Imperial Metals — Interim / Quarterly Report 2021

Nov 10, 2021

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Condensed Consolidated Interim Financial Statements (unaudited) For the Three and Nine Months Ended September 30, 2021 and 2020

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at September 30, 2021 and December 31, 2020

expressed in thousands of Canadian dollars

Notes ASSETS Current Assets Cash Marketable securities Trade and other receivables Inventory 3 Prepaid expenses and deposits Mineral Properties 4 Other Assets 5 Deferred Income Tax Assets LIABILITIES Current Liabilities Trade and other payables Taxes payable Provision for rehabilitation costs Current portion of finance lease 7 Provision for Rehabilitation Costs Non-Current Finance Lease 7 Future Site Reclamation Provisions 8 Deferred Income Tax Liabilities EQUITY Share Capital 9 Contributed Surplus Currency Translation Adjustment Retained Earnings Commitments and Pledges 16 Contingent Liabilities 17	September 30 2021 December 31 2020
	$45,070 $34,019 82 130 6,489 5,968 23,354 12,420 1,939 2,840
	76,934 55,377 996,245 979,484 38,127 45,230 11,178 11,230
	$1,122,484 $1,091,321
	$52,374 $44,170 246 313 487 762 1,877 840
	54,984 46,085 77 308 2,973 1,582 110,498 127,828 176,245 187,035
	344,777 362,838
	379,570 319,216 41,283 41,028 7,636 7,632 349,218 360,607
	777,707 728,483
	$1,122,484 $1,091,321

See accompanying notes to these condensed consolidated financial statements.

Approved by the Board and authorized for issue on November 9, 2021

/s/ Larry G. Moeller /s/ J. Brian Kynoch Director Director

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 1

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

xpressed in thousands of Canadian dollars, except share and per share	amounts
Notes Revenue Cost of Sales 10 Income from Mine Operations General and Administration Idle Mine Costs Interest Expense Other Finance Loss 11 Other Income (Loss) Income before Taxes Income and Mining Tax Recovery (Expense) Net (Loss) Income Other Comprehensive (Loss) Income: Currency translation adjustment Total Comprehensive (Loss) Income Loss Per Share Basic Diluted Weighted Average Number of Common Shares Outstanding Basic Diluted	Three Months Ended September 30 2021 2020 $37,064 $38,161 (32,201) (25,366) 4,863 12,795 (1,304) (805) (7,816) (4,965) (190) (322) (556) (1,568) 2 690 (5,001) 5,825 1,229 1,238 (3,772) 7,063 96 (147) $(3,676) $6,916 $(0.03) $0.05 $(0.03) $0.05 141,392,191 128,490,174 141,392,191 128,913,417	Nine Months Ended September 30 2021 2020
		$104,329 $111,182 (99,915) (88,849)
		4,414 22,333 (3,426) (2,401) (19,542) (16,134) (909) (1,085) (1,903) (1,441) 13 696
		(21,353) 1,968 9,964 (1,944)
		(11,389) 24
		4 178
		$(11,385) $202
		$(0.09) $ - $(0.09) $ - 133,144,378 128,490,174 133,144,378 128,667,744

See accompanying notes to these condensed consolidated financial statements.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

Balance December 31, 2019 Share based compensation expense Total comprehensive income Balance September 30, 2020 Balance December 31, 2020 Rights offering Exercised options Share based compensation expense Total comprehensive loss Balance September 30, 2021	Share Capital Number of Shares Amount 128,490,174 $319,216 - - - - 128,490,174 $319,216 128,490,174 $319,216 12,853,267 60,208 48,750 146 - - - - 141,392,191 $379,570	Currency Contributed Surplus Translation Adjustment Retained Earnings Total
		$40,302 $7,762 $365,499 $732,779 463 - - 463 - 178 24 202
		$40,765 $7,940 $365,523 $733,444
		$41,028 $7,632 $360,607 $728,483 - - - 60,208 (48) - - 98 303 - - 303 - 4 (11,389) (11,385)
		$41,283 $7,636 $349,218 $777,707

See accompanying notes to these condensed consolidated financial statements.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

