Lara Exploration Ltd. — Interim / Quarterly Report 2021

May 25, 2021

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LARA EXPLORATION LTD. (An Exploration Stage Company)

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Three Months Ended March 31, 2021, AND 2020 (Expressed in Canadian dollars)

NOTICE TO READER

The accompanying condensed consolidated interim financial statements of Lara Exploration Ltd. for the three months ended March 31, 2021, and 2020 (“Interim Financial Statements”) have been prepared by management and approved by the Audit Committee and the Board of Directors of the Company. The Company’s external auditors have not reviewed these Interim Financial Statements.

LARA EXPLORATION LTD.

(An Exploration Stage Company)

Condensed Consolidated Interim Statements of Financial Position (Expressed in Canadian dollars)

March 31, 2021	December 31, 2020
ASSETS Current assets Cash and cash equivalents $ 1,500,265 Receivables 54,887 Prepaids and deposits 30,249	$ 1,606,871 36,104 39,596
Total current assets 1,585,401	1,682,571
Non-current assets Restricted cash equivalents 57,500 Equipment 26,227 Exploration and evaluation assets (Note 3) 84,289 Long-term investments(Note 6) 178,668	57,500 30,172 84,289 375,068
Total non-current assets 346,684	547,029
TOTAL ASSETS $ 1,932,085	$ 2,229,600
LIABILITIES Current liabilities Accounts payable and accrued liabilities (Note 9) $ 125,729 Advances fromjoint venturepartners -	$ 108,435 198,742
Total current liabilities 125,729	307,177
Deferred income tax liability 11,203	11,203
TOTAL LIABILITIES 136,932	318,380
EQUITY Share capital (Note 7) 26,806,296 Share-based payments reserve 9,794,586 Deficit (34,805,729)	26,806,296 9,794,586 (34,689,662)
TOTAL EQUITY 1,795,153	1,911,220
TOTAL LIABILITIES AND EQUITY $ 1,932,085	$ 2,229,600

Nature of operations and ability to continue as a going concern (Note 1)

These Interim Financial Statements were authorized for issuance by the Board of Directors on May 20, 2021.

Approved by the Board of Directors

“ Miles Thompson” , Director “Christopher Jones” , Director

The accompanying notes are an integral part of these Interim Financial Statements .

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LARA EXPLORATION LTD.

(An Exploration Stage Company) Condensed Consolidated Interim Statements of Comprehensive Loss (Expressed in Canadian dollars)

		Three Months Ended	Three Months Ended	March 31,
		2021		2020
NET EXPLORATION EXPENDITURES(Note 4)	$	68,848	$	86,018
GENERAL AND ADMINISTRATIVE EXPENSES
Depreciation		394		394
Management fees		31,000		30,000
Office, rent and administrative services		80,757		83,039
Professional fees		20,995		12,960
Shareholder communication and investor relations		4,850		19,536
Share-based payments (Note 7)		-		5,918
Transfer agent and regulatory fees		24,459		12,040
Travel		-		5,588
Totalgeneral and administrative expenses		162,455		169,475
		(231,303)		(255,493)
Foreign exchange gain (loss)		(30,094)		101,416
Other income (Note 3)		72,791		103,047
Gain on sale of investments		72,539		-
Change in fair value of FVTPL investments(Note 6)		-		(147,754)
		115,236		56,709
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD	$	(116,067)	$	(198,784)
Loss per common share
Net loss per common share – basic and diluted	$	(0.00)	$	(0.01)
Weighted average number of common shares outstanding – basic and
diluted		39,627,608		38,641,681

The accompanying notes are an integral part of these Interim Financial Statements .

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LARA EXPLORATION LTD.

