GR SILVER MINING LTD. — Interim / Quarterly Report 2022

Nov 22, 2022

GR SILVER MINING LTD.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2022. (Unaudited – Prepared by Management) (Expressed in Canadian Dollars)

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

NOTICE TO READER

Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if an auditor has not performed a review of condensed interim consolidated financial statements, they must be accompanied by a notice indicating that the condensed interim consolidated financial statements have not been reviewed by an auditor.

The condensed interim consolidated financial statements of the Company for the quarter ended September 30, 2022, have been prepared by and are the responsibility of the Company's management.

The Company's independent auditors have not performed a review of these condensed interim consolidated financial statements in accordance with the standards established by the Chartered Professional Accountants of Canada for a review of condensed consolidated interim financial statements by an entity’s auditor.

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

GR SILVER MINING LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited – Prepared by management)

(Expressed in Canadian Dollars)

	September 30, 2022	December 31, 2021
ASSETS Current Cash (Note 3) Receivables (Note 4) Prepaid Equipment(Note 5) Exploration and evaluation assets(Note 6) Reclamation provision indemnification asset(Note 6 and 10) Value added tax receivable(Note 4)	$ 3,592,128 45,984 451,177 4,089,289 1,641,776 19,777,764 1,246,610 2,846,578 $29,602,017	$ 3,077,796 25,519 263,408 3,366,723 1,807,195 19,777,764 1,246,610 2,229,168 $28,427,460
LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and accrued liabilities (Note 8 and 9) Mexico mining concession taxes (Note 6 and 8) Non-current liabilities Reclamation provision (Note 10) Total liabilities Shareholders’ equity Share capital (Note 11) Share compensation reserve (Note 11) Deficit	$ 822,707 14,869,242 15,691,949 2,658,795 18,350,744 56,908,698 4,797,759 (50,455,184) 11,251,273 $29,602,017	$ 1,665,656 12,844,788 14,510,444 2,653,918 17,164,362 45,492,226 4,090,302 (38,319,430)
		11,263,098 $28,427,460

Nature of operations and going concern (Note 1) Subsequent events (Note 16)

On behalf of the Board:

“Eric Zaunscherb” Director “Gino DeMichele” Director

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

GR SILVER MINING LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Unaudited – Prepared by management) (Expressed in Canadian Dollars)

	Three Months Ended September 30, 2022 Three Months Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021
EXPENSES Amortization (Note 5) Consulting (Note 10) Exploration expenditures (Note 8) Foreign exchange (gain) loss Investor relations Office Professional fees (Note 10) Property investigation Regulatory and transfer agent Salaries (Note 10) Share-based compensation (Note 10 and 12) Travel Accretion expense evaluation assets (Note 11) Gain on concession taxes (Note 8) Interest income Recovery on exploration and evaluation assets (Note 7) Gain (Loss) on settlement of accounts payable Loss on sale of fixed assets Loss and comprehensive loss for the period	$ 142,344 $ 119,292 $ 408,415 $ 285,779 19,251 61,788 86,441 253,526 3,839,045 3,549,096 9,679,434 8,886,361 684,504 65,377 978,633 375,356 122,904 124,592 412,576 431,095 166,875 109,603 471,049 380,032 148,471 110,037 431,398 426,183 - - - 3,632 71,879 21,803 167,640 89,726 431,990 559,610 1,504,835 1,078,830 - - 453,446 1,498,909 50,276 16,019 104,727 67,659
	(5,677,539) (4,737,217) (14,698,594) (13,777,088) (1,638) (1,638) (4,877) (4,877) 1,723,586 - 2,555,207 - 9,183 4,984 14,452 15,587 - - - 72,366 - - 4,792 (3,015) - - (6,734) 27,000
	$ (3,946,408) $ (4,733,871) $ (12,135,754) $ (13,670,027)
Loss per common share -Basic and diluted	$ (0.02) $ (0.03) $ (0.07) $ (0.09)
Weighted average number of common shares outstanding -Basic and diluted	231,479,806 167,213,040 183,581,797 150,279,314

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

GR SILVER MINING LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited – Prepared by management)

(Expressed in Canadian Dollars)

	Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES Loss for the period Items not affecting cash: Amortization Gain on concession taxes Share-based compensation Accretion expenses on restoration obligations (Note 11) Changes in non-cash working capital items: Decrease (Increase) in Receivables Increases in Prepaids Increase in concession taxes payable Increase in Value added tax Increases (Decrease) in accounts payable and accrued liabilities Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of San Marcial Property (Note 7) Acquisition of La Trinidad Property (Note 7) Cash acquired from Mako acquisition (Note 7) Deferred acquisition costs Equipment Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of shares Share issue costs Net cash provided by financing activities Change in cash during the period Cash, beginning of period Cash, end of period	$ (12,135,754) $ (13,670,027) 408,415 285,779 (2,555,207) - 453,446 1,498,909 4,877 4,877 (20,465) 22,790 (187,769) (160,483) 4,579,661 - (617,410) (1,125,821) (814,197) 722,718
	(10,884,403) (12,421,258)
	- (2,500,000) - (332,516) - 5,467 - 158,860 (242,996) (221,784)
	(242,996) (2,889,973)
	12,874,871 18,019,453 (1,233,140) (851,163)
	11,641,731 17,168,290
	514,332 1,857,059 3,077,796 4,893,578
	$ 3,592,128 $ 6,750,637

Supplemental disclosure with respect to cash flows (Note 12)

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

GR SILVER MINING LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIENCY) (Expressed in Canadian Dollars)

Balance, December 31, 2020 Shares issued for cash Private placement Exercise of warrants Exercise of options Share issue costs Shares issued for non-cash Reclassification of reserves on exercise of options Reclassification of reserves on exercise of warrants Finder’s fees – warrants issued Commission shares Debt settlement Property acquisition Share-based compensation Loss for the period Balance, September 30, 2021 Shares issued for cash Exercise of options Shares issued for non-cash Reclassification of reserves on exercise of warrants Reclassification of reserves on exercise of options Share-based compensation Loss for the year Balance, December 31, 2021 Shares issued for cash Private placement Exercise of warrants Share issue costs Shares issued for non-cash Reclassification of reserves on exercise of warrants Finder’s fees – warrants issued Debt settlement Share-based compensation Loss for the period Balance, September 30, 2022	Share Capital Number of Shares Amount Share Compensation Reserve Deficit Total
	128,947,415 $ 27,300,384 $ 2,489,056 $ (20,122,187) $ 9,667,253 19,550,000 11,534,500 - - 11,534,500 16,153,000 6,265,160 - - 6,265,160 799,644 219,794 - - 219,794 - (1,001,614) - - (1,001,614) - 141,143 (141,143) - - - 359,257 (359,257) - - - (471,463) 471,463 - 255,000 150,450 - - 150,450 187,096 142,714 - - 142,714 1,500,000 933,000 - - 933,000 - - 1,498,909 - 1,498,909 - - - (13,670,027) (13,670,027)
	167,392,155 $ 45,573,325 $ 3,959,028 $ (33,792,214) $ 15,740,139 50,000 16,750 - - 16,750 - (129,503) 129,503 - - - 31,654 (31,654) - - - 33,425 - 33,425 - - - (4,527,216) (4,527,216)
	167,442,155 $ 45,492,226 $ 4,090,302 $ (38,319,430) $ 11,263,098
	63,499,755 12,793,374 - - 12,793,374 400,987 81,497 81,497 - (1,233,140) - - (1,233,140) - 77,841 (77,841) - - - (331,851) 331,851 - 136,909 28,751 - - 28,751 - - 453,447 - 453,447 - - - (12,135,754) (12,135,754)
	231,479,806 $ 56,908,698 $ 4,797,759 $ (50,455,184) $ 11,251,273

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

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

GR Silver Mining Ltd. (the “Company” or “GR Silver”) was incorporated on November 8, 2012, under the laws of British Columbia. The Company’s head office address is 1050 – 400 Burrard Street, Vancouver, BC, V6C 3A6. The Company’s registered and records office is Suite 1100 – 736 Granville Street, Vancouver, B.C. V6Z 1G3. To date, the Company has not earned operating revenue. The Company trades on the TSX Venture Exchange (TSX-V) under the trading system GRSL.

