Magna Mining Inc. - Audit Report / Information 2021

Magna Mining Inc. (formerly CT Developers Ltd.)

Consolidated Financial Statements

For the years ended December 31, 2021 and 2020 (Expressed in Canadian dollars)

Baker Tilly WM LLP 1500 - 401 Bay Street Toronto, Ontario Canada M5H 2Y4 T: +1 416.368.7990 F: +1 416.368.0886

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Magna Mining Inc. (formerly CT Developers Ltd.).

Opinion

We have audited the consolidated financial statements of Magna Mining Inc. (formerly CT Developers Ltd.), and its subsidiary (together the "entity"), which comprise the consolidated statements of financial position as at December 31, 2021 and December 31, 2020, and the consolidated statements of operations and comprehensive loss, consolidated statements of changes in equity (deficiency) and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the entity as at December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the entity in accordance with the ethical requirements that are relevant to our audits of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 in the consolidated financial statements, which describes the events and conditions indicating that a material uncertainty exists that may cast significant doubt on the entity’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Management’s Discussion & Analysis filed with the relevant Canadian securities commissions.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audits of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audits and remain alert for indications that the other information appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the entity’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the entity’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The engagement partner on the audit resulting in this independent auditor's report is Mary Louise Hall.

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Chartered Professional Accountants, Licensed Public Accountants

April 20, 2022 Toronto, Ontario

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Financial Position As at December 31, 2021 and 2020 (Expressed in Canadian dollars)

As at December 31, 2021 and 2020 (Expressed inCanadian dollars)
			December 31,		December 31,
	Notes		2021		2020
ASSETS
Current
Cash		$	5,682,332	$	1,520,933
Accounts receivable			502,923		64,856
Other assets	13, 16		-		391,192
Prepaid expenses			45,522		68,718
Total current assets			6,230,777		2,045,699
Non-current
Restricted cash	6		657,618		657,262
Equipment	7		52,636		40,776
Right of use asset	7		47,924		-
Total non-current assets			758,178		698,038
Total assets		$	6,988,955	$	2,743,737
LIABILITIES
Current
Accounts payable and accrued liabilities	9	$	872,891	$	858,392
Exploration advance	8a		260,670	$	-
Flow-through premium payable			332,704		10,853
Total current liabilities			1,466,265		869,245
Non-current
Asset retirement obligation	10		698,170		680,985
Right of use lease			49,466		-
Term loan	11		28,708		27,471
Total non-current liabilities			776,344		708,456
Total liabilities			2,242,609		1,577,701
Shareholders' Equity (Deficiency)
Share capital	13		13,287,816		4,614,474
Share-based payment reserve	15		1,151,558		559,269
Warrants reserve	16		1,340,663		263,018
Deficit			(11,033,691)		(4,270,725)
Total shareholders'equity (deficiency)			4,746,346		1,166,036
Total shareholders's equity and liabilties		$	6,988,955	$	2,743,737

“Jason Jessup” Director

“Derrick Weyrauch” Director

See accompanying notes to the consolidated financial statements

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Operations and Comprehensive Loss As at December 31, 2021 and 2020 (Expressed in Canadian dollars)

			Year	ended	ended
			December 31,		December 31,
	Notes		2021		2020
Operating expenses
Exploration and evaluation		$	3,771,965	$	402,914
General and administrative			642,689		159,346
Listing costs			1,255,151		-
Share based compensation	15, 17		643,252		446,519
Professional fees			155,134		42,427
Marketing and promotion			133,366		2,066
Property maintenance			199,717		139,215
Accretion of asset retirement obligation			17,185		16,762
Depreciation			15,821		2,618
Total operating expenses			6,834,280		1,211,867
Other income
Foreign exchange gain (loss)			270		8,850
Flow-through premium	13		27,984		17,147
Other			41,249		90,736
Interest			1,811		4,060
Total other income(loss)			71,314		120,793
Net and comprehensive loss		$	6,762,966	$	1,091,074
Basic loss per common share	14	$	0.115	$	0.028
Weighted average number of outstanding shares
Basic			58,698,031		38,837,648

See accompanying notes to the consolidated financial statements

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Changes in Equity (Deficiency) For the years ended December 31, 2021 and 2020 (Expressed in Canadian dollars)

(Expressed inCanadian dollars)
			Share-based
	Number of			payment	Warrants		Total equity
	shares	Share capital		reserve	reserve	Deficit	(deficiency)

Balance at December 31, 2019	37,002,517	$ 2,586,845	$	112,750	$-	$ (3,179,651)	$ (480,056)
Net and comprehensive loss for the period	-	-		-	-	(1,091,074)	(1,091,074)
Shares issued for cash	5,932,875	1,838,801		-	-	-	1,838,801
Shares issued to settle debt	590,907	200,000		-	-	-	200,000
Flow-through shares issued	325,000	110,000		-	-	-	110,000
Finders' fee	19,500	6,600		-	-	-	6,600
Shares issued to obtain claims	40,625	13,750		-	-	-	13,750
Warrants issued	-	-		-	263,018	-	263,018
Share issuance costs	-	(141,619)		-	-	-	(141,619)
Options exercised	157,625	97		-	-	-	97
Share-based compensation	-	-		446,519	-	-	446,519
Balance at December 31,2020	44,069,049	$4,614,474	$	559,269	$263,018	$ (4,270,725)	$1,166,036
Net and comprehensive loss for the period	-	-		-	-	(6,762,966)	(6,762,966)
Exercise of subscription receipts	17,501,250	5,471,079		-	675,550	-	6,146,629
Flow through shares issued	6,996,700	2,517,570		-	-	-	2,517,570
Corporate finance fee	262,518	85,125		-	19,885	-	105,010
Agent warrants issued	-	-		-	150,340	-	150,340
Acquisition of CT Developers Ltd.	2,004,612	801,845		-	-	-	801,845
Shares issued to obtain claims	40,625	16,250		-	-	-	16,250
Finders' fees	497,277	198,911		-	-	-	198,911
Options exercised	381,875	77,450		(50,963)	-	-	26,487
Options issued	-	-		524,338	-	-	524,338
Share based payment reserves	-	-		118,914	-	-	118,914
Warrants reserve	-	(494,888)		-	231,870	-	(263,018)
Balance at December 31, 2021	71,753,906	$ 13,287,816	$	1,151,558	1,340,663	$ (11,033,691)	$ 4,746,346

