Northcliff Resources Ltd. — Audit Report / Information 2021

Jan 30, 2021

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Northcliff Resources Ltd. CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED OCTOBER 31, 2020 AND 2019

(Expressed in Canadian Dollars)

Deloitte LLP 939 Granville Street Vancouver BC V6Z 1L3 Canada

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Tel: 604-669-4466 Fax: 778-374-0496 www.deloitte.ca

Independent Auditor’s Report

To the Shareholders of Northcliff Resources Ltd.

Opinion

We have audited the consolidated financial statements of Northcliff Resources Ltd. (the “Company”), which comprise the consolidated statements of financial position as at October 31, 2020 and 2019, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at October 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the 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 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.

Material Uncertainty related to Going Concern

loss of $1,118,389 during the year ended October 31, 2020. In addition, Northcliff Resources Ltd.’s current project is a development stage enterprise that does not currently earn revenue. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that material uncertainties exist that may cast significant doubt on 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. The other information comprises Management’s Discussion and Analysis.

Our opinion on the 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 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 financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

1

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. 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 in this auditor’s report. We have nothing to report in this regard.

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

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

In preparing the 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.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian GAAS 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 financial statements.

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

• Identify and assess the risks of material misstatement of the 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 auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

2

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the 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 financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

The engagement partner on the audit resulting in this independent auditor’s report is Brenton Francis.

/s/ Deloitte LLP

Chartered Professional Accountants Vancouver, British Columbia January 28, 2021

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Northcliff Resources Ltd.

Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

Northcliff Resources Ltd. Consolidated Statements of Financial Position (Expressed in Canadian Dollars)	– $
Note	October 31, October 31, 2020 2019
ASSETS Non‐current assets Mineral property and equipment 3 Investment 4 Current assets Amounts receivable and prepaid expenses 6 Cash 5	26,473,686 $ 26,189,110 $ 18,916 15,133
	26,492,602 26,204,243
	27,715 54,549 1,591,395 1,139,475
	1,619,110 1,194,024
TOTAL ASSETS	28,111,712 $ 27,398,267 $
EQUITY Equity attributable to shareholders of the Company Share capital 10 Reserves 10(c) Accumulated deficit Non‐controlling interests 7 TOTAL EQUITY LIABILITIES Current liabilities Amounts payable and other liabilities 8 Amounts payable to related parties 12 Loan payable 9	58,901,466 $ 58,040,328 $ 4,414,574 4,235,711 (39,465,243) (38,382,172)
	23,850,797 23,893,867 3,156,507 3,045,608
	27,007,304 26,939,475
	62,743 202,247 660,353 256,545 381,312 –
	1,104,408 458,792
TOTAL EQUITY AND LIABILITIES	28,111,712 $ 27,398,267 $

Nature and continuance of operations (note 1)

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

These consolidated financial statements are approved for issuance on January 28, 2021 by the Board of Director and are signed on the Company's behalf by the following:

/s/ Peter Mitchell	/s/ Marchand Snyman
Peter Mitchell	Marchand Snyman
Director	Director

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Northcliff Resources Ltd.

Consolidated Statements of Comprehensive Loss

(Expressed in Canadian Dollars, except for weighted average number of shares)

Note	Year ended October 31,
	2020 2019
Expenses Project management and financing General and administration Equity‐settled share‐basedpayments 11	200,734 $ 399,893 $ 764,519 873,396 175,080 225,033
Loss from operations Interest income Foreign exchangegain	(1,140,333) (1,498,322) 17,691 40,486 470 837
Loss before income tax Income tax 13	(1,122,172) (1,456,999) – –
Net loss	(1,122,172) $ (1,456,999) $
Other comprehensive income Items that may not be reclassified subsequently to net loss: Revaluation of marketable securities	3,783 –
Other comprehensive income	3,783 –
Total comprehensive loss	(1,118,389) $ (1,456,999) $
Total comprehensive loss	(1,118,389) $ (1,456,999) $
Net loss attributable to: Shareholders of the Company Non‐controllinginterests	(1,083,071) $ (1,401,267) $ (39,101) (55,732)
	(1,122,172) $ (1,456,999) $
Total comprehensive loss attributable to: Shareholders of the Company Non‐controllinginterests	(1,079,288) $ (1,401,267) $ (39,101) (55,732)
Total	(1,118,389) $ (1,456,999) $
Loss per share Basic and diluted loss per share attributable to shareholders of the Company	(0.01) $ (0.01) $
Weighted average number of common shares outstanding	186,906,615 173,756,229

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

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Northcliff Resources Ltd.

Consolidated Statements of Changes in Equity

(Expressed in Canadian Dollars, except for share information)

