Silver Bear Resources Plc

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CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Registered Number: 10669766 (England and Wales)

For the three months ended 31 March 2022 and 2021

(Expressed in Canadian dollars)

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Mangazeisky Silver Project – Open Pit

Page 1 of 40

NOTICE OF NO REVIEW OF INTERIM FINANCIAL STATEMENTS

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

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

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

Page 2 of 40

Consolidated Statement of Financial Position

(Canadian dollars)

		31 March	31 December
	Note	2022	2021
ASSETS
Non-current assets
Property, plant and equipment	10	70,983,917	78,949,060
Mineral property	9	9,793,018	10,247,095
Intangible assets	8	139,315	180,583
Prepaid non-current assets	6	1,176,231	881,469
Other non-current assets	7	3,876,254	4,040,580
Total non-current assets		85,968,735	94,298,787
Current assets
Inventories	5	21,560,246	18,473,628
Receivables	4	4,159,888	3,670,038
Cash and cash equivalents	3	885,105	1,879,447
Prepaid expenses	6	2,269,734	2,484,281
Total current assets		28,874,973	26,507,394
TOTAL ASSETS		114,843,708	120,806,181
EQUITY AND LIABILITIES
Non-current liabilities
Long-term loans	13	-	167,639,194
Asset retirement obligation	14	3,329,799	3,609,228
Lease obligation	12	1,508,367	2,277,726
Total non-current liabilities		4,838,166	173,526,148
Current liabilities
Advances received		153,174	639
Short-term loans	13	202,644,325	27,925,556
Account payable and accrued liabilities	11	7,879,812	3,515,620
Lease obligation	12	2,624,158	2,931,455
Total current liabilities		213,301,469	34,373,270
Total liabilities		218,139,635	207,899,418
Equity
Share Capital	15	99,569,970	99,568,972
Share Premium	15	23,158,166	23,106,647
Shareholders Contribution		5,381,283	5,381,283
Contributed surplus	15	16,768,915	16,765,939
Cumulative translation adjustment		24,426,711	14,591,860
Accumulated deficit		(272,600,972)	(246,507,938)
Total equity (deficiency)		(103,295,927)	(87,093,237)
TOTAL EQUITY AND LIABILITIES		114,843,708	120,806,181

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

Page 3 of 40

The financial statements on pages 3 to 40 were approved by the Board of Directors on 28 July 2022, and signed on its behalf by:

“Vadim Ilchuk” “Maxim Matveev” ____ ____ Vadim Ilchuk Maxim Matveev Director, President, CEO Director

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Silver Bear Resources Plc

Consolidated Statement of Comprehensive Profit/(Loss) For the years ended 31 March 2022 and 2021 (Canadian dollars)

Note
	2022	2021
Revenue: Metal Sales Cost of Sales: Production cost 18 Depreciation and amortization	10,712,288 (6,497,896) (2,823,478)	16,595,203 (10,927,980) (4,416,791)
Gross profit General and administrative expenses 18 Other income 17 Other expenses 17	1,390,914 (827,094) 77,624 (394,684)	1,250,432 (1,098,871) 146,327 (403,200)
Operating profit/(loss) Finance income 19 Finance expenses 19 Foreign exchange loss	246,760 6,993 (4,221,928) (22,123,767)	(105,312) 8,585 (4,344,934) (4,648,697)
Loss before tax Tax charge 25	(26,091,942) (1,092)	(9,090,358) 1,843
Loss for the year Other comprehensive loss Items, that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations	(26,093,034) 9,834,851	(9,088,515) 2,874,630
Total comprehensive loss for the year	(16,258,183)	(6,213,885)
Basic and diluted loss per ordinary share, cents per ordinary share 15	(0.04)	(0.01)

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

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Silver Bear Resources Plc Consolidated Statement of Changes in Equity

For the years ended 31 March 2022 and 2021 (Canadian dollars)

(Canadian dollars)
					Cumulative
		Share	Shareholders	Contributed	translation
	Share capital	premium	contribution	surplus	adjustment	Accumulated Deficit	Total equity

Balance -31 December 2020	99,561,998	22,570,500	5,381,283	16,960,163	13,460,394	(219,298,504)	(61,364,166)
Net profit for the period	-	-	-	-	-	(9,088,515)	(9,088,515)
Other comprehensive profit/(loss):
Cumulative translation adjustment	-	-	-	-	2,874,630	-	2,874,630
Comprehensive profit/(loss) for the period	-	-	-	-	2,874,630	(9,088,515)	(6,213,885)
Shares issued under share subscription plan,
Note 15	617	49,060	-	-	-	-	49,677
Shares issued under share bonus plan, Note 15	112	11,411	-	(12,340)	-	12,340	11,523
Share-based payments	-	-	-	25,494	-	-	25,494
Cancelled and expired options	-	-	-	-	-	-	-
Balance -31 March 2021	99,562,727	22,630,971	5,381,283	16,973,317	16,335,024	(228,374,679)	(67,491,357)

Balance - 31 December 2021	99,568,972	23,106,647	5,381,283	16,765,939	14,591,860	(246,507,938)	(87,093,237)
Net profit for the period	-	-	-	-	-	(26,093,034)	(26,093,034)
Other comprehensive profit/(loss):
Cumulative translation adjustment	-	-	-	-	9,834,851	-	9,834,851
Comprehensive profit/(loss) for the period	-	-	-	-	9,834,851	(26,093,034)	(16,258,183)
Shares issued under share subscription plan,
Note 15	998	51,519	-	-	-	-	52,517
Shares issued under share bonus plan, Note 15	-	-	-	-	-	-	-
Share-based payments	-	-	-	2,976	-	-	2,976
Cancelled and expired options	-	-	-	-	-	-	-
Balance - 31 March 2022	99,569,970	23,158,166	5,381,283	16,768,915	24,426,711	(272,600,972)	(103,295,927)

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

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Silver Bear Resources Plc Consolidated Statement of Cash Flow

For the years ended 31 March 2022 and 2021 (Canadian dollars)

	2022	2021
Cash provided by (used in)
Operating activities
Total loss for the year	(26,093,034)	(9,088,515)
Adjustments for items not affecting cash:
Depreciation	2,762,086	4,393,172
Amortization	90,943	59,236
Share-based payments (Note 18)	2,976	25,494
Accretion expenses	64,496	58,780
Unrealized FX movement	22,123,767	4,648,697
Interest income (Note 19)	(6,993)	(8,585)
Interest expense (Note 19)	4,157,432	4,286,154
Net change in non-cash workingcapital(Note 20)	(1,259,723)	(3,813,049)
Net cash generated from operations	1,841,950	561,383
Purchases of property, plant and equipment (Note 10)	(1,602,945)	(5,893,722)
Purchases of intangible assets	(20,700)	(29,756)
Exploration and evaluation capital expenditure (Note 10)	(3,187)	-
Interest income	6,993	8,585
Net cash used in investing activities	(1,619,839)	(5,914,893)
Repayment of principal on lease obligations	(735,636)	(730,049)
Repayment of interest on lease obligations	(133,383)	(206,802)
Short-term and long-term loans drawn (Note 13)	-	6,804,215
Short-term and long-term loans Interest repayment (Note 13)	(168,731)	-
Net cash generated from/(used in) financing activities	(1,037,750)	5,867,364
Effect of exchange rate changes on cash and cash equivalents
and translation differences	(178,703)	(48,878)
Increase/(decrease) in cash and cash equivalents during the
year	(994,342)	464,976
Cash and cash equivalents - beginning of the year	1,879,447	1,302,165
Cash and cash equivalents - end of the year	885,105	1,767,141
Cash and cash equivalents consist of:
Cash	885,105	1,767,141

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

1. NATURE OF OPERATIONS

Silver Bear Resources Plc was incorporated in United Kingdom on 14 March 2017 under the Companies Act 2006, registered office address 2nd Floor Regis House, 45 King William Street, London, United Kingdom, EC4R 9AN.

Silver Bear Resources Plc became the parent company of Silver Bear Resources Inc. on 30 June 2017 following a plan of arrangement transaction involving a one-for-one share exchange of all then outstanding common shares of Silver Bear Resources Inc. for ordinary shares of Silver Bear Resources Plc.

Silver Bear Resources Plc became the direct parent company of AO Prognoz on 16 November 2020. AO Prognoz was acquired from Silver Bear Resources B.V. following a plan of reorganization of the Group structure.