As at September 30, 2022, the Company has a working capital deficit of $11,602,659 and an accumulated deficit of $50,455,184. The Company expects to incur further losses in the development of its operations. The Company's ability to continue its operations and to realize its assets at their carrying values is dependent upon obtaining additional financing and generating revenues sufficient to cover its operating costs. These material uncertainties may cast significant doubt on the Company’s ability to continue as a going concern.

The Company is in the process of acquiring and exploring exploration and evaluation assets and has not yet determined whether the properties contain reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production.

These condensed interim consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and thus be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in these financial statements.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. Since the declaration, the COVID-19 pandemic has adversely affected workforces, economics, and financial markets globally. The spread of COVID-19 resulted in temporary travel restrictions to Mexico and in Canada, which made work more challenging, however disruptions were minimal to our business.

The extent to which COVID-19 may impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be accurately estimated at this time, including new information which may emerge concerning the severity of and the actions required to contain COVID-10 or remedy its impact.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The Board of Directors of the Company approved the condensed consolidated interim financial statements on November 21, 2022.

These condensed interim consolidated 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 International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”. The condensed interim consolidated financial statements do not include all note disclosures required by IFRS for annual financial statements and should be read in conjunction with the annual financial statements for the year ended December 31, 2021, which have been prepared in accordance with IFRS as issued by the IASB. In the opinion of management, all adjustments considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the nine-month period ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments classified as held-for-trading, which are stated at their fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting. These condensed consolidated interim financial statements are prepared in Canadian dollars.

These consolidated financial statements of the Company include the balances of its subsidiaries, Goldplay de Mexico SA de CV, Minera San Marcial SA de CV, Minera Matatan SA de CV (“Matatan”) and Marlin Gold Mining Ltd. (“Marlin”), which are wholly owned subsidiaries. Mineral La Rastra SA de CV is owned 100% by Matatan and Oro Gold de S.A. de C.V. (“Oro Gold”) and Marlin Gold Trading Inc. are 100% owned by Marlin.

The Company consolidates its subsidiaries on the basis that it controls the subsidiaries through its ability to govern its financial and operating policies. All intercompany transactions and balances are eliminated on consolidation.

New standards and interpretations adopted

Certain new standards, interpretations, amendments and improvements to existing standards were issued by IASB or IFRIC that are mandatory for future accounting periods which are not expected to have a material effect on the Company’s consolidated financial statements. There were no new standards adopted by the Company during the period having a material effect on the Company’s condensed interim consolidated financial statements.

3. CASH

The Company’s cash consists of the following:

	September 30,	December 31,
	2022	2021
Cash held with banks in Canadian dollars	$ 3,445,021	$ 2,731,429
Cash held with banks in foreign currencies	147,107	346,367
Total	$ 3,592,128	$ 3,077,796

4. RECEIVABLES

The Company’s receivable primarily arises from refundable sales tax receivables from government taxation authorities in Canada and Mexico.

	September 30,	September 30,	December 31,
		2022	2021
GST receivable	$	34,202 $	12,335
Other receivables		11,792	13,184
Current receivable	$	45,984 $	25,519
VAT receivable		2,846,578	2,229,168
Total receivable	$	2,892,572 $	2,254,687

GR SILVER MINING LTD.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

5. EQUIPMENT

		Office		Mobile		Exploration	Buildings	Building in	Building in
	Equipment		Equipment			Equipment		Progress			Total
Cost:
Balance at December 31, 2020	$	35,078	$	63,257	$	1,100,431	$ -		$ 69,671	$	1,268,437
Transfer to buildings		-		-		-	69,671		(69,671)		-
Additions		40,527		-		187,396	817,247		-		1,045,170
Balance at December 31, 2021	$	75,605	$	63,257	$	1,287,827	$ 886,918	$	-	$	2,313,607
Additions		-		75,658		115,617	85,076		-		276,351
Disposal		-		-		(45,125)	-		-		(45,125)
Balance at September 30, 2022	$	75,605	$	138,915	$	1,358,319	$ 971,994	$	-	$	2,544,833
Accumulated Depreciation:
Balance at December 31, 2020	$	18,719	$	8,668	$	74,413	$ -	$	-	$	101,800
Depreciation		4,674		12,475		141,915	245,548		-		404,612
Balance at December 31, 2021	$	23,393	$	21,143	$	216,328	$ 245,548	$	-	$	506,412
Depreciation		13,633		17,103		167,389	210,290		-		408,415
Disposal		-		-		(11,770)	-		-		(11,770)
Balance at September 30, 2022	$	37,026	$	38,246	$	371,947	$455,838	$	-	$	903,057
Net Book Value:
Balance at December 31, 2021	$	52,212	$	42,114	$	1,071,499	$ 641,370	$	-	$	1,807,195
Balance at September 30, 2022	$	38,579	$	100,669	$	986,372	$ 516,156	$	-	$	1,641,776