(An Exploration Stage Company) Condensed Consolidated Interim Statements of Cash Flows (Expressed in Canadian dollars)

		Three Months Ended March 31,	Three Months Ended March 31,	Three Months Ended March 31,
		2021		2020
OPERATING ACTIVITIES
Loss for the period	$	(116,067)	$	(198,784)
Items not affecting cash:
Depreciation		394		394
Depreciation included in exploration expenditures		3,551		3,734
Change in fair value of long-term investments		-		147,754
Gain on sale of long-term investments		(72,539)		-
Unrealized foreign exchange gain		(29,966)		(123,534)
Share-based payments		-		5,918
Changes in non-cash working capital items:
Receivables		(18,783)		49,233
Prepaids and deposits		9,347		(25,328)
Accounts payable and accrued liabilities		17,294		(57,579)
Advance from JVpartners		(198,742)		(95,734)
		(405,511)		(293,926)
INVESTING ACTIVITIES
Sale of long-term investments		268,939		-
		268,939		-
Effect of exchange rate changes on cash and cash equivalents		29,966		123,534
Change in cash and cash equivalents		(106,606)		(170,392)
Cash and cash equivalents, beginning ofyear		1,606,871		2,070,758
Cash and cash equivalents, end ofperiod	$	1,500,265	$	1,900,366
Supplementary cash flow information
Interest received	$	59	$	309

The accompanying notes are an integral part of these Interim Financial Statements .

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LARA EXPLORATION LTD.

(An Exploration Stage Company)

Condensed Consolidated Interim Statements of Changes in Equity (Expressed in Canadian dollars)

Commitment Share-based Number Share to issue payments of shares capital shares reserve Deficit	Total
Balance as at December 31, 2020 39,627,608 $ 26,806,296 $ - $ 9,794,586 $ (34,689,662) Accruals for share-based payments - - - - - Bonus shares issued - - - - - Net loss for theperiod - - - - (116,067)	$ 1,911,220 - - (116,067)
Balance as at March 31, 2021 38,717,608 $26,806,296 $ - $ 9,794,586 $ (34,805,729)	$ 1,795,153
Balance as at December 31, 2019 38,634,274 $ 26,433,900 $ 54,082 $ 9,238,600 $ (33,709,121) Accruals for share-based payments - - 5,918 - - Bonus shares issued 83,334 60,000 (60,000) - - Net loss for theperiod - - - - (198,784)	$ 2,017,461 5,918 - (198,784)
Balance as at March 31, 2020 38,717,608 $26,493,900 $ - $ 9,238,600 $ (33,907,905)	$ 1,824,595

The accompanying notes are an integral part of these Interim Financial Statements .

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LARA EXPLORATION LTD. (An Exploration Stage Company) Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

1. NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN

Lara Exploration Ltd. (the “Company” or “Lara”) was incorporated under the British Columbia Business Corporations Act on March 31, 2003. The Company’s principal business activities are the acquisition, exploration and development of mineral properties in South America, currently with exploration and evaluation properties in Brazil and Peru. These Interim Financial Statements are comprised of the Company and its subsidiaries. The Company’s common shares are listed on the TSX Venture Exchange under the symbol of “LRA.”

The Company is in the process of exploring its exploration and evaluation assets and has not yet determined whether they contain reserves that are economically recoverable. The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete their exploration and development, confirmation of the Company’s interest in the underlying claims and leases, ability to obtain the required permits to mine and future profitable production or proceeds from the disposition of these assets.

These Interim Financial Statements are prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from the carrying values shown, and these Interim Financial Statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company’s continuing operations and the ability of the Company to meet mineral property and other commitments are dependent upon the ability of the Company to continue to raise additional equity or debt financing and to seek joint venture partners. At the date of these Interim Financial Statements, the Company has not identified a known body of commercial-grade mineral on any of its properties. The Company has not achieved profitable operations and has accumulated losses since inception. The Company may need to raise additional capital resources to fund its exploration programs and administrative expenses for the next twelve months.

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, has adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company’s business or ability to raise funds. Therefore, there is additional uncertainty on the Company’s ability to continue as a going concern.

Statement of Compliance

These Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

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LARA EXPLORATION LTD.

(An Exploration Stage Company) Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

2. BASIS OF PRESENTATION (continued)

Basis of Presentation

These Interim Financial Statements have been prepared in accordance with the same accounting policies and methods of application as the most recent audited consolidated financial statements for the year ended December 31, 2020, except that they do not include all the information required for the annual consolidated financial statements. These Interim Financial Statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2020.

Basis of Consolidation

These Interim Financial Statements comprise the accounts of the parent company, and its subsidiaries, after the elimination of all material intercompany balances and transactions.

