Finlay Minerals Ltd. — Annual Report 2020

May 1, 2021

FINLAY MINERALS LTD.

Financial Statements

December 31, 2020 and December 31, 2019

(Expressed in Canadian Dollars)

1

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Independent Auditor’s Report

To the Shareholders of Finlay Minerals Ltd.:

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Finlay Minerals Ltd. (the “Company”), which comprise the statements of financial position as at December 31, 2020 and 2019, and the statements of comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the financial statements, which indicates that the Company has incurred operating losses since inception, has limited financial resources, no source of operating cash flow and no assurances that funding will be available to conduct further exploration and evaluation activities. These conditions indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the information included in “Management’s Discussion and Analysis”, but does not include the financial statements and our auditor’s report thereon.

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

In connection with our audit of the financial statements, our responsibility is to read the other information, and in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audits or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

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

The engagement partner on the audit resulting in this independent auditor’s report is Keith Macdonald

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CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, BC, Canada April 30, 2021

FINLAY MINERALS LTD. Statements of Financial Position

AS AT DECEMBER 31

(Expressed in Canadian Dollars)

See accompanying notes to the financial statements

ASSETS Current Assets Cash and cash equivalents GST receivable Investment in Serengeti Resources Inc.(Note 4) Prepaid expenses Reclamation deposits Exploration and evaluation assets(Note 5) LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payables and accrued liabilities Due to related parties(Note 7) Liability for flow-through shares(Note 12) Non-Current Liabilities Deferred income taxes(Note 11) Shareholders' Equity Share capital(Note 8) Contributed surplus Investment revaluation reserve Deficit	2020 $ 226,086 18,140 66,553 14,584 325,363 91,500 8,822,787 9,239,650 11,186 4,489 - 15,675 1,639,930 1,655,605 9,370,241 1,436,196 34,871 (3,257,263) 7,584,045 9,239,650	2019 $ 1,059,035 2,043 38,514 10,891
		1,110,483 91,500 8,124,270
		9,326,253
		30,512 6,556 187,500
		224,568 1,506,803
		1,731,371
		9,370,241 1,436,196 (1,836) (3,209,719)
		7,594,882
		9,326,253

Nature and continuance of operations (Note 1)

Approved by the Board of Directors and authorized for issue on April 30, 2021

"Robert F Brown" , Director "Richard T Dauphinee" , Director

4

FINLAY MINERALS LTD. Statements of Comprehensive Loss

FOR THE YEARS ENDED DECEMBER 31

Expressed in Canadian dollars

See accompanying notes to the financial statements

Operating Costs and Expenses Advertising and promotion Bank charges and interest Insurance Legal and accounting Office and administration Rent(Note 6) Salaries and benefits(Note 6) Share-based payments(Note 6) Telephone Travel and accommodation Trust and filing fees Loss before other items Flow-through recovery(Note 12) Interest Income Income (Loss) before income taxes Deferred income tax recovery (expense)(Note 11) Net loss for the year Other comprehensive income items that may not be reclassified subsequently to profit or loss: Net change in fair value of Investment in Serengeti Resources Inc.(Note 4) Realized gain on sale of shares in Serengeti Resources Inc.(Note 4) Net loss and comprehensive loss for the year Weighted average number of common shares Basic and diluted loss per share	2020 $ 23,900 413 11,098 27,423 2,940 20,127 8,230 - 835 179 12,788 107,933 (107,933) 187,500 6,016 85,583 (133,127) (47,544) 35,733 974 36,707 (10,837) 93,274,991 0.00	2019 $ 23,314 1,871 11,616 32,088 1,411 23,585 8,261 14,744 1,249 2,263 20,780
		141,182
		(141,182) - 1,966
		(139,216) 55,077
		(84,139) (28,657) 2,961
		(25,696) (109,835)
		77,292,114
		0.00

