Nortec Minerals Corp. — Interim / Quarterly Report 2021

Nov 26, 2021

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NORTEC MINERALS CORP.

CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September 30, 2021

Expressed in Canadian Dollars

(Unaudited – Prepared by Management)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

The accompanying condensed consolidated interim financial statements of Nortec Minerals Corp. have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditors have not performed a review or audit of these interim financial statements.

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Nortec Minerals Corp. Condensed Consolidated Interim Statements of Financial Position

Expressed in Canadian Dollars

Expressed in Canadian Dollars
(Unaudited)
As at Note	September 30, 2021 December 31, 2020
ASSETS Current Cash Receivables Prepaid expenses and deposits Other investments 3 Exploration and evaluation assets 4	$ 1,681 $ 58,700 10,876 6,747 2,150 37,260
	14,707 102,707 20,157 13,770 - 3,156,730
	$ 34,864 $ 3,273,207
LIABILITIES Current Accounts payable and accrued liabilities 4, 9 Loans payable 8 SHAREHOLDERS’ EQUITY Share capital 5 Reserves 6, 7 Accumulated other comprehensive loss 3 Deficit	$ 429,958 $ 708,390 145,750 145,000
	575,708 853,390
	21,530,137 21,530,137 4,350,497 4,350,497 (208,844) (215,231) (26,212,634) (23,245,586)
	(540,844) 2,419,817
	$ 34,864 $ 3,273,207

ON BEHALF OF THE BOARD:

“Derrick Weyrauch” Jason Birmingham, Director	“Michael Malana”
	Michael Malana, Director

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

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Nortec Minerals Corp.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

Expressed in Canadian Dollars (Unaudited)

Expressed in Canadian Dollars (Unaudited)
Note	Three months ended September 30, 2021 2020			Nine months ended September 30, 2021 2020
General and Administrative Expenses Accounting, audit and legal fees Consulting fees Foreign exchange loss (gain) Insurance Interest expense Management fees Office rental and storage Telecommunications Transfer agent and filing fees Wages and salaries Fair value gain (loss) on marketable securities Gain on sale of net smelter royalty Impairment of exploration and evaluation assets 4 Income (loss) for the period Other comprehensive loss Items that may be reclassed to profit or loss: Fair value gain (loss) on other investments 3 Comprehensive loss for the period	$	3,950 $ - 7,335 2,958 - 15,000 753 - 2,790 -	17,226 $ - (1,452) 2,250 8,623 43,470 9,896 1,285 8,140 -	13,099 $ 31,237 6,300 3,500 12,766 (739) 9,062 6,650 - 25,656 89,903 97,112 968 16,499 - 1,285 11,082 15,555 - -
		(32,786) - - (212,139)	(89,438) - - -	(143,180) (196,755) - (42,000) - 123,125 (2,823,868) -
		(244,925) 3,425	(89,438) 10,614	(2,967,048) (115,630) 6,387 3,042
	$	(241,500) $	(78,824) $	(2,960,661) $ (112,588)
Loss per share – basic and diluted	$	(0.00) $	(0.00) $	(0.03) $ (0.00)
Weighted average number of common shares outstanding		109,313,374	93,165,299	109,313,374 82,896,328

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

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Nortec Minerals Corp.

Consolidated Statements of Changes in Shareholders’ Equity

Expressed in Canadian Dollars (Unaudited)

Nortec Minerals Corp. Consolidated Statements of Changes in Shareholders’ Equity Expressed in Canadian Dollars (Unaudited)
Note Common Shares Share Capital Reserves Accumulated Other Comprehensive Loss	Deficit Total Shareholders’ Equity
Balance, December 31, 2019 77,705,419 20,979,207 4,350,497 (214,861) Shares issued – private placement 23,398,375 240,450 - - Fair value loss on other investments 3 - - - 3,042 Net loss for the period - - - -	(23,015,620) 2,099,223 - 240,450 - 3,042 (115,630) (115,630)
Balance, September 30, 2020 101,103,794 21,219,657 4,350,497 (211,819)	(23,131,250) 2,227,085
Balance, December 31, 2020 109,313,374 $ 21,530,137 $ 4,350,497 $ (215,231) $ Fair value gain on other investments 3 - - - 6,387 Net loss for the period - - - -	(23,245,586) $ 2,419,817 - 6,387 (2,967,048) (2,967,048)
Balance, September 30, 2021 109,313,374 $ 21,530,137 $ 4,350,497 $ (208,844) $	(26,212,634) $ (540,844)

