Fireweed Metals Corp. — Audit Report / Information 2019

Apr 25, 2020

(An Exploration Stage Company) (Audited - Expressed in Canadian Dollars) Financial Statements December 31, 2019 and 2018

Index

Independent Auditors' Report Statements of Financial Position Statements of Loss and Comprehensive Loss Statements of Cash Flows Statements of Changes in Shareholders' Equity Notes to the Financial Statements

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Fireweed Zinc Ltd.

Opinion

We have audited the accompanying financial statements of Fireweed Zinc Ltd. (the "Company"), which comprise the statements of financial position as at December 31, 2019 and 2018 and the statements of loss and comprehensive loss, cash flows and changes in shareholders' equity for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the financial statements, which indicates the Company's ability to continue operations is not assured and is dependent upon the ability of the Company to obtain necessary financing to meet its liabilities and commitments as they become due. As stated in Note 1, these events and 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 obtained at the date of this auditor's report includes Management's Discussion and Analysis.

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 audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, 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 Erez Bahar.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada Chartered Professional Accountants

April 22, 2020

Statements of Financial Position as at (Expressed in Canadian Dollars)

		December31,	December 31,
	Note	2019	2018
Assets
Current assets:
Cash		$783,789	$1,575,784
Receivables		30,147	50,254
Prepaid expenses		151,170	161,631
		965,106	1,787,669
Equipment	5	22,042	27,893
Reclamation bond		39,596	39,596
Exploration and evaluation assets	4	24,437,449	19,663,555
		$25,464,193	$21,518,713
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	6,11	$288,800	$327,380
		288,800	327,380
Deferred tax liability	10	874,000	455,000
Rehabilitation provisions	8	261,023	256,433
		1,423,823	1,038,813
Shareholders' equity:
Capital stock	9	26,879,253	22,242,738
Options reserve	9	1,532,985	1,152,711
Warrants reserve	9	133,910	222,832
Deficit		(4,505,778)	(3,138,381)
		24,040,370	20,479,900
		$25,464,193	$21,518,713
Nature and continuance of operations(Note 1)
Commitment (Note 15)
Subsequent event (Note 16)

On behalf of the Board:

"Brandon Macdonald" Director "George Gorzynski" Director

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

Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars)

		Year ended	Year ended
	Note	December 31, 2019	December 31, 2018
Expenses
Consulting and management	11	$469,807	$275,867
Depreciation	5	5,851	7,592
Director and committee fees	11	147,000	158,500
Finance expense		-	636
Investor relations	11	341,520	807,305
Insurance expense		12,688	11,270
Office and payroll expenses		48,396	59,285
Professional fees		63,083	78,391
Property investigation		-	5,505
Rent	11	61,117	52,515
Share-based compensation	9,11	380,274	876,760
Transfer agent and filing fees		34,713	39,321
Travel		51,236	69,988
		(1,615,685)	(2,442,935)
Amortization of flow-through liability	7	600,756	812,232
Interest income		71,022	110,025
Accretion on rehabilitation provision	8	(4,590)	-
Foreign exchange		100	(1,056)
Loss before income taxes		$(948,397)	$(1,521,734)
Deferred income tax	10	(419,000)	(455,000)
Loss and comprehensive loss for the year		$(1,367,397)	$(1,976,734)
Loss per share – basic and diluted		$(0.04)	$(0.07)
Weighted average number of common sharesoutstanding – basic and diluted		35,897,832	28,598,466

Statements of Cash Flows

(Unaudited - Expressed in Canadian Dollars)

		Year	EndedDecember31,
	Note(s)	2019		2018
OPERATING ACTIVITIESLoss for the year	$	(1,367,397)	$	(1,976,734)
Adjustment for items not affecting cash:
Amortization of flow-through liability	7	(600,756)		(812,232)
Deferred income tax	7,10	419,000		455,000
Depreciation	5	5,851		7,592
Finance expense		-		384
Accretion on rehabilitation provision	8	4,590		-
Share-based compensation	9	380,274		876,760
Change in non-cash working capital items:
Receivables		20,107		(9,933)
Prepaid expenses		10,461		(79,743)
Accounts payable and accrued liabilities	6	(25,003)		32,396
		(1,152,873)		(1,506,510)
INVESTING ACTIVITIES
Reclamation bond		-		(39,596)
Exploration and evaluation assets	4	(4,618,308)		(9,706,022)
		(4,618,308)		(9,745,618)
FINANCING ACTIVITIESCapital stock	9	5,013,992		12,504,000
Share issue costs	9	(223,806)		(861,828)
Lease liability		-		(27,144)
Proceeds from options exercised		-		20,750
Proceeds from warrants exercised	9	189,000		12,500
		4,979,186		11,648,278
Increase(decrease)in cash		(791,995)		396,150
Cash, beginning of the year	$	1,575,784	$	1,179,634
Cash, end of the year	$	783,789	$	1,575,784
Supplemental disclosures with respect to
cash flows:
Cash paid during the year for income taxes	$	-	$	-
Cash paid during the year for interest	$	-	$	636
Non-cash activities:
Exploration and evaluation expenditures
included in accounts payable	$	124,610	$	138,187
Fair value of finders' warrants	9	10,094		123,816
Fair value of shares issued for property	4	169,163		6,886,859
Fair value of exercised finders' warrants	9	99,016		6,549
Fair value of exercised options		-		17,043
Flow-through premium liability	7	649,609		1,020,000
Rehabilitation provisions	8	-		256,433
Share-issue costs allocated to flow-through
premium	9	48,853		207,768

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

Statements of Changes in Shareholders' Equity

(Expressed in Canadian Dollars)

