexibility to enable the Company to respond to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. 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 current excess funds realized from the non-brokered private placements are invested in highly liquid, interestbearing marketable securities with no restrictions on redemption.

At September 30, 2022, the Company does not have any long-term debt outstanding and is not subject to any externally imposed capital requirements or debt covenants. There was no change to the Company’s approach to capital management during the three and nine months ended September 30, 2022.

20. FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, short term investments, other receivable and deposits, investments in marketable securities, accounts payable and accrued liabilities and lease liabilities.

Cash and cash equivalents, short-term investments, accounts receivable and deposits are classified as receivables and are measured at amortized cost using the effective interest method. Investments in marketable securities are classified as receivables and are measured at fair value through profit and loss. Accounts payable and accrued liabilities are classified as other financial liabilities and are measured at amortized cost. These financial instruments approximate their fair value due to their short-term nature.

The fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Financial instruments are classified into one of three levels in the fair value hierarchy according to the degree to which the inputs used in the fair value measurement are observable.

• Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;

• Level 2: Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

• Level 3: Inputs that are not based on observable market data.

At September 30, 2022 the Company had no financial instruments classified as Level 2 or 3.

19

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted) For the Three and Nine Months Ended September 30, 2022 and 2021

21. FINANCIAL RISK MANAGEMENT

The Company is exposed to financial risks, including credit risk, liquidity risk, currency risk, interest rate risk and price risk. The aim of the Company’s overall risk management strategy is to reduce the potential adverse effect that these risks may have on the Company’s financial position and results. The Company’s Board of Directors has overall responsibility and oversight of management’s risk management practices. Risk management is carried out by the Board through the Nominating and Corporate Governance Committee with the policies being recommended for approval by the Board of Directors at least annually or when changes are required.

a) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. At September 30, 2022, the Company had a cash and cash equivalents balance of $55,552,791 (December 31, 2021 – $54,748,652) to settle current liabilities of $3,380,384 (December 31, 2021 – $1,704,530). The Company’s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

At September 30, 2022, the Company has no sources of revenue to fund its operating expenditures. Since inception the Company has relied solely on private placements to fund its operations. Management believes these financings will fund the Company’s continued exploration work on the properties in both Coahuila and Chihuahua, Mexico as well as the existing administrative needs. The Company may require additional financing to accomplish long-term strategic objectives. Future funding may be obtained by means of an equity or debt financing. At September 30, 2022, the Company is currently exposed to a low level of liquidity risk.

b) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to fulfill an obligation and cause the other party to incur a financial loss. The Company’s cash and cash equivalents, short-term investments, accounts receivable and prepaids and deposits are exposed to credit risk. The Company has assessed the credit risk on its cash and cash equivalents and short-term investments as low as its funds are held in several highly rated Canadian financial institutions. Management deems the credit risk associated with other receivables and deposits to be at an acceptable level. The Company’s maximum exposure to credit risk related to certain financial instruments as identified below, approximates the carrying value of these assets on the Company’s consolidated statements of financial position.

		September 30,		December 31,
		2022		2021
Cash and cash equivalents	$	55,552,791	$	54,748,652
Short-term investments		-		15,000,000
Other receivables		37,001		174,511
Deposits		101,235		112,364
	$	55,691,027	$	70,035,527

20

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS Unaudited - (Expressed in Canadian dollars, except where otherwise noted) For the Three and Nine Months Ended September 30, 2022 and 2021

c) Market Risks

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and equity prices.

i. Interest rate risk

The Company has significant cash balances and no interest-bearing debt. The Company’s current policy is to invest excess cash in high-yield savings accounts or other highly liquid interest-bearing short-term investments. The Company regularly monitors its cash management policy. Management has determined interest rate risk to be low.

ii. Foreign currency risk

The Company’s functional currency is the Canadian dollar. At September 30, 2022, cash balances were held primarily in Canadian and US dollars. Foreign currency risk is the risk that the value of the Company’s financial instruments denominated in foreign currencies will fluctuate due to changes in foreign exchange rates. Changes in the exchange rate between foreign currencies and the Canadian dollar could have a significant impact on the Company’s financial position, results of operations, and cash flows. The Company does not currently use derivative instruments to reduce its exposure to foreign currency risk, however exchange rates are continually monitored for any significant changes. A portion of the Company’s exploration expenses are paid in USD and in order to reduce its currency risk related to the CAD, the Company has converted a portion of its CAD cash balances into USD.