Silver Bear Resources Inc. was incorporated under the Business Corporations Act of the Province of Ontario, Canada, on 8 April 2004 and continued under Articles of Continuance dated 30 August 2004 under the Business Corporations Act (Yukon) and 1 February 2005 under the Business Corporations Act (Ontario).

The primary business of the Group is the acquisition, exploration, evaluation and development of precious metal properties. The head office of the Group is registered in London, United Kingdom. The strategy of the Group is to focus on the exploration and development of precious metal deposits. The principal asset of the Group is its right to explore and develop the Mangazeisky project (“Mangazeisky”), located approximately 400 kilometers north of Yakutsk in the Republic of Sakha (Yaktutia), in the Russian Federation. On June 22, 2018, the Group announced that it had achieved first silver production in April 2018 as a result of its commissioning activities.

Under the license No. YAKU 12692 BP registered on September 28, 2004, the Group carries out a geological study of the Endybal area - prospecting and evaluation of silver and gold deposits. According to Supplement No. 1, registered on 12 September 2016, the expiry date of the above license is 31 December 2023. The license area is located on the territory of the Kobyai region of the Republic of Sakha (Yakutia).

In 2013, the Group obtained a subsoil license No. YAKU 03626 BE, registered on August 28, 2013, for the exploration and production of silver, copper, lead, zinc at the Vertikalny deposit. The license area is located on the territory of the Kobyai region of the Republic of Sakha (Yakutia). The license expires on September 1, 2033. In 2015 the Group commenced the development of Mangazeisky that includes the construction of a silver mine with associated processing facilities and infrastructure. It has been determined that development costs incurred from 1 July 2015 have future economic benefits and are economically recoverable. In making this judgement, management assessed various sources of information including the geological and metallurgical information, scoping and feasibility studies, proximity of operating facilities, operating management expertise and existing permits.

2. BASIS OF PREPARATION

These unaudited condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), in accordance with International Standards (IAS) 34 – Interim Financial Reporting and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting Standards Board (IASB). The Group has consistently applied the accounting policies used in the preparation of its IFRS financial statements throughout all periods presented, as if these policies had always been in effect.

These unaudited condensed consolidated financial statements comprise the financial statements of Silver Bear Resources Plc and its 100% owned subsidiaries: Silver Bear Resources Inc. (a Canadian corporation) and AO Prognoz (a Russian Federation corporation). All significant inter-company accounts and transactions have been eliminated on consolidation.

These unaudited condensed consolidated financial statements were reviewed, approved and authorized for issue by the Board of Directors on 28 July 2022

Basis of consolidation

Following Silver Bear Resources Plc becoming the parent company of the Group (as detailed in note 1) and becoming direct parent of AO Prognoz, these transactions were not treated as a business combination under IFRS 3 “Business combinations” but was considered as a capital reorganisation, as these entities are under common control.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Basis of consolidation (Continued)

On 22 April 2021 Silver Bear Resources B.V. (a Netherlands corporation) was liquidated. Impact on financial statement was nil, as it was empty company.

The consolidated financial statements of Silver Bear Resources Plc are presented using the values from the consolidated financial statements of Silver Bear Resources Inc. The equity structure (that is, the issued share capital) reflects that of Silver Bear Resources Plc, with other amounts in equity being those from the consolidated financial statements of the previous group holding entity, Silver Bear Resources Inc. The resulting difference that will arise was recognised as a component of equity.

Going Concern

These unaudited consolidated financial statements have been prepared on a going concern basis which contemplates that the Group and Company will be able to realize its assets and settle its liabilities in the normal course as they come due for a period of at least 12 months form the date of approval of the financial statements.

The Directors have prepared a cash flow forecast for the 18 month period from the date of approval of these financial statements. Cash forecasts for the Group and Company are regularly produced based on management's best estimate of:

The Group's production and expenditure forecasts;
Future silver prices; and
Foreign exchange rate.

The ability of the Group and Company to operate as a going concern is dependent upon future production volumes and silver prices as they impact cash flows required to both fund working capital and meet the Group’s and Company’s liabilities as and when they fall due. These are in turn also impacted by the geopolitical situation between Russia and Ukraine, and the uncertain future potential impacts of Sanctions.

The Group’s and Company’s cash flow forecast was run with average silver price of $US 23.5/oz for 2022 and 25.0/oz for 2023 based on independent forecasts for silver sold in Russia.

The Directors have analysed the Group’s and Company’s expected liquidity position over the forecast period and believe that it is reasonable to apply the going concern principle for the preparation of the Group’s and Company’s financial statements. When assessing the going concern status, the Directors have taken into consideration the following factors:

As of 31 March 2022, the Group had $885,105 (31 December 2021: $1,879,447) cash and cash equivalents, and net current liabilities of $184,426,496 (31 December 2021: net current liabilities of $7,865,876). These current liabilities include the Group debt of $172,442,901 with its major shareholders, Inflection and Aterra, for which interest accrues monthly that matures in 2023. The Group has agreed with major shareholder to extend their loans to 2028, however for this to be executed it requires approval from TSX. While the Directors are confident of obtaining this approval, at the date of signing these financial statements this approval had not been obtained.
In the first quarter of 2022 the Group generated total operating cash inflow of $1,841,950. Since period ended there has been no deterioration in production or sales as a result of the geopolitical situation between Russia and Ukraine or imposed sanctions.
In the Group’s cashflow forecast, the Directors have assumed that the Group is able to defer interest repayments on its loans and obtain loan extensions from its shareholders for loans that matures in 2023 . This forecast shows that cash remains positive for the 18 month period from the date of approval of these financial statements. In the event that the Group is unable to defer interest payments or obtain a loan extension from its shareholders the Group would have insufficient cash to satisfy these liabilities.
While there is currently no contracted written agreement to defer interest repayments to the Group’s shareholders, the Group’s Directors note that in the past they have been successful in both securing financing from its Shareholders and deferring interest repayments to them. For this reason and based on the Group’s long-term relationships with their shareholders, the Directors have a reasonable expectation that they will be able to continue deferring interest payments and obtaining loan extensions during the forecast period, and that additional funding will be received if required.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Going concern (Continued)

In the first half of 2022, due to the geopolitical situation between Russia and Ukraine multiple sanctions were declared against Russia by Western countries. There are no sanctions against the Group, however sanctions that were implemented against Russia meant some brands ceased their operations in Russia. The Directors have prepared a plan to respond to this risk such as diversifying revenue channels and considering the use of aftermarket spare parts for mining equipment that can no longer be sourced directly from suppliers. While the effect from the sanctions to date has had minimal impacts on the Group’s operations, there is no certainty over the future impacts of sanctions imposed against Russia.
Also, in the first half of 2022 Russia implemented sanctions against Western countries. Since the Russian sanctions have been implemented, capital controls have been put in place that put restrictions on payments outside of Russia. Given the parent Company is reliant on cash from its Russian subsidiaries, this temporarily prevented the Parent Company fulfilling its obligation to creditors. Subsequently the Parent Company has received cash from its subsidiary through management service contracts which has enabled it to resume fulfilling its obligations to creditors. While the sanctions are in effect, the Group will be unable to pay dividends from Russia to UK and further to shareholders. There is no certainty over the future impact of sanctions imposed by Russia or Russian imposed capital controls.

In the light of the future potential impacts the Russian geopolitical situation and the resulting sanctions imposed by and against Russia or the Russian imposed capital controls could have on the Group’s and Company’s operations, and in the absence of a contractual agreement for the Group and Company to continue to defer interest and capital repayments on its loans from its shareholders, together with the other factors described above, the Group’s and Company’s Directors have identified a material uncertainty relating to the Group’s and Company's ability to maintain working capital liquidity to service the Group’s and Company's financing arrangements which may result in the need for additional funding.

These material uncertainties may cast significant doubt upon the Group’s and Company’s ability to continue as a going concern. Notwithstanding these material uncertainties, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in existence for a period of at least 12 months form the date of approval of the financial statements and have concluded it is appropriate to adopt the going concern basis of accounting in the preparation of the financial statements. The financial statements do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies

Foreign currency translation

Items included in the financial statements of each entity are measured using the currency of the primary economic environment in which it operates (“functional currency”). The consolidated financial statements are presented in Canadian dollars which is the functional currency of Silver Bear Resources Inc., and Silver Bear Resources B.V. Silver Bear Resources Plc has changed its functional currency as of 1 January 2018 from Canadian dollars to Russian roubles when it was deemed that the majority of underlying transactions now took place in roubles. Silver Bear Resources Plc functional currency is different to presentation currency, because the group is listed on TSX and presentation of financial statements in Canadian dollars is considered to be beneficial for potential and current shareholders in Canada. The financial statements of AO Prognoz have the Russian rouble as their functional currency. The results of both Silver Bear Resources Plc and AO Prognoz are translated into the Canadian dollar presentation currency for consolidation purposes as follows: assets and liabilities – at the closing rate at the date of the statements of financial position, and income and expenses at the average rate for each quarter (as this is considered a reasonable approximation to actual rates). All resulting changes are recognized in other comprehensive income as cumulative translation adjustments.