	Capital Stock
	Shares		Amount	Warrantsreserve	Optionsreserve	Deficit	Total
Balance at December 31, 2017	17,756,370	$	4,592,913	$105,565	$292,994	$(1,161,647)	$3,829,825
Shares issued for resource property	5,190,406		6,886,859	-	-	-	6,886,859
Shares issued in private placement	5,700,000		7,524,000	-	-	-	7,524,000
Flow-through shares issued in
private placement	3,000,000		4,167,768	-	-	-	4,167,768
Share issue costs	-		(985,644)	123,816	-	-	(861,828)
Share-based compensation	-		-	-	876,760	-	876,760
Options exercised	25,000		37,793	-	(17,043)	-	20,750
Warrants exercised	25,000		19,049	(6,549)	-	-	12,500
Loss for the year	-		-	-	-	(1,976,734)	(1,976,734)
Balance at December 31, 2018	31,696,776	$	22,242,738	$222,832	$1,152,711	$(3,138,381)	$20,479,900
Balance at December 31, 2018	31,696,776	$	22,242,738	$222,832	$1,152,711	$(3,138,381)	$20,479,900
Shares issued for resource property	266,875		169,163	-	-	-	169,163
Shares issued in private placement	2,379,750		1,903,800	-	-	-	1,903,800
Flow-through shares issued in
private placement	3,075,728		2,509,436	-	-	-	2,509,436
Share issue costs	-		(233,900)	10,094	-	-	(223,806)
Share-based compensation	-		-	-	380,274	-	380,274
Warrants exercised	378,000		288,016	(99,016)	-	-	189,000
Loss for the year	-		-	-	-	(1,367,397)	(1,367,397)
Balance at December 31, 2019	37,797,129	$	26,879,253	$133,910	$1,532,985	$(4,505,778)	$24,040,370

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

1. Nature and Continuance of Operations

Fireweed Zinc Ltd. (the "Company") was incorporated under the Business Corporations Act of the Yukon in Canada on October 20, 2015. The Company is a mineral exploration and development company and is engaged in the acquisition and exploration of mineral assets. Currently the Company has one project, the Macmillan Pass Project, which includes the Tom and Jason claims and zinc-lead-silver deposits, the Nidd claims and optioned large blocks of adjacent claims (MC, MP, Jerry, BR and NS, MAC) in Yukon, Canada (collectively, the "Project"). The Company is listed on the TSX Venture Exchange and trades under the symbol FWZ.

The Company's head office and principal address is Suite 1020 – 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6. The registered and records office is 3081 3rd Avenue, Whitehorse, Yukon, Canada Y1A 4Z7.

The Company's ability to continue operations is not assured and is dependent upon the ability of the Company to obtain necessary financing to meet its liabilities and commitments as they become due and the ability to generate future profitable production or operations or obtain sufficient proceeds from the disposition thereof. The outcome of these matters cannot be predicted at this time. These financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. As at December 31, 2019, management estimates that the Company does not have sufficient working capital to maintain its operations and activities for the next twelve months and will need to raise additional capital in the next few months in order to further fund its operations. These material uncertainties may cast significant doubt as to the Company's ability to continue as a going concern.

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or ability to raise funds.

The financial statements for the year ended December 31, 2019 have been prepared by management, reviewed by the Audit Committee and authorized for issue by the Board of Directors on April 22, 2020.

2. Basis of Presentation and 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 issued by the International Financial Reporting Interpretation Committee ("IFRIC") in effect at December 31, 2019.

The financial statements have been prepared on a historical cost basis, except for financial instruments classified as fair value through profit or loss, which are stated at their fair value. All dollar amounts presented are in Canadian dollars unless otherwise specified. In addition, the financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

3. Significant Accounting Policies

a) Financial Instruments

The Company classifies its financial assets into one of the categories described below, depending on the purpose for which the asset was acquired. Management determines the classification of its financial assets at initial recognition.

Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL, for other equity instruments, on the day of acquisition the Company can make an irrevocable

a) Financial Instruments (cont'd…)

election (on an instrument-by-instrument basis) to designate them as at fair value through other comprehensive income ("FVTOCI").

Fair value through profit or loss ("FVTPL") – Financial assets carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statement of loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial asset held at FVTPL are included in the statement of loss in the period in which they arise. Derivatives are also categorized as FVTPL unless they are designated as hedges.

Fair value through other comprehensive income ("FVTOCI") - Investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently, they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment

Financial assets at amortized cost - A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of contractual cash flows, and the asset's contractual cash flows are comprised solely of payments of principal and interest. They are classified as current assets or non-current assets based on their maturity date and are initially recognized at fair value and subsequently carried at amortized cost less any impairment.

The following table shows the classification of the Company's financial assets under IFRS 9:

Financial instrument	IFRS 9 Classification
Cash	Fair value through profit and loss
Receivables	Financial asset measured at amortized cost
Reclamation bond	Financial asset measured at amortized cost
Accounts payable and accrued liabilities	Financial asset measured at amortized cost

Financial liabilities other than derivative liabilities are recognized initially at fair value and are subsequently stated at amortized cost. Transaction costs on financial assets and liabilities other than those classified at FVTPL are treated as part of the carrying value of the asset or liability. Transaction costs for assets and liabilities at FVTPL are expensed as incurred.

b) Exploration and evaluation assets

Pre-exploration costs are expensed as incurred. The Company records exploration and evaluation asset interests, which consist of the right to explore for mineral deposits, at cost. The Company records deferred exploration costs, which consist of costs attributable to the exploration of exploration and evaluation asset interests, at cost. All direct and indirect costs relating to the acquisition and exploration of these exploration and evaluation asset interests are capitalized on the basis of specific claim blocks until the exploration and evaluation asset interests to which they relate are placed into production, disposed of through sale, or where management has determined there to be an impairment. If an exploration and evaluation asset interest is abandoned, the exploration and evaluation asset interests and deferred exploration costs will be written off to operations in the period of abandonment.

