RJK Explorations Ltd. — Interim / Quarterly Report 2021

Nov 26, 2021

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CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS NINE MONTH PERIODS ENDED SEPTEMBER 30, 2021 & 2020 EXPRESSED IN CANADIAN DOLLARS UNAUDITED

The independent auditor of RJK EXPLORATIONS has not performed a review of the unaudited condensed interim consolidated financial statements for the nine month periods ended September 30, 2021 and 2020.

RJK EXPLORATIONS

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS AS AT SEPTEMBER 30, 2021 and DECEMBER 31, 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

	SEPTEMBER 30	SEPTEMBER 30	DECEMBER 31	DECEMBER 31
		2021		2020
ASSETS
CURRENT ASSETS
Cash (Note 6)	$	379,829	$	1,759,445
Accounts receivable (Note 7)		33,415		96,145
Prepaid expenses		-		169
TOTAL CURRENT ASSETS		413,244		1,855,759
Exploration and evaluation properties (Note 5)		3,422,370		2,010,054
Plant and equipment (Note 8)		40,270		44,622
TOTAL ASSETS	$	3,875,884	$	3,910,435
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities (Notes 7 and 10)	$	41,333	$	233,591
Liability component of Class B preferred shares (Note 10)		170,828		170,828
TOTAL CURRENT LIABILITIES		212,161		404,419
TOTAL LIABILITIES		212,161		404,419
SHAREHOLDERS' EQUITY(Note 10)
Common stock (Class A shares)		29,381,914		28,965,834
Royalty preferred shares (Class C shares)		651,435		727,515
Equity component of Class B preferred shares		256,242		256,242
Contributed surplus and reserves		4,042,780		3,935,713
Deficit	(30,668,648)		(30,379,288)
TOTAL SHAREHOLDERS'EQUITY		3,663,723		3,506,016
TOTAL LIABILITIES AND SHAREHOLDERS'EQUITY	$	3,875,884	$	3,910,435

Description of business (Note 1) Going concern (Note 2c) Commitments and contingencies (Note 11) Events after the reporting date

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

RJK EXPLORATIONS

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

THREE MONTH PERIODS ENDED SEPTEMBER 30, 2021 AND 2021 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

		3 months ended	September 30	September 30		9 months ended	September 30	September 30
		2021		2020		2021		2020
EXPENSES
Shareholder information	$	4,137	$	19,841	$	68,784	$	87,613
Professional fees		19,418		29,699		66,941		67,093
Office and general expenses		11,426		5,587		42,319		35,425
Depreciation (Note 8)		1,451		3,955		4,353		11,865
Stock-based compensation (Note 10)		-		-		107,067		34,436
NET LOSS		36,432		59,082		289,464		236,432
Interest income		3		-		104		140
NET AND COMPREHENSIVE LOSS		36,429		59,082		289,360		236,292
Weighted average number of common
shares outstanding		67,424,109		56,284,143		67,356,834		53,618,576
BASIC AND DILUTED LOSS PER
COMMON SHARE	$	(0.001)	$	(0.001)	$	(0.004)	$	(0.004)

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

RJK EXPLORATIONS

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS NINE MONTH PERIODS ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

	9 months ended	9 months ended	September 30	September 30
		2021		2020
OPERATING ACTIVITIES
NET INCOME (LOSS)	$	(289,360)	$	(236,292)
ADD ITEMS NOT REQUIRING A CASH OUTLAY
Depreciation		4,353		11,865
Lease interest				835
Stock based compensation		107,067		34,436
CHANGES IN NON-CASH WORKING CAPITAL ITEMS
Accounts receivable		62,730		81,076
Prepaid expenses		169		(579)
Accounts payable		(192,258)		(7,260)
CASH FLOWS USED IN OPERATING ACTIVITIES		(307,299)		(115,919)
INVESTING ACTIVITIES
Additions to exploration and evaluation properties		(1,072,317)		(749,381)
CASH FLOWS USED IN INVESTING ACTIVITIES		(1,072,317)		(749,381)
FINANCING ACTIVITIES
Proceeds from issue of common stock		-		600,000
Proceeds from Class C conversions		-		(4,090)
Repayment of lease obligations		-		(8,100)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		-		587,810
CHANGE IN CASH DURING THE PERIOD		(1,379,616)		(277,490)
CASH, beginning of period		1,759,445		820,966
CASH, end of period	$	379,829	$	543,476

