Optegra Ventures Inc. — Annual Report 2020

Jan 27, 2021

ESSEX MINERALS INC.

Financial Statements

For the Years Ended September 30, 2020 and 2019

(Expressed in Canadian Dollars)

Management’s Responsibility for Financial Reporting

To the Shareholders of Essex Minerals Inc. (the “Company”):

Management is responsible for the preparation and presentation of the accompanying financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that transactions are authorized, assets are safeguarded, and financial records are properly maintained to provide reliable information for the preparation of financial statements.

The Board of Directors and Audit Committee are composed primarily of Directors who are neither management nor employees of the Company. The Board is responsible for overseeing management in the performance of its financial reporting responsibilities. The Board fulfils these responsibilities by reviewing the financial information prepared by management and discussing relevant matters with management and external auditors. The Audit Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Board of Directors is also responsible for recommending the appointment of the Company’s external auditors.

MNP LLP, an independent firm of Chartered Professional Accountants, is appointed by the shareholders to audit the financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, both the Audit Committee and management to discuss their audit findings.

January 25, 2021

Independent Auditor's Report

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To the Shareholders of Essex Minerals Inc.:

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Opinion

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We have audited the financial statements of Essex Minerals Inc. (the "Company"), which comprise the statements of financial position as at September 30, 2020 and September 30, 2019, and the statements of loss and comprehensive loss, changes in shareholders’ equity (deficit) and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

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In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2020 and September 30, 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

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Basis for Opinion

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We conducted our audits in accordance with Canadian generally accepted auditing standards. 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 audits 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.

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Material Uncertainty Related to Going Concern

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We draw attention to Note 1 in the financial statements, which indicates that the Company had a deficit of $3,535,262 and working capital of $2,909,004 as at September 30, 2020. 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.

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Other Information

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

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Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

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In connection with our audits of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audits 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. We have nothing to report in this regard.

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

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Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, 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.

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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

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Suite 2200, MNP Tower, 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3, Phone: (604) 685-8408, 1 (877) 688-8408

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accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

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Auditor's Responsibilities for the Audit of the Financial statements

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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 generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

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• 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.

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

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

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

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Vancouver, British Columbia January 25, 2021

Chartered Professional Accountants

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Suite 2200, MNP Tower, 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3, Phone: (604) 685-8408, 1 (877) 688-8408

ESSEX MINERALS INC.

Statements of Financial Position

As at September 30, 2020 and 2019 Expressed in Canadian Dollars

September 30, 2020 Note	September 30,
	2019
ASSETS Current assets Cash $ 2,911,633 Restricted cash 5 15,000 Receivables 6 62,638 Prepaid expenses and deposit 118,166	$ 46,793
	-
	21,103
	15,000
3,107,437 Non-current assets Equipment 7 5,150	82,896
	-
Exploration and evaluation assets 8 757,312	-
Total assets $ 3,869,899	$ 82,896
LIABILITIES Current liabilities Accounts payable and accrued liabilities 9 $ 198,433 Loanpayable 10 -	$ 257,562 113,400
Total liabilities 198,433 SHAREHOLDERS' EQUITY (DEFICIT) Share capital 11 5,939,418 Reserves 11 1,267,310 Deficit (3,535,262)	370,962
	888,219
	303,239
	(1,479,524)
Total shareholders' equity (deficit) 3,671,466	(288,066)
Total liabilities and shareholders' equity (deficit) $ 3,869,899	$ 82,896

Nature of Operations and Going Concern - Note 1 Subsequent Events – Note 17

These financial statements are authorized for issue by the Board of Directors on January 25, 2021:

They are signed on the Company’s behalf by:

“Paul Loudon” Director/CEO	“James Harris”
	Director

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

ESSEX MINERALS INC.

