Gold Mountain Mining Corp. — Interim / Quarterly Report 2022

Dec 18, 2021

GOLD MOUNTAIN MINING CORP. (Formerly Freeform Capital Partners Inc.)

Condensed Interim Consolidated Financial Statements Three and Nine-Month Periods Ended October 31, 2021 and 2020

(Expressed in Canadian Dollars)

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Financial Position As of October 31, 2021 and January 31, 2021 (Unaudited - Expressed in Canadian Dollars)

		October 31,	January 31,
	Notes	2021	2021
Assets
Current assets
Cash		$9,791,936	$2,691,382
Receivables	4	678,243	124,626
Tax credit receivable	6	378,983	58,851
Prepaid expenses and deposits	5	465,519	467,891
		11,314,681	3,342,750
Non-current assets
Prepaid expenses and deposits	5	831,823	526,875
Property and equipment	6	16,956,265	73,258
Reclamation deposits	8	180,000	160,000
Exploration and evaluation asset	7	3,502,760	9,881,559
Total Assets		$32,785,529	$13,984,442
Liabilities
Current liabilities
Accounts payable and accrued liabilities	9,15	$3,457,625	$1,493,740
Short-term loans	10	79,281	76,930
Current portion of lease payable	11	14,507	-
Current portion of promissory note	12	2,743,624	2,860,506
		6,295,037	4,431,176
Non-current liabilities
Reclamation provision		113,513	60,000
Flow-through share premium liability	13	202,382	-
Lease payable	11	30,306	-
Promissory note	12	2,312,722	4,471,018
Total Liabilities		8,953,960	8,962,194
Shareholders' Equity
Share capital	14	34,967,825	11,628,629
Warrants	14	4,748,332	1,406,273
Contributed surplus	14	3,604,844	1,135,288
Accumulated deficit		(19,489,432)	(9,147,942)
Total Shareholders' Equity		23,831,569	5,022,248
Total Liabilities and Shareholders' Equity		$32,785,529	$13,984,442

Nature of operations (Note 1) Commitments (Note 18) Events after reporting period (Note 19)

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Loss and Comprehensive Loss For the Three- and Nine-Month Periods Ended October 31, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars)

		ThreemonthsendedOctober 31,	ThreemonthsendedOctober 31,	NinemonthsendedOctober 31,	NinemonthsendedOctober 31,
	Notes	2021	2020	2021	2020
Operating ExpensesManagement, director and
consulting fees	14,15	$590,934	$126,746	$1,584,990	$201,581
General and administration		42,679	10,704	72,688	18,470
Investor relations		72,262	-	126,084	-
Marketing		535,085	-	2,788,662	-
Professional fees		29,260	17,025	83,669	80,916
Regulatory and transfer
agent fees		6,717	-	73,818	-
Share-based payments	14,15	1,182,090	-	4,940,485	726,500
Travel		4,766	3,680	19,833	3,680
Total operating expenses		(2,463,793)	(158,155)	(9,690,229)	(1,031,147)
Other Items
Interest income		42	133	286	876
Interest expense and
finance costs	10,11,12	(206,903)	(286,485)	(727,720)	(819,180)
Recovery of flow-through
share premium	13	-	-	76,173	-
Net loss and comprehensive loss		$ (2,670,654)	$ (444,507)	$ (10,341,490)	$ (1,849,451)
Basic and diluted loss percommon share		$(0.04)	$(0.01)	$(0.16)	$(0.06)
Weighted average number ofcommon shares outstanding		69,259,239	32,543,806	63,666,732	29,217,690

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Changes in Shareholders' Equity For the Nine-Month Period Ended October 31, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars except number of shares)

		Number of			Contributed
	Notes	shares	Share Capital	Warrants	Surplus	Deficit	Total
Balance at January 31, 2020		27,297,600	$2,398,082	$13,676	$-	$ (1,450,512)	$961,246
Shares issued in private placement		4,517,946	1,129,486	-	-	-	1,129,486
Share issuance costs		-	(41,417)	-	-	-	(41,417)
Share-based payments		-	-	-	726,500	-	726,500
Shares issued for consulting fees		1,000,000	250,000	-	-	-	250,000
Net loss for the period		-	-	-	-	(1,849,451)	(1,849,451)
Balance at October 31, 2020		32,815,546	$3,736,151	$13,676	$726,500	$ (3,299,963)	$1,176,364
Balance at January 31, 2021		49,069,852	$11,628,629	$ 1,406,273	$1,135,288	$ (9,147,942)	$5,022,248
Shares issued in private placements	14	15,891,640	17,271,218	4,450,926	-	-	21,722,144
Broker warrants	14	-	-	527,127	-	-	527,127
Share issuance costs	14	-	(1,562,427)	(382,253)	-	-	(1,944,680)
Shares subscription		-	(892)	-	-	-	(892)
Shares issued on exercise of warrants	14	2,351,178	3,922,949	(1,253,741)	-	-	2,669,208
Shares issued for bonus shares	14,15	230,000	289,800	-	-	-	289,800
Shares issued for RSUs	14	832,500	1,668,060	-	(1,668,060)	-	-
Shares issued for PSUs	14	865,500	1,218,691	-	(1,218,691)	-	-
Shares issued on exercise of options	14	409,258	531,797	-	(221,664)	-	310,133
Share-based payments	14	-	-	-	5,577,971	-	5,577,971
Net loss for the period		-	-	-	-	(10,341,490)	(10,341,490)
Balance at October 31, 2021		69,649,928	$34,967,825	$ 4,748,332	$3,604,844	$ (19,489,432)	$ 23,831,569

