Doubleview Gold Corp. — Interim / Quarterly Report 2021

Jan 29, 2021

DOUBLEVIEW GOLD CORP. (formerly "Doubleview Capital Corp.") (An Exploration Company)

FINANCIAL STATEMENTS (Expressed in Canadian dollars)

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2020

These Financial Statements have been prepared in accordance with International Financial Reporting Standards. WE HEREBY GIVE NOTICE that our condensed interim financial statements for the nine month period ended November 30, 2020 which follow this notice have not been reviewed by an auditor.

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION

(UNAUDITED – PREPARED BY MANAGEMENT, EXPRESSED IN CANADIAN DOLLARS)

AS AT NOVEMBER 30, 2020 AND FEBRUARY 29, 2020

	November 30, 2020		February 29, 2020
			(Audited)
ASSETS
Current
Cash and cash equivelants	\$ 3,212,529	\$	459,154
Amounts receivable (Note 3)	159,277		42,305
Marketable securities (Note 4)	50,000		50,000
Total current assets	3,421,806		551,459
Non-current
Exploration and evaluation assets (Note 9)	6,395,525		5,423,123
Reclamation bond	101,750		74,500
Office Equipment (Note 5)	1,479		858
Total non-current assets	6,498,754		5,498,481
Total assets	\$ 9,920,560 \$		6,049,940
LIABILITIES
Current
Accounts payable and accrued liabilities (Note 6)	\$ 170,873	\$	481,797
Flow through share liability	540,742		-
Total current liabilities	711,615		481,797
Non-current
Restoration obligation (Note 10)	76,979		76,979
Total liabilities	788,594		558,776
EQUITY
Share Capital (Note 7)	12,913,750		9,165,240
Reserves (Note 7)	2,712,077		2,095,813
Deficit	(6,493,861)		(5,769,889)
	9,131,966		5,491,164
Total liabilities and equity	\$ 9,920,560 \$		6,049,940

Approved and authorized by the Board on January 29, 2021:

"Farshad Shirvani"	Director	"Andrew Rees"	Director
Farshad Shirvani		Andrew Rees

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

CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED – PREPARED BY MANAGEMENT, EXPRESSED IN CANADIAN DOLLARS) FOR THE NINE MONTHS ENDED NOVEMBER 30, 2020

	Three Months ended November 30,			Nine Months ended November 30,
		2020		2019		2020		2019
Expenses
Amortization (Note 5)	\$	304	\$	405	\$	1,024	\$	1,215
Consulting fees		86,775		5,200		152,149		17,800
Director's fees (Note 8)		30,000		30,000		90,000		90,000
Corporate development		18,953		3,235		50,861		4,594
Office and administrative		17,854		4,567		24,092		6,726
Professional fees		7,050		4,058		26,583		12,059
Rent (Note 8)		5,400		4,500		16,200		13,500
Stock based compensation (Note 7)		485,378		-		609,529		180,022
Transfer agent & filing fees		24,093		(142)		32,332		16,134
		675,807		51,823		1,002,770		342,050
Other items
Flow-through share premium (Note 6)		(278,798)		(117,721)		(278,798)		(117,721)
Net (income) loss for the period	\$	397,009	\$	(65,898)	\$	723,972	\$	224,329
Loss per common share - basic and diluted	\$	0.00	\$	(0.00)	\$	0.01	\$	0.00
Weighted average number of common
shares outstanding - basic and diluted		127,106,264		108,070,922		117,693,752		107,936,248

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

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED – PREPARED BY MANAGEMENT, EXPRESSED IN CANADIAN DOLLARS)