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

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Nortec Minerals Corp. Condensed Consolidated Interim Statements of Cash Flows

Nortec Minerals Corp. Condensed Consolidated Interim Statements of Cash Flows
Expressed in Canadian Dollars
(Unaudited)
Nine months Ended September 30,		2021			2020
Operating Activities
Net income (loss) for the period	$	(2,962,460)		$	(115,630)
Items not affecting cash:
Interest expense on convertible debentures			-		25,656
Loss on sale of marketable securities			-		42,000
Gain on sale of Lantinen Koillismaa Property NSR			-		(123,125)
Impairment of exploration and evaluation assets		2,823,868			-
Changes in non-cash working capital:
Receivables		(4,129)			515
Prepaid expenses and deposits		35,110			(3,640)
Accounts payable and accrued liabilities		54,430			34,705
Net cash provided by (used in) operating activities		(57,769)			(139,519)
Investing Activities
Exploration and evaluation assets			-		(29,038)
Proceeds from sale of marketable securities			-		31,125
Proceeds from sale of Lantinen Koillismaa Property NSR			-		50,000
Net cash provided by (used in) investing activities			-		52,087
Financing Activities
Proceeds from share issuance, net of share issue costs			-		240,450
Loan from related party			750		-
Net cash provided by (used in) financing activities			750		240,450
Change in cash		(57,019)			153,018
Cash, beginning of period		58,700			5,175
Cash, end of period	$	1,384		$	158,193
Supplemental Cash Flow Information
		2021			2020
Fair value gain (loss) on other investments	$	6,387		$	3,042
Exploration and evaluation assets in accounts payable and accrued liabilities	$		-	$	376,160

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

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

1. Nature of operations and going concern

Nortec Minerals Corp. (the “Company”) was incorporated on June 1, 1999 in the province of British Columbia and is engaged in the acquisition and exploration of mineral properties. The Company’s corporate head office is located at 915 – 700 West Pender Street, Vancouver, BC, V6C 1G8. The Company is listed on the TSX Venture Exchange (“TSXV”), having the symbol NVT.V.

The Company is in the process of exploring and evaluating its mineral properties. The recoverability of the amounts shown for mineral properties is dependent upon the existence of economically recoverable reserves, successful permitting, the ability of the Company to obtain the necessary financing to complete exploration and development, and upon future profitable production or proceeds from disposition of each mineral property. Furthermore, the acquisition of title to mineral properties is a complicated and uncertain process, and while the Company has taken steps in accordance with normal industry standards to verify its title to the mineral properties in which it has an interest, there can be no assurance that such title will ultimately be secured. The carrying amounts of mineral properties are based on costs incurred to date, and do not necessarily represent present or future values.

As the Company is in the exploration stage, no mineral-producing-revenue has been generated to date. The ability of the Company to meet its obligations and continue the exploration and development of its mineral properties is dependent upon its ability to continue to raise adequate financing. Historically, operating capital and exploration requirements have been funded primarily from equity financing, joint ventures, disposition of mineral properties and investments. There can be no assurance that such financing will be available to the Company in the amount required at any time or for any period or, if available, that it can be obtained on terms satisfactory to the Company. Based on the amount of funding raised, the Company’s exploration program may be tailored accordingly. As at September 30, 2021 the Company had not yet achieved profitable operations, had an accumulated deficit of $26,212,634 (December 31, 2020 – $23,245,586), had a working capital deficiency of $561,001 (December 31, 2020 –$750,683), incurred a net loss of $2,967,048 (2020 –$115,630) for the nine months then ended and is expected to incur further losses in the development of its business, all of which may cast significant doubt about its ability to continue as a going concern. These condensed consolidated interim financial statements do not include any adjustments to the recoverability and/or classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

2. Significant accounting policies

a) Statement of compliance

These condensed consolidated interim financial statements were prepared using the same accounting policies and methods as those used in the Company’s audited consolidated financial statements for the year ended December 31, 2020 and have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) in compliance with International Accounting Standard (“lAS”) 34 - Interim Financial Reporting. Accordingly, certain disclosures normally included in annual financial statements prepared in accordance with IFRS have been omitted or condensed. These condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020.