See accompanying notes to the consolidated financial statements

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Cash Flows (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Cash Flows (Expressed in Canadian dollars) For theyears ended December 31, 2021 and 2020
		December 31,	December 31,
		2021		2020
Operating activities
Net and comprehensive loss for the period	$	(6,762,966)	$	(1,091,074)
Items not requiring an outlay of cash:
Depreciation of equipment		4,255		2,618
Depreciation of right of use assets		11,568		-
Flow through premium		(27,984)		(17,147)
Unrealized foreign exchange loss (gain)		(270)		(8,850)
Share-based compensation		643,252		446,519
Share issued to acquire claims		16,250		13,750
Accretion of asset retirement obligation		17,185		16,762
Interest income		(356)		(4,060)
Forgiveness of term loan and other		-		(12,529)
Interest on right of use lease		3,165		-
Accretion on term loan		1,237		-
Non-cash listing costs		750,959		-
		(5,343,705)		(654,011)
Net change in non-cash working capital balances
Accounts receivable		(438,067)		(9,754)
Prepaid expenses		23,196		(67,069)
Accounts payable and accrued liabilities		(9,786)		335,770
Net change in non-cash working capital balances		(424,657)		258,947
Net cash used in operating activities		(5,768,362)		(395,064)
Financing activities
Deferred financing costs		128,174		(128,174)
Payment of lease		(13,191)		-
Issuance of common shares, net of costs		9,468,295		1,841,782
Government loan received		-		40,000
Proceeds from exercise of options		26,487		97
Cash provided by financing activities		9,609,765		1,753,705
Investing activities
Purchase of equipment		(16,115)		(1,379)
Exploration advance received		282,500		-
Exploration advance utilized		(21,830)		-
Cash received on acquisition of CT Developers Ltd.		75,441		-
Cash used in investing activities		319,996		(1,379)
Increase in cash during the year		4,161,399		1,357,262
Cash at the beginning of the period		1,520,933		163,671
Cash at the end of theperiod	$	5,682,332	$	1,520,933
Supplemental cash flow information
Share issued to settle debt	$	-	$	200,000
Warrants issued		-		263,018
Warrants issued as share based payments		494,888		-
Non-cash share issuance costs		454,259		-

See accompanying notes to the consolidated financial statements

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2021

1. Reporting entity

Magna Mining Inc. (formerly CT Developers Ltd.) (the “Company”) was incorporated under the Canada Business Corporations Act (Canada) on April 2, 2011. On November 17, 2011, the Company completed its initial public offering and on November 23, 2011 listed its common shares on the TSX Venture Exchange (“TSXV”) as a capital pool company (“CPC”). Effective August 19, 2014, the Company’s common share listing was transferred to the NEX Board of the TSXV.

As a CPC, the Company’s business objective was to identify and evaluate assets or businesses with a view to potential acquisition or participation by completing a Qualifying Transaction (as defined in Exchange Policy 2.4) subject, in certain cases, to shareholder approval and acceptance by the Exchange.

On May 4, 2021, Magna Mining (Canada) Corp. (“MMCC”) and CT Developers Ltd ("CT") (now Magna Mining Inc.) completed a Qualifying Transaction, whereby CT acquired 100% of the issued and outstanding shares of MMCC by means of a share-for-share exchange, under which the former shareholders of MMCC acquired control of CT (now Magna Mining Inc.). (see note 3) Trading on the TSX Venture Exchange commenced May 11, 2021 under the symbol NICU and the name Magna Mining Inc. (formerly CT Developers Ltd.)

The Company's registered office is located at 45 Oak Street, PO Box 130, Dowling, ON P0M 1R0.

Going Concern

The nature of the Company’s operations results in significant expenditures for the acquisition and exploration of mineral properties. The eventual generation of revenue is dependent upon a number of factors including the existence of recoverable reserves, the ability of the Company to obtain financing to maintain the properties in good standing and to continue exploration and development and the discovery of economically recoverable reserves. To date, the Company has not generated any revenue from mining or other operations, and it is considered to be in the exploration stage.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to a going concern, which assumes the Company will be able to realize its assets and settle its liabilities in the normal course of business. For the year ended December 31, 2021, the Company reported a net loss of $6,762,966 (2020 - $1,091,074), and as at that date had net working capital of $4,764,512 (2020 net working capital of - $1,176,454) and an accumulated deficit of $11,033,691 (2020 - $4,270,725)

The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional funding from loans or equity financings provided by the Company’s existing shareholders and/or new shareholders or through other arrangements. There is no assurance that the Company will be successful in this regard. These events and conditions indicate a material uncertainty that may cast a significant doubt on the Company's ability to continue as a going concern.

These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary were the going concern assumption deemed to be inappropriate. These adjustments could be material.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2021

1. Reporting entity (continued)

Covid-19

On March 11, 2020, the World Health Organization categorized COVID-19 as a pandemic. The potential economic effects within the Company's environment and markets, possible disruption in supply chains, and measures being introduced at various levels of government to curtail the spread of the virus (such as travel restrictions, closures of non-essential municipal and private operations, imposition of quarantines and social distancing) could have a material impact on the Company's operations and the ability to finance its operations. The extent of the impact of this outbreak and related containment measures on the Company's operations cannot be reliably estimated at this time. Additionally, it is possible that estimates in the Company’s consolidated financial statements will change in the near term as a result of COVID-19. The Company is closely monitoring the impact of the pandemic on all aspects of its business.

2. Basis of presentation

(a) Statement of compliance

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards (''IFRS'') and its interpretations adopted by the International Accounting Standards Board (''IASB'').

The policies applied in these consolidated financial statements are based on IFRS issued and outstanding as of April 19, 2022, the effective date the Board of Directors approved these consolidated financial statements.

(b) Basis of consolidation

These financial statements include the accounts of Magna Mining Corp. and its 100% owned subsidiary Ursa Major Minerals Inc.

All intercompany transactions and balances have been eliminated upon consolidation.

A subsidiary is an entity which Magna controls. The Company has control over an entity when it is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

A subsidiary is fully consolidated from the date on which control is obtained by the Company and is deconsolidated from the date that control ceases.

(c) Basis of presentation

These consolidated financial statements have been prepared on an accrual basis, except for cash flow information and certain financial instruments, which are measured at fair value

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

2. Basis of presentation (continued)

(d) Functional and presentation currency

Management is required to assess the functional currency of Magna Mining Corp. and Ursa Major Minerals Inc. In concluding the functional currencies of the parent and its subsidiary company, management considered the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates. The Company also considered secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained.

These consolidated financial statements are presented in Canadian dollars, which is the functional currency of Magna Mining Corp. and Ursa Major Minerals Inc.

(e) Significant estimates and critical judgments

The preparation of the consolidated financial statements in conformity with IFRS requires the use of judgment and estimates that affect the amounts reported and disclosed in the consolidated financial statements and related notes. These judgments and estimates are based on management’s knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the consolidated financial statements. Information about such judgments and estimation is contained in the accounting policies and notes to the consolidated financial statements, and the key areas are summarised below.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods. The most significant estimate as at December 31, 2020 and 2021 relates to the asset retirement obligation.

Critical accounting judgments

In the preparation of these consolidated financial statements, management has made judgments, aside from those that involve estimates, in the process of applying the accounting policies. The judgments which may have an effect on the amounts recognized in the consolidated financial statements include the following:

The assessment of the going concern assumption;
The recognition of deferred income tax assets.

3. Qualifying transaction

On October 26, 2020, CT entered into an Arrangement (the “Arrangement”) agreement with MMCC, whereby:

a) CT would acquire all of the issued and outstanding shares of MMCC; and b) CT would change it’s name to “Magna Mining Inc.” (“MMI”)

On February 10, 2021, CT and MMCC finalized a definitive agreement for the transaction.

On May 4, 2021, the Arrangement was completed and the former shareholders of MMCC acquired control of CT (now Magna Mining Inc.).

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

3. Qualifying transaction (continued)

MMCC is deemed to be the acquirer and CT is deemed to be the acquiree for accounting purposes.