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

Gold Mountain Mining Corp. (formerly Freeform Capital Partners Inc.) Condensed Interim Consolidated Statements of Cash Flows For the Nine-Month Period Ended October 31, 2021 and 2020 (Unaudited - Expressed in Canadian Dollars)

	Nine months ended	Nine months ended
	October 31,	October 31,
	2021	2020
Operating activities
Net loss	$(10,341,490)	$(1,849,451)
Adjustments for non-cash items:
Depreciation	2,741	-
Bonus shares issued to management	289,800	-
Share-based payments	4,940,485	726,500
Interest expense and finance costs	727,645	819,180
Recovery of flow-through share premium	(76,173)	-
Changes in non-cash working capital items:
Receivables	(545,168)	(87,445)
Tax credit receivable	(320,132)	(58,851)
Prepaid expenses and deposits	2,372	28,359
Accounts payable and accrued liabilities	(729,119)	(374,394)
Net cash flows used in operating activities	(6,049,039)	(796,102)
Investing activities
Exploration and evaluation expenditures	(2,516,191)	(494,028)
Mineral property expenditures	(4,218,128)	-
Deposits for exploration and evaluation expenditures	(325,775)	-
Deposits for mine construction - work-in-progress	(234,448)	-
Increase in reclamation bonds	(20,000)	-
Purchase of property and equipment	(87,801)	-
Net cash flows used in investing activities	(7,402,343)	(494,028)
Financing activities
Repayment of promissory note	(3,000,000)	-
Repayment of lease payable	(1,209)	-
Shares issued for cash, net of share issuance costs	20,773,780	1,129,486
Share issuance costs	(199,084)	-
Proceeds from short-term loan	-	75,000
Warrants exercised	2,668,316	-
Options exercised	310,133	-
Net cash flows provided by financing activities	20,551,936	1,204,486
Net change in cash	7,100,554	(85,644)
Cash, beginning of the period	2,691,382	378,902
Cash, ending of the period	$9,791,936	$293,258
Non-cash transactions:
Broker warrants	$527,127	$-
Vested PSUs and RSUs	2,886,751	-
Reclamation provision	53,143	-
Fair value of leased asset	45,550	-
Exploration and evaluation expenditures in accounts payable and accrued
liabilities	903,049	-
Mine construction work-in-progress and mineral property expenditures in
accounts payable and accrued liabilities	1,789,955	-
Share-based payment capitalized to mine construction work-in-progress and
mineral property expenditures	618,550	-
Share-based payment capitalized to exploration and evaluation asset	18,936	-
Depreciation capitalized to mineral property expenditures and exploration
and evaluation asset	18,960	-

1. Nature of operations

Gold Mountain Mining Corp., (the "Company" or "GMTN") previously Freeform Capital Partners Inc. was incorporated pursuant to the provisions of the Business Corporations Act of British Columbia on November 5, 2018. The Company's common shares were listed on the TSX Venture Exchange (the "TSXV") under the stock symbol "FRM.P" and commenced trading on June 19, 2020. On December 23, 2020, the Company changed its name to Gold Mountain Mining Corp. On December 31, 2020, the Company listed on the TSXV as a Tier 2 Mining Issuer and began trading on the TSXV under the stock symbol "GMTN.V". Subsequently, on November 23, 2021, the Company's common shares graduated to the main board of the Toronto Stock Exchange and continued to trade under the symbol "GMTN". On January 22, 2021, the Company began trading on the Frankfurt Stock Exchange under the ticker "5XFA". On April 15, 2021, the Company's common shares also began trading on the OTCQB Venture Market under the stock symbol "GMTNF".

On December 23, 2020, the Company completed the three-cornered amalgamation between the Company, its wholly owned subsidiary, 1262975 B.C. Ltd. ("975 B.C."), and Bayshore Minerals Incorporated ("Bayshore"), under which 975 B.C. amalgamated with Bayshore and Bayshore became a wholly owned subsidiary of the Company. For accounting purposes, the amalgamation and acquisition constituted a reverse takeover ("RTO") whereby Bayshore is identified as the acquirer of GMTN.

GMTN is a mineral exploration and development company and is focused on the exploration and development of gold properties.

The registered head office and principal address of the Company is 1285 West Pender Street, Suite 1000, Vancouver, British Columbia, Canada, V6E 4B1.

Since March 2020, several measures have been implemented in Canada and the rest of the world in response to the increased impact from novel coronavirus ("COVID-19"). The impact of COVID-19 is expected to be long term, and the effects on business operations cannot be reasonably estimated at this time. The Company anticipates this could have an adverse impact on its business, results of operations, financial position, and cash flows in future periods.

2. Significant accounting policies and basis of preparation

These condensed interim consolidated financial statements were authorized for issue by the directors of the Company on December 15, 2021.

Statement of compliance with International Financial Reporting Standards

These condensed interim consolidated financial statements have been prepared under International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") in accordance with IAS 34, Interim Financial Reporting, using accounting policies consistent with those accounting policies followed by the Company in the most recent audited annual consolidated financial statements. These unaudited condensed interim consolidated financial statements do not include all of the information required for annual audited consolidated financial statements and should be read in conjunction with the annual audited consolidated financial statements of the Company for the year ended January 31, 2021.

