InZinc Mining Ltd. — Interim / Quarterly Report 2021

May 26, 2021

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(Unaudited - Expressed in Canadian Dollars)

InZinc Mining Ltd.

NOTICE OF NO AUDITOR REVIEW OF CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

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

The accompanying unaudited condensed interim consolidated financial statements for InZinc Mining Ltd. for the three months ended March 31, 2021 have been prepared by and are the responsibility of the Company’s management.

InZinc Mining Ltd.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited - Expressed in Canadian Dollars) As at

		March		December
		31, 2021		31, 2020
ASSETS
Current
Cash (Note 4)	$	386,536	$	270,214
Receivables (Note 5)		2,531		1,355
Prepaids		18,010		21,691
Marketable securities (Note 6)		249		291
		407,326		293,551
Reclamation deposits (Note 7)		159,431		160,853
Exploration and evaluation assets (Note 7)		665,890		612,890
	$	1,232,647	$	1,067,294
LIABILITIES
Current
Accounts payable and accrued liabilities (Notes 8 and 10)	$	28,085	$	50,277
SHAREHOLDERS’ EQUITY
Share capital (Note 9)		17,929,400		17,713,150
Reserves – share-based (Note 9)		447,217		477,262
Reserves – accumulated other comprehensive loss		(2,040)		(1,998)
Deficit		(17,170,015)		(17,171,397)
		1,204,562		1,017,017
	$	1,232,647	$	1,067,294

Nature of operations and going concern (Note 1) Subsequent event (Note 15)

Approved on behalf of the Board:

“Wayne Hubert” Wayne Hubert, Director	"John Murphy"
	John Murphy, Director

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

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InZinc Mining Ltd.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited - Expressed in Canadian Dollars) For the three months ended

		March 31,		March 31,
		2021		2020
EXPENSES
Communication and investor relations	$	2,160	$	1,085
Exploration and evaluation expenditures (Note 7)		1,905		3,058
Filing and regulatory		3,429		2,887
Foreign exchange loss (gain)		1,577		(11,333)
Office and miscellaneous		10,592		9,349
Professional fees (Note 10)		9,000		9,000
Share-based compensation (Notes 9 and 10)		587		7,082
Loss for the period		(29,250)		(21,128)
Unrealized loss on marketable securities		(42)		(146)
Loss and comprehensive loss for the period	$	(29,292)	$	(21,274)
Basic and diluted loss per common share	$	(0.00)	$	(0.00)
Weighted average number of common shares outstanding	118,289,863		114,843,661

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

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InZinc Mining Ltd.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited - Expressed in Canadian Dollars)

	Share capital Issued Amount Reserves – share-based Reserves – accumulated other comprehensive loss Deficit **Total **
Balance at December 31, 2019 Shares issued for exploration and evaluation assets Share-based compensation Unrealized loss on marketable securities Loss for the period	114,685,419 $ 17,705,150 $ 722,469 $ (1,998) $ (17,226,211) $ 1,199,410 400,000 8,000 - - - 8,000 - - 7,082 - - 7,082 - - - (146) - (146) - - - - (21,128) (21,128)
Balance at March 31, 2020	115,085,419 $17,713,150 $ 729,551 $ (2,144) $(17,247,339) $ 1,193,218
Balance at December 31, 2020 Shares issued for cash Shares issued for exploration and evaluation assets Shares issue costs Share-based compensation Allocation of expired options Unrealized loss on marketable securities Loss for the period	115,085,419 $ 17,713,150 $ 477,262 $ (1,998) $(17,171,397) $ 1,017,017 6,666,665 200,000 - - - 200,000 400,000 18,000 - - - 18,000 - (1,750) - - - (1,750) - - 587 - - 587 - - (30,632) - 30,632 - - - - (42) - (42) - - - - (29,250) (29,250)
Balance at March 31, 2021	122,152,084 $ 17,929,400 $ 447,217 $ (2,040) $(17,170,015) $ 1,204,562

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

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InZinc Mining Ltd.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in Canadian Dollars)

