Northcliff Resources Ltd. — Interim / Quarterly Report 2021

Mar 17, 2021

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Northcliff Resources Ltd.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JANUARY 31, 2021 AND 2020

(Unaudited – Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR REVIEW OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51‐102 Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of these condensed consolidated interim financial statements they must be accompanied by a notice indicating that the condensed consolidated interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company's management.

Northcliff Resources Ltd.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited – Expressed in Canadian Dollars)

Note	January 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	26,531,714 $ 26,473,686 $ 26,483 18,916
	26,558,197 26,492,602
	22,321 27,715 1,286,654 1,591,395
	1,308,975 1,619,110
TOTAL ASSETS	27,867,172 $ 28,111,712 $
EQUITY Equity attributable to shareholders of the Company Share capital 9 Reserves 9(c) Accumulated deficit Non-controlling interests TOTAL EQUITY LIABILITIES Current liabilities Amounts payable and other liabilities 7 Amounts payable to related parties 11 Loan payable 8	58,901,466 $ 58,901,466 $ 4,450,575 4,414,574 (39,831,894) (39,465,243)
	23,520,147 23,850,797 3,144,424 3,156,507
	26,664,571 27,007,304
	84,521 62,743 721,975 660,353 396,105 381,312
	1,202,601 1,104,408
TOTAL EQUITY AND LIABILITIES	27,867,172 $ 28,111,712 $

Nature and continuance of operations (note 1)

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

These condensed consolidated interim financial statements are approved for issuance on March 17, 2021 by the Audit and Risk Committee of the Company's Board of Directors and are signed on the Company's behalf by the fo

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

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Northcliff Resources Ltd.

Condensed Consolidated Interim Statements of Comprehensive Loss

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

Note	Three months ended January 31,
	2021 2020
Expenses Project management and financing General and administration Equity-settled share-based payments 10	46,212 69,287 254,107 278,176 66,501 32,500
Loss from operations Interest income Finance expense 8 Foreign exchange gain	(366,820) (379,963) 2,879 5,328 (14,793) – – 1,248
Loss before income tax Income tax	(378,734) (373,387) – –
Net loss	(378,734) $ (373,387) $
Other comprehensive income Items that may not be reclassified subsequently to net loss: Revaluation of marketable securities	7,566 –
Other comprehensive income	7,566 –
Total comprehensive loss	(371,168) $ (373,387) $
Total comprehensive loss	(371,168) $ (373,387) $
Net loss attributable to: Shareholders of the Company Non-controlling interests	(366,651) $ (356,990) $ (12,083) (16,397)
	(378,734) $ (373,387) $
Total comprehensive loss attributable to: Shareholders of the Company Non-controlling interests	(359,085) $ (356,990) $ (12,083) (16,397)
Total	(371,168) $ (373,387) $
Loss per share Basic and diluted loss per share attributable to shareholders of the Company	(0.00) $ (0.00) $
Weighted average number of common shares outstanding	187,755,348 174,322,825

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

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Northcliff Resources Ltd.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited – 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 $ – – – – (356,990) (356,990) (16,397) (373,387) – – – – – – – –
Total comprehensive loss Equity-settled share-based payments 10 Issuance of common shares pursuant to private placements	– – – – (356,990) (356,990) (16,397) (373,387) – – 32,500 – – 32,500 – 32,500 17,375,600 861,138 – – – 861,138 – 861,138
Balance at January 31, 2020	191,131,829 58,901,466 $ 4,503,078 $ (234,867) $ (38,739,162) $ 24,430,515 $ 3,029,211 $ 27,459,726 $
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 $ – – – – (366,651) (366,651) (12,083) (378,734) – – – 7,566 – 7,566 – 7,566
Total comprehensive loss Equity-settled share-based payments 10 Settlement of Restricted Share Units 10 (b)	– – – 7,566 (366,651) (359,085) (12,083) (371,168) – – 66,501 – – 66,501 – 66,501 – – (38,066) – – (38,066) – (38,066)
Balance atJanuary 31, 2021	191,131,829 58,901,466 $ 4,674,093 $ (223,518) $ (39,831,894) $ 23,520,147 $ 3,144,424 $ 26,664,571 $

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

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Northcliff Resources Ltd.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited – Expressed in Canadian Dollars)