These condensed interim consolidated financial statements have been prepared using the historical cost basis. The condensed interim consolidated financial statements are presented in Canadian dollars unless otherwise specified.

2. Significant accounting policies and basis of preparation (continued)

New accounting policies adopted in the reporting period

Property and equipment

Other equipment

Items of equipment are initially recognized at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items. All items of equipment are subsequently carried at depreciated cost less impairment loss, if any.

Depreciation is provided on all items of equipment to write off the carrying value of items over their expected useful economic lives. It is applied using the straight-line method using the following useful lives:

Asset category	Useful life (years)
Field equipment	5
Computer equipment	3
Vehicles	5
Leased vehicle	4

Material residual value estimates and estimates of useful life are updated as required, but at least annually.

Mine construction work-in-progress and mineral property

Costs recorded for assets under construction are capitalized as mine construction work-in-progress. On completion, the cost of construction is transferred to the appropriate category of plant and equipment. No depreciation or depletion is recorded until the assets are substantially complete and available for their intended use.

On the commencement of commercial production, depletion of mineral property will be provided for on a unit-of-production basis using the estimated mineral resources as the depletion base.

Reclamation provision

The Company records a reclamation provision from the legal and constructive obligations to restore exploration, development and mining operations in the period in which the obligation is incurred. When the liability is initially recognized the present value of the estimated costs is capitalized by increasing the carrying amount of the related mineral property asset. The provision is reviewed at each reporting date and all changes to the liability, including changes in discount rate, are recorded as a change to the mineral property asset to which it relates. Over time the discount is unwound through accretion expenses in the statement of comprehensive loss.

Flow-through units

The Company may, from time to time, issue flow-through common shares or units to finance a portion of its Canadian exploration programs. Pursuant to the terms of the flow-through share agreements and the Income Tax Act (Canada) (the "ITA"), these equity instruments transfer the tax deductibility of qualifying resource expenditures to investors.

Upon the issuance of a flow-through share, the Company bifurcates the flow-through share into i) fair value of capital stock issued, based on market price at time of issuance, and ii) the residual as a flow-through share premium, which is recognized as a liability.

2. Significant accounting policies and basis of preparation (continued)

New accounting policies adopted in the reporting period (continued)

Flow-through units (continued)

If a flow-through unit is issued concurrently with the regular unit, the flow-through share premium is calculated as the difference in prices of these units.

Upon incurring qualifying expenses, the Company derecognizes the flow-through share premium liability and recognizes a credit to recovery of flow-through share premium. Proceeds received from the issuance of flowthrough shares are to be used for Canadian resource property exploration expenditures within a certain time period as prescribed by the Government of Canada's flow-through regulations, as contained in the ITA. The portion of the proceeds received but not yet expended at the end of the Company's relevant reporting period is disclosed separately in the notes to the condensed interim consolidated financial statements as flowthrough expenditure commitments. The Company is also subject to Part XII.6 of the ITA, which imposes a tax on flow-through proceeds renounced under the "Look-back Rule", in accordance with the Government of Canada's flow-through regulations.

New IFRS pronouncements

Amendments to IAS 16 – Property, plant and equipment: Proceeds before intended use

In May 2020, the International Accounting Standards Board issued amendments to IAS 16, Property, Plant and Equipment (IAS 16). The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related costs in profit (loss). An entity is required to apply these amendments for annual reporting periods beginning on or after January 1, 2022. The amendments are applied retrospectively only to items of property, plant and equipment that are available for use after the beginning of the earliest period presented in the financial statements in which the entity first applies the amendments. The Company adopted the amendments in the second quarter of the current fiscal period. There was no impact of the amendments on the consolidated financial statements as no incidental revenues were generated in the three- and nine-month periods ended October 31, 2021. The Company anticipates an impact in the fourth quarter of the current fiscal year as production is forecast to commence then.

Amendments to IAS 12 – Income Taxes

In May 2021, the IASB issued amendments to IAS 12, Income Taxes (IAS 12). The amendments will require companies to recognize deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. The proposed amendments will typically apply to transactions such as leases for the lessee and decommissioning and restoration obligations related to assets in operation. An entity is required to apply these amendments for annual reporting periods beginning on or after January 1, 2023. Early application is permitted. The amendments are applied to transactions that occur on or after the beginning of the earliest comparative period presented. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

3. Management judgments and key sources of estimation uncertainty

Significant accounting judgments, estimates and assumptions

The preparation of condensed interim consolidated financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and the reported revenues and expenses during this period.

Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

The most significant accounts that require estimates as the basis for determining the stated amounts include the recoverability of evaluation and exploration assets and share-based payments.