For the three months ended

		March	March
		31, 2021	31, 2020
OPERATING ACTIVITIES
Loss for the period	$	(29,250)$	(21,128)
Items not involving cash:
Share-based compensation		587	7,082
Unrealized foreign exchange loss on reclamation deposit		1,422	(10,944)
Changes in non-cash working capital items:
Receivables		(1,176)	1,105
Prepaids		3,681	1,388
Accounts payable and accrued liabilities		(22,192)	(7,014)
Cash used in operating activities		(46,928)	(29,511)
INVESTING ACTIVITY
Exploration and evaluation assets		(35,000)	(25,000)
Cash used in investing activity		(35,000)	(25,000)
FINANCING ACTIVITIES
Proceeds from share issue		200,000	-
Share issue costs		(1,750)	-
Cash provided by financing activities		198,250	-
Change in cash during the period		116,322	(54,511)
Cash, beginning of the period		270,214	431,146
Cash, end of the period	$	386,536 $	376,635

Supplemental disclosure with respect to cash flows (Note 11)

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

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

1. NATURE OF OPERATIONS AND GOING CONCERN

InZinc Mining Ltd. (the “Company”) was incorporated on October 24, 1997 under the laws of British Columbia and was continued under the Canada Business Corporations Act in June 2002. The Company’s registered and records office is at Suite 2300, Bentall 5, 550 Burrard Street, Box 30, Vancouver, BC, V6C 2B5. The Company’s head office is at P.O. Box 48268, Station Bentall Centre, Vancouver, BC, V7X 1A2. The Company is listed on the TSX Venture Exchange (“TSX-V”) under the trading symbol IZN.

The Company’s principal business activities include the acquisition and exploration of mineral exploration and evaluation assets in the United States and Canada. The Company has not yet determined whether its exploration and evaluation assets contain ore 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. To date, the Company has not earned any revenues and is considered to be in the exploration stage.

These condensed interim consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since its inception and the ability of the Company to continue as a going-concern depends upon its ability to raise adequate financing and to develop profitable operations. These condensed interim consolidated financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

The continuance of the Company’s operations is dependent on obtaining sufficient additional financing in order to realize the recoverability of the Company’s investments in exploration and evaluation assets which is dependent upon the existence of economically recoverable reserves and market prices for the underlying minerals. Management closely monitors metal commodity prices, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company if favourable or adverse market conditions occur. The Company will be required to raise funding to continue operations in the upcoming year. These material uncertainties may cast significant doubt as to the ability of the Company to continue as a going concern.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments have adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. To date there has been significant stock market volatility, significant volatility in foreign exchange markets, and restrictions on the conduct of business in many jurisdictions and the global movement of people. There remains ongoing uncertainty surrounding COVID-19 and the extent of the impacts that it may have on the Company’s ability to develop and bring its properties into production, which could have an adverse impact on the Company’s business, results of operations, financial position and cash flows.

2. BASIS OF PRESENTATION

Statement of compliance

These condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with IAS 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") and the interpretations of the IFRS Interpretations committee. They do not include all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements, and, therefore, should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020, prepared in accordance with IFRS as issued by the IASB.

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

2. BASIS OF PREPARATION (cont’d…)

Approval of the financial statements

These condensed interim consolidated financial statements were authorized for issue by the Audit Committee and Board of Directors on May 26, 2021.

Basis of presentation

These condensed interim consolidated financial statements have been prepared on a historical cost basis except for certain non-current assets and financial instruments, which are measured at fair value. In addition, these condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Functional and presentation currency

These condensed interim consolidated financial statements are presented in Canadian dollars, unless otherwise noted, which is the functional currency of the parent and of its subsidiary.

Basis of consolidation

These condensed interim consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, N.P.R. (US) Inc., a Nevada corporation, the principal activity of which is exploration in the United States. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company transactions and balances have been eliminated upon consolidation.

Significant estimates

The preparation of these 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 expenses during the 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.

Estimates are made when applying accounting policies. The critical estimates that have the most significant effects on the amounts recognized in the condensed interim consolidated financial statements are as follows:

Economic recoverability and probability of future economic benefits of exploration and evaluation assets

Management has determined that exploration, evaluation, and related costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including, geologic and other technical information, a history of conversion of mineral deposits with similar characteristics to its own properties to proven and probable mineral reserves, the quality and capacity of existing infrastructure facilities, evaluation of permitting and environmental issues and local support for the project.

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

2. BASIS OF PREPARATION (cont’d…)

Significant estimates (cont’d…)

Valuation of share-based compensation

The Company uses the Black-Scholes Option Pricing Model for valuation of share-based compensation. Option pricing models require the input of subjective assumptions including expected price volatility, interest rate, and forfeiture rate. Changes in the input assumptions can materially affect the fair value estimate and the Company’s earnings and equity reserves.