FOR THE NINE MONTHS ENDED NOVEMBER 30, 2020

	Share Capital		Obligation
	No. of		to issue
	Shares	Amount	shares	Reserves	Deficit	Total
Balance February 28, 2019	107,210,920	\$8,597,713 -		\$1,810,163 \$	(5,371,720)	\$5,036,156
Shares issued for private placement	3,000,000	300,000	-	-	-	300,000
Proceeeds frpm share subscription	-	-	65,000	-	-	65,000
Shares issued for stock options	860,000	166,527	-	(77,127)	-	89,400
Stock based compensation (Note 7)	-	-	-	180,022	-	180,022
Loss for the period	-	-	-	-	(224,329)	(224,329)
Balance November 30, 2019	111,070,920	9,064,240	65,000	1,913,058	(5,596,049)	5,446,249
Shares issued for private placement	1,460,000	101,000	(65,000)	77,581	-	113,581
Stock based compensation (Note 7)	-	-	-	105,174	-	105,174
Loss for the period	-	-	-	-	(173,840)	(173,840)
Balance February 29, 2020	112,530,920	9,165,240	-	2,095,813	(5,769,889)	5,491,164
Shares issued for private placement	16,775,180	3,690,540	-	-	-	3,690,540
Shares issued for stock options	725,000	134,114	-	(59,614)	-	74,500
Shares issued for warrants	1,000,000	100,000	-	-	-	100,000
Share issuance costs	-	(109,795)	-	-	-	(109,795)
Finders warrants	-	(66,349)	-	66,349	-	-
Stock based compensation (Note 7)	-	-	-	609,529	-	609,529
Loss for the period	-	-	-	-	(723,972)	(723,972)
Balance November 30, 2020	131,031,100	\$12,913,750	\$0	\$2,712,077 \$	(6,493,861)	\$9,131,966

CONDENSED INTERIM STATEMENTS OF CASH FLOWS (UNAUDITED – PREPARED BY MANAGEMENT, EXPRESSED IN CANADIAN DOLLARS) FOR THE NINE MONTHS ENDED NOVEMBER 30, 2020

	2020	2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period	\$ (723,972) \$	(224,329)
Items not affecting cash
Amortization	1,024	1,215
Interest	-	-
Stock based compensation	609,529	180,022
Flow-through share premium	(278,798)	(117,721)
Changes in non-cash working capital items:
Prepaid expenses	-	-
Accounts receivable	(116,971)	(41,652)
Accounts payable and accrued liabilities	(310,923)	(12,002)
Net cash used in operating activities	(820,111)	(214,467)
CASH FLOWS FROM FINANCING ACTIVITES
Proceeds from share issuance, net	4,574,783	604,399
Net cash from financing activities	4,574,783	604,399
CASH FLOWS FOR INVESTING ACTIVIES
(Increase) decrease in reclamation bonds	(27,250)
Purchase of office equipment	(1,645)	-
Expenditure on exploration and evaluation assets, net of recoveries	(972,402)	221,102
Net cash used for investing activities	(1,001,297)	221,102
	2,753,375	611,034
Net increase (decrease) in cash during the period
Cash, beginning of period	459,154	54,928
Cash, end of period	\$3,212,529	\$665,962

1. CORPORATE INFORMATION AND GOING CONCERN

Doubleview Gold Corp. (formerly Doubleview Capital Corp.) (the "Company") was incorporated under the Business Corporations Act on January 18, 2008 pursuant to the Business Corporation Act of British Columbia. The Company is engaged in the exploration and development of mineral properties in North America and has not yet determined whether its properties contain ore reserves that are economically recoverable. The Company trades on the TSX Venture Exchange ("TSX-V"). On May 8, 2020, the Company changed its name from Doubleview Capital Corp. to Doubleview Gold Corp. under the symbol "DBG".

The head office and principal address of the Company is 822-470 Granville Street, Vancouver, British Columbia, Canada V6C 1V5. The Company's registered address and records office is Suite 704-595 Howe Street, Vancouver, British Columbia, V6C 2T5.

These financial statements have been prepared by management 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 for the foreseeable future. The Company has not generated any revenues to date and has incurred ongoing losses.

As the Company is in the exploration stage, the recoverability of the costs incurred to date on exploration and evaluation assets is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties and deferred exploration expenditures. The Company will have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future. As at November 30, 2020, the Company has cash and cash equivalents of \$3,212,529 (February 29, 2020- \$459,154) on hand and working capital of \$2,710,191 (February 29, 2020– \$69,662). For the nine months ended November 30, 2020 and the year ended February 29, 2020, the Company incurred net losses of \$723,972 and \$398,169, respectively. These uncertainties may cast significant doubt about the Company's ability to continue as a going concern. A number of alternatives including, but not limited to selling an interest in its exploration and evaluation assets or completing a financing, are being evaluated with the goal of funding ongoing activities and obtaining additional working capital. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the going concern basis of accounting be inappropriate. These adjustments could be material.