The Company is mainly exposed to foreign currency risk on financial instruments (consisting of trade payables) denominated in USD and MXP.

At September 30, 2022 and December 31, 2021, the Company had the following foreign currency denominated trade payables:

		September 30,		December 31,
		2022		2021
United States dollar	$	100,337	$	165,803
Mexican Peso		1,050,203		226,833
	$	1,150,540	$	392,636

It is estimated that a 10% fluctuation in the United States Dollar and Mexican Peso against the Canadian Dollar would affect net loss at September 30, 2022 by approximately $95,466 (December 31, 2021: $38,778).

At September 30, 2022, management has determined the Company’s exposure to foreign currency risk to be at an acceptable level.

21

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

• iii. Price risk

The Company is exposed to price risk with respect to commodity prices and prices of equity securities. Equity security price risk is defined as the potential adverse impact on the Company’s net income or loss due to movements in individual prices of equity securities or price movements in the stock market generally. Commodity price risk is defined as the potential adverse impact on net income or loss and economic value due to commodity price movement and volatility. The Company closely monitors commodity prices, particularly as they relate to base and precious metals, and movements in the price of individual equity securities, and movements in the stock market generally, to assist in determining the appropriate course of action to be taken by the Company.

At September 30, 2022, Management has determined the Company’s exposure to price risk to be at an acceptable level.

22. SEGMENTED INFORMATION

Operating segments are components of an entity whose operating results are regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance and for which separate financial information is available.

The Company has one operating segment, which is involved in the exploration and development of polymetallic mineral deposits. All of the Company’s mineral properties are located in Mexico.

Segment performance is evaluated based on several operating and financial measures, including net loss and total comprehensive loss, which is measured consistently with net loss and total comprehensive loss in the interim condensed consolidated financial statements.

The net loss and total comprehensive loss are distributed by geographic region as follows:

		Three Months Ended	Three Months Ended	Three Months Ended		Nine	Months Ended	Months Ended
			September 30,				September 30,
		2022		2021		2022		2021
Canada	$	(1,813,046)	$	(1,928,711)	$	(9,814,725)	$	(7,296,455)
Mexico		(3,180,931)		(6,810,596)		(20,636,593)		(21,178,112
Net loss and total comprehensive
loss	$	(4,993,977)	$	(8,739,307)	**$ **	(30,451,318)	$	(28,474,567

22

Discovery Silver Corp. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - (Expressed in Canadian dollars, except where otherwise noted)

For the Three and Nine Months Ended September 30, 2022 and 2021

23. RELATED PARTY TRANSACTIONS

a) Key management personnel

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as well as those personnel with responsibility for the oversight of the Company’s activities. The Company has determined that key management personnel consist of executive and non-executive members of the Company’s Board of Directors and corporate officers. There were no amounts due to related parties as at September 30, 2022.

Related party transactions for the three and nine months ended September 30, 2022 and 2021 are as follows:

		Three	Months Ended	September 30,	September 30,
**Transaction Type **	Nature of Relationship		2022		2021
Non-cash share-based payments	Directors and officers	$	1,170,533	$	660,000
Salaries and benefits	Officers		422,500		217,500
Director’s fees	Directors		81,250		91,250
		$	1,674,283	$	968,750
		Nine	Months Ended	September 30,
**Transaction Type **	Nature of Relationship		2022		2021
Non-cash share-based payments	Directors and officers	$	6,374,651	$	4,442,456
Salaries and benefits	Officers		1,087,000		652,500
Director’s fees	Directors		243,750		273,750
		$	7,705,401	$	5,368,706

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