Significant judgments

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in these condensed interim consolidated financial statements are, but are not limited to, as follows:

Determination of functional currency

The Company determines the functional currency through an analysis of several indicators such as expenses and cash flow, financing activities, retention of operating cash flows, and frequency of transactions with the reporting entity.

3. SIGNIFICANT ACCOUNTING POLICIES

There have been no significant changes to the Company’s significant accounting policies from those disclosed in the consolidated financial statements for the year ended December 31, 2020.

4. CASH

Cash is comprised as follows:

		March		December
		31, 2021		31, 2020
Cash in Canadian financial institutions	$	386,099	$	269,063
Cash in US financial institutions		437		1,151
	$	386,536	$	270,214

5. RECEIVABLES

Receivables are comprised as follows:

		March		December
		31, 2020		31, 2020
GST receivable	$	2,531	$	1,355
	$	**2,531 **	$	1,355

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

6. MARKETABLE SECURITIES

As at March 31, 2021 the fair market value of the securities held was $249 (December 31, 2020 - $291).

7. EXPLORATION AND EVALUATION ASSETS

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

	West Desert	West Desert		PX		Indy		Total
Total, December 31, 2019	$	394,127	$	35,066	$	185,763	$	614,956
Additions during the year:
Cash payments		-		-		25,000		25,000
Shares issued		-		-		8,000		8,000
		-		-		33,000		33,000
Write-off of exploration and evaluation asset		-		(35,066)		-		(35,066)
Total, December 31, 2020		394,127		-		218,763		612,890
Additions during the period:
Cash payments		-		-		35,000		35,000
Shares issued		-		-		18,000		18,000
		-		-		53,000		53,000
Total, March 31, 2021	$	394,127	$	-	$	271,763	$	665,890

West Desert property

The Company holds a 100% interest in various mining claims and a mineral lease referred to as the West Desert property (“West Desert”), located in Utah, USA. The property is subject to a 1.5% net smelter returns royalty (“NSR”) and a future cash payment of $1,000,000, upon the completion of a financing necessary to bring West Desert into production.

PX property

The Company held a 100% interest in various mining claims referred to as the PX property (“PX”), located in Utah, USA. In fiscal 2020, management decided to discontinue exploration on PX and, accordingly, wrote off the carrying value of $35,066.

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

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

Indy property

On October 17, 2016, subsequently amended April 2, 2020, the Company entered into an option agreement with Pac Shield Resources Inc. (“PSR”), a private British Columbia company, to acquire a 100% interest in and to certain mineral claims located in the central British Columbia referred to as the Indy Property (“Indy”).

To acquire Indy, the Company must make cash payments totaling $315,000, issue a total of 2,400,000 common shares, and complete work commitments of $2,600,000, as follows:

				Acquisition	Acquisition	Acquisition		Work
					in cash	in shares	commitments
January	31,	2017	(completed)	$	30,000	200,000	$	-
January	31,	2018	(completed)		25,000	200,000		75,000
January	31,	2019	(completed)		25,000	300,000		200,000
January	31,	2020	(completed)		25,000	400,000		325,000
January	31,	2021	(completed)		35,000	400,000		350,000
January	31,	2022			50,000	400,000		400,000
January	31,	2023			125,000	500,000		1,250,000
				$	315,000	2,400,000	$	2,600,000

In addition, a $500,000 cash payment and the issuance of 500,000 shares of the Company will be made to PSR if the Company files a technical report establishing a 500,000,000 pound zinc resource on the property. A further $500,000 cash payment will be made to PSR should the Company file a technical report establishing a 750,000,000 pound zinc resource on the property.

The property is subject to a 1.0% NSR held by PSR (the “PSR NSR”) and a 1.5% NSR held by Kerry Curtis, nonexecutive Chairman of the Board and a director of the Company and a director and the controlling shareholder of PSR. On exercise of the option and prior to completion of a feasibility study on the property, the Company has the right to purchase the PSR NSR for $1,500,000.