5

FINLAY MINERALS LTD. Statement of Cash Flows FOR THE YEARS ENDED DECEMBER 31

See accompanying notes to the financial statements

Expressed in Canadian dollars

CASH PROVIDED BY (USED FOR): Operating Activities Net loss for the year Add (deduct) non-cash items Share-based compensation Flow-through recovery Deferred income tax (recovery) expense Changes in non-cash working capital GST receivable Prepaid expenses Accounts payable and accrued liabilities Due to related parties Investing Activities Mineral property costs Proceeds from option of exploration and evaluation assets Proceeds from the sale of shares in Serengeti Resources Inc. Financing Activities Cash from shares issued Share issue costs INCREASE (DECREASE) IN CASH POSITION Cash position, beginning of the year CASH POSITION, END OF YEAR Cash position includes: Cash Short-term deposits High interest savings account	2020 $ (47,544) - (187,500) 133,127 (101,917) (16,097) (3,693) (8,035) (2,067) (131,809) (694,401) - 8,668 (685,733) - (15,407) (15,407) (832,949) 1,059,035 226,086 74,664 12,921 138,501 226,086	2019 $ (84,139) 14,744 - (55,077)
		(124,472) 4,491 (327) 1,317 3,246
		(115,745)
		(99,799) 25,683 12,761
		(61,355)
		1,000,000 -
		1,000,000
		822,900 236,135
		1,059,035
		1,046,309 12,726 -
		1,059,035

See Note 13 for supplementary cash flow information

6

FINLAY MINERALS LTD. Statements of Changes in Equity

FOR THE YEARS ENDED DECEMBER 31

See accompanying notes to the financial statements

All values expressed in Canadian dollars

December 31, 2018 Share-based compensation Share issue costs Private placements Other comprehensive loss for the year Net loss for the year December 31, 2019 Other comprehensive income for the year Net loss for the year December 31, 2020	Number of Shares 77,024,991 - 16,250,000 - - 93,274,991 - - 93,274,991	Share Capital $ 8,573,148 - (15,407) 812,500 - - 9,370,241 - - 9,370,241	Contributed Surplus $ 1,421,452 14,744 - - - - 1,436,196 - - 1,436,196	Investment Revaluaton Reserve $ 23,860 - - - (25,696) - (1,836) 36,707 - 34,871	Deficit $ (3,125,580) - - - - (84,139) (3,209,719) - (47,544) (3,257,263)	Total Equity $ 6,892,880 14,744 (15,407) 812,500 (25,696) (84,139)
						7,594,882
						36,707 (47,544)
						7,584,045

7

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

1) NATURE AND CONTINUANCE OF OPERATIONS

The Company was incorporated under the Business Corporations Act (British Columbia) and its principal business activity is the acquisition and exploration of resource properties. The properties of the Company are without a known economically feasible ore body. The exploration programs undertaken and proposed constitute an exploratory search. There is no assurance that the Company will be successful in its search. The business of exploring for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish ore reserves, to develop metallurgical processes, and to construct mining and processing facilities at a particular site. It is not possible to ensure that the current exploration programs planned by the Company will result in a profitable commercial mining operation.

Although the Company has taken steps to verify title to resource properties in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements and noncompliance with regulatory requirements.

These financial statements have been prepared on a going-concern basis, which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred operating losses since inception with a comprehensive loss for the year ended December 31, 2020 of $10,837, has limited financial resources, no source of operating cash flow, and no assurances that sufficient funding, including adequate financing, will be available to conduct further exploration and development of its mineral property projects.

The application of the going-concern concept is dependent upon the Company’s ability to generate future profitable operations and receive continued financial support from its creditors and shareholders. These financial statements do not give effect to any adjustments that might be required should the Company be unable to continue as a going-concern and therefore, be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts differing from those reflected in the financial statements.

Management plans to continue to pursue equity or debt financing to support operations. Management believes this plan will be sufficient to meet the Company’s liabilities and commitments as they become payable over the next twelve months. There can be no assurance that management’s plan will be successful. Failure to maintain the support of creditors and obtain additional external equity financing will cause the Company to curtail operations and the Company’s ability to continue as a goingconcern will be impaired. The outcome of these matters cannot be predicted at this time.

2) SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee ('IFRIC").

Basis of preparation

These financial statements have been prepared on the historical cost basis. The presentation and functional currency of the Company is the Canadian dollar.

