Jayden Resources Inc. — Interim / Quarterly Report 2022

Aug 25, 2022

Jayden Resources Inc.

Interim Condensed Consolidated Financial Statements

Six Months Ended June 30, 2022 and 2021

(Expressed in Canadian Dollars)

(Unaudited)

Address:	Suite#2250,1055WestHastingsStreetVancouver,BritishColumbiaV6E2E9
Contact:	Herrick LauChief Financial Officer
Telephonenumber:	(604)688-9588
Faxnumber:	(778)329-9361
Emailaddress:	hlau@jaydenresources.com
Website:	www.jaydenresources.com

Contents

	Page
Management'sResponsibility	2
Interim Condensed Consolidated StatementsofProfit andLoss	3
Interim Condensed Consolidated StatementsofFinancialPosition	4
Interim Condensed Consolidated StatementsofChangesinEquity	5
Interim Condensed Consolidated StatementsofCashFlows	6
NotestotheInterim Condensed Consolidated FinancialStatements	7-17

NOTICE OF NO AUDITOR REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim condensed consolidated financial statements of Jayden Resources Inc. for the six months ended June 30, 2022 have been prepared by the management of the Company and approved by the Company's Audit Committee and the Company's Board of Directors.

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

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared by and are the responsibility of the Company's management.

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

Jayden Resources Inc. Interim Condensed Consolidated Statements of Profit and Loss (Expressed in Canadian dollars) (Unaudited)

		Three Months EndedJune 30,		Six Months EndedJune 30,
	Notes		2022	2021		2022		2021
Expenses
Administrative expenses	4	$	(272,611) $	(135,717) $		(425,136) $		(238,180)
Operating loss for the period			(272,611)	(135,717)		(425,136)		(238,180)
Other income (loss)Unrealized gain on marketable securitiesOther income (loss) for the period	5		(367,500)(367,500)	--		(180,000)(180,000)		--
Net income (loss)		$	(640,111) $	(135,717) $		(605,136) $		(238,180)
Loss per share- Basic and diluted		$	(0.01) $	(0.00) $		(0.01) $		(0.01)
Weighted average number of common shares outstanding- Basic and diluted			50,663,699	35,442,001		49,617,861		35,020,406

Jayden Resources Inc. Interim Condensed Consolidated Statements of Financial Position (Expressed in Canadian dollars) (Unaudited)

As at	Notes	June 30,2022	December 31,2021
		$	$
ASSETS
Current assets
Cash and cash equivalents		1,526,900	4,065,226
GST and QST receivables		422,560	383,553
Subscription receivables		-	21,000
Prepaid expenses		66,447	3,784
Marketable securities	5	180,000	360,000
		2,195,907	4,833,563
Non-current assets
Exploration and evaluation assets	6	5,640,083	4,831,516
		5,640,083	4,831,516
Total Assets		7,835,990	9,665,079
Liabilities and Shareholders' Equity
Current liabilities
Account payable and accrued liabilities	8	337,918	2,221,871
Total Liabilities		337,918	2,221,871
Shareholders' Equity
Share capital	7	55,345,816	54,685,816
Reserves		2,315,132	2,315,132
Accumulated deficit		(50,162,876)	(49,557,740)
Total equity		7,498,072	7,443,208
Total Liabilities and Shareholders' Equity		7,835,990	9,665,079
(Nature of operations and going concern – Note 1)

(Commitments – Note 11) (Subsequent event – Note 13)

Approved on Behalf of the Board

"Denise Lok" Director Denise Lok

"Queenie Kuang" Director Queenie Kuang

Jayden Resources Inc.

Interim Condensed Consolidated Statements of Changes in Equity (Expressed in Canadian dollars, except per share values) (Unaudited)

			Reserve
	Number ofissuedshares	Sharecapital	Share-basedpaymentsreserve	Accumulateddeficit	Total
		$	$	$	$
Balances, January 1, 2021	33,871,904	47,304,195	2,173,333	(49,204,676)	272,852
Private placement	3,316,498	1,018,940	-	-	1,018,940
Loss for the period	-	-	-	(238,180)	(238,180)
Balances, June 30, 2021	37,188,402	48,323,135	2,173,333	(49,442,856)	1,053,612
Balances, January 1, 2022	48,560,402	54,685,816	2,315,132	(49,557,740)	7,443,208
Shares issued for property acquisition	2,200,000	660,000	-	-	660,000
Loss for the period	-	-	-	(605,136)	(605,136)
Balances, June 30, 2022	50,760,402	55,345,816	2,315,132	(50,162,876)	7,498,072

