Element 29 Resources Inc. — Interim / Quarterly Report 2022

Nov 14, 2022

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CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian dollars)

Three and nine month periods ended September 30, 2022

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORTING

The accompanying condensed consolidated interim financial statements of Element 29 Resources Inc. (the “Company”) have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”). Management acknowledges responsibility for the preparation and presentation of the condensed consolidated interim financial statements, including responsibility for significant accounting estimates and the choice of accounting principles and methods that are appropriate to the Company’s circumstances.

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Canadian Institute of Chartered Professional Accountants for a review of interim financial statements by a company’s auditor.

Element 29 Resources Inc. Condensed Consolidated Interim Statements of Financial Position

As at September 30, 2022 and December 31, 2021 (Unaudited)

(expressed in Canadian dollars, except where indicated)

		Note	Note	September 30, 2022	September 30, 2022	December 31, 2021
Assets Current assets Cash Restricted cash Receivables Prepaid expenses Deposit						$ 7,832,949 25,000 30,178 50,082 8,900
				$2,347,350
				25,000
				48,989
				127,343
				8,480
Non-current assets Property and equipment Exploration and evaluation assets				2,557,162		7,947,109 75,993 9,780,611
				94,395
		3		13,104,189
				13,198,584		9,856,604
Total assets				$ 15,755,746		$ 17,803,713
Liabilities Current liabilities Accounts payable and accrued liabilities						$ 751,337
				$318,325
Loan payable				318,325		751,337 40,000
				40,000
Total liabilities				358,325		791,337
Shareholders’ equity Share capital Reserves Deficit		4				21,796,857 1,416,811 (6,201,292)
				21,796,857
				2,976,699
				(9,376,135)
Total shareholders’ equity				15,397,421		17,012,376
Total liabilities and shareholders’ equity				$15,755,746		$ 17,803,713

Nature of operations (Note 1)

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

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Element 29 Resources Inc. Condensed Consolidated Interim Statements of Comprehensive Loss For the three and nine months ended September 30, 2022 and 2021 (Unaudited)

(expressed in Canadian dollars, except where indicated)

		Three months ended September 30	Three months ended September 30	Nine months ended September 30	Nine months ended September 30
	Note	2022	2021	2022	2021
General and administrative expenses Administration and office Investor relations Corporate development Personnel costs Professional fees Filing fees Foreign exchange (gain) loss Share-based compensation Depreciation Other					$ 101,815 526,372 - 643,211 185,402 32,414 20,506 933,998 - 7,637
		$ 39,184	$ 41,251	$ 109,698
		192,999	187,417	547,193
		97,561	-	273,687
	5	197,684	219,501	639,907
		8,514	70,862	148,756
		29,578	10,757	80,450
		(117,068)	(26,230)	(177,562)
	4,5	356,988	182,910	1,559,888
		4,430	-	13,270
		2,062	4,981	5,570
Operating loss Interest income		811,932	691,449	3,200,857	2,451,355 (16,354)
		(11,553)	(3,232)	(26,014)
Loss and comprehensive loss			$ 688,217		$ 2,435,001
		$ 800,379		$ 3,174,843
Loss per common share Basic and fully diluted Weighted average number of common shares outstanding					$ (0.04) 68,018,384
		$ (0.01)	$ (0.01)	$ (0.04)
			67,906,754
		79,240,860		79,240,860
Total common shares issued and outstanding	4		67,742,860		67,742,860
		79,240,860		79,240,860

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

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Element 29 Resources Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity For the nine months ended September 30, 2022 and 2021 (Unaudited)

(expressed in Canadian dollars, except where indicated)

					Number of		Share
			Note							Reserves			Deficit			Total
					Shares		capital
Balance at December 31, 2021					79,240,860		$ 21,796,857			$ 1,416,81		1	$ (6,201,2	92)		$ 17,012,376
Loss and comprehensive loss Share-based compensation						-		-				-	(3,174,843		)	(3,174,843)
				4		-		-		1,559,88		8			-	1,559,888
Balance at September 30, 2022					79,240,860		$ 21,796,857			$ 2,976,	699		$ (9,376,	135)		$ 15,397,421

					Number of		Share
			Note							Reserves			Deficit			Total
					Shares		capital
Balance at December 31, 2020					66,791,368		$ 15,068,459			$ 483,65		7	$ (3,295,5	73)		$ 12,256,543
Issuance of share capital – share options Common shares cancelled Loss and comprehensive loss Share-based compensation					1,490,	000	213,	901		(54,901		)			- - ) -	159,000 (53,851) (2,435,001) 933,998
					(538,5	08) - -	(53,8	51) - -		933,99		- - 8	(2,435,001
Balance at September 30, 2021					67,742,860		$ 15,228,509			$ 1,362,	754		$ (5,730,	574)		$ 10,860,689