The Board of Directors authorized these condensed consolidated interim financial statements for issue on November 25, 2021.

b) Basis of measurement

These condensed consolidated interim financial statements were prepared on an accrual basis, except for cash flow information, and are based on historical costs, except for certain financial instruments carried at fair value.

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

c) Critical accounting estimates and judgments

The preparation of these condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. In preparing these Financial Statements, the significant judgements made by management in applying the Company’s accounting policies and key sources of estimation uncertainty were the same as those that were applied to the audited annual consolidated financial statements for the year ended December 31, 2020.

d) Accounting policies

The preparation of these condensed consolidated interim financial statements is based on accounting principles and practices consistent with those used in the preparation of the audited annual consolidated financial statements for the year ended December 31, 2020 unless otherwise indicated.

Certain prior year comparative figures have been reclassified to comply with current year presentation.

e) Basis of consolidation

These condensed consolidated interim financial statements include the accounts of the Company and all of its subsidiaries. Subsidiaries are those entities over which the Company has the power over an investee, has exposure to variable returns from the investee and has the ability to use its power over the investee to affect its returns. The Company also assesses existence of control where it does not have more than 50% of voting power but is able to control the investee by virtue of de facto control. De facto control may arise in circumstances where the size of the Company’s voting rights relative to the size and dispersion of holdings of other shareholders gives the group the power to govern the financial and operating policies. The financial accounts of the subsidiaries are included in these condensed consolidated interim financial statements from the date that control commences until the date that control ceases. All intercompany transactions and balances are eliminated on consolidation.

The subsidiaries of the Company are as follows:

			Portion of Ownership Interest and	Portion of Ownership Interest and
			Voting	Power Held
		Place of Incorporation	September 30,	December 31,
Name ofSubsidiary	Principal Activity	and Operation	2021	2020
Tammela Minerals Oy	mineral property exploration	Finland	100%	100%
Fennor Minerals Corp.	mineral property exploration	Canada	100%	100%
Compania Minera Ecuador
Normiecu S.A.	mineral property exploration	Ecuador	95%	95%

When the Company ceases to control a subsidiary, assets, liabilities and non-controlling interests of the subsidiary are derecognized at their carrying amounts at the date when control is lost. Investments retained in the former subsidiary are recognized at their fair value and any gain or loss resulting from deconsolidation is recorded through profit or loss.

3. Other investments

As at September 30, 2021 and December 31, 2020, other investments consist of 200,000 common shares of The Golden Rule Ltd. ( “The Golden Rule”) and 1,000,000 common shares of Sunstone Metals Ltd. (“Sunstone”) (note 4(a)).

The Golden Rule is a private company that explored gold properties in the Republic of Guinea, Africa. The registered office of Golden Rule is in Hong Kong. Management estimates the fair value of the investment at September 30, 2021 to be $1 (December 31, 2020 – $1) in accordance with Level 3 of the fair value hierarchy.

Sunstone is a mineral exploration and mining project development company with a portfolio of gold, copper and lithium assets in Scandinavia. Sunstone is listed on the Australian Stock Exchange and has been fair valued at its listed trading price. Management estimates the fair value of its investment in Sunstone at September 30, 2021 to be $20,156 (December

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

31, 2020 – $13,769). During the nine months ended September 30, 2021, the Company recognized a gain on its investment in Sunstone of $6,387 (2020 –$3,042).