On an on-going basis, the capitalized costs are reviewed on a property-by-property basis to consider if there is any impairment on the subject property. Management's determination for impairment is based on 1) whether the Company's exploration programs have significantly changed, such that previously identified resource targets are no longer being pursued; 2) whether exploration results to date are promising and whether additional exploration work is being planned in the foreseeable future; or 3) whether remaining lease terms are insufficient to conduct necessary studies or exploration work. The recorded cost of exploration and evaluation asset interests is based on cash paid and the assigned value of share consideration issued (where shares are issued) for exploration and evaluation asset interest acquisitions

b) Exploration and evaluation assets (cont'd…)

and exploration costs incurred. The recorded amount may not reflect the recoverable value, as this will be dependent on future development programs, the nature of the mineral deposit, commodity prices, adequate funding and the ability of the Company to bring its projects into production.

Once an economically viable reserve has been determined for a property and the decision to proceed with development has been approved, acquisition, exploration and evaluation assets attributable to that area are first tested for impairment and then reclassified to construction in progress within property and equipment.

c) Provision for environmental rehabilitation

The Company recognizes liabilities for legal or constructive obligations associated with the retirement of exploration and evaluation assets and equipment. The net present value of future rehabilitation costs is capitalized to the related asset along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.

The Company's estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation provision.

The increase in the provision due to the passage of time is recognized as interest expense.

d) Equipment

Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and cost can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to profit or loss during the period in which they are incurred.

The major categories of equipment are depreciated as follows: Computer Hardware: 45% declining balance, and Exploration Equipment: 20% declining balance

e) Share-Based Payments

The Company's stock option plan allows Company employees, directors, officers and consultants to acquire shares of the Company. The fair value of options granted is recognized as share-based compensation expense with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee. Fair value is measured at grant date, and each tranche is recognized using the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted.

At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of stock options that are expected to vest. In situations where equity instruments are issued to consultants and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, sharebased payments are measured at the fair value of goods or services received.

Notes to the Financial Statements for the Year Ended December 31, 2019 (Expressed in Canadian Dollars)

3. Significant Accounting Policies (cont'd…)

f) Impairment of non-financial assets

At the end of each reporting period, the Company's assets are reviewed to determine whether there is any indication that those assets may be impaired. If 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 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 period. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

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

g) Loss per share

Basic loss per common share is calculated by dividing net loss available to common shareholders by the weighted-average number of shares outstanding during the year. The effect of dilutive stock options warrants and similar instruments on loss per share is recognized on the use of the proceeds that could be obtained upon these and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year. Diluted loss per share value excludes all dilutive potential common shares if their effect is anti-dilutive.

h) Critical accounting estimates, judgments, and assumptions

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 financial statements and reported amount of expenses during the reporting period. Actual outcomes could differ from these estimates. These financial statements include estimates that, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Information about significant areas of estimation uncertainty in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are noted below with further details of the assumptions contained in the relevant note.

h) Critical accounting judgments, estimates and assumptions (cont'd…)

Critical accounting judgment

The preparation of these financial statements requires management to make judgments regarding the going concern of the Company as discussed in Note 1.

Key sources of estimation uncertainty

Exploration and evaluation assets

Exploration and evaluation costs are initially capitalized as intangible exploration assets with the intent to establish commercially viable reserves. The Company is required to make estimates and judgments about the future events and circumstances regarding whether the carrying amount of intangible exploration assets exceeds its recoverable amount.

Recoverability is dependent on various factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development and upon future profitable production or proceeds from the disposition of the exploration and evaluation assets themselves. Additionally, there are numerous geological, economic, environmental and regulatory factors and uncertainties that could impact management's assessment as to the overall viability of its properties or the ability to generate future cash flows necessary to cover or exceed the carrying value of the Company's exploration and evaluation assets.

Deferred tax assets and liabilities

The measurement of a deferred tax provision is subject to uncertainty associated with the timing of future events and changes in legislation, tax rates and interpretations by tax authorities. The estimation of taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company's ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management's assessment of the Company's ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets, and future tax provisions or recoveries could be affected.

Share-based compensation

Share-based compensation expense is measured by reference to the fair value of the stock options at the date at which they are granted. Estimating fair value for granted stock options requires determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility, dividend yield, and rate of forfeitures and making assumptions about them. The value of the sharebased compensation expense for the years ended December 31, 2019 and 2018 are disclosed in Note 9.

Rehabilitation provision

The calculation of the asset retirement obligation involves significant measurement estimates and assumptions of the amount and timing of reclamation costs and applicable inputs used in the calculation, such as discount rates. The Company bases its estimates on historical experience, government regulations and assumptions that are believed to be reasonable given the scope of the exploration project. Refer to Note 8 for more details.

i) Income taxes

Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity. Current tax expense is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they revert, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current income tax liabilities and assets, and they relate to income taxes levied by the same tax authority for the same taxable entity. 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 income tax benefit will be realized.

j) Capital stock

Common shares are classified as shareholders' equity. Incremental costs directly attributable to the issuance of common shares and stock options are recognized as a deduction from equity. Common shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued.

The Company uses the residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in the private placements to be the more easily measurable component and the common shares are valued at their fair value, as determined by the closing market price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as reserves.