2. BASIS OF PREPARATION

a) Statement of Compliance

These condensed interim financial statements for the nine months ended November 30, 2020, have been prepared in accordance with IAS 34, 'Interim Financial Reporting'. The condensed interim consolidated financial information should be read in conjunction with the annual financial statements for the year ended February 29, 2020, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

These unaudited condensed interim financial statements have been prepared using accounting policies consistent with those used in the Company's annual financial statements for the year ended February 29, 2020.

The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported expenses during the period. Actual results could differ from these estimates.

2. BASIS OF PREPARATION (cont'd…)

These condensed interim financial statements were authorized for issue by the Audit Committee and Board of Directors on January 29, 2021.

b) Basis of Measurement

These condensed interim financial statements have been prepared on a historical costs basis except for financial instruments classified as financial instruments at fair value through profit or loss, which are stated at their fair value. In addition, this financial statement has been prepared using the accrual basis of accounting.

These condensed interim financial statements are presented in Canadian dollars, which is the Company's functional currency.

The preparation of these condensed interim financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the period. Actual results could differ from these estimates.

3. ACCOUNTS RECEIVABLE

The Company's accounts receivable consists of the following:

	November 30,			February 29,
		2020	2020
GST receivable	\$	75,264	\$	27,099
Advance to drilling company		37,692		-
Due from related parties (Note 8)		46,321		15,206
Total	\$	159,277	\$	42,305

4. MARKETABLE SECURITIES

Marketable securities consist of investment in 500,000 (February 29, 2020 – 500.000) common shares of Mucho Cobre Resources Ltd. ("Mucho Cobre"). The fair value of the marketable securities has been determined by reference to Mucho Cobre's most recent equity financing, a Level 2 valuation of the fair value hierarchy. The fair value on initial recognition during the year ended February 29, 2020 was \$0.10 per share for a fair value of \$50,000. No amounts for unrealized gain/loss have been recorded during the six months ended August 31, 2020 as \$0.10 per share remains the estimated fair value of the shares as at August 31, 2020.

	November 30,	February 29,
	2020	2020
Mucho Cobre Resource Ltd.	\$ 50,000 \$	50,000

5. EQUIPMENT

Equipment is comprised of the following:

	November 30, 2020		February 29, 2020
Cost	\$	8,927	\$	7,282
Accumulated amortization		(7,448)		(6,424)
Total	\$	1,479	\$	858

Amortization of \$1.024 (2019 - \$1,215) was charged during the nine months ended November 30, 2020.

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The Company's accounts payable and accrued liabilities consist of the following:

	November 30,		February 29,
	2020		2020
Accounts payable	\$	161,834	\$	337,952
Due to related parties (Note 8)		9,039		123,845
Accrued liabilities		-		20,000
Total		\$ 170,873		\$ 481,797

7. SHARE CAPITAL

• a) The authorized share capital of the Company consists of an unlimited number of common shares without par value and unlimited preferred shares without par value.
• b) Issued and outstanding common shares:

The Company issued 1,460,000 units on December 30, 2019 for total proceeds of \$146,000. Each unit was comprised of one common share and one share purchase warrant, with each warrant exercisable to purchase one additional common share at \$0.15 per common share for a period of 2 years. No value is assigned to the warrants.

The Company issued a further 860,000 common shares in March 2019 and May 2019 for the exercise of stock options generating gross proceeds of \$89,400.

The Company issued 3,000,000 flow-through units on September 20, 2019 for total proceeds of \$450,000. On issuance, the Company bifurcated the flow-through shares into i) share capital of \$255,000; ii) warrants of \$77,581 and; iiI) a flow-through share premium of \$117,419 that investors pay for the flow-through feature, which is recognized as a liability. The flow-through share liability was reduced by \$117,419 as the Company expended the \$450,000 on eligible exploration expenditures during the year ended February 29, 2020. Each unit was comprised of one common share and one share purchase warrant, with each warrant exercisable to purchase one additional common share at \$0.15 per common share for a period of 2 years. The warrants are subject of accelerated expiry of 30 days, such that if at any time the average close price of the Company's common share is equal to, or a greater than, \$0.25 for 5 consecutive trading days at any time after 4 months of closing.