The purchase price is the cost to acquire CT’s share capital at the fair value at the time of the transaction. The fair value is calculated as $801,845, being the cost of acquiring 2,004,612 shares at $0.40 per share, being the fair value of MMCC concurrent financing, after giving effect to the 1.625 conversion ratio. All CT stock options were exercised immediately prior to completion of the Arrangement and therefore no fair value was assigned to stock options.

The assets and liabilities of CT are included in the consolidated statement of financial position and are presented at their fair value, which is equal to their carrying value. The pre-acquisition equity of CT was eliminated on consolidation. The excess of the amount paid over the fair value of the net assets acquired of $750,959 has been charged to profit or loss as a listing expense. The excess was calculated as follows:

Fair value of consideration
2,004,612 common shares at $0.40 per share	$	801,845
Total consideration		801,845
Net assets acquired
Cash		75,441
Trade and other payables		(24,555)
Net assets		50,885

Excess ofconsiderationover net assets acquired	$	750,959

The share price of $0.40 was based on the concurrent financing price of $0.65 adjusted for the preconversion price ration of 1.625.

4. Significant accounting policies

Foreign currency translation

Assets and liabilities are translated at the exchange rate in effect at the year end date. Foreign currency transactions are translated into the relevant functional currency using the exchange rate prevailing at the date of the transaction. Foreign currency gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit or loss.

Cash

Cash consists of cash on deposit with banks and is subject to insignificant risk of changes in fair value.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Equipment

Recognition and measurement

Items of equipment are initially measured at cost. Items of equipment are carried at cost less accumulated depreciation and accumulated impairment losses. Equipment is classified by significant components, which are individually amortized over the useful life of the component.

Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of equipment have different useful lives, they are accounted for as separate items (major components) of equipment.

Depreciation

Depreciation is provided at the following rates:

ciation is provided at the following rates:
Computer equipment	3 years straight-line
Motor vehicles	3 years straight-line
Equipment	3 years straight-line
Fencing	20 years straight-line

Depreciation is calculated on the depreciable amount, which is the cost of an asset or other amount substituted for cost, less its residual value.

Depreciation is recognized in profit or loss over the estimated useful lives of each part of an item of equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Impairment

Long lived assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If an indicator is identified, the asset’s recoverable amount is calculated and compared to the carrying amount. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units or “CGUs”). The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGU, as determined by management). An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The Company evaluates impairment losses for potential reversals when events or circumstances warrant such consideration.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Mineral properties and exploration and development expenditures

Acquisition costs for exploration and evaluation assets and exploration expenditures, net of recoveries, are charged to profit or loss as incurred. Acquisition costs may include cash consideration, the fair value of common shares issued, and the fair value of share purchase warrants and options issued based on amounts determined using the Black-Scholes option pricing model, for mineral property interests pursuant to the terms of the agreement.

After a property is determined by management to be technically feasible and commercially viable (Bankable Feasibility Study), development expenditures on the property are capitalized.

The costs related to a property from which there is production, together with the costs of production equipment, will be depleted and amortized using the unit-of-production method.

Exploration and evaluation assets acquired under an option agreement where payments are made at the sole discretion of the Company are charged to operations at the time of payment. Property interests granted to others under an option agreement where payments to be made to the Company are at the sole discretion of the optionee, are recorded as recoveries at the time of receipt. Where recoveries exceed capitalized costs, such amounts are recognized in profit or loss.

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a Feasibility Study or the Company’s commitment to a plan of action based on the then known facts.

Asset retirement obligation

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral interest by or on behalf of the Company. Costs for restoration of site damage incurred on an ongoing basis during exploration and evaluation are provided for at their net present values and charged to profit or loss in the period such exploration and evaluation occurs. Net present value is calculated using the pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The liability is adjusted each period for the unwinding of the discount and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation.

Impairment of mineral properties

When mineral properties have been capitalized, they are assessed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. Assessment of impairment indicators involves the application of a number of significant judgments over internal and external factors including reserve and resource estimation, future precious metal prices, estimated costs of future production, changes in government legislation and regulations, estimated deferred taxes and the availability of financing and various other operational factors. If any such indication exists, an estimate of the recoverable amount is undertaken. If the asset’s carrying amount exceeds its recoverable amount, an impairment loss is recognized in profit or loss.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Title to mineral properties

Although the Company takes steps to verify title to exploration and evaluation assets in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Income taxes

Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity in which case, the income tax is also recognized in other comprehensive income or directly in equity, respectively.

Current tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax

Deferred tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Share capital

Common shares, stock options and warrants issued by the Company are classified as equity. Costs directly attributable to the issue of common shares, share purchase warrants and share options are recognized as a deduction from equity, net of any related income tax effects.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Resource expenditure deductions for income tax purposes may be renounced to investors in accordance with income tax legislation for flow-through share arrangements. On issuance of flowthrough common shares, the Company bifurcates the flow-through share proceeds into: (i) share capital, for the fair value of common shares without a flow-through feature (based on the most recent selling price), and (ii) a flow-through share premium liability, for the amount investors pay for the flow-through feature (in excess of the most recent selling price of the common shares). As resource expenditures are incurred, the Company derecognizes the liability and recognizes other income.

Proceeds from the issuance of flow-through shares are restricted, to be used only for Canadian resource expenditures, and must be incurred within a two-year period before a 10% penalty tax applies on any unspent amount that has been renounced.

Options, warrants, restricted share units and contributed surplus and stock-based compensation

The estimation of the fair value of options and warrants at the date of grant requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The fair value of each option or warrant is calculated using the Black-Scholes pricing model. The Company has made estimates as to the volatility, the expected life of options or warrants, the expected dividend rate, the risk-free interest rate for the life of the option or warrant, and where applicable, expected forfeiture rates. The expected life of the option or warrant is based on the contractual life and historical data. The expected volatility is based on the historical volatility of comparable companies, over the period of the expected life of the stock option or warrant. These estimates may not necessarily be indicative of future actual patterns.

Employees (including directors and senior executives) of the Company may receive a portion of their remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (“equity-settled transactions”). The value of equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date on which they are granted. The Company is also required to estimate the expected future forfeiture rate of options in its calculation of share-based payments.

In situations where equity instruments are issued to non-employees for goods or services, the transaction is measured at the fair value of the goods or services received by the Company. When the value of the goods or services cannot be reliably estimated, they are measured at the fair value of the share-based payment.

The costs of equity-settled transactions are recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant option holder become fully entitled to the award (“vesting date”). The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the Company’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and the corresponding amount is recorded in contributed surplus.

No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other performance and/or service conditions are satisfied.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Where the terms of an equity-settled transaction are modified, the minimum expense recognized is the expense as if the terms had not been modified. An additional amount is recognized on the same basis as the amount of the original award for any modification which increases the total fair value of the equitysettled transactions or is otherwise beneficial to the option holder as measured at the date of modification.

Contributed surplus consists of stock-based compensation expense relating to options vesting, net of exercises and forfeitures. In addition, all cancellations and forfeitures related to warrants are transferred from warrants reserve to contributed surplus.