4. Exploration and evaluation assets

		Tomboko Permit		Diguifara Permit
		Guinea,		Guinea,	Cottonwood Property,
		West Africa		West Africa		Utah, USA		Total
As at December 31, 2018	$	2,363,858	$	77,826	$	-	$	2,441,684
Acquisition costs		-		-		140,000		140,000
Exploration costs:
Camp expenses		102,027		-		-		102,027
Office and general		68,018		-		-		68,018
Standby expenditures(1)		366,262		-		-		366,262
Landowner costs		-		-		9,701		9,701
As at December 31, 2019		2,900,165		77,826		149,701		3,127,692
Exploration costs:
Landowner costs		-		-		29,038		29,038
As at December 31, 2020	$	2,900,165	$	77,826	$	178,739	$	3,156,730
Exploration costs:
Landowner costs		-		-		29,038		29,038
As at December 31, 2020	$	2,900,165	$	77,826	$	178,739	$	3,156,730
Field exploration		-		-		33,400		33,400
Impairment loss		(2,533,903)		(77,826)		(212,139)		(2,823,868)
Standby expenditures(1)		(366,262)		-		-		(366,262)
As at September 30, 2021	$	-	$	-	$	-	$	-

(1) Exploration and evaluation assets included in accounts payable and accrued liabilities

a) Tammela Property, Finland

Tammela Minerals Oy (“TMO”), a wholly owned subsidiary of the Company, completed an earn-in Heads of Agreement with Sunstone Minerals Ltd. (“Sunstone”) in which Sunstone paid TMO $28,920 (€ 20,000) and issued 1,000,000 Sunstone shares to the Company. Sunstone, through its subsidiary Scandian Metals (“Scandian”), has earned over 80% in the joint venture and has incorporated two subsidiaries; Kultatie Oy for the gold prospects (Satulinmaki and Riukka) and Litiumlöydös Oy for the lithium prospects (Kietyönmäki) with TMO holding less than 20% interest and Scandian owning more than 80% interest in both entities.

If a party's interest falls below 10%, the Company’s interest will convert to a 1.5% net smelter royalty (“NSR”).

On May 4, 2021, the Company announced that it has signed a letter of intent with United Lithium Corp., a CSE listed company, to sell its interest in the Kietyönmäki Lithium Project located in the Tammela region, Southwest Finland. The Company’s interest is through the ownership of shares in Litiumlöydös Oy.

The parties have agreed to an exclusivity period during which they will negotiate exclusively with each other with a view to settling a definitive agreement. There can be no assurances that any component of the proposed transaction will proceed, nor can there be any assurance as to the final definitive terms thereof.

b) Guinea, West Africa

On January 10, 2017, the Company signed a definitive option agreement (the “Option Agreement”) to earn an 80% participating interest in the Tomboko Permit (“Tomboko Gold Property”), then held by HKD International Trade & Mining SARL, an administrative entity for The Golden Rule. Under the Option Agreement, the Company was also

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

granted the right to earn a proportional financial interest in The Golden Rule’s interests in the Diguifara and Badamako exploration permits located in Guinea by contributing exploration expenditures.

Under the Option Agreement, the Company was to have incurred exploration expenses in three phases:

• (1) $500,000 Phase 1 program on or before June 30, 2017 (Met);

• (2) $500,000 Phase 2 program on or before June 30, 2018 to earn a 51% interest (Met); and

• (3) $2,500,000 Phase 3 Program between July 2018 to July 2019 to earn the entire 80% interest (Not met, see discussion below).

An amendment to the Option Agreement was signed on June 15, 2017 to extend the due dates for completion of the Phase 1, Phase 2 and Phase 3 exploration programs by 6 months to December 31, 2017, December 31, 2018 and December 31, 2019, respectively. A second amendment was signed on October 31, 2018 as The Golden Rule advised the Company that The Golden Rule Mining Inc., a Wyoming corporation (“TGR”), and Alamako Corporation International SARL, a Guinean corporation (“Alamako”) had been established as the administrative entities of The Golden Rule and that TGR and Alamako had become the holders of the beneficial rights, title and interest in the Tomboko Gold Property. The Company reimbursed Alamako for title-maintenance related fees and expenses incurred by it of $62,215, while at the same time of trying to obtain satisfactory legal confirmation that its 51% interest was reflected in the chain of title.