Note	Attributable to shareholders of the Company Share capital Reserves Number of shares Amount Equity‐settled share‐based payments Revaluation Deficit Total equity attributable to shareholders of the Company Non‐ controlling interests Total equity	Attributable to shareholders of the Company Share capital Reserves Number of shares Amount Equity‐settled share‐based payments Revaluation Deficit Total equity attributable to shareholders of the Company Non‐ controlling interests Total equity
	Share capital Number of shares Amount
Balance at November 1, 2018 Effect of change in accounting policyfor IFRS 9	173,756,229 58,040,328 $ – –	4,283,805 $ 1,891 $ (37,217,663) $ 25,108,361 $ 2,974,840 $ 28,083,201 $ – (236,758) 236,758 – – –
Balance at November 1, 2018 – restated Net Loss Other comprehensive loss	173,756,229 58,040,328 – – – –	4,283,805 (234,867) (36,980,905) 25,108,361 2,974,840 28,083,201 – – (1,401,267) (1,401,267) (55,732) (1,456,999) – – – – – –
Total comprehensive loss Capital contributions from non‐controlling interests 7 Settlement of Deferred Share Units 11(c) Equity‐settled share‐based payments 11	– – – – – – – –	– – (1,401,267) (1,401,267) (55,732) (1,456,999) – – – – 126,500 126,500 (38,260) – – (38,260) – (38,260) 225,033 – – 225,033 – 225,033
Balance at October 31, 2019	173,756,229 58,040,328 $	4,470,578 $ (234,867) $ (38,382,172) $ 23,893,867 $ 3,045,608 $ 26,939,475 $
Balance at November 1, 2019 Net Loss Other comprehensive loss	173,756,229 58,040,328 $ – – – –	4,470,578 $ (234,867) $ (38,382,172) $ 23,893,867 $ 3,045,608 $ 26,939,475 $ – – (1,083,071) (1,083,071) (39,101) (1,122,172) – 3,783 – 3,783 – 3,783
Total comprehensive loss Capital contributions from non‐controlling interests 7 Equity‐settled share‐based payments 11 Issuance of common shares pursuant to private placements 10 (b)	– – – – – – 17,375,600 861,138	– 3,783 (1,083,071) (1,079,288) (39,101) (1,118,389) – – – – 150,000 150,000 175,080 – – 175,080 – 175,080 – – – 861,138 – 861,138
Balance at October 31, 2020	191,131,829 58,901,466 $	4,645,658 $ (231,084) $ (39,465,243) $ 23,850,797 $ 3,156,507 $ 27,007,304 $

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

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Northcliff Resources Ltd. Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

Note	Year ended October 31,
	2020 2019
Operating activities Net loss Adjustments for: Amortization 3 Equity‐settled share‐based payments 11 Interest income Foreign exchange loss Changes in non‐cash operating working capital: Amounts receivable and prepaid expenses Amounts payable and other liabilities Amountspayable to relatedparties	(1,122,172) $ (1,456,999) $ 715 715 175,080 225,033 (2,658) (40,486) (470) 837 26,834 (6,400) 5,890 14,219 403,869 165,356
Cash used in operating activities	(512,912) (1,097,725)
Investing activities Deferred mineral development costs 3 Interest received	(430,746) (604,152) 2,658 40,486
Cash used in investing activities	(428,088) (563,666)
Financing activities Net proceeds from private placement 10 (b) 861,138 – Capital contributions from non‐controlling 7 150,000 126,500 Net proceeds from borrowings 9 381,312 – Settlement of Deferred Share Units 11(c) – (38,260)
Cashprovided by financing activities 1,392,450 88,240
Increase (decrease) in cash 451,450 (1,573,151) Foreign exchange translation difference on cash held 470 (837) Cash,beginningbalance 1,139,475 2,713,463
Cash, ending balance 5 1,591,395 $ 1,139,475 $

Supplementary cash flow information: (Note 5)

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

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

1. NATURE AND CONTINUANCE OF OPERATIONS

Northcliff Resources Ltd. (“Northcliff” or the "Company") is a public company listed on the Toronto Stock Exchange under the symbol “NCF” and was incorporated on May 18, 2010 under the laws of the Province of British Columbia, Canada. The address of the Company's corporate office is 15th Floor, 1040 West Georgia Street, Vancouver, BC, V6E 4H1.

The Company is primarily engaged in the acquisition and development of mineral properties. The Company holds an 88.5% economic interest in the Sisson Tungsten and Molybdenum Project (the “Sisson Project” or the “Property”), located in New Brunswick, Canada. Todd Minerals Ltd. (the “Todd Group”) holds the remaining 11.5% interest in the Sisson Project. Todd has the option to increase its interest in the Partnership by an additional 10% by contributing a one‐time payment of $20 million.

These consolidated financial statements (the “Financial Statements”) are comprised of the Company and its subsidiaries (together referred to as the "Group"). Northcliff is the ultimate parent entity of the Group.

The Group is in the process of advancing and developing the Sisson Project. The Group’s continuing operations and the underlying value and recoverability of the amount shown for the mineral property interest, consisting entirely of the Sisson Project, is dependent upon the ability of the Group to obtain the necessary financing to complete the development and construction of the Sisson Project, obtaining the necessary permits to mine, and the future profitable production from the mine or proceeds from the disposition of its mineral property interest.

These Financial Statements are prepared on the basis that the Group will continue as a going concern which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future. The Group’s current sources of funding consist of proceeds from the issuance of common shares of the Company, short term loan (note 9), and contributions by the Todd Group to the Sisson Project Limited Partnership (the “Partnership”) to be used to develop the Sisson Project.

Any change in the commitment or timing of debt and equity funding from existing or new shareholders of Northcliff, alternative capital providers, or existing or new limited partners to the Partnership may require Northcliff and the Partnership to curtail planned development activities or seek alternative sources of funding. The recoverability of the carrying value of its mineral property interest is dependent on ongoing access to financing and the successful development and commercial exploitation, or alternatively, the sale of the Sisson Project or the Company’s interest in the Partnership. As such, there is material uncertainty that casts significant doubt on the Company’s ability to continue as a going concern. Management has concluded that presentation as a going concern is appropriate in these Financial Statements based on the Company’s current financial position, and current plans for the Sisson Project for 2021.

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

2. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these Financial Statements are described below. These policies have been consistently applied for all years presented, unless otherwise stated.

(a) Statement of Compliance

These Financial Statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), effective for the Group’s reporting year ended October 31, 2020.