3. EXPLORATION AND EVALUATION ASSETS

	December 31, December 31, 2020 Additions Recoveries Write down 2020
	Brazil Planalto Copper $ - $ 62,955 $ (62,955) - $ - $ - Peru Puituco 26,240 - - - 26,240 Buenos Aires 20,086 - - - 20,086 Rafa 31,628 - - - 31,628 Emilia 6,335 - - - 6,335
	Total $ 84,289 $62,955 $ (62,955) $ - $84,289

Brazil

Celesta Copper Project (formerly Curionópolis Copper-Gold Project)

In October 2013, the Company signed an option agreement with Tessarema Resources Inc. (“Tessarema”), whereby Tessarema could earn a 100% interest in the Curionópolis Copper Project. Tessarema could complete its acquisition of 100% of the project by making a final payment of US$750,000 to Lara and placing the project into commercial production at a minimum rate of 500 tonnes per day, thereafter, paying a 2% NSR royalty to Lara. Tessarema was not able to reach commercial production on the property in 2017 by the contractual deadline. Lara and Tessarema agreed to revise the terms of the agreement. In June 2017, Lara completed the sale of the Curionópolis Copper Project to Tessarema and received $983,250 (US$750,000), a 5% carried interest in the project company, Mineração Maravaia Ltda., and a 2% NSR royalty on the Maravaia project and the other mineral rights covered by the original Curionópolis Option Agreement with Tessarema. The Maravaia Mine did not reach commercial production by November 26, 2018, according to the revised terms of the agreement, and Tessarema now is obliged to make an additional US$1,000,000 payment to Lara.

During the year ended December 31, 2019, the Company entered into an amended joint venture agreement (“the JV Agreement”) with Tessarema, and a new local partner North Extração de Minério Ltda. (“North”), to consolidate ownership of the processing plant and surface rights access agreements (held by North). The

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LARA EXPLORATION LTD. (An Exploration Stage Company) Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

3. EXPLORATION AND EVALUATION ASSETS (continued)

Curionópolis mineral rights (held by Lara) and all other rights to the Maravaia Copper Project held by Tessarema, were consolidated into a new venture denominated Celesta Mineração S.A. (“Celesta”) in order to move the project into production as soon as possible. As part of a previously agreed life-of-mine concentrates Offtake Agreement, Ocean Partners UK Ltd. (“Ocean Partners”), agreed to lend Celesta US$2.6m to fund upgrades to the plant, pre-stripping, mine infrastructure, and working capital.

Tessarema was in default under the terms of its original option agreement with Lara because it failed to achieve commercial production in November of 2018 and recognised that it owed Lara a US$1,000,000 late penalty fee. As part of the amended JV Agreement it was agreed that Celesta will assume and pay the penalty fee to Lara in ten monthly payments of US$100,000 the first of which was paid on November 28, 2019. During the year ended December 31, 2020, Lara received a second instalment of US$100,000.

Until the mine is operating efficiently it is unlikely that further penalty payments will be received and accordingly no receivable has been recorded. Lara also owns 5% of the shares of Celesta, which have a fair value of $Nil, without the obligation to contribute to the start-up costs. Lara continues to hold a 2% NSR on any production.

The Company has received some royalty payments from the project in the three months ended March 31, 2021. However, Celesta is in arrears with its royalty payments and those have been accrued up to March 31, 2021.

Planalto Copper Project

In February 2013 (amended in June 2016 and June 2019), the Company entered into an option agreement to acquire a 100% interest in the Planalto Copper Project from Brazil Americas Investments & Participation Mineracao LLC (“Brazil Americas”), by paying US$500,000 (US$250,000 paid as at December 31, 2020) in cash and a 2% NSR royalty. Lara has the right to acquire 50% of the NSR royalty for US$2,000,000. In June 2020, the Company made a scheduled option payment of US$50,000. Subsequent to the year ended December 31, 2020, Lara made an option payment of US$50,000, and must make an additional and final payment of US$200,000 by September 30, 2021, to complete the acquisition of the Planalto Project.

On October 30, 2018, Capstone Mining Corp. (“Capstone”) signed a letter of intent with Lara to option the Planalto Copper Project and made a payment of US$150,000 ($197,854) to Lara. The option payment was first applied against the capitalized value of the Planalto Copper Project in the amount of $127,486, with the balance of $70,368 being recorded as a recovery of exploration expenses.