Statements of Loss and Comprehensive Loss For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars, except for number of shares

		Year ended	Year ended
		September 30,	September 30,
	Note	2020	2019
Operating Expenses
General and administration		$ 38,356	$ 41,744
Investor relations		31,714	-
Management and consulting fees	12	436,550	30,500
Professional fees	12	121,710	147,013
Property investigation costs	12	681,119	-
Regulatory and transfer agent fees		34,705	18,086
Share-based payments	11	693,783	-
Travel and promotion		12,354	-
Total expenses		(2,050,291)	(237,343)
Other Items
Interest expense	10	(2,600)	(7,400)
Write-off of receivable	6	(2,847)	-
Write-off of exploration and evaluation assets	8	-	(462,656)
Net loss		$(2,055,738)	$(707,399)
Loss and comprehensive loss		$(2,055,738)	$(707,399)
Basic and diluted lossper common share		$(0.16)	$(0.34)
Weighted average number of common shares outstanding		13,045,218	2,085,001

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

ESSEX MINERALS INC.

Statements of Cash Flows

For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

	Year ended	Year ended
	September 30,	September 30,
	2020	2019
Operating activities
Net loss for the year	$ (2,055,738)	$ (707,399)
Adjustment for non-cash item:
Interest expense	2,600	7,400
Share-based payments	693,783	-
Write-off of receivable	2,847	-
Write-off of exploration and evaluation assets	-	462,656
Changes in non-cash working capital items:
Receivables	(44,382)	(9,802)
Prepaid expenses and deposit	(104,030)	(15,000)
Due to related parties	-	(63,000)
Accounts payable and accrued liabilities	(152,667)	176,244
Net cash flows used in operating activities	(1,657,587)	(148,901)
Investing activities
Restricted cash	(15,000)	-
Purchase of equipment	(4,286)	-
Acquisition of exploration and evaluation assets	(757,312)	-
Net cash flows used in investing activities	(776,598)	-
Financing activities
Proceeds from (repayment of) loan	(116,000)	106,000
Shares issued for cash (net of issuance costs)	5,415,025	-
Net cash flows provided by financing activities	5,299,025	106,000
Net change in cash	2,864,840	(42,901)
Cash, beginning	46,793	89,694
Cash, ending	$ 2,911,633	$ 46,793

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

ESSEX MINERALS INC.

Statement of Changes in Shareholders’ Equity (Deficit) For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars, except for number of shares

	Total Common Shares Note Number Amount Reserves Deficit
Balance, September 30, 2018 Net loss for theyear	2,085,001 $ 888,219 $ 303,239 $ (772,125) $ 419,333 - - -(707,399) (707,399)
Balance at September 30, 2019	2,085,001 $ 888,219 $ 303,239 $(1,479,524) $ (288,066)
Share issued, private placements Share issuance costs - finders' shares Share issuance costs - finders' warrants Share issuance costs Share-based payments Net loss for theyear	11 25,240,000 5,560,000 - - 5,560,000 11 1,622,800 - - - - 11 - (270,288) 270,288 - - 11 - (238,513) - - (238,513) 11 - - 693,783 - 693,783 - - -(2,055,738) (2,055,738)
Balance at September 30, 2020	28,947,801$ 5,939,418$1,267,310$(3,535,262) $ 3,671,466

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

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

1. Nature of Operations and Going Concern

Essex Minerals Inc. (the “Company”) was incorporated on November 19, 2012 under the Business Corporations Act (British Columbia). The Company’s principal business activity is the exploration of mineral properties

The head office and principal address of the Company is located at 3002-1211 Melville Street, Vancouver, BC V6E 0A7, and the registered and records office of the Company is located at 2500-700 W Georgia Street, Vancouver, BC V7Y 1B3.

These financial statements have been prepared using accounting principles applicable to a going concern which assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. The Company emphasises that attention should be drawn to matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern the most significant of these being the Company’s ability to carry out its business objectives dependent on the Company’s ability to receive continued financial support from related parties, to obtain public equity financing, or to generate profitable operations in the future. As at September 30, 2020, the Company has no properties in commercial production, continues to incur operating losses and no source of operating cash flow. The Company is considering a number of alternatives to secure additional capital including obtaining funding facilities or equity financings. Although management intends to secure additional financing there is no assurance management will be successful or that it will establish future profitable operations. These factors together indicate that a material uncertainty exists that may cast significant raise substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

		September 30,		September 30,
		2020		2019
Deficit	$	(3,535,262)	$	(1,479,524)
Working capital (deficiency)	$	2,909,004	$	(288,066)

If the going concern assumption was not appropriate for these financial statements then adjustments would be necessary to the carrying value of assets and liabilities, the reported expenses and the statements of financial position classifications used, and such amounts would be material.