The Company may from time to time, issue flow-through common shares to finance a significant portion of its exploration program. Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors. On issuance, the Company separates the flowthrough common share into i) a flow-through common share premium, equal to the estimated premium, if any, investors pay for the flow-through feature, which is recognized as a liability and; ii) capital stock. When the resource property expenditures are incurred, the Company derecognizes the liability and recognized as other income.

k) New accounting standards and interpretations adopted during the year

On January 1, 2019, the Company adopted IFRS 16, Leases and IFRIC 23, Uncertainty over Income Tax Treatments which has an initial application as at this date.

The newly adopted IFRS 16, Leases standard establishes principles for recognition, measurement, presentation and disclosure of leases with an impact on lessee accounting, effective for annual periods beginning on or after January 1, 2019. The Company has assessed its office lease agreement and concluded that the agreement does not constitute the ability to direct the use (right to use) of the underlying office premises in the context of IFRS 16. As such, the adoption of the above standard has not had an impact on the results and financial position of the Company.

k) New accounting standards and interpretations adopted during the year (cont'd…)

The newly adopted IFRIC 23, Uncertainty over Income Tax Treatments clarifies the accounting for uncertainties in income taxes. The interpretation provides guidance and clarifies the application of the recognition and measurement criteria in IAS 12, Income Taxes when there is uncertainty over income tax treatments. The adoption of IFRIC 23 has not had an impact on the financial statements of the Company.

4. Exploration and Evaluation Assets

	Fiscal Year Ended	Fiscal Year Ended
Macmillan Pass Project	December 31,	December 31,
(Yukon, Canada)	2019	2018
Acquisitionand maintenancecosts:
Opening balance	$8,226,892	$324,691
Additions during the year:
Cash payments	289,725	1,015,342
Shares issued	169,163	6,886,859
	458,888	7,902,201
Total acquisition costs	8,685,780	8,226,892
Exploration costs:
Opening balance	11,436,663	2,469,981
Additions during the year:
Assaying	220,260	267,295
Camp and field	1,000,780	2,078,520
Drilling	845,070	2,152,799
Engineering	115,316	846,932
Geological Consulting	1,812,011	2,568,240
Legal Fees	4,318	24,085
Other	17,607	51,141
Permitting	39,870	17,951
Rehabilitation provisions	-	256,433
Reporting	65,102	94,731
Travel & Support	194,672	608,555
	4,315,006	8,966,682
Total exploration costs	15,751,669	11,436,663
Ending balance	$24,437,449	$19,663,555

Macmillan Pass Project, Yukon, Canada

Option Agreement with Hudbay

On December 14, 2016, the Company entered into a two-year option agreement with Hudbay Minerals Inc. ("Hudbay") whereby the Company could acquire a 100% interest in the Tom Jason zinc-lead-silver property.

During the year ended December 31, 2018, the Company incurred the required exploration expenditures of $1,250,000 under the option agreement and, accordingly, exercised its option by paying a total of $1,000,000 cash and issuing 3,565,406 shares to acquire a 100% interest in the Tom Jason property.

Upon exercise of the option, the Company assumed a pre-existing 3% net smelter royalty ("NSR") on the Jason claims to third parties but has the right to purchase at any time – 1.5% of the NSR for $1,250,000 and the remaining 1.5% NSR for $4,000,000.

(Expressed in Canadian Dollars)

4. Exploration and Evaluation Assets (cont'd…)

Macmillan Pass Project, Yukon, Canada (cont'd…)

Option Agreement with Newmont/Maverix

On July 24, 2017, the Company entered into an option agreement with Newmont Canada Holdings, ULC ("Newmont"), whereby the Company can acquire a 100% interest in the MAC claims located on the northwest extension of the Company's Tom Jason claims by paying $450,000 in staged cash payments over four years (see summary of payments in the schedule below), maintaining the MAC claims in good standing, and granting Newmont a 0.25% NSR on base metals, 1% NSR on silver and 3% NSR on gold. Newmont will also have an exclusive but limited 30 days right of first offer on any future proposed sale, transfer or disposition by the Company of its interest in the MAC claims. The MAC claims are considered part of the MacMillan Pass project cash generating unit. On June 29, 2018 Newmont sold the MAC claims option agreement to Maverix Metals Inc. ("Maverix") as part of a larger transaction and as such the new registered owner and optionor of the MAC claims is now Maverix.

In July 2019, the Company entered into an amending agreement with Maverix modifying the second anniversary payment clause from $95,000 cash payment to $50,000 in cash and 95,000 common shares of the Company. The schedule below summarizes updated option payment terms between the Company and Maverix:

Due Date	Amount	Common Shares
July 24, 2017 (signing of the option)	$50,000 (paid)	-
July 24, 2018 (first anniversary)	$80,000 (paid)	-
July 24, 2019 (second anniversary)	$50,000(paid)	95,000 (issued)
July 24, 2020 (third anniversary)	$110,000	-
July 24, 2021 (fourth anniversary)	$115,000	-
TOTAL	$405,000	95,000

The Company may prepay any of the option payments and/or prepay the entire purchase price at any time.

Option Agreement with Constantine Metal Resources Ltd./Epica Gold Inc. and Carlin Gold Corporation

In March 2018, the Company entered into a mineral property option agreement with Constantine Metal Resources Ltd. ("Constantine") and Carlin Gold Corporation ("Carlin") to purchase the MC, MP and Jerry Claims. The terms of the agreement whereby the Company will have the right to earn a 100% interest in the MC, MP, and Jerry claims (the "Constantine-Carlin claims") are summarized below

Due Date	Cash	Common shares
Exchange approval of the option agreement (May 9, 2018)	$75,000 (paid)	50,000 (issued)
On or before May 9, 2019	$125,000(paid)	50,000(issued)
On or before May 9, 2020	$150,000	100,000
On or before May 9, 2021	$150,000	100,000
TOTAL	$500,000	300,000

The Company may prepay any of the option payments and/or prepay the entire purchase price at any time.