Foreign currency transactions are translated into the functional currency of the entity in which they occur using the exchange rates prevailing at the dates of transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in currencies other than functional currency at period-end exchange rates are recognized in profit or loss.

Mineral properties

Mineral properties include the costs of acquiring exploration and mining licenses, as well as the cost of assets associated with the obligation for environmental rehabilitation and costs of developing the mining properties. Licenses are valued at cost at the date of acquisition less impairment. Mining properties under development are accounted for at cost and are not amortised until production has commenced. Cost includes expenditure that is directly attributable to the development of mining properties and preparing them for production.

Developing costs and licenses depreciated through unit of production basis calculated based on the ratio of silver ore mined during a period to the total volume of silver ore to be mined based on the estimated commercial resources.

Asset associated with the obligation for environmental rehabilitation depreciated on straight line basis during life of mine.

Intangible assets

Intangible assets are carried at cost, less accumulated amortization. All intangible assets are amortized on a straight-line basis over one to eleven years.

Property, plant and equipment

Property, plant and equipment are carried at cost, less accumulated depreciation and impairment losses.

Mining properties are depleted on ‘unit of production basis’ calculated based on the ratio of silver ore mined during a period to the total volume of silver ore to be mined based on the estimated commercial resources. Commercial resources are mineral resources that are considered probable of economic extraction and include measured, indicated and inferred resources. While inferred resources have a lower degree of geological certainty, they are included in the depletion calculation due to the nature of the ore body which enables their presence being able to be inferred without a high concentration of drilling

Leased equipment are amortized over the remaining life of the lease. Significant components of property, plant and equipment are recorded and depreciated separately. Residual values, the method of depreciation and the useful lives of assets are revised annually and adjusted prospectively, if appropriate, if there is an indicator of a significant change since the last reporting date. Depreciation of underlying property, plant and equipment which directly contributed the developing the mining properties are capitalized as additions in mineral properties.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

In order to determine whether the project is ready to operate as intended by management, judgement was applied taking into account commercial production indicators such as pre-production output has reached a nominated percentage, the internal project management team has transferred the mine to the operational team, the majority of the assets necessary for the mining project are substantially complete and ready for use and the project’s ability to sustain commercial levels of production. These indicators provided guidance to recognize that the mine development phase was ceased and the production phase commenced from 1 July 2019.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

BASIS OF PREPARATION (Continued)

Exploration and development assets

Mineral exploration and evaluation costs, including geophysical, topographical, geological and similar types of costs, are capitalized into exploration assets if management concludes that future economic benefits are likely to be realized based on current internal assessment of exploration results and identified mineral resources.

In accordance with IFRS 6 Exploration for and evaluation of mineral resources, the potential indicators of impairment include: management’s plans to discontinue the exploration activities, lack of further substantial exploration expenditure planned, expiry of exploration licenses in the period or in the nearest future, or existence of other data indicating the expenditure capitalized is not recoverable. At the end of each reporting period, management assesses whether such indicators exist for the exploration and evaluation assets capitalized.

Exploration and evaluation expenditures are transferred to development assets when commercially-viable resources are identified, respective mining plan and model are prepared and approved. At the time of reclassification exploration and evaluation assets are assessed for impairment based on the economic models prepared.

The costs to remove any overburden and other waste materials to initially expose the ore body, referred to as stripping costs, are capitalized as a part of development assets when these costs are incurred.

Impairment of non-financial assets

The Group reviews and evaluates the recoverable amount of its mineral properties, property, plant and equipment and other noncurrent assets annually and when events or changes in circumstances indicate that the carrying amounts of related assets or groups of assets might not be recoverable.

For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The recoverable amount is the higher of an asset’s fair value less costs of disposal and its value in use (being the present value of the expected future cash flows of the relevant asset). Any resulting write-down of the excess of carrying value over the recoverable amount is charged to the consolidated statement of operations.

Provision for decommissioning and restoration liability

Mining and exploration activities normally give rise to obligations for environmental rehabilitation. Rehabilitation work may include facility decommissioning and dismantling; removal or treatment of waste materials; site and land rehabilitation, including compliance with and monitoring of environmental regulations; security and other site-related costs required to perform the rehabilitation work; and operation of equipment designed to reduce or eliminate environmental effects. The extent of work required and the associated costs are dependent on the requirements of relevant authorities and our environmental policies. Routine operating costs that may impact the ultimate closure and rehabilitation activities, such as waste material handling conducted as an integral part of a mining or exploration process, are not included in the provision. The timing of the actual rehabilitation expenditure is dependent upon a number of factors such as the life and nature of the asset, the license conditions and the operating environment. Expenditures may occur before and after the site closure and can continue for an extended period of time depending on rehabilitation requirements.

Rehabilitation provisions are measured at the expected value of future cash flows associated with the settlement of the obligation and discounted to their present value using a pre-tax discount rate which reflects current assessments of the time value of money.

The expected future cash flows include the effect of inflation. The unwinding of the discount in subsequent periods is presented as interest expense. The asset associated with retirement obligations represents the part of the cost of acquiring the future economic benefits of the operation and is capitalized to mineral properties as part of the carrying amount of the long-lived asset and amortized over the expected economic life of the operation to which it relates. The Group re-measures the liability at each reporting date. Changes in estimates are recorded using current discount rate assumptions. Adjustments are also accounted for as a change in the corresponding value of the related assets.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Financial instruments

Financial assets:

Financial assets within the scope of IFRS 9 are initially recognised at fair value and are classified financial assets at amortised cost. The Group determines the classification of its financial assets at initial recognition.

The Group’s financial assets include cash and cash equivalents, accounts receivable. Regular purchases and sales of financial assets are recognized on the trade-date, being the date on which the Group commits to purchase or sell assets.

The Group recognises a loss allowance for expected credit losses (‘ECL’) on financial assets that are measured at amortised cost which comprise mainly trade receivables. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. The Group always recognises lifetime ECL on trade receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate Financial assets are derecognized when the rights to receive cash flows from investments and the Group has transferred substantially all risks and rewards of ownership.

Financial liabilities:

Financial liabilities within the scope of IFRS 9 are initially recognised at fair value and are classified as financial liabilities at fair value through profit or loss, financial liabilities, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

The Group’s current financial liabilities include accounts payable, accrued liabilities, and short-term loans. Initially they are recognized at fair value, and subsequently measured at amortized cost using the effective interest method. Amortized cost approximates fair value due to the short-term maturity of these liabilities.

Financial instruments are initially recorded at fair value. The fair values of cash and cash equivalents, miscellaneous receivables, short-term loans, lease liabilities and accounts payable and accrued liabilities approximate their recorded amounts because of their short-term nature. The fair value of long-term loans and non-current lease liabilities is shown at their carrying values as any differences are not material.

In determining if a modification of a financial liability is substantial, which includes a comparison of the cash flows before and after the modification, discounted at the original effective interest rate (EIR), referred to as the ‘10% test’. If the difference between these discounted cash flows is more than 10%, the financial liability is derecognized and a new financial liability recognized at fair value.

If, a modified financial liability does not result in derecognition, the original EIRs retained and the Group recalculates carrying amount based on reviewed cash flow of financial liability and recognized modification gain or loss.

Gain on modification of shareholder loans is recognised either as finance income in the Consolidated Statement of Comprehensive Profit / (Loss) or as an increase in shareholder contribution in Equity. Management makes assessment of each modification and if change in terms, for example, reduction of interest rate, represents terms which are more favourable at the time than market and indicative of the lender acting in capacity of shareholder, then it is recognised through shareholder contribution, otherwise, it is recognised as finance income.