(b) Basis of Presentation and Consolidation

These Financial Statements have been prepared on a historical cost basis, except for financial instruments classified as available‐for‐sale which are stated at fair value. In addition, these Financial Statements have been prepared using the accrual basis of accounting, except for cash flow information.

These Financial Statements incorporate the financial statements of the Company and its subsidiaries, listed below:

Name of Entity	Country of	Principal Activity	Ownership
	Incorporation		Interest
Sisson Resources Ltd.	Canada	Holding company. Wholly‐owned	100%
		subsidiary of Northcliff.
Northcliff Holdings	Canada	Holding company. Wholly‐owned	100%
(Canada) Ltd.		subsidiary of Sisson Resources Ltd.	(indirect)
Sisson Services Ltd.	Canada	Management and services company to	100%
		Sisson Mines Ltd. Wholly‐owned	(indirect)
		subsidiary of Sisson Resources Ltd.
Sisson Mines Ltd.	Canada	General partner of Sisson Project Limited	88.5%
		Partnership holding a 0.01% interest in	(indirect)
		the Partnership. Subsidiary of Sisson
		Resources Ltd.
Sisson Project Limited	Canada	Owns the Sisson Project. Limited	88.5%
Partnership		Partnership interest held by Northcliff	(indirect)
		Holdings (Canada) Ltd.

Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Company controls an investee if and only if the Company has power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect its returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

Intercompany balances and transactions, including any unrealized income and expenses arising from intercompany transactions, are eliminated in full on consolidation. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non‐controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non‐controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non‐controlling interests.

(c) Significant Accounting Estimates and Judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates. The impact of such estimates are pervasive throughout the Financial Statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in subjective inputs and assumptions can materially affect accounting estimates.

Specific areas where significant estimates or judgements exist are:

Estimates:

• Inputs used in the valuation of share‐based payments. The Group uses the Black‐ Scholes Option Pricing Model to calculate the fair value of share purchase options granted. Inputs used in this model require assumptions including the expected price volatility. Changes in the input assumptions can materially affect the fair value estimate.

Judgements:

• Assessment of the Group’s ability to continue as a going concern (note 1);

• Developing and applying its accounting policy relating to mineral property development costs. Expenditures relating to these assets have been capitalized; and

• The recoverability of the carrying value of the Group’s mineral property interest. Management determines whether there is any indication that the Group’s mineral property interest may be impaired.

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

(d) Foreign currency

The functional and presentation currency of the Group is the Canadian Dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on dates of transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non‐monetary items that are measured in terms of historical cost in a foreign currency are not re‐translated. Gains and losses arising on translation are included in profit or loss for the year.

(e) Financial Instruments

Financial assets

A financial asset is classified as measured at: amortized cost; Fair Value through Other Comprehensive Income ("FVTOCI") (debt / equity investment); or Fair Value through Profit or Loss ("FVTPL"). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVTOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income ("OCI"). This election is made on an investment‐by‐investment basis.

All financial assets not classified as measured at amortised cost or FVTOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition.

The following accounting policies apply to the subsequent measurement of financial assets.

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

• Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

• Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses (see below). Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

• Debt investments at FVTOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

• Equity investments at FVTOCI are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Non‐derivative financial liabilities

The Company classifies its non‐derivative financial liabilities into the following category:

Financial liabilities measured at amortized cost

Such financial liabilities are recognized initially at fair value net of any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.

Financial liabilities measured at amortized cost comprise of amounts payable and other liabilities, amounts payable to related parties, and loan payable.

(f) Exploration and evaluation expenditures

Exploration and evaluation expenditures are those related to the search for and evaluation of mineral resources incurred after the Group has obtained legal rights to explore a specific area and before the technical feasibility and commercial viability of a mineral reserve are demonstrable.

Mineral property acquisition costs incurred that result in the outright ownership of a mineral property interest are capitalized and include the cash paid and the estimated fair market value of the consideration of financial instruments on the date of issue.

Exploration and evaluation expenditures, including payments made pursuant to option agreements, are expensed in the period incurred. Administrative expenditures related to exploration and development activities are expensed in the period incurred.

For presentation purposes, exploration and evaluation assets are presented as part of mineral property and equipment in the consolidated statements of financial position.

Once it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, and sufficient financing for the continuation of project development has been arranged, the related acquisition costs

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

capitalized are tested for impairment and transferred to mineral property interests and equipment.

(g) Mineral property and equipment

Mineral property and equipment are carried at cost, less accumulated amortization and accumulated impairment losses.

The cost of mineral property and equipment consists of the acquisition costs transferred from exploration and evaluation assets, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use including costs to further delineate the ore body, development and construction costs, removal of overburden to initially expose the ore body, an initial estimate of the costs of dismantling, removing the item and restoring the site on which it is located and, if applicable, borrowing costs. Costs are capitalized until saleable minerals are extracted from a mine.

Mineral property acquisition and development costs are not currently amortized as the Sisson Project is still in the development stage and no saleable minerals are being produced.

Amortization of equipment is provided at rates calculated to write off the cost of equipment, less their estimated residual value using either the diminishing balance or straight‐line method.

The amortization rate and method for the current and prior years are as follows:

• Equipment – 30%, diminishing balance

An item of equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss.

Where an item of equipment consists of major components with different useful lives, the components are accounted for as separate items of equipment. Expenditures incurred to replace a component of an item of equipment that is accounted for separately, including major inspection and overhaul expenditures, are capitalized.

Residual values and estimated useful lives are reviewed at least annually.

(h) Impairment of non‐financial assets

At the end of each reporting period, the carrying amounts of the Group’s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is the price that would be received when selling an asset or paid when transferring a liability in an orderly transaction between market participants at the measurement date. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the reporting period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash‐generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash‐ generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash‐generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

(i) Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issuance of common shares and share purchase options are recognized as a deduction from equity, net of any tax effects.