On July 31, 2019, Constantine transferred its rights, title and interest in and to the Constantine claims and assigned its right and interest in and to the aforementioned agreement, to its wholly-owned subsidiary, Epica Gold Inc. ("Epica") and later transferred 100% interest in Epica to its spinoff company, HighGold Mining Inc. (TSX.V: High).

4. Exploration and Evaluation Assets (cont'd…)

Macmillan Pass Project, Yukon, Canada (cont'd…)

Option Agreement with Constantine Metal Resources Ltd./Epica Gold Inc. and Carlin Gold Corporation (cont'd…)

Although not part of the consideration payable to exercise the option, the Company will pay an additional $750,000 in cash or equivalent in shares, upon receiving a resource calculation of at least 2.0 million tonnes of indicated (or better) resource on any part of the Epica-Carlin claims. Epica and Carlin will retain the right to receive a NSR on any future mine production from the Epica-Carlin claims as follows: 0.5% NSR on base metals and silver and 2% NSR on all other metals including gold. The Company maintains a right of first refusal on the sale of any NSR royalty from these claims by Constantine and/or Carlin.

Option Agreement with Golden Ridge Resources Ltd.

In April 2018, the Company entered into a mineral property option agreement with Golden Ridge Resources Ltd. ("Golden Ridge") extending the Company's Macmillan Pass Project land position.

This option allows the Company to acquire a 100% interest in a number of quartz claim tenures from Golden Ridge ("BR and NS claims"). As per the initial agreement, the Company can exercise the option and acquire a 100% interest in these claims by making payments totaling $500,000 and issuing 450,000 shares over three years to Golden Ridge.

During the year ended December 31, 2019 the Company signed an amending agreement, the terms of which are reflected in the schedule below. The cash payment of $37,500 was made and 121,875 shares issued in May 2019 representing a second installment towards 100% interest in BR and NS claims.

Due Date	Cash	Common shares
Exchange approval of the option agreement (May 9, 2018)	$75,000 (paid)	75,000 (issued)
On or before May 9, 2019	$37,500 (paid)	121,875 (issued)
On or before May 9, 2020	$150,000	100,000
On or before May 9, 2021	$200,000	200,000
TOTAL	$462,500	496,875

The Company may prepay any of the option payments and/or prepay the entire purchase price at any time.

Although not part of the consideration payable to exercise the option, the Company will pay an additional $750,000 in cash or equivalent in shares, to Golden Ridge, upon receiving a resource calculation of at least 2.0 million tonnes of indicated (or better) resource on any part of the BR and NS claims.

Golden Ridge will retain the right to receive NSR royalties on any future mine production from the BR and NS claims as follows: 0.5% NSR on base metals and silver and 2% NSR on all other metals, including gold. There is also a third party 3% NSR on any future cobalt production from the BR and NS claims. The Company will have the right to purchase one-half of these NSR royalties (excluding the cobalt royalty) for $2,000,000 at any time prior to the commencement of commercial production. The Company maintains a right of first refusal on the sale of any NSR royalty from the BR and NS claims by Golden Ridge.

Acquisition of Nidd Property

On November 2, 2018, the Company entered into a purchase and sale agreement with Teck Metals Ltd. and Teck Mining Worldwide Holdings Ltd. ("Teck"). to acquire the right, title and interest in and to the Nidd property on the western extension of the Macmillan Pass Zinc Project in Yukon.

On November 27, 2018, as per the terms of the purchase and sale agreement, the Company issued 1,500,000 common shares of the Company with a fair value of $1,350,000 and granted Teck a 1% NSR on the production from the Nidd Property. The fair value of the shares issued was determined based on the market price at the date of the issuance.

Notes to the Financial Statements for the Year Ended December 31, 2019 (Expressed in Canadian Dollars)

5. Equipment

	ExplorationEquipment	ComputerHardware	Total
Cost
As at December 31, 2017 and 2018and2019	$38,026	$3,603	$41,629
Accumulated Depreciation
As at December 31, 2017	(4,523)	(1,621)	(6,144)
Depreciation expense	(6,700)	(892)	(7,592)
As at December 31, 2018	(11,223)	(2,513)	(13,736)
Depreciation expense	(5,360)	(491)	(5,851)
Balance as at December31, 2019	(16,583)	(3,004)	(19,587)
Net book value
As at December 31, 2018	$26,803	$1,090	$27,893
As at December31, 2019	$21,443	$599	$22,042

6. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities mainly consist of payables to management and to vendors for work completed on the Company's project as well as accrual of professional and director fees. The breakdown of accounts payable and accrued liabilities are as follows:

	December31,2019	December 31,2018
Payable to related parties	$124,688	$91,317
Payable to vendors	164,112	236,063
Total Accounts Payable and Accrued Liabilities	$288,800	$327,380

7. Flow-Through Liability

Flow-through share premium liabilities include the liability portion of the flow-through shares issued. The following is a continuity schedule of the liability portion of the flow-through shares issuances:

Balance at December 31, 2017	$-
Liability incurred on flow-through shares issued	1,020,000
Flow-through issuance costs	(207,768)
Settlement of flow-through liability on incurred expenditures	(812,232)
Balance at December 31, 2018	$-
Liability incurred on flow-through shares issued	649,609
Flow-through issuance costs	(48,853)
Settlement of flow-through liability on incurred expenditures	(600,756)
Balance at December31, 2019	$-

On February 15, 2019, the Company issued 1,820,728 flow-through common shares at a price of $0.95 per share for gross proceeds of $1,729,692 and 1,255,000 flow-through shares at a price of $1.10 through a charity arrangement for the proceeds of $1,380,500. Premiums of $0.15 and $0.30 per share were recorded for each of these flow-through share issuances, totaling $649,609 in flow-through liability. Share issuance costs allocated to the flow-through premium liability were $48,853.