Notes OPERATING ACTIVITIES Net (Loss) Income Items not affecting cash flows Deferred mining and income tax (recovery) expense Depletion and depreciation Share based compensation Accretion of future site reclamation provisions Unrealized foreign exchange (gains) losses Interest expense Other Net change in non-cash operating working capital balances 12 Income and mining taxes paid Interest paid Cash provided by operating activities FINANCING ACTIVITIES Proceeds from short term debt Proceeds from non-current debt Repayment of short term debt Repayment of non-current debt Lease payments Share capital issued for exercised options Share capital issued for rights offering net of issue costs Cash (used in) provided by financing activities INVESTING ACTIVITIES Acquisition and development of mineral properties Net change in investing working capital balances Payments of other obligations Proceeds on sale of minerals properties Other investing items Cash used in investing activities EFFECT OF FOREIGN EXCHANGE ON CASH (DECREASE) INCREASE IN CASH CASH, BEGINNING OF PERIOD CASH, END OF PERIOD	Three Months Ended September 30 2021 2020 $(3,772) $7,063 (1,536) (1,481) 12,269 9,110 103 278 791 695 (299) 1,501 190 322 34 (76) 7,780 17,412 952 (1,141) (50) - (141) (233) 8,541 16,038 2,995 - - - (3,000) - (12) (63) (474) (267) - - (40) - (531) (330) (33,550) (25,392) 4,021 5,846 - (1,073) 17 - (59) - (29,571) (20,619) 343 (1,548) (21,218) (6,459) 66,288 67,547 $45,070 $61,088	Nine Months Ended September 30 2021 2020
		$(11,389) $24 (10,663) 1,332 37,114 30,374 303 463 2,308 2,198 (214) 544 909 1,085 40 (83)
		18,408 35,937 (1,775) (12,151) (765) (301) (749) (997)
		15,119 22,488
		21,447 - 10,000 - (21,500) - (10,036) (373) (1,198) (802) 98 - 60,132 -
		58,943 (1,175)
		(70,549) (56,264) 7,376 9,316 - (3,218) 23 432 (59) (6)
		(63,209) (49,740)
		198 (438)
		11,051 (28,865) 34,019 89,953
		$45,070 $61,088

See accompanying notes to these condensed consolidated financial statements.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 4

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020 expressed in thousands of Canadian dollars, except share and per share amounts

1. NATURE OF OPERATIONS

Imperial Metals Corporation (the “Company”) is incorporated under the laws of the Province of British Columbia, Canada, and its principal business activity is the exploration, development, and production of base and precious metals from its mineral properties. The head office, principal address and registered and records office of the Company are located at 580 Hornby Street, Suite 200, Vancouver, British Columbia, Canada V6C 3B6. The Company’s shares are listed as symbol “III” on the Toronto Stock Exchange.

The Company’s key projects are:

• 30% interest in the Red Chris copper-gold mine in northwest British Columbia;

• Mount Polley copper-gold mine in central British Columbia; and

• Huckleberry copper mine in west central British Columbia.

These condensed consolidated financial statements have been prepared on a going concern basis which assumes the Company will continue operating in the foreseeable future and will be able to service its debt obligations, realize its assets and discharge its liabilities in the normal course as they come due. The Company has in place a planning, budgeting, and forecasting process to determine the funds required to support its operations and expansionary plans.

2. SIGNIFICANT ACCOUNTING POLICIES

Statement of Compliance

The annual consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). These unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting (IAS 34).

These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2020.

