Northcliff Resources Ltd. — Audit Report / Information 2021

Jan 29, 2022

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Northcliff Resources Ltd.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED OCTOBER 31, 2021 AND 2020

(Expressed in Canadian Dollars)

Deloitte LLP 939 Granville Street Vancouver BC V6Z 1L3 Canada

Tel: 604.669.4466 Fax: 778.374.0496 www.deloitte.ca

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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, 2021 and 2020, 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, 2021 and 2020, 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

We draw attention to Note 1 in the financial statements, which indicates that the Company incurred a net comprehensive loss of $1,312,600 during the year ended October 31, 2021. 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 a material uncertainty exists 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.

Key Audit Matter

A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements for the year ended October 31, 2021. This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matter described below to be the key audit matter to be communicated in our auditor’s report.

Mineral Property and Equipment — Impairment of Mineral Property and Equipment— Refer to Notes 2(c), 2(h) and 3 to the financial statements

Key Audit Matter Description

At each reporting date, the Company assesses its Cash Generating Units (“CGUs”) to determine whether there is an any indication of impairment. When an impairment indicator has been identified for a CGU, the Company estimates the recoverable amount for the CGU and an impairment loss is recognized if the carrying amount exceeds the recoverable amount. The recoverable amount is determined based on the higher of value in use, using a discounted cash flow model, and fair value less cost of disposal, using a market approach. An impairment indicator was identified for the Sisson Project CGU. The recoverable amount of the CGU exceeded its carrying value and no impairment was recognized.

While there are several inputs required to determine the recoverable amount for the Sisson Project CGU, the estimates and assumptions with the highest degree of subjectivity and judgment uncertainty relate to the identification of comparable companies and transactions used to determine the in-situ multiples of the reserves. Performing audit procedures to evaluate the reasonableness of such estimates and assumptions required a high degree of auditor judgment and an increased extent of audit effort, including the involvement of fair value specialists.

How the Key Audit Matter Was Addressed in the Audit

With the assistance of fair value specialists, our audit procedures related to the identification of comparable companies and comparable transactions to determine the in-situ multiples of the reserves included the following, among others:

• Obtained third party information surrounding comparable companies and transactions, evaluated their comparability and determined in-situ multiples assigned to the potential reserves, including the consideration of contradictory evidence obtained in other areas of the audit.

• Developed a range of independent estimates of in-situ multiples using multiple valuation techniques and comparing those to the in-situ multiples selected by management.

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 and will 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.

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.

• 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, 2022

Northcliff Resources Ltd.

Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

Note	October 31, October 31, 2021 2020
ASSETS Non-current assets Mineral property and equipment 3 Investment 4 Current assets Amounts receivable and prepaid expenses 6 Cash 5	26,840,557 $ 26,473,686 $ 12,863 18,916
	26,853,420 26,492,602
	49,449 27,715 1,440,014 1,591,395
	1,489,463 1,619,110
TOTAL ASSETS	28,342,883 $ 28,111,712 $
EQUITY Equity attributable to shareholders of the Company Share capital 10 Reserves 11 Accumulated deficit Non-controlling interests 7 TOTAL EQUITY LIABILITIES Current liabilities Amounts payable and other liabilities 8 Amounts payable to related parties 12 Loans payable 9	58,901,466 $ 58,901,466 $ 4,484,610 4,414,574 (40,732,004) (39,465,243)
	22,654,072 23,850,797 3,143,821 3,156,507
	25,797,893 27,007,304
	107,627 62,743 1,097,044 660,353 1,340,319 381,312
	2,544,990 1,104,408
TOTAL EQUITY AND LIABILITIES	28,342,883 $ 28,111,712 $

Nature and continuance of operations (note 1) Commitments (note 15(c)) Events after the end of the reporting period (note 16)

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

These consolidated financial statements are approved for issuance on January 27, 2022 by the Board of Directors and are signed on the Company's behalf by the following:

/s/ Peter Mitchell /s/ Scott Cousens Peter Mitchell Scott.Cousens Director Director

Page 2

Northcliff Resources Ltd.

