Phenom Resources Corp. — Audit Report / Information 2021

Mar 31, 2021

Consolidated Financial Statements of

First Vanadium Corp.

For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

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INDEPENDENT AUDITOR’S REPORT

To the Shareholders of: First Vanadium Corp.

Opinion

We have audited the accompanying consolidated financial statements of First Vanadium Corp. (the “Company”), which comprise the consolidated statements of financial position as at November 30, 2020 and 2019 and the consolidated statements of loss and comprehensive loss, cash flows, and changes in equity for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at November 30, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our 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 Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred a net loss of $1,147,618 during the year ended November 30, 2020 and, as of that date, the Company’s total deficit was $13,932,668. 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.

Other Information

Management is responsible for the other information. The other information comprises the Management Discussion and Analysis. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, 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.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

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

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated 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 consolidated financial statements.

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:

• Identify and assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

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CHARTERED PROFESSIONAL ACCOUNTANTS

Vancouver, BC March 30, 2021

First Vanadium Corp. Consolidated Statements of Financial Position As at November 30, 2020 and 2019

(Expressed in Canadian dollars)

	Note	November 30,	November 30,
		2020	2019
		$	$
ASSETS
Current
Cash and cash equivalents		1,688,911	1,263,901
GST and other receivables		25,405	7,141
Prepaid expenses and deposits		104,316	68,502
		1,818,632	1,339,544
Deposit	4	-	10,954
Equipment	6	4,391	8,780
Right-of-use asset	4, 8	15,238	-
Reclamation bonds	7	86,637	24,371
Exploration and evaluation assets	7	8,310,241	6,630,307
TOTAL ASSETS		10,235,139	8,013,956
LIABILITIES
Current
Accounts payable and accrued liabilities	11	803,450	429,448
Lease liability	4, 8	5,697	-
		809,147	429,448
SHAREHOLDERS' EQUITY
Share capital	9	17,780,135	15,761,409
Reserves	9	5,578,525	4,608,149
Deficit		(13,932,668)	(12,785,050)
		9,425,992	7,584,508
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY		10,235,139	8,013,956

Nature of operations and going concern (Note 1) Commitments (Note 16) Subsequent event (Note 9 and Note 17)

Approved on behalf of the Board:

“Michael Mracek” “Paul S. Cowley” Director – Michael Mracek Director – Paul S. Cowley

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

First Vanadium Corp. Consolidated Statements of Loss and Comprehensive Loss For the years ended November 30, 2020 and 2019

(Expressed in Canadian dollars)

	Note	2020	2019
		$
Audit, accounting and legal	11	100,841	123,408
Consulting fees	11	264,700	646,564
Depreciation	6, 8	65,341	4,390
Directors’ fees	11	-	24,792
Exploration expenses		22,630	22,353
Foreign exchange loss		2,029	10,995
Investor relations and marketing		217,054	219,302
Office expenses	8	40,096	113,068
Share-based compensation	9	388,061	347,928
Transfer agent and filing fees		57,685	76,932
Travel and accommodation		7,057	33,464
		(1,165,494)	(1,623,196)
Interest income		17,876	-
Loss and comprehensive loss for the year		(1,147,618)	(1,623,196)
Basic and diluted lossper common share		(0.02)	(0.04)
Weighted average number of common shares outstanding –
basic and diluted		47,311,323	40,499,892

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

First Vanadium Corp. Consolidated Statements of Cash Flows For the years ended November 30, 2020 and 2019

(Expressed in Canadian dollars)

	2020	2019
	$	$
Cash flows provided by (used in):
Operating activities
Loss for the year	(1,147,618)	(1,623,196)
Items not involving cash:
Lease asset and equipment depreciation	65,341	4,390
Lease finance charges	7,149	-
Share-based compensation	388,061	347,928
Net changes in non-cash working capital items:
GST and other receivables	(18,264)	12,965
Prepaid expenses	(35,814)	134,858
Accounts payable and accrued liabilities	129,499	(27,785)
Cash used in operating activities	(611,646)	(1,150,840)
Investing activities
Reclamation bond deposits	(62,266)	-
Purchase of equipment	-	(13,170)
Exploration and evaluation asset expenditures	(1,435,431)	(1,418,316)
Cash used in investing activities	(1,497,697)	(1,431,486)
Financing activities
Proceeds from private placement	1,600,000	1,375,000
Proceeds from exercise of options	38,250	-
Proceeds from exercise of warrants	992,600	95,625
Lease payments	(66,688)	-
Share issuance costs	(29,809)	(13,725)
Cash provided by financing activities	2,534,353	1,456,900
Increase (decrease) in cash and cash equivalents during the year	425,010	(1,125,426)
Cash and cash equivalents, beginning of year	1,263,901	2,389,327
Cash and cash equivalents, end ofyear	1,688,911	1,263,901
Cash	688,911	63,901
Cash equivalents	1,000,000	1,200,000

Supplemental disclosure with respect to cash flows (Note 15)

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

First Vanadium Corp. Consolidated Statements of Changes in Equity For the years ended November 30, 2020 and 2019

(Expressed in Canadian dollars)

