Pacific Ridge Exploration Ltd. — Interim / Quarterly Report 2021

Oct 27, 2021

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(An Exploration-Stage Company)

Condensed Consolidated Interim Financial Statements

September 30, 2021 and 2020

(Unaudited - Expressed in Canadian Dollars)

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NOTICE TO READER

THE ISSUER’S AUDITORS HAVE NOT REVIEWED OR BEEN INVOLVED IN THE PREPARATION OF THESE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the 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 Pacific Ridge Exploration Ltd. (the “Company”) have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

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Condensed Consolidated Interim Statements of Financial Position

(Unaudited - expressed in Canadian dollars)

		(Unaudited)	(Audited)
	Note	September 30, 2021	December 31, 2020
Assets		$	$
Current
Cash		686,167	628,720
Other receivables		43,483	7,980
Marketable securities and warrants	3	53,000	42,700
Prepaid		883,457	9,587
		1,666,107	688,987
Equipment and furniture	4	9,863	2,898
Resource Properties	5	496,959	454,619
Reclamation bonds		21,000	33,500
Right-of-use asset	11	38,022	47,767
		2,231,951	1,227,771
Liabilities
Current
Trade payable and accrued liabilities		102,074	103,905
Lease liability- currentportion	11	39,731	27,920
		141,805	131,825
Lease liability - long-term portion	11	-	20,621
Flow-through premium liability	6(a)	213,855	-
		355,660	152,446
Shareholders' equity
Share capital	5(c)(ii), 6	46,241,154	43,784,464
Contributed surplus	6 (b & c)	3,657,640	3,367,186
Accumulated other comprehensive loss	3	-	(10,300)
Deficit		(48,022,503)	(46,066,025)
		1,876,291	1,075,325
		2,231,951	1,227,771

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

Approved and authorized for issue on behalf of the Board of Directors on October 27, 2021

"Bruce A. Youngman" "Gary Baschuk" Director Director

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Condensed Consolidated Interim

Statements of Loss and Comprehensive Loss

(Unaudited - expressed in Canadian dollars)

		(Unaudited - expressed in Canadian dollars)
Administration expenses	Note	2021 2020 2021 2020 Nine months ended September 30 Three months ended September 30
		$ $ $ $
Amortization of right-of-use asset	11	10,369 6,612 27,903 19,824
Depreciation	4	869 387 1,813 1,003
Finance lease interest	11	1,164 441 3,737 894
Insurance Professional and consulting Management and administrative Office operations and facilities Shareholder communications Share-based payments Transfer agent and regulatory fees	8 6(c)	- - 20,160 5,850 35,124 574 94,737 14,292 74,216 18,904 207,580 69,125 13,459 12,919 30,466 25,980 99,144 18,038 225,497 32,939 165,610 4,521 220,887 21,960 23,366 2,848 49,639 16,204
		423,321 65,244 882,419 208,071
Exploration-related expenses (income) Exploration and evaluation costs Mining tax credit Property option payments	5 7 5(b)(i)	1,071,490 216,839 1,306,044 361,539 (80,801) - (157,070) (347) - - (75,000) (325,000)
		990,689 216,839 1,073,974 36,192
Other expenses (income) Interest received Foreign exchange(gain)loss		(1,174) (664) (3,066) (3,212) 1,103 568 3,151 (2,167)
		(71) (96) 85 (5,379)
Net loss Other comprehensive income (loss): Net change in fair value of marketable securities	3	(1,413,939) (281,987) (1,956,478) (238,884) (2,400) 17,200 10,300 16,500
Total comprehensive loss		(1,416,339) (264,787) (1,946,178) (222,384)
Lossper share (basic and diluted)		(0.03) (0.01) (0.04) (0.01)
Weighted average number of shares outstanding basic and diluted		53,815,319 33,125,748 45,781,886 32,197,987

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

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Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

(Unaudited - expressed in Canadian dollars)

Note	Contributed Other comprehensive Amount Value surplus income(loss) Deficit Total Share capital
Balance, December 31, 2019 Units issued for cash in private placement Flow-through premium 7(a) Share issuance costs 7(a) Finders' warrants issued 7(b) Share based payments 6(c) Unrealized loss marketable securities 3 Net loss for the period	# $ $ $ $ $ 31,729,009 43,596,559 3,312,624 (36,300) (45,572,515) 1,300,368 3,119,999 234,000 - - - 234,000 - (25,700) 6,146 - - (19,554) - (17,194) - - - (17,194) - (1,500) 1,500 - - - - - 21,960 - - 21,960 - - - 16,500 - 16,500 - - - - (238,884) (238,884)
Balance, September 30, 2020 Share issuance costs 6(a) Share-based payments 6(c) Unrealized gain marketable securities 3 Net loss for theperiod	34,849,008 43,786,165 3,342,230 (19,800) (45,811,399) 1,297,196 - (1,701) - - - (1,701) - - 24,956 - - 24,956 - - - 9,500 - 9,500 - - - - (254,626) (254,626)
Balance, December 31, 2020 Flow-through units issued for cash Flow-through premium 6(a) Non flow-through units issued for cash Shares issued for property 5(c)(ii) Shares issued for services 5(c)(ii) Share issuance costs 6(a) Shares issued on exercise of warrants 6(a, b) Shares issued on exercise of options 6(a, c)	34,849,008 43,784,464 3,367,186 (10,300) (46,066,025) 1,075,325 8,000,000 1,136,000 - - - 1,136,000 - (296,000) 82,145 - - (213,855) 10,000,000 1,500,000 - - - 1,500,000 100,000 31,000 - - - 31,000 100,000 22,000 - - - 22,000 - (39,628) - - - (39,628) 662,833 82,718 (3,178) - - 79,540 140,000 20,600 (9,400) - - 11,200
Share-based payments 6(c)	- - 220,887 - - 220,887
Unrealized loss in marketable securities 3 Net loss for theperiod	- - - 10,300 - 10,300 - - - - (1,956,478) (1,956,478)
Balance, September 30, 2021	53,851,841 46,241,154 3,657,640 - (48,022,503) 1,876,291