Since March 2020, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its operations in future periods.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

2. Basis of Preparation

The financial statements were approved by the Board of Directors of the Company on January 25, 2021.

Statement of Compliance

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board and Interpretations of the International Financial Reporting Interpretations Committee.

Basis of Presentation

These financial statements have been prepared on a historical cost basis except for some financial instruments classified in accordance with measurement standards under IFRS. The financials statements are presented in Canadian dollars unless otherwise specified.

Certain comparative figures have been reclassified to conform to the current year’s presentation.

Functional and Presentation Currency

These financial statements are presented in Canadian dollars, which is the Company’s functional currency.

3. Significant Accounting Judgements and Estimates

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and related disclosure. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgment is used mainly in determining how a balance or transaction should be recognized in the financial statements. Estimates and assumptions are used mainly in determining the measurement of recognized transactions and balances. Actual results may differ from these estimates.

Significant areas where management’s judgment has been applied include:

• Impairment of exploration and evaluation assets (E&E assets) In accordance with the Company’s accounting policy, the Company’s E&E assets are evaluated every reporting period to determine whether there are any indications of impairment. If any such indication exists, which is often judgmental, a formal estimate of recoverable amount is performed, and an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount. The recoverable amount of an asset or cash generating group of assets is measured at the higher of fair value less costs to sell and value in use.

The evaluation of asset carrying values for indications of impairment includes consideration of both external and internal sources of information, including such factors as market and economic conditions, metal prices, future plans for the Company’s mineral properties and mineral resources and/or reserve estimates.

• The assessment of the Company’s ability to continue as a going concern and to raise sufficient funds to pay for its ongoing operating expenditures, meet its liabilities for the ensuing year as they fall due, and to fund planned and contractual exploration programs, involves judgment based on historical experience and other factors including expectation of future events that are believed to be reasonable under the circumstances.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

3. Significant Accounting Judgements and Estimates (cont’d)

Significant areas requiring the use of management estimates and assumptions include:

• Asset Retirement Obligations The Company recognizes the liability for an asset retirement obligation. The relevant costs associated with the asset retirement obligations are estimated based on the Company’s interpretation of current regulatory requirements. Based on the assessment, the Company did not have any significant asset retirement obligations at the reporting dates.

• Valuation of options and warrants Estimating the fair value of the granted options and warrants required determining the most appropriate valuation model which is dependent on the terms and conditions of the grant. The fair value is estimated using the Black Scholes Model. The estimate of option valuation also requires determining the most appropriate inputs to the valuation model including the volatility, expected life of warrants, risk free interest rate and dividend yield.

• Current and deferred taxation

The determination of income tax expense and the composition of deferred income tax assets and liabilities involves judgment and estimates as to the future taxable earnings, expected timing of reversals of deferred income tax assets and liabilities, and interpretations of tax laws. The Company is subject to assessments by tax authorities who may interpret the tax law differently. Changes in these interpretation, judgements and estimates may materially affect the final amounts.

4. Significant accounting policies

Cash

Cash consists of cash, deposits held at call with banks. As a result, the carrying amount of cash approximates fair value.

Equipment

Equipment are stated at cost less accumulated amortization and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of equipment have different useful lives, they are accounted for as separate items of equipment.

Depreciation on the equipment is recognized using declining balance method at a rate of 30%. Depreciation method, useful life and residual values are reviewed each financial year end and are adjusted if appropriate.

Leases

On October 1, 2019, the Company adopted IFRS 16 – Leases is a new standard which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both the lessee and lessor. It introduces a single lessee accounting model that requires the recognition of all assets and liabilities arising from a lease. The adoption of this new standard did not have a material impact on the financial statements of the Company since the Company does not have any lease.

Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control; related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

4. Significant accounting policies (cont’d)

Impairment of non-financial assets

The carrying amount of the Company’s assets (which include equipment and exploration and evaluation assets) are reviewed at each reporting date to determine whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. An impairment loss is recognized whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognized in the statement of loss and comprehensive loss.

