Galore Resources Inc. — Interim / Quarterly Report 2021

Mar 2, 2021

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Condensed Consolidated Interim Financial Statements

Third Quarter ended December 31, 2020

(Expressed in Canadian Dollars) (Unaudited)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

These condensed consolidated interim financial statements of the Company for the period ended December 31, 2020 have been prepared by management and have not been subject to review by the Company’s auditors.

• 1 -

GALORE RESOURCES INC.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited - Expressed in Canadian Dollars)

	December 31,	March 31, 2020
	2020	(audited)
	$	$
Assets
Current assets
Cash	321	1,035
Amounts receivable	49,953	41,948
Prepaid expenses	20,315	-
	70,589	42,983
Equipment(note 3)	11,967	12,965
Exploration and evaluation assets (note 4)	7,209,511	7,111,456
	7,292,067	7,167,404
Liabilities and Equity
Current liabilities
Accounts payable and accrued liabilities	2,677,543	2,624,770
Due to related party (note 6)	558,298	485,701
Loanspayable(note 7)	86,174	50,806
	3,322,015	3,161,277
Shareholders’ equity
Share capital (note 8 (a))	17,482,474	17,241,825
Reserves (note 8 (c))	2,902,152	2,876,704
Deficit	(16,414,574)	(16,112,402)
	3,970,052	4,006,127
	7,292,067	7,167,404

See accompanying notes to the condensed consolidated interim financial statements

Nature and continuance of operations (note 1) Commitments (note 13)

Approved by the Board of Directors and authorized for issue on March 1, 2021.

• 2 -

GALORE RESOURCES INC.

Condensed Consolidated Interim Statements of Comprehensive Loss (Unaudited - Expressed in Canadian Dollars)

Three Months Ended December 31, Nine Months Ended December 31, 2020 2019 2020 2019	Three Months Ended December 31, Nine Months Ended December 31, 2020 2019 2020 2019	Three Months Ended December 31, Nine Months Ended December 31, 2020 2019 2020 2019
$ Operating costs and expenses Amortization 113 Consulting (note 5) 3,825 Corporate development and investor relations 708 Interest expense (notes 6 & 7) 50,583 Management fees (note 5) 74,273 Office and miscellaneous 3,606 Professional fees 21,146 Share-based compensation (notes 5 & 8) - Shareholder communications 364 Trust and filingfees 3,072	$ $ 69 217 - 6,015 790 2,413 38,500 153,990 75,242 195,173 4,366 7,646 - 26,222 - 25,448 - 364 - 16,378	$ 207 9,135 2,925 101,084 226,754 8,402 11,009 14,790 - 13,658
Loss before other items (157,690) Bonus shares (note 8 (a)) - Bonus warrants (note 6) - Foreign exchangegain(loss) 49,561	(118,967) (433,866) - - - - 19,517 131,694	(387,964) (15,720) (63,600) 27,975
Net loss and comprehensive loss for theperiod (108,129)	(99,450) (302,172)	(439,309)
Weighted average number of common shares outstanding 136,914,128	128,706,904 132,497,671	124,814,094
Basic and diluted lossper share $ (0.00)	$ (0.00) $ (0.00)	$ (0.00)

See accompanying notes to the condensed consolidated interim financial statements

• 3 -

GALORE RESOURCES INC.

Condensed Consolidated Interim Statements of Cash Flows (Unaudited - Expressed in Canadian dollars)

	Nine Months Ended December 31,	Nine Months Ended December 31,
	2020	2019
	$	$
Cash provided by (used for):
Operating activities
Net loss for the period	(302,172)	(439,309)
Items not involving the use of cash:
Amortization	217	207
Share-based compensation	25,448	14,790
Interest accrual on loans	153,990	27,033
Foreign exchange gain	(133,262)	(12,749)
Bonus shares issued	-	15,720
Bonus warrants	-	63,600
	(255,779)	(330,708)
Change in non-cash working capital:
Amounts receivable	(8,005)	(23,185)
Prepaid expenses	(20,315)	(9,198)
Accountspayable and accrued liabilities	166,389	270,044
	(117,710)	(93,047)
Investing activities
Exploration and evaluation assets	(92,380)	(372,715)
Purchase of equipment	(1,635)	-
	(94,015)	(372,715)
Financing activities
Advances from related party, net	98,455	185,929
Proceeds from private placement	75,649	279,816
Loanproceeds	36,907	-
	211,011	465,745
Increase (decrease) in cash	(714)	(17)
Cash,beginningof theperiod	1,035	1,155
Cash, end of theperiod	321	1,138