Cash and cash equivalents

Cash represents cash on hand and demand deposits. Cash equivalents represent short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of change in value.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Revenue recognition

Timing of recognition is governed by IFRS 15. Entity recognizes revenues when a performance obligation is satisfied, which is when “control” of the goods has transferred to the customer. Control of goods is transferred at the point of time, when silver is passed to the buyer at the refinery site. Payments terms allows 80% prepayment in advance and the remaining payment based on the final Price, dependent on silver weight per Act of Acceptance and London price on London Market of metals, adjusted for the prepaid amount under provisional price.

Current and deferred income Taxes

Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable or receivable in respect of previous years.

The Group uses the asset and liability method of accounting for income taxes, under which deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or laws is recognized as part of the provision for income tax in the year the changes are considered substantively enacted. Deferred tax benefits attributable to these differences, if any, are recognized to the extent that the realization of such benefits is more likely than not.

The Group did not recognised deferred taxes raised during pre-production stage.

Earnings per share

Basic earnings per share is computed by dividing the profit/(loss) for the period by the weighted average number of common shares outstanding.

Diluted earnings per share is computed by dividing the profit/(loss) for the period by the diluted weighted average number of common shares outstanding.

Share-based payments

The fair value of any stock options granted to directors, officers, consultants and employees is recognized as an expense over the vesting period with a corresponding increase recorded to contributed surplus. The fair value of share-based compensation is determined using the Black-Scholes option pricing model and management's assumptions as disclosed in Note 15. An estimate for forfeitures is made when determining the number of equity instruments expected to vest. Upon exercise of the stock options, consideration paid by the option holder is recorded as an increase to share capital.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred, using the average exchange rate prevailing for that period. Translation differences associated with borrowings costs are expensed.

Prepaid expenses

Prepaid expenses represent payments made or obligations incurred in advance of the receipt of goods or rendering of services. Prepaid expenses are typically included in other current assets on the consolidated statement of financial position.

Page | 14

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Inventories

Costs incurred in bringing each product to its present location and conditions are accounted for as follows:

Raw materials: purchase price plus transportation cost plus any applicable customs duties and taxes.

Ore stockpiles comprises direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.

The cost of silver for sale and silver in circuit comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs.

Inventories are accounted for using weighted average basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Inventories related to construction supplies accounted as other non-current assets.

Inventory measured at lower of cost and net realisable value.

Leases

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

Leases of low value assets; and leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease.

On initial recognition, the carrying value of the lease liability also includes amounts expected to be payable under any residual value guarantee, the exercise price of any purchase option granted in favour of the group if it is reasonably certain to assess that option, any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

Lease liabilities accounted under a separate line in financial statement.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

Lease payments made at or before commencement of the lease, initial direct costs incurred and the amount of any provision recognised where the group is contractually required to dismantle, remove or restore the leased asset.

Right of the use assets related to mining equipment under leased contracts are disclosed in property plant and equipment.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

Amounts payable for leases covered by the short-term exemption are charged to the income statement on a straight-line basis over the term of the relevant lease.

Page | 15

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Accounting estimates and management judgments

The preparation of consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The significant areas of estimation and uncertainties considered by management in preparing the consolidated financial statements include:

Critical judgements in applying accounting policies:

Determination of functional currency

Based on the primary indicators in IAS 21 – The Effects of Change in Foreign Exchange Rates – the Russian rouble has been determined as the functional currency of AO Prognoz, an operating subsidiary of the Group, because the Russian rouble is the currency that mainly influences labour, material and other costs of providing goods or services, and is the currency in which these costs are denominated and settled.

Effects of changes in foreign exchange rates on the consolidation of the financial statements are recorded in other comprehensive income and carried in the form of a cumulative translation adjustment in the accumulated other comprehensive income section of the Statement of financial position of the Group.

The functional currency of Silver Bear Resources Plc changed from Canadian dollars to Russian rouble in 2018 as it is now deemed that the majority of underlying transactions for this entity are undertaken in roubles and therefore it is appropriate for this to be its functional currency.

The functional currency of Silver Bear Resources Inc. has been determined to be the Canadian Dollar reflecting the current principal equity and financing structure.

Page | 16

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Key sources of estimation uncertainty:

Mineral resource estimate

Mineral resource estimates are estimates of the amount of silver that can be economically and legally extracted from the Group’s mining properties. Such resource estimates and their changes may impact the Group’s reported financial position and results in the following ways:

(a) The carrying value of exploration and evaluation assets, mining properties and property, plant and equipment may be affected due to changes in estimated future cash flows.

(b) Depreciation and amortisation charges in the statement comprehensive income may change where such charges are determined using the unit of production method.

(c) Provisions for rehabilitation and environmental provisions may change where resource estimate changes affect expectations about when such activities will occur and the associated cost of these activities.

The Group estimates mineral resources based on information compiled by appropriately qualified Competent Persons relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. Such an analysis requires complex geological judgements to interpret the data. The estimation of recoverable resources is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body.

The Group reviews its mineral resource estimates on regular basis and as at 1 April 2020 the Group obtained a mineral resource (not reserve) estimate from a third party, Wardell Armstrong. Wardell Armstrong has issued their report on 10 November 2021 the delay in issuing report due to COVID-19 travel restrictions. This report has superseded the Companies previous estimate of recoverable reserves and resources that was prepared in 2017.

The difference between a resource statement (as obtained in 2020) and reserves and resources statement (as obtained previously in 2017) is the level of confidence of the presence of economically viable minerals.

Impairment of mineral properties and property, plant and equipment

The carrying value of mineral properties and property, plant and equipment is $9,793,018 and $70,983,917, respectively, as disclosed in Note 9 and Note 10. While assessing whether any indications of impairment exist for mineral properties, consideration is given to both external and internal sources of information. Information that management considers includes, changes in the market, and changes in the economic and legal environment in which the Group operates that are not within its control that could affect the recoverable amount of mineral properties. Internal sources of information include the manner in which mineral properties are being used or are expected to be used and indications of expected economic performance of the assets. Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the Group’s mineral properties, costs to sell the properties and the appropriate discount rate. Reductions in metal price forecasts, reductions in the amount of recoverable mineral reserves and mineral resources, and/or adverse current economics can result in a write-down of the carrying amounts of the Group’s mineral properties.

On 22 June 2020, the Group announced that it has received a draft report from Wardell Armstrong (Moscow) that provides a review of the Company’s current mineral resources, as well as draft revised mine and processing plans, for its Vertikalny and Mangazeisky North deposits. The Group had previously disclosed that it had engaged Wardell Armstrong (Moscow) to conduct this review of the mineral resources as well as reassessing mine and processing plans for these deposits. Wardell Armstrong (Moscow) have issued their final report on 10 November 2021.Following additional exploration activities, this included a material change in the mineral resource estimates of both Vertikalny and Mangazeisky North deposits.

In accordance with IAS 36, the impairment review was undertaken on 31 December 2021.

Page | 17

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Impairment of mineral properties and property, plant and equipment (continued)

Key Assumption used in the impairment test:

The economic life of the Vertikalny and Mangazeisky North deposits is currently expected to be around 2028 as per management’s expectation as of 31 December 2021. While the Mangazeisky North deposit licence expires in 2023, the directors have a high degree of confidence that it will be extended given the renewal process is routine.
For the following seven years Silver price is US$24.7/ounce as per management’s expectation as of 31 December 2021.
For the following seven years RUB/USD foreign exchange rate 75 as per management’s expectation as of 31 December 2021.
For the following seven years Annual inflation of costs expressed in USD is 2% as per management’s expectation as of 31 December 2021.
For the following seven years Annual inflation of costs expressed in RUB is 4% as per management’s expectation as of 31 December 2021.
Post tax nominal discount rate of 10.8% (pre-tax of 13.5%). This was based on a Capital Asset Pricing Model analysis.
The situation in Ukraine is considered to be a non- adjusting post balance sheet event.

Based on the key assumptions set out above:

The recoverable amount of Vertikalny and Mangazeisky North deposits ($93.26 mln) exceeds its carrying value of the mining assets less asset retirement obligation of ($88.91 mln) by $4.35 mln and therefore assets were not impaired.

Sensitivity analysis:

		In millions of CAD
Impact if metal prices	Increased by 20% Decreased by 20%	71 (74)
Impact if RUB/USD exchange rate	Increased by 20% Decreased by 20%	32 (50)
Impact if future capex	Increased by 20% Decreased by 20%	(9) 9
Impact if post-tax discount rate:	Increased by 20% Decreased by 20%	(6) 7

Page | 18

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Depreciation rates

Once a mine development phase ceases and the production phase commences mining assets are depreciated using a unitof production method based on estimated economically recoverable resources, which results in a depreciation charge proportional to the depletion of reserves.