Critical judgments exercised in applying accounting policies that have the most significant effect on the amounts recognized in the condensed interim consolidated financial statements are as follows:

i) Exploration and evaluation assets

The application of the Company's accounting policy for exploration and evaluation assets, which requires judgement in the following areas:

a) Determination of whether any impairment indicators exist at each reporting date giving consideration to factors such as mining title expiration dates, budgeted expenditures on the project, discontinuation of activities in any area and evaluation of any data which would indicate that the carrying amount of exploration and evaluation assets is not recoverable; and

b) Assessing when the commercial viability and technical feasibility of the project has been determined, at which point the asset is reclassified to mineral properties.

ii) Determination of technical feasibility and commercial viability of the Elk Gold Property

The application of the Company's accounting policy for mineral property development costs requires judgment to determine when technical feasibility and commercial viability of the Elk Gold Property was demonstrable. The Company considered the positive National Instrument ("NI") 43-101 compliant Preliminary Economic Assessment, the receipt of key environmental mine permits and the completion of the financing to fund development as key indicators confirming that technical feasibility and commercial viability of the Elk Gold Property had been established. Accordingly, effective June 1, 2021, the Company commenced capitalization of all direct costs related to the development of the Elk Gold Property, and reclassified capitalized costs from exploration and evaluation assets to property and equipment and tested for impairment. No impairment was recognized after management concluded that the forecast discounted cash flows valuation of the Elk Gold Property, based on the NI 43-101 compliant Preliminary Economic Assessment, exceeded the carrying value of the project of $12.3 million as at the date of the final investment decision.

4. Receivables

	October 31,		January 31,
	2021		2021
GST receivable	675,470		122,995
Accrued interest receivable	19		196
Other receivable	2,754		1,435
	678,243		124,626

5. Prepaid expenses and deposits

	October 31.		January 31,
	2021		2021
Current:
Other deposits	$8,500	$	8,500
Prepaid marketing expense	117,265		220,960
Prepaid investor relations	100,987		7,310
Prepaid consulting and management fees	223,635		217,473
Prepaid insurance and other prepaids	15,132		13,648
	465,519		467,891
Non-current:
Deposits for exploration expenditures	$550,000	Ś	525,000
Deposits for mine construction - work-in-progress	225,448
Prepaid exploration expenditures	56,375		1,875
	831,823		526,875

6. Property and equipment

	Mine
	constructionwork-in		Mineral		Leased		Other
	progress		property		vehicle		equipment	Total
Cost
Balance January 31, 2021	$	- $		- $		- $	111,278 $	111,278
Additions	4,749,868		-		45,550		87,801	4,883,219
Transfer from explorationand evaluation asset	-		12,288,108		-		-	12,288,108
Exploration tax credits	-		(320,132)		-		-	(320,132)
Reclamation costs	-		53,513		-		-	53,513
Balance October 31, 2021	$4,749,868 $		12,021,489 $ 45,550 $				199,079 $	17,015,986
Accumulated depreciation
Balance January 31, 2021	$	- $	-			- $	38,020 $	38,020
Depreciation	-		-		949		20,752	21,701
Balance October 31, 2021	$	- $		- $	949 $		58,772 $	59,721
Net book value
Balance January 31, 2021	$	- $	-			- $	73,258 $	73,258
Balance October 31, 2021	$4,749,868 $		12,021,489 $ 44,601 $				140,307 $	16,956,265

6. Property and equipment (continued)

Effective June 1, 2021, the Company commenced capitalization of all direct costs related to the development of the Elk Gold Property, as management determined that the technical feasibility and commercial viability of the project had been established. Accordingly, the Company reclassified capitalized costs associated with the Elk Gold Property from exploration and evaluation asset (Note 7) to mineral property within property and equipment. Capitalized mineral property costs will be carried at cost until the Elk Gold Property is placed in commercial production, sold, abandoned, or determined by management to be impaired in value. Costs related to development work are capitalized in property and equipment as mine construction work-inprogress.

The Company incurred $4,749,868 on mine development activities in the nine-month period ended October 31, 2021.

During the nine-month period ended October 31, 2021, other equipment additions consisted of a truck and computer equipment acquired by the Company for an aggregate amount of $87,801.

In September 2021, the Company entered into a vehicle lease agreement for a term of four years. In accordance with IFRS 16, the Company recorded a lease asset and a lease liability with a fair value of $45,550. Fair value was determined by discounting future lease payments at an incremental borrowing rate of 13% (Note 11).

During the nine-month period ended October 31, 2021, the Company recorded $320,132 in BC Mineral Exploration Tax Credits ("BCMETC") as a reduction to the mineral property, bringing the total BCMETC receivable to $378,983. An additional $488,121 of BCMETC was recorded subsequent to October 31, 2021 (Note 19).

7. Exploration and evaluation asset

Elk Gold Property

On May 16, 2019, pursuant to the acquisition of Elk Gold Mining Corp ("Elk Mining") and Gold Mountain Resources Corp. ("GMRC"), the Company acquired the Elk Gold Property in British Columbia, Canada from Equinox Gold Corp. ("Equinox") for total consideration of $10,000,000 as follows:

• Cash of $1,000,000 paid at the closing date; and
• A secured promissory note for $9,000,000 payable in annual installments of $3,000,000 commencing two years from closing (Note 12).

The Elk Gold Property is located near Merritt, British Columbia, Canada within the Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease. Production from the Elk Gold Property is subject to a 2% net smelter return ("NSR") royalty held by Star Royalties Ltd., who purchased the NSR from Almadex Minerals Limited on September 28, 2021 for total consideration of US$10,630,000. A further 1% NSR royalty is payable to Don Agur on production from the Agur Option block which is outside of any of the identified mineralized zones.