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

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Element 29 Resources Inc. Condensed Consolidated Interim Statements of Cash Flows

For the nine months ended September 30, 2022 and 2021 (Unaudited)

(expressed in Canadian dollars, except where indicated)

		Note	Note	2022	2022	2021
Cash flows used in operating activities Loss and comprehensive loss Items not affecting cash: Share-based compensation Unrealized foreign exchange loss (gain) Depreciation Other						$ (2,435,001) 933,998 (18,738) 147 4,885
				$(3,174,843)
		4		1,559,888
				145,889
				13,270
				-
Changes in non-cash operating working capital: Increase in receivables and prepaid expenses Decrease in accounts payable and accrued liabilities Decrease in deposits				(1,455,796)		(1,514,709) (57,746) (12,787) -
				(96,072)
				(478,701)
				421
				(2,030,148)		(1,585,242)
Cash flows used in investing activities Payment for exploration and evaluation assets Purchase of equipment						(1,305,954) (35,764)
		3		(3,455,451)
				-
				(3,455,451)		(1,341,718)
Cash flows from financing activities Proceeds from issuance of common shares – share options						159,000
				-
				-		159,000
Decrease in cash Cash - beginning of period				(5,485,599)		(2,767,960) 6,219,707
				7,832,949
Cash - end of period				$ 2,347,350		$ 3,451,747
Supplemental cash flow information (Note 7)

Supplemental cash flow information (Note 7)

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

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements For the three and nine month periods ended September 30, 2022 (Unaudited)

(expressed in Canadian dollars, except where indicated)

1 Nature of operations

Nature of operations

Element 29 Resources Inc. together with its subsidiaries (collectively referred to as the “Company” or “E29”), is focused on the exploration of mineral property interests in Peru.

The Company was incorporated on August 30, 2017 in British Columbia. The Company’s registered office is at 1900-1040 West Georgia Street, Vancouver, BC, V6E 4H3, Canada. The Company completed an initial public offering (“IPO”) on December 3, 2020 and the Company’s common shares commenced trading on the TSX Venture Exchange (“TSX-V”) on December 7, 2020 under the symbol “ECU”. On May 27, 2021, the Company commenced trading on the Over-the-Counter OTCQB Venture Market (“OTCQB”) under the symbol “EMTRF”.

All amounts are expressed in Canadian dollars, except for certain amounts denoted in United States dollars (“US$”).

The Company has not yet determined whether its exploration and evaluation assets contain mineral reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production. To date, the Company has not earned any revenues and is considered to be in the exploration stage.

Going concern

These condensed consolidated interim financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.

The Company has not generated revenues from its operations to date. As at September 30, 2022, the Company has accumulated net losses of $9,376,135 since inception and has working capital of $2,198,837. The operations of the Company have primarily been funded by the issuance of common shares. These condensed consolidated interim financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. Management estimates its current working capital will be sufficient to fund its current level of activities for the next twelve months.

If the going concern assumption was not appropriate for these condensed consolidated interim financial statements, then adjustments may be necessary to the carrying values of assets and liabilities, the reported expenses and the statement of financial position classifications used. Such adjustments could be material.

2 Basis of presentation

Basis of presentation

The Company prepares its condensed consolidated interim financial statements in accordance with International Accounting Standards 34, Interim Financial Reporting (“IAS 34”), under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretation of the International Reporting Interpretations Committee (“IFRIC”). These should be read in conjunction with the Company’s annual audited consolidated financial statements as at and for the year ended December 31, 2021 (“annual financial statements”). The accounting policies and critical estimates and judgements applied by the Company in these condensed consolidated interim financial statements are the same as those applied in the Company’s annual financial statements, unless otherwise stated.

These condensed consolidated interim financial statements of the Company have been prepared on an accrual basis and are based on historical costs, except for financial instruments measured at fair value or amortized cost.

The Board of Directors of the Company approved these condensed consolidated interim financial statements and authorized them for issue on November 10, 2022.

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements For the three and nine month periods ended September 30, 2022 (Unaudited)

(expressed in Canadian dollars, except where indicated)

Basis of consolidation

These condensed consolidated interim financial statements include the accounts of the Company and its wholly owned subsidiaries:

• Candelaria Resources S.A.C. (“Candelaria”)

• Elida Resources S.A.C. (“Elida”)

• Pahuay Resources S.A.C. (“Pahuay”)

All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated upon consolidation.