	Common	Share		Shares to
	shares	capital	Reserves	be issued	Deficit	Total
	number	$	$	$	$	$
Balance – November 30, 2018	37,465,915	13,464,009	3,878,721	1,222,000	(11,161,854)	7,402,876
Shares issued for:
cash pursuant to private placement	3,437,500	951,000	424,000	-	-	1,375,000
cash pursuant to exercise of warrants	212,500	138,125	(42,500)	-	-	95,625
Shares issued for exploration and evaluation
assets	1,300,000	1,222,000	-	(1,222,000)	-	-
Share issuance costs - cash	-	(13,725)	-	-	-	(13,725)
Share-based compensation	-	-	347,928	-	-	347,928
Loss for the year	-	-	-	-	(1,623,196)	(1,623,196)
Balance– November 30, 2019	42,415,915	15,761,409	4,608,149	-	(12,785,050)	7,584,508
Shares issued for:
cash pursuant to private placement	10,666,667	730,982	869,018	-	-	1,600,000
cash pursuant to exercise of options	150,000	66,306	(28,056)	-	-	38,250
cash pursuant to exercise of warrants	4,125,000	1,267,583	(274,983)	-	-	992,600
Share issuance costs	-	(46,145)	16,336	-	-	(29,809)
Share-based compensation	-	-	388,061	-	-	388,061
Loss for the year	-	-	-	-	(1,147,618)	(1,147,618)
Balance– November 30, 2020	57,357,582	17,780,135	5,578,525	-	(13,932,668)	9,425,992

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

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

First Vanadium Corp. (the “Company” or “First Vanadium”) is in the business of the acquisition, exploration and evaluation of mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. The Company has an interest in properties located in Nevada and Arizona, USA. The Company is incorporated under the Business Corporations Act (British Columbia). The common shares of the Company trade on the TSX Venture Exchange (“TSX-V”) under the symbol “FVAN”. On September 20, 2018, the Company changed its name from Cornerstone Metals Inc. to First Vanadium Corp. The Company’s corporate head office is located at 2200 - 1055 Dunsmuir Street, Four Bentall Centre, Vancouver, British Columbia, Canada.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these consolidated financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. Such adjustments could be material. At November 30, 2020, the Company had not yet achieved profitable operations, had a deficit of $13,932,668 (2019 - $12,785,050) since inception, a working capital of $1,009,485 (2019 - $910,096), and expects to incur further losses in the development of its business. These circumstances comprise a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern. Therefore, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to explore its exploration property interests and to meet its ongoing levels of corporate overhead and discharge its liabilities as they come due. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company.

In March 2020, the World Health Organization declared coronavirus (“COVID-19”) a global pandemic. The COVID-19 outbreak has resulted in social and economic disruption and had a resultant impact on the mining and exploration industries and capital markets. As at the date of this report, the Company has not been significantly impacted by the spread of COVID19. However, the duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, remains unclear at this time and could have a material impact on the Company's future financial position, results of operation and cash flows. The Company's liquidity and ability to continue as a going concern may also be impacted.

2. BASIS OF PRESENTATION

Statement of compliance

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

These consolidated financial statements were approved by the board of directors on March 30, 2021.

Basis of presentation

These consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments which are measured at fair value. Additionally, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

3. SIGNIFICANT ACCOUNTING POLICIES

Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Appleton Chile Exploration Limitada and Copper One USA Inc. (“CO USA”). The results of Appleton Chile Exploration Limitada and CO USA will continue to be included in the consolidated financial statements of the Company until the date that the Company's control over the subsidiary ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All intercompany balances and transactions, including unrealized income and expenses arising from intercompany transactions, are eliminated on consolidation.

Foreign currencies

The functional currency of a company is the currency of the primary economic environment in which the company operates. The presentation currency for a company is the currency in which the company chooses to present its financial statements. These consolidated financial statements are presented in Canadian dollars. The Canadian dollar is considered the functional currency and the presentation currency of the Company and all of its subsidiaries.

Foreign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that date. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. Non-monetary assets and liabilities that are stated at fair value are translated using the historical rate on the date that the fair value was determined. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. All gains and losses on translation of these foreign currency transactions are charged to the statement of loss and comprehensive loss.

Cash and cash equivalents

Cash and cash equivalents include cash and highly liquid investments held in the form of guaranteed investment certificates that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

Exploration and evaluation assets

The Company records its interests in exploration and evaluation assets at cost less option payments received and other recoveries. Exploration and acquisition costs relating to these interests are capitalized until the properties to which they relate are placed into production, sold or allowed to lapse. Acquisition costs and deferred exploration and development costs will be amortized over the useful life of the mine following attainment of commercial production or will be written off if the property or project is abandoned.

Exploration costs that are not attributable to a specific property are charged to operations as general exploration expense. Exploration costs incurred prior to the Company acquiring the legal rights to a property are charged to operations as general exploration expense.

The Company is in the process of exploring its exploration and evaluation assets. Management reviews the carrying value of the exploration and evaluation assets on a periodic basis and will recognize impairment in value based upon current exploration and development results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the property or from the sale of the property. Amounts shown for properties represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values. The ultimate recovery of such capitalized costs is dependent upon the development of economic ore reserves or the sale of mineral rights.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

Equipment

Equipment is carried at cost less accumulated depreciation and any recognized impairment loss, net of reversals. Depreciation is computed using the straight-line method over estimated useful lives as follows:

Furniture and equipment	5 years
Computer hardware	3 years
Computer software	1 year
Vehicles	5 years

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

Impairment of non-financial assets

At the end of each reporting period the carrying amounts of the Company’s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

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

Decommissioning and restoration provisions

The Company recognizes a provision for statutory, contractual, constructive or legal obligations associated with decommissioning of mining operations and reclamation and rehabilitation costs arising when environmental disturbance is caused by the exploration or development of mineral properties. Provisions for site closure and restoration are recognized in the period in which the obligation is incurred or acquired, and are measured based on expected future cash flows to settle the obligation, discounted to their present value. The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and risks specific to the liability.

When an obligation is initially recognized, the corresponding cost is capitalized to the carrying amount of the related exploration property. These costs are depreciated over the same economic life as the related asset.