Consolidated Statements of Comprehensive Loss

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

Note	Year ended October 31,
	2021 2020
Expenses Project management and financing General and administration Equity-settled share-based payments 11	210,473 200,734 876,598 764,519 114,155 175,080
Loss from operations Interest income Finance expense 9 Foreign exchange (loss) gain	(1,201,226) (1,140,333) 10,752 17,691 (116,071) – (2) 470
Loss before income tax Income tax 13	(1,306,547) (1,122,172) – –
Net loss	(1,306,547) $ (1,122,172) $
Other comprehensive (loss) income Items that may not be reclassified subsequently to net loss: Revaluation of marketable securities	(6,053) 3,783
Other comprehensive (loss) income	(6,053) 3,783
Total comprehensive loss	(1,312,600) $ (1,118,389) $
Total comprehensive loss	(1,312,600) $ (1,118,389) $
Net loss attributable to: Shareholders of the Company Non-controlling interests	(1,266,761) $ (1,083,071) $ (39,786) (39,101)
	(1,306,547) $ (1,122,172) $
Total comprehensive loss attributable to: Shareholders of the Company Non-controlling interests	(1,272,814) $ (1,079,288) $ (39,786) (39,101)
Total	(1,312,600) $ (1,118,389) $
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	191,131,829 186,906,615

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

Page 3

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
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	– – – 3,783 (1,083,071) (1,079,288) (39,101) (1,118,389) – – – – – – 150,000 150,000 – – 175,080 – – 175,080 – 175,080 17,375,600 861,138 – – – 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 $
Balance at November 1, 2020 Net Loss Other comprehensive loss	191,131,829 58,901,466 $ 4,645,658 $ (231,084) $ (39,465,243) $ 23,850,797 $ 3,156,507 $ 27,007,304 $ – – – – (1,266,761) (1,266,761) (39,786) (1,306,547) – – – (6,053) – (6,053) – (6,053)
Total comprehensive loss Capital contributions from non-controlling interests 7 Equity-settled share-based payments 11 Settlement of Restricted Share Units 11	– – – (6,053) (1,266,761) (1,272,814) (39,786) (1,312,600) – – – – – – 27,100 27,100 – – 114,155 – – 114,155 – 114,155 – – (38,066) – – (38,066) – (38,066)
Balance at October 31, 2021	191,131,829 58,901,466 $ 4,721,747 $ (237,137) $ (40,732,004) $ 22,654,072 $ 3,143,821 $ 25,797,893 $

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

Page 4

Northcliff Resources Ltd.

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

Note	Year ended October 31,
	2021 2020
Operating activities Net loss Adjustments for: Amortization 3 Equity-settled share-based payments 11 Interest income Finance expense Foreign exchange loss Changes in non-cash operating working capital: Amounts receivable and prepaid expenses Amounts payable and other liabilities Amounts payable to related parties	(1,306,547) $ (1,122,172) $ 658 715 114,155 175,080 (10,752) (2,658) 116,071 – 3 (470) (21,734) 26,834 (4,994) 5,890 436,691 403,869
Cash used in operating activities	(676,449) (512,912)
Investing activities Deferred mineral development costs 3 Interest received	(317,651) (430,746) 10,752 2,658
Cash used in investing activities	(306,899) (428,088)
Financing activities Net proceeds from private placement 10 Net proceeds from borrowings 9 Capital contributions from non‐controlling interests 7 Settlement of Restricted Share Units (RSUs) 10	– 861,138 842,936 381,312 27,100 150,000 (38,066) –
Cash provided by financing activities	831,970 1,392,450
(Decrease) increase in cash Foreign exchange translation difference on cash held Cash, beginning balance	(151,378) 451,450 (3) 470 1,591,395 1,139,475
Cash, ending balance	1,440,014 $ 1,591,395 $

Supplementary cash flow information: (Note 5)

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

Page 5

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (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 14th 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.

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 fund working capital requirements and 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 2022.

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, 2021.

(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.