The recoverable amount of assets is the greater of an asset’s fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is only reversed if there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount.

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.

Exploration and evaluation assets

The Company is in the exploration stage with respect to its investment in mineral interests. Accordingly, once a license to explore an area has been secured, the Company follows the practice of capitalizing all costs relating to the acquisition of, exploration for and development of exploration and evaluation assets. Such costs include, but are not limited to, geological and geophysical studies, exploratory drilling and sampling. At such time as commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable reserves. The aggregate costs related to abandoned exploration and evaluation assets are charged to operations at the time of any abandonment or when it has been determined that there is evidence of a permanent impairment.

The Company reviews the indicators of impairment of each property on an annual basis, at a minimum. This review generally is made by reference to the timing of exploration work, work programs proposed, and the exploration results achieved by the Company and others. When the indicators of impairment exist, the carrying value of a property is compared to its net recoverable amount. An impairment adjustment is made for the decline in fair value.

The amounts shown for the exploration and evaluation assets represent costs incurred to date and do not reflect present or future values. Acquisition costs represent shares or cash paid to acquire the rights to the resource property, while exploration expenditures represent amounts paid to explore and develop the resource properties. The recoverability of these capitalized costs is dependent upon the existence of economically recoverable reserves and the ability of the Company to obtain necessary financing to successfully complete their exploration program.

From time to time, the Company may acquire or dispose of mineral interests pursuant to the terms of option agreements. Due to the fact that options are exercisable entirely at the discretion of the optionee, the amounts payable or receivable are not recorded. Option payments are recorded in the period that the payments are made or received. The Company does not accrue costs to maintain mineral interests in good standing.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

4. Significant accounting policies (cont’d)

Asset retirement obligation

Provisions for the decommissioning, restoration and rehabilitation are recognized in other liabilities when the Company has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period and are discounted to present value where the effect is material. Upon initial recognition of the liability, the corresponding costs are added to the carrying amount of the related asset and amortized as an expense, using a systematic method, over the economic life of the asset. Following initial recognition of the asset retirement obligation, the carrying amount of the liability is adjusted annually for the passage of time and changes to the amount or timing of the underlying cash flows needed to settle the obligation. The Company performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts. The Company does not have any asset retirement obligation as at September 30, 2020 and 2019.

Share capital

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

Share issue costs

Professional, consulting, regulatory and other costs directly attributable to equity financing transactions are recorded as deferred share issue costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issue costs are charged to share capital when the related shares are issued. Deferred share issue costs related to financing transactions that are not completed are charged to expenses.

Share purchase warrants

The Company bifurcates units consisting of common shares and share purchase warrants using the residual value approach whereby it first measures the common share component of the unit at fair value using quoted market prices as input values and then allocates any residual amount to the warrant component of the unit. The residual value of the warrant component is credited to contributed surplus. If the proceeds from the offering are less than or equal to the estimated fair market value of shares issued, a Nil carrying amount is assigned to the warrants. When warrants are exercised, the corresponding assigned value of the warrants is reclassified to share capital. Warrants that are issued as payments for agency fee or other transactions costs are accounted for as share-based payments.

Share-based payments

Share-based payments to directors, officers and consultants are measured at the fair value of the goods or services received, unless that fair value cannot be estimated reliably, in which case the fair value of the equity instruments issued is used. The value of the goods or services is recorded at the earlier of the vesting date, or the date the goods or services are received. The corresponding amount is recorded to the contributed surplus. The Company applies the fair value method of accounting for share-based payments and the fair value is calculated using the Black-Scholes option pricing model.

Loss per share

Basic loss per share is calculated using the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury method. The treasury method assumes that proceeds received from the exercise of stock options and warrants are used to repurchase common shares at the prevailing market rate. Diluted loss per share is equal to the basic loss per share as the outstanding options and warrants are anti-dilutive.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

4. Significant accounting policies (cont’d)

Deferred financing costs

Costs directly identifiable with the raising of capital will be charged against the related capital stock. Costs related to shares not yet issued are recorded as deferred financing costs. These costs will be deferred until the issuance of the shares to which the costs relate, at which time the costs will be charged against the related capital stock or charged to operations if the shares are not issued.