7. SHARE CAPITAL (cont'd…)

In August 2020, the Company issued 6,173,909 units at \$0.22 per unit and 2,844,906 flow-through units at \$0.33 per flow-through unit for total proceeds of \$2,297,079. Each unit was comprised of one common share and one share purchase warrant, with each warrant exercisable to purchase one additional common share at \$0.40 per common share for a period of 2 years. Each flow-through unit was comprised of one common share and one half of one share purchase warrant, with each warrant exercisable to purchase one additional common share at \$0.40 per common share for a period of 2 years. On issuance, the Company bifurcated the flow-through shares into share capital of \$625,879 and a flow-through share premium of \$312,940 that investors pay for the flow-through feature, which is recognized as a liability. The Company issued 322,420 finders' warrants, exercisable into one common share at the price of \$0.40 per share for a period of 2 years. The Company allocated a fair value of \$48,972 to the finders' warrants based on the Black-Scholes Option Pricing Model using the following assumptions: a risk-free interest rate: 0.25%, an expected life 2 years, an annualized volatility of 141.97%, and a dividend yield of 0%..

In September and October 2020, the Company issued a further 3,150,910 units at \$0.22 per unit and 4,605,455 flow-through units at \$0.33 per flow-through unit for total proceeds of \$2,213,000. Each unit was comprised of one common share and one share purchase warrant, with each warrant exercisable to purchase one additional common share at \$0.40 per common share for a period of 2 years. Each flow-through unit was comprised of one common share and one half of one share purchase warrant, with each warrant exercisable to purchase one additional common share at \$0.40 per common share for a period of 2 years. On issuance, the Company bifurcated the flow-through shares into share capital of \$1,013,200 and a flow-through share premium of \$506,600 that investors pay for the flow-through feature, which is recognized as a liability. The Company issued 108,8000 finders' warrants, exercisable into one common share at the price of \$0.40 per share for a period of 2 years. The Company allocated a fair value of \$17,377 to the finders' warrants based on the Black-Scholes Option Pricing Model using the following assumptions: a risk-free interest rate: 0.25%, an expected life 2 years, an annualized volatility of 141.97%, and a dividend yield of 0%..

The Company issued a further 725,000 common shares in July and August 2020 for the exercise of stock options generating gross proceeds of \$74,500 and 1,000,000 common shares in September 2020 for the exercise of warrants for proceeds of \$100,000

c) Reserves

Reserves represent the fair value of stock options or compensation warrants until such time that the share-based instruments are exercised, at which time the corresponding amount is transferred to share capital.

d) Stock options

The Company has an incentive stock option plan that conforms to the requirements of the TSX-V. Options to purchase common shares have been granted to directors, officers, employees and consultants of the Company at exercise prices determined by the market value of the common shares on the date of the grant. The options vest immediately on the date of the grant or otherwise at the discretion of the Board.

When the Company issues stock options, it records a share-based payment compensation ("SBC") expense in the year or period which the options are granted and/or vested. SBC expense is estimated using the following assumptions. The expected volatility assumption is based on the historical and implied volatility of the Company's common share price on the TSX Venture Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options' expected life. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. The Company has not paid and does not anticipate paying dividends on its common stock

7. SHARE CAPITAL (cont'd…)

d) `Stock options (cont'd…)

During the nine months ended November 30, 2020, the Company granted 3,955,000 incentive stock options to directors, officers, employees and consultants of the Company. The granting of these incentive stock options resulted in share-based compensation expense, calculated using the Black-Scholes Option Pricing Model, of \$609,529 which was recorded as share-based compensation expense. The assumptions used for the Black-Scholes Option Pricing Model valuation of stock options issued during the year were: a risk-free interest rate: 0.25%, an expected life 5 years, an annualized volatility of 130.65%, and a dividend yield of 0%.

During the year ended February 29, 2020, the Company granted 3,580,000 incentive stock options to directors, officers, employees and consultants of the Company. The granting of these incentive stock options resulted in share-based compensation expense, calculated using the Black-Scholes Option Pricing Model, of \$285,196 which was recorded as share-based compensation expense. The assumptions used for the Black-Scholes Option Pricing Model valuation of stock options issued during the year were: a risk-free interest rate: 1.75%, an expected life 5 years, an annualized volatility of 130.65%, and a dividend yield of 0%.