Loss per share

Basic loss per share is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding during the year. The computation of diluted loss per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on loss per share. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted loss per share by the treasury stock method. In a loss period, potentially dilutive stock options and warrants are excluded from the loss per share calculation as the effect is anti-dilutive

Financial instruments

The following table summarizes the classification and measurement of the Company’s financial instruments:

nstruments:
Classification	Financial instrument	Description
Amortized cost	Cash	Cash balances with banks
Amortized cost	Accounts receivable	Receivables from related party
Amortized cost	Restricted cash	Cash held by Ministry of Energy,
		Northern Developments and Mines
Amortized cost	Accounts payable and other	Amounts payable to third parties
	liability and due to related
	party
Amortized cost	Long-term loan	Government loan

Criteria for classification

The Company classifies financial instruments at amortized cost, FVOCI or FVTPL . The classification is driven by the following criteria:

Receivables

Amortized cost  Held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Financial instruments (continued)

Contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Measurement

After classification as amortized cost, FVTPL or FVOCI, the Company uses the following policy for initial measurement and subsequent measurement at each reporting period:

Classification	Initial	Subsequent	Changes in fair value
	measurement	measurement
Financial assets measured	Fair value less	Amortized cost using	Reported in profit or loss
at amortized cost	expected credit	the effective interest	when realized or impaired.
	loss	method
Financial liabilities	Fair value	Amortized cost using	Reported in profit or loss
measured at amortized cost		the effective interest	when liability is extinguished.
		method.

Impairment of financial assets

The Company assesses all information available, including on a forward-looking basis the expected credit loss associated with its financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset at the reporting date with the risk of default at the date of initial recognition based on all information available, and reasonable and supportive forward-looking information. Evidence of increased credit risk may include indications that the counterparty debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Receivables are reviewed qualitatively on a case-by-case basis to determine whether they need to be written off.

Expected credit losses are measured as the difference in the present value of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive. The Company assesses all information available, including past due status, credit ratings, the existence of third-party insurance, and forward-looking macroeconomic factors in the measurement of the expected credit losses associated with its financial assets carried at amortized cost. The Company measures expected credit loss by considering the risk of default over the contract period and incorporates forward-looking information into its measurement.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

4. Significant accounting policies (continued)

Revenue recognition

Revenue represents the amount the Company expects to receive for goods and services in its contracts with customers, net of discounts and sales taxes.

The Company recognizes consultancy revenue as other income in the profit or loss under IFRS 15 which provides a single, principles based five - step model for revenue recognition to be applied to all customer contracts and requires enhanced disclosures.

Consultancy revenue is recognized when there is a contract with the customer, a performance obligation exists, the transaction price has been determined and the price is allocated to the performance obligations in the contract. Revenue is recognized over time as the performance obligations are satisfied.

5. Recent accounting pronouncements

New standards and interpretations

New standards not yet adopted

Amendments to IAS 1: Classification of Liabilities as Current or Non-Current

In January 2020, the IASB issued Classification of Liabilities as Current or Non-current (“Amendments to IAS 1”). The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. The amendments are effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted.

Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract

In May 2020, the IASB issued Onerous Contracts – Cost of Fulfilling a Contract (“Amendments to IAS 37”) amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendment is effective for annual reporting periods beginning on or after January 1, 2022.

The Company does not expect these amendments to have a material impact on the consolidated financial statements in the period of initial application.

6. Restricted cash

Restricted cash represents a cash security deposit with the Ministry of Northern Development and Mines ("MNDM") as a financial assurance guarantee in connection with the Stage One Mining Closure Plan on the Shakespeare Mine.

In May 2018, the Company filed a Notice of Material Change and Updated Closure Cost Estimate with the MNDM and provided a cash surety deposit. At December 31, 2021, the deposit plus accrued interest amounted to $657,618 (2020: $657,262).

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

7. Property and equipment

The carrying value of depreciable assets and the changes in the carrying value are as follows:

		Computer								Right of use
		equipment		Fencing		Equipment	Motor	vehicles		asset		Total
a) Cost
At December 31, 2020	$	1,379	$	44,689	$	5,400	$	4,600	$	-	$	56,068
Additions		4,725		-		5,390		6,000		59,491	$	75,606
At December 31, 2021	$	6,104	$	44,689	$	10,790	$	10,600	$	59,491	$	131,674
b) Accumulated depreciation
At December 31, 2020	$	41	$	5,251	$	5,400	$	4,600	$	-	$	15,292
Depreciation		1,261		2,235		331		428		11,567	$	15,822
At December 31, 2021	$	1,302	$	7,486	$	5,731	$	5,028	$	11,567	$	31,114
c) Carrying amounts (a-b)
At December 31, 2020	$	1,338	$	39,438	$	-	$	-	$	-	$	40,776
At December 31, 2021	$	4,802	$	37,203	$	5,059	$	5,572	$	47,924	$	100,560

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

8. Mineral properties

The Company’s primary mineral property is the Shakespeare Mine.

All of the Company’s properties are located near Sudbury, Ontario, Canada.

The Company is required to make a $24,000 per year advance royalty payment in order to maintain certain property agreements in good standing, as outlined below. The Company is also required to make statutory licence and property tax expenditures each year to maintain its properties in good standing.

a) Shakespeare Mine

The Company has a 84% interest in the Shakespeare Mine consisting of six claims and three leases. The Shakespeare Mine contains a nickel, copper, platinum group metal resource.

During the financial year ended January 31, 2011, the Company’s subsidiary, Ursa, declared commercial production at the Shakespeare Mine. Subsequently, it suspended production and the mine remains on care and maintenance.

Various exploration mineral claims that surround the Shakespeare Mine are subject to an 84/16 joint venture between the Company and Glencore International PLC.

During the year ended December 31, 2021, the Company entered into a transaction with a third party whereby $282,500 was provided to the Company for use in an exploration program targeting the Palladium Valley target area, located in the north central portion of the Shakespeare property. The Exploration program is to be completed prior to May 1, 2022. In exchange, the Company is to make available to the third party all records and data with respect to the exploration program, and the third party will have the exclusive and discretionary right to enter into a definitive formal exploration and option agreement within 30 days of the end of the exploration period. The funds remaining to be spent as at December 31, 2021 is $260,670 (2020 - $nil).

b) Stumpy Bay Property

The Company owns a 84% interest in three claims known as the Stumpy Bay Property, located in Shakespeare and Baldwin Townships, Ontario. Nickel Creek Platinum Corp. has a 0.5% Net Smelter Return Royalty of which 100% can be repurchased by the Company for $250,000.

Prior vendors have retained a 2% Net Returns Royalty. Aggregate advance royalty payments of $200,000 were paid by the former operator and no further advance royalty obligation exist. The Company has the right to purchase one half of the royalty for $750,000.

Glencore International PLC has elected to include this property as part of the Shakespeare agreement and accordingly it holds a 16% interest in the Stumpy Bay Property.

c) Porter Baldwin Property

The Company has staked 62 mining claims in the Agnew Lake area that are contiguous with the Shakespeare Mine noted above and are 100% owned by the Company.