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

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Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - expressed in Canadian dollars)

	Nine months ended September 30
	2021 2020
Operating activities Loss for the period Items not affecting cash: Right-of-use asset amortization Depreciation of plant and equipment Finance lease interest Share-based payments Shares issued for services Unrealized foreign exchange Property option recovery Interest received	$ $ (1,956,478) (238,884) 27,903 19,824 1,813 1,003 3,737 894 220,887 21,960 22,000 - 2,187 (2,188) (75,000) (325,000) (3,066) (3,212)
Changes in non-cash working capital items: Other receivables Prepaid Trade payable and accrued liabilities	(1,756,017) (525,603) (35,503) (8,231) (873,870) (91,433) (1,831) (10,765)
Cash used in operatingactivities	(2,667,221) (636,032)
Investing activities Resource property acquisition costs Acquisition of plant and equipment Proceeds from property option payments Interest received Reclamation bonds	(11,340) (10,000) (8,778) (1,803) 75,000 325,000 3,066 3,212 12,500 (16,000)
Cashprovided by (used in)investingactivities	70,448 300,409
Financing activities Proceeds from flow-through private placement Proceeds from non flow-through private placement Proceeds from warrant exercises Proceeds from exercise of stock options Share issue costs Finance lease -principal payments Finance lease -interest payments	1,136,000 234,000 1,500,000 - 79,540 - 11,200 - (39,628) (10,233) (26,968) (17,621) (3,737) (894)
Cashprovided by (used in)financingactivities	2,656,407 205,252
Effect of foreign exchange translation on cash	(2,187) 2,188
Increase (decrease) in cash Cash, beginningof theperiod	57,447 (128,183) 628,720 895,320
Cash, end of the period	686,167 767,137
Supplementary cash flow information: Non-cash investing activities: Shares issued for resource properties Non-cash financing activities: Flow-through premium liability Finders' fees paid through issuance of warrants Share issuance costs incurred through trade payables and accrued liabilities	(31,000) - (213,855) - - (1,500) - (6,961)

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

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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1. Nature of operations

Pacific Ridge Exploration Ltd. and its wholly owned subsidiary Pacific Ridge Exploration (US) Inc. (the “Company” or “Pacific Ridge”) are in the business of acquiring and exploring resource properties in Canada and the United States. Pacific Ridge is incorporated and domiciled in Canada under the Business Corporations Act (British Columbia). The address of its registered office is 1710 – 1177 West Hastings Street, Vancouver, British Columbia, Canada, V6E 2L3.

The Company has not yet determined whether its properties contain ore reserves that are economically recoverable. The recoverability of the amounts shown for resource properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary capital to finance operations including contributions from future joint venture partners. The carrying value of the Company’s mineral properties does not reflect current or future value.

These consolidated financial statements are prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. Should the Company be unable to realize its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts on the statements of financial position. As of September 30, 2021, the Company had a working capital (current assets minus current liabilities) of $1,524,302 (December 31, 2020 - $557,162). The Company believes that, based on its current working capital, it can sustain its operation and maintain its minimum obligations for the next year.

The COVID-19 pandemic had an initial negative impact on global financial markets, followed by a recovery, but significant volatility could still be expected. The economic viability of the Company’s business plan could be impacted by its ability to obtain financing, and global economic conditions impact the general availability of financing through public and private debt and equity markets, as well as through other avenues.

In addition, as the health and safety of the Company’s employees, contractors, visitors, and stakeholders are the Company’s top priority, the Company is monitoring developments with respect to COVID-19, both globally and within its operating jurisdictions, and will implement any such changes to its business as may be deemed appropriate to mitigate any potential impacts to its business and the stakeholders. Such changes, may include, but are not limited to, temporary closures of the Company’s site exploration activities or offices, and deviations from the timing and nature of previous exploration plans.

2. Basis of preparation and summary of significant accounting policies

• (a) Statement of Compliance

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting (“IAS 34”). These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the audited annual consolidated financial statements of the Company for the year ended December 31, 2020.

The condensed consolidated interim financial statements were approved by the Board of Directors on October 27, 2021.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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2. Basis of preparation and summary of significant accounting policies (continued)

(b) Critical accounting estimates

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

(c) Comparative statements

The presentation of the comparative figures for the prior year (nine months ended September 30, 2020), specifically with respect to the grouping of lines on the consolidated statement of loss and comprehensive loss , has been modified in order to conform to the presentation of the annual consolidated financial statements for the year ended December 31, 2020.