8

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

2) SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and cash equivalents

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

Significant accounting judgments, estimates and assumptions

The preparation of the Company's financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management's experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Critical judgments in applying accounting policies:

The following are critical judgments that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the financial statements:

• the determination that the Company will continue as a going-concern for the next year; and

• the determination that there have been no events or changes in circumstances that indicate the carrying amount of exploration and evaluations assets may not be recoverable.

Exploration and evaluation expenditures

Once a license to explore an area has been secured, expenditures on mineral properties are capitalized to exploration and evaluation assets.

Exploration and evaluation expenditures relate to the initial search for deposits with economic potential and to detailed assessments of deposits or other projects that have been identified as having economic potential.

All capitalized exploration and evaluation expenditures are monitored for indications of impairment. Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that exploration and evaluation expenditures are not expected to be recovered they are charged to operations.

Share Capital

The Company records proceeds from share issuances net of issue costs and any tax effects. Common shares issued for consideration other than cash are valued based on their market value at the date the agreement to issue shares was concluded.

Impairment of non-financial assets

At the end of each reporting year, and when relevant triggering events and circumstances occur, the carrying amounts of the Company's non-financial assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and the value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the year.

9

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

2) SIGNIFICANT ACCOUNTING POLICIES (continued)

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Income taxes

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

Flow-through shares

The Company has issued common shares as flow-through shares, whereby the investor may claim the tax deductions arising from the related resource expenditures. When flow-through shares are issued, the sale of the tax deduction is valued (using the residual method) and deferred as a flow-through liability. When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, the flow-through liability is reversed, and a deferred income tax liability is recognized.

Previously unrecognized deferred income tax assets may be used to reduce the deferred income tax liability amount recognized, and the Company will recognize a future income tax recovery to this extent.

Share-based payments

The Company's Stock Option Plan allows employees and consultants to acquire shares of the Company. Share-based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The fair value of the share-based payment is measured using the Black-Scholes option pricing model. The fair value of the share-based payment is recognized as an expense or capitalized to exploration and evaluation assets with a corresponding increase in contributed surplus. Consideration received on the exercise of stock options is recorded as share capital and a corresponding amount is transferred to share capital from contributed surplus.

Loss per share

Basic loss per share is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted loss per share is calculated by the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the period. Where the effects of including all outstanding options and warrants would be anti-dilutive, no dilution is calculated and the diluted loss per share is presented as the same as basic loss per share.

Reclamation deposits

The Company maintains cash deposits as required by regulatory bodies as assurance for the funding of reclamation costs. These funds are restricted to that purpose and are not available to the Company until the reclamation obligations have been fulfilled. Reclamation deposits are classified as non-current assets.

10

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

2) SIGNIFICANT ACCOUNTING POLICIES (continued)

Mineral Exploration Tax Credit ("METC")

The Company recognizes METC amounts when the Company's METC application is approved by the Canada Revenue Agency or when the amount to be received can be reasonably estimated and collection is reasonably assured.

Financial instruments

The Company recognizes financial assets and liabilities on the statement of financial position when it becomes a party to the contractual provisions of the instrument.

Financial assets

Cash and cash equivalents are classified as subsequently measured at amortized cost.

Investment in Serengeti Resources Inc. is irrevocably classified, at the Company’s election, as subsequently measured at fair value through other comprehensive income. Investment transactions are recognized on the trade date with transaction costs included in the underlying balance. Fair values are determined by reference to quoted market prices at the statement of financial position date.

Reclamation deposits are classified as subsequently measured at amortized cost.

Financial liabilities

Trade payables are non-interest bearing if paid when due and are recognized at face amount, except when fair value is materially different. Trade payables are subsequently measured at amortized cost.

Due to related parties is subsequently measured at amortized cost.

3) NEW ACCOUNTING STANDARDS AND RECENT PRONOUNCEMENTS

The Company has not adopted any new IFRS pronouncements as at January 1, 2020 as any new standards are not applicable to the Company’s financial statements.

4) INVESTMENT IN SERENGETI RESOURCES INC.

At December 31, 2020, the Company owned 170,648 (2019 – 202,706) shares of Serengeti Resources Inc., the shares of which are traded on the TSX Venture Exchange.