New Standards, Interpretations and Amendments

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the annual consolidated financial statements for the year ended December 31, 2020, except for the adoption of new standards effective as of January 1, 2021. The Company has not adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

3. INVENTORY

Stockpile ore Concentrate Supplies Total inventories Less non-current inventories included in other assets(Note 5) Total current inventories	September 30 2021 December 31 2020
	$12,622 $9,873 3,360 1,725 31,050 31,643
	47,032 43,241 (23,678) (30,821)
	$23,354 $12,420

During the nine month period ended September 30, 2021 inventory of $93,980 was recognized in cost of sales (September 30, 2020-$82,566). As at September 30, 2021, the Company had $23,816 (December 31, 2020-$23,893) of inventory pledged as security for debt.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 5

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

4. MINERAL PROPERTIES

. MINERAL PROPERTIES
Cost Balance December 31, 2019 Additions and reclass Change in estimates of future site reclamation provisions Disposals Foreign exchange movement Balance December 31, 2020 Additions Change in estimates of future site reclamation provisions Disposal Foreign exchange movement Balance September 30, 2021 Accumulated depletion & depreciation & impairment losses Balance December 31, 2019 Depletion and depreciation Disposals Foreign exchange movement Balance December 31, 2020 Depletion and depreciation Disposal Foreign exchange movement Balance September 30, 2021 Carrying Amount Balance December 31, 2019 Balance December 31, 2020 Balance September 30, 2021	Mineral Properties being Depleted	Mineral Properties not beingDepleted Projects not in Production Exploration & Evaluation Assets Plant & Equipment Total
	$667,445 20,676 9,946 - -	$2,568 $173,588 $562,193 $1,405,794 13,801 (1,428) 40,605 73,654 - (43) - 9,903 - - (1,255) (1,255) - (130) (16) (146)
	698,067 8,489 (19,913) - -	16,369 171,987 601,527 1,487,950 24,164 2,641 39,051 74,345 - - - (19,913) - - (1,138) (1,138) - 5 1 6
	$686,643	$40,533 $174,633 $639,441 $1,541,250
	Mineral Properties being Depleted	Mineral Properties not beingDepleted Projects not in Production Exploration & Evaluation Assets Plant & Equipment Total
	$263,156 17,613 - -	$ - $1,645 $204,832 $469,633 - - 22,065 39,678 - - (829) (829) - - (16) (16)
	280,769 21,110 - -	- 1,645 226,052 508,466 - - 16,566 37,676 - - (1,138) (1,138) - - 1 1
	$301,879	$- $1,645 $241,481 $545,005
	$404,289	$2,568 $171,943 $357,361 $936,161
	$417,298	$16,369 $170,342 $375,475 $979,484
	$384,764	$40,533 $172,988 $397,960 $996,245

At September 30, 2021, the net carrying value of the deferred stripping costs was $18,077 (December 31, 2020-$21,001) and is included in mineral properties.

At September 30, 2021, leased mobile equipment at cost of $8,715 (December 31, 2020-$5,124) and accumulated depreciation of $1,863 (December 31, 2020-$1,062) were included with plant and equipment.

At September 30, 2021, the Company had provided $28,370 (December 31, 2020-$28,370) of security for reclamation bonding obligations by securing certain plant and equipment.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 6

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020 expressed in thousands of Canadian dollars, except share and per share amounts

Red Chris Mine

Red Chris Development Company Ltd., a subsidiary of the Company, owns a 30% beneficial interest in the Red Chris copper/gold mine in northwest British Columbia. The Company and Newcrest formed a joint venture for the operation of Red Chris, with Newcrest Red Chris Mining Limited acting as operator. The property is comprised of the Red Chris Main claim group and the Red Chris South group, consisting of 77 mineral tenures (23,142 hectares). Five of these tenures are mining leases (5,141 hectares). Net smelter royalties between 1.0% to 2.0% are payable on production from the Red Chris mine.

On March 15, 2021 the Company acquired a 30% interest in the GJ Property for a payment of $3,038 to Newcrest Red Chris Mining Limited.

Mount Polley Mine

The Mount Polley copper/gold mine in south-central British Columbia is owned by Mount Polley Mining Corporation, a subsidiary of the Company. The property encompasses 23,369 hectares (including claims under option) consisting of seven mining leases (2,007 hectares) and 50 mineral claims (21,362 hectares). A production royalty is payable on ore mined from Mining Lease 933970 but no production occurred on this tenure in 2019 or 2020. In October 2019, Mount Polley Mining Corporation optioned seven adjacent mineral tenures (3,331 hectares). Upon the exercising of the option on or before December 31, 2022, these claims will be subject to a production royalty payable on ore mined from the claims and milled in the Mount Polley processing plant.