3 Exploration and evaluation assets

Title to exploration and evaluation assets involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristics of many mineral properties. The Company has investigated title to its mineral properties and, to the best of its knowledge, title to the mineral property assets remains in good standing.

Flor de Cobre copper project

The Company owns 100% interest of the Flor de Cobre copper project, with the exception of certain claims (“Candelaria claims”), where it has an option to earn 100% interest.

The Company can earn 100% interest in the Candelaria claims at Flor de Cobre by making payments to the vendor in the total amount of approximately US$5 million over five years between 2020 and 2024. An additional US$6 million payment would be due on the positive feasibility study for the claim area.

In 2019, the Company acquired several claims through a government auction (the “San Jose Property”). The San Jose Property forms part of the Flor de Cobre project.

Elida copper project

The Company owns 100% of the Elida copper project.

Pahuay copper skarn project

The Company owns 100% interest of the Pahuay copper skarn project. The property is located in Peru.

Muñaorjo copper skarn project

The Company owns 100% interest of the Muñaorjo copper skarn porphyry project. The project is located in Peru.

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Element 29 Resources Inc.

Notes to Condensed Consolidated Interim Financial Statements

For the three and nine month periods ended September 30, 2022 (Unaudited)

(expressed in Canadian dollars, except where indicated)

Expenditures for the nine months ended September 30, 2022 were as follows:

		Flor de Cobre	Elida	Pahuay and	Total
				Muñaorjo
Balance at December 31, 2021 Additions: Option payments Drilling Geological and mapping Geophysics and geochemistry Permitting, concessions and taxes Community, health, safety and environment Technical report Geology salaries Propertymaintenance and administration		$ 1,910,378	$ 6,342,479	$ 1,527,754	$ 9,780,611
		44,544	-	-	44,544
		1,213,264	123,241	-	1,336,505
		19,501	118,677	-	138,178
		113,841	109,793	-	223,634
		371,837	130,415	506	502,758
		116,004	179,309	-	295,313
		-	29,032	-	29,032
		62,300	32,590	-	94,890
		294,574	351,713	12,437	658,724
Total additions for theperiod		2,235,865	1,074,770	12,943	3,323,578
Balance at September 30, 2022		$ 4,146,243	$ 7,417,249	$ 1,540,697	$ 13,104,189

Expenditures for the year ended December 31, 2021 were as follows:

		Flor de Cobre	Elida	Pahuay and	Total
				Muñaorjo
Balance at December 31, 2020 Additions: Option payments Geological and mapping Geophysics Geochemistry Permitting Community, health, safety and environment Concessions and taxes Technical report Geology salaries Propertymaintenance and administration		$ 1,449,929 339,344 1,721 41,839 - 1,159 18,927 435 905 - 56,119	$ 3,173,864 - 650,959 26,678 1,325,934 2,588 280,791 502,848 3,115 224,661 151,041	$ 1,511,778 - - - - - - 1,559 - - 14,417	$ 6,135,571 339,344 652,680 68,517 1,325,934 3,747 299,718 504,842 4,020 224,661 221,577
Total additions for theyear		460,449	3,168,615	15,976	3,645,040
Balance at December 31, 2021		$ 1,910,378	$ 6,342,479	$ 1,527,754	$ 9,780,611

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements For the three and nine month periods ended September 30, 2022 (Unaudited) (expressed in Canadian dollars, except where indicated)

4 Share capital

a) Common shares

The Company’s authorized share capital consists of unlimited common shares without par value. At September 30, 2022, the Company had 79,240,860 (December 31, 2021 – 79,240,860) shares issued and outstanding.

b) Share options

The Company provides share-based compensation to its directors, officers, employees, and consultants through grants of share options.

The Company has adopted a stock option plan (the “Plan”), as amended, to grant options to directors, officers, employees and consultants to acquire up to 10% of the issued and outstanding shares of the Company. Vesting is determined at the discretion of the Board of Directors.

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options granted. For employees, the share-based compensation expense is amortized on a graded vesting basis over the requisite service period which approximates the vesting period. Share-based compensation expense for share options granted to non-employees is recognized over the contract services period or, if none exists, from the date of grant until the share options vest.

The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the share options. Since the Company has not paid and does not anticipate paying dividends on its common shares, the expected dividend yield is assumed to be zero. Companies are required to utilize an estimated forfeiture rate when calculating the share-based compensation expense for the reporting period. Based on the best estimate, management applied the estimated forfeiture rate of nil in determining the share-based compensation expense recorded in the accompanying Condensed Consolidated Interim Statements of Comprehensive Loss.