The obligation is accreted over time for the change in their present value, with this accretion charge recognized as a finance expense in profit or loss. The obligation is also adjusted for changes in the estimated timing, amount of expected future cash flows, and changes in the discount rate. Such changes in estimates are added to or deducted from the related asset except where deductions are greater than the carrying value of the related asset in which case, the amount of the excess is recognized in profit or loss.

Due to uncertainties concerning environmental remediation, the ultimate cost to the Company of future site restoration could differ from the amounts provided. The estimate of the total provision for future site closure and restoration costs is subject to change based on amendments to laws and regulations, changes in technology, price increases and changes in interest rates, and as new information concerning the Company’s closure and restoration obligations becomes available. As at November 30, 2020 and 2019, the Company had not recognized any decommissioning liabilities.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

Financial Instruments

The Company recognizes a financial asset or financial liability on the statement of financial position when it becomes a party to the contractual provisions of the financial instrument.

The Company classifies its financial instruments in the following categories: at fair value through profit and 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 if the Company has opted to measure them at FVTPL.

The Company classifies its cash and cash equivalents and its other receivables and accounts payable and accrued liabilities at amortized cost.

Measurement

Financial assets at FVTOCI

Investments in equity instruments designated at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with both realized and unrealized gains and losses recognized in other comprehensive income (loss) in the period in which they arise. Interest income from these financial assets is included as finance income using the effective interest rate method. As at November 30, 2020 and 2019, the Company does not carry any financial assets at FVTOCI.

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 transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in profit or loss in the period in which they arise.

Impairment of financial assets at amortized cost

The Company recognizes 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 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 profit or 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 of financial assets and liabilities

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 profit or loss in the period in which they arise.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

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 profit or loss.

Share capital

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

Broker warrants and warrants

Warrants issued to agents or brokers in connection with a financing are recorded at fair value using the Black-Scholes option pricing model and charged to share issuance costs associated with the offering with an offsetting credit to reserves in shareholders' equity.

The Company accounts for warrants issued in unit offerings comprising a common share and warrant using the relative fair value method. Under this method, the fair value of common shares and warrants are measured at the issuance date and the proceeds raised are allocated to the common shares and warrants proportionately. The fair value of common shares is measured based on the quoted market price of the Company’s stock and the warrant issued is measured at the issue date using the Black-Scholes valuation model.

Proceeds of the exercise of these warrants are credited to share capital together with the corresponding amount, if any, of the original warrant charge included in reserves.

Share-based compensation

The Company has established a stock option plan for the benefit of full-time and part-time employees, officers, directors and consultants of the Company and its affiliates. The Company accounts for share-based compensation using the fair value method. Share-based compensation paid to employees are measured at the fair value of the instruments issued and amortized over the vesting periods. Share-based compensation paid to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured and are recorded at the date the goods or services are received. The fair value of the stock options granted is recorded as a charge to profit or loss or deferred exploration costs and the corresponding amount is charged to reserves. The fair value of options is determined using the Black-Scholes Option Pricing Model which incorporates all market vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognized for services received as consideration for the equity instruments granted shall be based on the number of equity instruments that eventually vest. Any consideration received on the exercise of stock options together with the related portion of reserves is credited to share capital.

Income tax

Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

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

Deferred tax is provided 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. The Company does not provide for temporary differences relating to differences relating to investments in subsidiaries, associates, and joint ventures to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet reporting date applicable to the period of expected realization or settlement.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

A deferred tax asset is recognized only to the extent that it is probable that future taxable incomes will be available against which the asset can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Loss per share

Basic loss per share is calculated by dividing the net loss for the year available to common shareholders by the weighted average number of shares outstanding during the year. Diluted loss per share represents the loss for the year, divided by the weighted average number of common shares outstanding during the year plus the weighted average number of dilutive shares resulting from the exercise of stock options, warrants and other similar instruments where the inclusion of these would not be anti-dilutive.

4. NEW AND FUTURE ACCOUNTING STANDARDS

i) Standards adopted during the current year

IFRS 16 Leases

In January 2016, the IASB published a new standard, IFRS 16, Leases. The new standard brings most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. Under the new standard, a lessee recognizes a right-of-use asset (“ROU asset”) and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly. The liability accrues interest. This will typically produce a front-loaded expense profile (whereas operating leases under IAS 17 would typically have had straight-line expenses).

The primary lease which is subject to the requirements of IFRS-16 is the Company’s lease of office premises. The Company adopted IFRS-16 effective December 1, 2019 and has elected not to apply this Standard to contracts that were not previously identified as containing a lease. IFRS-16 permits a choice that, upon adoption of IFRS-16, enables the Company to apply the standard retrospectively on a modified basis, which requires that the Company shall not restate comparative information, but instead shall recognize the cumulative effect of initially applying IFRS-16 as an adjustment to the opening balance of retained earnings at the date of initial application. The Company elected to apply the modified retrospective application method, and the November 30, 2019 balances were not restated. The Company determined there were no adjustments to the opening balance of the deficit as at December 1, 2019.

In applying this form of retrospective application, the Company is required to:

• (a) recognise a lease liability at the date of initial application for leases previously classified as an operating lease applying IAS 17. The Company shall measure that lease liability at the present value of the remaining lease payments, discounted using the Company's incremental borrowing rate at the date of initial application.

• (b) recognise a right-of-use asset at the date of initial application for leases previously classified as an operating lease applying IAS 17. The Company chose, as permitted by IFRS-16 to measure the right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position immediately before the date of initial application.