(j) Loss per share

Loss per share is computed by dividing losses attributable to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is determined by adjusting the losses attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all dilutive potential common shares, such as options granted to employees. The dilutive effect of options assumes that the proceeds to be received on the exercise of share purchase options are applied to repurchase common shares at the average market price for the reporting period. Share purchase options are included in the calculation of dilutive earnings per share only to the extent that the market price of the common shares exceeds the exercise price of the share purchase options.

The effect of anti–dilutive factors is not considered when computing diluted loss per share. The Company’s outstanding share purchase options (note 11(a)), RSUs (note 11(b)), DSUs (note 11(c)), and warrants are anti–dilutive and are therefore excluded from the calculation of the weighted number of common shares for the purposes of diluted loss per share.

(k) Share‐based payments

• (i) Share purchase options granted to the Company’s employees and consultants

The share purchase option plan allows Group employees and consultants to acquire shares of the Company. The fair value of share options granted is recognized as an employee or consultant expense with a corresponding increase in the equity‐settled share‐based payments reserve in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee.

For employees the fair value is measured at the grant date and each tranche is recognized on a straight‐line basis over the period during which the share options

Page 12

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

vest. The fair value of the share purchase options granted is measured using the Black‐Scholes option pricing model taking into account the terms and conditions upon which the share purchase options were granted. At the end of each financial reporting period, the amount recognized as an expense is adjusted to reflect the actual number of share purchase options that are expected to vest.

Equity‐settled share‐based payment transactions with non‐employees are measured at the fair value of the goods or services received. However, if the fair value cannot be estimated reliably, the share‐based payment transaction is measured at the fair value of the equity instruments granted at the date the Group obtains the goods or the counterparty renders the service.

• (ii) Restricted Share Unit ("RSU") Plan and Deferred Share Unit ("DSU") Plan

The Company adopted and operates an RSU plan for its employees, executive directors and eligible consultants and a DSU plan for its non‐executive directors. The Company determines whether to account for RSUs or DSUs, as the case may be, as equity‐settled or cash‐settled share‐based payment based on the contractual terms of the arrangement. At grant date, the fair value of RSUs or DSUs is estimated using the quoted market price of the underlying common shares of the Company and expensed over the vesting period as share‐based payment in the Statement of Comprehensive Loss, with a corresponding increase in equity for an equity‐settled award or with a corresponding recognition of liability for a cash‐settled award; and in the case of the latter, the liability is marked to market using quoted market price of the underlying common shares at the end of each reporting period.

• (l) Income taxes

Income taxes on the consolidated statements of comprehensive loss for the years presented comprise current and deferred taxes. Income tax 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 taxable income for the year, using tax rates enacted or substantively enacted at year‐end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The following temporary differences are not provided for:

• goodwill not deductible for tax purposes;

• the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and

• differences relating to investments in subsidiaries, associates, and joint ventures to the extent that they will probably not reverse in the foreseeable future.

Page 13

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

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 financial position reporting date applicable to the period of expected realization or settlement.

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.

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.

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 Group intends to settle its current tax assets and liabilities on a net basis.

(m) Restoration, rehabilitation and environmental costs

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration or development of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, along with a corresponding liability at the time the obligation to incur such costs arises. The timing of the actual rehabilitation expenditure is dependent on a number of factors such as the life and nature of the project or asset, the conditions imposed by the relevant permits and, when applicable, the jurisdiction in which the project or asset is located.

Discount rates using a pre‐tax rate that reflects the time value of money are used to calculate the net present value, where applicable. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit‐of‐ production or the straight‐line method. The corresponding liability is progressively increased as the effect of discounting unwinds, creating an expense recognized in profit or loss.

Restoration, rehabilitation and environmental costs are also adjusted for changes in estimates. Those adjustments are accounted for as a change in the corresponding capitalized cost, except where a reduction in costs is greater than the unamortized capitalized cost of the related assets, in which case the capitalized cost is reduced to nil and the remaining adjustment is recognized in profit or loss.

The operations of the Group may be affected in the future in varying degree by changes in environmental regulations, including those for site restoration costs. Both the likelihood of new regulations and their overall effect on the Group are not predictable.

The Group has no material restoration, rehabilitation or environmental obligations as at October 31, 2020.

Page 14

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

(n) Operating Segments

As Northcliff operates the Sisson Project as a single segment, the Financial Statements should be read as a whole for the results of this single reporting segment.

(o) Changes in Accounting Standards

New and amended IFRS standards that are effective for the current year

The Company adopted IFRS 16 Leases (“IFRS 16”) effective November 1, 2019, using the modified retrospective approach and therefore comparative information continues to be reported under IAS 17, Leases, and IFRIC 4, Determining Whether an Arrangement Contains a Lease, as permitted under the specific transitional provisions in the standard.

IFRS 16 introduces a single, on‐balance sheet accounting model for lessees. As a result, a lessee recognizes right‐of‐use assets ("ROU Assets"), representing its rights to use the underlying assets, and lease liabilities, representing its obligation to make lease payments.

At inception of a contract, a lessee assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has elected not to recognize right‐of‐use assets and lease liabilities for short‐term leases that have a lease term of 12 months or less, and leases of low‐value assets. For these leases, the Company recognizes the lease payments as an expense in loss on a straight‐line basis over the term of the lease.