3. Marketable securities

The fair value of the shares and warrants of third parties owned by the Company is as follows:

	Number Fair value Common shares Four Nines Gold Inc.	Total Number Fair value Fair value Trifecta Gold Ltd. Common shares
Balance, December 31, 2019 Expiryof warrants	# $ 60,000 8,700 - 10,500	# $ $ 200,000 8,000 16,700 - 6,000 16,500
Balance,September 30, 2020 Adjustments	60,000 19,200 - 7,500	200,000 14,000 33,200 - 2,000 9,500
Balance, December 31, 2020 Adjustments	60,000 26,700 - 9,300	200,000 16,000 42,700 - 1,000 10,300
Balance, September 30, 2021	60,000 36,000	200,000 17,000 53,000

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021

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(Unaudited - Expressed in Canadian dollars)

4. Equipment and furniture

The Company has the following assets:

	Computing equipment Furniture TOTAL $ $ $
Balance, December 31, 2019 Additions Depreciation	2,543 - 2,543 1,803 - 1,803 (1,003) - (1,003)
Balance, September 30, 2020 Depreciation	3,343 - 3,343 (445) - (445)
Balance, December 31, 2020 Additions Depreciation	2,898 - 2,898 5,843 2,935 8,778 (1,544) (269) (1,813)
Balance, September 30, 2021	7,197 2,666 9,863
As at September 30, 2021	$ $ $
Cost Accumulated depreciation	10,380 2,935 13,315 (3,183) (269) (3,452)
Net book value	7,197 2,666 9,863

5. Resource properties

The Company has interests in mineral properties in British Columbia and Yukon in Canada. This portfolio of mineral properties is as follows:

a) Company-owned properties:

i) Mariposa property (Yukon)

The Company acquired a 100% interest in the Mariposa property, Dawson Mining District, Yukon, in 2014. Between September 2016 and March 2019, the property was optioned to Four Nines Gold Inc. (“Four Nines”). The securities referred to in note 3 from Four Nines were received by the Company as part of the option payments. Upon termination of the option agreement, Four Nines advanced $50,000 to the Company, which committed to carry out any possible reclamation work on behalf of Four Nines. This amount is recorded as an accrued liability. The Company is continuing exploration and reclamation activities on Mariposa during 2021.

ii) Eureka Dome property (Yukon)

This property was under an option to Trifecta Gold Ltd. (“Trifecta”) between April 2018 and April 2019, when the option was terminated. The securities referred to in note 3 from Trifecta were received by the Company as part of the option payments. No exploration is planned for 2021 on Eureka Dome.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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5. Resource properties (continued)

• b) Company-owned properties on option to third parties

i) Fyre Lake property (Yukon)

The Company owns a 100% interest in the Fyre Lake property, located in the Watson Lake Mining District, Yukon. On January 18, 2017, the Company closed an option agreement with BMC Minerals (No. 1) Ltd. ("BMC"), amended on December 19, 2018, and on April 10, 2020, whereby BMC has the right to acquire a 100% interest in Fyre Lake by making payments totalling $3,125,000 as follows:

A non-refundable deposit and initial option payment of $375,000 ($25,000 received in November 2016 and $350,000 received in January 2017), a second option payment of $300,000 received in December 2017, and a third option payment of $1,200,000 received on December 28, 2018. During the year ended December 31, 2019, the Company received a further $150,000. A special payment of $250,000 was made pursuant to the April 10, 2020, amending agreement. In order to exercise the option, BMC must make a final $1,000,000 payment. This payment is due within thirty days of BMC receiving the Type A Water License for the development of its proposed ABM Mine, but in any event no later than December 31, 2021. BMC will also continue payments to the Company of $75,000 every six months ($150,000 of these payments received during the year ended December 31, 2020, and $75,000 on June 30, 2021), until the final tranche has been paid.

In addition, if it exercises the option, BMC has agreed to make a bonus payment of $1,000,000 if and when BMC’s Kudz Ze Kayah property has reached commercial production for one year.

As there is no carrying value for Fyre Lake on the Company’s statement of financial position, these option payments are recorded as property option payments on the statement of loss and comprehensive loss.

c) Properties under option from third parties

• i) Kliyul and Redton properties (British Columbia)

On January 17, 2020, the Company entered into an earn-in property agreement (the “KliyulRedton Agreement”), amended on April 7, 2020, and on July 22, 2020, with Aurico Metals Inc. (“Aurico”), with respect to the Kliyul and Redton properties located in British Columbia (jointly, “the Properties”).