The Company and Alamako engaged in lengthy negotiations over a new option agreement which was to contain essentially the same terms as contained in the Option Agreement and that was in the Company’s view, to have solidified its claim of 51% beneficial ownership in the Tomboko Gold Property. Alamako has to date declined to execute the new option agreement and had demanded that Nortec first reimburse it for monthly standby expenditures that Alamako claims it has incurred even though no exploration had been taking place on the property (which standby expenditures Alamako previously advised amounted to approximately US$282,000). The Company required Alamako to first execute the new option agreement, and thereby confirm the Company’s legal interest in the Tomboko Gold Property, before it could be in a position to raise funds to reimburse Alamako for any of such standby expenditures.

The Company curtailed funding of the Tomboko Gold Property pending receipt of satisfactory legal confirmation that its 51% interest is reflected in the chain of title for the property.

Additionally, the Company has determined that the carrying amount of the Tomboko Gold Property exceeded its recoverable amount and an impairment of $2,533,903 was recorded in the nine-month period ended September 30, 2021, thus bringing the net asset value of the Tomboko Gold Project to $nil. Additionally, the provision for standby expenditures included in accounts payable and accrued liabilities that Alamako previously advised amounted to approximately US$282,000 were reversed during the nine months ended September 30, 2021.

The Company wishes to continue to work towards resolving the aforementioned impasse and continues to evaluate its options, legal or otherwise, in respect of the Tomboko Gold Property.

During the nine months ended September 30, 2021, the Company decided not to renew the Diguifara Permit and therefore will not proceed with this project. As a result, the Company expensed $77,826 of deferred costs thus bringing the net asset value of this property to $nil.

• c) Lantinen Koillismaa Property, Northern Finland

As at December 31, 2019, the Company held a 2% NSR with a 1% buy-out for €1 million on the Haukiaho Zone, Lantinen Koillismaa Palladium-Platinum-Gold-Copper-Nickel Property, Northern Finland (“Lantinen Koillismaa Property NSR”).

On January 20, 2020, the Company completed the sale of its Lantinen Koillismaa Property NSR to Palladium One Mining Inc. (“Palladium One”), a Canadian public mining company. The terms of the sale included a cash payment of $50,000 and the issuance of 375,000 common shares of Palladium One with a fair value of $73,125 to the Company. The asset’s carrying value was $nil upon sale and the Company recognized a gain on sale of $123,125 in profit or loss. During the year ended December 31, 2020, the Company sold all of its holding in Palladium One for gross proceeds of $31,125 and recorded a loss on sale of marketable securities of $42,000.

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

• d) Cottonwood Property, Utah, USA

On March 25, 2019, the Company issued 4,000,000 shares to Utah Mineral Resources LLC ("UMR"), a private Utah Company, for the purchase of 100% interest in UMR’s Cottonwood Vanadium-Uranium Project ("Cottonwood Property") located in Garfield County, Utah, USA. UMR located in Kaysville, Utah has sole exclusive right, title, interest and ownership of the Property. The issued shares had fair market price of $0.035 per share for a total purchase price of $140,000. As per terms of the purchase, UMR is entitled to receive a 1% NSR on any production from the Property. The 1% NSR may be reduced to 0.5% by the Company at any time by paying UMR US $500,000 on or before the 5-year anniversary of the Cottonwood Property purchase closing date.

On September 10, 2021, the Company announced that it was unable to renew the unpatented mining claims for the Cottonwood Property. As a result, the Company determined that the carrying amount of the Cottonwood Property exceeded its recoverable amount and an impairment of $212,139 was recorded in the nine-month period ended September 30, 2021, thus bringing the net asset value of the Cottonwood Property to $nil.

e) Title

Although the Company has taken steps to verify title to mineral properties 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.

5. Share capital

a) Authorized

Unlimited number of common shares at no par value.

• b) Share issuance

There were no shares issued for the nine months ended September 30, 2021 and 2020.