Mount Polley mine operations were suspended in May 2019. The mine restart plan prepared in 2019 is being updated to include revised pit designs, results of recent drilling and current metal prices. The Company is actively seeking to secure financing to fund the restart of the mine. The COVID-19 pandemic continues to impact the mine restart timeline.

Huckleberry Mine

The Huckleberry copper mine in west-central British Columbia is owned by Huckleberry Mines Ltd., a subsidiary of the Company. The property encompasses 23,241 hectares, consisting of two mining leases (2,422 hectares) and 44 mineral claims (20,819 hectares).

Huckleberry mine operations were suspended in August 2016. The mine remains on care and maintenance status until the economics of mining and COVID-19 restrictions improve.

Other Exploration Properties

In July 2021 the Company increased its interest in the Ruddock Creek high grade zinc-lead project to 100% by purchasing the 54.72% interest held by its joint venture partners.

Imperial has a portfolio of 23 greenfield exploration properties in British Columbia. These properties have defined areas of mineralization and clear exploration potential.

Impairment Analysis of Mineral Properties

In accordance with its accounting policies and processes, each asset or cash-generating unit (“CGU”) is evaluated to determine whether there are any indications of impairment or impairment reversal. If any such indications of impairment exist, a formal estimate of the recoverable amount is performed.

Based on the Company’s assessment with respect to possible indicators of either impairment or reversal of previous impairments to its mineral properties, including the impact of COVID-19 on the operations and the prevailing market metals prices, the Company concluded that as of September 30, 2021 no impairment or impairment reversal indicators were identified.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 7

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

5. OTHER ASSETS

5. OTHER ASSETS
Future site reclamation deposits Non-current inventory – ore stockpile Non-current inventory – supplies, including critical spare parts Other	September 30 2021 December 31 2020
	$14,418 $14,359 12,622 9,873 11,056 20,948 31 50
	$38,127 $45,230

6. DEBT

The Company has the following debt facilities:

a) Promissory Note

On March 10, 2021 the Company entered into an unsecured $10,000 promissory note financing (“Note”) with an affiliate of its major shareholder. The Note matures on April 1, 2022 and bears interest of 8.0% per annum. The Note was fully repaid on June 28, 2021 prior to its maturity date.

b) Credit Facility

At September 30, 2021, a credit facility aggregating $50,000 (December 31, 2020-$50,000) is in effect until expiry on October 9, 2022. The facility is secured by shares of all material subsidiaries and a floating charge on certain assets of the Company. A total of $39,046 (December 31, 2020-$38,478) has been utilized for letters of credit pledged for settlement of future site reclamation provisions and for other liabilities.

7. FINANCE LEASES AND EQUIPMENT LOANS

Amounts due for non-current debt are:

Equipment loans (a) Equipment leases (b) Less portion due within one year	September 30 2021 December 31 2020
	$42 $78 4,808 2,344
	4,850 2,422 (1,877) (840)
	$2,973 $1,582

The Company has the following non-current debt facilities:

(a) Equipment Loans

The outstanding amount of equipment loans is $42 (December 31, 2020-$78) at a weighted average interest rate of 4.30% with monthly payments of $4. All equipment loans are secured by the financed equipment.

(b) Equipment Leases

The outstanding amount of equipment leases is $4,808 (December 31, 2020-$2,344) at weighted average interest rate of 3.42% with monthly payments of $159.

Contractual Lease Payments Due in less than one year Due in one to three years Total undiscounted lease liabilities, end of period	September 30 2021 December 31 2020
	$1,908 $960 3,146 1,520
	$5,054 $2,480

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 8

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020 expressed in thousands of Canadian dollars, except share and per share amounts

8. FUTURE SITE RECLAMATION PROVISIONS

The Company has recognized provisions for future site reclamation at its Red Chris, Mount Polley, Huckleberry, Ruddock Creek and Catface properties. Although the ultimate amounts of the future site reclamation provisions are uncertain, the provision of these obligations is based on information currently available, including closure plans and applicable regulations. Significant closure activities include land rehabilitation, water treatment, demolition of facilities, monitoring and other costs.

