Masivo Silver Corp. — Audit Report / Information 2021

Jul 30, 2021

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.)

CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars)

FOR THE YEARS ENDED MARCH 31, 2021 AND 2020

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Directors of Masivo Silver Corp. (formerly Gainey Capital Corp.)

Opinion

We have audited the consolidated financial statements of Masivo Silver Corp. and its subsidiaries (the “Company”) which comprise the consolidated statements of financial position as at March 31, 2021 and 2020, and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information.

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

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit 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 is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying consolidated financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company’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, which comprises the information included in the Company’s Management Discussion & Analysis to be 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 audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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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 as issued by the International Accounting Standards Board, 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 Company'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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditors’ 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 auditors’ 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 Company'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 Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ 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 auditors’ report. However, future events or conditions may cause the Company 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.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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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 auditors’ report is Fernando J. Costa.

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CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, Canada July 29, 2021

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

AS AT

AS AT
	MARCH 31, 2021 MARCH 31, 2020
ASSETS Current Cash and cash equivalents $ Restricted cash (Note 13) Receivables Due from related party (Note 10) Prepaid expenses	541,565 $ 75,459 46,000 46,000 13,185 5,957 - 101,008 14,075 6,896
Plant and equipment(Note 5) Exploration and evaluation asset(Note 6)	614,825 235,320 183,583 232,759 20,000 2,484,644
$	818,408 $ 2,952,723
LIABILITIES AND EQUITY Current Accounts payable and accrued liabilities (Note 10) $ Due to related party (Note 10) Share subscriptions returnable (Note 8) Equity Share capital (Note 8) Share subscriptions receivable (Note 8) Reserves Deficit	272,027 $ 221,186 - 2,625 2,550 2,550
	274,577 226,361
	13,957,970 13,332,970 (52,400) (52,400) 1,575,120 1,420,220 (14,936,859) (11,974,428)
	543,831 2,726,362
$	818,408 $ 2,952,723

Nature and continuance of operations (Note 1) Subsequent event (Note 15) On behalf of the Board:

“David Coburn” Director “Brent Omland” Director

The accompanying notes are an integral part of these consolidated financial statements

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)

	2021 2020
EXPENSES Accounting and audit Amortization Legal Management fees (Note 10) Mineral property costs Office Share-based compensation Shareholder & investor relations Transfer agent and regulatory fees Travel OTHER INCOME Interest earned Foreign exchange (loss) / gain Write-off of accounts payables Write down of exploration costs (Note 6) Loss and comprehensive loss for the year Loss per common share – basic and diluted Basic and diluted	$ 67,000 $ 93,366 49,176 53,591 7,482 4,195 158,623 159,978 25,409 10,000 15,725 45,714 154,900 325,938 - 97,776 22,180 20,136 - 44,536
	(500,495) (855,230) 256 606 (4,054) 4,053 9,050 - (2,467,188) -
	(2,461,936) 4,659
	$ (2,962,431) $ (850,571)
	$ (0.03) $ (0.01)
	85,802,636 84,193,136

The accompanying notes are an integral part of these consolidated financial statements

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) STATEMENTS OF CHANGES IN EQUITY (Expressed in Canadian Dollars) FOR THE YEARS ENDED MARCH 31, 2021 and 2020

	Number of				Share
	Shares		Amount		subscriptions		Reserves	Deficit		Total
					receivable
Balance – April 1, 2019	82,978,940		13,257,970		(52,400)		1,088,782	(11,123,857)		3,170,495
Shares issued for property	1,217,532		75,000		-		-	-		75,000
Share-based compensation	-		-		-		331,438	-		331,438
Loss for theyear	-		-		-		-	(850,571)		(850,571)
Balance – March 31, 2020	84,196,472	$	13,332,970	$	(52,400)	$	1,420,220	$ (11,974,428)	$	2,726,362
Balance – April 1, 2020	84,196,472		13,332,970		(52,400)		1,420,220	(11,974,428)		2,726,362
Shares issued for private placement	11,000,000		550,000		-		-	-		550,000
Shares issued for warrant exercises	750,000		75,000		-		-	-		75,000
Share-based compensation	-		-		-		154,900	-		154,900
Loss for theyear	-		-		-		-	(2,962,431)		(2,933,418)
Balance – March 31, 2021	95,946,472	$	13,957,970	$	(52,400)	$	1,575,120	$ (14,936,859)	$	543,831