The lease liability is initially measured as the present value of future lease payments discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, using the lessee’s incremental borrowing rate, which is the rate that a lessee would have to pay to borrow, over a similar term and with a similar security, the funds necessary to obtain an asset of similar value to the right‐of‐use asset in a similar economic environment.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in‐substance fixed payments, less any lease incentives receivable;

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

• amounts expected to be payable under residual value guarantees;

• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

• payments of penalties for terminating the lease, if the lessee expects to exercise an option to terminate the lease.

The lease liability is subsequently measured by:

• increasing the carrying amount to reflect interest on the lease liability;

• reducing the carrying amount to reflect the lease payments made; and

• remeasuring the carrying amount to reflect any reassessment or lease modifications.

Page 15

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

The lease liability is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the estimated amount expected to be payable under a residual value guarantee, or if there is a change in the assessment of whether a purchase, extension or termination option will be exercised.

The ROU Asset is initially measured at cost, which comprises the following:

• the amount of the initial measurement of the lease liability;

• any lease payments made at or before the commencement date, less any lease incentives received;

• any initial direct costs incurred by the lessee; and

• an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories.

The ROU Asset is subsequently measured at cost, less any accumulated depreciation and any accumulated impairment losses, and adjusted for any remeasurement of the lease liability. It is depreciated from the commencement date to the earlier of the end of its useful life or the end of the lease term using either the straight‐line or units‐of‐production method depending on which method more accurately reflects the expected pattern of consumption of the future economic benefits.

Each lease payment is allocated between the lease liability and finance cost. The finance cost is charged to loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

The Company had no leases classified as finance leases under IAS 17.

As at and during the fiscal year ended October 31, 2020, the Company was a party, as lessee, to the following short‐term leases:

• 1) a lease for an office space; and

• 2) a lease for a warehouse.

The Company elected not to recognize right‐of‐use assets and lease liabilities for the aforementioned leases.

The Company had no other leasing arrangement; therefore, the adoption of IFRS 16 did not have an impact on these Financial Statements.

Page 16

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

3. MINERAL PROPERTY AND EQUIPMENT

Year ended October 31, 2020

Year ended October 31, 2020
		Mineral property
		acquisition and
	development costs			Equipment		Total
Cost
Balance at November 1, 2019	$	26,187,523	$	46,287	$	26,233,810
Additions duringtheyear		285,291		–		285,291
Balance at October 31, 2020	$	26,472,814	$	46,287	$	26,519,101
Accumulated amortization
Balance at November 1, 2019	$	–	$	44,700	$	44,700
Amortization for theyear		–		715		715
Balance at October 31, 2020	$	–	$	45,415	$	45,415
Carrying amount
Net carryingamount at October 31,2020	$	26,472,814	$	872	$	26,473,686

The Company’s mineral property interest on the consolidated statement of financial position represents the 100% economic interest in the Sisson Project, located in New Brunswick, Canada.

The following deferred mineral development costs were recorded by the Group as additions to mineral property interest:

	Year ended October 31,
	2020 2019
Engineering and design Environmental and permitting Communityand sustainability	45,973 $ 68,259 $ 60,054 295,233 179,264 270,550
Total	285,291 $ 634,042 $

Page 17

Northcliff Resources Ltd.

Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

	Mineral property	Mineral property
	acquisition and
	development costs			Equipment		Total
Cost
Balance at November 1, 2018	$	25,553,481	$	46,287	$	25,599,768
Additions duringtheyear		634,042		–		634,042
Balance at October 31, 2019	$	26,187,523	$	46,287	$	26,233,810
Accumulated amortization
Balance at November 1, 2018	$	–	$	43,985	$	43,985
Amortization for theyear		–		715		715
Balance at October 31, 2019	$	–	$	44,700	$	44,700
Carrying amount
Net carryingamount at October 31,2019	$	26,187,523	$	1,587	$	26,189,110

4. INVESTMENT

The Group’s available‐for‐sale financial asset is comprised of an investment in Minfocus Exploration Corp. (“Minfocus”), a publicly listed company on the TSX Venture Exchange.

5. CASH

		October 31,		October 31,
		2020		2019
Bank demand deposits	$	1,591,395	$	1,139,475
Cash held in the Partnership included in the total cash balance above:
Cash available for use by the Partnership	$	40,825	$	324,490
Cash not available for use by the Partnership:
Cash held as collateral against a standbyletter of credit		874,000		185,000
Total cash held in the Partnership	$	914,825	$	509,490

Page 18

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

6. AMOUNTS RECEIVABLE AND PREPAID EXPENSES

		October 31,		October 31,
		2020		2019
Prepaid expenses	$	17,290	$	19,872
Sales tax receivable		10,425		34,677
Total	$	27,715	$	54,549

7. NON‐CONTROLLING INTERESTS

Sisson Project Limited Partnership

Capital contributions from the Todd Group have been recorded to non‐controlling interests.

Up to the date that the Todd Group’s initial earn‐in contribution for its 11.5% interest totaling $14 million unconditionally vested (October 15, 2014), non‐controlling interest capital contributions were recognized as the Todd Group’s proportionate share of cash contributions to the Partnership. The difference between each instalment and the amount recorded as non‐ controlling interest capital contributions were recognized in the statement of financial position within equity.