	2020	2019
	$	$
Marketable securities -- fair value	66,553	38,514
Marketable securities -- cost	53,769	63,870

During 2020, 32,058 shares (2019 - 40,000) were sold for proceeds of $8,668 (2019 - $12,671).

See Note 5.

11

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

5) EXPLORATION AND EVALUATION ASSETS

Omineca Mining Division

British Columbia

Silver Hope Claims

The Company has a 100% interest in 39 mineral tenures, eight of which are subject to a 1½% Net Smelter Returns royalty (“NSR”), and were acquired in 2006 by the issuance of two million common shares. One half of the NSR (3/4%) is purchasable prior to a production decision for one million dollars.

PIL-Gold Claims

The Company has a 100% interest in 39 mineral tenures (formerly 376 mineral claim units) of which 23 mineral claims were acquired from a private company controlled by a director of the Company with consideration for the issuance to that private company of nine million common shares (post subdivision) and a 3% NSR. The Company is also obligated to issue a further two million shares to this private company when the property is put into commercial production and may also, prior to that date, purchase a 1½ % NSR (½ of the 3% NSR) for two million dollars.

ATTY Claims

The Company has a 100% interest in 12 mineral tenures. The option agreement with Serengeti Resources Inc., see page 14 for further details relating to this agreement, was terminated on June 24, 2020. The property has fully reverted back to the Company with all tenures being in good standing until 2030.

On March 27, 2020, the Chief Gold Commissioner of the Province of British Columbia issued an order pursuant to section 66 of the Mineral Tenure Act (the "Act") extending the time limit for registering a statement of exploration and development, registering a revised expiry date, or registering a rental payment, until December 31, 2021 for the following mineral and placer mineral titles in the Mineral Titles Online Registry and in existence on March 27, 2020:

l All mineral claims and placer claims, where the claim is not terminated and where the expiry date of the claim is prior to December 31, 2021; and

l All mining leases and placer leases, where the lease is not terminated and where the annual rental date of the lease is prior to December 31, 2021.

Under section 6.36 of the Act, all time extensions in effect with a current expiry date prior to December 31, 2021 have been extended to December 31, 2021. Certain of the Company's PIL and Silver Hope mineral titles have expiry dates from August 2020 to December 2021 and are subject to this extension.

12

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

5) EXPLORATION AND EVALUATION ASSETS (continued)

evaluation expenditures BRITISH COLUMBIA Total exploration and Equipment rental Geological and geophysical(Note 6) BCMETC refund Geological and geophysical(Note 6) Road construction Tenure management PIL Claims Drilling Acquisition Assay Camp and travel BCMETC refund Assay Road construction Tenure management Acquisition ATTY Claims Equipment rental Field office Silver Hope Claims Assay Drilling Camp and travel Acquisition Field office Road construction Tenure management Camp and travel Drilling Royalty buyback payment Equipment rental Field office BCMETC refund Recovery Geological and geophysical(Note 6)	December 31 2018 $ 166,873 176,942 114,236 1,274,952 31,461 12,916 920,169 45,239 41,980 (19,495) 2,765,273 28,536 240,575 778,271 1,466,687 105,044 104,834 1,335,683 392,273 35,215 (53,288) 4,433,830 540 38,606 331,714 - 27,158 12,674 529,541 - 20,135 - (50,000) - 910,368 8,109,471	Net Additions $ - 5,233 4,511 - 2,104 216 41,310 - 3,345 - 56,719 - 5,391 19,692 - 1,259 147 27,321 - - (10,730) 43,080 - - - - - - - - - - (75,000) (10,000) (85,000) 14,799	December 31 2019 $ 166,873 182,175 118,747 1,274,952 33,565 13,132 961,479 45,239 45,325 (19,495) 2,821,992 28,536 245,966 797,963 1,466,687 106,303 104,981 1,363,004 392,273 35,215 (64,018) 4,476,910 540 38,606 331,714 - 27,158 12,674 529,541 - 20,135 - (125,000) (10,000) 825,368 8,124,270	Net Additions $ - 31,843 48,269 138,434 1,570 2,000 217,568 - 4,701 - 444,385 - 16,952 90,127 - 4,304 100 162,599 10,000 - (30,170) 253,912 - 220 - - - - - - - - - - 220 698,517	December 31 2020 $ 166,873 214,018 167,016 1,413,386 35,135 15,132 1,179,047 45,239 50,026 (19,495)
					3,266,377
					28,536 262,918 888,090 1,466,687 110,607 105,081 1,525,603 402,273 35,215 (94,188)
					4,730,822
					540 38,826 331,714 - 27,158 12,674 529,541 - 20,135 - (125,000) (10,000)
					825,588
					8,822,787