The accompanying notes are an integral part of these consolidated financial statements

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

CASH PROVIDED BY(USED IN):	Year Ended March 31, 2021 Year Ended March 31,2020
Cash flows from operating activities: Loss for the year Non-cash items: Amortization Share-based compensation Write-off of exploration expenditures Changes in non-cash working capital: Receivables Prepaid expense Accounts payable and accrued liabilities Due from related party Cash flows from investing activities: Exploration advances Expenditures on resource properties Cash flows from financing activities: Shares issued for cash (net) Increase (decrease) in cash Cash – beginning of year Cash– end of year	$ (2,962,431) $ (850,571) 49,176 53,591 154,900 331,438 2,467,188 - (7,228) (23,755) (7,178) 3,771 48,216 76,747 101,008 (76,330)
	(156,349) (485,109) - (21,665) (2,545) (410,608)
	(2,545) (432,273) 625,000 -
	625,000 -
	466,106 (917,382) 75,459 992,841
	$ 541,565 $ 75,459
Supplemental disclosure on non-cash financing activities: Exploration and evaluation asset expenditures included in accrued liabilities Shares issued for property Share-based compensation included in Exploration & Evaluation	$ - $ 65,262 - 75,000 - 5,500

The accompanying notes are an integral part of these consolidated financial statements.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

Masivo Silver Corp. (formerly Gainey Capital Corp.) (the “Company”) is in the business of mineral property exploration and development in Mexico. The Company was incorporated under the Business Corporations Act (British Columbia) on February 11, 2011 and is publicly listed on the TSX Venture Exchange (the “Exchange”) under the symbol MASS. The Company’s head office is located at Suite 312–125 West 18th Street, Vancouver, BC, Canada V7M 1W5.

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, confirmation of the Company's interest in the underlying mineral claims, the ability of the Company to obtain necessary financing to complete the development and upon future profitable production or proceeds from the disposition thereof.

The Company had a net loss of $2,962,431 for the year ended March 31, 2021, and an accumulated deficit of $14,936,859 (2020 – $11,974,428), which has been funded primarily by the issuance of equity. The Company’s ability to continue as a going concern is uncertain and is dependent upon the generation of profits from exploration and evaluation assets, obtaining additional financing or maintaining continued support from its shareholders and creditors. In the event that additional financial support is not received or operating profits are not generated, the carrying values of the Company’s assets may be adversely affected. These material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern.

These consolidated interim financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

In March 2020, there was a global outbreak of COVID-19, which continues to rapidly evolve. The extent to which the COVID-19 coronavirus may impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, social distancing, business closures or business disruptions, and the effectiveness of actions taken by countries to contain and treat the disease.

2. BASIS OF PREPARATION

Statement of compliance

These consolidated 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”).

These audited consolidated financial statements were reviewed by the Audit Committee and approved and authorized for issuance by the Board of Directors on July 29, 2021.

Consolidation

The consolidated financial statements include, on a consolidated basis, the assets, liabilities, revenues and expenses of the Company and its wholly-owned dormant subsidiaries, Gainey Mexico, S.A. de C.V. and Minera Buena Fortuna, S.A. de C.V., which were incorporated in Mexico and which carry out the exploration and evaluation activities in Mexico. The financial statements of the subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

All intercompany transactions and balances are eliminated on consolidation.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (cont’d)

Basis of measurement

The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of certain financial assets and financial liabilities measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Use of Estimates and Judgments

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

• (i) Critical accounting estimates:

Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and are, but are not limited to, the following:

Recovery of deferred tax assets – Judgment is required in determining whether deferred tax assets are recognized in the statement of financial position. Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilize recognized deferred tax assets. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the net deferred tax assets recorded at the date of the statement of financial position could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the Company operates could limit the ability of the Company to obtain tax deductions in future periods. The Company has not recorded any deferred tax assets.