Under the terms of the Kliyul-Redton Agreement, the Company, at its sole option, can earn a 51% undivided right, title and interest, other than underlying royalties, in the Properties by a payment to Aurico of $100,000 in cash of which $25,000 has been paid, the issuance of 2,000,000 common shares, and incurring expenditures in the aggregate amount of no less than $3,500,000, as follows:

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021

(Unaudited - Expressed in Canadian dollars)

5. Resource properties (continued)

• c) Properties under option from third parties (continued)

• i) Kliyul and Redton properties (British Columbia) (continued)

Cash	Shares	Exploration
payments to	to be	expenses to be	Due
be made	issued	incurred	date	Comment
$	#	$
To earn 51%:
10,000	-	-	Upon execution and	(Paid)
			regulatory approval
15,000	-	-	December 31, 2020	(Paid)
20,000	-	1,250,000	December 31, 2021
25,000	-	1,000,000	December 31, 2022
30,000	2,000,000	1,250,000	December 31, 2023
100,000	2,000,000	3,500,000

Since inception and to September 30, 2021, the Company has incurred exploration expenses of $1,787,715 in Kliyul and $301,542 in Redton.

In addition, the Company has the right to acquire, after the exercise of the 51% earn-in right, a 75% earned interest (an additional 24% undivided interest, other than underlying royalties) in the Properties by paying Aurico an additional $60,000 in cash, issuing an additional 1,500,000 common shares and incurring additional expenditures of no less than $3,500,000, as follows:

Cash	Shares	Exploration
payments to	to be	expenses to be	Due
be made	issued	incurred	date	Comment
$	#	$
To increase to	75%:
30,000	-	1,500,000	December 31, 2024
30,000	1,500,000	2,000,000	December 31, 2025
60,000	1,500,000	3,500,000

The Kliyul property is subject to 2% net smelter return royalties. The Redton property is subject to (i) a 2.5% net smelter return royalty, with the right of reducing it to 1% for $2,000,000, and (ii) a 2% net smelter return royalty.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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5. Resource properties (continued)

• c) Properties under option from third parties (continued)

• ii) RDP Property (British Columbia)

On May 3, 2021, the Company entered into an agreement to acquire 100% of the RDP coppergold porphyry project in central British Columbia, approximately 40km west of its flagship Kliyul copper-gold project.

Under the terms of the Agreement, the Company has the option to earn a 100% interest in RDP by making payments as follows:

Cash	Shares	Exploration
payments to	to be	expenses to be	Due date
be made	issued	incurred	(on or before)	Status
$	#	$
5,000	100,000	-	Upon execution and	Completed
			regulatory approval
10,000	100,000	60,000	November 30, 2021
30,000	300,000	250,000	December 15, 2022
80,000	700,000	550,000	December 15, 2023
125,000	1,200,000	860,000

In addition, Pacific Ridge will issue 300,000 shares to the vendor on completion of 5,000 m of drilling and an additional 500,000 shares upon defining a 1,000,000 ounces of gold equivalent resource in the inferred or greater category. The property is also subject to a 2% NSR payable to the vendor, half of which can be purchased at any time for $1.5 million.

The Company issued an additional 100,000 common shares with a fair value of $0.22 per share ($22,000) to a consulting company that had certain data on the RDP property that the Company considered relevant for its project.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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5. Resource properties (continued)

• d) Other properties

• i) Spius (British Columbia)

On April 27, 2018, the Company entered into an option agreement to acquire a 100% interest in the Spius property, Nicola and New Westminster Mining Divisions, British Columbia. The terms of the option agreement as amended on December 10, 2019, are as follows:

Cash	Shares	Exploration
payments to	to be	expenses to be	Due
be made	issued	incurred	date	Comment
$	#	$
10,000	200,000	-	Upon execution and	Completed
			regulatory approval
40,000	200,000	50,000	December 15, 2018	Completed
-	-	250,000	December 15, 2019	Completed
-	-	25,000	December 15, 2020	Completed
15,000	200,000	-	May 31, 2021	See below
15,000	200,000	-	December 15, 2021
30,000	600,000	500,000	December 15, 2022
110,000	1,400,000	825,000

During the nine months ended September 30, 2021, the Company’s expenses for Spius amounted to $18,434 (2020 - $18,126).

During the year ended December 31, 2020, exploration expenses incurred in Spius amounted to $27,520 (2019 - $255,555 and 2018 - $94,965), thus already exceeding the $325,000 cumulative commitment for 2020.

The agreement is subject to a 1% NSR to the property vendor, half of which can be purchased for $1,500,000, as well as an underlying 2% NSR, of which the Company has the right to buy down half for $1,500,000. In addition, bonus payments are payable upon certain advanced development mileposts. One of the underlying vendors of the Spius property is a company where a director of the Company owns a 25% interest. During the year ended December 31, 2018, the Company posted a bond for $12,500 for future reclamation costs with the Government of British Columbia, which was still outstanding as at September 30, 2021, but was refunded to the Company subsequent to September 30, 2021.