In prior years, the PIL claims and ATTY claims were presented in a single column as the ATTY and PIL claims. During the year, these claims were separated and are now being presented as individual claims.

13

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

5) EXPLORATION AND EVALUATION ASSETS (continued)

On March 1, 2018, the Company entered into an option agreement (the “OA”) with Serengeti Resources Inc. (“Serengeti”) and Electrum Resource Corp. (the “RH”) to grant Serengeti the exclusive right and option to acquire a 100% interest in and to the ATTY claims, among other things.

On June 24, 2020, Serengeti terminated the OA.

On March 1, 2018, in connection with entering into the OA, the Company and the RH entered into an amending agreement to amend the purchase agreement between the Company and the RH dated as of July 29, 1999 (the "PA") so that (i) certain clauses only apply to the ATTY claims and not the PIL claims; and (ii) to provide for a separate royalty agreement between the Company and the RH relating to the PIL claims. The PA was amended as follows:

l As additional consideration for the original purchase, the Company will issue 500,000 shares of the Company to the RH immediately following an ATTY Project Production Decision (as defined in the OA); and

l Prior to an ATTY Project Production Decision (as defined in the OA), the Company may, at its sole discretion, purchase one half (1.5%) of the NSR from RH by paying $1 million.

On March 1, 2018, the Company and the RH entered into a royalty agreement (the “RA”) in respect of the PIL claims. The RA incorporates the mineral claims acquired under the Purchase Agreement with the RH dated as of October 1, 2001, as well as the rights and interest pertaining to the PIL claims, into the RA, and terminates the 2001 Purchase Agreement. As additional consideration for the purchase of the PIL claims, the Company:

l Will issue 1 million shares of the Company to RH immediately following a PIL Project Production Decision (as defined in the RA);

l Will pay an NSR of 3% to the RH; and

l May, at its sole discretion, and prior to a PIL Project Production Decision, purchase one half (1.5%) of the NSR from RH by paying $2 million.

6) RELATED PARTY TRANSACTIONS

	2020	2019
	$	$
Key management personnel compensation:
Mineral property geological consulting	16,631	30,227
Share-based compensation	-	14,744
Wages and benefits	8,230	8,261
Other related party compensation	15,068	-

During the year ended December 31, 2020, the Company paid office rent of $14,300 (2019 - $23,585) to a company controlled by a director of the Company.

See Note 8.

14

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

7) DUE TO RELATED PARTIES

At December 31, 2020, the Company owes $1,000 (2019 - $6,556) to an officer of the Company, as well as $3,489 (2019 - nil) to a private company owned by a director and the Company's VP-Exploration for geological costs. The amounts are unsecured, do not bear interest and have no fixed terms of repayment.

8) SHARE CAPITAL

a) The authorized share capital of the Company consists of:

an unlimited number of common shares. 100,000,000 Class A preference shares 100,000,000 Class B preference shares

On December 18, 2019, the Company issued a total of 16,250,000 units of which 6,250,000 were flow-through units at $0.08 and 10,000,000 were non-flow-through units at $0.05 for gross proceeds of $1,000,000 in a private placement. Each flow-through unit consists of one common share and one-half of one share purchase warrant. Each non-flow-through unit consists of one common share and one full share purchase warrant. Each whole warrant is exercisable for the purchase of an additional common share at $0.20 for four years. If at any time after four months and a day following closing of the private placement, the closing price of the Company's common shares trading on the TSX-V is $0.30 or higher for 20 consecutive trading days, the Company may acclerate the expiry of the warrants upon written notice to the holders thereof, and all such holders shall have 30 days from the date of such notice being provided to exercise their warrants.