7. Exploration and evaluation asset (continued)

The following table summarizes the cumulative costs capitalized as exploration and evaluation assets at October 31, 2021 and January 31, 2021 by their nature:

	Nine Months	Twelve Months
	Ended	Ended
Elk Gold Property	October 31, 2021		January 31, 2021
Property acquisition costs
Balance, beginning	$6,248,405	$	6,248,405
Transfer to property and equipment	(6,248,405)
Property acquisition costs, ending			6,248,405
Exploration and evaluation costs
Balance, beginning	3,633,154		793,539
Costs incurred during the period:
Aircraft	27,083
Assaying	313,789		48,676
Camp operations	335.104		47,854
Consulting	440.834		121,906
Drilling	2,201,734		585,088
Depreciation	18.960		22,255
Environmental	623,882		1,183,480
Geological	976,990		376,071
Maintenance	496,191		426,541
Share-based payments	395.863
Travel and accommodation	78,879		26,595
	5,909,309		2,838,466
Other Items:
Exploration tax credits			(58, 851)
Transfer to property and equipment	(6,039,703)		60,000
Exploration and evaluation costs, ending	3,502,760		3,633,154
Total	$3,502,760	$	9,881,559

Share-based payments of $376,927 were reclassified to mineral property under property and equipment.

The remaining exploration and evaluation assets balance as at October 31, 2021 relates to ongoing exploration programs outside of the mine development zone.

8. Reclamation deposits

The Company has posted bonds and investment certificates to provide for certain potential reclamation liabilities as agreed with the Province of British Columbia – Ministry of Energy, Mines and Low Carbon Innovation (formerly Ministry of Energy, Mines and Petroleum Resources).

	October 31, 2021	January 31, 2021
Balance, beginning		160.000	160,000
Increase		20,000
Balance, ending		180.000	160,000

9. Accounts payable and accrued liabilities

	October 31, 2021	January 31, 2021
Accounts payable	$2,667,874	$1,113,743
Amounts due to related parties (Note 15)	667,037	174,780
Accrued liabilities	122,714	205,217
	$3,457,625	$1,493,740

10. Short-term loans

On April 30, 2020, the Company received a loan in the amount of $50,000 from K2 Solutions Ltd, an arm'slength company. The loan is unsecured, bears interest at 5% per annum and is due on December 31, 2021. During the three and nine-month periods ended October 31, 2021, the Company recorded $861 and $2,351, respectively (three and nine-month periods ended October 31, 2020 - $634 and $1,274, respectively) in interest on the loan. The balance of the loan at October 31, 2021 is $54,281 (January 31, 2021 - $51,930).

On May 1, 2020, the Company received a loan in the amount of $25,000 from K2 Solutions Ltd. The loan is unsecured, non-interest bearing and has no specified terms of repayment. The balance of the loan at October 31, 2021 is $25,000 (January 31, 2021 - $25,000).

11. Lease payable

In September 2021, the Company entered into a vehicle lease agreement for a term of four years. In accordance with IFRS 16, the Company recorded a lease asset and a lease liability with a fair value of $45,550. Fair value was determined by discounting future lease payments at an incremental borrowing rate of 13%.

The following table summarizes the lease transactions for the three and nine-month periods ended October 31, 2021:

	October 31, 2021
Balance, beginning	$	-
Fair value of leased vehicle (Note 6)		45,550
Repayment		(1,209)
Interest		472
Balance, ending	$	44,813

11. Lease payable (continued)

	October 31, 2021
Current portion	$14,507
Long term portion	30,306
	$44,813

12. Promissory note

On May 16, 2019, the Company entered into a secured promissory note agreement with Equinox in the amount of $9,000,000 with respect to the purchase of 100% of the common shares of Elk Mining, which is the owner of the Elk Gold Property and its subsidiary GMRC. The fair value of the promissory note was $5,527,813, calculated by discounting the future cash payments at a market rate of interest of 18%.

During the three and nine-month periods ended October 31, 2021, interest of $205,495 and $724,822, respectively was recorded in the condensed interim consolidated statements of loss and comprehensive loss (three and nine-month periods ended October 31, 2020 - $285,851 and $817,906, respectively).

At October 31, 2021 and January 31, 2021, the promissory note is made up as follows:

	October 31, 2021	January 31, 2021
Current portion	2,743,624	2,860,506
Long term portion	2,312,722	4,471,018
	5,056,346	7,331,524

The promissory note is non-interest bearing. In the event of default, the outstanding amount shall bear interest at a rate of 10% per annum, payable monthly from the date of default until the earlier of (i) the date of repayment; or (ii) the date of default is cured. The promissory note is a direct first ranking secured obligation of the Company in priority to all current and future debt and other liabilities of the Company and in priority to all equity securities of the Company of any nature whatsoever. If the Company defaults on the payment of the promissory note, Equinox may take possession of the Elk Mining common shares.

The principal is payable as follows:

• $3,000,000 shall be payable on the third anniversary date of the promissory note ("Second Installment Date"). Due on May 16, 2022; and
• $3,000,000 shall be payable on the fourth anniversary date of the promissory note. Due on May 16, 2023.

If the Company pays $5,500,000 on the Second Installment Date, said payment shall represent full and final payment of the principal.