As there was a security deposit of $10,954, which will be applied against the last two months of lease payments, the initial carrying value of the lease obligations and right of use asset were recorded at the initial values of $65,236 and $76,190, respectively. The Company’s right of use asset (lease asset) is the office rental asset and is presented within current assets as the lease will terminate in 12 months from the date of these consolidated financial statements.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

The cumulative effect of the changes made to the consolidated statement of financial position as at December 1, 2019 for the adoption of IFRS 16 is as follows:

			Effect of transition to
	November 30, 2019		IFRS 16	December 1, 2019
Right-of-use asset	$	-	$ 76,190	$ 76,190
Deposit		10,954	(10,954)	-
Lease liability		-	(65,236)	(65,236)
	$	10,954	$-	$10,954

New accounting policy for leases under IFRS 16

At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Leases of right-of-use assets are recognized at the lease commencement date at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, and otherwise at the Company’s incremental borrowing rate. At the commencement date, a rightof-use asset is measured at cost, which is comprised of the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any decommissioning and restoration costs, less any lease incentives received.

Each lease payment is allocated between repayment of the lease principal and interest. Interest on the lease liability in each period during the lease term is allocated to produce a constant periodic rate of interest on the remaining balance of the lease liability. Except where the costs are included in the carrying amount of another asset, the Company recognizes in profit or loss (a) interest on a lease liability and (b) variable lease payments not included in the measurement of a lease liability in the period in which the event or condition that triggers those payments occurs. The Company subsequently measures a right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability. Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term, except where the lease contains a bargain purchase option a right-of-use asset is depreciated over the asset’s useful life.

ii) Future accounting standards issued but not yet effective

IAS 16 – Property, plant and equipment - proceeds before intended use (“IAS 16”)

IAS 16 has been amended to clarify the accounting for the net proceeds from selling any items produced while bringing an item of property, plant or equipment to the location and condition necessary for it to be capable of operating in the manner intended by management. The amendments prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and related cost in profit or loss. These amendments are effective for periods beginning on or after January 1, 2022. The Company is currently assessing the impact of this amendment.

IAS 37–Provisions (“IAS 37”)

IAS 37 has been amended to clarify (i) the meaning of “costs to fulfil a contract”, and (ii) that, before a separate provision for an onerous contract is established, an entity recognizes any impairment loss that has occurred on assets used in fulfilling the contract, rather than on assets dedicated to that contract. These amendments are effective for periods beginning on or after January 1, 2022. The Company is currently assessing the impact of this amendment.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

IAS 1 –Presentation of Financial Statements (“IAS 1”)

IAS 1 has been amended to clarify how to classify debt and other liabilities as either current or non-current. The amendment to IAS 1 is effective for the years beginning on or after January 1, 2023. The Company is currently assessing the impact of this amendment.

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires management to use judgement in applying its accounting policies and estimates and assumptions about the future. Estimates and other judgements are continuously evaluated and are based on management’s experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances.

Judgements

• Going concern – Judgement is required in making assumptions that the Company is a going concern and will continue in operation for the foreseeable future for at least one year.

• Impairment of exploration and evaluation assets – Judgement is required when assessing whether indicators of impairment exist for exploration and evaluation assets. Recorded costs of exploration and evaluation assets are not intended to reflect present or future values of these properties. The recorded costs are subject to measurement uncertainty and it is reasonably possible, based on existing knowledge, that change in future conditions could require a material change in the recognized amount.

• Functional currency- Judgement is required when determining the functional currency for the parent and subsidiaries in foreign jurisdictions in accordance with IAS 21 – The effects of changes in foreign exchange rates .

• Deferred income tax assets - Judgment is required in determining whether deferred tax assets are recognized in the statement of financial position. Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilize recognized deferred tax assets.

Critical accounting estimates are estimates and assumptions made by management that may result in a material adjustment to the carrying amount of assets and liabilities within the next financial year and include, but are not limited to, the following:

Estimates

• Share-based compensation and warrant valuation - The Company measures the cost of equity-settled transactions with employees and finders by reference to the fair value of the equity instruments at the date at which they were granted. Estimating the fair value for share-based payment transactions and finders’ warrants requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility, and dividend yield and making assumptions about them.

• Discount rates used to measure the present value of leases - Management is required to estimate the Company’s incremental borrowing rate. This rate is used to discount the future lease cash flows to determine the carrying value of the lease liability. Management estimates its incremental borrowing rate based on the risk-free rate and a credit risk premium for a period commensurate with the term of the lease.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

6. EQUIPMENT

Cost	Computer Hardware
As at November 30, 2018	-
Additions	13,170
As at November 30, 2019	13,170
As at November 30, 2020	13,170
Accumulated Depreciation
As at November 30, 2018	-
Depreciation	4,390
As at November 30, 2019	4,390
Depreciation	4,389
As at November 30, 2020	8,779
Net Book Value
As at November 30, 2019	8,780
As at November 30, 2020	4,391

7. EXPLORATION AND EVALUATION ASSETS

Carlin Gold-Vanadium Property, Nevada

	Carlin Gold-Vanadium
	$
Balance as at November 30, 2018	5,203,429
Acquisition costs	153,752
Deferred exploration expenditures
Assaying	361,591
Consulting	805,110
Licenses, permits and fees	34,951
Staking	12,337
Surveying	23,627
Other	35,510
	1,426,878
Balance as at November 30, 2019	6,630,307

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019

(Expressed in Canadian dollars)

	Carlin Gold-Vanadium
	$
Balance as at November 30, 2019	6,630,307
Acquisition costs	7,171
Deferred exploration expenditures
Assaying	132,632
Consulting	449,835
Drilling	934,246
Licenses, permits and fees	62,045
Surveying	9,226
Other	84,779
	1,679,934
Balance as at November 30, 2020	8,310,241

On September 22, 2017 the Company entered into an assignment agreement with America’s Gold Exploration Inc. (“AGEI”). Pursuant to the assignment agreement, AGEI assigned to the Company all of AGEI’s interest in an option agreement between AGEI and Golden Predator US Holding Corp. (“GPUS”) dated June 14, 2017 as amended September 12, 2017. The option agreement grants to First Vanadium the option to acquire a 100% interest in the Carlin GoldVanadium Project (the “Property”) located in Elko Nevada.