Northcliff Resources Ltd.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Name of Entity	Country In		Ownership
	Incorporation	Principal Activity	Interest
Sisson Resources Ltd.	Canada	Holding company. Wholly-owned	100%
		subsidiary of Northcliff.
Northcliff Holdings (Canada) Ltd.	Canada	Holding company. Wholly-owned	100%
		subsidiary of Sisson Resources Ltd.	(indirect)
Sisson Services Ltd.	Canada	Management and services company to	100%
		Sisson Mines Ltd. Wholly-owned	(indirect)
Sisson Mines Ltd.	Canada	General partner of Sisson Project	88.50%
		Limited Partnership holding a 0.01%	(indirect)
Sisson Project Limited Partnership	Canada	Owns the Sisson Project. Limited	88.50%
		Partnershipinterest held byNorthcliff	(indirect)

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.

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 noncontrolling 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.

The critical judgements and estimates applied in the preparation of these Financial Statements are consistent with those applied in the Group’s audited consolidated financial statements as at and for the year ended October 31, 2020.

Specific areas where significant estimates or judgements exist are:

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Estimates:

• At each reporting date, the Group reviews the carrying amounts of its mineral property interest to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. To the extent the estimation of the recoverable amount is required, management considers several inputs including geological information, estimated market values of reserves and resources, current and future prices of tungsten and molybdenum, feasibility studies, permitting, infrastructure and development costs.

• 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.

(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.

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements

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.

• 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.

• 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 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.

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

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 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 B275, 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.

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements

(k) Share-based payments

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 vest. The fair value of the share purchase options granted is measured using the BlackScholes 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.

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 equitysettled 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.

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.

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

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, 2021.

(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) Leases

At inception of a contract, the Group 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 Group 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 Group recognizes the lease payments as an expense in loss on a straight-line basis over the term of the lease.

The Group recognizes a lease liability and a right-of-use asset ("ROU Asset") at the lease commencement date.

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 Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The incremental borrowing rate is the rate which the Group 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

• 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.

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

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.

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 Group’s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

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 Group; and

• an estimate of costs to be incurred by the Group 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.

At October 31, 2021 and 2020, there was no ROU Asset or lease liability recognized in these Financial Statements.

3 . MINERAL PROPERTY AND EQUIPMENT

Year ended October 31, 2021	Mineral property	Mineral property
		acquisition and
	development costs			Equipment		Total
Cost
Balance at November 1, 2020	$	26,472,814	$	46,287	$	26,519,101
Additions during the period		367,529		–		367,529
Balance at October 31, 2021	$	26,840,343	$	46,287	$	26,886,630
Accumulated amortization
Balance at November 1, 2020	$	–	$	45,415	$	45,415
Amortization for the period		–		658		658
Balance at October 31, 2021	$	–	$	46,073	$	46,073
Carrying amount
Net carrying amount at October 31, 2021	$	26,840,343	$	214	$	26,840,557

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.

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements

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

	Three months ended October 31,
	2021 2020
Engineering and design Environmental and permitting Community and sustainability	142,955 $ 45,973 $ 32,181 60,054 192,393 179,264
Total	367,529 $ 285,291 $
Year ended October 31, 2020	Mineral property acquisition and development costs Equipment Total
Cost Balance at November 1, 2019 Additions during the period	26,187,523 $ 46,287 $ 26,233,810 $ 285,291 – 285,291
Balance at October 31, 2020	26,472,814 $ 46,287 $ 26,519,101 $
Accumulated amortization Balance at November 1, 2019 Amortization for the period	– $ 44,700 $ 44,700 $ – 715 715
Balance at October 31, 2020	– $ 45,415 $ 45,415 $
Carrying amount
Net carrying amount at October 31, 2020	26,472,814 $ 872 $ 26,473,686 $

4 . INVESTMENT

At October 31, 2021 and October 31, 2020, the Group’s investment represented shares of a public company, listed on the TSX Venture Exchange.