See Note 12.

In connection with the private placement, the Chairman of the Board of Directors purchased a total of 6,187,500 flow-through units and a private company controlled by the Chairman purchased a total of 10,000,000 units.

b) Share purchase options Private placements Opening balance Ending Balance Issued for: Share issue costs	Number of Shares $ 93,274,991 9,370,241 - - - - 93,274,991 9,370,241 2020	Number of Shares $ 77,024,991 8,573,148 - (15,407) 16,250,000 812,500 93,274,991 9,370,241 2019	Number of Shares $ 77,024,991 8,573,148 - (15,407) 16,250,000 812,500 93,274,991 9,370,241 2019
			9,370,241

The following is a summary of the changes in the Company’s outstanding stock options:

Issued Exercisable, end of the year Balance, beginning of the year Balance, end of the year Expired Weighted average years to expiry	Weighted Number of Average Options Exercise Price $ 3,750,000 0.07 - - - - 3,750,000 0.07 3,750,000 0.07 1.48 2020	Weighted Number of Average Options Exercise Price $ 3,650,000 0.07 (300,000) 0.05 400,000 0.05 3,750,000 0.07 3,750,000 0.07 2.48 2019	Weighted Number of Average Options Exercise Price $ 3,650,000 0.07 (300,000) 0.05 400,000 0.05 3,750,000 0.07 3,750,000 0.07 2.48 2019
			0.07
			0.07
			2.48

15

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

8) SHARE CAPITAL (continued)

c) Share purchase warrants

The continuity of share purchase warrants is as follows:

Issued Balance, beginning of the year Balance, end of the year Weighted average years to expiry Expired	Weighted Number of Average Warrants Exercise Price $ 16,278,595 0.19 (71,429) 0.05 - - 16,207,166 0.19 2.55 2020	Weighted Number of Average Warrants Exercise Price $ 3,153,595 0.10 - - 13,125,000 0.20 16,278,595 0.19 3.53 2019	Weighted Number of Average Warrants Exercise Price $ 3,153,595 0.10 - - 13,125,000 0.20 16,278,595 0.19 3.53 2019
			0.19
			3.53

1. On June 20, 2019 the Company extended 1,666,666 warrants with an original term of 24 months to 48 months; the new expiry date of these warrants is now August 2, 2021.

2. On April 13, 2020, 71,429 of the Company’s warrants expired unexercised, lowering the Company’s outstanding warrant total to 16,207,166.

d) Share-based compensation

The weighted average fair value of stock options granted during the years ended December 31, 2020 and 2019 was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	2020		2019
Expected dividend yield		-	N/A
Risk-free interest rate		-	1.519
Expected stock price volatility		-	160.38%
Expected life of options		-	5 years
Weighted average fair value per stock option		-	$0.037

Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the stock. Changes in these assumptions can materially affect the fair value estimate and therefore it is management's view that the existing models do not necessarily provide a single reliable measure of the fair value of the Company's stock option grants.

e) Contributed surplus

Contributed surplus records the fair value of share-based payments, agent options and agent warrants until such time that the options and warrants are excercised, at which time the corresponding amount will be transferred to share capital.

16

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

9) CAPITAL MANAGEMENT

The Company’s objectives for the management of capital are to safeguard the Company’s ability to continue as a goingconcern, including the preservation of capital, and to achieve reasonable returns on invested cash after satisfying the objective of preserving capital.

The Company considers its cash and cash equivalents to be its manageable capital. The Company’s policy is to maintain sufficient cash and deposit balances to cover operating and exploration costs over a reasonable future period. The Company accesses capital markets as necessary and may also acquire additional funds where advantageous circumstances arise.

The Company currently has no externally-imposed capital requirements except to maintain sufficient cash and deposit balances to meet exploration commitments.