The total consideration applicable to First Vanadium’s acquisition of the Property under the assignment agreement with AGEI is as follows:

• US$15,000 on execution of the LOI (paid on September 1, 2017)

• Pay US$35,000 (paid on November 9, 2017) and issue 1,000,000 common shares (issued on November 8, 2017) on the Closing Date of the Agreement

• Issue 1,000,000 common shares on the date that is one year from the Closing Date (issued on October 15, 2018).

The consideration applicable to First Vanadium’s acquisition of the Property under the option agreement with GPUS is as follows:

• Pay US$15,000 on June 14, 2017 (paid by AGEI prior to the assignment agreement);

• Pay US$25,000 by June 14, 2018 (paid on May 28, 2018);

• Pay US$50,000 by June 14, 2019 (paid on May 22, 2019); and

• Pay US$1,910,000 at any time during the option period (June 14, 2017 to June 14, 2022)

In addition, the Company is required to incur $1,022,000 in exploration expenditures on the property as follows:

• US$50,000 on or before December 15, 2017 (completed);

• US$125,000 on or before December 15, 2018 (completed);

• US$225,000 on or before December 15, 2019 (completed);

• US$250,000 on or before December 15, 2020 (completed);

• US$250,000 on or before December 15, 2021 (completed); and

• US$122,000 on or before June 14, 2022 (completed).

Upon completion of the US$1,910,000 payment obligation, First Vanadium would then be deemed to have exercised the option and to have acquired a 100% interest in the Property.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

At such time as First Vanadium has exercised the option in full and acquired a 100% interest in the Property, a 1.5% NSR will be granted to AGEI under the assignment agreement and a 2% NSR will be granted to GPUS under the option agreement. On November 23, 2018, the Company purchased the 1.5% NSR from AGEI and adopted certain amendments to the assignment agreement for 1,300,000 common shares (issued on December 5, 2018 with a fair value of $1,222,000) (Note 9). The common shares were issued on December 5, 2018. The GPUS 2% NSR may be purchased by the Company at the time of the option exercise for US$4 million.

A finder’s fee of US$5,000 and 100,000 common shares (valued at $41,000) of the Company was also paid and issued in relation to this transaction during the year ended November 30, 2017. During the year ended November 30, 2018, the Company issued an additional 100,000 common shares (valued at $162,000) in relation to the finders’ fee.

On January 17, 2019, the Company entered into an Access and Mineral Lease Agreement which increased mineral rights adjacent to the Carlin Gold-Vanadium property (referred to as the “Cole Creek Property”). Under the terms of the Access and Mineral Lease Agreement the Company paid the lessor US$50,000 on signing (paid) and is required to pay an additional US$20,000 annually for the lease.

In addition, the Company is to incur an aggregate of US$100,000 in expenditures before January 19, 2022. In the event the Company commences mining operations on the Cole Creek Property, the annual payments will be replaced with a 5% NSR royalty in favour of the lessor. The lessor also owns or has rights to certain lands containing roads which the Company wishes to use for access to the Cole Creek Property and the Carlin Gold-Vanadium property. The Access and Mineral Lease Agreement grants to the Company the right to access such lands and roads for a payment of US$15,000 (paid) on signing and US$5,000 annually which will terminate at the Company’s start of development and mining operations. The Company has the right to terminate the lease portion of the agreement without termination of the road access portion of the agreement.

The Company has paid $77,637 (US$59,582) (2019 - $15,371 (US$11,556)) into a reclamation bonds for the Carlin GoldVanadium Property.

West Jerome, Arizona

On August 22, 2013, the Company acquired all of the issued and outstanding shares of CO USA. The acquisition included an undivided 100% interest in West Jerome located in Arizona. The property is subject to a 1.5% NSR to one party and a 0.5% NSR to another party.

As there is no further planned expenditures for exploration of the West Jerome property, the costs of $130,083 that had been previously capitalized were written off as at November 30, 2018.

During the year ended November 30, 2020 the Company paid $22,630 (2019 - $22,353) in permitting fees to keep the West Jerome property in good standing. These costs have been expensed as exploration costs on the statement of loss and comprehensive loss.

Other

As at November 30, 2020, the Company holds a total of $9,000 (2019 - $9,000) in reclamation bonds related to its previously held Spences Bridge prospect.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

8. LEASE

The Company recognized a ROU asset and lease liability for office space leased by the Company. The Company is required to make monthly payments of approximately $5,650, with the term of the lease expiring on February 27, 2021. The last two months of the lease were prepaid in the prior year.

	Right-of-use asset
	$
Balance, November 30, 2019 and 2018	-
ROU asset recognized on transition	76,190
Depreciation	(60,952)
Balance, November 30, 2020	15,238

The following is a schedule of the Company’s future minimum lease payments related to the lease obligations and the lease liability balance outstanding as at November 30, 2020. The outstanding liability balances as at November 30, 2020 was calculated using the Company’s incremental borrowing rate of 20% per annum. Lease interest of $7,149 (2019 - $nil) is included within office expenses.