On February 4, 2019, the Company announced that it had signed a definitive agreement (“the Agreement”) (amended on June 20, 2019 and February 21, 2021) granting Capstone, an exclusive option to earn up to a 70% interest in the Company’s Planalto Copper Project. Capstone has paid Lara a further US$200,000 following receipt of a drill permit for the Project and assumed the costs of the underlying agreement. Capstone can earn an initial 49% interest by paying the Company US$5,000,000 by the third anniversary of the Agreement and can then elect to purchase an additional 2% interest in the Planalto Copper Project by paying Lara US$400,000 and committing to fund a Feasibility Study by the fifth anniversary, to reach a 61% interest. The third and final phase will comprise Capstone electing to finance, build and operate a commercial mining operation to the benefit of Lara 30% and Capstone 70%, with Lara repaying its pro-rata share of the financing out of production cash flow. Lara will hold certain buy back rights to reacquire a majority interest in the Project should Capstone decide to discontinue investing.

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LARA EXPLORATION LTD. (An Exploration Stage Company) Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

3. EXPLORATION AND EVALUATION ASSETS (continued)

Lara elected to accelerate the drill program at the Planalto Copper Project and, on May 28, 2019, filed a “Final Exploration Report” (“RFP”) with the National Agency of Mining (“ANM”) in Brazil. On June 20, 2019, Lara and Capstone amended their Agreement such that the initial three-year earn-in period for Capstone to acquire a 49% interest in the Planalto Copper Project, now starts from the date of approval of the RFP and the 2019 drill program as fulfilling Capstone’s first year work commitment. Capstone transferred US$500,000 to Lara upon signing of the amendment to cover the payment to Lara due upon receipt of the permit to drill, the payment due to the underlying vendor and a partial reimbursement of Lara’s costs. The RFP was approved on October 31, 2019, and Capstone reimbursed Lara the additional costs of US$600,000. The remaining conditions of the agreement are unchanged, and exploration work resumed in November 2019. Capstone advanced a further US$400,000 to Lara in November 2019 to fund ongoing project expenditures. For the year ended December 31, 2020, Capstone advanced $1,120,625 for work on the Planalto property.

In August 2020, Lara entered into an option agreement to acquire mining rights adjacent to the original Planalto Project from Mineracao Zaspir Ltda. (“Zaspir”). Lara agreed to acquire a 100% interest in these mining rights for payments totaling US$250,000. The first US$25,000 was paid upon signing the option agreement and will pay a further US$25,000 upon filing of the license transfer to Lara. Lara must pay an additional US$100,000 on the first anniversary of application to transfer the mining rights. A second US$100,000 payment must be made on the second anniversary of the application to transfer the mining rights. In addition to the cash purchase price, the Company will grant Zaspir a 2% NSR royalty on any production, which can be repurchased for US$250,000 within 2 years of granting of the exploration license. After the two-year period has passed, one half of the royalty (1%) can be purchased for the same price.

In December 2020, the Company signed an option agreement with Mineração Tariana Ltda. (“Tariana”), a subsidiary of Anglo American do Brasil Ltda., to acquire an exploration licence adjacent to the Company’s Planalto Copper Project (“the Project”) in the Carajás Mineral Province of northern Brazil. The license will form part of the company’s staged earn-in agreement with Capstone Mining Corp.

Under the terms of the agreement the Company will make a payment of US$50,000 upon the date of publication of the transfer of title by the Brazilian Mining Agency (“the ANM”) and payments of US$50,000 on the first and second anniversaries of that date. The Company has committed to complete a minimum of 2,000 metres of diamond drilling together with resource and reserve studies by May 2022. The Company then has until the date of filing of the Final Exploration Report with the ANM to notify Tariana of its intention to exercise the option and put the project into production. The Company will pay a 1.25% NSR royalty to Tariana on production. If the project is not operating from July 31, 2026, at such date the Company will make advanced royalty payments of US$50,000 per year for five years or until the start of production if that is sooner, which amounts are recoverable from 50% of the royalties payable to Tariana thereafter.