• (ii) Critical accounting judgments

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

Determination of functional currency

In accordance with IAS 21, “The Effects of Changes in Foreign Exchange Rates” management determined that the functional currency of the parent Company as well as the Company’s Mexican subsidiaries is the Canadian dollar.

Going concern

The assessment of the Company’s ability to execute its strategy by funding future working capital requirements involves judgement. The management monitor future cash requirements to assess the Company’s ability to meet these future funding requirements. Further information regarding going concern is outlined in Note 1.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

2. BASIS OF PREPARATION (cont’d)

The carrying value and the recoverability of exploration and evaluation assets

Management has determined that exploration and evaluation costs incurred which were capitalized may have future economic benefits and may be economically recoverable. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefits including geologic and other technical information, scoping and feasibility studies, accessibility of facilities and existing permits.

Share-based compensation

The fair value of stock options issued are subject to the limitation of the Black-Scholes option pricing model, which incorporates market date involves uncertainty in estimates used by management in the assumptions. The Black-Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of shares prices, and, as a result, changes in subjective input assumptions can materially affect the fair value estimate.

3. SIGNIFICANT ACCOUNTING POLICIES

Exploration and evaluation assets

All property payments and all costs related to the exploration permitting process, exploration and development of evaluation and exploration assets are capitalized by property until the commencement of commercial production. Properties that have close proximity and have the possibility of being developed as a single mine are grouped as projects and are considered separate cash generating units (“CGU”) for the purpose of determining future mineral reserves and impairments.

Management reviews the capitalized costs on its evaluation and exploration assets at least annually to consider if there is an impairment in value to take into consideration from current exploration results and management’s assessment of the future probability of profitable operations from the property, or likely gains from the disposition or option of the property. If a property is abandoned, or considered to have no future economic potential, the acquisition and accumulated exploration and evaluation costs are written off to profit or loss. If the carrying value of a project exceeds its estimated value, an impairment provision is recorded.

Once the technical feasibility and commercial viability of extracting the mineral resource has been determined, the exploration and evaluation asset is considered to be a mine under development and is classified as “Mining Assets”. Exploration and evaluation expenditures accumulated are also tested for impairment before the property costs are transferred to mining assets.

Plant and equipment

Plant and equipment are recorded at cost less accumulated amortization and, where applicable, impairment losses. The cost less residual value is amortized over the estimated useful life. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual period of financial reporting and the impact of any change in estimates is recognized prospectively. Depreciation is calculated using the declining balance method at a rate of 20% for processing plant and equipment and mining equipment, and at 30% for transportation equipment.

Impairment of long-lived assets

At each reporting date, the Company reviews the carrying amounts of its assets to determine whether there are any indicators of impairment. If any such indicator exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Impairment of long-lived assets (cont’d)

Where the asset does not generate cash inflows that are independent from other assets, the Company estimates the recoverable amount of the cash generating unit (“CGU”) to which the asset belongs. The recoverable amount is determined as the higher of fair value less direct costs to sell and the asset or CGU’s value in use. In assessing value in use, the estimated future cash flows are discounted to their present value. Estimated future cash flows are calculated using estimated recoverable reserves, estimated future commodity prices and the expected future operating and capital costs. The pre-tax discount rate applied to the estimated future cash flows reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. Determining the discount rate includes appropriate adjustments for the risk profile of the country in which the individual asset or CGU operates.

If the carrying amount of an asset or CGU exceeds its recoverable amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognized in profit or loss.

Assets that have been impaired are tested for possible reversal of the impairment whenever events or changes in circumstance indicate that the impairment may have reversed. Where an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but only so that the increased carrying amount does not exceed the carrying amount that would have been determined (net of amortization or depletion) had no impairment loss been recognized for the asset or CGU in prior periods. A reversal of impairment is recognized as a gain in profit or loss.

Provision for environmental rehabilitation

The Company recognizes the liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of tangible long-lived assets in the period when the liability arises. The net present value of future rehabilitation costs is capitalized to the long-lived asset to which it relates with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value.

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation provision.

The increase in the provision due to the passage of time is recognized as interest expense.