	9 months ended November 31, 2020	Weighted average exercise price (\$)	Year ended February 29, 2020	Weighted average exercise price (\$)
Beginning of the year	10,955,000	0.11	10,310,000	0.11
Granted	3,955,000	0.18	3,580,000	0.11
Exercised	(725,000)	0.10	(860,000)	0.10
Expired / cancelled	(1,090,000)	0.17	(2,075,000)	0.11
End of the period	13,095,000	0.13	10,955,000	0.11

The Company's stock options outstanding and exercisable are as follows:

Options to acquire common shares at November 30, 2020 and February 29, 2020 are as follows:

Exercise Price	Expiry Date	Number Outstanding	Number Outstanding
		November 30,2020	February 29,2020
\$0.17	April 27, 2020	-	1,020,000
\$0.10	August 13, 2020	-	340,000
\$0.10	April 29, 2021	650,000	650,000
\$0.10	April 12, 2023	1,950,000	1,950,000
\$0.12	September 5, 2023	1,780,000	1,810,000
\$0.10	November 14, 2023	1,725,000	1,750,000
\$0.11	May 28, 2024	2,215,000	2,215,000
\$0.10	January 20, 2025	1,100,00	1,100,00
\$0.10	January 24, 2025	120,000	120,000
\$0.105	May 29, 2025	980,000	-
\$0.22	November 2, 2025	2,575,000	-
Total		13,095,000	10,955,000

The outstanding stock options have a weighted average remaining contractual life of 3.42 years (February 29, 2020 – 3.23 years).

7. SHARE CAPITAL (cont'd…)

d) Warrants

The Company's warrants outstanding are as follows:

				Year ended
	9 months ended	Weighted average	Year ended	February 28,
	November 30, 2020	exercise price (\$)	February 28, 2020	2020
Beginning of the year	27,060,000	0.08	25,282,732	0.07
Issued	13,483,980	0.40	4,460,000	0.15
Exercised	(1,000,000)	0.10	-	-
Expired	-	-	(2,682,732)	(0.15)
End of the period	39,543,980	0.19	27,060,000	0.08

Warrants to acquire common shares at November 30, 2020 and February 29, 2020 are as follows

Number Outstanding	Number Outstanding		Expiry date
November 30,2020	February 29,2020	Exercise price
-	1,000,000	\$ 0.10	September 4, 2020
10,000,000	10,000,000	\$ 0.08	May 17, 2021
3,000,000	3,000,000	\$ 0.15	September 20, 2021
1,460,000	1,460,000	\$ 0.15	December 30, 2021
2,570,998	-	\$ 0.40	August 17, 2022
5,025,364	-	\$ 0.40	August 28, 2022
322,420	-	\$ 0.40	August 28, 2022
1.935.455	-	\$ 0.40	September 24, 2022
108,800	-	\$ 0.40	September 24, 2022
11,600,000	11,600,000	\$ 0.05	October 10, 2022
3,518,183	-	\$ 0.40	October 23, 2022
39,541,220	27,060,000

The outstanding warrants have a weighted average remaining contractual life of 1.37 years (February 29, 2020 – 1.86).

8. RELATED PARTY TRANSACTIONS

Details of the transactions between the Company and other related parties during the nine months ended November 30, 2020 and 2019 are disclosed below:

• a) Incurred director's fees of \$90,000 (2019 \$90,000) to the CEO, President and director of the Company;
• b) Incurred rent of \$16,200 (2019-\$13,500) to a company controlled by the CEO and director of the Company;
• c) Incurred administrative charges of \$6,000 (2019-\$NIL) to a company controlled by the CEO and director of the Company;

At November 30, 2020, recorded in accounts payable is \$NIL (February 28, 2020 - \$114,806) due to a company controlled by the CEO and director of the Company.

At November 30, 2020, recorded in accounts payable and accrued liabilities is \$9,039 (February 29, 2020- \$9,039) due to the CEO, President and director of the Company.

At November 30, 2020, recorded in amounts receivable is \$31,115 (February 29, 2020- \$NIL) due from a company controlled by the CEO and director of the Company and \$15,206 (February 29, 2020- \$15,206) due from companies controlled by the CEO, CFO and directors of the Company.

Amounts payable and receivable from related parties are non-interest bearing and do not contain specified terms of repayment.

Effective April 1, 2013, the Company approved an employment agreement, whereby the Company is required to pay \$120,000 per annum to the CEO and director of the Company. Pursuant to the agreement, the Company is required to pay a severance equal to two years of salary (\$240,000).

9. EXPLORATION AND EVALUATION ASSETS

Mount Milligan North Property

The Company owns a 100% interest in the Mount Milligan North Property located in northwest Prince George, British Columbia.

During the year ended February 28, 2019, the Company capitalized \$13,915 to the Mount Milligan North Property.