The following financial data pertains to the Partnership for the years ended October 31, 2020 and 2019:

and 2019:
	October 31, October 31, 2020 2019
Non‐current assets Current assets Current liabilities Equity attributable to shareholders of the Company Non‐controllinginterests	26,473,686 $ 26,189,110 $ 925,349 545,508 307,619 231,858 23,934,909 22,911,644 3,156,507 3,045,608
	Year ended October 31,
	2020 2019
Net expenses	340,144 $ 484,841 $
Net loss and total comprehensive loss for theyear	340,144 $ 484,841 $
Net loss and total comprehensive loss attributable to shareholders of the Company Net loss and total comprehensive loss attributable to non‐controlling interests	301,027 $ 429,084 $ 39,117 55,757
Net loss and comprehensive loss for theyear	340,144 $ 484,841 $

Page 19

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

	Year ended October 31,
	2020 2019
Net cash used in operating activities Net cash used in investing activities Net cashprovided byfinancingactivities	(228,741) $ (491,560) $ (294,724) (620,050) 928,800 1,100,000
Net cash inflow(outflow)for theyear	405,335 $ (11,610) $

8. AMOUNTS PAYABLE AND OTHER LIABILITIES

Due within 12 months		October 31,		October 31,
		2020		2019
Amounts payable	$	42,610	$	170,289
Accrued liabilities		18,688		29,389
Sales taxpayable		1,445		2,569
Total	$	62,743	$	202,247

9. LOAN PAYABLE

In October 2020, the Company entered into a $400,000 Loan Agreement (the "Loan") with Todd Sisson (NZ) Limited ("Todd"), a subsidiary of the Todd Corporation, the Company's largest shareholder.

The Loan is secured against the Company’s ownership interest in the Sisson Project, will bear interest at a rate of 10% per annum and has a term of 12 months. Interest will be payable at maturity. The Loan, as well as accrued interest thereon, is repayable in cash at any time by the Company without penalty. In the event that the Loan is not repaid by the Company in cash, it can be settled at maturity, either through issuances of shares in the Company ("Share Settlement") or transfer of part of the Company's interest in the Sisson Project Limited Partnership and its general partner, Sisson Mines Ltd. ("Partnership Settlement"), at the election of Todd.

The conversion price ("Conversion Price") used for the Share Settlement or Partnership Settlement will be the higher of the 5‐day or 30‐day volume weighted average share price of the Company on the Toronto Stock Exchange ("TSX") at the maturity date.

For the Share Settlement, the maximum discount (currently 25%) allowed under the TSX rules will be applied to the Conversion Price. Northcliff will be required to obtain disinterested shareholder approval to issue any shares in excess of 19,113,182 shares (10% of issued and outstanding common shares when the Loan was advanced).

Alternatively, the general and limited partnership interest to be transferred under the Partnership Settlement will be determined as the percentage that the Loan plus accrued interest represents of the implied value of the Sisson Partnership based on the Conversion Price.

Page 20

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

In the event the loan is settled through shares of the Company, any remaining balance after issuance of 19,113,182 shares may be settled through transfer of a general and limited partnership interest.

The Company has recorded the Loan, net of transaction costs, at amortized cost as a financial liability.

10. SHARE CAPITAL

(a) Authorized share capital

As at October 31, 2020 and October 31, 2019, the authorized share capital was comprised of an unlimited number of common shares (“Common Shares”) without par value. All issued shares are fully paid.

(b) Issued share capital

At October 31, 2020, there were 191,131,829 Common Shares outstanding (October 31, 2019 – 173,756,229).

On January 29, 2020, the Company announced that it has closed a private placement of 17,375,600 Common Shares at a price of $0.05 per Common Share with the Todd Group for gross proceeds to the Company of $868,780. The net amount of the private placement recorded in equity after deducting regulatory costs was $861,138.

(c) Reserves

Equity‐settled share‐based payments reserve

The equity‐settled share‐based payments reserve relates to equity‐settled share‐based payments described in Note 11.

Revaluation reserve

The investment revaluation reserve represents the cumulative gains and losses arising on the revaluation of the marketable securities (note 4) that have been recognized in other comprehensive income.

11. EQUITY‐SETTLED SHARE‐BASED PAYMENTS

The share‐based payment expense recorded in the Statement of Comprehensive Loss included the following:

Page 21

Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd.

	Year ended October 31,
	2020 2019
Option‐based award (note 11(a)) Share‐based award – Restricted Share Units (note 11(b)) Share‐based award – Deferred Share Units(note 11(c))	74,997 $ 73,035 $ 65,583 74,796 34,500 77,202
	175,080 $ 225,033 $

(a) Share purchase options (the “Options”)

The following summarizes the changes in the Options:

Continuity of Options	Year ended October 31, 2020 Year ended October 31, 2019
	Weighted Weighted Number of average Number of average Options exercise price Options exercise price
Outstanding – beginning balance Granted Expired Cancelled	5,700,800 $ 0.08 3,569,700 $ 0.16 – – 3,586,000 $ 0.07 (1,464,800) $ 0.12 (1,454,900) $ 0.23 (51,000) $ 0.07 – –
Outstanding– endingbalance	4,185,000 $ 0.07 5,700,800 $ 0.08
Exercisable – endingbalance	3,006,671 $ 0.07 2,114,800 $ 0.11

Awards vest in several tranches ranging from 6 months to 18 months.