On October 20, 2020, the Company entered into an Option Agreement with Arctic Fox Interactive Ltd. (“Arctic Fox”) and with the underlying owner of Spius, whereby the Company granted Arctic Fox an option to acquire a 60% interest in the Company’s Spius Option by making payments to the Company of $50,000, issuing 1,000,000 shares and spending $550,000 on exploration by December 31, 2022. With this agreement, Arctic Fox effectively assumes the Company’s obligations pursuant to the Spius option.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021

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(Unaudited - Expressed in Canadian dollars)

5. Resource properties (continued)

• e) Carrying costs and exploration expenses summary

The Company capitalizes mineral property acquisition-related costs, and expenses all costs incurred in exploration-related activities, as follows:

i) Capitalized costs

The following costs are reflected on the Company’s consolidated statement of financial position:

	Company- owned properties	On option from third parties	Total
	Mariposa YT	Kliyul Redton RDP BC BC BC
Balance, December 31, 2019 Optionpayments in cash	$ 429,619 -	$ $ $ - - - 5,000 5,000 -	$ 429,619 10,000
Balance, September 30, 2020 Optionpayments in cash	429,619 -	5,000 5,000 - 7,500 7,500	439,619 15,000
Balance, December 31, 2020 Option payments in cash Option payments in shares Stakingcosts	429,619 - - -	12,500 12,500 - - - 5,000 - - 31,000 - - 6,340	454,619 5,000 31,000 6,340
Balance, September 30, 2021	429,619	12,500 12,500 42,340	496,959

ii) Expensed costs

The following costs are reflected on the Company’s consolidated statement of loss and comprehensive loss and reflect amounts incurred in exploration expenses:

Province / Property Territory	Nine months ended September 30
	2021 2020
Kliyul BC RDP BC Redton BC Spius BC Mariposa YT General exploration not allocated to a specificproperty	$ $ 1,146,221 254,947 59,379 - 33,306 80,713 18,434 18,126 3,797 - 44,907 7,753
	1,306,044 361,539

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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6. Share capital

a) Common Shares

The Company is authorized to issue an unlimited authorized number of common shares without par value.

On June 1, 2021, the Company closed a non-brokered private placement, raising cash proceeds of $1,500,000 through the issuance of 10,000,000 units at a price of $0.15 per unit ("Unit"). Each Unit is comprised of one common share of the Company and one-half of one common share purchase warrant, with each whole warrant exercisable to purchase one additional common share at an exercise price of $0.23 for a period of 24 months expiring on June 3, 2023. No finders’ fees were paid in connection to the private placement, and share issuance costs amounted to $29,732. Final approval from the TSX Venture Exchange was obtained on June 8, 2021. Of the total number of units issued, 448,000 were subscribed for by three directors of the Company.

The Company applied the residual value approach to allocate the proceeds received from the unit offering to their respective components (shares and warrants). Using this approach, the Company attributed no fair value to the warrant portion of the units.

.

On March 8, 2021, the Company raised gross proceeds of $1,136,000 on closing of a non-brokered flow-through private placement, issuing 8,000,000 units at a price of $0.142 per unit ("2021 FT Unit"). Each 2021 FT Unit was comprised of one common share of the Company that qualifies as a "flowthrough share" for the purposes of the Income Tax Act (Canada) (an "2021 FT Unit Share") and onehalf of one common share purchase warrant, with each whole warrant exercisable to purchase one additional non-flow-through common share at an exercise price of $0.15 for a period of two years. The securities are restricted from trading until July 6, 2021, as required by securities law. No finder’s fees were paid. Share issuance costs in connection with legal advice and filing fees amounted to $9,896.

The Company applied the residual value approach to allocate the proceeds received from the unit offering to their respective components. The fair value of the common shares was determined by using the trading price of the Company's shares at the date of issuance. The excess of the unit price over the fair value of the common shares was used to determine the residual value. The residual value was allocated between warrants and the flow-through liability by using their relative fair values as determined by the Black-Scholes option pricing model and the approximate expected tax benefit received by the investor, respectively. The parameters used in the Black Scholes calculations were as follows: expected volatility: 117.2%, risk-free interest rate: 0.24%, dividend yield: 0%, and expected life of two years.

The residual value of the unit offering after deducting the fair value of the common shares was $296,000 or $0.037 per share, of which $82,145 and $213,855 was allocated to the corresponding investors' warrants and flow-through premium liability, respectively. This flow-through premium liability will be derecognized as deferred flow-through tax recovery in the Company’s consolidated statement of loss and comprehensive as the Company incurs the $1,126,000 raised through the 2021 FT units in qualifying expenses.

The Company received final TSX Venture Exchange approval on March 9, 2021.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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6. Share capital (continued)

• a) Common Shares (continued)

In addition to shares issued on 2021 private placements, on May 5, 2021, the Company issued 100,000 common shares with a fair value of $0.31 per share as part of the option agreement for the acquisition of the RDP project, and on July 7, 2021, the Company issued a further 100,000 common shares at a fair value of $0.22 per share to acquire some geological data relevant to the RDP project; the related $22,000 was expensed as exploration cost.

During the nine months ended September 30, 2021, the Company issued 662,833 common shares on exercise of share purchase warrants and agents’ warrants with an exercise price of $0.12 per share (Note 6(b)) for cash proceeds of $79,540, and 140,000 common shares on exercise of stock options with an exercise price of $0.08 per share (Note 6(c)) for cash proceeds of $11,200.