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

RJK EXPLORATIONS

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY NINE MONTH PERIODS ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

	COMMON STOCK (Class A Shares) # OF SHARES AMOUNT CLASS B PREFERRED SHARES CLASS C PREFERRED SHARES CONTRIBUTED SURPLUS AND RESERVES DEFICIT TOTAL 51,687,440 $ 26,235,544 $ 256,242 $ 760,800 $ 3,875,009 $(29,557,052) $ 1,570,543 - - - - 34,436 - 34,436 3,900,000 442,605 - - - - 442,605 - - - - 159,078 - 159,078 350,000 33,285 - (33,285) - - - 700,000 186,000 - - - - 186,000 50,000 5,000 - - - - 5,000 - - - - - (236,292) (236,292) - (5,774) - - - - (5,774)
Balance, December 31, 2019 Stock options issued to directors and officers Private placements Fair value of broker warrants issued with private placements Conversion of Class C preferred shares to Class A commons shares Issued for properties option payments Stock options exercised Loss and comprehensive loss for the period Share issue costs
Balance, September 30, 2020 Balance, December 31, 2020 Stock options issued to directors, officers, consultants Issued for properties option payments Loss and comprehensive loss for the period Conversion of Class C preferred shares to Class A commons shares	56,687,440 $26,896,660 $ 256,242 $ 727,515 $ 4,068,523 $ (29,793,344) $ 2,155,596 65,969,334 $28,965,834 $ 256,242 $ 727,515 $ 3,935,713 $ (30,379,288) $ 3,506,016 - - - - 107,067 - 107,067 1,200,000 340,000 - - - - 340,000 - - - - - (289,360) (289,360) 800,000 76,080 - (76,080) - - -
Balance, September 30, 2021	67,969,334 $29,381,914 $ 256,242 $ 651,435 $ 4,042,780 $(30,668,648) $ 3,663,723

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

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

1. DESCRIPTION OF BUSINESS

RJK Explorations Ltd. (the “Company” or "RJK") is a mineral exploration company originally formed in 1922 and is engaged in the acquisition and exploration of early stage exploration and evaluation properties. The Company’s current focus is on diamond exploration in Northern Ontario. The Company continues to evaluate its exploration and evaluation properties and may acquire additional properties as venture capital and opportunities present themselves. The Company is a reporting issuer in Ontario, Alberta and British Columbia and trades on the TSX Venture Exchange as a Tier II reporting issuer under the symbol “RJX.A”.

The address of the Company's corporate office and principal place of business is 4 Al Wende Avenue, Kirkland Lake, Ontario, Canada.

The Company is in the process of exploring its exploration and evaluation property interests and has not yet determined whether its exploration and evaluation interests contain mineral deposits that are economically recoverable. The Company will periodically have to raise additional funds to continue its exploration activities and, while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future.

Until it is determined that properties contain mineral reserves or resources that can be economically mined, they are classified as exploration and evaluation properties. The recoverability of deferred exploration expenses is dependent upon: the discovery of economically recoverable reserves and resources; securing and maintaining title and beneficial interest in the properties; the ability to obtain necessary financing to complete exploration, development and construction of processing facilities; obtaining certain government approvals; and attaining profitable production.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims, indigenous claims, and non-compliance with regulatory and environmental requirements.

2. BASIS OF PRESENTATION

(a) Condensed Interim Consolidated Financial Statements

These unaudited condensed interim consolidated financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS"), and in accordance with International Accounting Standard 34 - Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"). Certain disclosures included in the notes to the annual financial statements have been condensed in the following note disclosures or have been disclosed on an annual basis only. Accordingly, these unaudited condensed interim financial statements should be read in conjunction with the Company's 2020 annual financial statements as well as the following disclosure now required.

The unaudited condensed interim consolidated financial statements were authorized for issue by the Board of Directors on November 26, 2021.