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS

The Company’s capitalized acquisition expenditures on its exploration and evaluation assets are as follows:

		San Marcial	La Trinidad		Plomosas	Plomosas	Total
		Mexico	Mexico		Mexico
Balance,December 31,2020	$	612,500$	-	$	3,094,180	$	3,706,680
Acquisition costs
Shares issued		933,000	-			-	933,000
Acquisition of La Trinidad Property		-	12,638,084			-	12,638,084
Cash		2,500,000	-			-	2,500,000
Total acquisition		3,433,000	12,638,084			-	16,071,084
Balance, September 30, 2022 and December 31,	$	4,045,500 $	12,638,084	$	3,094,180 $		19,777,764
2021

La Trinidad Property, Mexico

The Company entered into a share purchase agreement to acquire a 100% interest in Marlin and its wholly owned subsidiary which own the La Trinidad property located in the Rosario Mining District, Sinaloa, Mexico. On March 31, 2021, the Company completed the acquisition by paying $50,000, granted a 1% net smelter royalty (“NSR”) with the NSR being subject to a buy-back for US$2,000,000 at any time and assumed concession taxes owed in Mexico on concessions acquired as noted below. The Company assumed pre-existing NSR’S between 0.5% and 2.5% on certain properties.

For accounting purposes, the acquisition of Marlin was treated as an asset acquisition. As such, effective as of the date of closing, the fair value assigned to the identifiable assets and liabilities purchased are presented below:

Purchase Price
Cash payment	$	50,000
Legal,regulatory,and other costs		282,516
Total purchase price	$	332,516
Net assets acquired and allocation
Assets
Cash	$	5,467
Receivables and prepaids		39,084
Value added tax		82,568
Buildings		747,225
Indemnification asset		1,246,610
Exploration and evaluation assets		12,638,084
Liabilities
Accounts payable	$	(31,533)
Mexico mining concession taxes (Note 8)		(11,963,059)
Reclamationprovision(Note 10)		(2,431,930)
Total net assets acquired and allocated	$	332,516

As part of the acquisition, the Company assumed responsibility for estimated mining taxes owing (Note 8 as well as an estimated reclamation liability for which the vendor has agreed to remediate and indemnify the Company (Note 10). The Company entered into an agreement on non-core concessions (Note 8) that has not yet completed.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d…)

Plomosas Property, Mexico

The Company entered into a share purchase agreement to acquire a 100% interest in Matatan and its wholly owned subsidiary which own the Plomosas property located in the Rosario Mining District, Sinaloa, Mexico. On March 26, 2020, the Company completed the acquisition by paying $100,000, issuing 17,097,500 common shares of the Company (valued at $2,906,575) and granted a 2% net smelter royalty (“NSR”) with half of the NSR (i.e., 1% NSR) being subject to a buy-back for US$1,000,000. The Company assumed a pre-existing NSR between 1.75% and 3.5% based on the price of zinc.

For accounting purposes, the acquisition of Matatan was treated as an asset acquisition. As such, effective as of the date of closing, the fair value assigned to the identifiable assets and liabilities purchased are presented below:

Purchase Price
Cash payment	$	100,000
Common shares issued		2,906,575
Legal,regulatory,and other costs		161,268
Total purchase price	$	3,167,843
Net assets acquired and allocation
Assets
Cash	$	2,379
Receivables		11,095
Equipment		276,965
Exploration and evaluation assets		3,094,180
Liabilities
Accounts payable	$	(6,085)
Reclamationprovision		(210,691)
Total net assets acquired and allocated	$	3,167,843

San Marcial Property, Mexico

The Company owns a 100% interest in the San Marcial property located in the Rosario Mining District, Sinaloa, Mexico. As consideration, the Company paid $2,575,000 in cash, issued 3,500,000 common shares with a fair value of $1,470,500 and incurred $3,000,000 in exploration expenditures. The vendor also reserved an NSR on the San Marcial Property, the amount of which was determined and fixed at 0.75% when the Company issued a NI 43-101 report on June 12, 2020. The Company has a buy back right on the NSR that can be exercised at any time by paying $1,250,000. The Company also assumed a pre-existing 3% NSR on the San Marcial Property which is subject to a buy back right on the NPR of US$600,000 per 1% that can be exercised by the Company at any time and from time to time, in whole or in part.