The Company has no known restoration, rehabilitation or environmental costs related to its long-lived assets.

Share-based payments

The Company grants stock options to certain directors and employees of the Company. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. Fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. Compensation expense is recognized over the tranche’s vesting period by increasing reserves based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually, with any impact being recognized immediately. In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods or services received.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Loss per share

The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

Income taxes

Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years. Deferred tax is recognized in respect of temporary differences, between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the date of the statement of financial position. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a future tax asset will be recovered, it does not recognize the asset. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Financial instruments

Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL.

The Company has classified its financial assets and liabilities as at March 31, 2021 as follows:

Financial assets/liabilities	Classification
Cash and cash equivalents	FVTPL
Restricted cash	FVTPL
Due from relatedparties	Amortized cost
Due to relatedparties	Amortized cost
Accountspayable	Amortized cost

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in the period in which they arise.

Impairment of financial assets at amortized cost

An ‘expected credit loss’ impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset’s original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss.

Foreign exchange

The functional currency of an entity is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and its subsidiaries is the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates.

Transactions in currencies other than the Canadian dollar (“CAD” or “$”) are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in profit or loss.

(Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

MASIVO SILVER CORP.

4. NEW STANDARDS PRONOUNCEMENTS

The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its financial statements. Other accounting standards or amendments to existing accounting standards that have been issued but have future effective dates are either not applicable or are not expected to have a significant impact on the Company's financial statements.

5. PLANT AND EQUIPMENT

Cost Balance March 31, 2019 Additions Balance, April 1, 2020 Balance, March 31, 2021 Accumulated amortization Balance, March 31, 2019 Amortization Balance, April 1, 2020 Amortization Balance, March 31, 2021 Net book value, March 31, 2020 Net book value, March 31, 2021	Processing plant and equipment Mining equipment Transportation equipment Total
	$ 612,354 $ 25,100 $ 31,269 $ 668,723 - - 21,665 21,665
	$ 612,354 $ 25,100 $ 52,934 $ 690,388
	$ 612,354 $ 25,100 $ 52,934 $ 690,388
	$ (364,340) $ (14,968) $ (24,730) $ (404,038) (49,603) (2,027) (1,961) (53,591)
	(413,943) (16,995) (26,691) (457,629) (39,682) (1,621) (7,873) (49,176)
	$ (453,625) $ (18,616) $ (34,564) $ (506,805)
	$ 198,411 $ 8,105 $ 26,243 $ 232,759
	$ 158,729 $ 6,484 $ 18,370 $ 183,583

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS

EXPLORATION AND EVALUATION ASSETS
		El Colomo		Las
		Property	Margaritas
Acquisition costs:
Beginningbalance: April 1,2020	$	161,397		$182,842
Acquisition costs – March 31, 2021	$	**161,397 **		182,842
Exploration costs - Beginning balance:	$	1,722,535		$ 417,870
Deferred exploration costs:
Site personnel		2,545		-
Total deferred exploration costs:		1,725,080		417,870
Total write down of acquisition & exploration costs,		(1,866,476)		(600,712)
March 31, 2021
Acquisition and Explorations costs, March 31, 2021	$	20,000		$ -
				Las
		El Colomo		Margaritas
		Property		Property		Totals
Acquisition costs:
Beginning balance: April 1, 2019	$	161,397	$	32,375	$	193,772
Cash payments		-		40,813		40,813
Share issue payments		-		75,000		75,000
Accruedpayments		-		34,654		34,654
Acquisition costs – March 31, 2020		**161,397 **		182,842		344,239
Exploration costs - Beginning balance:	$	1,722,535	$	82,729	$	1,805,264
Deferred exploration costs:
Concession taxes		-		12,273		12,273
Drilling		-		53,120		53,120
Equipment rental		-		41,077		41,077
Field expenses		-		102,050		102,050
Geological consulting		-		116,031		116,031
Share-based compensation				5,500		5,500
Site personnel		-		1,748		1,748
Travel		-		3,342		3,342
Total deferred exploration costs:		-		335,141		335,141
Cumulative exploration costs, March 31, 2020		1,722,535		417,870		2,140,405
Acquisition and Explorations costs, March 31, 2020	$	**1,883,932 **	$	600,712	$	2,484,644