13. Flow-through share premium liability

The Company's flow-through share liability as a result of the issuance of flow-through shares in connection with a private placement is as follows:

	October 31, 2021
Balance, beginning	$-
Liability incurred on flow-through shares issued	278,555
Settlement of flow-through share premium liability upon incurring qualifying
expenses	(76,173)
Balance, ending	$202,382

During the three and nine-month periods ended October 31, 2021, the Company incurred a total of $Nil and $837,898, respectively (three and nine-month periods ended October 31, 2020 - $Nil) qualifying flow-through expenditures on the Elk Gold Property. The Company derecognized the associated flow-through share premium liability and recognized a deferred income tax recovery of flow-through share premium of $76,173 for the nine-month period ended October 31, 2021 (nine-month period ended October 31, 2020 - $Nil)

As at October 31, 2021, the Company is committed to spending approximately $2,226,202 of qualifying expenditures in connection with its flow-through offerings (January 31, 2021 - $Nil).

14. Share capital

Authorized share capital

An unlimited number of common shares and preferred shares without par value.

Issued share capital

At October 31, 2021, there were 69,649,928 issued and fully paid common shares outstanding (January 31, 2021 – 49,069,852).

• On February 23, 2021, the Company closed its brokered private placement by issuing 10,310,000 units at a price of $0.97 per unit. Each unit consists of one common share of the Company and onehalf of a share purchase warrant. Each full warrant is exercisable for one common share of the Company for a price of $1.25 for a period of three years following the closing of the private placement. Further, a broker commission of $262,507 in cash and 270,626 warrants with a fair value of $243,779 were paid. Each brokers' warrant is exercisable for one common share of the Company for a price of $0.97 for a period of two years. Share issuance costs of $562,587 in connection with the private placement were allocated to share capital.
• On March 24, 2021, 230,000 bonus shares were issued to officers of the Company with a fair value of $289,800 included in the condensed interim consolidated statement of loss and comprehensive loss (Note 15).

14. Share capital (continued)

Issued share capital (continued)

• On June 24, 2021, the Company closed its bought deal private placement by issuing a total of 4,255,190 units (the "HD Units") at a price of $2.10 per HD Unit and 1,326,450 flow-through units (the "FT Units") at a price of $2.31 per FT Unit, for total gross proceeds of $11,999,999. Each FT Unit consists of one common share of the Company and one-half of one common share purchase warrant where each common share entitles the holder to a renunciation of qualifying expenditures incurred by the Company in respect of the Elk Gold Property. Each HD Unit consists of one common share of the Company and one-half of one common share purchase warrant. Each HD Unit and FT Unit warrant will entitle the holder thereof to purchase one common share of the Company at an exercise price of $3.15 for a period of two years following the closing date of the private placement. Further, a broker commission of $690,000 in cash and 320,612 warrants with a fair value of $283,348 were paid. Each brokers' warrant is exercisable for one common share of the Company for a price of $2.10 for a period of two years. Share issuance costs of $999,840 in connection with the private placement were allocated to share capital. The Company recorded an initial flow-through share premium liability of $278,555 related to the value of the flow-through component (Note 13).
• During the nine-month period ended October 31, 2021, 832,500 of vested Restricted Share Units ("RSUs") with a fair value of $1,668,060 and 865,500 Performance Share Units ("PSUs") with a fair value of $1,218,691 were converted to common shares.

Warrants

In connection with the February 23, 2021 private placement, 5,154,999 warrants were issued. Each warrant gives the holder the right to acquire one common share of the Company at a price of $1.25 for a term of three years. Proceeds from the private placement were allocated between warrants and common shares based on the relative fair value method and the warrants were valued at $2,973,499 using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 0.40%, volatility of 167%, dividends of $Nil, and expected life of 3 years.

In connection with the June 24, 2021 private placement, 2,790,820 warrants were issued. Each warrant gives the holder the right to acquire one common share of the Company at a price of $3.15 for a term of two years. Proceeds from the private placement were allocated between warrants and common shares based on the relative fair value method and the warrants were valued at $1,477,427 using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 0.43%, volatility of 73%, dividends of $Nil, and expected life of 2 years.

During the nine-month period ended October 31, 2021, 2,351,178 warrants were exercised for gross proceeds of $2,669,208.

The changes in warrants during the nine-month period ended October 31, 2021 are as follows:

		Weighted Average
	Number of Warrants	Exercise Price ($)
Balance, January 31, 2021	3,092,466	1.10
Issued	8,537,057	1.89
Exercised	(2,351,178)	1.14
Balance, October 31, 2021	9,278,345	1.82

14. Share capital (continued)

Warrants (continued)

Warrants outstanding and exercisable as at October 31, 2021 are as follows:

Expiry	Exercise	Number of
Date	Price $(5)$	Warrants
June 22, 2022	0.10	59,726
December 23, 2022	0.90	192,806
February 23, 2023	0.97	270,626
June 24, 2023	2.10	320,612
June 24, 2023	3.15	2,790,820
December 23, 2023	1.20	1,222,368
February 23, 2024	1.25	4,421,387
		9.278.345

Share-based compensation

The Company has adopted a new equity incentive compensation plan ("New Plan") which provides for the granting of options which equal a maximum of 10% of the Company's issued and outstanding common shares at any given time. The New Plan also provides for the issuance of up to 4,800,000 fixed share awards which include Deferred Share Units ("DSUs"), RSUs and PSUs.