6. Share purchase warrants

As at September 30, 2021 and December 31, 2020, the Company had the following warrants outstanding:

	September 30, 2021	September 30, 2021		December 31, 2020	December 31, 2020
		Weighted			Weighted
		average	Remaining		average	Remaining
	Number of	exercise	life	Number of	exercise	life
Expiry date	warrants	price	(years)	warrants	price	(years)
July 19, 2021	-	$-	-	2,205,000	$0.05	0.55
August 5, 2022	12,699,188	$0.05	0.85	12,699,188	$0.05	1.59
	12,699,188	$0.05	0.85	14,904,188	$0.05	**1.44 **

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

Warrant activity was as follows:

Number of warrants	Weighted average exercise Price Weighted average remaining life (years)
Balance at December 31, 2019 18,620,704 Issued 12,699,188 Expired (16,415,704)	$0.17 0.38 $0.05 1.59 $0.18 -
Balance at December 31, 2020 14,904,188 Expired (2,205,000)	$0.05 1.44 $0.18 -
Balance at September 30, 2021 12,699,188	$0.05 0.85

7. Stock options

There were no stock options issued during the nine months ended September 30, 2021 and 2020.

As at September 30, 2021 and December 31, 2020, the Company had the following options outstanding:

September 30, 2021	September 30, 2021	September 30, 2021	December 31, 2020
Expiry date Number of options	Weighted average exercise price	Remaining life (years)	Number of options Weighted average exercise price Remaining life (years)
December 11, 2021 400,000 August 7, 2024 1,000,000	$0.10 $0.05	0.20 2.85	400,000 $0.10 0.95 1,000,000 $0.05 3.60
1,400,000	$0.07	2.10	1,400,000 $0.07 **2.84 **

8. Loans payable

As at September 30, 2021, the Company had outstanding loans from a director and former director of the Company totalling $145,750 (and December 31, 2020 – $145,000). The loans are unsecured, non-interest-bearing and are without fixed terms of repayment.

9. Related party transactions

Key management personnel includes the Company’s directors, officers and key consultants.

Except as disclosed elsewhere in these condensed consolidated interim financial statements, related party transactions for the nine months ended September 30, 2021 and 2020 are as follows:

Nine months ended September 30,		2021			2020
Management fees	$		89,903	$	497,112
Interest expense			-		15,266
	$		89,903	$	112,378

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

Amounts due to related parties are as follows:

		September 30,		December 31,
As at		2021		2020
Accounts payable and accrued liabilities	$	335,628	$	243,352
Loans payable		145,750		145,000
	$	481,378	$	388,352

Amounts due to related parties included in accounts payable and accrued liabilities and loans payable are unsecured, noninterest-bearing and are without fixed terms of repayment.

10. Capital disclosures

The Company’s objectives when managing capital are:

• to maintain and safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds, to support continued evaluation and maintenance at the Company’s existing properties, and to acquire, explore, and develop other precious and base metal deposits in Europe and Africa.

• to invest cash on hand in highly liquid and highly rated financial instruments with high credit quality issuers, thereby minimizing the risk of loss of principal; and

• to obtain the necessary financing to complete exploration and development of its properties, if and when it is required.

• In the management of capital, the Company includes shareholders’ equity in the definition of capital.

The Company manages the capital structure and makes adjustments to it, based on the level of funds required to manage its operations in light of changes in economic conditions and the risk characteristics of its underlying assets, especially with respect to exploration results on properties in which the Company has an interest.

In order to facilitate the management of capital and development of its exploration and evaluation assets, the Company prepares annual expenditure budgets, which are updated as necessary and are reviewed and approved by the Company’s Board of Directors. In addition, the Company may issue new equity, incur additional debt, option its mineral properties for cash and/or expenditure commitments from optionees, enter into joint venture arrangements, or dispose of certain assets. The Company’s investment policy is to hold cash in interest-bearing accounts at a major Canadian banking institution to maximize liquidity. In order to maximize ongoing development efforts, the Company does not pay dividends. The Company is not exposed to any externally imposed capital requirements. There were no changes to the management of capital during the nine months ended September 30, 2021.