There were no exploration costs incurred on the El Colomo property during the year ended March 31, 2021 and the Company has opted not to continue with the option on the Las Margaritas gold project in Durango, Mexico, and has notified First Mining Gold accordingly. The global outbreak of COVID-19 is still ongoing and has had a significant impact on businesses through the restrictions put in place by the Canadian and Mexican governments regarding travel, business operations and isolation/quarantine orders.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d)

El Colomo Property

On October 2, 2013, the Company completed the acquisition from Golden Anvil S.A. de C.V. (“Golden Anvil”) of certain assets comprising of the El Colomo concessions, a concentration plant, and other associated assets and equipment all located in Mexico.

The Company has not registered the concessions under the Company name with the Public Registry of Mines (“PRM”) in Mexico. These mineral concessions are registered with the PRM under the name of Golden Anvil and the Company has been assigned the rights to explore the concessions.

Promissory Note

As part of the El Colomo acquisition, the Company could recover property costs incurred by the Company on behalf of Golden Anvil through a promissory note (“Note”). Due to uncertainty in collecting the Note, the Company accounted for the costs incurred as part of exploration and evaluation assets. Any amounts received from the Note will be offset against exploration and evaluation assets.

The Note has an interest rate of 12% per annum compounded monthly. The Note is secured by 800,000 common shares issued as part of the El Colomo acquisition (“Pledged Shares”) and personally guaranteed by Marco Antonio Rincon-Valdes (a former director of the Company) and Francisco Rolando Rincon-Romo. Pursuant to the Note, Golden Anvil agreed to repay 50% of the original balance on or before October 2, 2014, and the remaining 50% on or before April 2, 2015. Payment was not made, and the Company has taken action pursuant to the personal guarantees and if necessary, the Company may realize on the Pledged Shares.

During the year ended March 31, 2017, the Company received notice of a claim from Marco Antonio Rincon-Valdes seeking the delivery of 571,337 escrowed common shares of the Company pursuant to the terms of the El Colomo purchase agreement, as well as for general damages associated with a claimed breach of the purchase agreement. As at March 31, 2021, no provisions have been recorded for any potential liability arising from this matter, as management believes the claim to be without merit, with the likelihood of the Company being required to pay general damages being remote.

During the year ended March 31, 2021, the Company wrote-down the exploration and evaluation costs related to the El Colomo property to reflect their economic value.

Las Margaritas Property

On July 30, 2018, the Company entered into an option agreement with First Mining Gold Corp. (“First Mining”) granting the Company the right to earn a 100% interest in the Las Margaritas property located in the State of Durango, Mexico. The property is located approximately 140 kilometres to the southeast of Mazatlan, Sinaloa and is comprised of two mineral concessions encompassing a total of 500 hectares. The concession lies to the north of the Company’s El Colomo project and within El Colomo’s overall claim package.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

6. EXPLORATION AND EVALUATION ASSETS (cont’d)

Under the terms of the four-year option agreement, the Company can elect to make either annual share or cash payments to First Mining in the following amounts:

Payment Term	CAD$ Aggregate Value of Gainey Common Shares (applicable Mexican VAT to be paid in cash)	CAD$ Cash Payment (inclusive of applicable Mexican VAT @ 16%)
Upon approval by the TSX Venture Exchange (Received January 25, 2019)	$75,000 in Shares ($12,000 in Cash – VAT)	N/A
First anniversary date of the agreement (Not Paid)	$175,000 in Shares ($28,000 in Cash – VAT)	$174,000 in Cash
Second anniversary date of the agreement (Not Paid)	$250,000 Shares ($40,000 in Cash – VAT)	$261,000 in Cash
Third anniversary date of the agreement	$225,000 Shares ($36,000 in Cash – VAT)	$232,000 in Cash
Fourth anniversary date of the agreement	$225,000 Shares ($36,000 in Cash – VAT)	$232,000 in Cash

In addition, as per the terms of the option agreement, Gainey will make annual cash payments to First Mining of USD$25,000 from September 2018 (paid) to September 2020, and USD$250,000 in September 2021 in connection with an existing agreement on the property, and will incur exploration expenditures on the Las Margaritas property totaling USD$1,000,000 over the fouryear option period. Upon completion, the Company will obtain 100% ownership of the Las Margaritas project and First Mining will retain a 2% net smelter returns (“NSR”) royalty, with the Company having the right to buy back 1% of the NSR royalty for USD$1,000,000 up until the first anniversary of the commencement of commercial production at the project.