El Habal Property, Mexico

The Company acquired all 100% of the rights, title and interest in the El Habal Property by issuing 474,423 common shares of the Company valued at $35,000. The property is subject to an NSR between 1.0% and 1.5%.

During fiscal 2018 the Company entered into an option agreement pursuant to which the Company received $1,000 for the option to purchase a 1% NSR on the property, which option can be exercised by payment to the Company of US$1,000,000 per 0.5% NSR, for a total option exercise price of US$2,000,000 for a 1% NSR. The Company also entered into a royalty agreement pursuant to which it received $99,000 for a 1% royalty on four concessions adjacent to the property resulting in a recovery of $65,000.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d…)

Golconda Summit Property, Nevada USA

The Company entered into a property option agreement to acquire a 100% interest in and to the Golconda Summit (“Golconda”) property. During the year ended December 31, 2021, the Company sold the property option agreement to a third party and received $70,796 in consideration.

7. EXPLORATION EXPENDITURES

Exploration expenditures for the period ended September 30, 2022, are comprised of the following:

				La		San
		El Habal		Trinidad		Marcial		Plomosas		Total
Concession taxes	$	128,666	$	4,333,336	$	31,102	$	211,823	$	4,704,927
Community relations		-		131,239		56,366		38,385		225,990
Consulting		-		-		8,433		10,649		19,082
Drilling		-		-		532,112		844,555		1,376,667
Environmental		-		-		13,036		54,486		67,522
Field		-		96,098		279,769		1,226,848		1,602,715
Geological		4,329		-		537,267		557,958		1,099,554
Geochemistry		-		20,120		174,684		215,612		410,416
Metallurgical		-		117,157		-		-		117,157
Topography		-		-		16,905		38,499		55,404
Total	$	132,995	$	4,697,950	$	1,649,674	$	3,198,815	$	9,679,434

Exploration expenditures for the period ended September 30, 2021, are comprised of the following:

		La			San
		Trinidad	El Habal		Marcial		Plomosas		Total
Concession taxes	$	1,626,391	84,012	$	27,498	$	186,187	$	1,924,088
Consulting		34,244	-		85,615		31,170		151,029
Drilling		-	-		77,494		1,704,247		1,781,741
Field		315,014	-		249,862		1,341,823		1,906,699
Geological		-	-		912,463		968,001		1,880,464
Geochemistry		-	-		363		496,473		496,836
Geophysical		-	-		415,555		-		415,555
Metallurgical		-	-		-		74,261		74,261
Report preparation		-	-		-		104,004		104,004
Survey		-	-		-		16,438		16,438
Topography		-	-		12,931		69,302		82,233
Underground development		-	-		53,013		-		53,013
Total	$	1,975,649	84,012	$	1,834,794	$	4,991,906	$	8,886,361

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	September 30,	September 30,	December 31,
		2022	2021
Trade payables	$	755,207	$ 1,569,655
Accrued liabilities		67,500	96,000
		822,707	1,665,655
Mexico miningconcessions taxes		14,869,242	12,844,788
		$ 15,691,949	$ 14,510,443

As part of the acquisition of Marlin (Note 6) the Company assumed liabilities for unpaid Mexican mining concession taxes of $11,963,059 for the years 2015 – 2020. During the quarter ended September 30, 2022, a portion of the concession taxes became statute barred and are no longer payable resulting in the Company incurring a gain on concession tax forgiveness of $2,555,207 (2021 – $Nil).

During fiscal 2021 the Company entered into an agreement to sell the El Salto and El Salto Sur non-core concessions within the La Trinidad Property in an arm’s length transaction. The Company received no consideration accept the vendor will be responsible for $8,534,206 (December 31, 2021 - $6,489,455) of the concession taxes owed. Approval of the transaction is pending and is subject to approval form government agencies in Mexico.