See accompanying notes to the condensed consolidated interim financial statements

Supplementary disclosure: Refer to note 9.

• 4 -

GALORE RESOURCES INC.

Condensed Consolidated Interim Statements of Changes in Equity (Unaudited - Expressed in Canadian dollars)

Number of shares Share capital	Reserves Deficit Total equity
$ March 31, 2020 130,277,375) 17,241,825) Private placement 2,521,623 75,649 Shares for debt settlement 6,600,000 165,000 Share-based compensation - - Net loss for the period - -	$ $ $ 2,876,704) (16,112,402) 4,006,127) - - 75,649 - - 165,000 25,448 - 25,448 -) (302,172) (302,172)
December 31, 2020 139,398,998 17,482,474	2,902,152 (16,414,574) 3,970,052
March 31, 2019 122,546,603) 16,909,888) Private placement 5,596,319 279,816 Bonus shares issued 314,400 15,720 Shares for debt settlement 1,820,053 36,401 Bonus warrants issued - - Share-based compensation - - Net loss for the period - -	2,798,314) (15,451,864) 4,256,338) - - 279,816 - - 15,720 - - 36,401 63,600 - 63,600 14,790 - 14,790 -) (439,309) (439,309)
December 31, 2019 130,277,375 17,241,825	2,876,704 (15,891,173) 4,227,356

See accompanying notes to condensed consolidated interim financial statements

• 5 -

GALORE RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

1) NATURE AND CONTINUANCE OF OPERATIONS

The Company is incorporated in British Columbia, Canada and has been primarily involved in the acquisition and exploration of mineral property interests in North America. The address of the Company’s corporate office and principal place of business is 432 Lyon Place, North Vancouver, B.C. V7L-1Y3 and the corporate mailing address is 19141 Stone Oak Parkway - #104, San Antonio, Texas, 78258, United States of America.

At the date of these financial statements, the Company has not been able to identify a known body of commercial grade ore on any of its properties. The ability of the Company to recover the costs it has incurred to date on these properties is dependent upon the Company being able to identify a commercial ore body, to finance its exploration and development costs and to resolve any environmental, regulatory, or other constraints which may hinder the successful development of the property. Although the Company is unaware of any defects in its title to its mineral properties, no guarantee can be made that none exist.

These condensed consolidated interim financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its commitments, continue operations, and realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception, has no recurring source of revenue and at December 31, 2020, the Company has a working capital deficiency of $3,251,426 (March 31, 2020 - $3,118,294) and an accumulated deficit of $16,414,574 (March 31, 2020 - $16,112,402).

The Company continuing operations as intended is dependent upon its ability to raise sufficient funds in order to finance exploration and administrative expenses. The Company has no assurance that such financing will be available or be available on favourable terms. Factors that could affect the availability of financing include the Company’s performance (as measured by numerous factors including the progress and results of its projects), the state of international debt and equity markets, investor perceptions and expectations and the global financial and metals markets. If successful, the Company would obtain additional financing through, but not limited to, the issuance of additional equity. These conditions, as well as the financial conditions noted above, indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.

These condensed consolidated interim financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption inappropriate, and these adjustments could be material.