Cumaru Manganese Royalty

On May 20, 2019, the Company signed a definitive agreement transferring all its rights and obligations for the Cumaru Manganese Project in northern Brazil, to local mining company Seven Mineração Limitada, in exchange for BRL 250,000 in cash (equivalent to approximately US$60,975) and a royalty of US$2/ton of ore taken from the property. The Company has received the first BRL 125,000 payment. The second payment was due on July 19, 2020, but is still outstanding, and accordingly no amount receivable has been recorded.

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LARA EXPLORATION LTD.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

3. EXPLORATION AND EVALUATION ASSETS (continued)

Corina Gold Project

In July 2014, the Company signed a definitive agreement with Compañía Minera Ares S.A.C. (“Ares”), a subsidiary of London-listed Hochschild Mining plc., granting it an option to purchase Lara’s Corina Gold Project in southern Peru. Upon the signing of the agreement, Lara received US$150,000. Under the proposed terms, Ares can acquire the Corina property from Lara for staged cash payments totalling US$4,150,000, (of which US$650,000 has been paid to date), carrying out US$2,000,000 in exploration (which has been completed), and paying a 2% NSR royalty on any future production. In October 2016, Ares signed a community agreement in support of their application to conduct drilling on the property and made a cash payment of US$150,000 to Lara. In June 2020, Ares made a scheduled option payment of $US350,000 to Lara. The payment was recorded as other income. The schedule for the remaining option payments is as follows:

			US$
June	30,	2021	1,000,000
June	30,	2022	2,500,000
			3,500,000

Bifox Phosphate Project

In October 2014, Lara and Kiwanda agreed to sell all the rights and options held under their Phosphate Alliance and Coal Alliance, to Bifox Limited (“Bifox”) formerly Phillips River Mining Limited. In November 2016, Bifox signed definitive option agreements with the underlying owners of the phosphate rock mine and processing facilities at Bahia Inglesa in northern Chile and has assumed control and management of the day to day operations. At December 31, 2020, Lara owns approximately 13% of Bifox, and upon relisting of the shares Bifox will be obligated to reimburse Lara for US$570,000 of project expenses. Lara also holds a 2% production royalty that is triggered once the production rate exceeds 20,000 tonnes per annum. Lara’s Bifox shares were subject to an escrow agreement. On November 20, 2020, Bifox and Lara signed an escrow release notice whereby Bifox agreed to release Lara’s Bifox shares in exchange for Lara’s 50% interests in Andean and Kiwanda. As of that date, Lara no longer had an interest in either of those companies.

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LARA EXPLORATION LTD. (An Exploration Stage Company) Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

3. EXPLORATION AND EVALUATION ASSETS (continued)

Lara Copper Project

In July 2020, the Company, with its partner, Global Battery Metals Ltd. (“GBM”), signed an option and royalty agreement for the sale of the Lara Copper Project (the “Project”) for US$5,759,000 and a 1.5% NSR royalty, to Minsur S.A. (“Minsur”). The Project is owned 45% by Lara and 55% by GBM. Minsur retains the right to purchase a 0.25% NSR royalty for US$2.5 million from each of Lara and GBM at any time before the commencement of commercial production. Under the terms of the agreement Lara and GBM have granted Minsur an exclusive option to acquire a 100% interest in the Project by making staged cash payments based on permitting milestones, as summarized in the table below:

Milestone / Date	Option Payments (US$)
Upon registration of the agreement before a Public Notary	(received) 59,000
One year from registration of the agreement	200,000
Approval of environment study and start of work (“DIA-IA”)	200,000
One year from approval from the DIA-IA	300,000
Approval of semi-detailed environmental study (“EIA-SD”)	500,000
One year from the approval of EIA-SD	1,500,000
Upon transfer of title	3,000,000
Total	5,759,000

Other Income and Expense

The Company reported the following items as other income and expense for the three months ended March 31, 2021 and 2020:

	March	31,2021	March	31,2020
Celesta penalty payment	$	-	$	115,218
Celesta royalty		46,968		-
Operator’s fee		29,288		-
Other expense		(3,465)		(12,171)
	$	72,791	$	103,047

During the quarter ended March 31, 2021, Lara received royalty payments of $46,968 from Celesta, an operator’s fee on the Planalto Copper Project of $29,288, and incurred other expenses of $3,465 for net other income of $72,791.