9. RELATED PARTY TRANSACTIONS

Key management personnel include those people who have authority and responsibility for planning, directing and controlling the activities of the Company. 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. Key management personnel compensation for the period ended September 30 was:

	2022	2021
Short-term benefits paid or accrued: Salaries $ Director fees Share-based compensation Professional fees Total remuneration $	906,674 $ 35,250 309,442 198,245 1,449,611$	592,095 99,750 834,034 137,246 1,663,125

Included in accounts payable and accrued liabilities as at September 30, 2022 was $24,525 (December 31, 2021 – $74,862) owed to a director and companies controlled by a director or officer.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

10. RECLAMATION PROVISIONS

As at March 31, 2022 the Company’s reclamation provisions are related to the Company’s La Trinidad and Plomosas properties (Note 7). The provision was calculated using an inflation rate of 3.25% and a discount rate of approximately 3.03% with the assumption that the reclamation would be settled in the year ended 2025. Significant activities include land rehabilitation, demolition and removal and restoration costs. On March 31, 2021, the Company acquired the La Trinidad property (Note 7) and added a reclamation provision of $2,431,930 relating to the property reclamation and dismantling and removal of buildings, salvaged topsoil replacement and recontouring and grading. Mako is responsible for certain costs estimated at $1,246,610 which has been recorded as an indemnification asset. The amounts and timing of the reclamation will vary depending on several factors including exploration success and alternative mining plans.

September 30,2022	December 31,2021
Balance as at beginning of year $ 2,653,918 Acquisition of the La Trinidad property (Note 6) - Accretion expense 4,877	$ 215,461 2,431,930 6,527
Balance as at end ofyear $ 2,658,795	$ 2,653,918

11. SHARE CAPITAL AND RESERVES

Authorized – Unlimited common shares without par value

During the period ended September 30, 2022 the Company;

• a) The Company issued 400,987 common shares on the exercise of warrants for proceeds of $81,497. Share issue costs of $684 were incurred and was recorded as an offset to share capital, as share issue costs.

• b) The Company issued 136,909 common shares valued at $28,751 as debt settlement resulting in a gain on settlement of $556.

• c) Completed conversion of 27,236,755 special warrants (the “Special Warrants”) to 27,236,755 units (the “Units”). The Special Warrants were previously issued upon completion of a private placement at a price of $0.27 per Special Warrant for gross proceeds of $7,353,924. Upon receipt of a final short form prospectus, each Special Warrant was automatically exercised, at no additional cost to the holder thereof, for one Unit. Each Unit was comprised of one common share and one-half of one common share purchase warrant. Each whole warrant is exercisable to acquire one share at an exercise price of $0.37 per share to March 29, 2025. On completion of the private placement, the Company paid cash finders fees of $422,931 and issued 1,566,410 special agent warrants valued at $190,844. Upon receipt of a final short form prospectus, each special agent warrant was automatically exercised, at no additional cost to the holder thereof, for one broker warrant. Each broker warrant is exercisable for one common share until March 29, 2025, at an exercise price of $0.27 per share. Additional share issue costs of $300,892 were incurred in connection with this financing, and was recorded as an offset to share capital, as share issue costs.

• d) Completed a bought deal private placement of 36,263,000 units at a price of $0.15 per unit for gross proceeds of $5,439,450. Each Unit consisted of one common share in the capital of the Company and onehalf of one common share purchase warrant ("Warrant") and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.22 per warrant to August 30, 2025. The Company paid cash finders fees of $271,458 and issued 2,148,720 agent warrants and valued at $141,007. Each agent warrant is exercisable at an exercise price of $0.15 per agent warrant to August 30, 2025. Additional share issue costs of $271,212 were incurred in connection with this financing, and was recorded as an offset to share capital, as share issue costs.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

11. SHARE CAPITAL AND RESERVES (cont’d…)

During the year ended December 31, 2021, the Company;

• e) Issued 16,153,000 common shares on the exercise of warrants for proceeds of $6,265,160.

• f) Issued 849,644 common shares on the exercise of options for proceeds of $236,544.