5 . CASH

	October 31, October 31,
	2021 2020
Bank demand deposits	1,440,014 $ 1,591,395 $
Cash held in the Partnership included in the total cash balance above: Cash available for use by the Partnership Cash not available for use by the Partnership: Cash held as collateral against a standby letter of credit	326,109 $ 40,825 $ 874,000 874,000
Total cash held in the Partnership	1,200,109 $ 914,825 $

6 . AMOUNTS RECEIVABLE AND PREPAID EXPENSES

	October 31, October 31,
	2021 2020
Prepaid expenses Sales tax receivable	32,176 $ 17,290 $ 17,273 10,425
Total	49,449 $ 27,715 $

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

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 noncontrolling 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, 2021 and 2020:

	October 31, October 31,
	2021 2020
Non-current assets Current assets Current liabilities Equity attributable to shareholders of the Company Non-controlling interests	26,840,557 $ 26,473,686 $ 1,214,516 925,349 398,491 307,619 24,512,761 23,934,909 3,143,821 3,156,507
	Year ended October 31,
	2021 2020
Net expenses	346,034 $ 340,144 $
Net loss and total comprehensive loss for the year	346,034 $ 340,144 $
Net loss and total comprehensive loss attributable to shareholders of the Company Net loss and total comprehensive loss attributable to non-controllinginterests	306,240 $ 301,027 $ 39,794 39,117
Net loss and comprehensive loss for the year	$ 346,034 $ 340,144
	Year ended October 31,
	2021 2020
Net cash used in operating activities Net cash used in investing activities Net cash provided by financing activities	(316,601) $ (228,741) $ (309,315) (294,724) 911,200 928,800
Net cash inflow for the year	285,284 $ 405,335 $

8 . AMOUNTS PAYABLE AND OTHER LIABILITIES

Due within 12 months	October 31, October 31,
	2021 2020
Amounts payable Accrued liabilities Sales tax payable	24,329 $ 42,610 $ 81,927 18,688 1,371 1,445
Total	107,627 $ 62,743 $

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

9 . LOANS PAYABLE

(a) October-2020 Loan and March-2021 Loan

In October 2020, the Company entered into a convertible loan agreement (the “Convertible Loan Agreement”) to borrow $400,000 (the "October-2020 Loan") from Todd Sisson (NZ) Limited ("Todd Sisson"), a subsidiary of the Todd Corporation, which is the Company’s largest shareholder and an insider of the Company by virtue of it owning 79,204,598 common shares of the Company, representing approximately 41.4% of the outstanding shares of the Company.

The October-2020 Loan is secured against the Company’s ownership interest in the Sisson Project, will bear interest at a rate of 10% per annum and had an initial term of 12 months, which term was subsequently extended by approximately five months to March 2022 as announced by the Company in December 2021. Interest will be payable at maturity. The October-2020 Loan, as well as accrued interest thereon, is repayable in cash at any time by the Company without penalty. In the event that the October-2020 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 Sisson.

In March 2021, the Company and Todd entered into an amendment and restatement of the Convertible Loan Agreement, pursuant to which Todd agreed to provide an additional advance in the amount of $400,000 (the “March‐2021 Loan”). The March-2021 Loan bears interest at a rate of 10% per annum and has a term of 12 months. The March-2021 Loan, as well as accrued interest thereon, is repayable in cash at any time by the Company without penalty. In the event that the March-2021 Loan is not repaid by the Company in cash, it can be settled at maturity, either through Share Settlement or Partnership Settlement, at the election of Todd Sisson.

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 was 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 October-2020 Loan was advanced). At the Company’s Annual General Meeting held on April 22, 2021, approval of disinterested shareholders was obtained that will allow the Company to potentially issue common shares to Todd in excess of the 19,113,182 shares under and in accordance with the amended and restated Convertible Loan Agreement.

(b) August -2021 Loan

In August 2021, the Company entered into an agreement with Todd Sisson for a loan facility (the “August‐2021 Loan”) of up to $1,000,000 that can be drawn down in two tranches of $500,000 each. The first cash advance pursuant to the August-2021 Loan was drawn down on September 1, 2021. The second cash advance pursuant to the August-2021 Loan was drawn down after the end of the reporting period on January 10, 2022.

Each cash advance under the August-2021 Loan is secured, will bear interest at a rate of 10% per annum and has a term of 12 months with the interest payable at maturity. The August-2021 Loan and accrued interest is repayable at any time by the Company without penalty, or 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 (VWAP) of the Company on the 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 currently issued and outstanding common shares). Alternatively, the general and limited partnership interest to be transferred under the Partnership Settlement will be determined as the percentage that the August-2021 Loan plus accrued interest represents of the implied value of the Sisson Partnership based on the Conversion Price. In the event the August-2021 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.