Exploration and evaluation expenditures

Exploration and evaluation expenditures for the three months ended March 31, 2021 are as follows:

	West	Desert		Indy		Total
Claims maintenance	$	633	$	-	$	633
Equipment and supplies		998		-		998
Room and board		274		-		274
Total, March 31, 2021	$	1,905	$	-	$	1,905

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

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

Exploration and evaluation expenditures (cont’d…)

Exploration and evaluation expenditures for the three months ended March 31, 2020 are as follows:

	West	Desert		PX		Indy		Total
Analytical	$	222	$	-	$	-	$	222
Claims maintenance		201		-		-		201
Equipment and supplies		1,093		-		-		1,093
Personnel		-		-		750		750
Room and board		292		-		500		792
Total, March 31, 2020	$	1,808	$	-	$	1,250	$	3,058

Reclamation deposits

As at March 31, 2021, the Company has reclamation deposits of $119,431 (December 31, 2020 - $120,853) to cover potential disturbances on West Desert and has reclamation deposits of $40,000 (December 31, 2020 - $40,000) to cover potential disturbances on Indy.

8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities are comprised of the following:

		March		December
		31, 2021		31, 2020
Trade payables	$	5,035	$	27,227
Accrued liabilities		22,000		22,000
Due to related parties		1,050		1,050
	$	28,085	$	50,277

9. SHARE CAPITAL AND RESERVES

Authorized share capital

The Company has authorized share capital of unlimited common shares without par value.

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

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

Issued share capital

During the three months ended March 31, 2021, the Company issued:

• i. 6,666,665 units at a price of $0.03 per unit by way of a non-brokered private placement for total proceeds of $200,000. Each unit was comprised of one common share and one-half of one share purchase warrant, which entitles the holder of each whole warrant to acquire an additional common share of the Company at a price of $0.06 per common share, for a period of 24 months from the date of issue. The Company paid a total of $1,750 in cash for fees; and

• ii. 400,000 common shares, valued at $18,000, pursuant to the Indy option agreement (Note 7).

During the three months ended March 31, 2020, the Company issued:

• i. 400,000 common shares, valued at $8,000, pursuant to the Indy option agreement (Note 7).

Stock options

The Company grants stock options to employees and consultants as compensation for services, pursuant to its incentive Share Option Plan (the “Plan”). Options issued must have an exercise price greater than or equal to the “Discounted Market Price” of the Company’s stock on the grant date. Options have a maximum expiry period of up to five years from the grant date and vest at such time as may be determined by the Board of Directors at the date of the grant. Options granted to consultants performing investor relations activities shall vest in stages over a 12month period with a maximum of one-quarter of the options vesting in any three month period. The number of options that may be issued under the Plan is limited to no more than 10% of the Company’s issued and outstanding shares on the grant date.

During the three months ended March 31, 2021, the Company granted 100,000 (2020 - Nil) incentive stock options to a consultant, with various vesting provisions. During the three months ended March 31, 2021, the Company expensed $587 (2020 - $7,082), which was recorded in share-based compensation.

The weighted average fair value of stock options granted during the three months ended March 31, 2021 was $0.026 (2020 - $Nil) per option.

The fair value of stock options granted was estimated using the Black-Scholes option pricing model with weighted average assumptions as follows:

	For the three	For the three
	months ended	months ended
	March 31, 2021	March 31, 2020
Risk-free interest rate	0.23%	-
Expected option life (years)	3.0	-
Expected stock price volatility	185%	-
Expectedforfeiturerate	-	-

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

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

Stock options (cont’d…)

Option transactions are summarized as follows:

			Weighted
	Number of		average
	options		exercise price
Balance - December 31, 2019	9,480,000	$	0.10
Expired	(2,800,000)		0.13
Balance - December 31, 2020	6,680,000	$	0.09
Granted	100,000		0.05
Expired	(200,000)		0.22
Balance-March 31, 2021	6,580,000	$	0.08
Exercisable- March31,2021	6,480,000	$	0.08

Options outstanding as at March 31, 2021 are as follows:

				Contractual life
Number of options	Exercise	price	Expiry date	remaining (years)
2,650,000	$	0.09	May 31, 2021	0.17
500,000	$	0.11	June 21, 2021	0.22
2,350,000	$	0.05	May 30, 2022	1.16
980,000	$	0.12	October 11, 2022	1.53
100,000	$	0.05	February 4, 2024	2.85
6,580,000				0.77(1)

(1) weighted average

Warrants

Warrant transactions are summarized as follows:

			Weighted
	Number of		average
	warrants		exercise price
Balance - December 31, 2019 and 2020	3,080,000	$	0.09
Granted	3,333,331		0.06
Balance- March31,2021	6,413,331	$	0.08

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

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

Warrants (cont’d…)