2) SIGNIFICANT ACCOUNTING POLICIES

a) Statement of compliance and basis of presentation

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended March 31, 2020, which have been prepared in accordance with IFRS, as issued by the IASB.

b) Consolidation

		Proportion of
Name of Subsidiary	Place of Incorporation	Ownership Interest	Principal Activity
Minerales Galore,S.A de C.V.	Zacatecas State,Mexico	100%	Mineral Exploration

• 6 -

GALORE RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

2) SIGNIFICANT ACCOUNTING POLICIES (continued)

c) Significant accounting policies

These condensed consolidated interim financial statements have been prepared using the same accounting policies and methods of computation as the annual consolidated financial statements of the Company for the year ended March 31, 2020. The disclosure contained in these condensed consolidated interim financial statements do not include all the requirements in IAS 1 Presentation of Financial Statements (“IAS 1”). Accordingly, these condensed consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended March 31, 2020.

The accounting policies below have been applied consistently to all periods presented in these condensed consolidated interim financial statements.

d) Equipment

Equipment is measured at cost less accumulated amortization, less any accumulated impairment losses. When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) within equipment. Amortization on equipment is recorded at annual declining balance rates, with only 50% recorded in the year of acquisition, as follows:

• i) Office and exploration equipment – 20%

• ii) Computer hardware – 30%

• iii) Computer software – 100%

e) Significant accounting judgments, estimates and assumptions

The preparation of the Company’s condensed consolidated interim 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 condensed consolidated interim 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 judgements in applying accounting policies:

The following are critical judgements that management has made in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the condensed consolidated interim 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 evaluation assets may not be recoverable.

• 7 -

GALORE RESOURCES INC.

Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

3) EQUIPMENT

Exploration equipment Office equipment	Computer hardware	Total
$ $ Cost	$	$
Balance as at March 31, 2019, and 2020 25,876 7,976 Additions for the period - -	14,532 1,635	48,384 1,635
Balance as at December 31,2020 25,876 7,976	16,167	50,019
Accumulated amortization Balance as at March 31, 2019 13,790 7,275) Amortization for the year - 140)	14,078) 136)	35,143) 276
Balance as at March 31, 2020 13,790 7,415) Amortization for the period 2,417 84	14,214) 133	35,419 2,634
Balance as at December 31,2020 16,207 7,499	14,347	38,053
Net book value At March 31,2020 12,086 561	318)	12,965
At December 31,2020 9,669 477	1,820	11,966

4) EXPLORATION AND EVALUATION ASSETS

Title to exploration and evaluation assets

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

	Dos Santos,
	Mexico
	$
Balance, March 31, 2019	5,839,385)
Assays and lab analysis	3,554
Camp cost, logistics and community	87,290
Field office, travel and accommodation	412,290
Geological, geophysical and geochemical	208,086
Other exploration costs	121,388
Payments of rights	439,463
Balance, March 31, 2020	7,111,456
Amortization	2,417
Assays and lab analysis	33,670
Field office, travel and accommodation	38,739
Geological, geophysical and geochemical	22,927
Other exploration costs	302
Balance, December 31, 2020	7,209,511

• 8 -

GALORE RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

4) EXPLORATION AND EVALUATION ASSET (continued)

Dos Santos, Mexico

In December 2007 (and amended on April 4, 2009), the Company signed an option agreement to purchase 100% of the Dos Santos gold and base-metal property located in Zacatecas State, Mexico. In order to earn a 100% interest in the property the Company had to pay $250,000 U.S. over a four-year period (paid).

The Company also acquired certain other mineral claims through staking.

During the year ended March 31, 2012, the Company entered into a purchase agreement to acquire the surface rights to certain privately-owned lands known as Rancho Duraznillo that cover a portion of the Dos Santos project. The terms of the agreement required payments of 350,000 MXN Pesos on signing (paid) and further monthly payments over 18 months totaling approximately 1,050,000 MXN Pesos. The Company completed these payments during the period ended December 31, 2018, and acquired the surface rights and gained full title.