10) FINANCIAL INSTRUMENT RISKS

The Company's financial instruments are exposed to the following risks:

Credit Risk

The Company's primary exposure to credit risk is the risk of illiquidity of cash and cash equivalents, amounting to $226,086 at December 31, 2020 (2019 - $1,059,035). As the Company's policy is to limit cash holdings to instruments issued by major Canadian banks, or investments of equivalent or better quality, the credit risk is considered by management to be negligible.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to pay financial instrument liabilities as they come due. The Company's liquidity risk from financial instruments is its need to meet accounts payable and accrued liabilities and related party balance obligations. The Company maintained sufficient cash and cash equivalent balances to meet these needs at December 31, 2020.

Interest Rate Risk

The Company has cash balances, a term deposit and a high interest savings account. The Company's current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking insititutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Fair Value of Financial Instruments

The fair value of the Company's financial assets and liabilities approximates the carrying amount. Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• l Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilites;

• l Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and l Level 3 - Inputs are not based on observable market data.

17

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

10) FINANCIAL INSTRUMENT RISKS (continued)

The fair value classification of the company's financial instruments as at December 31, 2020 and 2019 is as follows:

		2020	2019
		Fair value	Fair value
	Fair	through	through
	value	other	other
	level	comprehensive	comprehensive
		income	income
		$	$
Financial assets:
Investment in Serengeti Resources Inc.	1	66,553	38,514

During the years ended December 31, 2020 and 2019, there were no transfers between level 1, level 2, and level 3 classified assets and liabilities.

11) INCOME TAXES

A reconciliation of income taxes at statutory rates is as follows:

Net adjustment for deductible and non-deductible amounts Total income tax recovery (expense) Expected income tax recovery (expense) Net change in valuation allowance Net loss for the year before tax	2020 $ 85,583 23,107 (50,469) (105,765) (133,127)	2019 $ (139,216)
		(37,588) 835 91,830
		55,077

The significant components of the Company's deferred income tax liabilities are as follows:

Investment in Serengeti Resources Inc. Deferred income tax liabilities: Exploration and evaluation assets carrying amounts in excess of tax pools Non-capital loss carry forwards and share issue costs Net deferred tax liabilities	2020 $ (8,046,671) 1,985,643 (12,784) (6,073,812)	2019 $ (2,023,243) 509,594 6,846
		(1,506,803)

18

FINLAY MINERALS LTD. Notes to the Financial Statements FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Expressed in Canadian dollars

11) INCOME TAXES (continued)

Subject to certain restrictions, the Company has exploration and evaluation expenditures at December 31, 2020 of approximately $631,000 (2019 - $631,000) available to reduce taxable income in future years. The Company also has non-capital losses available for possible deduction against future years' taxable income of approximately $1,971,000 (2019 - $1,861,000). The Company has not recognized any future benefit for these tax losses, credits and resource deductions, as it is not considered likely that they will be utilized. If unused, these non-capital losses will expire as follows:

2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040	$ 243,000 173,000 133,000 79,000 141,000 212,000 154,000 121,000 113,000 70,000 73,000 112,000 110,000 127,000 110,000
	1,971,000

12) LIABILITY AND INCOME TAX EFFECT ON FLOW-THROUGH SHARES

Funds raised through the issuance of flow-through shares are expected to be expended on qualified Canadian mineral exploration expenditures, as defined pursuant to Canadian income tax legislation. The flow-through gross proceeds less the qualified expenditures made to date represent the funds received from flow-through share issuances that have not been spent and are held by the Company for such expenditures.

On December 18, 2019, the Company issued 6,250,000 units on a flow-through basis at $0.08 per unit for gross proceeds of $500,000 and recognized a liability for flow-through shares of $187,500. As at December 31, 2020, the Company has spent $500,000 of the flow-through funds and recognized a flow-through recovery of $187,500. As at December 31, 2020 the liability for flow-through shares was nil.

See Note 8.

13) SUPPLEMENTARY CASH FLOW INFORMATION

	2020	2019
	$	$
Investment in Serengeti Resources Inc.	-	59,317
Exploration and evaluation assets (recovery)	-	(59,317)
Share issue costs included in accounts payable and accrued liabilities	-	15,407
Exploration and evaluation assets included in accounts payable	4,116	-
and accrued liabilities

See Notes 4 and 5.

19