Income taxes

Income tax expense comprises current and deferred tax. Income tax is recognized in the statement of loss and comprehensive loss except to the extent it relates to items recognized directly in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recognized using the 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. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Financial Instruments

Classification

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

At September 30, 2020, the Company measured cash, restricted cash, receivables, accounts payables and accrued liabilities and loan payable at amortized cost.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

4. Significant accounting policies (cont’d)

Financial Instruments

Measurement

Financial assets at FVTOCI

Elected investments in equity investments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses recognized in other comprehensive loss.

Financial assets and liabilities at amortized cost

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

Financial assets and liabilities at FVTPL

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

Impairment of financial assets and amortized cost

The Company recognized a loss allowance for expected credit losses on financial assets that are measured at amortized cost.

At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset’s credit risk has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the statements of loss and comprehensive loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the statements of loss and comprehensive loss. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss).

Financial liabilities

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled, or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the statements of loss and comprehensive loss.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

4. Significant accounting policies (cont’d)

Accounting Standards Issued But Not Yet Effective

Pronouncements that are not applicable to the Company have not been included in these financial statements.

IAS 1 Presentation of Financial Statements (Amendment)

In October 2018, the International Accounting Standards Board (IASB) issued amendments to IAS 1 which were incorporated into Part I of the CPA Canada Handbook – Accounting by the Accounting Standards Board (AcSB) in February 2019. The amendments clarify the definition of material and how it should be applied, as well as align the definition of material across IFRS standards and other publications. The amended definition of material states: Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

The amendments are effective for annual periods beginning on or after January 1, 2020 and are required to be applied prospectively. Earlier application is permitted. The Company does not expect the adoption of this standard to have a material impact on the Company’s financial statements.

5. Restricted Cash

The Company has pledged $15,000 (September 30, 2019 - $Nil) in cash as collateral against the credit limits of credit cards issued to the Company. Cash pledged is held in short-term GIC maturing in one year or less and it will be automatically renewed on maturity date.

During the year ended September 30, 2020, the Company recorded $47 (year ended September 30, 2019 - $Nil) in interest income on restricted cash.

6. Receivables

Receivables consist of the following:

	September 30, 2020	September 30, 2019
	$	$
GST receivable	56,417	20,821
Other receivable	6,221	282
Receivables	62,638	21,103

During the year ended September 30, 2020, the Company wrote off $2,847 of GST receivable.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

7. Equipment

Cost
Balance, September 30, 2018 and 2019	$	-
Additions		5,150
Balance,September 30,2020		5,150
Accumulated depreciation
Balance,September 30,2018 and 2019		-
Balance,September 30,2020		-
Net book value
Balance,September 30,2019	$	-
Balance, September 30, 2020	$	5,150

8. Exploration and Evaluation Assets

Advance for Australian gold properties

On May 1, 2020, the Company announced the signing of an earn-in joint venture over three exploration properties in Australia selected for their potential to host large, high-grade gold deposits. The properties were assembled by a private Australian company KNX Resources Ltd (“KNX”) in the Georgetown region of Queensland and the Pine Creek region of the Northern Territory.

The three properties are:

Cumberland

Five granted exploration permits covering 26,000 ha, 30 km from Georgetown, North Queensland, 70 km northwest of the former 3.5 million-ounce Kidston gold mine. The property has the potential to host highgrade epithermal gold mineralisation and is currently owned 80% by KNX and 20% by another Australian private company, AMD Resources Ltd. (“AMD”) The property has a number of drill-ready exploration targets.

Mt. Turner

A granted exploration permit covering 6,000 ha, 30 km northeast of Cumberland with potential to host highgrade epithermal mineralisation and large gold-copper porphyry mineralisation. This property is owned 100% by KNX.

Compass Creek

Three granted exploration permits covering 6,400 ha in Pine Creek goldfield, 28 km north of Kirkland Lake’s 2.5Mtpa Union Reefs mill. The property has the potential to host large high-grade orogenic gold mineralisation and is owned 80% by KNX and 20% by AMD.