On January 17, 2018, the Company announced that it had entered into a 5-year contract with Urbanizaciones Y Acabados, S.A. De CV (“URBYASA”), (subject to a two-year validity for renewal) to mine gold from certain mineral claims within the property. Under this contract, URBYASA was to be responsible for all required insurance, permits, fees, duties, and taxes associated with the Mining Law and other federal, state and local laws. Any proceeds, net of costs, will be allocated 40% to the Company and 60% to URBYASA. The Company would retain the rights on all other minerals extracted at the Company’s other claims. The contract with URBYASA is with the Company’s wholly owned subsidiary, Minerales Galore S.A. De CV.

During the year ended March 31, 2019, the Company formally requested that URBYASA terminate the small-scale mining operation at Los Gemelos that was previously announced in October 2018. URBYASA was asked to vacate the property and terminate the agreement. On June 5, 2019 Minerales Galore filed in the proper courts to have URBYASA removed from the project. To date the case is still pending.

5) RELATED PARTY TRANSACTIONS

Key management personnel compensation:

	Nine Months Ended December 31,	Nine Months Ended December 31,
	2020	2019
	$	$
Share-based compensation	25,448	14,790
Consulting fees	7,515	9,135
Management fees*	195,173	226,754
Bonus warrants	-	63,600
Total management compensation	314,279	314,279

• Management fees on the Condensed Consolidated Interim Statement of Comprehensive Loss includes a recovery of prior year management fees of $34,000.

All transactions with related parties have occurred in the normal course of operations and management represents that they have occurred on a basis consistent with those involving unrelated parties, and accordingly that they are measured at fair value.

In November 2020, the Company issued 6,600,000 common shares to settle debt of $165,000 owed to key management.

• 9 -

GALORE RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

Included in accounts payable and accrued liabilities as at December 31, 2020 is $992,641 (March 31, 2020 - $957,947) due to officers and directors and companies controlled by officers and directors.

6) DUE TO RELATED PARTY

In January 2017, the Company entered into a loan agreement with the CEO of the Company (the “Lender”), whereby the Company borrowed USD$150,000. Under the terms of the agreement, the loan was to be due on January 12, 2019, bore interest of 8% per annum, compounded monthly, and was payable upon demand, provided however, that the Lender agreed not to make a demand within the first twelve months of the Loan. On January 12, 2019, the loan matured and remains outstanding. No formal loan extension has been reached, and the loan continues to accrue interest at the stated terms.

In May 2019, the CEO of the Company loaned the Company a further USD $100,000, bearing interest at 10% per annum. As further consideration for advancing the loan, in July 2019, the Company issued 2,000,000 bonus warrants to the Lender in consideration of the loan. These warrants were ascribed a fair value $63,600.

During the year ended March 31, 2020, the CEO of the Company advanced an additional $68,098 (USD $48,000). A further $44,946 (USD $34,000) was advanced in September 2020, and $74,154 (USD $56,800) was advanced in the threemonth period ending December 31, 2020. As of September 30, 2020, $31,907 (USD $23,485) has been repaid. The advance is unsecured, non-interest bearing and due on demand.

During the nine-month period ended December 31, 2020, the Company accrued interest of $27,245 (USD $20,343) (March 31, 2020 - $32,613 (USD$24,313)). As at December 31, 2020, the total amount owing is $558,297 (March 31, 2020 - $485,701).

Also included in interest expense is $122,901 accrued during the period related to unpaid management fees.

7) LOANS PAYABLE

On June 21, 2018, the Company entered into a loan agreement with a non-arm’s length shareholder of the Company (the “Lender”). Under the terms of the agreement, the Lender provided the Company with a loan of USD $30,000, bearing interest at 10% per annum, compounded monthly. As additional consideration, the Company agreed to issue to the Lender a bonus of 159,600 common shares. No formal loan extension has been reached, and the loan continues to accrue interest at the stated terms.

On December 17, 2020, the Company entered into a loan agreement with another non-arm’s length shareholder of the Company (the “Lender 2”). Under the terms of the agreement, the Lender 2 provided the Company with a loan of USD $29,000, bearing interest at 6% per annum, compounded monthly. As additional consideration, the Company agreed to issue to the Lender 2 a bonus of 140,000 common shares (issued subsequent to December 31, 2020).