• g) Issued 187,096 common shares valued at $142,714 as debt settlement including $32,659 to a related party, resulting in a loss on settlement of $3,015.

• h) Issued 1,500,000 common shares for acquisition of exploration and evaluation assets at a value of $933,000.

• i) Completed a bought deal private placement of 19,550,000 units at a price of $0.59 per unit for gross proceeds of $11,534,500. Each Unit consisted of one common share in the capital of the Company and onehalf of one common share purchase warrant ("Warrant") and each whole warrant is exercisable into one common share of the Company at an exercise price of $0.74 per warrant to April 27, 2023. The Company paid cash finders fees of $617,369, issued 1,301,388 agent warrants and issued 255,000 units valued at $150,450. The Company also paid a corporate finance fee of $22,000 and 37,000 agent warrants. Each agent warrant is exercisable at an exercise price of $0.59 per agent warrant to April 23, 2023. The agent warrants were valued at $431,714 and the warrants on the units at $39,749. Additional share issue costs of $223,796 were incurred in connection with this financing, and was recorded as an offset to share capital, as share issue costs.

Additional share issue costs of $10,083 were incurred in connection with the exercise of options and warrants and shares issued for debt settlement, and was recorded as an offset to share capital, as share issue costs.

Stock Options

The Company has adopted an incentive stock option plan, which provides that the Board of Directors of the Company may from time-to-time, at its discretion, and in accordance with the TSX-V requirements, grant to directors, officers, employees and technical consultants to the Company, non-transferable stock options to purchase common shares, provided that the number of common shares reserved for issuance will not exceed a rolling 10% of the Company’s issued and outstanding common shares at the time the options are granted. Vesting of stock options is at the discretion of the Board of Directors. Stock options are exercisable for a maximum of 10 years, and the exercise price of the stock options is set in accordance with the policies of the TSX-V.

As at September 30, 2022, the Company had stock options outstanding enabling the holder to acquire common shares as follows:

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

11. SHARE CAPITAL AND RESERVES (cont’d…)

Number ofShares Exercise Price ExpiryDate	Weighted Average LifeRemaining
1,157,157 $0.30 March 1, 2023 450,000 $0.30 May 7, 2023 1,070,000 $0.22 December 19, 2023 370,000 $0.21 August 8, 2024 217,000 $0.20 January 26, 2027 975,000 $0.185 November 27, 2024 300,000 $0.20 April 16, 2025 935,000 $0.335 May 13, 2025 935,000 $0.78 September 14, 2025 1,705,000 $0.74 January 21, 2026 200,000 $0.75 February 24, 2026 460,000 $0.71 May 13, 2026 65,000 $0.29 October 5, 2026 895,000 $0.25 April 6, 2027 9,734,157	0.67 0.85 1.47 2.10 4.59 2.41 2.80 2.87 3.21 3.56 3.66 3.87 4.27 4.77
	2.73

Stock option transactions are summarized as follows:

	Number ofOptions	Weighted Average ExercisePrice
As at December 31, 2020 Expired Exercised Granted As at December 31, 2021 Expired Granted As at September30,2022	7,702,178 (429,000) (849,644) 3,660,000 10,083,534 (1,269,377) 920,000 9,734,157	$ 0.33 0.67 0.28 0.72 $ 0.46 0.63 0.25 $ 0.42
Number of options currentlyexercisable	8,917,491	$ 0.37

During the period ended September 30, 2022, the Company recognized share-based payments expense of $453,446 (2021 - $1,498,909) in connection with the vesting of stock options granted.

The following weighted average assumptions were used for the Black-Scholes option pricing model valuation of stock options granted during the period ended as follows:

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

11. SHARE CAPITAL AND RESERVES (cont’d…)

	September	30,	December 31, 2021
	2022
Risk-free interest rate	2.51%		0.61%
Expected life of options		5	5
Annualized volatility	96.65%		100%
Dividend rate		0%	0%

Warrants

The following common shares purchase warrants entitle the holder thereof to purchase one common share for each warrant. Warrant transactions are summarized as follows:

As at December 31, 2020 Granted Expired Exercised As at December 31, 2021 Granted Expired Exercised As at September 30,2022		17,685,487 $ 0.38 11,240,888 0.72 (237,500) 0.40 (16,153,000) 0.39 12,535,875 $ 0.67 35,465,007 0.28 (3,000) 0.15 (400,987) 0.20 47,596,895 $ 0.38

The weighted average remaining contractual life of warrants outstanding at September 30, 2022 was 2.18 (December 31, 2021 – 01.25) years.