The following table summarizes information on the Options outstanding as at the following reporting dates:

Options outstanding Exercise price	October 31, 2020 October 31, 2019
	Weighted average Weighted average Number of remaining Number of remaining Options contractual life Options contractual life outstanding (years) outstanding (years)
$ 0.07 $ 0.09 $ 0.12	3,535,000 2.53 3,586,000 3.52 650,000 0.20 650,000 1.20 – – 1,464,800 0.78
Total	4,185,000 2.17 5,700,800 2.55

Page 22

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

The following table summarizes information on the Options exercisable as at the following reporting dates:

reporting dates:
Options exercisable Exercise price	October 31, 2020 October 31, 2019
	Weighted average Weighted average Number of remaining Number of remaining Options contractual life Options contractual life exercisable (years) exercisable (years)
$ 0.07 $ 0.09 $ 0.12	2,356,671 2.53 – – 650,000 0.20 650,000 1.20 – – 1,464,800 0.78
Total	3,006,671 2.03 2,114,800 0.91

(b) Restricted Share Units (“RSU”)

The Company’s RSU plan, as approved by its shareholders, allows the Board to grant employees, executive directors and consultants RSUs from time to time. The RSUs are granted conditionally and entitle the recipient to receive one common share (or the cash equivalent) upon attainment of a time‐based vesting period. RSUs can be settled by the Group at its discretion in Common Shares issued from treasury, in Common Shares purchased by the Group in the open market, in cash or in any combination thereof.

During the year ended October 31, 2020, the Company granted 678,686 RSUs with a one‐year vesting term and classified these RSUs as an equity‐settled share‐based payment. The grant date fair value of the RSUs was determined as $37,812, which represented the quoted market price of the underlying common shares at the time. The fair value of the RSUs is recorded as equity‐settled share‐based payment expense over the vesting term on a straight‐line basis with a corresponding increase in equity.

The following summarizes the changes in the Company’s RSUs:

Number of RSUs	Year ended October 31,
	2020 2019
Outstanding – beginning balance Granted	2,710,565 1,566,528 678,686 1,144,037
Outstanding– endingbalance	3,389,251 2,710,565
Vested – endingbalance	– –

(c) Deferred Share Units (“DSU”)

The Company has a DSU plan approved by its shareholders that allows the Board, at its discretion, to award DSUs to non‐executive directors for services rendered to the Company. DSUs are payable when the non‐executive director ceases to be a director. DSUs may be settled in Common Shares issued from treasury, in Common Shares purchased by the Group in the open market, in cash, or any combination thereof, at the discretion of the Group.

Page 23

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

During the year ended October 31, 2020, the Company granted 619,230 fully vested DSUs and classified the DSUs as an equity‐settled share‐based payment. The grant date fair value was determined as $34,500, which was recorded as share‐based compensation expense in the Statement of Comprehensive Loss with a corresponding increase in equity. During the year ended October 31, 2019, the Company settled 561,708 DSUs with a cash payment of $38,260. Management’s intention is to continue to settle DSUs with equity, and therefore the remaining DSUs remain equity‐settled instruments.

The following summarizes the changes in the Company’s DSUs:

remaining DSUs remain equity‐settled instruments. The following summarizes the changes in the Company’s	DSUs:
Number of DSUs	Year ended October 31,
	2020 2019
Outstanding – beginning balance Granted Exercised	2,307,940 1,701,169 619,230 1,168,479 – (561,708)
Outstanding– endingbalance	2,927,170 2,307,940
Vested – endingbalance	2,927,170 2,307,940

12. RELATED PARTY TRANSACTIONS

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation.

Amounts payable to related parties are comprised of the following:

	Year ended October 31,
	2020 2019
Unpaid directors' fees (a) Amount owing to Hunter Dickinson Services Inc. (b)	170,875 $ – $ 489,478 256,545
Total	660,353 $ 256,545 $

Details of transactions with and amounts due to related parties are discussed below:

(a) Transactions with Key Management Personnel

Key management personnel (“KMP”) are those persons that have the authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, and by definition include the directors of the Company.

To conserve cash, the Company ceased to make cash payments for directors’ fees commencing November 1, 2020 and accrued the unpaid amount of directors’ fees in these Financial Statements.

Page 24

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

Transactions with KMP were as follows:

	Year ended October 31,
	2020 2019
Remuneration for services of KMP employed under contract with HDSI(i) Remuneration of KMP directly paid by the Group(ii) Share‐based compensation	324,000 $ 600,000 $ 21,000 84,000 136,770 189,000
Total	481,770 $ 873,000 $

(i) Certain of the Company's executive directors and senior management are employed by the Company under contract with Hunter Dickinson Services Inc. ("HDSI").

(ii) These payments represent fees paid to independent directors.

(b) Balances and transactions with related entities

Certain directors and employees of Hunter Dickinson Services Inc. ("HDSI") are KMP of the Company. Pursuant to certain services agreements between the Company and HDSI, the Group receives geological, engineering, corporate development, administrative, management and shareholder communication services from HDSI. The Group determines the nature, timing and extent of services received from HDSI. HDSI also incurs third party costs on behalf of the Group that are reimbursed by the Group at cost with no markup.

The following is a summary of transactions with HDSI:

The following is a summary of transactions with HDSI:
	Year ended October 31,
	2020 2019
Services requested from HDSI and received based on annually set rates: Accounting, legal and administration Corporate communications and stakeholder affairs Corporate development Engineering Geology Management and directors’ fees	183,000 $ 209,000 $ 4,700 7,000 51,000 80,000 99,000 194,000 1,400 13,000 120,000 311,000
	459,100 814,000
Reimbursement of third party costs incurred by HDSI on behalf of the Group	110,000 $ 117,000 $

At October 31, 2020, the Group owed $489,478 to HDSI on account of services rendered and third party costs paid by HDSI (October 31, 2019 – $256,545).

13. TAXATION

(a) Provision for current tax

No provision has been made for current income taxes, as the Group has no taxable income.

Page 25

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

(b) Provision for deferred tax

As future taxable profits of the Group are uncertain, no deferred tax asset has been recognized.

As at October 31, 2020, the Group had unused tax loss carry forwards of approximately $24,778,000 (October 31, 2019 – $23,682,000) in Canada.