Under the terms of the agreement, Essex has the right to earn an initial Fist Stage Earn-in of 50% of KNX’s interest in the three properties by spending AUD $1,000,000 on exploration by May 2021.

The Company has committed to spend an initial AUD $125,000 within three months to pay for aerial lidar mapping and assaying of soil samples to better position initial drill programs and completion of NI 43-101 property reports.

At the end of the First Stage Earn-in, Essex has the right to acquire the balance of KNX’s interest in the properties at independent valuation or earn an additional 25% interest in Mt Turner and 20% interest in Cumberland and Compass Creek by funding a further AUD $3,000,000 on exploration.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

8. Exploration and Evaluation Assets (cont’d)

Advance for Australian gold properties (cont’d)

As at September 30, 2020, the Company advanced $757,312 (AUD $837,300) to KNX as part of its initial First Stage Earn-In on the KNX properties.

On November 29, 2020, KNX acknowledged that the Company had earned its First Stage Earn-in interest. The Company is awaiting outstanding exploration results before considering future expenditure on the properties.

Gold Stream Joint Venture

On July 13, 2020, the Company entered into a gold stream joint venture agreement with Zola Minerals Inc. (“Zola”), an arm’s length private streaming and royalty company whereby the Company has the option to participate for a 50% interest with respect to the gold re-leach project in Chile “Chile Project” in exchange for $300,000 cash payment to Zola and financing the upfront payment of up to US$4.5 million on the first project. Gross profits generated will be shared 50:50 with Zola, subject to a minimum IRR to the Company of 15% on funds invested. The cash payment to Zola was recorded as project investigation costs in the statements of loss and comprehensive loss.

Melba Mineral Property

On December 18, 2012 and subsequently amended on September 30, 2014, December 1, 2014, September 30, 2015, November 5, 2015 and October 3, 2016, the Company entered into an option agreement to acquire a 100% interest in 8 mining claims (“Melba Property”) located in the Kamloops Mining District of British Columbia. To acquire the 100% interest, the Company must make total cash payments of $120,000 and issue 100,000 of the Company’s common shares. During the term of the option, the Company is required to keep the claims in good standing, and to incur minimum exploration expenditures on the properties.

During the year ended September 30, 2019, the Company decided not to proceed further with the Melba Property and did not make the required cash payment. As a result, an impairment charge of $462,656 was taken to the statements of loss and comprehensive loss.

9. Accounts Payable and Accrued Liabilities

	September 30, 2020	September 30, 2019
	$	$
Accounts payable	164,443	162,872
Amounts due to related parties (Note 12)	4,150	94,500
Accrued liabilities	29,840	190
Accountspayable and accrued liabilities	198,433	257,562

10. Loan Payable

On October 1, 2018, the Company received a loan of $106,000 from a third party. The loan bore interest at 7% per annum and was payable on demand. During the year ended September 30, 2020, the Company repaid the loan principal plus accrued interest for a total of $116,000.

As at September 30, 2020, the loan payable is $Nil (September 30, 2019: $113,400).

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

11. Share Capital

a) Authorized

Unlimited number of common shares with no par value.

b) Issued and outstanding

As at September 30, 2020, 28,947,801 (September 30, 2019: 2,085,001) common shares with no par value were issued and outstanding.

On January 31, 2020, the Company consolidated all the issued and outstanding common shares on a five for one basis. The consolidation has reduced the common shares issued and outstanding from 10,425,007 pre-consolidated to 2,085,001 post-consolidated common shares. All shares, warrants, options, per share figures and references in the financial statement have been retroactively adjusted to reflect the share consolidation.

On March 17, 2020, the Company completed the first tranche of a non-brokered private placement financing, issuing 12,675,000 common shares at a price of $0.10 per share for gross proceeds of $1,267,500.

On March 18, 2020, the Company completed the second tranche of a non-brokered private placement financing, issuing 2,325,000 common shares at a price of $0.10 per share for gross proceeds of $232,500.

On April 23, 2020, in connection with the March 2020 private placement, the Company paid finder’s fee by issuing 1,451,500 common shares with a fair value of $387,236.

On June 26, 2020, the Company closed the first tranche of a non-brokered private placement financing, issuing 5,160,000 common shares at a price of $0.25 per share for gross proceeds of $1,290,000.