Share option transactions are summarized as follows:

	Number of share	Weighted average
	options	exerciseprice $
Outstanding – December 31, 2021 Granted Cancelled	3,825,000	0.42
	2,845,000	0.57
	(60,000)	0.57
Outstanding – September 30, 2022	6,610,000	0.49

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements

For the three and nine month periods ended September 30, 2022 (Unaudited) (expressed in Canadian dollars, except where indicated)

At September 30, 2022, the following share options were outstanding:

	Number of share options	Exercise price per share
Number of share options			Expiry date
	vested	option $
300,000 200,000 200,000 350,000 150,000 150,000 225,000 2,100,000 150,000 2,285,000 500,000	300,000 150,000 200,000 350,000 150,000 100,000 150,000 2,100,000 150,000 1,172,500 250,000	0.30 0.59 0.30 0.30 0.30 0.50 0.50 0.45 0.45 0.57 0.59	August 23, 2024 November 28, 2024 May 19, 2025 June 25, 2025 June 29, 2025 October 28, 2025 November 9, 2025 February 3, 2026 April 7, 2026 March 1, 2027 March 29, 2027
6,610,000	5,072,500
			September 30, 2022
Weighted average exercise price for exercisable share options Weighted average share price for share options exercised Weighted averageyears to expiryfor exercisable share options			$0.46 n/a 3.41years

For the nine months ended September 30, 2022, the total share-based compensation charges relating to options granted and vested to directors, officers, employees and consultants was $1,559,888 (2021 - $933,998).

The weighted average fair value at date of grant for the options granted during the nine months ended September 30, 2022 was $0.44 (2021 - $0.36) per option. The following weighted average assumptions were used for the Black-Scholes valuation of share options granted:

Risk-free interest rate Expected life of share options Expected volatility Expected dividend	1.72%
	5.0 years
	97.43%
	0.00%

c) Deferred Share Units (“DSU”)

DSUs are granted to the Company’s directors as a part of compensation under the terms of the Company’s deferred share units plan (the “DSU Plan”). Each DSU entitles the participant to receive the value of one common share of the Company (a “Common Share”). The maximum number of awards of DSU’s and all other security based compensation arrangements shall not exceed 10% of the Company’s outstanding shares.

Participants are entitled to the value of the Common Share upon termination of their service. In accordance to the DSU Plan, upon each vesting date the Company shall decide at, at its sole discretion whether, participants receive (a) the issuance of Common Shares equal to the number of DSUs vesting, or (b) a cash payment equal to the number of vested DSUs multiplied

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements For the three and nine month periods ended September 30, 2022 (Unaudited)

(expressed in Canadian dollars, except where indicated)

by the fair market value of a Common Share, calculated as the closing price of the Common Shares on the TSX-V for the trading day immediately preceding such payment date; or (c) a combination of (a) and (b).

On the grant date of DSUs, the Company determines whether it has a present obligation to settle in cash. If the Company has a present obligation to settle in cash, the DSUs are accounted for as liabilities, with the fair value remeasured at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the period. The Company has a present obligation to settle in cash if the Company has a past practice or a stated policy of settling in cash, or generally settles in cash whenever the counterparty asks for cash settlement. If no such obligation exists, DSUs are accounted for as equity settled share-based payments and are valued using the share price of the Common Share on grant date. Since the Company controls the settlement, the DSU’s are considered equity settled.

On March 3, 2022, the Company granted 300,000 (2021 – nil) DSUs to the Company’s directors and recorded share-based compensation of $171,000 (2021 – nil). The fair value per DSU granted was determined to be C$0.57 (2021 – nil) which was the share price of the Common Share on grant date.

d) Restricted Share Units (“RSU”)

RSUs are granted to the Company’s directors, officers, employees and consultants as a part of compensation under the terms of the Company’s restricted share units plan (the “RSU Plan”). Each RSU entitles the participant to receive the value of one Common Share. The maximum number of awards of RSU’s and all other security based compensation arrangements shall not exceed 10% of the Company’s outstanding shares.

The number of RSUs awarded and underlying vesting conditions are determined by the Board of Directors in its discretion. In accordance with the RSU Plan, upon each vesting date the Company shall decide, at its sole discretion, whether participants receive (a) the issuance of Common Shares equal to the number of RSUs vesting, or (b) a cash payment equal to the number of vested RSUs multiplied by the fair market value of a Common Share, calculated as the closing price of the Common Shares on the TSX-V for the trading day immediately preceding such payment date; or (c) a combination of (a) and (b).