Jayden Resources Inc. Interim Condensed Consolidated Statements of Cash Flows (Expressed in Canadian dollars) (Unaudited)

	Six Months Ended June 30,
	2022	2021
	$	$
Cash flows from operating activities
Net loss for the period	(605,136)	(238,180)
Adjustments for:
Unrealised gain on marketable securities	180,000	-
Operating loss before working capital changes	(425,136)	(238,180)
Decrease (increase) in receivables	(18,007)	(2,014)
Decrease (increase) in prepaid expenses	(62,663)	(253,372)
Increase (decrease) in accounts payables and accrued liabilities	(1,883,953)	174,425
Net cash provided by (used in) operating activities	(2,389,759)	(319,141)
Cash flows from investing activities
Exploration and evaluation assets	(148,567)	(126,544)
Net cash used in investing activities	(148,567)	(126,544)
Cash flows from financing activities
Proceeds from private placements	-	1,018,940
Net cash provided by financing activities	-	1,018,940
Net increase in cash	(2,538,326)	573,255
Cash and cash equivalents, beginning of the period	4,065,226	344,820
Cash and cash equivalents, end of the period	1,526,900	918,075

(Supplementary disclosure – Note 12)

(Unaudited - Expressed in Canadian Dollars)

1. Nature of operations and going concern

(a) Nature of operations

Jayden Resources Inc. (the "Company") was incorporated under the laws of the Province of British Columbia. On October 15, 2015, the Company's common shares ceased trading on the TSE and began trading on the TSX Venture Exchange under the symbol JDN. On August 8, 2012, the Company changed its place of jurisdiction and was registered in the Cayman Islands as an exempted company with limited liability by way of continuation. Its subsidiary, Jayden Resources (Canada) Inc. ("Jayden Canada") was disposed of during the year ended December 31, 2018, as such the financial statements have been deconsolidated in 2018. On September 2, 2021, the Company completed the continuation from the Companies Law (2021 Revision) of the Cayman Islands into the jurisdiction of British Columbia under the Business Corporations Act (British Columbia) with the intention to increase flexibility, and to reduce administrative costs. On December 17, 2021, the Company incorporated a wholly owned subsidiary, Jayden Resources (Quebec) Ltd. under the laws of the Province of Quebec.

The Company is principally engaged in the business of acquiring, exploring and developing interests in mining projects. To date, the Company has not generated revenues from its principal activities and is considered to be in the exploration stage.

The head office and principal address of the Company are located at Suite 2250, 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9. The registered and records office are located at 1500 Royal Centre P.O. Box 11117, 1055 West Georgia Street, Vancouver, BC, V6E 4N7.

(b) Going concern

These unaudited interim condensed consolidated financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operation, and do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore 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 the accompanying interim condensed consolidated financial statements.

The Company has not generated any revenues and has incurred accumulated deficits of $50,162,876 (2021: $49,557,740) since inception. The Company has a net loss of $605,136 as at June 30, 2022 (2021: $$238,180). The Company is not expected to generate cash inflow from its operation during the next twelve months and therefore must rely on securing additional funds from either debt or equity financings for cash consideration.

The Company's continuing operations are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its mineral property interests, and on future profitable production or proceeds from the disposition of the mineral property interests. These matters and conditions, primarily as a result of the conditions described above, indicate the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as going concern. If the going concern assumption is not appropriate, material adjustments to the interim condensed consolidated financial statements could be required.

(Unaudited - Expressed in Canadian Dollars)

2. Basis of presentation

(a) Statement of compliance

These unaudited interim condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Boards ("IASB"), and interpretations of the International Financial Reporting Interpretations Committee. These interim condensed consolidated financial statements were approved by the board of directors for issue on August 25, 2022.

The accounting policies applied in these interim condensed consolidated financial statements are consistent with those applied and disclosed in the Company's audited consolidated financial statements for the year ended December 31, 2021 except those disclosed in note 3. The Company's interim results are not necessarily indicative of its results for a full year.