During nine-month period ended December 31, 2020, the Company accrued interest of $3,842 (USD $2,871) (March 31, 2020 - $4,565 (USD $3,403)). As at December 31, 2020, the total amount owing is $86,174 (March 31, 2020 - $50,806).

• 10 -

GALORE RESOURCES INC.

Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

8) SHARE CAPITAL

• a) The authorized share capital of the Company consists of an unlimited number of common shares.

During the nine months ended December 31, 2020, the Company issued the following shares:

• On July 23, 2020, the Company completed a non-brokered private placement, issuing 2,521,623 units for gross proceeds of $75,649. Each unit consisted of one common share and one common share purchase warrant, each warrant entitling the holder to purchase one additional common share of the Company for a period of five years at a price of $0.05.

• On November 30, 2020, the Company issued 6,600,000 shares, valued at $165,000, to members of key management to settle a portion of debt for services.

During the year ended March 31, 2020, the Company issued the following shares:

• On September 5, 2019, the Company issued 314,400 bonus shares, valued at $15,720, to an agent of the Company for implementing the drilling and shares for service agreements with COMEFIN S. de R.L. de C.V (“Comefins”).

• On September 16, 2019, the Company closed the first tranche of non-broker private placement, issuing 3,743,629 units for gross proceeds of $187,181. Each unit consisted of one common share and one common share purchase warrant, each warrant entitling the holder to purchase one additional common share of the Company for a period of two years, subject to acceleration, at a price of $0.10.

• On November 11, 2019, the Company closed the second tranche of non-broker private placement, issuing 1,852,690 units for gross proceeds of $92,635. Each unit consisted of one common share and one common share purchase warrant, each warrant entitling the holder to purchase one additional common share of the Company for a period of two years, subject to acceleration, at a price of $0.10.

• On November 18, 2019, the Company issued 1,820,053 common shares, valued at $36,401, to Comefins to fulfill a shares-for-services arrangement on a drill program at El Alamo. The Company realized a gain on this settlement of $54,602.

b) Stock options

The Company has a stock option plan (the "Plan") which allows the Company to grant options to directors, officers, employees and consultants. Under the Plan, options will be exercisable over periods of up to 5 years and are required to have an exercise price no less than the closing market price of the Company's shares prevailing on the day that the option is granted less a discount of up to 25%. Under the Company’s current plan, which was approved by the shareholders at its annual general meeting held November 8, 2018, a total of 24,500,000 are reserved for issuance.

The continuity of stock options is as follows:

Nine Months Ended December 31, 2020	Year Ended March 31, 2020
Number of Options Weighted Average Exercise Price	Number of Options Weighted Average Exercise Price
$ Balance, beginning of the period 14,850,000 0.08 Granted 1,300,000 0.10 Expired/cancelled (1,350,000) 0.08	$ 16,725,000 0.09 425,000 0.10 (2,300,000) 0.12
Balance,end of theperiod 15,850,000 0.08	14,850,000 0.08
Weighted averageyears to expiry 1.92	2.33

• 11 -

Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

GALORE RESOURCES INC.

8) SHARE CAPITAL (continued)

b) Stock options (continued)

As at December 31, 2020, the following options are outstanding:

Number of	Exercise
Options	Price	Expiry Date
	$
4,625,000	0.05	December 29, 2021
2,200,000	0.10	December 29, 2021
300,000	0.05	March 8, 2022
1,000,000	0.10	September 7, 2022*
3,300,000	0.10	May 1, 2023
1,650,000	0.10	November 13, 2023
425,000	0.10	August 13, 2024
1,300,000	0.10	May 12, 2025
14,800,000

• These options had an original expiry date of September 7, 2017, but were extended a further 5 years.

c) Share-based payment reserve

During the nine months ended December 31, 2020, the Company granted 1,300,000 options exercisable at price of $0.10 for a period of 5 years, to eligible directors and officers of the Company.