The total undiscounted amount of estimated future cash flows required to settle the obligations is $234,328 (December 31, 2020-$234,531). The estimated future cash flows were then adjusted using a 1% (December 31, 2020-1%) rate of inflation. The estimated future cash flows have been discounted using a rate of 2.98% (December 31, 2020-2.24%) except for obligations related to Mount Polley and Huckleberry beyond 2050 that are discounted using a rate of 3.98% (December 31, 2020-3.24%). Obligations in the amount of $113,320 are expected to be settled in the years 2022 through 2050.

Balance, beginning of period Accretion Change in estimates of future costs and discount rate Increase (Dilution) in interest in Ruddock Creek project Balance, end of period	Nine Months Ended September 30 2021 Year Ended December 31 2020
	$127,828 $115,187 2,308 2,764 (19,913) 9,903 275 (26)
	$110,498 $127,828

The amount and timing of closure plans for the mineral properties will vary depending on a number of factors including exploration success and alternative mining plans.

9. SHARE CAPITAL

(i) Share Capital

Authorized

50,000,000 First Preferred shares without par value with special rights and restrictions to be determined by the directors, of which 3,100,000 have been designated as “Series A First Preferred shares” (issued and outstanding – Nil)

50,000,000 Second Preferred shares without par value with rights and restrictions to be determined by the directors (issued and outstanding – Nil)

An unlimited number of Common Shares without par value

On June 25, 2021 the Company completed a rights offering transaction and issued 12,853,267 common shares at $4.70 per share for gross proceeds of $60,410 and incurred transaction cost of $278.

(ii) Share Option Plans

Under the Share Option Plans, options not exceeding 10% of the issued common shares of the Company, may be granted to its directors, officers and employees. As at September 30, 2021, a total of 11,876,969 common share options had remained available for grant under the plans. Under the plans, the exercise price of each option cannot be greater than the market price of the Company’s shares on the date of grant and an option’s maximum term is 10 years. Options are granted from time to time by the Board of Directors and vest over a three or five year period.

During the three and Nine months ended September 30, 2021 the Company did not grant any stock options to its directors, officers or employees.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 9

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

Movements in Share Options

The changes in share options were as follows:

Outstanding at beginning of period Granted Exercised Forfeited Cancelled Expired Outstanding at end of period Options exercisable at end of period	Nine Months Ended September 30,2021 Number of Shares Weighted Average Exercise Price 2,345,000 $4.60 - $ - (48,750) $2.00 (7,500) $2.00 (24,000) $8.00 (2,500) $2.00 2,262,250 $4.63 1,265,000 $6.63	Year Ended December 31,2020
		Number of Shares Weighted Average Exercise Price
		1,996,000 $9.62 1,305,000 $2.00 - $ - - $ - (6,000) $8.00 (950,000) $11.55
		2,345,000 $4.60
		1,014,000 $7.91

The following table summarizes information about the Company’s share options outstanding as at September 30, 2021:

Exercise Prices $2.00 $5.75 $8.00	Options Outstanding Options Outstanding Remaining Contractual Life in Years 1,246,250 3.58 65,000 6.25 951,000 4.18 2,262,250 3.91	Options Exercisable
		Options Outstanding & Exercisable Remaining Contractual Life in Years
		275,000 3.58 39,000 6.25 951,000 4.18
		1,265,000 4.11

10. COST OF SALES

10. COST OF SALES
Operating expenses Depletion and depreciation	Three Months Ended September 30 2021 2020 $20,738 $17,516 11,463 7,850 $32,201 $25,366	Nine Months Ended September 30 2021 2020
		$65,392 $62,450 34,523 26,399
		$99,915 $88,849

Included in cost of sales for the three and nine months ended September 30, 2021 is $93 of impairment charge and $130 of impairment recovery accordingly (three and nine months ended September 30, 2020 - $Nil and $359 of impairment charge) in relation to concentrate, stockpile and supplies inventory.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 10