The Company’s geological team has been evaluating exploration opportunities throughout Mexico and in Nevada. Management is at an advanced stage of negotiations on new acquisitions in both of these areas that will afford the opportunity for significant value appreciation for shareholders. Given these new opportunities, management has taken the decision not to continue with the option on the Las Margaritas gold project in Durango, Mexico, and has notified First Mining Gold accordingly. As a result, the Company has written down its exploration and evaluation costs related to the property.

7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

	**March **	31, 2021	**March **	31, 2020
Accounts payable	$	63,474	$	86,528
Accrued liabilities		208,553		134,658
	$	272,027	$	221,186

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

8. SHARE CAPITAL

Authorized share capital

Unlimited number of common shares without par value.

Share issuances

Year ended March 31, 2021

On February 4, 2021, the Company closed a private placement with the issuance of 11,000,000 units at a price of $0.05 per unit for gross proceeds of $550,000. Each unit consists of one common share and one common share purchase warrant which entitles the holder to purchase an additional common share of the Company at a price of $0.075 for a period of two years, expiring on February 8, 2023.

The Company also issued 750,000 shares for the exercise of warrants priced at $0.10 per warrant for gross proceeds of $75,000.

Year ended March 31, 2020

On April 2, 2019, the Company issued 1,217,532 common shares to First Mining Gold Corp as per the terms of the Option Agreement on the Las Margaritas property (described in Note 6) with a recorded fair value of $75,000.

Shares held in escrow

Included in the common shares outstanding at March 31, 2021 are 6,673,698 (2020 – 7,633,698) common shares held in escrow, which may not be transferred, assigned or otherwise dealt without the consent of the regulators.

During the years ended March 31, 2021 and 2020, certain escrow releases were not completed pursuant to escrow agreements because of non-payment issues regarding the Note with Golden Anvil (Note 6). A special warrant (as described in Note 6) exercisable for up to 3,000,000 common shares of the Company is also held in escrow.

Warrants

Warrant transactions and the number of warrants outstanding are summarized as follows:

				Weighted
		Weighted		Average
	Number of	Average		Remaining
	Warrants	Exercise Price		Life (years)
Balance, April 1, 2018	28,780,486	$	0.27	1.27
Expired	(14,367,500)		0.30	-
Cancelled	(1,416,667)		0.24	-
Granted	25,360,000		0.08	2.45
Balance, March 31, 2020	38,356,319		0.13	3.01
Expired	(12,806,319)		0.24	-
Expired	(250,000)		0.18	-
Exercised	(750,000)		0.10	-
Granted	11,000,000		0.075	-
Balance, March 31, 2021	35,550,000	$	0.20	1.89

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

8. SHARE CAPITAL (cont’d)

Additional information regarding warrants outstanding as at March 31, 2021 is as follows:

Number of warrants	Exercise Price	Expiry Date
15,000,000	$0.10	January 3, 2023
9,550,000	$0.10	March 18, 2023
11,000,000	$0.075	February8,2023

The weighted average remaining contractual life of warrants outstanding at March 31, 2021 is 1.89 years (2020 – 2.32 years).

9. SHARE-BASED PAYMENTS

Stock options

The Company follows the policies of the Exchange, under which it is authorized to grant options to officers, directors, employees and consultants, enabling them to acquire a number of shares equal to up to 10% of the issued and outstanding common shares of the Company. The exercise price of an option may not be less than the closing market price during the trading day immediately preceding the date of the grant of the option, less any applicable discount allowed by the Exchange. The options can be granted for a maximum term of 10 years and vest at the discretion of the board of directors.