7. Flow-Through Liability (cont'd…)

During year ended December 31, 2019, the Company incurred eligible flow-through expenditures in excess of the $3,110,192 of the total flow-through funds raised. Therefore, 100% of the flow-through premium liability ($649,609) and 100% of the flow-through related share issuance costs ($48,853) were recognized on the statement of loss and comprehensive loss, resulting in the $Nil flow-through liability balance at December 31, 2019.

On February 26, 2018, the Company issued 3,000,000 flow-through common shares at a price of $1.66 per share for gross proceeds of $4,980,000. A premium of $0.34 per share was received for the flow-through shares. Share issuance costs relating to the flow-through premium liability were $207,768.

During the year ended December 31, 2018, the Company incurred eligible flow-through expenditures in excess of the $4,980,000 flow-through funds raised. Therefore, 100% of the flow-through premium liability ($1,020,000) and 100% of the flow-through related share issuance costs ($207,768) were recognized on the Statement of loss and comprehensive loss.

8. Rehabilitation Provisions

The Company has estimated that the present value of future rehabilitation costs required to remediate the Tom Jason property based on its current state. The Company did not have any rehabilitation provisions prior to the acquisition of the Tom Jason property.

Although the ultimate amount of the rehabilitation liability is uncertain, the best estimate of these obligations is based on information currently available. Current significant closure and rehabilitation activities include dismantling and removing camp facilities, roads reclamation and mobile equipment removal costs.

The total amount of estimated undiscounted cash flow required to settle the Company's estimated obligation as at December 31, 2019 was $234,596. The calculation of present value of estimated future cash flows assumed a discount rate of 1.79% and an inflation rate of 2.70%. Rehabilitation costs are estimated to be settled at various dates during 2028.

	December31, 2019
Balance, December 31, 2017	$-
Change in estimates	256,433
Balance, December 31, 2018	$256,433
Change in estimates	4,590
Balance, December 31, 2019	$261,023

9. Capital Stock and Reserves

The authorized capital stock of the Company consists of an unlimited number of common shares without nominal or par value. As at December 31, 2019, the Company had 37,797,129 (December 31, 2018 – 31,696,776) common shares issued and outstanding.

Transactions for the year ended December 31, 2019

On February 15, 2019, the Company closed a non-brokered private placement for gross proceeds of $5,013,992. The Company issued a total of 2,379,750 common shares at a price of $0.80 per share, 1,820,728 flow-through common shares at a price of $0.95 and 1,255,000 charity flow-through common shares at a price of $1.10 through a donation arrangement. An associated flow-through liability of $649,609 was recognized on the statement of financial position (Note 7).

The Company incurred a total of $233,900 issue costs, $48,853 of which was allocated to flow-through share issue costs. The issue costs included 6% finders' cash commission ($36,237) and a fair value of 34,680 agents' warrants in the amount of $10,094 as well as other legal, advisory and filing fees. All the agent's warrants are exercisable at $0.95 for a period of two years from the grant date.

9. Capital Stock and Reserves (cont'd…)

During the year ended December 31, 2019, the Company issued 378,000 shares on the exercise of agents' warrants for the total proceeds of $189,000 and allocated a fair value of $99,016 from reserves to capital stock.

On May 3, 2019, the Company issued 25,000 shares to Constantine and Carlin each for the total of 50,000 shares as part of the second option payment for the MC, MP and Jerry Claims. The shares were valued at the closing market price of $0.67 at the date of issue (Note 4) for the total fair value of $33,500.

On May 27, 2019, Fireweed issued 121,875 shares to Golden Ridge for NS and BR claims, as per the option agreement amendment effective April 15, 2019 (Note 4). The fair value of the shares issued was $85,313, based on the closing market price at the share issue date.

On August 12, 2019, the Company issued 95,000 shares to Maverix for MAC claims, as per the option agreement amendment effective July 23, 2019 (Note 4). The fair value of the shares issued was $50,350, based on the closing market price at the share issue date.

Transactions for the year ended December 31, 2018

On January 24, 2018, the Company issued 25,000 shares on the exercise of agent's warrants for total proceeds of $12,500 and allocated $6,549 from warrants reserve to capital stock.

On February 2, 2018, the Company issued 3,565,406 common shares to Hudbay pursuant to the terms of the Hudbay Property Option Agreement at a fair value of $5,348,109 based on the common share quoted market price, which was capitalized to mineral property acquisition (Note 4).

On February 26, 2018, the Company completed a private placement of flow-through and non-flow-through shares for gross proceeds of $12,504,000. The Company issued 3,000,000 flow-through shares at a price of $1.66 for the gross proceeds of $4,980,000, including a flow-through premium of $1,020,000 (Note 8) and 5,700,000 non-flow-through shares at a price of $1.32 for the gross proceeds of $7,524,000.

In connection with the private placement, the Company incurred $985,644 issue costs, $207,768 of which were allocated to flow-through share issue costs. The issue costs included $721,368 commission cash payments to brokers and a fair value of 250,064 compensation options granted to brokers in the amount of $123,816. The compensation options are exercisable at $1.32 for a period of 2 years following the grant date.

On May 10, 2018, the Company issued a total of 125,000 shares in connection with property option agreements (25,000 shares each to Constantine and Carlin and 75,000 shares to Golden Ridge (see Note 4 for details of the option agreements)). The fair value of the 125,000 shares was $188,750.