(b) Basis of measurement

These unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, under the historical cost basis except for the financial instruments that are recorded at fair value. In addition, these interim condensed consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

(c) Critical accounting judgements, estimates and assumptions

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations as of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Deferred taxes

The Company recognizes the deferred tax benefit related to deferred tax assets to the extent recovery is probable. Assessing the recoverability of deferred tax assets requires management to make significant estimates of future taxable profit. In addition, future changes in tax laws could limit the ability of the Company to obtain tax deductions in the future periods. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the reporting date could be impacted.

Critical judgments in applying the Company's accounting policies

The following is the critical judgment, apart from those involving estimations that management have made in the process of applying the Company's accounting policies and that have the most significant effect on the amounts recognized in the interim condensed consolidated financial statements.

(Unaudited - Expressed in Canadian Dollars)

2. Basis of presentation (continued)

Going concern

Management has applied judgments in the assessment of the Company's ability to continue as a going concern when preparing its interim condensed consolidated financial statements for the period ended June 30, 2022. Management prepares the unaudited interim condensed consolidated financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. Management considered a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing. As a result of the assessment, management concluded the ultimate appropriateness of the use of accounting principles applicable to a going concern.

3. Significant accounting policies

(a) Recent accounting pronouncements and future changes in accounting standards

There were no other new accounting standards or amendments to standards that were applicable to the Company for the period ended June 30, 2022 nor does the Company expect any that have not yet become effective to have a significant impact on its financial statements.

4. Administrative expenses

	Three Months EndedJune 30,		Six Months EndedJune 30,
	2022	2021	2022	2021$
	$	$	$
Consulting fees	48,000	42,000	96,000	84,000
Corporate administration	45,340	37,675	81,746	73,917
Investor relations and marketing	12,500	-	35,000	-
Net foreign exchange gain loss	2,505	(65)	2,505	(27)
Professional fees	102,819	33,503	116,057	38,997
Regulatory and shareholder services	61,447	22,604	93,828	41,293
	272,611	135,717	425,136	238,180

(Unaudited - Expressed in Canadian Dollars)

5. Marketable securities

In fiscal year 2021, the Company entered into a termination agreement with Teuton and a quitclaim agreement (the "Quitclaim Agreement") with Optimum Ventures Ltd. ("Optimum") whereby the Company agreed with Teuton to terminate its Harry Property option agreement dated September 4, 2020, and simultaneously enter into the Quitclaim Agreement with Optimum allowing Teuton and Optimum to enter into a new option/sale agreement on the property. Under the terms of the Quitclaim Agreement, Optimum issued the Company 750,000 Optimum common shares valued at $0.455/share and paid the Company's existing costs on the project which were $27,000. On November 10, 2021, the transaction was closed.

		As at June 30,	As at December 31,
	Note	2022	2021
Number of shares		750,000	750,000
		$	$
Opening balance		360,000	-
Addition	6	-	341,250
Fair value change in P&L		(180,000)	18,750
Ending balance		180,000	360,000

6. Exploration and evaluation assets

Storm Lake Gold Property

On February 17, 2021, the Company entered into a property option agreement with three arm's length vendors (the "Optionors") to acquire a 100% interest in the Storm Lake Gold Property located in the Frotet-Evans Greenstone Belt in central Quebec. Under the terms of the agreement, the Company can acquire a 100% interest in the Storm Lake Gold Property by making cash and share payments to the Optionors totaling $750,000 and 6,600,000 post-consolidation common shares respectively.

Upon TSXV approval of the transaction (the "Effective Date"), the Company will pay $200,000 and issue 2,200,000 shares to the Optionors. On the nine (9) month anniversary of the Effective Date an additional 2,200,000 shares will be issued. On the fifteen (15) month anniversary of the Effective Date an additional $300,000 and 2,200,000 shares; and on the thirty (30) month anniversary of the Effective Date a further $250,000.

On July 5, 2021, the Company paid $200,000 and issued 2,200,000 shares to the Optionors. On April 5, 2022, the Company issued 2,200,000 shares to the Optionors at the nine-month anniversary.