11. Segmented information

The Company has reportable operating segments being the acquisition, exploration and evaluation of mineral properties in West Africa and United States. Geographical information of the Company’s long-term assets is as follows:

		September	30,		December 31,
As at		2021			2020
West Africa	$		-	$	2,977,991
United States			-		178,739
Canada		20,157			13,770
	$	**20,157 **		$	3,170,500

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

12. Financial risk management and financial instruments

Financial risk management

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

Credit risk

Credit risk is the risk that one party to a financial instrument will fail to fulfill an obligation and cause the other party to incur a financial loss. The credit risk of cash is assessed as low as the primary counterparty is major Canadian financial institutions. The carrying amount of these financial assets is the maximum exposure to credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulties in meeting its financial obligations associated with its financial liabilities as they fall due. The Company’s objective is to ensure that sufficient financial resources are available to meet its short-term business requirements for a minimum of twelve months. The Company has a planning and budgeting process in place to determine the funds required to support its ongoing operations and capital expenditures.

– As at September 30, 2021, the Company had a cash balance of $1,681 (December 31, 2020 $58,700) and total liabilities – of $429,958 (December 31, 2020 $853,390).

To execute its planned exploration program for the next twelve months, the Company will need to raise additional funds through the issuance of equity or debt instruments or the sale of assets. The Company ensures that sufficient funds are raised from private placements to meet its operating requirements, after taking into account existing cash and investments.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: foreign exchange risk, interest rate risk and other price risk.

Foreign exchange risk

The Company operates in foreign jurisdictions and is exposed to foreign currency exposures, primarily with respect to the US dollar. The Company has operations in Canada, the United States, and Africa, all of which require different currencies to conduct business. The Company is exposed to foreign currency fluctuations on cash and accounts payable and accrued liabilities of the companies not denominated in Canadian dollars.

Based upon the above net exposure and assuming all other variables remain constant, a 15% depreciation or appreciation of the US dollar relative to the Canadian dollar would not be significant as at September 30, 2021.

Other price risk

Other price risk is the risk that the fair or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk. The Company is exposed to other price risk to the extent of its other investments. For the nine months ended September 30, 2021, a 10% change in market price would result in approximately – $2,000 (2020 $1,700) in the Company’s net loss and comprehensive loss.

Financial instruments

Fair value

The amounts for cash, accounts payable and accrued liabilities, loans payable, and convertible debentures approximate fair value due to the short-term nature of these items.

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Nortec Minerals Corp. Notes to the Condensed Consolidated Interim Financial Statements For the Nine Months Ended June 30, 2021 and 2020 Expressed in Canadian Dollars (Unaudited)

The Company’s other investments are measured using the fair value hierarchy as follows:

Other investments $	September 30, 2021
	Level 1 Level 2 Level 3 20,156 $ - $ 1
Other investment $	December 31, 2020
	Level 1 Level 2 Level 3 13,769 $ - $ 1

13. COVID-19

Since March 2020, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and physical distancing, have caused material disruption to business globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness.

The duration and impact of the COVID-19 outbreak is unknown at this time, including how it would impact the Company’s exploration program and ability to raise financing. However, the Company believe that the COVID-19 pandemic will likely have only a minimal impact on the Company’s activities, most notably in curtailment of travel. There is no material disruption to the Company’s operations.

14. Subsequent events

On November 9, 2021, the Company announced that it intends to complete a non-brokered private placement of up to 12,500,000 units at a price of $0.02 per unit for gross proceeds of up to $250,000. Each unit will consist of one common share and one common share purchase warrant entitling the holder to purchase one additional common share at an exercise price of $0.05 per common share for a period of five years from the date of issue.

On November 17, 2021, the Company announced that it has entered into debt settlement agreements with related parties and an arms-length services provider to settle an aggregate of CAD$387,416.75 in debt (the “Debt”) by exchanging CAD$178,631.03 of debt for common shares of the Company. The remaining $208,785.72 of the Debt will be forgiven. In settlement of the Debt, the Company will issue an aggregate of 8,931,551 common shares of the Company (the “Debt Shares”) at a deemed price of CAD$0.02 per Debt Share.

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