During the year ended March 31, 2020, the Company granted 425,000 options exercisable at price of $0.10 for a period of 5 years, to an eligible director of the Company.

The following weighted average assumptions were used for the Black Scholes valuation of stock options granted in:

	Nine Months Ended	Year Ended
	December 31, 2020	March 31, 2020
Risk-free interest rate	0.37%	1.24%
Expected life	5 years	5 years
Expected volatility	230.51%	261.12%
Dividend rate	-	-

• 12 -

GALORE RESOURCES INC.

Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

8) SHARE CAPITAL ( continued

d) Warrants

The continuity of warrants is as follows:

	Nine Months Ended	Nine Months Ended	Year	Ended
	December	31, 2020	March	31, 2020
		Weighted		Weighted
	Number of	Average	Number of	Average
	Warrants	Exercise Price	Warrants	Exercise Price
		$		$
Balance, beginning of the period	27,407,045	0.08	22,506,026	0.08
Granted	2,521,623	0.05	7,596,319)	0.09
Expired	(2,000,000)	0.05	(2,695,300)	0.10
Balance,end of theperiod	27,928,668	0.09	27,407,045)	0.08
Weighted averageyears to expiry		1.83		1.99

As at December 31, 2020 the following warrants are outstanding:

Number of	Exercise
Warrants	Price	Expiry Date
	$
11,419,184	0.08*	August 29, 2021
3,743,629	0.10	September 16, 2021
1,324,250	0.10	October 25, 2021
528,440	0.10	November 11, 2021
8,391,542	0.08	October 4, 2023
2,521,623	0.05	July 23, 2025
27,928,668

*Exercisable at $0.05 in the first year, $0.06 in the second year, $0.07 in the third year, $0.08 in the fourth year, and $0.09 in the fifth year after issuance.

9) SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

The significant non-cash transactions for the period ended December 31, 2020 were:

a) At period end, included in accounts payable was $1,650,596 of exploration and evaluation asset costs.

b) 6,600,000 common shares, valued at $165,000, were issued to settle a portion of debt owed to key management for services.

The significant non-cash transactions for the period ended December 31, 2019 were:

a) At period end, included in accounts payable was $945,230 of exploration and evaluation asset costs.

b) 1,820,053 common shares, valued at $36,401, were issued to settle a shares-for-services arrangement related to the Company’s exploration and evaluation assets.

• 13 -

Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

GALORE RESOURCES INC.

10) SEGMENTED INFORMATION

The Company primarily operates in one reportable segment, being the acquisition, exploration and evaluation of exploration and evaluation assets located in Canada and Mexico. Geographic information is as follows:

	Nine Months Ended	Year Ended
	December 31, 2020	March 31, 2020
	$	$
Non-current assets
Canada	2,298	879
Mexico	7,219,180	7,123,542
	7,221,478	7,124,421

11) 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, amounting to $321 at December 31, 2020 (March 31, 2020 - $1,035). As the Company’s policy is to limit cash holdings to instruments issued by major Canadian and Mexican 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 only liquidity risk from financial instruments is its need to meet operating accounts payable and accrued liabilities, due to related party and loan payable requirements. The Company did not maintain sufficient cash balances to meet these needs at December 31, 2020.

Foreign Exchange Risk

The Company has foreign exchange risk due to its activities carried out in Mexico. At December 31, 2020, the Company had $41,532 (March 31, 2020 - $38,364) in current assets and $1,647,336 (March 31, 2020 - $1,620,693) in current liabilities originating in Mexico.

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:

• 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.

• 14 -

GALORE RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

12) CAPITAL MANAGEMENT

The Company’s primary objective for managing its capital structure is to maintain financial capacity for the purpose of sustaining the future development of the business and maintaining investor, creditor and market confidence.

The Company considers its capital structure to include shareholders’ equity and working capital. Management is continually monitoring changes in economic conditions and the risk characteristics of the underlying mineral property industry. In the event that adjustments to the capital structure are necessary, the Company may consider issuing additional equity, raising debt or revising its capital investment programs.