Hat Property

On August 29, 2011, and effective September 9, 2011 upon TSX-V approval, the Company entered into an option agreement whereby the Company was granted an option to acquire a 100% interest in the Hat Property located in the Sheslay District of north-western British Columbia. The Hat Property is subject to a 2% Net Smelter Royalty ("NSR").

During the year ended February 29, 2016, the Company issued 300,000 common shares with a fair value of \$31,500 under the terms of the option agreement and also issued 125,000 common shares with a fair value of \$16,250 as consideration for extending the due date of the final cash payment under the Hat Property agreement.

During the year ended February 28, 2017, the Company earned a 100% interest in the Hat Property through cash payment of \$100,000.

9. EXPLORATION AND EVALUATION ASSETS (cont'd…)

As at November 30, 2020, the Company has posted reclamation bonds totalling \$81,750 (February 29, 2020 - \$54,500) with the Ministry of Energy and Mines for indemnification of site restoration of the Hat Property.

On June 19, 2018, the Company entered into a definitive Option Agreement with Hudbay Minerals Inc ("Hudbay"). Under the terms of the Option Agreement, Hudbay will be the operator and has the right to earn up to a 65% interest in the Hat Property on the following terms:

Hudbay may earn an initial 51% interest in the Hat Property (the "First Option"): by incurring a total of \$25,000,000 in exploration expenditures as follows:

(i) \$2,000,000 in exploration expenditures by the first anniversary date,

(ii) an additional \$5,000,000 in exploration expenditures by the second anniversary date,

(iii) an additional \$7,000,000 in exploration expenditures by the third anniversary date, and

(iv) an additional \$11,000,000 in exploration expenditures by the fourth anniversary date.

Hudbay must also deliver a resource estimate by the fourth anniversary date to exercise the First Option

Hudbay may earn an additional 4% interest (cumulative 55% interest) in the Hat Property (the "Second Option") by:

• incurring a total of \$15,000,000 in exploration expenditures by the seventh anniversary date;
• completing pre-feasibility study by the seventh anniversary date; and
• paying \$1,000,000 in cash to the Company by the seventh anniversary date.

Hudbay may earn an additional 10% interest (cumulative 65% interest) in the Hat Property by completing a feasibility study by the tenth anniversary date (the "Third Option"). Under the terms of the Option Agreement, Hudbay may, on a one-time basis, elect to defer one year of exploration expenditures to a later date without extending the length of the agreement or the timeline for earning an interest in the Hat Property.

Upon exercise of the First Option, the Second Option or the Third Option, Hudbay may elect to form a joint venture with the Company in respect of the Hat Property. If Hudbay elects not to proceed with the Second Option, The Company has the right to purchase a 2% interest from Hudbay for \$500,000, which would result in the Company holding a 51% interest in the project and becoming the operator.

On September 25, 2018, the definitive Option Agreement was amended to allow the Company to incur \$200,000 in expenditures on the property on or before December 31, 2018.

In accordance with the Option Agreement, Hudbay paid the Company \$139,000 (2019- \$NIL) consulting fees, scheduled BCMETC refunds of \$334,215 and option payments of \$100,000 during the year ended February 29, 2020 which has been recorded against the capitalized property costs.

On July 28, 2019, the Company announced that the Option Agreement between Hudbay and the Company was terminated. The Company resumed its own exploration on the Hat Copper-Gold Porphyry Property in fall of 2019.

9. EXPLORATION AND EVALUATION ASSETS (cont'd…)

Red Springs Property

On September 8, 2013, and effective September 23, 2013 upon TSX-V approval, the Company entered into an option agreement with a director of the Company whereby the Company was granted an option to acquire a 90% interest in certain claims comprising the Red Springs property, located in the Omineca district of British Columbia. In order to exercise the option, the Company was required to:

• a) Pay an aggregate \$127,000 as follows:
• i) \$7,000 on or before August 8, 2014;
• ii) \$15,000 on or before August 8, 2015;
• iii) \$25,000 on or before August 8, 2016;
• iv) \$35,000 on or before August 8, 2017; and
• v) \$45,000 on or before August 8, 2018.
• b) Issue an aggregate 800,000 common shares of the Company as follows:
• i) 50,000 common shares on TSX-V approval (issued at a fair value for \$3,000);
• ii) 100,000 on or before August 8, 2014 (issued at a fair value of \$15,000);
• iii) 150,000 on or before August 8, 2015;
• iv) 200,000 on or before August 8, 2016; and
• v) 300,000 on or before August 8, 2017.
• c) Incur aggregate exploration expenditures of \$650,000 as follows:
• i) \$100,000 on or before August 8, 2014;
• ii) \$100,000 on or before August 8, 2015;
• iii) \$100,000 on or before August 8, 2016;
• iv) \$100,000 on or before August 8, 2017; and
• v) \$250,000 on or before August 8, 2018.