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

11. OTHER FINANCE LOSS

11. OTHER FINANCE LOSS
Accretion of future site reclamation provisions Foreign exchange (loss) gain on non-current debt Other foreign exchange gain (loss) Fair value adjustment to marketable securities Interest income Other finance loss	Three Months Ended September 30 2021 2020 $(791) $(694) (283) 48 533 (1,161) (36) 80 (577) (1,727) 21 159 $(556) $(1,568)	Nine Months Ended September 30 2021 2020
		$(2,308) $(2,198) (224) (108) 495 89 (48) 81
		(2,085) (2,136) 182 695
		$(1,903) $(1,441)

12. SUPPLEMENTAL CASH FLOW INFORMATION

Net change in non-cash operating working capital balances:

Trade and other receivables Inventory Prepaid expenses and deposits Trade and other payables	Three Months Ended September 30 2021 2020 $1,581 $3,670 (598) (4,519) 684 820 (618) 4,883 257 243 - (5,732) (354) (506) $952 $(1,141)	Nine Months Ended September 30 2021 2020 $1,345 $(966) (3,229) (3,316) 901 1,187 (935) (3,577) 649 612 - (5,328) (506) (763) $(1,775) $(12,151)
Income and mining tax payable
Deferred trade payables Provision for rehabilitation costs

13. RELATED PARTY TRANSACTIONS AND COMPENSATION TO DIRECTORS AND KEY MANAGEMENT PERSONNEL

(a) Related Party Transactions

Related party transactions with a significant shareholder, companies controlled by a significant shareholder, companies in which directors are owners, and with directors and officers are as follows: interest expense of $Nil and $241 for the three and nine months ended September 30, 2021; $Nil balances outstanding at September 30, 2021 and December 31, 2020.

The Company incurred the above transactions and balances in the normal course of operations.

• (b) Compensation of Directors and Key Management Personnel

The remuneration of the Company’s directors and other key management personnel $612 and $1,322 for the three and Nine months ended September 30, 2021, respectively (three and nine months ended September 30, 2020-$323 and $1,536).

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 11

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

14. REPORTABLE SEGMENTED INFORMATION

The Company operates primarily in Canada. All the Company’s assets are located in Canada, except for assets comprised primarily of Sterling totalling $6,481 as September 30, 2021 (December 31, 2020-$6,609) which are located in the USA. The Company’s reportable segments reflect the internal reporting used by the Company’s management to report to the chief operating decision maker.

Reportable Segments

eportable Segments
Reportable segmented revenues Less inter-segment revenues Revenues from external sources Depletion and depreciation Interest expense and other finance expense Net income (loss) Capital expenditures Total assets Total liabilities		Three Months Ended September 30,2021
	Red Chris	Mount Polley Huckleberry Corporate and Others Total
	$36,827 -	$121 $190 $27 $37,165 (36) (57) (8) (101)
	$36,827	85 133 19 37,064
	$11,290	$664 $308 $7 $12,269
	$(477)	$(387) $(368) $(47) $(1,279)
	$3,372	$(5,255) $(665) $(1,224) $(3,772)
	$28,190	$1,326 $1,806 $2,443 $33,765
	$691,620	$143,114 $229,574 $58,176 $1,122,484
	$226,088	$50,972 $66,961 $756 $344,777

Reportable segmented revenues Less inter-segment revenues Revenues from external sources Depletion and depreciation Interest (expense) and other finance (expense) income Net income (loss) Capital expenditures Total assets Total liabilities		Three Months Ended September 30,2020
	Red Chris	Mount Polley Huckleberry Corporate and Others Total
	$37,608 -	$228 $396 $72 $38,304 - (119) (24) (143)
	$37,608	$228 $277 $48 $38,161
	$7,743	$1,072 $288 $7 $9,110
	$286	$(349) $(416) $(1,411) $(1,890)
	$7,708	$(1,771) $2,550 $(1,424) $7,063
	$26,317	$236 $469 $(1,626) $25,396
	$658,095	$147,959 $270,666 $15,414 $1,092,134
	$241,802	$60,820 $55,714 $2,377 $360,713