Note	Three months ended January 31,
	2021 2020
Operating activities Net loss Adjustments for: Amortization 3 Equity-settled share-based payments 10 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	(378,734) $ (373,387) $ 177 179 66,501 32,500 (2,879) (5,328) 14,793 – – (1,248) 5,393 23,535 21,778 64,853 61,622 15,534
Cash used in operating activities	(211,349) (243,362)
Investing activities Deferred mineral development costs 3 Interest received	(58,205) (118,208) 2,879 5,328
Cash used in investing activities	(55,326) (112,880)
Financing activities Net proceeds from private placement 9(b) Settlement of Restricted Share Units (RSU) in cash 9(c)	– 861,138 (38,066) –
Cash (used in) provided by financing activities	(38,066) 861,138
(Decrease) increase in cash Foreign exchange translation difference on cash held Cash, beginning balance	(304,741) 504,896 – 1,248 1,591,395 1,139,475
Cash, ending balance 5	1,286,654 $ 1,645,619 $

Supplementary cash flow information: (Note 5)

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

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For the three months ended January 31, 2021 and 2020 (Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

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.

These condensed consolidated interim 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 8), 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.

2 . SIGNIFICANT ACCOUNTING POLICIES

(a) Statement of Compliance

These Financial Statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”), as issued by the International Accounting Standards Board (“IASB”). These Financial Statements do not include all of the information and footnotes required by International Financial Reporting Standards (“IFRS”) for complete financial statements for year-end reporting purposes. These Financial Statements should be read in conjunction with the Group’s consolidated financial statements as at and for the year ended October 31, 2020. Results for the interim reporting period are not necessarily indicative of future results. The accounting policies and methods of computation applied by the Group in these Financial Statements are the same as those applied by the Group in its most recent annual consolidated financial statements which are filed under the Company’s profile on SEDAR at www.sedar.com.

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Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended January 31, 2021 and 2020

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

(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.

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.

There was no change in the composition of the Group during the current fiscal quarter.

(c) Significant Accounting Estimates and Judgements

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.

3 . MINERAL PROPERTY AND EQUIPMENT

Three months ended January 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		58,205		–		58,205
Balance at January 31,2021	$	26,531,019	$	46,287	$	26,577,306
Accumulated amortization
Balance at November 1, 2020	$	–	$	45,415	$	45,415
Amortization for the period		–		177		177
Balance at January 31,2021	$	–	$	45,592	$	45,592
Carrying amount
Net carrying amount at January 31, 2021	$	26,531,019	$	695	$	26,531,714

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:

	Threemonths ended January 31,
	2021 2020
Engineering and design Environmental and permitting Community and sustainability	5,994 $ 13,564 $ – 59,275 52,211 45,369
Total	58,205 $ 118,208 $

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Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended January 31, 2021 and 2020

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

Three months ended January 31, 2020	Mineral property	Mineral property
		acquisition and
	development costs			Equipment		Total
Cost
Balance at November 1, 2019	$	26,187,523	$	46,287	$	26,233,810
Additions during the period		118,208		–		118,208
Balance at January 31,2020	$	26,305,731	$	46,287	$	26,352,018
Accumulated amortization
Balance at November 1, 2019	$	–	$	44,700	$	44,700
Amortization forthe period		–		179		179
Balance at January 31,2020	$	–	$	44,879	$	44,879
Carrying amount		–		–		–
Net carrying amount at January 31, 2020	$	26,305,731	$	1,408	$	26,307,139

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

		January 31,		October 31,
		2021		2020
Bank demand deposits	$	1,286,654	$	1,591,395
Cash held in the Partnership included in the total cash balance above:
Cash available for use by the Partnership	$	51,367	$	729,825
Cash not available for use by the Partnership:
Cash held as collateralagainst a standbyletterofcredit		874,000		185,000
Total cash held in the Partnership	$	925,367	$	914,825

6 . AMOUNTS RECEIVABLE AND PREPAID EXPENSES

		January 31,		October 31,
		2021		2020
Prepaid expenses	$	10,829	$	17,290
Sales tax receivable		11,492		10,425
Total	$	22,321	$	27,715

7 . AMOUNTS PAYABLE AND OTHER LIABILITIES

Due within 12 months		January 31,		October 31,
		2021		2020
Amounts payable	$	58,250	$	42,610
Accrued liabilities		26,271		18,688
Sales taxpayable		–		1,445
Total	$	84,521	$	62,743

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Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended January 31, 2021 and 2020 (Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

8 . LOAN PAYABLE

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

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 has a term of 12 months. 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.

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 October 2020 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 October 2020 Loan plus accrued interest represents of the implied value of the Sisson Partnership based on the Conversion Price.