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements

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

Loans Payable – Continuity Schedule

Loans Payable – Continuity Schedule
	Year ended October 31,
	2021 2020
Beginning balance Cash advance received (October-2020 Loan) Cash advance received (March-2021 Loan) Cash advance received (Aug-2021 Loan) Financing Costs Interest accrual Amortization of financingcosts	381,312 $ – $ – 400,000 400,000 – 500,000 – (57,001) (18,688) 74,026 – 41,982 –
Total	1,340,319 $ 381,312 $

10 . SHARE CAPITAL

• (a) Authorized share capital

As at October 31, 2021 and 2020, 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

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 these Financial Statements included the following:

	Year ended October 31,
	2021 2020
Option-based award (note 11(a)) Share‐based award – RSUs (note 11(b)) Share‐based award–DSUs (note 11(c))	3,666 $ 74,997 $ 58,739 65,583 51,750 34,500
	114,155 $ 175,080 $

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd.

Notes to the Consolidated Financial Statements

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

The following summarizes the changes in the Options:

Continuity of Options	Year ended Year ended October 31,2021 October 31,2020
	Weighted Weighted Number of average Number of average Options exerciseprice Options exerciseprice
Outstanding – beginning balance Granted Cancelled Expired	4,185,000 $ 0.07 5,700,800 $ 0.08 – – – – – – (51,000) $ 0.07 (650,000) – (1,464,800) $ 0.12
Outstanding–ending balance	3,535,000 $ 0.08 4,185,000 $ 0.07
Exercisable–ending balance	3,535,000 $ 0.07 3,006,671 $ 0.07

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 Exerciseprice	October 31,2021 October 31,2020
	Weighted average Weighted average Number of remaining Number of remaining Options contractual life Options contractual life outstanding (years) outstanding (years)
$ 0.07 $ 0.09	3,535,000 1.53 3,535,000 2.53 – – 650,000 0.20
Total	3,535,000 1.53 4,185,000 2.17

(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,
	2021 2020
Outstanding – beginning balance Granted Settlement	3,389,251 2,710,565 1,181,642 678,686 (790,048) –
Outstanding–ending balance	3,780,845 3,389,251
Vested–ending balance	– –

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

(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 nonexecutive 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.

During the year ended October 31, 2020, the Company granted 619,230 fully vested DSUs and classified the DSUs as an equitysettled 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:

Number of DSUs	Year ended October 31,
	2021 2020
Outstanding – beginning balance Granted	2,927,170 2,307,940 1,078,126 619,230
Outstanding–ending balance	4,005,296 2,927,170
Vested–ending balance	4,005,296 2,927,170

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:

Amounts payable to related parties are comprised of the following:
		October 31,		October 31,
		2021		2020
Unpaid directors' fees (a)	$	450,219	$	170,875
Amount owingto Hunter Dickinson Services Inc.(b)		646,825		489,478
Total	$	1,097,044	$	660,353

(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.

Transactions with KMP were as follows:

	Year ended October 31,
	2021 2020
Remuneration for services of KMP employed under contract with HDSI (i) Remuneration of KMP directly paid by the Group (ii) Share-based compensation	269,000 $ 324,000 $ – 21,000 113,000 136,770
Total	382,000 $ 481,770 $

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

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

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements

(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:

	Year ended October 31,
	2021 2020
Services requested from HDSI and received based on annually set rates: Accounting, legal and administration 188,000 $ 183,000 $ Corporate communications and stakeholder affairs 7,000 4,700 Corporate development – 51,000 Engineering 4,000 99,000 Geology 3,000 1,400 Management and directors’fees 171,000 120,000
373,000 $ 459,100 $
Reimbursement of third party costs incurred by HDSI on behalf of the Group 130,000 $ 110,000 $

13 . TAXATION

• (a) Provision for current tax

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

(b) Provision for deferred tax

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

The Group unused tax loss carry forwards and expenditure pools are summarized below:

	October 31, October 31,
	2021 2020
Unused tax loss carry forwards in Canada	26,113,000 $ 24,778,000 $
Expenditures tax pools available to the Group: Expenditures tax pools available in Canada which may be carried forward and utilized to reduce future taxes related to certain income Deductible temporary difference relating to above	47,553,000 47,398,000 20,711,000 20,924,000

Northcliff Resources Ltd.