The changes in stock options are as follows:

hanges in stock options are as follows:
	Number of Options	Weighted Average
		Exercise Price
Balance, March 31, 2019	2,195,000	0.22
Granted	3,500,000	0.12
Balance, March 31, 2020	5,695,000	$ 0.16
Cancelled	(925,000)	0.25
Cancelled	(890,000)	0.17
Granted	2,900,000	0.10
Balance, March 31, 2021	6,780,000	$ 0.12

The Company applies the fair value method using the Black-Scholes Option Pricing Model in accounting for stock options granted to employees. Stock options granted to non-employee are valued using the Black-Scholes Option Pricing Model as the fair values of services received were not reliably measurable.

The fair value of the options granted was calculated using the following weighted average assumptions:

	2021	2020
Expected life (years)	5.00	5.00
Risk-free interest rate	1.15%	0.73%
Expected annualized volatility	129%	78%
Dividend yield	N/A	N/A
Stock price at grant date	$0.10	$0.10
Exercise price	$0.10	$0.12
Weighted averagegrant date fair value	$0.11	$0.11

Option pricing models require the input of highly subjective assumptions regarding volatility. The Company has used historical volatility to estimate the volatility of the share price.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

9. SHARE-BASED PAYMENTS (cont’d)

The following stock options were outstanding and exercisable at March 31, 2021:

Number of	Number of
Options	Options
Outstanding	Exercisable	**Exercise **	Price	Expiry Date
680,000	680,000		0.20	September 8, 2021
1,050,000	1,050,000		0.12	April 1, 2024
2,150,000	2,150,000		0.12	April 1, 2024
2,900,000	2,900,000		0.10	September 17,2024
6,780,000	6,780,000	$	0.12

The weighted average remaining contractual life of stock options outstanding at March 31, 2021 is 2.50 years (2020 – 3.32 years).

Reserves

The stock option reserve records items recognized as share-based compensation expense within reserves until such time that the stock options are exercised, at which time the corresponding amount will be transferred to share capital.

10. RELATED PARTY TRANSACTIONS AND BALANCES

The remuneration of key management personnel, being those persons determined as having authority and responsibility for planning, directing and controlling the activities of the Company during the years ended March 31, 2021 and 2020 is as follows:

	Years ended
	March 31, 2021 March 31, 2020
Management fees paid/accrued to the CEO Accounting fees paid/accrued to the CFO Share-based compensation	$ 158,623 $ 159,978 30,000 30,000 42,730 134,804
	$231,353 $ 374,782

Related party balances

As at March 31, 2021, a total of $Nil (2020 – $76,330) had been advanced to the CEO of the Company. Due from related party includes $Nil (2020 – $24,678) from a company with a Director in common. Included in due to related party at March 31, 2021 is $Nil (2020 - $2,625) payable to the CFO.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

11. INCOME TAXES

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

	2021	2020
	$	$
Loss for the year	(2,962,431)	(850,571)
Canadian statutoryincome tax rate	27%	27%
Expected income tax (recovery)	(799,856)	(229,654)
Change in statutory, foreign tax, foreign exchange rates and other	4,435	8,812
Permanent differences	41,829	2,000
Share issue costs	-	(2,082)
Change in unrecognized deductible temporarydifferences	753,592	220,924
Total income tax expense(recovery)	-	-

The following table reconciles the amount of income tax recoverable on application of the combined statutory Canadian federal and provincial income tax rates:

	2021	Expiry Date	2020	Expiry Date
		**Range **		Range
Temporary Differences
	$		$
Share issue costs	19,161	2039 to 2044	19,161	2039 to 2043
Non-capital losses available for futureperiod	5,335,727	2031 to 2041	4,535,871	2031 to 2040
Canada	5,335,727	2031 to 2041	4,535,871	2031 to 2040

Tax attributes are subject to review, and potential adjustment, by tax authorities.

12. MANAGEMENT OF CAPITAL

The Company manages its capital structure and makes adjustments to it based on the funds available to the Company, in order to support the acquisition, exploration and evaluation of exploration and evaluation assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its exploration and evaluation assets, acquire additional mineral property interests and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. In the management of capital, the Company includes its components of shareholders’ equity. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. The Company may issue new shares or issue debt in the near future to meet its current obligations.