On the grant date of RSUs, the Company determines whether it has a present obligation to settle in cash. If the Company has a present obligation to settle in cash, the RSUs are accounted for as liabilities, with the fair value remeasured at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in profit or loss for the period. The Company has a present obligation to settle in cash if the Company has a past practice or a stated policy of settling in cash, or generally settles in cash whenever the counterparty asks for cash settlement. If no such obligation exists, RSUs are accounted for as equity settled share-based payments and are valued using the share price of the Common Share on grant date. Since the Company controls the settlement, the RSU’s are considered equity settled.

On March 3, 2022, the Company issued 500,000 (2021 – nil) RSUs to employees and consultants of the Company all of which vest 50% after the first anniversary of the grant date and 50% after the second anniversary of the grant date. The Company recorded share-based compensation expense of $285,000 (2021 – nil). The fair value per RSU granted was determined to be C$0.57 (2021 – nil) which was the share price of the Common Share on grant date.

e) Share purchase warrants

At September 30, 2022, the following share purchase warrants were outstanding:

Number of share purchase	Exercise price per share purchase	Expiry date
warrants	warrant $
6,655,200 2,666,478 5,749,000	0.70 0.50 0.85	December 3, 2023 December 3, 2023 December 14,2024
15,070,678

No share purchase warrants were exercised during the nine month period ended September 30, 2022.

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements For the three and nine month periods ended September 30, 2022 (Unaudited) (expressed in Canadian dollars, except where indicated)

5 Related party transactions

The Company’s related parties include key management personnel and directors. Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Board of Directors and corporate officers, including the Company’s interim Chief Executive Officer, former Chief Executive Officer and President, Chief Financial Officer, Vice President – Exploration, and Corporate Secretary.

Direct remuneration paid to the Company’s directors and key management personnel during the nine months ended September 30, 2022 and 2021 were as follows:

	2022	2021
Salaries and benefits – personnel costs Consulting fees – personnel costs Directors’ fees – personnel costs Share-based compensation	$271,591	$ 337,715 75,875 76,685 655,312
	160,300
	69,545
	1,105,952
	$1,607,388	$ 1,145,587

As at September 30, 2022, included in accounts payable and accrued liabilities was an amount of $58,090 (2021 - $21,075) due to the Company’s related parties.

6 Segmented information

The Company has one business segment, the exploration of mineral properties. As at September 30, 2022, all of the Company’s significant non-current non-financial assets are located in Peru.

7 Supplement cash flow information

	September 30, 2022	September 30, 2022	September 30, 2021
Non-cash investing activities - Exploration and evaluation expenditures included in accounts payable - Promissory notes			$ - $ 53,851
	$45,689
	$	-

8 Financial instruments

a) Fair value classification of financial instruments

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices). Level 3 inputs are for the assets or liabilities that are not based on observable market data (unobservable inputs).

The Company’s financial instruments consist of cash, restricted cash, receivables, deposits, accounts payable and accrued liabilities, and loan payable.

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Element 29 Resources Inc. Notes to Condensed Consolidated Interim Financial Statements For the three and nine month periods ended September 30, 2022 (Unaudited)

(expressed in Canadian dollars, except where indicated)

The carrying values of these financial instruments approximate their fair value due to their short terms to maturity.

The following table summarizes the classification and carrying values of the Company’s financial instruments at September 30, 2022:

			Amortized cost
		Amortized cost
September 30, 2022	FVTPL		(financial	Total
		(financial assets)
			liabilities)
Financial assets Cash Restricted cash Receivables Deposit	$ - - - -	$ 2,347,350 25,000 48,989 8,480	$ - - - -	$ 2,347,350 25,000 48,989 8,480
Totalfinancial assets	$ -	$ 2,429,819	$ -	$ 2,429,819
Financial liabilities
Accounts payable and accrued liabilities Loanpayable	$ - -	$ - -	$ 318,325 40,000	$ 318,325 40,000
Total financial liabilities	$ -	$ -	$ 358,325	$ 358,325

9 Capital management

The Company considers items included in shareholders’ equity as capital. The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets which are revised periodically based on the results of its exploration programs, availability of financing and industry conditions. There are no external restrictions on management of capital and there has been no changes to the Company’s capital management during the current year. The Company believes it will be able to raise new funds as required in the long term to fund its exploration programs but recognizes there will be risks involved that may be beyond its control.

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