The Group proven and probable mineral reserves at the beginning of commercial production was 717 thousand tonnes, depletion for the period 1 July 2019 - 31 March 2020 was 95 thousand tonnes.

Starting from 1 April 2020 management of the group has changed its depreciation base for the unit of production method from mineral reserves to mineral resources. In making this change, the UoP calculation has been adjusted to include the estimated future costs to access and process resources expected to be converted to reserves. The most material impact of this is in respect of costs required to enable the processing facility to process sulphide ores that will be mined in the future, in addition to the oxide ores currently being processed. Management believes that this change in accounting estimate represent the most accurate and fair view for the depreciation charge calculation.

On 1 April 2020, the change in accounting estimate occurred, resources were 810 thousand tonnes and depletion for the period 1 April 2020 - 31 December 2020 was 79 thousand tonnes.

On 1 January 2021 the change in accounting estimate occurred, management reassess estimation of existing resources based on available data and resources used for “life of mine model” were 1,504,232 tonnes. This estimation includes “inferred” resources, that was not included into Wardell Armstrong mineral resource report. Depletion for the period 1 January 2020- 31 March 2022 was 120 tonnes.

Rehabilitation provisions and asset retirement obligations

The carrying value of the asset retirement obligation is $1,658,673 as disclosed in Note 14. Exploration and development activities carried out by the Group give rise to obligations for environmental rehabilitation. Significant uncertainty exists as to the amount and timing of associated cash flows and regulatory requirements. A Russian Central Bank borrowing rate for a 7-year zero coupon year bond is used in discounting future cash flows as a pre-tax discount rate.

The expected life of the mine is used as the discounting period. If the estimated discount rate used in the calculation had been higher for 20% than the management estimate, the carrying amount of the provision would have been lower for $313,343 and the interest expense higher for $21,187.

Ore stocks

Stock is valued at the lower of cost or net realisable value. Costs that are incurred in or benefit the production process are accumulated as ore stockpiles, silver in process and silver bullion. Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of silver actually recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based on contained silver and metals prices, less estimated costs to complete production and bring the product to sale. These net realisable tests take into account management’s estimate of the maximum values to be realised from ore stockpiles, in some instances through blending of different ore stockpile grades, prior to these being added to future processing plant feeds. Judgement is required in assessing whether stockpiles of different grades should be tested individually, or tested as inputs to the silver production process.

Accounting developments not yet adopted

There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective in future accounting periods that the Group has decided not to adopt early. The Group has determined these standards and interpretations are unlikely to have a material impact on its consolidated financial statements or are not applicable to the Group

Page | 19

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

2. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS

The Group manages its capital structure and makes adjustments to it, based on the funds available to the Group, in order to support the current production operations, acquisition, exploration and development of precious metal properties.

The Group considers excess cash balances, all the components of shareholders’ equity and loans as capital. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Group’s management to sustain the future development of the business.

The property in which the Group currently has an interest is in production stage.

In order to fund the ongoing development activities, the Group will spend existing working capital and plans to raise additional amounts as needed through equity and/or debt. The Group will continue to assess new properties and seek to acquire an interest in additional properties where sufficient geologic or economic potential are noted and if financial resources exist to do so. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable.

There were no changes in the Group’s approach to capital management during the period ended 31 March 2022 compared to the year ended 31 December 2021. The Group is not subject to externally imposed capital requirements.

FINANCIAL RISK FACTORS

The Group is exposed to credit and liquidity risks and market risk. The risk management policies employed by the Group to manage these risks are discussed below:

Market risk

The Group takes on exposure to market risks. Market risks arise from open positions in (a) silver prices (b) foreign currencies, (c) interest bearing assets and liabilities and (d) equity products, all of which are exposed to general and specific market movements. Management sets limits on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

Sensitivities to market risks included below are based on a change in a factor while holding all other factors constant. In practice this is unlikely to occur and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

Credit risk

The Group has no significant concentration of credit risk arising from operations. Cash equivalents consist of interest earning bank accounts held in banks in the Russia and Canada which in the presentational currency total $858,875 (31 December 2022: $1,853,168) and $26,230 (31 December 2021: $26,279), respectively.

Miscellaneous receivables other than tax refunds due from the Canadian and Russian tax authorities are insignificant.

The Group maximum exposure to credit risk by class of individual financial instrument is shown in the table below:

	31 March 31 December
	2022 2021
	Receivables from customers 1,224,351 1,244,898
	Cash and cash equivalents 885,105 1,879,447
	2,109,456 3,124,345

Page | 20

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS (Continued)

Liquidity risk

The Group’s approach to managing liquidity risk is to ensure it will have sufficient liquidity to meet liabilities when due by continual review of budgets and forecasts and discussions with shareholders and other providers of finance as appropriate. The Group’s current assets and current liabilities are show in the table below:

	31 March	31 December
	2022	2021
Total current assets	28,874,973	26,507,394
Total current liabilities	213,301,469	34,373,270

As at 31 March 2022 the Group had total current assets of $28,874,973 (31 December 2021 – $26,507,394) to settle total current liabilities of $213,301,469 (31 December 2021 – $34,373,270), as well as its commitments outlined in Note 21. These current liabilities include shareholder loans totalling $174,560,313, fair value gain on modification of loans of $2,117,412 and accrued interest of $18,566,428 on shareholders loans.

The Group has agreed with major shareholder to extend their loans to 2028, however for this to be executed it requires approval from TSX. While the Directors are confident of obtaining this approval, at the date of signing these financial statements this approval had not been obtained.

As at 31 March 2022, the Group had cash balances of $885,105 (31 December 2021 – $1,879,447)

The Group had total lease obligations of $4,132,525 at 31 March 2022 (31 December 2021 – $5,209,181) under a combination of three and five-year leases for equipment in relation to the development of Mangazeisky, as outlined in Note 12.

The contractual maturities of the Group’s financial liabilities (which are all carried at amortised cost) are shown in the table below:

|31 March
2022|Carrying
amount||Contractual cash
flows||6 months or less||6 to 12
months||12 to 36
months||Page | 21
36 to 72
months
-
-
-
-
-
36 to 72
months
-
-
-
-
-|
|---|---|---|---|---|---|---|---|---|---|---|---|
|Current liabilities||||||||||||
|Accounts payable & accrued
liabilities|7,879,812||7,879,812||7,879,812||-||-|||
|Short-term loans principal|183,887,900||183,887,900||||183,887,900|||||
|Short-term loans interest|18,756,425||27,110,494||22,088,045||5,022,450|||||
|Lease liabilities|2,624,158||2,988,989||1,590,783||1,398,206||-|||
|Non-current liabilities||||||||||||
|Long-term loans principal|-||-||-||-||-|||
|Long-term loans interest|-||-||||||-|||
|Lease liabilities|1,508,367||1,572,526||||-||1,572,526|||
||214,656,662||223,439,721||31,558,640||190,308,556||1,572,526|||
|.||||||||||||
|||||||||||||
|31 December
2021|Carrying
amount||Contractual cash
flows||6 months or less||6 to 12
months||12 to 36
months|||
|Current liabilities||||||||||||
|Accounts payable & accrued
liabilities|3,515,620||3,515,620||3,515,620||-||-|||
|Short-term loans principal|12,667,507||12,667,507||||12,667,507|||||
|Short-term loans interest|15,258,049||28,022,810||21,385,452||6,637,358|||||
|Lease liabilities|2,931,455||3,426,188||1,791,088||1,635,100||-|||
|Non-current liabilities||||||||||||
|Long-term loans principal|167,639,194||170,705,444||-||-||170,705,444|||
|Long-term loans interest|-||2,568,159||||||2,568,159|||
|Lease liabilities|2,277,726||2,439,383||||-||2,439,383|||
||204,289,551||223,642,939||26,839,850||21,090,103||175,712,986|||
|||||||||||||

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS (Continued)

Interest rate risk

The Group has cash balances and interest-bearing debt on short term loans at commercial fixed rates. The Group’s current policy is to invest excess cash in interest-earning bank accounts with Canadian and Russian financial institutions. The Group periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

Foreign currency risk

The Group has funded certain exploration, project construction and administrative expenses on a transaction by transaction basis using U.S. dollar and Russian ruble. USD funding has been provided directly to AO Prognoz in Russia and converted to Russian ruble. This exposes the Group to changes in foreign exchange rates for U.S. dollar and Russian ruble.