During the quarter ended March 31, 2020, Lara received a penalty payment of $115,218 from Celesta and incurred other expenses of $12,171 and reported net other income of $103,047.

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LARA EXPLORATION LTD.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

4. EXPLORATION EXPENDITURES

During the three months ended March 31, 2021, the Company incurred the following exploration expenditures, which were expensed as incurred:

				General		General
		Planalto		and other		and other
		Brazil		Brazil		Peru		Total
Administrative	$	56,042	$	-	$	7,320	$	63,362
Assays		209		2,042		283		2,534
Field costs		29,295		-		356		29,651
Property maintenance		2,243		-		-		2,243
Salaries and consultants		106,635		12,371		25,739		144,745
Geophysics		68,259		-		-		68,259
Telecommunications		278		-		-		278
Travel and related costs		20,314		-		293		20,607
Total expenditures		283,275		14,413		33,991		331,679
Recoveries		(262,831)		-		-		(262,831)
Net expenditures	$	20,444	$	14,413	$	33,991	$	68,848

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LARA EXPLORATION LTD.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

4. EXPLORATION EXPENDITURES (continued)

During the three months ended March 31, 2020, the Company incurred the following exploration expenditures, which were expensed as incurred:

				General		General
		Planalto		and other		and other
		Brazil		Brazil		Peru		Total
Administrative	$	25,639	$	44,036	$	5,829	$	75,504
Assays		55,196		-		-		55,196
Drilling		323,372		-		-		323,372
Field costs		49,712		-		449		50,161
Property maintenance		35		7,086		-		7,121
Salaries and consultants		183,097		12,849		15,576		211,522
Telecommunications		575		-		-		575
Travel and related costs		5,847		-		193		6,040
Total expenditures		643,473		63,971		22,047		729,491
Recoveries		(643,473)		-		-		(643,473)
Net expenditures	$	-	$	63,971	$	22,047	$	86,018

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LARA EXPLORATION LTD. (An Exploration Stage Company) Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

5. INVESTMENT IN ASSOCIATED COMPANY

The Company has a 45% interest in Minas Dixon S.A. (“Minas”). The balance of investment in associated companies and joint ventures was $Nil at December 31, 2020, and no further investments were made in the three months ended March 31, 2021. Therefore, the Company did not recognize its share of losses in Minas for the three months ended March 31, 2021 (2020 - $Nil).

6. LONG-TERM INVESTMENTS

At December 31, 2020, the Company had an investment in the common shares of Valor Resources Limited, that trades on the Australia Securities Exchange (“ASX”). In the three months ended March 31, 2021 Lara sold this investment for proceeds of $268,939 and recorded a gain on sale of $72,539. In the year ended December 31, 2019, the Company signed an agreement with Estrella Gold SAC and received 5% of its shares valued at $1,041. Estrella is a private mineral exploration company. In the year ended December 31, 2020, the Company purchased a right from Sereno Minerals (BVI) Ltd., a private mineral exploration company, to 5% of the proceeds of two lawsuits in Brazil. Lara paid $177,627 (US$140,000) for the right. This investment has been valued at cost which is the best estimate of fair value.

	Fair value December 31,2020 Change in fair value Disposals Fair value March 31,2021
	FVTPL investments Valor Resources Limited $ 196,400 $ - $ (196,400) $ - Estrella Gold SAC 1,041 - - 1,041 Sereno Minerals(BVI)Ltd. 177,627 - - 177,627
	Total $375,068 $-$ (196,400) $178,668

7. EQUITY

Authorized

As at March 31, 2021, the authorized share capital of the Company was an unlimited number of common shares without par value.

Share Issuances

Stock Options

There were no changes to the number of stock options outstanding for the three months ended March 31, 2020.