During the year ended December 31, 2020, the Company closed a flow-through private placement at a price of $0.075 per unit ("2020 FT Unit"). Each 2020 FT Unit was comprised of one common share of the Company that qualifies as a "flow-through share" for the purposes of the Income Tax Act (Canada) (an "2020 FT Unit Share") and one-half of one common share purchase warrant, with each whole warrant exercisable to purchase one additional non-flow-through common share at an exercise price of $0.12 for a period of 18 months, subject to the following acceleration provision: if at any time after 4 months from the date of issue of the warrants the closing market price of the Company's common shares on the TSX Venture Exchange is greater than $0.35 per share for 20 consecutive trading days (the "Triggering Event"), the Company may, within 5 days of the Triggering Event, accelerate the expiry date of the warrants by giving notice thereof to the holders of the warrants, by way of press release, in which event the warrants will expire on the 30th day after the date on which such notice is given.

The private placement closed in two tranches: the first closing on August 11, 2020, by issuing 2,569,999 units for gross cash proceeds of $192,750, and the second and final closing on September 30, 2020, issuing an additional 550,000 units for additional gross cash proceeds of $41,250.

The Company applied the residual value approach to allocate the proceeds received from the unit offering to their respective components. The fair value of the common shares was determined by using the trading price of the Company's shares at the date of issuance. The excess of the unit price over the fair value of the common shares was used to determine the residual value. The residual value was allocated between warrants and the flow-through liability by using their relative fair values as determined by the Black-Scholes option pricing model and the approximate expected tax benefit received by the investors, respectively.

The residual value of the unit offering after deducting the fair value of the common shares was $25,700 or $0.01 per share for the first tranche, of which $6,146 and $19,554 was allocated to the corresponding investors' warrants and flow-through premium liability, respectively. This flowthrough premium liability was derecognized as deferred flow-through tax recovery in the Company’s consolidated statement of loss and comprehensive loss on December 31, 2020, as the Company incurred the $234,000 raised through the 2020 FT units in qualifying expenses.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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6. Share capital (continued)

a) Common Shares (continued)

The flow-through feature of the flow-through shares corresponding to the second tranche was valued at $nil. The corresponding warrants were also valued at $nil.

The Company paid finder's fees of 6% cash and 6% finder's warrants on a portion of the private placement. The cash finder’s fees, and other cash costs related to the offering, such as legal and filing fees, were charged to share issuance costs for a total of $18,895. In addition, the fair value of the finders’ warrants was calculated at $1,500 (note 7(b), below) and charged to share issuance costs.

The Company received final TSX Venture Exchange approval on October 7, 2020.

b) Share Purchase Warrants

A summary of the warrants outstanding is as follows:

	Number of Warrants Number of Warrants Weighted Average Exercise Price Weighted Average Exercise Price Three months ended September 30, 2021 Year ended December 31, 2020
Starting balance Issued to investors Issued to agents Exercised by investors Exercised byagents	# $ # $ 1,617,000 0.12 - - 9,000,002 0.19 1,560,000 0.12 - - 57,000 0.12 (643,333) 0.12 - - (19,500) 0.12 - -
Endingbalance	9,954,169 0.19 1,617,000 0.12

As at September 30, 2021, the following share purchase warrants are outstanding:

Issue	Type of	Expiry	Exercise	Warrants
date	warrants	date	price	outstanding
			$	#
August 11, 2020	Investor warrants	February 11, 2022	0.12	716,667
August 11, 2020	Agent warrants	February 11, 2022	0.12	13,500
September 30, 2020	Investor warrants	March 31, 2022	0.12	200,000
September 30, 2020	Agent warrants	March 31, 2022	0.12	24,000
March 8, 2021	Investor warrants	March 8, 2023	0.15	4,000,000
June 3, 2021	Investor warrants	June 3, 2023	0.23	5,000,002
			0.19	9,954,169

The fair value of the warrants issued to investors, was discussed above in note 6(a) for each of the respective private placements.

The fair value of the warrants issued to agents was calculated at $1,500 using the Black Scholes option pricing model with the following parameters: for the 33,000 agent warrants issued on August 11, 2020, expected volatility of 113.02%, risk-free interest rate of 0.26%. For the 24,000 agent warrants issued on September 30, 2020, expected volatility of 113.82%, risk-free interest rate of 0.31%.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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6. Share capital (continued)

c) Stock Options

The Company has a stock option plan in place authorizing the granting of stock options to qualified optionees to purchase a total of up to 10% of the then issued and outstanding common shares of the Company. Stock options generally are granted for a maximum term of five years and expire 90 days following the termination of the optionee’s agreement. The exercise price for the options is set at the closing market price of the common shares on the grant date. The vesting periods of options vary with terms determined by the board of directors. The following options were granted pursuant to the Company’s stock option plan:

• On March 17, 2020, the Company granted an aggregate of 750,000 fully vested stock options to certain directors and a consultant. Each stock option is exercisable into one common share of the Company at an exercise price of $0.05 per common share for a period of five years.

• On July 21, 2020, the Company granted 200,000 incentive stock options to an investor relations consultant pursuant to an agreement entered into on July 1, 2020, and expiring on November 30, 2020. The stock options will be exercisable for two years at an exercise price per share of $0.05. The Options will vest in stages over 12 months with 25% vesting each quarter following the date of granting.

• On October 22, 2020, the Company granted 350,000 fully vested incentive stock options to certain officers of the Company, exercisable into one common share of the Company at a price of $0.075 per share for a period of five years.