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 October 2020 Loan, net of transaction costs, at amortized cost as a financial liability.

The continuity of the October 2020 Loan is as follow:

The continuity of the October 2020 Loan is as follow:
		Three months		Year
	ended January 31,		ended	October 31,
		2021		2020
Beginning balance	$	381,312	$	–
Cash advance received		–		400,000
Financing Costs		–		(18,688)
Interest accrual		10,082		–
Amortizationof financing costs		4,711		–
Total	$	396,105	$	381,312

9 . SHARE CAPITAL

(a) Authorized share capital

As at January 31, 2021 and October 31, 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

At January 31, 2021, there were 191,131,829 Common Shares outstanding (October 31, 2020 – 191,131,829).

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.

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Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended January 31, 2021 and 2020

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

(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 10.

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.

10 . EQUITY-SETTLED SHARE-BASED PAYMENTS

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

	Threemonths ended January 31,
	2021 2020
Option-based award (note 10(a)) Share‐based award – Restricted Share Units (note 10(b)) Share‐based award–Deferred Share Units (note 10(c))	3,666 $ 32,500 $ 11,085 – 51,750 –
	66,501 $ 32,500 $

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

The following summarizes the changes in the Options:

Continuity of Options	January 31,2021 Three months ended January 31,2020 Three months ended
	Weighted Weighted Number of average Number of average Options exerciseprice Options exerciseprice
Outstanding – beginning balance Expired	4,185,000 $ 0.07 5,700,800 $ 0.08 (650,000) $ 0.09 – –
Outstanding–ending balance	3,535,000 $ 0.07 5,700,800 $ 0.08
Exercisable–ending balance	– $ 0.07 3,310,136 $ 0.09

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	January31,2021 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 2.28 3,535,000 2.53 – – 650,000 0.20
Total	3,535,000 2.28 4,185,000 2.17

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Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended January 31, 2021 and 2020

(Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

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

Options exercisable Exercise price	January31,2021 October 31,2020
	Weighted average Weighted average Number of remaining Number of remaining Options contractual life Options contractual life exercisable (years) exercisable (years)
$ 0.07 $ 0.09	3,535,000 2.28 2,356,671 2.53 – – 650,000 0.20
Total	3,535,000 2.28 3,006,671 2.03

(b) Restricted Share Units (“RSU”)

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

Number of RSUs	Threemonths ended January 31,
	2021 2020
Outstanding – beginning balance Granted Exercised	3,389,251 2,710,565 1,181,642 – (790,048) –
Outstanding–ending balance	3,780,845 2,710,565
Vested–ending balance	– –

(c) Deferred Share Units (“DSU”)

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

11 . 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:
		January 31,		October 31,
		2021		2020
Unpaid directors' fees (a)	$	213,594	$	170,875
Amount owing to Hunter Dickinson Services Inc. (b)		508,381		489,478
Total	$	721,975	$	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.

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Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended January 31, 2021 and 2020 (Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

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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:

	Threemonths ended January 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	86,000 $ 145,000 $ – 21,000 88,000 16,000
Total	174,000 $ 182,000 $

(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.

(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:

	Threemonths ended January 31,
	2021 2020
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	65,000 $ 63,000 $ 5,000 2,000 – 22,000 – 48,000 2,000 1,000 50,000 48,000
	122,000 $ 184,000 $
Reimbursement of third party costs incurred by HDSI on behalf of the Group	20,000 $ 21,000 $

At January 31, 2021, the Group owed $508,381 to HDSI on account of services rendered and third party costs paid by HDSI (October 31, 2020 – $489,478).

12 . EMPLOYMENT COSTS

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

	Threemonths ended January 31,
	2021 2020
Project management and financing General and administration expenses Equity-settled share-based payments	46,212 $ 69,287 $ 118,788 157,338 66,501 32,500
	231,501 $ 259,125 $

(i) Salaries include remuneration of KMPs and amounts paid to HDSI for services (note 11(a)).

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For the three months ended January 31, 2021 and 2020 (Unaudited – Expressed in Canadian Dollars, unless otherwise stated)

Northcliff Resources Ltd.

Notes to the Condensed Consolidated Interim Financial Statements

13 . EVENTS AFTER THE REPORTING PERIOD

After the end of the reporting period, in March 2021, the Company announced that it had entered into an agreement with Todd for a $400,000 loan with terms similar to the October 2020 Loan (Note 8).

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