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s borrowings (when borrowing is denominated in a different currency from functional currencies of the Group companies).

31 March 2022	31 December 2021
GBP USD CAD EUR	GBP USD CAD EUR
Current assets:
Cash and cash equivalents - 9,518 21,854 -	2 4,759 21,941 -
Receivables - - - -	- - - -
Total current assets - 9,518 21,854 -	2 4,759 21,941 -
Current liabilities:
Accounts payable and accrued liabilities 312,013 773,499 71,834 15,027	273,679 109,890 58,304 134,284
Lease liabilities - 1,150,303 -	- 808,753 - -
Total current liabilities 312,013 1,923,802 71,834 15,027	273,679 918,643 58,304 134,284
Non-current liabilities:
Long-term loans - 191,009,329 - -	- 182,808,269 - -
Lease liabilities - 410,360 -	- 113,764 -
Total non-current liabilities - 191,419,689 - -	- 182,922,033 - -

The following table presents sensitivities of profit and loss to reasonably possible changes in exchange rates applied at the end of the reporting period relative to the functional currency of the respective Group entities, with all other variables held constant:

	31 March	31 December
	2022	2021
	Impact on profit or loss	Impact on profit or loss
US Dollar strengthening by 20% (2020: strengthening by 20%)	(36,298,636)	(37,437,427)
US Dollar weakening by 20% (2020: weakening by 20%)	36,298,636	37,437,427
CAD strengthening by 20% (2020: strengthening by 20%)	(3,532)	(1,127)
CAD weakening by 20% (2020: weakening by 20%)	3,532	1,127
GBP strengthening by 20% (2020: strengthening by 20%)	(56,051)	(55,103)
GBP weakening by 20% (2020: weakening by 20%)	56,051	55,103
EUR strengthening by 20% (2020: strengthening by 20%)	(17,180)	(27,041)
EUR weakening by 20% (2020: weakening by 20%)	17,180	27,041

Page | 22

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

4. RECEIVABLES

	31 March 2022	31 December 2021
Russian Value Added Tax	2,568,112	1,531,695
Deferred Russian Value Added Tax	367,425	893,445
Receivables from customers	1,224,351	1,244,898
	4,159,888	3,670,038

Deferred Russian Value Added Tax relates to the VAT paid on acquisition of materials and services and the costs incurred on the construction of both building and technological equipment. This VAT can be claimed once the assets the VAT relates to are ready for use. The VAT recognized here is on assets that are expected to be available for use in the second and third quarter of 2022 therefore the asset has been recognized as current.

The amount of VAT recovered in cash during the period was RUB 75,649,693 (CAD: $1,080,840). All VAT is expected to be received.

Receivables from customer mainly consist of receivables from fuel sales. Sales of fuel was accounted on net basis in other income, which comprise of the selling price less cost of fuel.

5. INVENTORIES

Material and supplies inventories are stated at the lower of weighted average costs and net realizable value. Inventories consist of the following:

the following:
	31 March	31 December
	2022	2021
Fuel and lubricants	4,389,045	3,247,752
Parts and supplies	8,380,285	7,724,864
Reagents	3,693,356	3,086,556
Silver for sale	838,103	236,898
Ore stockpile	1,476,060	559,810
Silver in circuit	2,783,397	3,617,748
	21,560,246	18,473,628

The total cost of inventory recognized in cost of sales is $9,321,374 (2021: $15,344,771).

Page | 23

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

6. PREPAID EXPENSES AND NON-CURRENT ASSETS

Prepaid expenses consist of the following:

		31 March 2022 31 December 2021
	Prepayments to suppliers	2,194,162 2,445,757
	Taxes	75,572 38,524
		2,269,734 2,484,281

	Prepaid non-current assets consist of the following:	31 March 2022 31 December 2021
	Prepaymentsforproperty, plant and equipment	1,176,231 881,469
		1,176,231 881,469

Non-current prepayments consist of prepayments that will be converted to non-current assets – property, plant and equipment. The equipment will be delivered and transferred to construction in progress within next twelve months.

7. OTHER NON-CURRENT ASSETS

7. OTHER NON-CURRENT ASSETS
	31 March	31 December
	2022	2021
Construction supplies	3,876,254	4,040,580
	3,876,254	4,040,580

8. INTANGIBLE ASSETS

8. INTANGIBLE ASSETS
	31 March	31 December
Software	2022	2021
Balance at the beginning of the year	180,583	299,528
Additions	-	1,854
Amortization	(22,321)	(116,681)
Translationadjustment	(18,947)	(4,118)
Balance at the end of the period	139,315	180,583

Page | 24

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

9. MINERAL PROPERTY

Mineral property includes the cost of acquiring exploration and mining licenses, as well as the value of assets associated with asset retirement obligations and capitalized project development costs.

Mineral property consists of the following:		31 March 31 December
		2022 2021
Mangazeisky	Licenses and Development costs Asset Retirement Obligation	Total Total
Balance at the beginning of the year	8,343,254 1,903,841	10,247,095 11,923,604
Depreciation	(167,240) (57,517)	(224,757) (1,023,397)
Change in estimate	- -	- (617,167)
Translation adjustment	(41,669) (187,650)	(229,319) (35,945)
Balance at the end of theyear	8,134,345 1,658,673	9,793,019 10,247,095

Mineral property is made up of the following classes of assets; licenses $531,116 (2021: $570,808), asset retirement obligation $1,658,673 (2021: $1,903,841) and development costs of $7,603,229 (2021: $7,772,446).

The Group acquired the exploration license in respect of the Mangazeisky property when it acquired all the shares of AO Prognoz on 21 October 2004. In September 2016, the Mangazeisky exploration license was extended by the Federal Subsoil Use Agency in the Russian Federation (“Rosnedra”) through to 31 December 2023.

In September 2013, the Group acquired the mining license in respect of the Mangazeisky property which is valid for a period of 20 years from the grant date.

The licenses and development cost are depreciated on unit of production basis in proportion of depletion of total tonnes mined.

10. PROPERTY, PLANT AND EQUIPMENT

Reconciliation of the carrying amount at the beginning and end of the periods ended 31 December 2021 and 31 December 2020:

	Right of the use assets	Mining Assets	Assets under construction	Total
Carrying amount at 31 December 2020	3,657,247	67,774,786	2,664,503	74,096,536
Additions	6,780,319	744,170	8,534,687	16,059,176
Transfers	-	3,898,241	(3,898,241)	-
Disposal at cost	-	(716,611)	(427,428)	(1,144,039)
Depreciation	(4,597,124)	(4,869,781)	-	(9,466,905)
Depreciation eliminated on disposal	-	532,091	-	532,091
Translation adjustment	499,274	(1,597,119)	(29,954)	(1,127,799)
Carrying amount at 31 December 2021	6,339,716	65,765,777	6,843,567	78,949,060
Additions	-	31,466	1,298,117	1,329,583
Transfers	-	500,563	(500,563)	-
Disposal at cost	-	-	(25,960)	(25,960)
Depreciation	(845,236)	(1,580,617)	-	(2,425,853)
Depreciation eliminated on disposal	-	-	-	-
Translation adjustment	(669,367)	(5,565,613)	(607,932)	(6,842,912)
Carrying amount at 31 March 2022	4,825,113	59,151,575	7,007,229	70,983,917

Page | 25

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

10. PROPERTY, PLANT AND EQUIPMENT (Continued)

The property, plant and equipment as of the period ended 31 December 2021 included $7,007,229 (31 December 2021: $6,843,567) of assets that are not yet ready for use. During the period ended 31 March 2022, $500,563 (31 December 2021: $$3,898,241) of these assets became available for use, they were transferred into property, plant and equipment and depreciation was charged on them. Leased assets are pledged as security for the related lease obligations.

The Group acquires property, plant and equipment on prepayment terms. Cash paid to suppliers of property, plant and equipment and capitalized expenses paid by cash during the period was $1,619,839 (For the period ended 31 March 2021 - $5,914,893).

All the property plant and equipment of the Group is pledged to shareholders under borrowings agreements.

Mining assets depreciated on unit of production basis in proportion of depletion of resources.