(b) Basis of Presentation

These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis. In addition, these unaudited condensed interim consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

These condensed interim consolidated financial statements include the financial statements of the Company and its whollyowned subsidiary, RJK Minerals Inc., for the period from June 8, 2021 (date of incorporation) to September 30, 2021 (collectively the "Group"). Control is achieved when the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. RJK has incorporated RJK Minerals Inc. to look at gold, silver, cobalt and base metal opportunities.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

The preparation of unaudited interim financial consolidated statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the condensed interim consolidated financial statements are disclosed in Note 4.

(c) Going Concern of Operations

The Company has not generated revenue from operations. The Company incurred a net and comprehensive loss of $289,360 during the six months ended September 30, 2021 and, as at that date the Company’s deficit was $30,668,648. The Company has a working capital of $201,083. The Company expects to incur further losses in the development of its business, all of which indicate that material uncertainties exist that cast significant doubt upon the Company’s ability to continue as a going concern. The Company is in the exploration stage and has no proven reserves or production relating to its operations. The application of the going concern assumption is dependent upon the Company’s ability to generate future profitable operations and obtain necessary financing to do so.

These condensed interim consolidated financial statements have been prepared on the basis of accounting principles applicable to a "going concern", which assume that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The business of mining and exploring for minerals involves a high degree of risk and there is no guarantee that the Company's exploration programs will yield positive results or that the Company will be able to obtain the necessary financing to carry out the exploration and development of its exploration and evaluation property interests.

Management believes the going concern assumption to be appropriate for these condensed interim financial statements. If the going concern assumption was not appropriate, adjustments might be necessary to the carrying value of the assets and liabilities, reported revenues and expenses, and the balance sheet classifications used in the condensed interim consolidated financial statements.

The future profitability of exploration properties and the Company's continued existence are dependent upon the preservation of its interests in the underlying properties, the development of economically recoverable reserves, the achievement of profitable operations, or the ability of the Company to raise additional financing, if necessary, or alternatively upon the Company's ability to dispose of its interests on an advantageous basis. As the Company is in the exploration stage, the recoverability of the costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties and deferred exploration expenditures. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future.

3. CHANGES IN ACCOUNTING POLICIES AND ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

(a) Changes in Accounting Policies

Certain pronouncements were issued by the IASB or the International Financial Reporting Interpretations Committee (“IFRIC”) that are mandatory for accounting periods on or after January 1, 2022 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following have not yet been adopted and are being evaluated to determine their impact on the Company.

IAS 1, Presentation of Financial Statements

The IASB issued an amendment to IAS 1, Presentation of Financial Statements to clarify one of the requirements under the standard for classifying a liability as non-current in nature, specifically the requirement for an entity to have the right to defer settlement of the liability for at least 12 months after the reporting period. The amendment includes:

(i) specifying that an entity’s right to defer settlement must exist at the end of the reporting period; (ii) clarifying that classification is unaffected by management’s intentions or expectations about whether the entity will exercise its right to defer settlement; (iii) clarifying how lending conditions affect classification; and (iv) clarifying requirements for classifying liabilities an entity will or may settle by issuing its own equity instruments. An assessment will be performed prior to the effective date of January 1, 2023 to determine the impact to the Company's financial statements.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

IAS 16, Property, Plant and Equipment

The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use. The amendment is effective for annual periods beginning on or after January 1, 2022, with earlier application permitted.

4. CRITICAL ACCOUNT ESTIMATES AND JUDGMENTS

RJK Explorations Ltd. makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized prospectively by including it in income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.

Information about critical judgments in applying accounting policies that have the most significant risk of causing material adjustment to the carrying amounts of assets and liabilities recognized in the condensed interim consolidated financial statements within the next financial year are discussed below:

(a) Exploration and Evaluation Expenditures

The application of the Company’s accounting policy for exploration and evaluation expenditures requires judgment in determining whether it is likely that future economic benefits will flow to the Company, which may be based on assumptions about future events or circumstances. Estimates and assumptions made may change if new information becomes available. If, after expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in the statement of operations in the period the new information becomes available.

(b) Title to Exploration and Evaluation Property Interest

Although the Company has taken steps to verify title to exploration and evaluation properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

(c) Income, Value Added, Withholding, and Other Taxes

The Company is subject to income, value added, withholding and other taxes. Significant judgment is required in determining the Company's provision for taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Company recognizes liabilities and contingencies for anticipated tax audit issues based on the Company’s current understanding of the tax law. For matters where it is probable that an adjustment will be made, the Company records its best estimate of the tax liability including the related interest and penalties in the current tax provision. Management believes they have adequately provided for the probable outcome of these matters; however, the final outcome may result in a materially different outcome than the amount included in the tax liabilities.