(i) Stock options

The changes in stock options during the nine-month period ended October 31, 2021 are as follows:

		Weighted
		Average Exercise
	Number of Options	Price $(5)$
Balance, January 31, 2021	4,321,354	0.39
Stock options granted	1,025,000	1.79
Stock options exercised	(409, 258)	0.76
Balance, October 31, 2021	4,937,096	0.65

Stock options outstanding and exercisable at October 31, 2021 are as follows:

Number of Options	Number of Options	Exercise	Expiry
Outstanding	Exercisable	Price ($)	Date
50,000	50,000	2.21	May 31, 2023
325,000	175,000	2.00	August 23, 2023
170,455	170,455	0.10	January 25, 2024
200,000	100,000	2.00	October 15, 2024
2,580,000	2,580,000	0.25	February 1, 2025
314,141	314,141	0.25	July 30, 2025
972,500	972,500	0.90	January 14, 2026
285,000	207,500	1.20	April 9, 2026
40,000	20,000	1.96	October 25, 2026
4.937.096	4.589.596

14. Share capital (continued)

Share-based compensation (continued)

(i) Stock options (continued)

The average remaining life of the options is 3.39 years as at October 31, 2021.

During the nine-month period ended October 31, 2021, the Company granted 1,025,000 stock options (ninemonth period ended October 31, 2020 – 972,500). The fair value of options granted was determined using the Black-Scholes option pricing model with the following weighted average assumptions:

	October 31, 2021	October 31, 2020
Risk-free interest rate	0.70%	0.46%
Expected life	3.22 years	5 years
Estimated volatility	100.02%	162.19%
Dividend rate	N/A	N/A

During the three and nine-month periods ended October 31, 2021, the Company recorded share-based payments of $391,120 and $1,335,022, respectively, related to the stock options granted and vested during the period (three and nine-month periods ended October 31, 2020 – $Nil and $726,500, respectively).

During the nine-month period ended October 31, 2021, 409,258 stock options were exercised for gross proceeds of $310,133. The weighted average trading price of the Company's share on the date of exercise was $2.11.

(ii) Restricted Share Units (RSUs) and Performance Share Units (PSUs)

The Company intends to settle RSUs and PSUs in equity and each may be granted to directors, consultants, officers and employees of the Company. Share-based payment expense is recognized based on the share price of the Company's common shares on the grant date multiplied by the number of RSUs and PSUs expected to vest and recognized ratably over the vesting period, with a corresponding credit to the contributed surplus. Adjustments to the number of RSUs and PSUs expected to vest are recognized in the current period.

Share-based payments of $887,580 and $4,242,949 were recorded for RSUs and PSUs vested during the three and nine-month periods ended October 31, 2021, respectively (three and nine-month periods ended October 31, 2020 - $Nil), recorded as follows:

	Three MonthsEndedOctober 31,2021	Three MonthsEndedOctober 31,2020	Nine MonthsEndedOctober 31,2021	Nine MonthsEndedOctober 31,2020
Share-based payment expense	$790,970	$-	$ 3,605,463	$-
Exploration and evaluation asset	18,936	-	18,936	-
Mineral property	-	-	376,927	-
Mine construction - work-in-progress	77,673	-	241,623	-
	$887,579	$-	$ 4,242,949	$-

14. Share capital (continued)

Share-based compensation (continued)

(ii) Restricted Share Units (RSUs) and Performance Share Units (PSUs) (continued)

The continuity of RSUs and PSUs for the nine-month period ended October 31, 2021 is as follows:

	Number of RSUs	Number of PSUs
Balance, January 31, 2021	170.000	405,000
Issued	1.055.000	1.340.000
Converted	(832.500)	(865,500)
Balance, October 31, 2021	392.500	879,500

15. Related party transactions

Transactions

The Company has identified the CEO (Mr. Kevin Smith), President (Mr. Ronald Woo), CFO (Mr. Braydon Hobbs), COO (Mr. Grant Carlson) and General Counsel and Corporate Secretary (Mr. Alex Bayer) and the Company's directors as its key management personnel. During the three and nine-month periods ended October 31, 2021 and 2020, the following amounts were incurred for key management personnel of the Company:

	Three MonthsEndedOctober 31,2021	Three MonthsEndedOctober 31,2020	Nine MonthsEndedOctober 31,2021	Nine MonthsEndedOctober 31,2020
Management, director and consulting feesShare-based payments	$405,0101,212,269	$6,00025,441	$913,4762,401,049	$12,217225,064
	$ 1,617,279	$31,441	$ 3,314,525	$237,281

Included in the management, director and consulting fees for the nine-month period ended October 31, 2021 was 230,000 bonus shares issued to officers of the Company with a fair value of $289,800 (Note 14).

During the nine-month period ended October 31, 2021, the Company converted 155,000 of vested RSUs and 865,500 of vested PSUs into common shares and issued them to the directors and officers of the Company (Note 14).