The Company has granted a 0.5% Net Returns Royalty, 100% of which can be repurchased for $250,000 related to certain mining claims.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

8. Mineral properties (continued)

d) Porter Option

The Company has a 100% interest in certain mineral claims known as the Porter Option, located in Shakespeare, Dunlop and Porter Townships, Ontario. The optionor has retained a 2% Net Returns Royalty. Advance royalty payments of $24,000 per year commenced January 15, 2007.

The Company has the right to purchase one half of the royalty for $1,000,000.

e) Shining Tree Property

The Company has a 100% interest in 39 mineral claims known as the Shining Tree Property, located in Fawcett Township, Ontario. The optionor has retained a 1% Net Returns Royalty. The Company has the right to purchase one half of the royalty for $500,000. Nickel Creek Platinum Corp. has a 0.5% Net Smelter Return Royalty of which 100% can be repurchased by the Company for $250,000.

f) Fox Mountain

The Company has staked 14 mining claims in the Thunder Bay Mining Division of Ontario, known as the Fox Mountain property.

The Fox Mountain property was disposed of in 2020 for gross proceeds of $5,000.The Fox Mountain Acquisition Agreement also contemplates the payment to Magna of a $1,000,000 discovery bonus, in cash or such number of shares of the purchaser (or part cash and part shares) equivalent in value to $1,000,000, payable upon the completion of a resource estimate or calculation prepared in accordance with NI 43 101 of at least one million ounces of palladium (or palladium equivalent being based on the three year trailing average dollar value of platinum, gold, copper, nickel, and cobalt estimated as a portion of the three year trailing average dollar value of palladium) on the Fox Mountain Property at any time after the Closing Date (such date as the Parties agree in writing as the date that the Closing shall take place), but before the eighth anniversary of such Closing Date.

In connection with the sale, Magna also retained a 1.0% NSR royalty interest in the property, 50% (0.5%) of which can be bought back by the purchaser at any time after the Closing Date but prior the eighth anniversary of the Closing Date for $1,000,000.

g) Spanish River Option

The Company has a 100% interest in 7 claim units located in Baldwin Township, Ontario collectively known as the Spanish River Option.

On November 2, 2020, Magna entered into an option to purchase agreement with 2060014 Ontario Inc. to acquire 100% of 7 claim units located in Baldwin Township, Ontario (The “Spanish River Option”). The terms of the agreement were as follows:

Within 10 days (November 12, 2020) from the date of signing: $6,000 cash and 25,000 shares of Magna. The cash balance has been paid.
Before the 1st anniversary date of signing (November 2, 2021): $14,000 cash and 25,000 shares of Magna. The cash balance has been paid
Before the 2nd anniversary date of signing (November 2, 2022): $25,000 cash and 25,000 shares of Magna

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

8. Mineral properties (continued)

Before the 3rd anniversary date of signing (November 2, 2023): $30,000 cash and 25,000 shares of Magna

Magna will be required to complete cumulative exploration expenditures totaling $100,000 prior to the third anniversary date of signing. The Optionor will retain a 1.5% NSR royalty of which Magna can repurchase 50% (0.75%) for $1,000,000 at any time.

9. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consist of:

		December 31,		December 31,
		2021		2020
Trade accounts payable	$	349,271	$	190,807
Accrued liabilities and other payables		523,620		667,585
	$	872,891	$	858,392

10. Asset retirement obligation

The Company's provision for closure and reclamation costs is based on management's estimates of the discounted costs to abandon and reclaim mineral properties and facilities as well as an estimate of the future timing of the costs to be incurred.

The Company has estimated its total provision for closure and reclamation to be $698,170 at December 31, 2021 (December 31, 2020 - $680,985), using an inflation rate of 2.50% (2020 - 2.50%) and a discount rate of 2.70% (2020 - 2.70%) over the period of 7 years.

The following is an analysis of the provision for closure and reclamation :

Balance, December 31, 2019	$	664,223
Accretion		16,762
Balance, December 31, 2020	$	680,985
Accretion		17,185
Balance, December 31, 2021	$	698,170

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

11. Term loan

On April 17, 2020, the Company received a $40,000 loan under the Canada Emergency Business Account (“CEBA”) program. The loan is guaranteed by the Canadian government, unsecured, and interest-free through December 31, 2023. $10,000 is eligible for forgiveness, contingent on the Company repaying $30,000 on or before December 31, 2023. During the year ended December 31, 2020, the Company recognized $10,000 as other income for the forgivable portion of the loan. If $30,000 isn’t repaid on or before December 31, 2023, $40,000 (including the forgivable amount) will be converted to a three-year term loan maturing on December 31, 2025 and bearing interest at 5% per annum with monthly interest-only payments. As at December 31, 2021, the principal balance owing on the loan was $40,000 (December 31, 2020 - $40,000).

The funds from the CEBA program must only be used to pay non-deferrable operating expenses such as payroll, rent, utilities, insurance, property tax and regularly scheduled debt service, and may not be used to fund any costs such as prepayment or refinancing of existing indebtedness, payments of dividends and distributions, and/or increases in management compensation.

The loan was fair valued and the difference of $3,712 between the proceeds and fair value was recognized in the profit or loss in 2020.

12. Income taxes

A reconciliation of income taxes at the statutory rate is as follows:

		December 31,		December 31,
		2021		2020
Netloss beforeincome taxes	$	6,762,966	$	1,091,074
Expected income tax recovery at the statutory tax rate of 26.5%		1,792,186		289,135
Timing differences:
Mineral exploration expenses		(999,571)		(106,772)
Non-deductible expenses:
Share-based compensation		(170,462)		(118,328)
Other		2,934		20,299
Expected income tax recovery		625,087		84,334
Unrecognized benefit of deferred tax assets		625,087		84,334
Deferred income tax expense	$	-	$	-

The Company’s deductible temporary differences and unused tax losses consist of the following amounts:

amounts:
		December 31,		December 31,
		2021		2020
Non capital losses	$	1,237,000	$	766,000
Mineral properties and equipment		5,153,000		4,437,000
Asset retirement obligation		185,000		180,000
Deferred income tax assets		6,575,000		5,383,000
Deferred income tax not recognized		(6,575,000)		(5,383,000)
Deferred income tax assets	$	-	$	-

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

13. Issued share capital

The authorized share capital of the Company is comprised of unlimited number of common shares without par value

On March 19, 2020, the Company closed a private placement financing pursuant to which a total of 432,248 shares were issued at a price of $0.34 per share, for gross proceeds of $146,301.

On March 19, 2020, the Company closed a private placement financing pursuant to which a total of 325,000 flow through common shares were issued at a price of $0.42 per share, for gross proceeds of $138,000, of which $110,000 was allocated to share capital and $27,984 was allocated to flow through premium. $17,147 of the flow through premium was recognised in other income in 2020. At December 31, 2020, the Company's outstanding commitment to recognise the remaining flow through premium is $53,489. Finder’s fees of 19,500 common shares were paid in connection with this financing at a price of $0.34 per share, for gross aggregate total of $6,600. Legal fees of $10,008 was incurred with respect to the flow-through financing.

On March 19, 2020, the Company settled a related party loan of $194,439 through the issuance of common shares. The Company issued a total of 590,907 common shares at an issue price of $0.34 per share.

On November 2, 2020, the Company issued 40,625 shares of Magna at their fair value of $13,750 in connection with the purchase of the Spanish River Option. See note 8(g).