	Lease liability
	$
Carrying value, December 1, 2019	65,236
Interest accrued	7,149
Lease payments	(66,688)
Carrying value, November 30, 2020	5,697
Current portion of lease liability	5,697
Long-term portion of lease liability	-
	5,697
Remaining lease payments as at November 30, 2020	5,650
Total minimum lease payments	5,650
Add: imputed interest	47
Totalpresent value of minimum leasepayments	5,697

9. SHARE CAPITAL

• a) Authorized: Unlimited common shares without par value

• b) Financing:

For the year ended November 30, 2020

On July 9, 2020, the Company closed a non-brokered private placement of 10,666,667 units at $0.15 per unit for total gross proceeds of $1,600,000. Each unit consists of one common share and one purchase warrant. Each purchase warrant is exercisable into one common share for a period of three years at an exercise price of $0.26 per share. The value of $869,018 attributed to the warrants was estimated using the Black-Scholes pricing model with the following weighted average assumptions: share price - $0.28; exercise price - $0.26; risk-free rate – 0.27%; expected life – 3.0 years; expected volatility – 109%; and expected dividends – nil. Additionally, in connection with the private placement, the Company incurred $29,809 in cash share issuance costs and issued 87,150 finder warrants. The value

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

of $16,336 attributed to the finders’ warrants was estimated using the Black-Scholes pricing model with the following weighted average assumptions: share price - $0.28; exercise price - $0.26; risk-free rate – 0.27%; expected life – 3.0 years; expected volatility – 109%; and expected dividends – nil.

During the year ended November 30, 2020 a total of 3,995,000 warrants with an exercise price of $0.24 per share and 130,000 warrants with an exercise price of $0.26 per share were exercised for gross proceeds of $992,600. The fair value assigned to the warrants of $274,983 was reclassified from reserves to share capital.

During the year ended November 30, 2020 a total of 150,000 options with an exercise price of $0.255 per share were exercised for gross proceeds of $38,250. The fair value of the stock options of $28,056 was reclassified from reserves to share capital.

For the year ended November 30, 2019

On June 6, 2019 and July 3, 2019, the Company closed two tranches of a non-brokered private placement by issuing 2,125,500 and 1,312,000 units, respectively, at $0.40 per unit for total gross proceeds of $1,375,000. Each unit consists of one common share and one purchase warrant. Each purchase warrant is exercisable into one common share for a period of three years at an exercise price of $0.65 per share. The value of $424,000 attributed to the warrants was estimated using the Black-Scholes pricing model with the following weighted average assumptions: share price - $0.39; exercise price - $0.65; risk-free rate – 1.46%; expected life – 2.0 years; expected volatility – 109%; and expected dividends – nil. Additionally, in connection with the private placement, the Company incurred $13,725 in cash share issuance costs.

On December 5, 2018, the Company issued 1,300,000 common shares to purchase a 1.5% NSR from AGEI (note 7). The fair value of the shares on the date of issuance was $1,222,000.

During the year ended November 30, 2019 a total of 212,500 warrants with an exercise price of $0.45 per share were exercised for gross proceeds of $95,625. The fair value assigned to the warrants of $42,500 was reclassified from reserves to share capital.

• c) Stock options:

Stock option plan

The Company has adopted a stock option plan which authorizes the grant of up to 10% of the issued and outstanding shares as incentive stock options to directors, officers, insiders, employees and other service providers to the Company. The stock option plan limits the number of incentive stock options which may be granted to any one individual to not more than 5% of the total issued shares of the Company in any 12-month period. The number of incentive stock options granted to any one consultant or a person employed to provide investor relations activities in any 12-month period must not exceed 2% of the total issued shares of the Company. The options granted under the stock option plan vest immediately, unless otherwise elected by the Board of Directors.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

The balance of fully exercisable options outstanding and related information for the years ended November 30, 2020 and 2019 are as follows:

		Weighted
		Average	Weighted
	Options	Exercise Price	Average Life
	Outstanding	Per Share	(Years)
Balance, November 30, 2018	2,980,000	$0.60	4.17
Expired	(280,000)	$0.56
Granted	685,000	$0.30
Balance, November 30, 2019	3,385,000	$0.37	3.42
Exercised	(150,000)	$0.255
Granted	1,225,000	$0.32
Balance, November 30, 2020	4,460,000	$0.36	3.02

During the year ended November 30, 2020, the Company granted 1,225,000 stock options and recognized share-based compensation of $388,061. All options vested immediately upon issuance. The weighted average fair value per option of the share options granted during the year was $0.32. The fair value of the options was estimated on the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions: share price - $0.38; exercise price - $0.32; dividend yield – nil; volatility – 119%; risk-free interest rate – 0.32%; expected life of options (years) – 5 years; forfeiture rate – nil.

During the year ended November 30, 2019, the Company granted 685,000 stock options and recognized share-based compensation of $347,928. All options vested immediately upon issuance, except for the options granted on January 18, 2019 which vest quarterly over the first year. The weighted average fair value per option of the share options granted during the year was $0.42. The fair value of the options was estimated on the date of grant using the BlackScholes option valuation model with the following weighted average assumptions: share price - $0.49; exercise price - $0.51; dividend yield – nil; volatility – 142%; risk-free interest rate – 1.46%; expected life of options (years) – 4 years; forfeiture rate – nil.