As at October 31, 2020, the Group had expenditures tax pools of approximately $47,398,000 (October 31, 2019 – $47,304,000) available in Canada, which may be carried forward and utilized to reduce future taxes related to certain income. Of this total, $20,924,000 (October 31, 2019 – $21,115,000) is a deductible temporary difference.

Reconciliation of effective tax rate	Year ended October 31,
	2020 2019
Loss for the year Total income tax expense	$ (1,122,172) $ (1,456,999) – –
Loss excludingincome tax	$ (1,122,172) $ (1,456,999)
Income tax recovery using the Group's domestic tax rate Difference in tax rates Non‐deductible expenses and other Change in unrecognized temporary differences	(303,000) (393,000) – – 61,000 96,000 242,000 297,000
	$– $ –

The Group’s domestic tax rate was 27% (2019 – 27%) and its effective tax rate is nil (2019 – nil).

As at October 31, 2020, the Group had the following temporary differences in respect of which no deferred tax asset was recognized:

			Expenditures	Investment Tax
Expiry		Tax Losses	Pools	Credits		Other
Within one year	$	–	$ –	$ –	$	–
One to five years		–	–	–		57,000
After five years		24,547,000	–	803,000		–
No expirydate		231,000	20,924,000	–		98,000
Total	$ 24,778,000		$ 20,924,000	$ 803,000	$	155,000

The Group has taxable temporary differences totalling $16,800,000 in relation to investments in subsidiaries or branches for which deferred tax liabilities have not been recognized.

Page 26

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

14. EMPLOYMENT COSTS

Employees’ salaries[(i)] and benefits, included in various expenses were as follows:

Employees’ salaries(i)and benefits, included in various expenses w	ere as follows:
	Year ended October 31,
	2020 2019
Project management and financing General and administration expenses Equity‐settled share‐basedpayments	200,734 $ 357,819 $ 427,422 540,380 175,080 225,033
	803,236 $ 1,123,232 $

(i) Salaries include remuneration of KMPs and amounts paid to HDSI for services (note 12(a)).

15. FINANCIAL RISK MANAGEMENT

(a) Capital management objectives

The Group's primary objectives when managing capital are to have sufficient funds on hand for business opportunities as they arise and to pay liabilities as they come due. The capital structure of the Group consists of equity, comprising share capital, net of accumulated deficit. In order to facilitate the management of its capital requirements, the Group prepares annual expenditure budgets that are approved by the Board of Directors. The Group ensures, as far as reasonably possible, it will have sufficient capital in order to meet short‐term business requirements, after taking into account the cash flows from operations and the Group’s holdings of cash and cash equivalents.

The Group’s investment policy is to invest its cash in highly liquid short‐term interest‐bearing investments, typically having maturity dates of three months or less from the date of acquisition, that are readily convertible to known amounts of cash.

There were no changes to the Group's approach to capital management during the year ended October 31, 2020.

(b) Carrying amounts and fair values of financial instruments

At October 31, 2020 and 2019, the fair values of the Group's financial assets and financial liabilities approximate their carrying amounts.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

Page 27

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

The Group's marketable securities are classified under Level 1 of the hierarchy.

(c) Financial instrument risk exposure and risk management

The Group is exposed in varying degrees to a variety of financial instrument‐related risks. The Board of Directors approves and monitors the risk management processes, inclusive of counterparty limits, and controlling and reporting structures and related documented policies. The type of risk exposure and the way in which such exposure is managed is provided as follows:

Credit risk

Credit risk is the risk of potential loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations. The Group’s credit risk is primarily attributable to its liquid financial assets, including cash and cash equivalents, and amounts receivable. The carrying values of these financial assets represent the maximum exposure to credit risk.

The Group limits the exposure to credit risk by only investing its cash and cash equivalents with high‐credit quality financial institutions in business and savings accounts, guaranteed investment certificates, and in government treasury bills which are available on demand by the Group for its programs. Amounts receivable consists of sales taxes recoverable from governments in the jurisdictions in which the Group operates.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or other financial assets. The Group ensures that there is sufficient capital in order to meet its short‐term business requirements, after taking into account the Group's holdings of cash and cash equivalents.

The Group’s liabilities at October 31, 2020 and 2019 as presented in the Financial Statements approximate their contractual cash flows and are due within 12 months of the respective reporting dates.

Foreign exchange risk

The Group is exposed to foreign exchange risk as some of its cash and cash equivalents are denominated in United States Dollars to pay for obligations incurred in foreign currency in the normal course of business. The fluctuation of the United States Dollar in relation to the Canadian Dollar will consequently have an impact upon the losses incurred by the Group and may also affect the value of the Group’s assets, liabilities and the amount of shareholders’ equity.

As at October 31, 2020 and 2019, the Group’s exposure to foreign exchange risk was nominal.

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Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2020 and 2019 (Expressed in Canadian Dollars, unless otherwise stated)

Interest rate risk

The Group is subject to interest rate risk with respect to its investments in cash and cash equivalents. The Group’s policy is to invest cash at variable rates of interest and cash reserves are to be maintained in cash and cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates when cash and cash equivalents mature impact interest income earned.

As at October 31, 2020 and 2019, the Group’s exposure to interest rate risk was nominal as the Company did not have interest bearing obligations subject to variable interest rates.

Price risk

Equity price risk is defined as the potential adverse impact on the Group’s earnings due to movements in individual equity prices or general movements in the level of the stock market. The Group is subject to price risk in respect of its investment in marketable securities.

The objective of price risk management is to eliminate or limit emerging risk exposures to within acceptable parameters, while optimizing return and meeting strategic goals.

As at October 31, 2020 and 2019, the Group’s exposure to price risk was nominal.

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