On June 8, 2018, the Company issued 25,000 shares on the exercise of stock options for total proceeds of $20,750 and allocated $17,043 from options reserve to capital stock.

On November 27, the Company issued 1,500,000 shares with a fair value of $1,350,000 to Teck for the right, title and interest in and to the Nidd property (Note 4).

Escrow shares

Pursuant to TSX Venture Exchange policies, 1,713,811 (December 31, 2018 – 5,141,433) common shares are held in escrow as at December 31, 2019. The common shares issued in connection with IPO and held in escrow were released as to 10% on the listing date and the balance in equal 15% tranches are released every six months from the listing date.

On February 2, 2018, the Company issued 3,565,406 shares to Hudbay upon exercise of the option to acquire 100% interest in the Tom Jason property (Note 4), which were placed in escrow with 25% of shares released on Feb 6, 2018 and another 15% released on May 29, 2018. The balance is released in equal 15% tranches every six months.

9. Capital Stock and Reserves (cont'd…)

Stock options

The Company adopted a stock option plan ("the Plan") whereby it can grant options to directors, officers, employees, and technical consultants of the Company. The maximum numbers of shares that may be reserved for issuance under the Plan is limited to 10% of the issued common shares of the Company at any time and are exercisable within a maximum of ten (10) years. The vesting period for all options is at the discretion of the directors. The exercise price will be set by the directors at the time of grant and cannot be less than the discounted market price of the Company's common shares.

The following is a summary of the Company's stock option activity:

	Number ofOptions	Weighted AverageExercise Price
Balance as at December 31, 2017	1,610,000	$0.54
Granted	860,000	$0.50
Exercised	(25,000)	$0.83
Balance as at December 31, 2018	2,445,000	$0.86
Granted	250,000	$0.65
Balance as at December31, 2019	2,695,000	$0.84

Share-based payments relating to options vested during the year ended December 31, 2019 using the Black-Scholes option pricing model were $380,274 (2018 - $876,760), which was recorded as reserves on the statements of financial position and as share-based compensation expense on the statement of loss and comprehensive loss.

On July 11, 2019, the Company granted a total of 250,000 stock options to its employees and consultants, exercisable at $0.65 per share for a five-year term. They options vest 20% every 6 months following the grant date.

	December31, 2019	December31, 2018
Risk-free interest rate	1.56%	0.95%
Expected life of options	5 years	5 years
Annualized volatility	62.66%	100%
Dividend rate	0.00%	0.00%
Forfeiture rate	0.00%	0.00%
Shareprice on grant date	$0.57	$1.45
Weighted average fair value of options granted	$0.29	$1.08

As at December 31, 2019, the Company had outstanding stock options exercisable as follows:

Expiry date(mm/dd/yyyy)	Number ofOptionsOutstanding	Number ofOptionsExercisable	Weighted AverageRemaining life in Years	Weighted AverageExercise Price
04/26/2022	1,380,000	1,104,000	2.32	$0.50
10/27/2022	30,000	24,000	2.82	$0.70
12/06/2022	175,000	175,000	2.93	$0.83
03/14/2023	860,000	516,000	3.20	$1.45
07/11/2024	250,000	-	4.53	$0.65
	2,695,000	1,819,000	2.85	$0.84

9. Capital Stock and Reserves (cont'd…)

Agents' warrants and compensation options

During the year ended December 31, 2019, the Company issued 34,680 agents' warrants with a fair value of $10,094. In addition, 378,000 common shares of the Company were issued upon the exercise of agent warrants for gross proceeds of $189,000.

The agents' warrants and options activities are summarized below:

	Number ofWarrants	Weighted AverageExercise Price
Balance as at December 31, 2017	403,000	$0.50
Issued	250,064	$1.32
Exercised	(25,000)	$0.50
Balance as at December 31, 2018	628,064	$0.83
Issued	34,680	$0.95
Exercised	(378,000)	$0.50
Balance as at December31, 2019	284,744	$1.27

The fair value of the agents' warrants of $10,094 was determined using the Black Scholes option valuation model with the assumptions indicated below:

	December 31, 2019	December 31,2018
Risk-free interest rate	1.78%	1.79%
Expected life of options	2 years	2 years
Annualized volatility	66.65%	66.88%
Dividend rate	0.00%	0.00%
Forfeiture rate	0.00%	0.00%
Share price on grant date	$0.87	$1.32
Weighted average fair value of the warrants
granted	$0.29	$0.50

The entire amount of the compensation options was recorded directly to warrants reserve on the statement of financial position.

10. Income Taxes

A reconciliation of current income taxes at statutory rates with the reported taxes is as follows:

	2019	2018
Net loss before income tax	$(948,397)$	(1,521,734)
Expected income tax expense (recovery)Permanent differenceImpact of flow through sharesShare issue costChange in statutory, foreign tax, foreign exchange rates and otherAdjustment to prior years provision versus statutory tax returnsand expiry of non-capital losses	(256,000)(60,000)840,000(60,000)-(45,000)	(411,000)19,0001,345,000(233,000)-7,000
Change in unrecognized deductible temporary differences	-	(272,000)
Total income taxexpense	$419,000$	455,000

10. Income Taxes (cont'd…)

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

Deferred tax assets (liabilities)	2019	2018
Exploration and evaluation assets	$(2,230,000)$	(1,345,000)
Property and equipment	12,000	(6,000)
Share issue costs	237,000	225,000
Non-capita losses available for future period	1,107,000	671,000
Net deferred tax liabilities	$(874,000)$	(455,000)

The significant components of deductible temporary differences, unused tax losses and unused tax credits that have not been included on the statement of financial position are as follows:

	December 31,2019		December 31,ExpiryDates2018		ExpiryDates
Share issue costs	$876,000	2040-2043	$	835,000	2039-2042
Non-capital losses	$4,100,000	2035-2039	$	2,484,000	2035-2038

Tax attributes are subject to review and potential adjustment by tax authorities.