Warrants outstanding as at March 31, 2021 are as follows:

				Contractual life
Number of warrants	Exercise	price	Expiry date	remaining (years)
2,750,000	$	0.10	May 29, 2021	0.16
330,000	$	0.05	May 29, 2021	0.16
3,333,331	$	0.06	February 18, 2023	1.89
6,413,331				1.06(1)

(1) weighted average

10. RELATED PARTY TRANSACTIONS

The Company defines key management personnel as its directors and officers. The Company entered into the following transactions with key management personnel:

		For the three		For the three
	months ended		months ended
	March 31, 2021		March 31, 2020
Professional fees	$	3,000	$	3,000
Share-based compensation		-		4,524
	$	3,000	$	7,524

As at March 31, 2021, included in accounts payable and accrued liabilities are amounts owing to related parties of $1,050 (December 31, 2020 - $1,050).

11. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

For the three months ended March 31, 2021, the Company’s significant non-cash transactions consisted of:

• i. shares issued for acquisition of exploration and evaluation assets of $18,000;

• ii. change in fair market value of marketable securities of $42; and

• iii. allocation of expired options from reserves to deficit of $30,632.

For the three months ended March 31, 2020, the Company’s significant non-cash transactions consisted of:

• i. shares issued for acquisition of exploration and evaluation assets of $8,000; and

• ii. change in fair market value of marketable securities of $146.

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

12. SEGMENTED INFORMATION

The Company operates in one industry segment being the acquisition and exploration of mineral exploration and evaluation assets. The total assets attributable to the geographical locations relate primarily to exploration and evaluation assets and are all located as follows:

March 31, 2021	United States		Canada		Total
Exploration and evaluation assets	$ 394,127	$	271,763	$	665,890
December 31, 2020	United States		Canada		Total
Exploration and evaluation assets	$ 394,127	$	218,763	$	612,890

13. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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.

Marketable securities are measured at fair value using level 1 inputs. The fair value of cash, receivables, reclamation deposits, and accounts payable and accrued liabilities approximates their carrying values.

Financial risk factors

The Company is exposed to a variety of financial risks by virtue of its activities including credit, liquidity, interest rate, foreign currency, and price risk.

Credit risk

The Company is exposed to industry credit risks arising from its cash holdings and receivables. The Company manages credit risk by placing cash with major Canadian financial institutions. The Company’s receivables are due from the Federal Government of Canada. Management believes that credit risk related to these amounts is nominal.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient funds to meet its financial obligations when they are due. To manage liquidity risk, the Company reviews additional sources of capital and financing to continue its operations and discharge its commitments as they become due.

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 interest rate risk as it does not have any significant financial instruments with interest rates, with the exception of cash. Interest earned on cash is based on prevailing bank account interest rates, which may fluctuate. A 1% change in interest rates would result in a nominal difference for the three months ended March 31, 2021.

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InZinc Mining Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited - Expressed in Canadian dollars) For the three months ended March 31, 2021

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

Foreign currency risk

The Company is exposed to foreign currency risk on fluctuations related to cash and accounts payables and accrued liabilities that are denominated in United States Dollars. A 10% change in foreign exchange rates would result in a nominal difference for the three months ended March 31, 2021.

Price risk

The Company has limited exposure to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities.

14. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of exploration and evaluation assets. 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 defines capital that it manages as share capital, options and warrants.

The properties in which the Company currently has an interest are in the exploration stage, as such 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 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. The Company is not subject to externally imposed capital restrictions.

There has been no significant change in the Company’s objectives, policies, and processes for managing its capital during the three months ended March 31, 2021.

15. SUBSEQUENT EVENT

Subsequent to March 31, 2021, the Company entered into an option agreement (the "Option Agreement") with American West Metals Limited ("American West"), a private Australian company, pursuant to which the Company granted an option ("Option"), subject to an indium royalty in favour of the Company, to earn a 100% interest in West Desert. To earn its interest, America West is required to pay USD $500,000 on the effective date (the "Effective Date"); pay $1,000,000 within 30 days of American West listing its shares on the Australian Securities Exchange ("ASX") or 12 months after the Effective Date, whichever is earlier; pay USD $1,500,000 upon the announcement by American West to the ASX of a completed Prefeasibility Study for West Desert or 24 months after the Effective Date, whichever is earlier; and issue $2,500,000 by way of shares of American West. The Option Agreement is subject to, among other things, regulatory and shareholder approval.

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