(Unaudited - Expressed in Canadian Dollars)

6. Exploration and evaluation assets (continued)

Storm Lake Gold Property (continued)

Pursuant to the terms of the option agreement, the Company may acquire a 100% interest in the Property by making the following:

Date	Cash	Shares	Expenditures
Effective Date (paid and issued)	$200,000	2,200,000 $	-
Nine month anniversary of the Effective Date (issued)	-	2,200,000	-
One year anniversary of the Effective Date	-	-	150,000
Fifteen month anniversary of the Effective Date	300,000	2,200,000	-
Two year anniversary of the Effective Date	-	-	1,350,000
Thirty month anniversary of the Effective Date	250,000	-	-
Three year anniversary of the Effective Date	-	-	1,500,000
	$750,000	6,600,000 $	3,000,000

The schedule below outlines the costs incurred on the Property as at June 30, 2022:

	As at December 31	Additions/	As at December 31	Additions/	As at June 30
	2020	(Writedowns)	2021	(Writedowns)	2022
	$	$	$	$	$
Acquisition
Cash payment	-	200,300	200,300	-	200,300
Share issuance	-	2,090,000	2,090,000	660,000	2,750,000
	-	2,290,300	2,290,300	660,000	2,950,300

	Cumulative to	Expenditures	Cumulative to	Expenditures	Cumulative to
	December 31, 2020	during the period	December 31, 2021	during the period	June 30, 2022
	$	$	$	$	$
Camp construction	-	242,507	242,507	14,000	256,507
Drilling	-	1,835,094	1,835,094	(40,197)	1,794,897
Equipment and supplies	-	184,651	184,651	-	184,651
Field expenses	-	24,771	24,771	115,038	139,809
General administration	-	171,876	171,876	10,072	181,948
Geological consulting	-	53,206	53,206	29,231	82,437
Permitting	-	3,142	3,142	-	3,142
Surveys and geophysics	-	24,278	24,278	20,000	44,278
Travel and accommodation	-	1,691	1,691	423	2,114
Total exploration and evaluation expenditures	-	2,541,216	2,541,216	148,567	2,689,783
Total acquisition and exploration and evaluation expenditures			4,831,516		5,640,083

(Unaudited - Expressed in Canadian Dollars)

7. Share capital and stock options

(a) Share capital

The authorized share capital of the Company is 5,000,000,000 common shares without par value.

Fiscal 2022

On April 5, 2022, the Company issued 2,200,000 shares to the Optionors of the Storm Lake Property at the ninemonth anniversary to acquire a 100% interest in the Storm Lake Gold Property located in the Frotet-Evans Greenstone Belt in central Quebec (Note 6).

Fiscal 2021

On January 12, 2021, the Company had closed the second tranche of the Offering (as defined below) for gross proceeds of $125,000 by issuing 833,334 units of the Company at a price of $0.15 per unit. Each unit consisted of one common share of the Company and one transferable common share purchase warrant. Each warrant entitles the holder to purchase one additional share of the Company at a price of $0.21 per warrant share until January 12, 2023. No finder's fees or commissions were paid in relation to the Offering.

On June 3, 2021, the Company closed a private placement by issuing 2,483,164 units at a price of $0.36 per unit for total proceeds of $893,940 ("Offering"). Each unit consisted of one common share of the Company and one half of a transferable common share purchase warrant. Each whole warrant entitles the holder to purchase one additional share of the Company at a price of $0.66 per warrant share until June 3, 2023. No finder's fees or commissions were paid in relation to the Offering.

Effective July 5, 2021, the Company consolidated its issued and outstanding share capital on the basis of one (1) post consolidation share for each three (3) pre-consolidation common shares. No fractional shares were issued. Any fractional shares resulting from the consolidation of the common shares were converted such that each fractional common share remaining after conversion that is less than one-half of a common share be cancelled and each fractional common share that was at least one-half of a common share be changed to one whole common share. Outstanding stock options and warrants were adjusted by the same consolidation ratio. All references to shares and per share amounts have been retroactively restated to give effect to the consolidation. After the consolidation, the authorized share capital was increased to 5,000,000,000 post consolidation shares without par value.

On July 5, 2021, the Company paid $200,000 and issued 2,200,000 shares to the Optionors (Note 6).

On November 26, 2021, the Company issued a total of 9,072,000 units at a price of $0.50 per unit, for gross proceeds of $4,536,000. Each unit consists of one common share of the Company and one-half of a transferable common share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at a price of $0.80 per warrant share until November 26, 2023.