On November 13, 2020, the Company completed a private placement at a price of $0.31 per common share for gross proceeds of $1,692,500 and issued 5,500,625 common shares. Share issue costs in respect of the issuance amounted to $125,011 including cash finder’s fees of $91,950.

On February 12, 2021, the Company completed a private placement of 17,501,250 subscription receipts (“Subscription Receipts”) at a price of $0.40 per Subscription Receipt for gross proceeds of $7,000,500. Each Subscription Receipt was exchanged, without payment of any consideration in addition to the purchase price, for one common share and one-half of one warrant of the Company (“Magna Unit”). Proceeds from shares and warrants are allocated between share capital and warrants on a residual value basis, whereby the fair value of the warrants is determined using a Black-Scholes Option Pricing model (as described in note 16) and the fair value of share capital is based on the remaining residual value.

On May 4, 2021, concurrent with the completion of the Qualifying Transaction (see note 3), Magna Units were exchanged for the underlying 17,501,250 common shares and 8,750,625 warrants and net cash proceeds of $6,426,763 were released from Escrow and provided to the Company.

Subscription Receipt issue costs included agent’s fee of 6% of specific gross proceeds paid in cash of $408,488, legal fees of $129,000, a corporate finance fee of 1.5% payable in Subscription Receipts of 262,518 shares and 131,259 warrants. Proceeds from shares and warrants are allocated between share capital and warrants on a residual value basis, whereby the fair value of the warrants is determined using a Black-Scholes Option Pricing model and the fair value of share capital is based on the remaining residual value.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

13. Issued share capital (continued)

On October 26, 2021, the Company completed the first tranche of a non-brokered private placement. This tranche consisted of 5,888,900 flow-through common shares at a price of $0.45 per share for gross proceeds of $2,650,005, of which $2,355,560 was allocated to share capital and $294,445 was allocated to flow-through premium.

On November 3, 2021, the Company completed the second and final tranche of the private placement. This tranche consisted of 1,107,800 flow-through common shares at a price of $0.45 per share for gross proceeds of $498,510, of which $443,120 was allocated to share capital and $55,390 was allocated to flow-through premium.

Finders’ fee of 497,277 common shares were paid in connection with this flow through private placement financing at a price of $0.40 per share, for a total of $198,911. Cash financing fees of $82,199 were incurred with respect to the private placement.

As at December 31, 2021, deferred transaction costs of $nil (2020- $128,174) were included in other assets.

14. Basic and diluted loss per share

The calculation of basic and diluted loss per share for the year ended December 31, 2021 was based on the loss attributable to common shareholders of $6,762,966 (2020 - $1,091,074) and the weighted average number of common shares outstanding of 58,732,657 (2020 – 38,837,648).

15. Share-based payment reserve

The Company has a share option plan for certain employees, directors and consultants and each such share option converts into one ordinary share of the Company on exercise.

Details of the stock options issued during the year are as follows:

	December	31,	2021	December	31,	2020
			Weighted			Weighted
	Number of		average	Number of		average
	stock options	exercise price		stock options	exercise price
Outstanding at the beginning of year	4,346,875	$	0.23	2,067,000	$	0.20
Issued during the year	1,500,000		0.46	2,437,500		0.25
Exercised during the year	(381,875)		0.07	(157,625)		0.00
Outstanding at end of year	5,465,000	$	0.31	4,346,875	$	0.23
Vested and exercisable	5,019,164	$	0.31	1,511,790	$	0.16

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

15. Share based payment reserve (continued)

			Weighted
		Numbers of	average			Number of
		options	remaining life			options
Grant Date	Expiry Date	outstanding	in years	Exercise	Price	exercisable
2018-01-08	2023-01-08	325,000	1.02	$	0.06	325,000
2018-10-01	2023-10-01	325,000	1.75		0.22	325,000
2019-11-29	2022-11-28	893,750	0.91		0.34	893,750
2020-11-06	2023-12-07	1,625,000	1.94		0.22	1,625,000
2020-11-06	2023-11-06	308,750	1.85		0.28	308,750
2020-11-06	2023-11-06	487,500	1.85		0.31	324,999
2021-05-28	2026-05-28	925,000	4.41		0.50	641,665
2021-12-23	2026-12-23	575,000	4.98		0.40	575,000
		5,465,000	2.43	$	0.31	5,019,164

After giving effect to the 1.625 exchange ratio of the Qualifying Transaction (see note 3), on November 6, 2020, the Company granted 2,437,500 stock options to employees, directors, and consultants. 1,625,000 of these stock options have a term of 3-years, vest immediately and have an exercise price of $0.22 per common share, 325,000 stock options have a term of 3-years, vest immediately and have an exercise price of $0.28 per common share (16,250 exercised in the three months ended September 30, 2021) and 487,500 stock options have a term of 3-years, vest one-third immediately and one-third annually thereafter and have an exercise price of $0.31 per common share.

On May 28, 2021, the Company granted 925,000 stock options to certain employees, directors, and consultants. 500,000 of these stock options have a term of 5-years, vest immediately and have an exercise price of $0.50 per common share, and 425,000 stock options have a term of 5-years, vest one-third immediately and one-third annually thereafter and have an exercise price of $0.50 per common share.

On December 23, 2021, the Company granted 575,000 stock options to certain directors and officers. The options have a term of 5-years, vest immediately, and have an exercise price of $0.40 per common share.

The options outstanding at December 31, 2021 had a weighted average exercise price of $0.31 (2020: $0.16), and a weighted average remaining contractual life of 2.43 years (2020: 2.24 years). The options vest from May 2022 to November 2024. The aggregate of the estimated fair values of the options granted in 2020 is $448,824 (2019: $93,513).

The weighted average inputs to the Black-Scholes Option Pricing model are as follows:

		2021		2020
Dividend		NIL		NIL
Expected volatility		145%		85%
Risk-free interest rate		1.25%		0.27%
Expected life (months)		60		36
Exercise price	$	0.50	$ 0.35 - $0.50
Spot price	$	0.54	$	0.50

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

15. Share based payment reserve (continued)

Expected volatility was determined by calculating the historical volatility of similar public companies over the same period as the expected life of the options.

The Company recognized total stock-based compensation expense of $643,252 in 2021 (2019 - $446,519).

During the year ended December 31, 2020, the Company extended the contractual life of 97,000 fully vested share options held by an employee. The resulting modification did not have a material incremental fair value and therefore additional compensation expense was not recognised. These options were subsequently exercised at an exercise price of $0.001 per share. There were no modifications in 2021.