In addition, the Company recognizes deferred tax assets relating to tax losses carried forward to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating to the same taxation authority and the same taxable entity against which the unused tax losses can be utilized. However, utilization of the tax losses also depends on the ability of the taxable entity to satisfy certain tests at the time the losses are recouped.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

4. CRITICAL ACCOUNT ESTIMATES AND JUDGMENTS (continued)

(d) Share-Based Payment Transactions

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires determining the most appropriate valuation model. This estimate also requires determining the most appropriate inputs to the Black-Scholes valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for stock-based payment transactions are disclosed in Note 10.

(e) Contingencies

See Note 11.

5. EXPLORATION AND EVALUATION PROPERTIES

The Company's mineral property interests consist of various early stage exploration projects as detailed below.

	September 30, 2021	September 30, 2021	December 31, 2020	December 31, 2020
ROLLING POND PROPERTIES:
Balance, beginning of the year	$	-	$	349,753
Acquisition/staking		-		41,000
Write off		-		(390,753)
Balance, end of the period	$	-	$	-
BISHOP DIAMOND PROPERTY:
Balance, beginning of the year	$	1,359,953	$	497,789
Acquisition/staking		301,300		177,907
Drilling		445,851		334,835
Geo reporting		7,296		94,528
Assaying, surveys and maps		220,631		85,566
Other exploration costs		63,815		169,328
Balance, end of the period	$	2,398,846	$	1,359,953
OTHER COBALT PROPERTIES:
Balance, beginning of the year	$	628,055	$	162,296
Acquisition/staking		96,303		153,726
Drilling		222,957		235,702
Geo reporting		-		6,589
Assaying, surveys and maps		379		52,841
Other exploration costs		53,784		35,135
Write off		-		(18,234)
Balance, end of the period	$	1,001,478	$	628,055

RJK EXPLORATIONS

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

OTHER:

OTHER:
Balance, beginning of the year	$	22,046	$	22,046
Balance, end of the period	$	22,046	$	22,046
Exploration and evaluation properties, end of the period	$	3,422,370	$	2,010,054

There was no impairment to exploration and evaluation assets in the quarter or year-to-date ended September 30, 2021.

The impairment assessment of exploration and evaluation assets resulted in the write down of $408,986 in exploration and evaluation assets during the year ended December 31, 2020. $390,753 of this write down pertains to the Rolling Pond property in Newfoundland as it was decided in the final quarter of the year to not move forward with the final anniversary payment and work commitments required in the agreement in order to maintain full focus on the Cobalt diamond properties. The remaining write down of $18,234 is related to not continuing with the Cruz property option.

6. CASH

Cash at banks and on hand earn interest at floating rates based on daily bank deposit rates.

As at September 30, 2021, there were no unspent flow through funds to be spent.

		September 30, 2021		December 31, 2020
Unrestricted cash	$	379,829	$	1,759,445
Total Cash	$	379,829	$	1,759,445

7. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE

Accounts receivable is comprised solely of goods and services tax receivable from the Federal Government of Canada as at September 30, 2021 and as at December 31, 2020.

Accounts payable consists of the following:

		September 30, 2021		December 31, 2020
Trade accounts payable	$	15,333	$	55,307
Accrued liabilities		15,000		96,400
Amount due to related parties		11,000		81,884
Total	$	41,333	$	233,591

RJK EXPLORATIONS

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

8. PLANT AND EQUIPMENT

	Cost Accumulated Amortization September 30, 2021 Net Book Value
Building Equipment	$ 3,475 $ 3,475 $ - 58,035 17,765 40,270
	$ 61,510 $ 21,240 $ 40,270
	Cost Accumulated Amortization December 31, 2020 Net Book Value
Building Equipment	$ 3,475 $ 3,475 $ - 58,035 13,413 44,622
	$ 61,510 $ 16,888 $ 44,622

Depreciation expense for the nine month period amounted to $4,353 (2020 - $11,865).