On June 27, 2018, the Company entered into an amended agreement with a director of the Company with regards to the Red Springs property in which all previous cash payments and exploration expenditure commitments were waived and replaced with a single cash payment of \$132,000 on or before August 8, 2020.

On December 4, 2018, the Company entered into an option agreement with 1169787 BC Ltd. (later changed its name to Mucho Cobre Resources Inc.). and was amended on March 30, 2020. Mucho Cobre will acquire a 60% interest on the Company's 90% owned Red Springs Property. In order to exercise the option, Mucho Cobre is required to:

• a) Pay an aggregate of \$500,000 to the Company as follows:
• i) \$65,000 on March 30, 2020 (paid);
• ii) \$25,000 on or before the second anniversary of the date of the amending agreement;
• iii) \$60,000 on or before the third anniversary of the date of the amending agreement;
• iv) \$125,000 on or before the fourth anniversary of the date of the amending agreement; and
• v) \$275,000 on or before the fifth anniversary of the date of the amending agreement.
• b) Issue an aggregate 2,000,000 common shares (the "Shares") to the Company as follows:
• i) 250,000 Shares on the date of this Agreement; (issued)
• ii) 250,000 Shares on or before the first anniversary of the date of this Agreement; (issued)
• iii) 250,000 Shares on or before the second anniversary of the date of this Agreement;
• iv) 500,000 Shares on or before the third anniversary of the date of this Agreement; and
• v) 750,000 Shares on or before the fourth anniversary of the date of this Agreement.

9. EXPLORATION AND EVALUATION ASSETS (cont'd…)

• c) Incur aggregate exploration expenditures of \$4,000,000 as follows:
• i) \$150,000 of Exploration Expenditures on or before the first anniversary of the amending agreement;
• ii) an additional \$350,000 of Exploration Expenditures on or before the second anniversary of the amending agreement;
• iii) an additional \$1,000,000 of Exploration Expenditures on or before the third anniversary of the amending agreement;
• iv) an additional \$1,000,000 of Exploration Expenditures on or before the fourth anniversary of the amending agreement;
• v) an additional \$1,500,000 of Exploration Expenditures on or before the fifth anniversary of the amending agreement.

The Company will retain a 0.5% NSR upon commencement of commercial production, of which 0.5% of the NSR may be purchased for \$600,000.

	Mount Milligan North			Red Springs
Exploration costs	Property		Hat Property		Property		Total
Balance as at February 28, 2019	\$	13,915	\$	4,553,679	\$	47,142	4,614,736
Restoration obligation		-		76,979		-	76,979
Exploration costs incurred
Surveys, mapping, sampling and other		-		848,912		3,150	852,062
BC Mining Credit		-		(4,220)		-	(4,220)
Shares received from Mucho Cobre		-		-		(50,000)	(50,000)
Recoveries from Hudbay		-		(573,215)		- -	573,215
Balance as at February 29, 2020	\$	13,915	\$	4,902,135	\$	292 \$	4,916,342
Exploration costs incurred
Surveys, mapping, sampling and other		-		917,543		2,889	920,432
BC METC repayment		-		116,970		-	116,970
Cash received from Mucho Cobre		-		-		(65,000)	(65,000)
Balance as at November 30, 2020	\$	13,915	\$	5,936,648		(61,819) \$	5,888,744
Total at February 29, 2020	\$	13,916	\$	5,272,885	\$	136,322 \$	5,423,123
Total at November 30, 2020	\$	13,916	\$	6,307,398	\$	74,211 \$	6,395,525

10. RESTORATION OBLIGATION

During the year-ended February 29, 2020, the Company recognized a restoration obligation of \$76,979.

The provision represents the present value of reclamation costs related to the Hat property, which are expected to be incurred up to 2025. These provisions have been created based on the Company's internal estimates. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual reclamation costs will ultimately depend upon future market prices for the necessary reclamation work required that will reflect market conditions at the relevant time.