The Company’s share capital is not subject to any external restrictions. The Company has not paid or declared any dividends since the date of incorporation, nor are any currently contemplated. There have been no changes to the Company’s approach to capital management during the period.

13) COMMITMENTS

On September 1, 2016, the Company entered into a management services agreement with the company’s Chief Financial Officer (“CFO”) to provide services at a rate of CDN $5,000 per month. These fees shall be accrued until sufficient funds are available to the Company for payment and will be recorded on the Company’s books as an account payable. Payment of accrued fees shall be upon the recommendation of the Compensation and Corporate Governance Committee, acting reasonably, to the Board of Directors. Effective September 1, 2017, the agreement with the CFO was amended such that the rate was increased to USD $7,000 per month.

Additionally, under the amended agreement, if there is a sale, lease or exchange of all or substantially all of the property of the Company to another person or entity, other than in the ordinary course of business of the Company, or there is deemed to be a change of control, which means acquiring an interest in the Company’s shares conferring 50% or more of the votes entitling the purchaser to elect the board of directors of the Company, either of which constitutes a “Transaction”, the CFO will be entitled to receive at the time of closing of the Transaction any accrued fees as well as the yearly amount (12 months equaling USD $84,000) of the fee for each year of service provided to the Company since January, 2015.

The CFO will also be entitled to receive at the time of closing of the Transaction, five-hundred thousand (500,000) common shares of the Company for every year (September 2015 to September 2016) that he did not receive any compensation for services performed due to the financial condition of the business.

On September 1, 2016, the Company entered into a management services agreement with the company’s Chief Executive Officer (“CEO”) to provide services at a rate of CDN $12,000 per month. These fees shall be accrued until sufficient funds are available to the Company for payment and will be recorded on the Company’s books as an accounts payable. Payment of accrued fees shall be upon the recommendation of the Compensation and Corporate Governance Committee, acting reasonably, to the Board of Directors. Effective September 1, 2017, the agreement was amended and services will be provided to the Company at a rate of USD $12,000 per month.

Additionally, under the amended agreement, if there is a sale, lease or exchange of all or substantially all of the property of the Company to another person or entity, other than in the ordinary course of business of the Company, or there is deemed to be a change of control, which means acquiring an interest in the Company’s shares conferring 50% or more of the votes entitling the purchaser to elect the board of directors of the Company, either of which constitutes a “Transaction”, the CEO will be entitled to receive at the time of closing of the Transaction any accrued fees as well as the yearly amount (12 months equaling USD $144,000) of the fee for each year of service the CEO provided to the Company since July, 2012. The CEO will also be entitled to receive at the time of closing of the Transaction, one (1) million common shares of Galore for every year (July 2012 to July 2016) that he did not receive any compensation for services performed due to the financial condition of the business.

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GALORE RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements Nine months ended December 31, 2020 (Unaudited - Expressed in Canadian dollars)

13) COMMITMENTS (continued)

The Company has an agreement to pay consulting fees to a related party company owned by the Company’s Corporate Secretary (“SEC”), billed at an hourly rate on an as needed basis. Three months’ notice is required to terminate the applicable agreement, meaning the Company is committed to paying three months’ fees at any time prior to giving notice of termination.

Additionally, if there is a sale, lease or exchange of all or substantially all of the property of the Company to another person or entity, other than in the ordinary course of business of the Company, or there is deemed to be a change of control, which means acquiring an interest in the Company’s shares conferring 50% or more of the votes entitling the purchaser to elect the board of directors of the Company, either of which constitutes a “Transaction”, SEC will be entitled to receive at the time of closing of the Transaction all outstanding amounts due and payable for past services, plus an amount of compensation equal to $2,500 for each year of service SEC provided to the Company since 2007.

14) SUBSEQUENT EVENTS

On January 18, 2021, the Company received TSX Venture Exchange approval to issue 140,000 common shares as a bonus to Lender 2 in consideration of the USD $29,000 loan provided to the Company (Refer to Note 7).

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