9. LEASE OBLIGATIONS

The Company had a lease for office premises in the amount of $900 per month until December 31, 2020. The Company recognized right-of-use asset and corresponding lease liability related to office premises. The right-of-use asset is depreciated on a straight-line basis over 24 months.

		September 30, 2021		December	31, 2020
Balance, opening	$	-	$		10,346
Right-of-use asset		-		-
Interest		-			454
Payments		-			(10,800)
Balance, closing	$	-	$	-

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

10. SHAREHOLDERS' EQUITY

• (a) i) COMMON SHARES

The Company is authorized to issue an unlimited number of common shares.

ii) ISSUED

ISSUED
	Number of Shares		Amount
Balance, December 31, 2019	51,687,440	$	26,235,544
Stock option exercise	50,000		5,000
Conversion Class C preferred shares to Class A common shares	350,000		33,285
(viii)
Private placement (iii)	3,900,000		442,605
Warrant exercise (iv)	8,060,000		1,612,000
Fair value of option and warrant exercises	-		245,693
Issued for properties option payments (v)	1,050,000		240,750
Debt settlement on shareholder loan (vi)	871,894		156,941
Share issuance costs	-		(5,984)
Balance, December 31, 2020	65,969,334	$	28,965,834
Conversion of Class C preferred shares to Class A common shares	800,000		76,080
(viii)
Issued for properties option payments (vii)	1,200,000		340,000
Balance, September 30, 2021	67,969,334		29,381,914

iii) NON-BROKERED PRIVATE PLACEMENT JULY 2020

The Company closed a non-brokered private placement on July 7, 2020, and raised a total of $600,000 for the issuance of 3,600,000 Units of the Company at a price of $0.15 per Unit, and 300,000 flow-through shares at a price of $0.20 per flow through share. Each Unit consists of one common share of the Company and one common share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of $0.25 for a period of one year from the closing date of the offering. A finder's fee of $4,000 cash and an aggregate of 20,000 non-transferable warrants were issued at a price of $0.20 and are exercisable for a period of one year from the closing date of the Offering.

iv) 2020 WARRANT EXERCISE

The Company raised $1,612,000 as a result of 8,060,000 warrants exercised from the December 23 and 31, 2019 financings.

• v) 2020 PROPERTY OPTIONS

On February 1, 2020, the Company issued 500,000 shares related to the property option agreement for the Bishop Nipissing Diamond Properties on the first anniversary of that agreement.

On February 25, 2020, the Company issued 100,000 shares as per the amended agreement of September 23, 2019 on the Rolling Pond property.

On May 29, 2020, the Company issued 100,000 shares as per the amended agreement of September 23, 2019 on the Rolling Pond property.

In November, 2nd anniversary payments of 100,000 and 250,000 shares were issued as per the respective Camirelli and Kon property agreements.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

10. SHAREHOLDERS' EQUITY (continued)

vi) DEBT SETTLEMENT ON SHAREHOLDER LOAN

On December 1, 2020, the Company settled an aggregate of $156,941 RJK owed to the President of the Company through an issuance of 871,894 Class A shares. The shares were recorded at fair value based on their market value on the date of issuance.

vii) 2021 PROPERTY OPTION

On February 1, 2021, the Company issued 500,000 shares related to the property option agreement for the Bishop Nipissing Diamond Properties on the second anniversary of that agreement.

The Company has accelerated its earn-in options on the Bishop and Camilleri agreements and now owns a 100% interest in those respective properties, subject to Gross Overriding Royalties and Net Smelter Return royalties. The accelerated payments include 500,000 shares for the Bishop property originally due in 2022, and 200,000 shares and $20,000 on the Camilleri property, which were originally outlined to be paid later in 2021.

viii) CLASS C PREFERRED SHARES (ROYALTY SHARES)