Warrants outstanding are as follows:

Number of Shares	Exercise	Price	ExpiryDate
891,000(*)	$	0.25	November 6, 2022
9,902,500	$	0.74	April 27, 2023
1,338,388	$	0.59	April 27, 2023
1,566,410	$	0.27	March 29, 2025
13,618,377	$	0.37	March 29, 2025
18,131,500	$	0.22	August 30, 2025
2,148,720	$	0.15	August 30,2025
47,596,895

(*) See Note 16

The weighted average Black-Scholes inputs are as follows:

	September 30,2022	December 31,2021
Expected life of warrants	3.00	2.00
Annualized volatility	75.62%	100%
Dividend rate	-	-
Discount rate	3.03%	0.33%

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

12. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Significant non-cash transactions during the period ended September 30, 2022;

• reclassification of reserves in share capital of $77,841.

• issued 136,909 common shares in settlement of debt in the amount of $28,751.

Significant non-cash transactions during the period ended September 30, 2021;

• issued 1,500,000 common shares for the acquisition of exploration and evaluation assets at a fair value of $933,000.

• issued 1,383,388 agent warrants with a fair value of $471,463 recorded as share issuance costs.

• issued 255,000 units valued at $150,000 recorded as share issue costs.

• reclassification of reserves in share capital of $500,400 on exercise of warrants and options.

• issued 187,096 common shares in settlement of debt in the amount of $142,714.

13. SEGMENTED INFORMATION

The business of the Company is the acquisition and exploration of mineral properties which is considered one business segment.

Geographic information is as follows:

	September 30,2022	December 31,2021
Equipment
Mexico	$ 1,638,195	$ 1,802,574
Canada	3,581	4,621
Total	$ 1,641,776	$ 1,807,195
Exploration and evaluation assets
Mexico	$ 19,777,764	$ 19,777,764
Total	$ 19,777,764	$ 19,777,764

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

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 cash is measured at Level 1 of the fair value hierarchy. The carrying value of receivables and value added tax and accounts payable and accrued liabilities approximate their fair value because of the shortterm nature of these instruments.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

14. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Financial risk factors

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. The Company’s credit risk is primarily attributable to cash, receivables and value added tax. Management believes that the credit risk concentration with respect to financial instruments included in receivables is remote and has deposited cash in high credit quality financial institutions. Credit risk with respect to value added taxes is considered to be low as they are due from a government agency. Value added taxes are subject to review and potential adjustment by taxation authorities.

Liquidity risk

As of September 30, 2022, the Company had cash balance of $3,592,128 to settle current liabilities of $15,691,949 and has significant expenditure requirements pursuant to Mexican concession taxes (Note 6 and 8). The Company is exposed to liquidity risk. The funds raised (Note 11(c and d) are not sufficient to cover its current liabilities as of September 30, 2022, and additional financing will be required. Additional funds will be required for property expenditures, retention of essential personnel, general and administration and to maintain its listing on the TSX.V

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices.

Interest rate risk

The Company has cash balances and no interest-bearing debt. The Company’s current policy is to invest excess cash in investment-grade demand investments issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to assets and liabilities that are denominated in foreign currency. Amounts exposed to foreign currency risk include cash of MX$2,164,614 as of September 30, 2022, and accounts payable of MX$225,316,547. A 10% change in foreign exchange rates will affect profit or loss by less than $1,520,000.

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 profit or loss 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, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company. Fluctuations in value may be significant.

GR SILVER MINING LTD. NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (Expressed in Canadian Dollars)

15. CAPITAL MANAGEMENT

The Company defines capital that it manages as shareholders’ equity, consisting of issued common shares, stock options and warrants.

The Company manages its capital structure and adjusts it, based on the funds available to the Company, in order to support the acquisition and exploration of exploration and evaluation assets. 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 Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient 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. The Company is not subject to externally imposed capital restrictions. There were no changes to the Company’s approach to capital management during the year.

16. SUBSEQUENT EVENTS

The Company had 891,000 warrants expire unexercised.