At this stage of the Company’s development, in order to maximize ongoing development efforts, the Company does not pay out dividends. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes in the Company’s approach to capital management during the year ended March 31, 2021. The Company is not subject to externally imposed capital requirements.

(Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

MASIVO SILVER CORP.

13. FINANCIAL RISK MANAGEMENT

IFRS 7, Financial Instruments: Disclosures, establishes a fair value hierarchy that reflects the significance of the inputs used in making fair value measurements. The fair value hierarchy has the following levels:

• Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

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

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

As at March 31, 2021, the carrying values of the Company’s accounts payable and due from to related party approximate their fair values due to their short terms to maturity. The Company’s cash and cash equivalents and restricted cash, under the fair value hierarchy is based on level one quoted inputs.

Financial Risks

The Company has exposure to the following risks from its use of financial instruments:

Credit risk

The Company's credit risk is primarily attributable to cash. The Company has no significant concentration of credit risk arising from operations. Cash consist of bank accounts held with reputable financial institutions, from which management believes the risk of loss to be remote. Federal deposit insurance covers balances of up to $100,000 in Canada and the Company holds nominal amounts in Mexican accounts as at March 31, 2021 and 2020. The Company limits its exposure to credit loss for cash by placing its cash with high quality financial institutions. Accordingly, as at March 31, 2021, the Company’s exposure to credit risk is minimal.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. The Company ensures that there are sufficient funds to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash.

At March 31, 2021, the Company had a cash balance of $541,565 (2020 - $75,459) to settle current liabilities of $274,577 (2020 - $226,361). The Company has corporate credit cards with various credit limits not exceeding $35,000. As collateral for the credit cards, the Company has a restricted one-year term deposit of $46,000 earning annual interest at Canadian prime rate less 2.30%.

Historically, the Company's sole source of funding has been the issuance of equity securities for cash, primarily through private placements and loans from related and other parties. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding. The Company is exposed to liquidity risk.

Market risk

The Company is subject to normal risks including fluctuations in foreign exchange rates and interest rates. While the Company manages its operations in order to minimize exposure to these risks, it has not entered into any derivatives or contracts to hedge or otherwise mitigate this exposure. At March 31, 2021, the Company was not exposed to significant interest rate risk.

The Company is principally engaged in the acquisition and exploration of exploration and evaluation assets in Mexico. To date the operating expenditures have been denominated in Canadian dollars. In the future, due to the location of operations, the Company may experience exposure to foreign exchange rate fluctuations for expenditures in foreign currencies against the Canadian dollar as the functional currency of the business entity.

MASIVO SILVER CORP. (Formerly Gainey Capital Corp.) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2021 AND 2020 (Expressed in Canadian Dollars)

14. SEGMENTED INFORMATION

The Company operates in one reportable operating segment, being the acquisition and exploration of mineral properties in Mexico. As at March 31, 2021, all of the Company’s exploration and evaluation assets and plant and equipment are located in Mexico.

15. SUBSEQUENT EVENT

On May 26, 2021, the Company announced it has signed a definitive agreement for an option to earn a 100-per-cent interest in a highly prospective silver-gold-copper project in Elko County, Nevada, the leading gold producer in the United States. The claim group comprises approximately 543 hectares (1,342 acres) consisting of 65 unpatented claims including the historic Boston Mine.

Under the terms of the agreement, to earn 100-per-cent interest, Masivo has agreed to pay US$450,000 and grant eight million shares over four years (US$20,000, one million warrants which entitles the holder to purchase an additional common share of the Company at a price of US$0.15 cents for a period of two years and one million shares at signing; US$25,000 and 1.5 million shares on the first anniversary; US$30,000 and one million shares on the second anniversary; US$35,000 and two million shares on the third anniversary; and US$340,000 and 2.5 million shares on the fourth anniversary) and subject to a 2-per-cent net smelter return royalty, with the option to buy down the royalty to 1 per cent at US$500,000 per US$0.5 per cent. Additionally, Masivo has agreed to invest US$1 million over the four-year term (US$100,000 in the first year, US$200,000 in the second year, US$300,000 in the third year and US$400,000 in the fourth year).