						Weighted
					Number	Average
					of Options	Exercise Price
Balance as at December	**31, **	2020, and March	**31, **	2020	3,750,000	$0.75

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LARA EXPLORATION LTD.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

7. EQUITY (continued)

The following table summarizes the stock options outstanding and exercisable at March 31, 2021:

		Exercise	Number	Number
Date Granted	ExpiryDate	Price	Outstanding	Exercisable
May 27, 2016	May 27, 2021	$0.86	100,000	100,000
November 18, 2016	November 18, 2021	$1.02	80,000	80,000
November 21, 2017	November 21, 2022	$0.76	1,455,000	1,455,000
March 14, 2018	March 14, 2023	$0.72	350,000	350,000
November 13, 2019	November 13, 2024	$0.50	200,000	200,000
September 1,2020	September 1,2025	$0.76	1,565,000	1,565,000
Total			3,750,000	3,750,000

At March 31, 2021, the weighted average remaining life of the outstanding stock options was 2.84 years.

8. SEGMENTED INFORMATION

The Company operates in one reportable operating segment, being exploration and development of exploration and evaluation assets. Except for exploration and evaluation assets, equipment and exploration expenditures, substantially all of the Company’s assets and expenditures are located and incurred in Canada. Exploration and evaluation assets are in Brazil and Peru, equipment is located mainly in Brazil, and all the exploration expenditures are incurred in Brazil and Peru.

9. RELATED PARTY TRANSACTIONS AND BALANCES

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Company, which includes the directors. The aggregate value of transactions and outstanding balances relating to key management personnel are as follows:

	Three months ended
	March 31, March 31, 2021 2020
Management fees - CEO Exploration expenses – VP Exploration Office, rent and administrative services Seabord Services Corp. VP Corporate Development Share-basedpayments	$ 31,000 $ 30,000 42,653 27,850 53,400 53,400 12,000 12,000 - 5,918
	$ 139,053 $ 129,168

Seabord Services Corp. is related to Lara because it provides key management personnel services to Lara.

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LARA EXPLORATION LTD.

(An Exploration Stage Company)

Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020

(Expressed in Canadian dollars)

9. RELATED PARTY TRANSACTIONS AND BALANCES (continued)

Amounts due to and from related parties as at March 31, 2021, and December 31, 2020, are as follows:

			March 31	December 31	December 31
Relatedpartyassets and liabilities	Service or items		2021		2020
Amounts due from (to):
Chief Executive Officer	Fees and expenses	$	-	$	(946)
Vice President, Corporate Development	Fees and expenses		(2,898)		(2,677)
Vice President, Exploration	Fees and expenses		(13,894)		-
Seabord Services Corp.	Deposit		10,000		10,000

10. FINANCIAL INSTRUMENTS

The Company classified its financial instruments as follows:

March 31,2021	FVTPL	Amortized Cost	Total
Cash and cash equivalents	$ -	$ 1,500,265	$ 1,500,265
Restricted cash equivalents	-	57,500	57,500
Receivables	-	25,599	25,599
Long-term investments	178,668	-	178,668
Accounts payable and accrued liabilities	-	(125,729)	(125,729)
Advances from JV Partners	-	-	-
	$178,668	$1,457,635	$1,636,303
December 31,2020	FVTPL	Amortized Cost	Total
Cash and cash equivalents	$ -	$ 1,606,871	$ 1,606,871
Restricted cash equivalents	-	57,500	57,500
Receivables	-	36,104	36,104
Long-term investments	375,068	-	375,068
Accounts payable and accrued liabilities	-	(108,435)	(108,435)
Advances from JV Partners	-	(198,742)	(198,742)
	$375,068	$1,393,298	$1,768,366

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LARA EXPLORATION LTD. (An Exploration Stage Company)

Notes to the Condensed Consolidated Interim Financial Statements For the Three Months Ended March 31, 2021 and 2020 (Expressed in Canadian dollars)

10. FINANCIAL INSTRUMENTS (continued)

Fair Value

Financial instruments measured at fair value on the consolidated statement of financial position are summarized into the following fair value hierarchy levels:

• a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

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

• c) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The carrying value of receivables, accounts payable, and accrued liabilities approximated their fair value due to the short-term nature of these instruments. The Company’s level 3 investment is a right to a 5% interest in the proceeds from two lawsuits. Cost is the best measure of fair value. Financial instruments measured at fair value on the condensed consolidated interim statements of financial position are summarized in levels of fair value hierarchy as follows:

Level 1 Level 2 Level 3	Total
March 31, 2021 Long-term investments $1,041 $ - $177,627	$178,668
December 31, 2020 Long-term investments $197,441 $ - $177,627	$375,068

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