In a non-brokered private placement in December 2019, the Company issued 8,000,000 units to raise $1,000,000. Each unit consisted of 1 Class C preferred share ("Royalty Share"), and one share purchase warrant exercisable for 1 Class A common share at an exercise price of $0.20 for up to 12 months. The purchasers of the units ("Royalty Share Purchasers") have entered into an agreement with the Company to which the Company has granted the Royalty Share Purchasers the option to purchase a 2.5% gross overriding royalty on the Company's Bishop claims subject to the publication by the Company of a “bankable” feasibility study on the Bishop claims. This option has been valued at $NIL. Pursuant to the terms of the Royalty Shares and the Royalty Shareholders Agreement, the Royalty Shares include a voluntary conversion right with 25% of each Royalty Share Purchaser’s Royalty Shares being convertible into Class A Shares beginning six (6) months after the Initial Closing, an additional 25% being convertible into Class A Shares beginning twelve (12) months after the Initial Closing, an additional 25% being convertible into Class A Shares beginning eighteen (18) months after the Initial Closing and the remaining 25% being convertible into Class A Shares beginning twenty-four (24) months after the Initial Closing. The voluntary conversion period for all Royalty Shares ends five (5) years after the Initial Closing. Each Royalty Share shall be a voting share. As at September 30, 2021, there are 6,850,000 Class C shares outstanding (2020 - 7,650,000).

ix) CLASS B PREFERRED SHARES

There are currently 85,414 Class B preferred shares outstanding, which are bifurcated as both a liability and equity. These shares have been classified as a compound financial instrument. The Company recognizes $170,828 (2020 - $170,828) as a liability and $256,242 (2020 - $256,242) as equity. At any time, a holder of Class B preferred shares may require the Company to redeem, in whole or any part of the Class B preferred shares so held upon the payment of $2.00 for each share redeemed. Any holder of Class B preferred shares is entitled, at the holder’s option, to convert any number of the Class B preferred shares into Class A subordinate voting shares on a 1:1 basis. The Class B preferred shares will be deemed to be converted into Class A subordinate voting shares under a take-over bid that is at a price above the market price of the Class A subordinate voting shares.

(b)

WARRANTS

					Weighted
	Number of				Average
	Warrants		Amount	Exercise Price
Balance, December 31, 2020	3,620,000	$	159,079	$	0.25
Warrants expired during the period	(20,000)		(1,684)		0.20
Balance, September 30, 2021	3,600,000	$	157,395	$	0.25

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

10. SHAREHOLDERS' EQUITY (continued)

The warrants expire as follows:

Number of Warrants	Exercise price	Expiry Date
3,600,000	0.25	July 2021

The value of the 3,600,000 warrants issued as part of the July 2020 Private Placement was estimated using the Black-Scholes pricing model, using the following assumptions: risk-free rate of 0.33%, annualized volatility of 133%, expected life of one year, and expected dividend of 0%.

(c) STOCK OPTIONS

RJK has a stock option plan pursuant to which options to purchase Class A Subordinate Voting Shares may be granted to certain officers, directors and employees. The plan allows for the issuance of a rolling 10% of common shares outstanding.

The change in stock options issued during the 9 month period ended are as follows:

			Weighted
			average
		exercise price			Amount
Options outstanding - December 31, 2020	5,610,000	$	0.12	$	641,225
Issued	500,000		0.24		107,067
Options outstanding-September 30, 2021	6,110,000	$	0.12	$	748,292

The following table summarizes information about stock options outstanding and exercisable at September 30, 2021:

Exercise Price	Number of	Number of	Expiry Date
	Options	Options Vested
0.12	500,000	500,000	December 2021
0.20	1,000,000	1,000,000	August 2023
0.08	1,500,000	1,500,000	February 2024
0.10	1,000,000	1,000,000	March 2024
0.10	950,000	950,000	June 2024
0.23	150,000	150,000	February 2025
0.18	60,000	60,000	September 2025
0.18	450,000	450,000	December 2025
0.24	500,000	500,000	February 2026
	6,110,000	6,110,000

OPTIONS ISSUED TO EMPLOYEES

The fair value at issue date is determined using a Black-Scholes pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield (0% for all grants) and the risk free interest rate for the term of the option. The company grants all employee stock options with an exercise price equal to or greater than the market value of the underlying common shares on the date of grant. Compensation expense recorded for the nine months ended September 30, 2021 was $107,067 ($34,436 for the same period in 2020).