Right of the use assets depreciated on straight line basis in accordance with lease agreements and consist from the following classes of underlying assets:

	Processing plant	Mining vehicles	Infrastructure and other	Total
Carrying amount at 31 December 2020	1,199,525	2,418,494	39,228	3,657,247
Additions	-	5,627,833	1,152,486	6,780,319
Depreciation	(729,484)	(3,472,793)	(394,847)	(4,597,124)
Translationadjustment	77,277	378,917	43,080	499,274
Carrying amount at 31 December 2021	547,318	4,952,451	839,947	6,339,716
Additions	-	-	-	-
Depreciation	(92,596)	(671,987)	(80,653)	(845,236)
Translationadjustment	(59,124)	(523,690)	(86,553)	(669,367)
Carrying amount at 31 March 2022	395,598	3,756,774	672,741	4,825,113

Page | 26

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consist of the following:

	31 March 2022 31 December 2021
	Trade and other payables 5,769,032 1,492,224
	Accrued liabilities 1,055,839 1,151,434
	Property tax liabilities 342,548 373,436
	Other taxes and other liabilities 712,393 498,526
	7,879,812 3,515,620

12. LEASES

The Group have long and short-term lease agreements for the purchase of equipment in relation to the development of the Mangazeisky project payable in monthly instalments of circa US$ 259,000. The lease payments have been discounted at rates of between 11.02% and 20.00%. The Group made down payments of 20% of the cost of the equipment.

During first quarter of 2022 the Group did not entered into new lease agreements.

Interest expenses on lease liabilities were $129,388, total cash outflow for leases was $869,019.

Future minimum lease payments under leases, together with the present value of the minimum lease payments, are as follows:

	31 March	31 December
	2022	2021
Within one year	2,988,989	3,426,188
Within two to five years	1,572,526	2,439,383
Over 5 years	-	-
	4,561,515	5,865,571
Futurefinance charges on financeleases	(428,990)	(656,390)
Present value of the net lease payments	4,132,525	5,209,181
Current portion	2,624,158	2,931,455
Long-term portion	1,508,367	2,277,726
Total obligations under leases	4,132,525	5,209,181

Page | 27

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

13. LONG-TERM AND SHORT-TERM LOANS

			31 March			31 December
			2022			2021
Lender	Principal	Interest	Total	Principal	Interest	Total
Long-term shareholder loans:
Unifirm Ltd (formerly A.B. Aterra Resources Ltd)	-	-	-	34,311,410	-	34,311,410
Inflection Management Corp.	-	-	-	136,394,034	-	136,394,034
Fair value gain on modification of loans	-	-	-	(3,066,250)	-	(3,066,250)
Total long-term shareholders loans	-	-	-	167,639,194	-	167,639,194
Short-term shareholder loans:
Unifirm Ltd (formerly A.B. Aterra Resources Ltd)	35,086,230	3,731,810	38,818,040		3,048,950	3,048,950
Inflection Management Corp.	139,474,083	14,834,618	154,308,701		12,120,125	12,120,125
SKA Assets Management	11,445,000	189,996	11,634,996	12,667,507	88,974	12,756,481
Fair value gain on modification of loans	(2,117,412)	-	(2,117,412)	-	-	-
Total short-term shareholders loans	183,887,901	18,756,424	202,644,325	12,667,507	15,258,049	27,925,556
Total shareholders loans	183,887,901	18,756,424	202,644,325	180,306,701	15,258,049	195,564,750

Movement in long-term loans and short-term interest is analyzed as follows in USD:

	Unifirm (formerly Aterra) Inflection Gain on modification of loans	Total
	*Principal* *Interest* *Principal* *Interest*
	*USD* *USD* *USD* *USD* *USD*	*USD*
As at 31 December 2020(USD)	27,344,069 489,155 108,697,596 1,944,479 (5,661,408)	132,813,890
As at 31 December 2020(CAD)	34,664,242 620,105 137,796,607 2,465,028 (7,398,016)	168,147,966

Principal amounts received	- - - - -	-
Interest accrued Principal and interest repayment	- 1,940,669 - 7,714,510 3,217,797	12,872,976
	- - - - -	-

As at 31 December 2021(USD)	27,344,069 2,429,824 108,697,596 9,658,989 (2,443,611)	145,686,867
As at 31 December 2021 (CAD)	34,311,410 3,048,950 136,394,034 12,120,125 (3,066,250)	182,808,269
Principal amounts received
	- - - - -	-
Interest accrued	- 478,521 - 1,902,208 793,429	3,174,158
Principalandinterestrepayment	- - - - -	-
As at 31 March 2022(USD)	27,344,069 2,908,345 108,697,596 11,561,197 (1,650,182)	148,861,024
As at 31 March 2022 (CAD)	35,086,230 3,731,810 139,474,083 14,834,618 (2,117,412)	191,009,329

Page | 28

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

13. LONG-TERM AND SHORT-TERM LOANS (Continued)

Movement in long term loans is analyzed as follows in CAD:

	Unifirm (formerly Aterra) Inflection Gain on modification of loans Total
	Principal Interest Principal Interest
	*CAD$* *CAD$* *CAD$* *CAD$* *CAD$* *CAD$*
As at 31 December 2020	34,664,242 620,105 137,796,607 2,465,028 (7,398,016) 168,147,966
Principal amounts received	- - - - - -
Interest accrued	- 2,437,601 - 9,689,904 4,029,896 16,157,401
Principal and interest repayment	- - - - - -
Foreign exchange loss	248,950 22,329 989,622 88,763 - 1,349,664
Translation adjustment	(601,782) (31,085) (2,392,195) (123,570) 301,870 (2,846,762)
As at 31 December 2021	34,311,410 3,048,950 136,394,034 12,120,125 (3,066,250) 182,808,269
Principal amounts received	- - - - - -
Interest accrued	- 558,975 - 2,222,027 975,688 3,756,690
Principal and interest repayment	- - - - - -
Foreign exchange loss	3,825,700 355,857 15,207,848 1,414,597 - 20,804,002
Translation adjustment	(3,050,880) (231,972) (12,127,799) (922,131) (26,850) (16,359,632)
As at 31 March 2022	35,086,230 3,731,810 139,474,083 14,834,618 (2,117,412) 191,009,329

On 1 January 2019, the Group’s major shareholders Aterra and Inflection agreed to further reduce the interest rate applicable to all funds drawn under the Facilities Agreement, as amended, from 10% to 9% per annum. The accrued interest accrued quarterly, and is payable on 1 January, 1 April, 1 July and 1 October in each calendar year starting from 31 December 2019 and on the maturity date, being 20 March 2023. The modification of the loan interest from 10% to 9% in 2019 was considered to be non-substantive and resulted recognition of shareholders contribution reserve of $3,574,206.

On 24 December 2019, the Group entered into an amendment and restatement deed relating to the Facilities Agreement. Under this agreement, the lenders have agreed to provide an additional US$4 million of working capital of which US$2 million was drawn down in December 2019.

On 26 May 2020, the Group’s major shareholders Aterra and Inflection agreed to further reduce the interest rate applicable to all funds drawn under the Facilities Agreement, as amended, from 9% to 7% per annum. The accrued interest accrued quarterly, and is payable on 1 January, 1 April, 1 July and 1 October in each calendar year starting from 1 April 2020 and on the maturity date, being 20 March 2023. Accrued interest at 1 April 2020 was capitalized to the loan principal. The modification of the loan interest from 9% to 7% in 2020 was considered to be non-substantive. As this reduction of interest rate was reflective of market conditions having been benchmarked against Russian bank lending rates offered to the Group it has been recognized through finance income in amount of $7,817,537.

31 December 2020, the Group further amended its existing Facilities Agreement major shareholders Aterra and Inflection, extending the maturity dates of certain components of Tranches F, G, H and I, issued by Inflection from 31 July 2021 and 20 September 2022, as applicable, to 1 January 2023. The modification of the loan in 31 December 2020 was considered to be non-substantive and has been recognized through finance income in amount of $233,058.

The Secured Loan Funding is secured and the parent and subsidiaries of the Group will act as guarantor of each other’s obligations under the Facilities Agreement and all related security documents.

Page | 29

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

13. LONG-TERM AND SHORT-TERM LOANS (Continued)

Movement in short-term loan is analyzed as follows in CAD:

	SKA Assets Management
	*Principal* *Interest* *Total*

As at 31 December 2020	- -
Principal amounts received	12,752,624 - 12,752,624
Interest accrued	- 788,814 788,814
Principal and interest repayment	- (699,242) (699,242)
Translation adjustment	(85,117) (598) (85,715)
As at 31 December 2021	12,667,507 88,974 12,756,481
Principal amounts received	- - -
Interest accrued	- 271,354 271,354
Principal and interest repayment	- (168,731) (168,731)
Translation adjustment	(1,222,507) (1,601) (1,224,108)
As at 31 March 2022	11,445,000 189,996 11,634,996

On 4 February 2021, the Group entered into a loan agreement with SKA ASSETS MANAGEMENT LIMITED, a company under common control with Inflection, in the amount of RUB 750,000,000 (equivalent to approximately C$12,000,000) with an interest rate of 8.27% per annum, accruing interest on a monthly basis. The Principal will be due and payable on 31 December 2021.