16. Warrants

On October 26, 2020, the Company issued 3,000,000 common share purchase warrants (the "Magna Warrants"), to consultants as consideration for services, on terms which include: (i) a vesting provision such that the Magna Warrants shall not vest unless a qualifying transaction (note 3) and prior to or concurrent with the closing of the qualifying transaction, an offering of units occurs, for minimum aggregate gross proceeds of $5,000,000. Exercise of the Magna Warrants was conditional on the Magna Warrant holders entering into lock-up agreements. Each Magna Warrant was exercisable to acquire, one common share at a price of $0.10 per share at any time prior to October 26, 2022. On completion of the qualifying transaction, each Magna Warrant issued to the Consultants was exchanged for CT Exchange Warrants on the basis of the Exchange Ratio (such warrants referred to as Resulting Issuer Warrants following the Closing). Based on the existing terms of the Magna Warrants, after giving effect to the Exchange Ratio, the Consultants would receive an aggregate of 4,875,000 Resulting Issuer Warrants in connection with the transaction, each Resulting Issuer Warrant entitling the holder thereof to acquire one Resulting Issuer Share at an effective exercise price of $0.06 per share. However, prior to and as a condition to completion of the Arrangement (see note 3), as required by the TSX Venture Exchange, the Company amended the warrant certificates issued to the Consultants such that an aggregate of no more than 4,209,405 Resulting Issuer Warrants would be issued to the Consultants, with an effective exercise price of $0.40 per Resulting Issuer Share.

On May 28, 2021, the Company issued 9,874,250 warrants in relation to the subscription receipt transaction. 8,881,884 of these warrants were in exchange for subscription receipts, have a term of 2-years, vest immediately and have an exercise price of $0.615 per common share, and 992,366 were broker warrants, have a term of 2-years, vest immediately and have an exercise price of $0.40 per common share.

The Company recognized deferred transaction costs of $nil as at December 31, 2021 (December 31, 2020 - $263,018) within other assets, relating to vested portion of the warrants granted in anticipation of the Go-Public Public transaction and $7,000,500 Subscription Receipts financing transaction.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

16. Warrants (continued)

The outstanding warrants as at December 31, 2021 and December 31, 2020 and the respective changes during the year are summarised as follows:

	December 31, 2021	December 31, 2021	December 31, 2021	December 31, 2020	December 31, 2020	December 31, 2020
			Weighted			Weighted
	Number of		average	Number of		average
	warrants	exercise price		warrants	exercise price
Outstanding beginning of period	4,209,405	$	0.40	-	$	-
Issued during the period	9,874,250		0.59	4,209,405		0.40
Exercised during the period	-		-	-		-
Outstanding end of period	14,083,655	$	0.54	4,209,405	$	0.40
Vested and exercisable	14,083,655		0.54	-	$	-

The warrants outstanding at December 31, 2021 had a weighted average exercise price of $0.54 (2020 - $0.40), and a weighted average remaining contractual life of 1.19 years (2020 – 1.82). The estimated vesting date of the warrants outstanding at December 31, 2020 was August 2021. The aggregate of the estimated fair values of the warrants granted in 2021 is $863,780.91 (2020 - $494,888).

The weighted average inputs to the Black-Scholes Option Pricing model are as follows:

		2021		2020
Expected volatility		85%		85%
Risk-free interest rate		0.31%		0.23%
Expected life (months)		24		24
Exercise price		$ 0.40 - $.62	$	0.65
Spot price	$	0.58	$	0.50

Expected volatility was determined by calculating the historical volatility of similar public companies over the same period as the expected life of the warrants

17. Restricted share units (“RSUs”)

During the year ended December 31, 2021, the directors of the Company approved a RSU Plan, which contemplates the granting of RSUs to directors, senior officers, employees and consultants of the Company and its subsidiaries. The RSU Plan is intended to provide an incentive to eligible persons to acquire a proprietary interest in the Company, to continue their participation in the affairs and to increase their efforts on its behalf. The RSU Plan is administered by the Board of the Company.

The aggregate number of Shares reserved for issuance under the Stock Option Plan and RSU plan may not exceed 10% of the issued and outstanding common shares on the date of grant.

The terms of the RSU plan allow for the issuance of one non-assessable common share only upon meeting the vesting conditions.

Details of the RSUs issued during the period are as follows:

On May 28, 2021, the Company granted 93,000 RSUs with a fair value of $46,500 to certain employees. The RSUs will fully vest three years from the date of the grant.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

17. Restricted share units (“RSUs”) (continued)

On July 27, 2021, the Company granted 225,000 restricted share units (“RSUs”) to certain officers. The RSUs will fully vest three years from the date of the grant.

The Company recognized total RSU compensation expense of $20,810 for the year ended December 31, 2021 (2020 - $Nil) within share based compensation expenses.

18. Expenses by nature

Certain expenses are presented on the face of the consolidated statements of operations and comprehensive loss using a classification based on the functions exploration and evaluation, property maintenance and general and administrative.

Salaries and wages

Total salaries, wages and related costs incurred in the year ended December 31, 2021 amounted to $615,760 (2020 - $169,550). Salaries of $273,730 were paid to key management personnel during the year (2020 - $Nil). The Company’s key management personnel include executives, directors, and officers.

During the years ended December 31, 2021 and 2020, salaries, wages, and related costs were allocated to the following expense categories:

		2021		2020
Exploration expense	$	280,357	$	91,133
Property maintenance		62,850		78,417
General and administrative		304,976		-
	$	648,183	$	169,550

General and administrative expenses

For the years ended December 31, 2021 and 2020, general and administrative expenses consisted of the following:

		2021		2020
General office and admin	$	83,584	$	43,451
Consultancy		22,790		88,445
Management salary		304,976		-
Investor Relations		231,339		27,450
	$	642,689	$	159,346

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

19. Segmented information

The Company operates in one reportable operating segment, being the acquisition, exploration and development of mineral properties. The Company’s assets are located in Canada.

20. Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence, and related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

During the year, the Company entered into various transactions with related parties. The transactions are measured at the exchange amounts which are the amounts of consideration established between the related parties.

In 2019, Vernon Baker, Director of the Company, advanced a loan of $194,439 to the Company. The loan was unsecured, interest free with no set terms of repayment. The loan was converted into shares of the Company during the year ended December 31, 2020.

In 2021, the Company had Consultancy income of $Nil from Mine Management Partners Ltd. (2020 - $68,550), a Company controlled by the Chief Executive Officer. Trade receivables in relation to the above was $Nil as of December 31, 2021 (2020 - $12,204).

Compensation to related parties during the years ended December 31, 2021 and 2020 is summarized as follows:

as follows:
		Three months ended				Twelve months		ended
	December 31,		December	31,	December 31,		December		31,
		2021	2020			2021		2020
Salaries, consulting and management fees	$	221,750	$	-	$	418,800	$		-
Share based compensation		228,701		-		545,656		66,128
Total remuneration	$	450,451	$	-	$	964,456	$	66,128

(1) Salaries, consulting and management fees represent CEO, CFO, Vice President, and Director compensation.

a. Derrick Weyrauch, CFO, is a related party to the Company and is related to Weyrauch and Associates Inc. In 2021, $90,000 (2020 - $22,500) was paid to Weyrauch and Associates Inc. and there was $Nil (2020 - $Nil) outstanding at year end

b. Jason Jessup, CEO, is a related party to the Company and is related to Mine Management Partners Ltd. In 2021, $Nil (2020 - $Nil) was paid to Mine Management Partners Ltd. and there was $Nil (2020 - $2,593) outstanding at year end

c. Vice Presidents of the Company were paid $140,550 (2020 - $68,500). Directors were paid $32,000 (2020 - $12,000)

(2) Share based compensation represents stock option issuance to executives, officers and directors.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

21. Capital management

The Company’s objectives in managing its capital are as follows:

To safeguard its ability to continue as a going concern; and
To have sufficient capital to be able to meet its strategic objectives including the continued exploration and development of its existing mineral projects and the identification of additional projects.