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 12

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

Reportable segmented revenues Less inter-segment revenues Revenues from external sources Depletion and depreciation Interest expense and other finance expense Net income (loss) Capital expenditures Total assets Total liabilities		Nine Months Ended September 30,2021
	Red Chris	Mount Polley Huckleberry Corporate and Others Total
	$103,491 -	$256 $911 $33 $104,691 (77) (273) (12) (362)
	$103,491	$179 $638 $21 $104,329
	$34,043	$2,128 $922 $21 $37,114
	$(1,054)	$(1,116) $(1,037) $(100) $(3,307)
	$3,262	$(10,962) $(222) $(3,467) $(11,389)
	$67,942	$1,730 $1,934 $2,739 $74,345
	$691,620	$143,114 $229,574 $58,176 $1,122,484
	$226,088	$50,972 $66,961 $756 $344,777

Reportable segmented revenues Less inter-segment revenues Revenues from external sources Depletion and depreciation Interest (expense) and other finance (expense) income Net income (loss) Capital expenditures Total assets Total liabilities		Nine Months Ended September 30,2020
	Red Chris	Mount Polley Huckleberry Corporate and Others Total
	$109,684 -	$492 $1,193 $370 $111,739 (79) (358) (120) (557)
	$109,684	$413 $835 $250 $111,182
	$25,908	$3,566 $879 $21 $30,374
	$(482)	$(1,126) $(1,286) $368 $(2,526)
	$13,447	$(8,276) $(3,330) $(1,817) $24
	$56,569	$600 $513 $(1,405) $56,277
	$658,095	$147,959 $270,666 $15,414 $1,092,134
	$241,802	$60,820 $55,714 $2,377 $360,713

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 13

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

Revenue by Geographic Area

evenue by Geographic Area
Switzerland Singapore China Australia Canada	Three Months Ended September 30 2021 2020	Nine Months Ended September 30 2021 2020
	$17,845 $19,913 9,472 15,975 9,510 1,357 - 363 237 553 $37,064 $38,161	$44,133 $63,947 31,512 23,064 27,846 14,950 - 7,723 838 1,498
		$104,329 $111,182

Revenues are attributed to geographic area based on country of customer. In the period ended September 30, 2021, the Company had 3 principal customers totalling 72% of revenues (September 30, 2020 - 4 principal customers totaling 78% of revenues). Each one of these principal customers individually account for more than 10% of the total revenue: 30%, 24%, and 18% (September 30, 2020- 24%, 20%, 18 and 16%)

The Company’s principal product is copper concentrate (contains copper, gold, and silver) which is sold at prices quoted on the London Metals Exchange and London Bullion Market Association, London gold price. All concentrate production is sold to third party traders and smelters.

Revenue by Major Product and Service

evenue by Major Product and Service
Copper Gold Silver Other	Three Months Ended September 30 2021 2020	Nine Months Ended September 30 2021 2020
	$26,167 $24,432 10,232 12,767 428 409 237 553 $37,064 $38,161	$73,867 $69,528 28,344 39,375 1,280 781 838 1,498
		$104,329 $111,182

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 14

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020 expressed in thousands of Canadian dollars, except share and per share amounts

15. FINANCIAL INSTRUMENTS, INTEREST RATE AND CREDIT RISK

During the reporting period, the Company examined the various financial instrument risks to which it is exposed and assessed the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, market risk and other price risks. Where material, these risks are reviewed and monitored by the Board of Directors.

Capital Risk Management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of the debt and equity balance. The capital structure of the Company consists of equity comprised of share capital, contributed surplus, currency translation adjustment and retained earnings.

Credit Risk

The Company’s credit risk is limited to cash, trade and other receivables, and future site reclamation deposits in the ordinary course of business. The credit risk of cash and future site reclamation deposits is mitigated by placing funds in financial institutions with high credit quality.

Liquidity Risk

Cash balances on hand, the projected cash flow from the Red Chris mine are expected to be sufficient to fund the Company’s obligations as they come. However, there are inherent risks related to the operation of the Company’s mines which could require additional sources of financing.

Liquidity risk is also impacted by credit risk, although the Company considers this risk low.