RJK EXPLORATIONS

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

10.	SHAREHOLDERS' EQUITY(continued)
	Number of options granted on February 26, 2020:	150,000
	Risk-free rate:	1.21%
	Expected life (in years):	5
	Volatility:	178.7%
	Exercise price:	$0.23
	Market price:	$0.23
	Vesting:	Immediate
	Number of options granted on September 17, 2020:	60,000
	Risk-free rate:	0.36%
	Expected life (in years):	5
	Volatility:	142.2%
	Exercise price:	$0.18
	Market price:	$0.18
	Vesting:	Immediate
	Number of options granted on December 1, 2020:	450,000
	Risk-free rate:	0.46%
	Expected life (in years):	5
	Volatility:	143.4%
	Exercise price:	$0.18
	Market price:	$0.24
	Vesting:	Immediate
	Number of options granted on February 17, 2021:	500,000
	Risk-free rate:	0.45%
	Expected life (in years):	5
	Volatility:	143.4%
	Exercise price:	$0.24
	Market price:	$0.24
	Vesting:	Immediate

Option pricing models require the input of highly subjective assumptions noted above. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable measure of the fair value of the Company's purchase options.

OPTIONS ISSUED TO NON-EMPLOYEES

Options issued to non-employees, are measured based on the fair value of the goods or services received, at the date of receiving those goods or services. If the fair value of the goods or services received cannot be estimated reliably, the options are measured by determining the fair value of the options granted, using a valuation model.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

10. SHAREHOLDERS' EQUITY (continued)

• (d) CONTRIBUTED SURPLUs AND RESERVES

Contributed surplus is made up of the following amounts:

		Amount
Options reserve	$	748,292
Warrants reserve		157,395
Contributed surplus		3,137,092
Total contributed surplus	$	4,042,780

The following events have impacted contributed surplus during the current period:

		Amount
Balance, December 31, 2019	$	3,875,009
Warrants issued during the period		159,079
Options issued during the period		147,318
Options and warrants exercised during year		(245,693)
Balance, December 31, 2020	$	3,935,713
Options issued during the period		107,067
Balance, September 30, 2021	$	4,042,780

• (e) NATURE AND PURPOSE OF EQUITY AND RESERVES

The reserves recorded in equity on the Company’s balance sheet include ‘Contributed Surplus’ and ‘Deficit’.

‘Contributed Surplus’ is used to recognize the value of stock option grants and share warrants prior to exercise.

‘Deficit’ is used to record the Company’s change in deficit from earnings and losses from period to period.

11. COMMITMENTS AND CONTINGENCIES

a) Environmental Contingencies

The Company’s exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

b) Management Contracts

The Company is party to a management contract. Minimum contract commitments remaining under the agreement are approximately $90,000, all due within one year. Upon the occurrence of certain events such as a change in control, the contract requires payment of up to $150,000. As a triggering event has not taken place, the contingent payment has not been reflected in these financial statements.

c) Flow-Through Shares

Pursuant to the issuance of flow through shares, the Company has renounced qualified exploration expenditures in current and prior years. As of September 30, 2021, the Company has spent all required flow-through funds on qualifying exploration and evaluation expenditures. The Company has indemnified the subscribers of current and previous flow-through share offerings against any tax related amounts that may become payable by the subscribers as a result of the Company not meeting the expenditure commitment.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

RJK EXPLORATIONS

d) COVID-19

The Company’s operations could be significantly adversely affected by the effects of a widespread global outbreak of a contagious disease, including the recent outbreak of respiratory illness caused by COVID-19. The Company cannot accurately predict the impact COVID-19 will have on its operations and the ability of others to meet their obligations with the Company, including uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the length of travel and quarantine restrictions imposed by governments of affected countries. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations and ability to finance its operations.

12. RELATED PARTY TRANSACTIONS

The Company defines its officers (CEO and CFO) and directors as Key Management Personnel (“KMP”). During the three months ended September 30, 2021, officers and companies controlled by officers charged consulting fees totaling $19,500 ($19,500 for the same period in 2020). At the end of the period, there was $11,000 remaining payable to KMP ($197,941 as at September 30, 2020). Directors’ fees paid during the quarter ended September 30, 2021 totaled $NIL ($NIL at September 30, 2020). KMP, directors and consultants received $NIL in stock based compensation during the quarter ($NIL during the quarter ended September 30, 2020). There 85,414 Class B preferred shares outstanding are held by a related party.