• On March 9, 2021, the Company granted 850,000 stock options to two directors and to an investor relations consultant, exercisable into one common share of the Company at a price of $0.105 per share for a period of five years. Of the total amount, 650,000 were granted to two directors fully vested; the remaining 200,000 options granted to the investor relations consultant will vest 25% every quarter over a period of one year.

• On July 15, 2021, the Company granted an aggregate of 1,100,000 stock options to directors, officers, employees and certain consultants, pursuant to the Company’s stock option plan and the policies of the TSX Venture Exchange. Each option is exercisable into one common share of the Company at a price of $0.25 per share for a period of five years from this date. An aggregate of 200,000 of those stock options will vest 25% each quarter during a 12-month period, while the remaining options were granted fully vested.

The Company applies the fair value method of accounting for stock options. Option pricing models require the input of highly subjective assumptions including expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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6. Share capital (continued)

c) Stock Options (continued)

The fair value of options granted was estimated at the grant date based on the Black-Scholes optionpricing model, using the following assumptions:

pricing model, using the following assumptions:
	Nine months ended	Year ended
Date of grant	September 30, 2021	December 31, 2020
Number of options granted	1,950,000	1,300,000
Weighed average risk-free interest rate	0.85%	0.68%
Weighted average expected volatility	109.34%	118.17%
Weighted average expected option life in years	5	5
Calculated total fair value	$254,543	$46,916
Expected dividendyield	Nil	Nil

Stock option transactions and the number of stock options outstanding and exercisable are summarized below:

summarized below:
Period ended:	Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price September 30, 2021 December 31, 2020
Balance, beginning of year Granted Exercised Expired unexercised	# $ # $ 3,355,000 0.06 3,060,000 0.06 1,950,000 0.19 1,300,000 0.05 (140,000) 0.08 - - - 0.05 (1,005,000) 0.05
Balance, end ofperiod	5,165,000 0.10 3,355,000 0.06
Exercisable, end ofperiod	4,865,000 0.10 3,205,000 0.06

Stock options exercisable are as follows:

Expirydate	Exerciseprice	September 30, 2021	December 31, 2020
	$	#	#
July 21, 2021	0.080	-	100,000
August 12, 2021	0.080	-	40,000
November 30, 2021	0.080	275,000	275,000
June 16, 2022	0.060	340,000	340,000
July 21, 2022	0.050	200,000	50,000
January 12, 2023	0.060	200,000	200,000
November 1, 2023	0.065	200,000	200,000
January 4, 2024	0.050	900,000	900,000
March 16, 2025	0.050	750,000	750,000
October 22, 2025	0.075	350,000	350,000
March 9, 2026	0.105	750,000	-
July 15, 2026	0.250	900,000	-
	0.101	4,865,000	3,205,000

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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7. Government grants and tax credits

During the nine months ended September 30, 2021, the Company received $157,070 (2020 - $347) as part of the British Columbia Mining Exploration Tax Credit (“BCMETC”). Of the total amount received during the nine months ended September 30, 2021, $76,269 corresponded to expenditures made during fiscal year 2019, and the rest during fiscal year 2020, in the Company’s projects located in British Columbia.

8. Related parties

Related parties include the board of directors and officers, close family members and enterprises that are controlled by these individuals as well as certain consultants performing similar functions.

The Company has no compensation arrangements with its board of directors other than non-cash stock option grants. The Company has no termination benefits, post-employment benefits and other long-term benefits in place except for its executive officers where certain minimum termination payments and change-of-control provisions apply. Key management includes the board of directors and executive officers. Executive officers include the Chairman, the President & CEO, and the CFO.

Compensation awarded to key management is listed below:

	2021 2020 2021 2020 Nine months ended Three months ended
Management fees paid to the Executive Chairman of the Company or to a company under his control* Salary paid to the CEO of the Company Management fees paid to a company controlled by the CFO of the Company Share-based payments recorded for stock options granted to directors and officers of the Company (non-cash expense)	$ $ $ $ 24,000 24,000 72,000 72,000 49,800 - 111,925 - 15,000 9,000 41,000 27,000 100,132 10,464 154,402 10,464
	188,932 43,464 379,327 109,464

• A percentage of the Executive Chairman's compensation is charged to exploration and evaluation costs

No amounts were due to related parties at September 30, 2021 or December 31, 2020.

In addition, with respect to the option agreement for the purchase of the Spius property (Note 5(d)(i)). The underlying vendors of this property include a company where a director of the Company owns a 25% interest.

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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9. Capital management

The Company’s objective in managing its capital is to maintain the ability to continue as a going concern and to continue to explore the various properties for the benefits of its shareholders. The Company’s operations have been and will continue to be funded by the sale of equity to investors.

The Company’s capital includes the components of shareholders’ equity. Capital requirements are driven by the Company’s exploration activities on its mineral property interests and associated administration expenses. To effectively manage the Company’s capital requirements, the Company has a planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals.

The Company monitors actual expenses relative to the approved budget on all exploration projects and overheads to manage costs, commitments and exploration activities. There were no changes in the Company’s approach to capital management during the nine months ended September 30, 2021, or the year ended December 31, 2020.