Currency Risk

Financial instruments that impact the Company’s net income and comprehensive income due to currency fluctuations include US dollar denominated cash, trade, and other accounts receivable, reclamation deposits, trade and other payables and debt. If the US Dollar had been 10% higher/lower and all other variables were held constant, net (loss) income and comprehensive (loss) income for the Nine months ended September 30, 2021 would have been higher/lower by $914.

Provisionally Priced Revenues

As a result of the provisional pricing terms in its sales contracts, the Company is exposed to commodity price risk until final pricing is determined. Therefore, revenues in subsequent periods will be adjusted for any changes to provisionally priced accounts receivables outstanding at period end. Final pricing may be four to five months after the date of shipment and therefore changes in metal prices may have a material impact on the final revenue.

Provisionally priced revenues is comprised of the following:

Copper Gold	Nine Months Ended September 30,2021 Provisional lb/oz Provisional Priceper lb/oz 000’s US$ 2,440.5 $4.09 0.3 $1,764	Nine Months Ended September 30,2020
		Provisional lb/oz Provisional Priceper lb/oz
		000’s US$ 4,605.5 $3.03 0.3 $1,883

The following tables summarize the realized and unrealized gains (losses) on provisionally priced sales:

Realized Unrealized Total	Nine Months Ended September 30,2021 Copper Gold & Silver Total $2,480 $(438) $2,042 (326) (126) (452) $2,154 $(564) $1,590	Nine Months Ended September 30,2020
		Copper Gold & Silver Total
		$770 $1,419 $2,189 1,156 610 1,766
		$1,926 $2,029 $3,955

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 15

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2021 and 2020

expressed in thousands of Canadian dollars, except share and per share amounts

16. COMMITMENTS AND PLEDGES

At September 30, 2021, the Company has pledged the following assets for settlement of future site reclamation provisions:

Future site reclamation deposits included with other assets(Note 5) Mineral property, plant and equipment(Note 4) Other assets secured by Letters of credit(Note 6)	$14,418 28,370 34,390
	$77,178

17. CONTINGENT LIABILITIES

The Company is from time to time involved in various claims and legal proceedings arising in the conduct of its business.

During the third quarter of 2014, a securities class action under section 138 of the Ontario Securities Act was filed against the Company and certain of its directors, officers and others. On September 23, 2020, the Ontario Superior Court denied the Plaintiff leave to proceed with this claim. The Plaintiff has appealed this decision. The Company is of the view that the allegations contained in the claim are without merit and are unlikely to succeed.

During the June 2020 period, a claim from a contractor was filed against the Company and has been submitted to arbitration. The claim is based on a contractor’s self-assessment of additional compensation owed for work previously carried out. The Company has denied that any further amounts are owed and is of the view that the allegations contained in the claim are without merit and are unlikely to succeed. The Company has made a counter claim against the contractor for breach of contract and negligent misrepresentations.

The Company has commenced action against its insurance underwriters to recover business interruption losses incurred at the Mount Polley mine. The insurers have filed a statement of defense and a counterclaim. The Company is of the view that the counterclaim is without merit and unlikely to succeed.

18. SUBSEQUENT EVENTS

Subsequent to September 30, 2021 the Company

• a) Increased its existing Credit Facility from $50,000 to $75,000. The increase of $25,000 in the facility is guaranteed by a related party.

• b) Received notice that the binding arbitration of the claim from a contractor filed in the June 2020 period was completed. The arbitrator’s partial final award dismissed all of the contractor’s claims and found the contractor liable for numerous misrepresentations and for overbilling. Damages payable by the contractor will be determined in the next phase of arbitration.

19. COMPARATIVE INFORMATION

Certain comparative amounts have been reclassified to conform to current period presentation, and those reclassifications are not significant.

Imperial Metals Corporation | September 30, 2021 | Financial Statements | # 16

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Imperial Metals Corporation 200-580 Hornby Street Vancouver, BC V6C 3B6

imperialmetals.com

604.669.8959 | inquiries@imperialmetals.com 604.488.2657 | investor@imperialmetals.com