The undiscounted value of these obligations was \$81,750 as at February 29, 2020. Using a discount rate of 1.21%, the present value of the site closure and reclamation provisions recognized on February 29, 2020, upon initial recognition, was \$76,979. There was no change as at November 30, 2020.

11. FINANCIAL INSTRUMENTS AND RISK

Fair value

IFRS 7 Financial Instruments establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

As at August 31, 2020, the Company's financial instruments are comprised of cash and cash equivalents, amounts receivable excluding GST receivable, marketable securities, reclamation bonds and accounts payable and accrued liabilities. The carrying value of cash and cash equivalents, amounts receivable and accounts payable approximate their fair values due to the relatively short periods to maturity of these financial instruments. Marketable securities represent shares held in a private company and measured at Level 2 of the fair value hierarchy.

Risk management

The Company's risk exposures and the impact on the Company's financial instruments are summarized below:

- Credit risk

Credit risk is the risk of potential loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is limited to the carrying amount on the statement of financial position and arises from the Company's cash and cash equivalents and amounts receivables.

The Company's cash and cash equivalents are held with a Canadian chartered bank, which are high-credit quality financial institutions.

As at November 30, 2020, the Company had \$NIL (February 29, 2020 - \$300,000) invested in Canadian dollar denominated guaranteed investment certificates ("GICs") which redeemable in 6 months. Interest of 1.48% is accrued during the GIC term.

11. FINANCIAL INSTRUMENTS AND RISK (cont'd…)

Liquidity risk

Liquidity risk is the risk that the Company will not meet its financial obligations as they fall due. The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at November 30, 2020, the Company had a cash and cash equivalents balance of \$3,212,529 (February 29, 2020- \$459,154) to settle current liabilities of \$711,615 (February 29, 2020 – \$481,797). The Company does not have enough funds to cover the current financial liabilities and will be required to obtain additional financing. All the Company's financial liabilities have contractual maturities of 30 days or less and are subject to normal trade terms. Liquidity risk is assessed as high.

Market risk

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

(a) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has cash balances and interest-bearing debt at fixed rates. Interest rate risk is considered to be low.

(b) Foreign currency rate risk

While the Company is domiciled in Canada and its capital is raised in Canadian dollars, the Company is not exposed to any significant foreign exchange risk.

12. CAPITAL MANAGEMENT

The Company manages its cash and cash equivalents and common shares as capital. The Company manages its capital with the following objectives:

• to ensure sufficient financial flexibility to achieve the on-going business objectives including, but not limited to pursuing the exploration of its exploration and evaluation assets, funding of future growth opportunities, and pursuit of new acquisitions; and
• to maximize shareholder return through enhancing the share value.

The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and industry in general. The Company manages its capital structure by issuing new shares, adjusting capital spending or disposing of assets. In addition, management of the Company's capital structure is facilitated through its financial and operational forecasting processes. The forecast of the Company's future cash flows is based on estimates of commodity prices, forecast capital and operating expenditures, and other investing and financing activities. The forecast is regularly updated based on new commodity prices and other changes, which the Company views as critical in the current environment.

The Company is not subject to any externally imposed capital requirements and there have not been any changes to capital management from the prior year.

13. SEGMENTED INFORMATION

The Company operates in one reportable operating segment, being the exploration and development of exploration and evaluation assets in Canada. All of its long term assets are located in Canada.

14. LEGAL DISCLOSURES

During the year ended February 29, 2020, the Company was subject to a legal claim by a supplier for unpaid fees of \$140,000 relating to drilling services rendered on the Hat property. The Company counterclaimed against the supplier. As of November 30, 2020, the Company has accrued the full amount as a payable. The Company reached a settlement with the supplier and on July 31, 2020, a court order was entered by consent dismissing the claim and counterclaim.

15. SUBSEQUENT EVENTS

Since November 30, 2020, the outbreak of the novel strain of coronavirus, specifically identified as "COVID-19", has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and physical distancing, have caused material disruption to business globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

On December 15, 2020, the Company entered into an employment agreement with Farshad Shirvani for the roles of CEO and President. Mr. Shirvani's annual base salary is \$200,000. Under the terms of the agreement, Mr. Shirvani is entitled to a \$100,000 bonus and severance in the amount of two years annual base salary.