10. Financial instruments

Fair values

As at September 30, 2021, the recorded amounts for cash, other receivables and trade payable and accrued liabilities approximate their fair values due to their short maturity. The Company’s marketable securities and warrants are measured at fair value on a recurring basis. These financial instruments are grouped into Level 1 to 3 based on the degree to which the significant inputs used to determine the fair value are observable. Marketable securities are classified within level 1 of the fair value hierarchy as their fair value measurement is derived from quoted prices in active markets for identical assets. Warrants are classified within level 2 of the fair value hierarchy as their fair value measurement is derived from inputs other than quoted prices included within level 1, that are observable either directly or indirectly. No financial instruments were considered level 3, which are fair value measurements derived from valuation techniques that include significant inputs that are not based on observable market data.

Interest rate risk

The Company’s cash held in financial institutions earns interest at variable interest rates. Due to the short-term nature of these financial instruments, fluctuations in market rates do not have a material impact on the expected cash flows.

Credit risk

The Company has its cash deposited with large, federally insured, commercial financial institutions, and therefore exposed to minimal credit risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities and through the management of its capital structure. At September 30, 2021, the Company had cash of $686,167 (December 31, 2020 - $628,720), trade payable and accrued liabilities of $102,074 (December 31, 2020 - $103,905), and a lease liability of $39,731 (December 31, 2020 - $48,541) (note 11).

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021 (Unaudited - Expressed in Canadian dollars)

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10. Financial instruments (continued)

Currency risk

The Company keeps approximately less than 1% of its cash in US dollars. A change in the value of the US dollar by 10% relative to the Canadian dollar would have minimal effect on the Company’s working capital.

Price risk

The Company is exposed to price risk on its marketable securities and warrants due to fluctuations in the current market prices and fluctuations in trading volumes of those securities. At September 30, 2021, the Company held marketable securities with a fair value of $53,000 (December 31, 2020 - $42,700). These investments are subject to market price fluctuations that can be significant.

11. Right-of-use asset and lease liability

The Company recognizes lease liabilities in relation to a sublease agreement for office space. These liabilities are measured at the present value of the remaining lease payments starting on January 1, 2019, discounted by using the Company’s incremental borrowing rate. The weighted average incremental borrowing rate applied to the lease liabilities on January 1, 2019, was 10%. The associated lease liability recognized as at January 1, 2019, was $44,041.

An associated right-of-use asset for the lease was measured at the amount equal to the lease liability on January 1, 2019. Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. Lease liabilities are subsequently measured at amortized cost using the effective interest rate method.

The original lease expired on August 31, 2020. On September 1, 2020, the Company entered into a new sublease agreement, using the same methodology. The weighted average incremental borrowing rate applied to the lease liabilities on September 1, 2020, was 10%. The associated lease liability discounted with the incremental borrowing rate recognized as at September 1, 2020, was $57,319.

On April 1, 2021, the Company increased its office space, incorporating this increase into the September 1. 2020 sublease. The associated lease liability for this additional space was discounted at the same rate and valued at $18,158.

The following table summarizes the difference between operating lease commitments disclosed immediately preceding the date of initial application, and lease liabilities recognized in the condensed consolidated interim statement of financial position at the date of initial application:

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021

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(Unaudited - Expressed in Canadian dollars)

11. Right-of-use asset and lease liability (continued)

Lease liability	$
Lease liability as at December 31, 2019 Lease payments Lease interest	15,417 (15,870) 453
Lease liability as at June 30, 2020 Setup of new lease agreement on September 1, 2020 Discount using the incremental borrowing rate at September 1, 2020 Value of lease as at September 1, 2020 Lease payments Lease interest	- 63,480 (6,161) 57,319 57,319 (2,645) 478
Lease liability as at September 30, 2020 Lease payments Lease interest	55,152 (7,935) 1,324
Lease liability as at December 31, 2020 Setup of new lease agreement on April 1, 2021 Lease interest Value of lease as at April 1, 2021 Lease payments Lease interest	48,541 19,550 (1,392) 18,158 18,158 (30,705) 3,737
Lease liability as at September 30, 2021	39,731
Current portion Long-termportion	39,731 -
	39,731

The following table summarizes the value of the right-of-use asset:

The following table summarizes the value of the right-of-use asset:
Right-of-use asset	$
Value of right-of-use asset as December 31, 2019	17,616
Setup of new right-of-use asset on September 1, 2020	57,319
Amortization	(19,824)
Value of right-of-use asset as at September 30, 2020	55,111
Amortization	(7,344)
Value of right-of-use asset as at December 31, 2020	47,767
Setup of new right-of-use asset on April 1, 2021	18,158
Amortization	(27,903)
Value of right-of-use asset as at September 30, 2021	38,022

The payment commitments pursuant to the above lease are as follows:

		$
Remainder of	2021	11,385
2022		26,565
		37,950

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Notes to the Condensed Consolidated Interim Financial Statements September 30, 2021

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(Unaudited - Expressed in Canadian dollars)

12. Segmented information

The Company has one business segment, the exploration of mineral properties, further subdivided into geographic regions. As at September 30, 2021, and during the year ended December 31, 2020, all of the Company’s non-current assets were held in Canada.

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