The warrants will be subject to an acceleration clause whereby, commencing on the date that is four months and one day following the closing date (March 27, 2022), the Company may, in its sole discretion, provide notice to warrant holders to shorten the warrant expiry date to 30 days from the notice date if the daily volume weighted average closing price of the Company's shares is greater than $1.00 for the 10 consecutive trading days preceding the notice date.

(Unaudited - Expressed in Canadian Dollars)

7. Share capital and stock options (continued)

(a) Share capital (continued)

The Company also paid finder's fees totaling $142,520 in cash equal to 7% of the proceeds raised by the finders and issued a total of 142,520 whole finder's warrants equal to 3.5% of the number of units sold by the finders. The finder's warrants are exercisable on the same terms as above and are subject to the acceleration clause.

During the year ended December 31, 2021, the Company issued 100,000 shares for the exercise of warrants with exercise price of $0.21 per share. The total proceeds of $21,000 was received subsequent to the year end, therefore was recorded as subscription receivables as of December 31, 2021.

(b) Stock options

The Company has a stock option plan whereby the maximum number of shares subject to the plan, in the aggregate, shall not exceed 10% of the Company's issued and outstanding shares. The maximum term of any option will be ten years and the vesting is at the direction of the board, however, options granted to consultants performing "investor relations' activities" must at a minimum vest in stages over a period of not less than twelve months, with no more than ¼ of the options vesting in any three month period or such longer period as the board determines. The exercise price shall be no less than the discount market price as determined in accordance with TSE policies.

On May 2, 2022 the Company's Board adopted a new form of stock option plan which was conditionally approved by the TSX Venture Exchange and was ratified and approved by the shareholders of the Company at the Company's Annual General Meeting of Common Shareholders on July 7, 2022. The new stock option plan was created to comply with the new TSX Venture Exchange policy governing security-based compensation which became effective November 24, 2021. The new stock option plan also allows option holders to exercise options on a "Cashless Exercise" or "Net Exercise" basis, as now expressly permitted by the new policy.

The new stock option plan replaces the Company's September 4, 2015 stock option plan.

There were no stock option transactions for the period ended June 30, 2022.

There were no stock option transactions for the year ended December 31, 2021

The Company had no stock options outstanding as at June 30, 2022 and December 31, 2021.

(c) Share purchase warrants

Fiscal 2022

There were no warrant transactions for the period ended June 30, 2022.

Fiscal 2021

On January 12, 2021, as part of the second tranche of the Offering, the Company issued 833,334 warrants which were valued at $nil. Each warrant entitles the holder to purchase one additional share of the Company at a price of $0.21 per warrant share until January 12, 2023.

On June 3, 2021, as part of the private placement, the Company issued 1,241,584 warrants which were valued at $nil. Each whole warrant entitles the holder to purchase one additional share of the Company at a price of $0.66 per warrant share until June 3, 2023.

(Unaudited - Expressed in Canadian Dollars)

7. Share capital and stock options (continued)

(c) Share purchase warrants (continued)

On November 26, 2021, as part of the private placement, the Company issued 4,536,000 warrants which were valued at $90,720. Each whole warrant entitles the holder to purchase one additional share of the Company at a price of $0.80 per warrant share until November 26, 2023. The Company also paid finder's fees by issuing a total of 142,520 whole finder's warrants. The finder's warrants are exercisable on the same terms as above. The Company used the Black-Scholes to estimate the fair value of the finder's warrants for $51,079 using the following assumptions: share price of $0.49; risk free interest rate of 0.93%; dividend yield of 0%; expected volatility of 175.64%; and expected life of 2 years.

During the year ended December 31, 2021, 6,753,438 warrants were granted and 100,000 warrants were exercised.

Share purchase warrant transactions during the period ended June 30, 2022 and the year ended December 31, 2021 are summarized as follows:

	Number ofWarrants	Weighted AverageExercise Price
Balance, December 31, 2020	3,099,999	$0.21
Granted During the Year	6,753,438	$0.70
Exercised	(100,000)	$0.21
Balance, December 31, 2021	9,753,437	$0.55
Granted During the Period	-	$-
Balance, June 30, 2022	9,753,437	$0.55

The outstanding warrants as at June 30, 2022 are as follows:

Number			Remaining Life
Outstanding	Expiry Date	Exercise Price	(in years)
		$
2,999,999	November 5, 2022	0.21	0.35
833,334	January 12, 2023	0.21	0.54
1,241,584	June 3, 2023	0.66	0.93
4,678,520	November 26, 2023	0.80	1.41

Jayden Resources Inc.