On November 15, 2019, the Company amended certain options by reducing the exercise price to $0.255, with all other terms of the options remaining unchanged. The fair value per option of the modification was $0.18. The fair value of the modification was estimated using the Black-Scholes option valuation model with the following weighted average assumptions: share price - $0.26; exercise price - $0.255; dividend yield – nil; volatility – 117%; risk-free interest rate – 2%; expected life of options (years) – 3 years; forfeiture rate – nil.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

As at November 30, 2020, the Company had the following fully exercisable options outstanding:

	Exercise	Options outstanding and
Expiry Date	Price	exercisable
October 11, 2021	$0.10	350,000
October 25, 2022	$0.30	495,000
November 9, 2022	$0.31	200,000
January 22, 2023	$0.30	10,000
April 6, 2023	$0.26	100,000
April 6, 2023	$0.56	845,000
June 12, 2023	$0.98	175,000
July 30, 2023	$0.26	150,000
October 23, 2023	$0.26	100,000
October 30, 2023	$0.26	200,000
January 18, 2024	$0.26	75,000
March 18, 2024	$0.26	245,000
March 18, 2024	$0.60	90,000
November 8, 2024	$0.25	100,000
November 18, 2024	$0.25	100,000
August 5, 2025	$0.32	1,225,000
		4,460,000

Subsequent to November 30, 2020, a total of 400,000 options with a weighted averaged exercise price of $0.68 were cancelled.

d) Warrants:

The balance of warrants outstanding and related information for the years ended November 30, 2020 and 2019 were as follows:

		Weighted
		Average	Weighted
	Warrants	Exercise Price	Average
	Outstanding	(per share)	Life (years)
Balance, November 30, 2018	7,591,500	$0.34	1.62
Issued	3,437,500	$0.65
Exercised	(212,500)	$0.45
Balance, November 30, 2019	10,816,500	$0.43	1.24
Issued	10,753,817	$0.26
Exercised	(4,125,000)	$0.24
Expired	(3,384,000)	$0.45
Balance, November 30, 2020	14,061,317	$0.36	2.35

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019

(Expressed in Canadian dollars)

As at November 30, 2020, the Company had the following warrants outstanding:

	Exercise
Expiry Date	Price	Warrants outstanding
June 6, 2022	$0.65	2,125,500
July 3, 2022	$0.65	1,312,000
July 9, 2023	$0.26	10,623,817
		14,061,317

Subsequent to November 30, 2020, a total of 466,625 warrants exercised at an exercise price of $0.26 for gross proceeds of $121,323.

10. INCOME TAXES

A reconciliation from the Company’s income tax provision computed at statutory rates to the reported income tax provision for the years ended November 30, 2020 and 2019 is as follows:

	2020	2019
	$	$
Loss for the year before income taxes	(1,147,618)	(1,623,196)
Expected income tax recovery	(310,000)	(438,000)
Share issuance costs	(12,000)	(4,000)
Change in foreign tax, foreign exchange rates and other	52,000	(38,000)
Permanent differences	101,000	210,000
Change in unrecognized deductible temporary differences	169,000	270,000
Income taxexpense (recovery)	-	-

The significant components of the Company’s unrealized deferred income tax assets and liabilities are as follows:

	November 30	November 30
	2020	2019
	$	$
Deferred income tax assets
Non-capital tax losses carried forward	2,200,000	1,997,000
Exploration and evaluation assets	840,000	878,000
Share issuance costs and others	29,000	24,000
Total unrecognized deferred income tax assets	3,069,000	2,899,000

Losses in Canada that reduce future income for tax purposes expire as follows:

			$
2026	-	2030	1,851,000
2031	-	2035	1,236,000
2036	-	2040	3,902,000
			6,989,000

At November 30, 2020, the Company also has non-capital losses of approximately US$1,490,047 (2019 – US$1,133,714) that arose in the United States of which US$1,428,622 will expire by 2028 to 2038 and US$61,424 is carried forward indefinitely. At November 30, 2020, in addition to the tax losses listed above, there are resource related expenditures of approximately $3,026,000 (2019 – $3,026,000) which can be used to offset future Canadian income indefinitely.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

11. RELATED PARTY TRANSACTIONS

Key management personnel are the persons responsible for the planning, directing, and controlling the activities of the Company and include both executive and non-executive directors, and entities controlled by such persons. The Company’s key management personnel include all directors, officers and companies associated with them including the following:

• Buena Tierra Development Ltd (“Buena Tierra”), a company owned by Paul Cowley, the President, Chief Executive Officer and a director of the Company.

• International Mine Builders Inc., a company owned by a former director of the Company (ceased to be a director on November 30, 2019).

Compensation paid or payable to key management personnel for services provided during the years ended November 30, 2020 and 2019 was as follows:

	2020	2019
	$	$
Accounting fees	14,822	29,273
Consulting fees	170,000	330,900
Deferred exploration expenditure - consulting	44,701	-
Director fees	-	24,792
Share-based compensation	197,990	26,190
	427,513	411,155

The Company incurred additional expenditures charged by former related parties during the years ended November 30, 2020 and 2019 was as follows:

	2020	2019
	$	$
Consulting fees	-	21,300

As at November 30, 2020, accounts payable and accrued liabilities include $176,268 (2019 – $177,385) due to officers of the Company and/or companies controlled by officers of the Company. The amounts are non-interest bearing, unsecured and have no specific terms of repayment. The balance includes $153,010 (2019 - $153,010) related to bonus payments earned by an officer and director of the Company. The payment will be deferred until such time as the Company’s Board of Directors approves payment.

12. MANAGEMENT OF CAPITAL

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern to pursue the development of its exploration and evaluation assets and to maintain a flexible capital structure which optimizes the cost of capital within a framework of acceptable risk. In the management of capital, the Company includes the components of shareholders’ equity as well as cash. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new shares, issue debt, acquire or dispose of assets or adjust the amount of cash.

The Company is dependent on the capital markets as its primary source of operating capital and the Company’s capital resources are largely determined by the strength of the junior resource markets and by the status of the Company’s projects in relation to these markets, and its ability to compete for investor support of its projects. The Company is not subject to any capital requirements imposed by a regulator, other than continued listing requirements of the TSX-V.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

13. FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, other receivables excluding GST receivable, and accounts payable and accrued liabilities. All financial instruments are designated as amortized cost.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value, by reference to the reliability of the inputs used to estimate the fair values.