15. Related party transactions (continued)

Transactions (continued)

During the three and nine-month periods ended October 31, 2021 and 2020, included in management, director and consulting fees disclosed above are fees capitalized to the following:

	Three MonthsEndedOctober 31,				Three MonthsEndedOctober 31,		Nine MonthsEndedOctober 31,	Nine MonthsEndedOctober 31,
		2021		2020	2021	2020
Exploration and evaluation asset	$	12,500	$	-	$12,500	$-
Mineral property		-		-	136,423	-
Mine construction - work-in-progress		31,250		-	31,250	-
	$	43,750	$	-	$180,173	$-

During the three and nine-month periods ended October 31, 2021 and 2020, included in share-based payments disclosed above are fees capitalized to the following:

	Three MonthsEndedOctober 31,2021	Three MonthsEndedOctober 31,2020	Nine MonthsEndedOctober 31,2021	Nine MonthsEndedOctober 31,2020
Exploration and evaluation asset	$18,936	$-	$18,936	$-
Mineral property	-	-	376,927	-
Mine construction - work-in-progress	77,673	-	241,623	-
	$96,609	$-	$637,486	$-

Balances

The following amounts due to related parties are unpaid director and management fees and expense reimbursements included in trade payables and accrued liabilities (Note 9). These amounts are unsecured, non-interest bearing and have no fixed terms of repayment.

Related party liabilities:	October 31,2021	January 31,2021
CEO (1)	$201,642	$21,364
President (2)	92,333	17,333
COO (3)	96,451	36,275
CFO (2)	59,000	14,000
General Counsel and Corporate Secretary (1)	202,394	70,591
Director (4)	9,000	9,000
Former director of subsidiary (4)	6,217	6,217
	$667,037	$174,780

(1) Related party liabilities include management fees and expense reimbursements.

(2) Related party liabilities include management and director fees.

(3) Related party liabilities include management and director fees and expense reimbursements.

(4) Related party liabilities for director fees.

16. Capital management

The Company defines its capital as both debt and shareholders' equity. 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 and development of mineral properties.

The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of management to sustain future development of the business. As such, the Company expects to rely on the equity markets to fund its activities. In addition, the Company is dependent upon external financings to fund activities.

In order to carry out planned exploration and development activities and pay for administrative costs, the Company plans to enter production at the Elk Project or will need to raise additional funds. The Company will 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 adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

17. Financial instruments

The following table summarizes the classification of the Company's financial instruments under IFRS 9:

Financial Asset/Liability	IFRS 9 Classification
Cash	Amortized cost
Receivables excluding GST receivables	Amortized cost
Reclamation deposits	Amortized cost
Accounts payable and accrued liabilities	Amortized cost
Short-term loans	Amortized cost
Lease payable	Amortized cost
Promissory note	Amortized cost

The carrying values of cash, receivables, excluding GST receivables, accounts payable and accrued liabilities and short-term loans approximate their fair value because of the relatively short-term nature of the instruments and are measured and reported at amortized cost. The lease payable, promissory note and reclamation deposits are measured and reported at amortized cost using the effective interest rate method. These estimates are subjective and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumption could significantly affect the estimates.

There are three levels of the fair value hierarchy as follows:

• Level 1: Values based on unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.
• Level 2: Values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability.
• Level 3: Values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement.

17. Financial instruments (continued)

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures. The type of risk exposure and the way in which such exposure is managed is summarized as follows:

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company's primary exposure to credit risk is on its cash held in bank accounts. The majority of cash is deposited in bank accounts at a major bank in Canada. As most of the Company's cash is held by one bank there is a concentration of credit risk. This risk is managed by using major banks that are high credit quality financial institutions as determined by rating agencies.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company's normal operating requirements on an ongoing basis. The Company aims to have sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from its ability to raise equity capital or borrowing sufficient funds and its holdings of cash.

Historically, the Company's principal source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company's access to financing is always uncertain. There can be no assurance of continued access to necessary levels of equity funding.

The following table sets forth details of the payment profile of financial liabilities based on their undiscounted cash flows:

	Total carryingamount	Contractualcash flows	Less than 1vear	years	1 to 5 More than 5years
Accounts payable and accrued
liabilities	3,457,625	3,457,625	3,457,625
Short-term loans	79,281	79,900	79,900
Lease payable	44,813	59,401	15,166	44,235
Promissory note	5,056,346	6,000,000	3,000,000	3,000,000
Total	8,638,065	9,596,926	6,552,691	3,044,235

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to significant interest rate risks.

Foreign exchange risk

The Company's functional and reporting currency is the Canadian dollar and major purchases are transacted in Canadian dollars. As a result, the Company's exposure to foreign currency risk is minimal.

18. Commitments

On January 26, 2021, the Company entered into an Ore Purchase Agreement ("OPA") with New Gold Inc. ("New Gold") for a three-year term. Under the terms of the OPA, GMTN will deliver 70,000 tonnes of ore per annum, approximately 200 tonnes per day, to the mill located at New Gold's New Afton Mine situated 130km from the Elk Gold Property, in Kamloops British Columbia.

The OPA is effective upon the first delivery of ore to the New Afton Mine. Prior to the first delivery of ore, the parties must settle on a sampling procedure for tracking the tonnes and grade delivered, GMTN must receive an amendment to its existing M-199 permit (received October 2021) and New Gold must obtain a permit amendment to allow for the processing of ore from the Elk Gold Project.

19. Events after reporting period

Share capital transactions

Subsequent to October 31, 2021, 222,222 warrants were exercised for gross proceeds of $246,666.

On December 7, 2021, 110,000 PSUs were converted to common shares.

Exploration tax credit

Subsequent to October 31, 2021, the Company recorded $488,121 in BCMETC.