In connection with the June 26, 2020 private placement, finders’ fee of $63,000 in cash and 252,000 finders’ warrants with a fair value of $75,967 were paid. The finders’ warrants are exercisable at a price of $0.25 for a period of two years from the date of issuance.

On June 30, 2020, the Company closed the second tranche of a non-brokered private placement financing, issuing 80,000 common shares at a price of $0.25 per share for gross proceeds of $20,000.

On September 21, 2020, the Company completed a non-brokered private placement financing, issuing 5,000,000 common shares for a price of $0.55 per share for gross proceeds of $2,750,000.

In connection with the September 21, 2020 private placement, the Company paid $70,797 of finders’ fee in cash. The Company also paid finders’ fee by issuing 171,300 common shares with a fair value of $128,475 and 300,000 finders’ warrants with a fair value of $194,321. The finders’ warrants are exercisable at a price of $0.55 for a period of two years from the date of issuance.

During the year ended September 30, 2020, share issuance costs of $1,024,513 were incurred in connection with the March, June and September 2020 private placements.

c) Escrow shares

As at September 30, 2020, the Company has Nil (September 30, 2019 - 435,150) common shares held in escrow.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

11. Share Capital (cont’d)

d) Warrants

In connection with the June 25, 2020 private placement, 252,000 finders’ warrants were issued. Each warrant gives the holder the right to acquire one share of the Company at a price of $0.25 for a term of two years. The finders’ warrants were valued at $75,967 using the Black-Scholes pricing model with the following assumptions: risk free rate of 0.29%, volatility of $196.18%, dividends of nil, and expected life of two years.

In connection with the September 21, 2020 private placement, 300,000 finder warrants were issued. Each warrant gives the holder the right to acquire one share of the Company at a price of $0.55 for a term of two years. The finders’ warrants were valued at $194,321 using the Black-Scholes pricing model with the following assumptions: risk free rate of 0.23%, volatility of $198.60%, dividends of nil, and expected life of two years.

The changes in warrants during the years ended September 30, 2020 and 2019, are as follows:

The changes in warrants during the years ended	September 30, 2020 and	2019, are as follows:
	Number of	Weighted Average
	Warrants	Exercise Price($)
Balance, September 30, 2018 and 2019	-	-
Issued	552,000	0.41
Balance, September 30, 2020	552,000	0.41

Warrants outstanding as at September 30, 2020 are as follows:

Number of		Exercise	Expiry
Warrants		Price	Date
252,000	$	0.25	June 26, 2022
300,000	$	0.55	September 21,2022
552,000	$	0.41

Weighted average remaining life of the warrants is 1.87 as of September 30, 2020.

e) Stock options

On July 17, 2020 the Company granted 2,100,000 incentive stock options to its directors and officers vesting immediately. The stock options are exercisable for a period of 5 years, expiring on July 17, 2025, at an exercise price of $0.40 per share.

The Company recorded share-based payments of $693,783 (September 30, 2019 - $Nil) relating to the options vested during the year. The fair value of stock options granted was determined using the Black-Scholes option pricing model with the following assumptions: risk free rate of 0.35%, volatility of $173.11%, dividends of nil, and expected life of five years.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

11. Share Capital (cont’d)

e) Stock options (cont’d)

The changes in stock options during the years ended September 30, 2020 and 2019, are as follows:

	Number of	Weighted Average
	Options	Exercise Price ($)
Balance, September 30, 2018 and 2019	-	-
Stock options granted	2,100,000	0.40
Balance, September30,2020	2,100,000	0.40

Stock options outstanding as at September 30, 2020 are as follows:

Number of Options	Number of Options	Exercise	Expiry
Outstanding	Exercisable	Price($)	Date
2,100,000	2,100,000	0.40	July 17, 2025

Weighted average remaining life of the options is 4.80 as of September 30, 2020.

12. Related Party Balances and Transactions

Balances

As at September 30, 2020, the Company has $4,150 (September 30, 2019 - $94,500) due to related parties included in accounts payables and accrued liabilities. These amounts are unsecured, non-interest bearing and have no specified terms of repayment.