Given the current exploration stage of its projects, the Company’s primary source of capital is derived from equity issuances. Capital consists of equity attributable to common shareholders.

The Company has no externally imposed capital requirements and manages its capital structure in accordance with its strategic objectives and changes in economic conditions. In order to maintain or adjust its capital structure, the Company may issue new shares in the form of private placements and/or secondary public offerings.

Additional information relating to going concern is disclosed in Note 1.

There has been no change in the Company's approach to capital management in the year ended December 31, 2021.

22. Financial instruments

Carrying value and fair value

The Company’s financial instruments comprise cash, restricted cash, accounts receivable, due to related parties, accounts payable and accrued liabilities and government loan.

Financial instruments recognised at fair value on the consolidated statement of financial position are classified in fair value hierarchy levels as follows:

Level 1: Valuation based on unadjusted quoted prices in active markets for identical assets or liabilities
Level 2: Valuation techniques based on inputs other than Level 1 quoted prices that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices)
Level 3: Valuation techniques with unobservable market inputs (involves assumptions and estimates by management).

Cash, accounts receivable and restricted cash are recorded in the consolidated financial statements at amortized cost.

Accounts payable and accrued liabilities and government loan are classified as other financial liabilities and are recorded in the consolidated financial statements at amortized cost.

Fair value

The carrying values of cash, accounts payable and accrued liabilities do not materially differ from their fair values given their short-term period to maturity.

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

22. Financial instruments (continued)

Financial risk factors

The Company’s activities expose it to a variety of financial risks, including credit risk, liquidity risk, foreign exchange risk, and interest rate risk.

Credit risk

Credit risk is the risk of economic loss arising from a counterparty’s failure to repay or service debt according to the contractual terms. Financial instruments that potentially subject the Company to credit risk consist of cash, accounts receivable and restricted cash. The carrying value of the Company’s financial assets recorded in the consolidated financial statements represents the Company's maximum exposure to credit risk. The Company manages credit risk by placing cash with major Canadian financial institutions. Management believes the credit risk is low.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations associated with financial liabilities. The Company manages liquidity risk through the management of its capital structure. The Company’s approach to managing liquidity is to ensure that it will have sufficient liquidity to settle obligations and liabilities when due.

Foreign exchange risk

The Company operates in Canada and therefore, currently, has limited exposure to foreign exchange risk arising from transactions denominated in foreign currencies. Other than Canadian dollar balances, the Company holds balances in cash and royalties payable that are denominated in US$ as outlined below. Accordingly, the Company is subject to foreign exchange risk relating to such balances in connection with fluctuations against the Canadian dollar. The Company has no program in place for hedging foreign currency risk.

The Company held the following foreign currency denominated balances as at December 31, 2021 and December 31, 2020:

December 31,2020:
	December 31,		December 31,
		2021		2020
Cash (US $)	$	14,346	$	128
Accrued liabilities (US $)		(346,628)		(346,628)
		(332,282)		(346,500)
Foreign exchange rate		1.27		1.27
Equivalent in Canadian dollars ($)	$	(421,998)	$	(440,055)

Based on the balances held as at December 31, 2021, a 10% decrease in the Canadian dollar per US dollar exchange rates would have resulted in a increase in the net loss for the year then ended of approximately $42,200 (2020: $44,000) .

Magna Mining Inc. (formerly CT Developers Ltd.) Notes to the Consolidated Financial Statements (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

22. Financial instruments (continued)

Interest rate risk

Interest rate risk is the risk that cash flows will fluctuate due to changes in market interest rates. While the Company’s financial assets are generally not exposed to significant interest rate risk because of their short-term nature, changes in interest rates will have a corresponding impact on interest income realised on such assets.

The Company did not have any interest-bearing liabilities outstanding as at December 31, 2021.

23. Commitments and contingencies

Environmental Contingencies

Exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company believes its materially in compliance with all applicable laws and regulations. Management believes that the Company has made appropriate expenditures to comply with such laws and regulations.

Flow-Through Expenditures

In connection with financings completed by the issuance of flow-through shares (see Note 13), the Company provides subscribers with an indemnification for any tax liability that may arise if the Company is found to have not incurred the qualifying exploration expenditures in accordance with the flow-through subscription agreements. The Company’s remaining flow through spending obligation is $2,979,223 as at December 31, 2021, of which 100% is required to be spent before December 31, 2022.

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Magna Mining Inc. — Audit Report / Information 2021

46860_rns_2022-04-25_f1d64f65-8a4b-4700-9310-68357144c1e0.pdf

INDEPENDENT AUDITOR’S REPORT

Opinion

Basis for Opinion

Material Uncertainty Related to Going Concern

Other Information

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Financial Position As at December 31, 2021 and 2020 (Expressed in Canadian dollars)

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Operations and Comprehensive Loss As at December 31, 2021 and 2020 (Expressed in Canadian dollars)

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Changes in Equity (Deficiency) For the years ended December 31, 2021 and 2020 (Expressed in Canadian dollars)

Magna Mining Inc. (formerly CT Developers Ltd.) Consolidated Statements of Cash Flows (Expressed in Canadian dollars) For the years ended December 31, 2021 and 2020

1. Reporting entity

Going Concern

1. Reporting entity (continued)

Covid-19

2. Basis of presentation

(a) Statement of compliance

(b) Basis of consolidation

(c) Basis of presentation

2. Basis of presentation (continued)

(d) Functional and presentation currency

(e) Significant estimates and critical judgments

Critical accounting judgments

3. Qualifying transaction

3. Qualifying transaction (continued)

4. Significant accounting policies

Foreign currency translation

Cash

4. Significant accounting policies (continued)

Equipment

Recognition and measurement

Depreciation

Impairment

4. Significant accounting policies (continued)

Mineral properties and exploration and development expenditures

Asset retirement obligation

Impairment of mineral properties

4. Significant accounting policies (continued)

Title to mineral properties

Income taxes

Current tax

Deferred tax

Share capital

4. Significant accounting policies (continued)

Options, warrants, restricted share units and contributed surplus and stock-based compensation

4. Significant accounting policies (continued)

Loss per share

Financial instruments

Criteria for classification

Receivables

4. Significant accounting policies (continued)

Financial instruments (continued)

Measurement

Impairment of financial assets

4. Significant accounting policies (continued)

Revenue recognition

5. Recent accounting pronouncements

New standards and interpretations

New standards not yet adopted

Amendments to IAS 1: Classification of Liabilities as Current or Non-Current

Amendments to IAS 37: Onerous Contracts – Cost of Fulfilling a Contract

6. Restricted cash

7. Property and equipment

8. Mineral properties

a) Shakespeare Mine

b) Stumpy Bay Property

c) Porter Baldwin Property

8. Mineral properties (continued)

d) Porter Option

e) Shining Tree Property

f) Fox Mountain

g) Spanish River Option

8. Mineral properties (continued)

9. Accounts payable and accrued liabilities

10. Asset retirement obligation

11. Term loan

12. Income taxes

Magna Mining Inc. Audit Report / Information 2021