Notes to the Consolidated Financial Statements

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Reconciliation of effective tax rate	Year ended October 31,
	2021 2020
Loss for the year Total income tax expense	(1,306,547) $ (1,122,172) $ – –
Loss excluding income tax	(1,306,547) $ (1,122,172) $
Income tax recovery using the Group's domestic tax rate Difference in tax rates Non-deductible expenses and other Change in unrecognized temporary differences	(353,000) $ (303,000) $ – – 54,000 61,000 299,000 242,000
	– $ – $
Domestic tax rate of the Group Effective tax rate of the Group	27% 27% – –

As at October 31, 2021, the Group had the following temporary differences in respect of which no deferred tax asset was recognized:

Expiry				Expenditures		Investment
		Tax Losses		Pools		Tax Credits		Other
Within one year	$	–	$	–	$	–	$	–
One to five years		–		–		–		46,000
After five years		25,876,000		–		803,000		–
No expiry date		237,000		20,711,000		–		98,000
Total	$	26,113,000	$	20,711,000	$	803,000	$	144,000

The Group has taxable temporary differences totalling $17.2M in relation to investments in subsidiaries or branches for which deferred tax liabilities have not been recognized.

14 . EMPLOYMENT COSTS

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

	Year ended October 31,
	2021 2020
Project management and financing General and administration expenses Equity-settled share-based payments	120,250 $ 200,734 $ 531,645 427,422 114,155 175,080
	766,050 $ 803,236 $

(i) Salaries include remuneration of KMPs and amounts paid to HDSI for services (note12(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, that 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, 2021.

For the years ended October 31, 2021 and 2020 (Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements

(b) Carrying amounts and fair values of financial instruments

At October 31, 2021 and 2020, 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.

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’s liabilities at October 31, 2021 and 2020 as presented in the Financial Statements are due within 12 months of the respective reporting dates.

		Carrying		Contractual		Less than		Between		Between
		Amount		Obligation		12 months		1 - 3years		4 - 5years
Amounts payable and other liabilities	$	107,627	$	107,627	$	107,627	$	–	$	–
Amounts payable to related parties		1,097,044		1,097,044		1,097,044		–		–
Loans payable (i)		1,340,319		1,340,319		1,340,319		–		–
Leases(ii)		–		136,945		33,974		58,848		44,123
	$	2,544,990	$	2,681,935	$	2,578,964	$	58,848	$	44,123

(i) The Company has no obligation to repay these loans in cash (note 9).

(ii) The Company has certain leases for office and warehouse spaces for which the Company elected not to recognize right-of-use assets and corresponding lease liabilities (note 2(o)).

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, 2021 and 2020, the Group’s exposure to foreign exchange risk was nominal.

Northcliff Resources Ltd. Notes to the Consolidated Financial Statements For the years ended October 31, 2021 and 2020 (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, 2021 and 2020, 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, 2021 and 2020, the Group’s exposure to price risk was nominal.

16 . EVENTS AFTER THE END OF THE REPORTING PERIOD

• (a) Extension of the October-2020 Loan (note 9(a))

After the end of the reporting period, in December 2021, the Company announced that the maturity date of the October-2020 Loan (note 9(a)) was extended to March 2022 from October 2021, with all other material terms and conditions of the loan remaining unchanged.

(b) Second cash advance pursuant to August-2021 Loan (note 9(b))

In January 2022, the Company announced that it drew down the second and final cash advance pursuant to the August-2021 Loan (note 9(b)).

(c) Grant of options

In November 2021 the Company granted 3,646,500 share purchase options to its directors, officers, employees and certain consultants at an exercise price of $0.045 per share and with weighted average expiration term of 4 years. Of the total options granted in November 2021, 1,770,000 options were granted to the Company's directors and officers with expiration term of 5 years.