As at September 30, 2020, the Company has $24,000 (September 30, 2019 - $Nil) of management and consulting fees paid in advance to the related parties included in prepaid and deposit.

Transactions

During the years ended September 30, 2020 and 2019, the Company has the following related party transactions:

	September 30,	September 30,
	2020	2019
	$	$
Management and consulting fees - current directors and officers	150,762	-
Management and consulting fees - former directors and officer	4,645	30,000
Professional fees - former officer	6,000	-
Property investigation costs	58,810	-
Share-based payments	693,783	-
	914,000	30,000

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

13. Financial Risk Management

The Company’s financial instruments are exposed to certain financial risks, including liquidity risk, credit risk and interest rate risk.

Liquidity risk

Liquidity risk is the risk that the Company will not meet its financial obligations as they become due. Refer to Note 1 for further details related to the ability of the Company to continue as a going concern.

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at September 30, 2020, the Company had a cash balance of $2,911,633 (September 30, 2019 - $46,793) to settle current liabilities of $198,433 (September 30, 2019 - $370,960). All of the Company’s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.

Historically, the Company’s sole source of funding has been the issuance of equity securities for cash, primarily through private placements. The Company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amounts of financial assets best represent the maximum credit risk exposure at the reporting date. The Company’s cash is held in large Canadian financial institutions. The Company has not experience nor is exposed to any significant credit losses. As a result, the Company’s exposure to credit risk is minimal.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market interest rates. An immaterial amount of interest rate exposure exists in respect of cash balances on the statement of financial position. As a result, the Company is not exposed to material cash flow interest rate risk on its cash balances.

Foreign currency risk

Foreign currency exchange risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. The Company’s exploration assets are located in Australia and advances to the exploration assets are denominated in Australian dollar. However, given the exploration assets are not fair valued at each reporting date, the Company is not significantly exposed to foreign currency exchange risk.Fair value

The Company’s financial instruments measured at fair value consist of cash, restricted cash, receivables (excluding GST), accounts payable and accrued liabilities, and loan payable. The carrying values of cash and cash, restricted cash, receivables (excluding GST), accounts payable and accrued liabilities, and loan payable approximate their fair values due to their short-term in nature and/or the existence of market related interest rates on the instruments.

Financial instruments measure 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 fair value hierarchy are:

• Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities;

• Level 2 – inputs other than quoted prices that are observable for the other assets or liabilities either directly or indirectly; and

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

All financial instruments are classified as Level 1.

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

14. Commitments

See note 8.

15. Capital Management

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

The capital structure of the Company consists of shareholder’s equity, comprising issued capital, reserves and deficit. The Company is not exposed to any externally imposed requirements and the Company’s overall strategy with respect to capital risk management has not changed from prior year. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

16. Income Taxes

The following table reconciles the expected income tax expense (recovery) at the Canadian statutory income tax rates to the amounts recognized in the statement of loss and comprehensive loss for the years ended September 30, 2020 and 2019:

	2020	2019
	$	$
Net loss before tax	(2,055,738)	(707,399)
Statutorytax rate	27.00%	27.00%
Expected income tax	(555,049)	(190,998)
Non-deductible items	269,114	-
Share Issuance cost	(276,619)	-
Change in deferred tax asset not recognized	562,554	190,998
Total income tax expense	-	-

The unrecognized deductible temporary differences as at September 30, 2020 and 2019 are comprised of the following:

	2020	2019
	$	$
Non-capital loss carry-forwards	2,122,513	877,191
Share issuance costs	843,909	48,596
Exploration and evaluation assets	105,733	67,430
Equipment	4,595	-
Total unrecognized deductible temporarydifferences	3,076,750	993,217

ESSEX MINERALS INC. Notes to Financial Statements For the Years Ended September 30, 2020 and 2019 Expressed in Canadian dollars

16. Income Taxes (cont’d)

The Company has non-capital loss carryforwards of approximately $2,122,513 (2019: $877,191) which may be carried forward to apply against future income for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring in the following years:

Expiry	$
2032	12,261
2033	3,164
2034	86,146
2035	25,934
2036	85,640
2037	79,841
2038	274,730
2039	271,173
2040	1,283,624
Total	2,122,513