There are no post-employment benefits.

13. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of exploration and evaluation properties.

The Company considers its capital to be shareholders’ equity, which is comprised of common stock, contributed surplus and reserves, and deficit.

The Company's objective when managing capital is to obtain adequate levels of funding to support its exploration activities, to obtain corporate and administrative functions necessary to support organizational functioning and obtain sufficient funding to further the identification and development of precious metals deposits. The Company raises capital, as necessary, to meet its needs and take advantage of perceived opportunities and, therefore, does not have a numeric target for its capital structure. Funds are primarily secured through equity capital raised by way of private placements. There can be no assurance that the Company will be able to continue raising equity capital in this manner.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company invests all capital that is surplus to its immediate operational needs in short term, liquid and highly rated financial instruments, such as cash, and short term guarantee deposits, all held with major Canadian financial institutions. The Company is not subject to externally imposed capital requirements. There were no significant changes in the Company's approach to capital management during the quarters ended September 30, 2021 and 2020.

14. SEGMENTAL REPORTING

The Company is organized into business units based on exploration and evaluation properties and has one reportable operating segment, being that of acquisition and exploration and evaluation activities in Canada.

15. FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS

The Company is exposed through its operations to the following financial risks:

Market Risk Credit Risk Liquidity Risk

RJK EXPLORATIONS

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Company's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous years unless otherwise stated in the note.

General Objectives, Policies and Processes

The Board of Directors has overall responsibility for the determination of the Company's risk management objectives and policies, and whilst remaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies for the Company's finance function.

Market Risk

Risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices are comprised of four types of risk: foreign currency risk, interest rate risk, commodity price risk and equity price risk.

Foreign Currency Risk

Foreign currency risk is the risk that a variation in exchange rates between the Canadian dollar and the US dollar or other foreign currencies will affect the Company's operations and financial results. The Company does not have significant exposure to foreign exchange rate fluctuation.

Interest Rate Risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company does not have any borrowings. Interest rate risk is limited to potential decreases on the interest rate offered on cash and cash equivalents held with chartered Canadian financial institutions. The Company considers this risk to be immaterial.

Commodity Price Risk

The ability of the Company to develop its mining properties and the future profitability of the Company is directly related to the market price of gold, silver and other base metals.

Equity Price Risk

Equity risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The Company is exposed to this risk through its equity holdings. The Company does not hold any equity investments at this time.

Credit Risk

Credit risk is the risk that a third party will be unable to pay or receive any amounts owed or owing by the Company. Management's assessment of the Company's risk is low as it is primarily attributable to goods and services tax due from the Federal Government of Canada.

Liquidity Risk

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due. There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. The Company may seek additional financing through debt or equity offerings, but there can be no assurance that such financing will be available on terms acceptable to the Company or at all. Should the Company be unable to secure such financing, it may have to, at any time, cease its operations. Any equity offering will result in dilution to the ownership interests of the Company's shareholders and may result in dilution to the value of such interests. The Company intends on fulfilling its obligations.

RJK EXPLORATIONS

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NINE MONTH PERIOD ENDED SEPTEMBER 30, 2021 AND 2020 (UNAUDITED) - EXPRESSED IN CANADIAN DOLLARS

Sensitivity Analysis

The Company has designated its cash and short-term investments as held-for-trading, which are measured at fair value. Financial instruments included in amounts receivable are classified as accounts receivable, which are measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which are measured at amortized cost.

As at September 30, 2021, the carrying value and fair value amounts of the Company's financial instruments are the same.

Based on management's knowledge and experience of the financial markets, the Company believes the following movements are reasonably possible over a twelve month period.

• (i) The Company currently has no short-term investments as at September 30, 2021; therefore, percentage change in interest rates will not have a significant impact on the Company.

• (ii) The Company does not hold foreign currencies to give rise to exposure to foreign exchange risk. Therefore, a percentage change in certain foreign exchange rates will not have a significant impact on the Company.

• (iii) The Company has no long-term loans as at September 30, 2021. Therefore, percentage change in interest rates will not have a significant impact on the Company.

Determination of Fair Values

As at September 30, 2021 and December 31, 2020, the Company does not have any financial instruments recorded at fair value.