11. Related Party Transactions

Related party transactions mainly include management and consulting fees, director and committee fees as well as share-based compensation. The related parties are mainly represented by the key management personnel, which 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 executive and non-executive members of the Company's Board of Directors and corporate officers. Related parties also include companies, controlled by officers and/or directors.

The remuneration to directors and key management personnel during the years ended December 31, 2019 and 2018 was as follows:

Nature of the transaction	Year EndedDecember31, 2019	YearendedDecember31, 2018
Director and committee fees	$147,000	$158,500
Investor relationsand corporate development	-	46,500
Management and consulting feesexpensed	388,526	206,992
Management and consulting fees
capitalized to exploration and evaluation	37,475	86,173
Rent	-	9,370
Share-based compensation	173,619	407,700
	$746,620	$915,235

11. Related Party Transactions (cont'd…)

The following amounts were owed to directors and key management personnel. These payables are unsecured, non-interest bearing and are expected to be repaid under normal trade terms.

		December31,2019	December31,2018
Directors	Director and committee fees	$110,250	$73,500
Key management	Management fees and expense recoveries	14,438	17,817
		$124,688	$91,317

12. Segmented Information

The Company operates in one reportable segment, being the acquisition and exploration of mineral projects. All of the Company's operations are within the mineral exploration sector in Canada.

13. Capital Management

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of exploration and evaluation assets. In the management of capital, the Company includes components of shareholders' equity. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business. The properties in which the Company currently has an interest are in the exploration stage, as such the Company is dependent on external financing to fund activities. In order to carry out planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. The Company may continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has or feels it can raise adequate financial resources to do so. The Company is not subject to any externally imposed capital requirements and there were no changes to management's approach to capital manager during the year ended December 31, 2019.

14. Financial Instruments and Risk Management

Fair Value

The Company has classified its financial instruments as follows:

Financial instrument	IFRS 9 Classification
Cash	Fair value through profit and loss
Receivables	Financial asset measured at amortized cost
Reclamation bond	Financial asset measured at amortized cost
Accounts payable and accrued liabilities	Financial asset measured at amortized cost

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:

• Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
• Level 3 Inputs that are not based on observable market data.

The fair value of the Company's receivables, reclamation bond, and accounts payable and accrued liabilities approximate carrying value, which is the amount recorded on the statements of financial position. The fair value of the Company's other financial instruments, cash, under the fair value hierarchy are based on level 1 quoted prices in active markets for identical assets and liabilities.

14. Financial Instruments and Risk Management (cont'd…)

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 loss associated with a counterparty's inability to fulfill its payment obligations. Receivables of $30,147 consist of Goods and Services Tax ("GST") recoverable from the Federal Government of Canada. The Company believes its exposure to credit risk is equal to the carrying value of this balance. The Company has exposure to credit risk with respect to its cash as it places most of its cash in one financial institution in Canada. The Company believes its exposure is limited as it banks with a large Canadian institution.

Liquidity risk

The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2019, the Company had a cash balance of $783,789 to settle current liabilities of $288,800. The Company believes it has sufficient funds to meet its current liabilities as they become due.

The Company is dependent on obtaining regular financings in order to continue as a going concern. Despite previous success in acquiring these financings, there is no guarantee of obtaining future financings.

Interest rate risk

The interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As at December 31, 2019, the Company is not exposed to significant interest rate risk.

Price risk

The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on profit or loss and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices of resources, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company.

Foreign currency risk

The Company operates predominately in Canada and is not exposed to any significant foreign currency risk.

15. Commitment

On December 19, 2016, the Company granted but did not issue, 1,000,000 performance shares to each of four founders/directors for a total of 4,000,000 shares, in recognition of services to date and as incentive for continuing services in advancing the project and increasing shareholder value. Each founder/director will receive, upon request, the following performance shares upon achievement of the following milestones:

15. Commitment (cont'd…)

Number ofshares to beissued	Milestone
300,000	Preparation of a positive preliminary economic assessment of the Tom and Jason zinclead-silver deposits (or any part of this property thereof).
300,000	Increasing the mineral resources contained within the Tom and Jason property by atleast 50% over the current stated mineral resources as stated in the 2007 TechnicalReport by D. Rennie (either by additional tonnage or increased total zinc+lead+silvercontent at similar or higher grade).
Balance(1)	Preparation of a positive Pre-Feasibility Study of the Tom and Jason deposits (or anypart thereof).
Balance(1)	The effective disposition of greater than 50% of the Tom and Jason deposits or of theCompany, whether by way of sale, business combination, joint venture or other similarform of transaction, demonstrating a value of at least $10,000,000.

(1) Balance of the 1,000,000 performance shares which have not been previously issued will be issued upon the achievement of either one or the other of these two milestones.

16. Subsequent Event

On April 14, 2020, the Company closed a private placement financing for gross proceeds of $1,142,301. The financing consisted of 3,807,670 common shares of the Company at a price of $0.30 per share with a full fouryear warrant exercisable at $0.60 per share, but subject to accelerated expiry terms if the Company's shares trade at or above $1.00 per share for 20 consecutive days. In connection with the private placement, the Company incurred a cash finders' fee of $30,930 and issued 103,099 finders' warrants, which are exercisable at a price of $0.40 per share until April 14, 2021.