Notes to the Interim Condensed Consolidated Financial Statements For the six months ended June 30, 2022 and 2021

(Unaudited - Expressed in Canadian Dollars)

8. Related party balances and transactions

The Company entered into the following material related party transactions during the following periods:

		As at
		June 30,	December 31,
	Notes	2022	2021
		$	$
Amounts due to related companies/ directors
- David Eaton	(2)	283,944	228,525
		Six Months Ended
		June 30,	June 30,
	Notes	2022	2021
		$	$
Management services provided by
- Baron Global Financial Canada Ltd.	(1)	60,000	60,000
- David Eaton	(2)	60,000	48,000

(1) Baron Global Financial Canada Ltd provided CFO and corporate advisory services.

(2) Mr. David Eaton, officer of the Company, provided CEO services.

9. Financial instruments

The Company is exposed to financial risks through its use of financial instruments in its ordinary course of operations. The financial risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The Company does not have any written risk management policies and guidelines. However, the board of directors meets regularly and co-operates closely with key management to identify and evaluate risks and to formulate strategies to manage financial risks. The Company has not used any derivatives or other instruments for hedging purposes and does not hold or issue derivative financial instruments for trading purposes. The most significant risks to which the Company is exposed to are described below.

(i) Currency risk

Some of the operating expenses and cash and cash equivalents held are denominated in foreign currencies and as such are subject to currency risk. The Company does not enter into derivative financial instruments to mitigate this risk but the Company does not believe its net exposure to foreign exchange risk is significant as most funds are held by the Company in Canadian dollars.

(ii) Credit risk

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company's credit risk arises primarily with respect to subscription receivables.

(Unaudited - Expressed in Canadian Dollars)

9. Financial instruments (continued)

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has interest-bearing assets in relation to cash at banks and cash equivalents carried at floating interest rates with reference to the market and non-interest bearing director's loans. The Company's operating cash flows are substantially independent of changes in market interest rates. The Company has not used any financial instrument to hedge potential fluctuations in interest rates. The exposure to interest rates for the Company is considered minimal. The Company has no interest bearing borrowings.

The policies to manage interest rate risk have been followed by the Company since prior years and are considered to be effective.

(iv) Liquidity risk

The Company's ability to continue as a going concern is dependent on management's ability to raise required funding through future equity issuances. The Company has a working capital as at June 30, 2022 of $1,857,989 (2021: $2,611,692). The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the board of directors are actively involved in the review, planning and approval of significant expenditures and commitments.

The liquidity policies have been followed by the Company since prior years and are considered to have been effective in managing liquidity risk.

(v) Fair value measurements

The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. The hierarchy groups financial assets into three levels based on the relative reliability of significant inputs used in measuring the fair value of these financial assets. The fair value hierarchy has the following three levels:

Level 1 – quoted prices (unadjusted) in active markets for identical assets;

Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

Level 3 – inputs for the asset that are not based on observable market data (unobservable inputs).

The level in the fair value hierarchy within which the financial asset is categorized in its entirety is based on the lowest level of input that is significant to the fair value measurement.

There have been no significant transfers between levels 1 and 2 in the respective reporting periods. The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting periods. Marketable securities are measured at fair value using level 1.

Financial instruments that are not measured at fair value on the balance sheet are represented by cash and cash equivalents, subscription receivables and accounts payable and accrued liabilities. The fair value of these financial instruments approximates their carrying value due to their short-term nature.

(Unaudited - Expressed in Canadian Dollars)

10. Capital risk management

The Company's capital management objectives are to ensure the Company's ability to continue as a going concern so as to benefit from its operations to provide an adequate return for its shareholders.

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, exploration and development of mineral properties. The Company defines capital that it manages as its shareholders' equity. 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 the acquisition, exploration and development of mineral properties. In addition, the Company is dependent upon external financings to fund activities. In order to carry out planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional funds as needed. 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 requirements.

11. Commitments

Refer to Note 6.

12. Supplementary cash flow information

During the period ended June 30, 2022 and June 30, 2021, there were no non-cash financing activities transactions.

13. Subsequent events

There is no subsequent event disclosure.