• Level 1 – Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or modelderived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

• Level 3 – Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

As at November 30, 2020, the Company believes that the carrying values of cash and cash equivalents, other receivables excluding GST receivable, and accounts payable and accrued liabilities approximate their fair values because of their nature and relatively short maturity dates or durations.

Discussions of risks associated with financial assets and liabilities are detailed below:

Foreign Exchange Risk

As at November 30, 2020, the Company’s current assets were held in US and Canadian dollars. A 10% change in the exchange rate would not result in a material change to the Company’s current assets.

Credit Risk

Credit risk arises from cash and cash equivalents held with banks and financial institutions. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The Company’s cash and cash equivalents, aside from the nominal holdings in USA is held with a large Canadian bank. Other receivables consist of accrued interest receivable from a large Canadian bank and excludes GST receivables. Management believes that the credit risk concentration with respect to accrued interest receivable is remote.

Interest Rate Risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize such a loss is limited as its interest bearing financial instrument is redeemable at any time.

Liquidity Risk

The Company manages liquidity risk by maintaining sufficient cash to enable settlement of transactions as they come due. Management monitors the Company’s contractual obligations and other expenses to ensure adequate liquidity is maintained.

Price Risk

Price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices. The Company does not hold any financial instruments with price risk.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

Commodity Price Risk

The Company’s ability to raise capital to fund exploration or development activities is subject to risks associated with fluctuations in the market prices of gold, silver and copper.

14. SEGMENTED INFORMATION

The Company has identified its operating segments based on the internal reports that are reviewed and used by the chief executive officer and the executive management in assessing performance and in determining the allocation of resources. The Company considers the business from a geographic perspective and assesses the performance of the operating segments based on measures such as net property and equipment as well as operational results.

Operating Segment

The Company’s operations are limited to a single industry segment, being the acquisition, exploration and development of mineral properties.

Geographic Segments

As at November 30, 2020, the Company’s operations and assets are located in Canada and the USA. By geographic areas, the Company’s losses for the years ended November 30, 2020 and 2019 are as follows:

	2020	2019
	$	$
Canada	1,125,200	1,569,633
USA	22,418	53,563
	1,147,618	1,623,196

By geographic areas, the Company’s non-current assets as at November 30, 2020 and November 30, 2019 are as follows:

	2020	2019
	$	$
Canada	28,629	28,734
USA	8,387,878	6,645,678
	8,416,507	6,674,412

15. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Non-cash investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows.

During the year ended November 30, 2020 and 2019, non-cash financing and investing activities included:

• $869,018 (2019 - $424,000) was allocated from share capital to reserves to record the relative fair value of the warrants issued in private placements;

• $16,336 (2019 - $nil) in brokers’ warrants was recorded as share issuance costs;

• $303,039 (2019 - $42,500) was reclassified from reserves to share capital on the exercise of stock options and warrants;

• $ 443,491 (2019 - $198,988) in accounts payable and accrued liabilities related to exploration and evaluation assets; and

• $nil (2019 - $1,222,000) in common shares were issued for the acquisition of exploration and evaluation assets.

First Vanadium Corp. Notes to the Consolidated Financial Statements For the years ended November 30, 2020 and 2019 (Expressed in Canadian dollars)

16. COMMITMENTS

The following table summarizes the contractual maturities of the Company’s significant financial liabilities and capital commitments, including contractual obligations for the years ended November 30 indicated:

	2022	2022	2023	2024	2025	Total
	$	$	$	$	$	$
Accounts payable and accrued
liabilities	803,450	-	-	-	-	803,450
Consulting agreement obligations	180,000	180,000	180,000	180,000	180,000	900,000
Exploration obligations(1)	64,825	2,962,503	356,538	356,538	388,950	4,129,354
Rent obligations	5,650	-	-	-	-	5,650
	1,053,925	3,142,503	536,538	536,538	568,950	5,838,454

(1) Exploration obligations include all option payments, mineral access, mineral lease, and exploration expenditure obligations for the Company's mineral properties, including those entered into subsequent to November 30, 2020 (Note 17).

17. SUBSEQUENT EVENT

On January 14, 2021, the Company entered into an option agreement with Nevada Gold Ventures, LLC (“Nevada Gold”) whereby the Company has the option to acquire a 100% interest in the AVP Property located in Eureka, Nevada, by completing cash payments and share issuances to Nevada Gold and incurring the exploration expenditures on the property over a period of five years. The Company received TSX-V acceptance on January 20, 2021.

As consideration for the property, the Company will make cash payments of US$50,000 and issue 1,500,000 common shares as follows:

• Pay US$25,000 in cash (paid January 21, 2021) and issue 250,000 common shares within 5 days after the TSXV approval date; (issued on January 21, 2021);

• Issue 250,000 common shares on or before January 20, 2022;

• Issue 250,000 common shares on or before January 20, 2023;

• Issue 250,000 common shares on or before January 20, 2024; and

• Pay US$25,000 in cash and issue 500,000 common shares on or before January 20, 2025

In addition, the Company is required to incur $2,000,000 in exploration expenditures on the property over the next five years as follows:

• US$250,000 on or before January 20, 2022;

• US$250,000 on or before January 20, 2023;

• US$250,000 on or before January 20, 2024;

• US$250,000 on or before January 20, 2025; and

• US$1,000,000 on or before January 20, 2026

Nevada Gold will retain a 3% NSR on any mineral products derived from the AVP Property. The Company will have the right to purchase up to 2% of the NSR for US$1.0 million per each 1% NSR prior to commencing commercial production, leaving Nevada Gold with a 1% NSR.