On 19 January 2022, the Group entered into an amendment of agreement with SKA ASSETS MANAGEMENT LIMITED, a company under common control with Inflection extending the maturity date to 31 December 2022, with an interest rate of 10.27% per annum effectively from 1 January 2022.

14. PROVISION FOR DECOMMISSIONING AND RESTORATION LIABILITY

The Group’s mining, exploration and development activities are subject to various governmental laws and regulations relating to the protection of the environment. These environmental regulations are continually changing and are generally becoming more restrictive. The Group has made, and intends to make in the future, expenditures to comply with such laws and regulations. The Group has recorded a liability and corresponding asset for the estimated future cost of reclamation and closure, including site rehabilitation and long-term treatment and monitoring costs, discounted to net present value. Such estimates are, however, subject to change based on negotiations with regulatory authorities, or changes in laws and regulations.

The Group’s provision for decommissioning and restoration liability consists of management’s best estimate of reclamation and closure costs for the Mangazeisky project.

Significant reclamation and closure activities include land rehabilitation, demolition of buildings and site facilities and other costs defined by the license requirements.

Page | 30

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

14. PROVISION FOR DECOMMISSIONING AND RESTORATION LIABILITY

Asset retirement obligation consists of the following:

	31 March	31 December
	2022	2021
Balance at the beginning of the year	3,609,228	4,040,784
Accretion expense	64,497	235,090
Impact of change to underlying cost estimate	-	-
Impact of rates adjustment	-	(617,167)
Translationadjustment	(343,926)	(49,479)
Balance at the end of the year	3,329,799	3,609,228

At 31 March 2022, the expected life of the Mangazeisky project has been assessed to be 7 years. The projected cost for reclamation and closure of the Mangazeisky project in 2028 has been estimated to be $5.7m. A Russian Government 7-year zero coupon year bond of 8.45% (2021 8.45%) has been used in discounting of future cash flows

15. SHAREHOLDERS’ EQUITY

Common shares

Authorized: Unlimited number of common shares with a par value of GBP 0.001.

All issued shares are fully paid. Reconciliation of the number and value of common shares at the beginning and end of the period ended 31 March 2022 and 31 December 202:

		31 March		31 December
Common shares		2022		2021
	Number of		Number of
	common	$	common	$
	shares		shares
Balance - Beginning of the year	677,746,082	99,568,972	673,690,423	99,561,998
Issued under stock option plan	-	-	64,017	112
Issued under share subscription plan	583,529	998	3,991,642	6,862
Issued under share bonus plan	-	-	-	-
Shares issued during the period	-	-	-	-
Balance - End of theyear	678,329,611	99,569,970	677,746,082	99,568,972

Share premium

Share premium
	31 March	31 December
	2022	2021
Balance - Beginning of the year	23,106,647	22,570,500
Shares issued under share subscription plan	51,519	524,736
Shares issued under stock option plan	-	11,411
Balance - End of theyear	23,158,166	23,106,647

Share premium comprises the amount subscribed for share capital in excess of nominal value.

Page | 31

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

15. SHAREHOLDER’S EQUITY (Continued)

Share Subscription Plan

On 27 June 2019, the board of directors resolved, and the Group obtained approval from the TSX and the shareholders an amendment to the Share Bonus Plan. The number of the Bonus Shares issued to insiders of the Group, within any one-year period, and issuable to insiders of the Group, at any time, under the Share Bonus Plan, or when combined with all of the Group’s other security based compensation arrangements, shall not exceed 10% of the Group’s total issued and outstanding Shares, respectively.

On 5 January 2021, the Group issued 274,714 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 27 January 2021, the Group issued 80,125 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 12 February 2021, the Group issued 64,017 common shares under exercising of stock option for the nominal fee of £0.001.

On 23 April 2021, the Group issued 270,000 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 26 April 2021, the Group issued 78,750 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 16 July 2021, the Group issued 2,389,771 common shares in settlement of debts of up to $327,398 owed to certain directors of the Group

On 16 July 2021, the Group issued 353,630 common shares under the non-executive director subscription plan for the nominal fee of £0.001

On 21 December 2021, the Group issued 544,652 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 2 February 2022, the Group issued 451,764 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

On 16 February 2022, the Group issued 131,765 common shares under the non-executive director subscription plan for the nominal fee of £0.001.

Stock options

The Group has a stock option plan which is intended to provide an incentive to officers, employees, directors and consultants of the Group. Stock options are granted from time to time and the option price is determined by the Compensation Committee of the Board of Directors at its sole discretion but shall not be less than the closing price of the Group’s common stock on the “TSX” on the last trading date preceding the date of the grant. The term of each option is granted for a period not exceeding five years from the date of the grant. Except as expressly provided for in the option holder’s employment, consulting or termination contract, the option holder may exercise the option to the extent exercisable on the date of such termination at any time within twelve months after the date of termination.

The maximum aggregate number of Shares reserved by the Group for issuance and which may be purchased upon the exercise of all options granted under its option plan together will all shares reserved for issuance under the share bonus plan must not exceed 10% of the outstanding Shares (on a non-diluted basis) issued and outstanding at the time of the granting of the options.

On 18 May 2016, 2,900,000 options were granted to directors, officers and consultants of the Group. The exercise price of the options is $0.19 per option. Granted stock options vest immediately on the day of grant and expire on 18 May 2021.

On 21 December 2017, 18,000,000 options were grated to directors of the Group. 6,000,000 of these options have an exercise price of $0.17 per option, 6,000,000 have an exercise price of $0.25 per share and the remaining 6,000,000 have an exercise price of $0.30 per share.

On 4 April 2018, 2,600,000 options were granted to directors, officers and consultants of the Group. 866,667 of these options have an exercise price of $0.22 per option, 866,667 have an exercise price of $0.30 per share and the remaining 866,666 have an exercise price of $0.35 per share.

Page | 32

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

15 . SHAREHOLDERS’ EQUITY (Continued)

Stock options (Continued)

On 14 November 2018, 3,000,000 options were granted to directors, officers and consultants of the Group. 1,000,000 of these options have an exercise price of $0.18 per option and will fully invest on 14 November 2019, 1,000,000 have an exercise price of $0.25 per share and will be fully vested on 14 November 2020, and the remaining 1,000,000 have an exercise price of $0.30 per share and will be fully vested on 14 November 2021.

On 24 May 2019, 500,000 options were granted to officer of the Group 166,667 of these options have an exercise price of $0.11 per option and will fully vested on 24 May 2020, 166,667 have an exercise price of $0.25 per share and will be fully vested on 24 May 2021, and the remaining 166,666 have an exercise price of $0.30 per share and will be fully vested on 24 May 2022.

During the period ended 31 December 2021, options generated a share-based payments expense of $2,976 (2021: $25,494). The fair value of options is estimated on the date of grant using the Black-Scholes option pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability and exercise restrictions (including the probability of meeting market conditions attached to the option). Expected volatility is based on the historical share price volatility over the past 4 years. The expected life of the option was calculated based on the history of option exercises.

Reconciliation of the number of options at the beginning and end of the periods ended 31 March 2022 and 31 December 2021 follows:

		31 March	31 December
		2022	2021
	Number	Weighted average Number exercise price, $	Weighted average
			exercise price, $
Balance - Beginning of the year 22,433,333		0.25 24,251,000	0.25
Granted -		- -	-
Exercised -		- (166,667)	0.11
Expired / Cancelled / Forfeited -		- (1,651,000)	0.19
Balance - End of theyear 22,433,333		0.25 22,433,333	0.25

As at 31 March 2022, the Group had share options outstanding and exercisable as follows:

		Outstanding Exercisable	Outstanding Exercisable
Expiry year	Number	Weighted average Number exercise price, $	Weighted average
			exercise price, $
2022	18,000,000 4,100,000 333,333	0.24 18,000,000	0.24
2023		0.26 4,100,000	0.26
2024		0.27 333,333	0.27
	22,433,333	0.25 22,433,333	0.25

The weighted average remaining contractual life of share options outstanding at the end of the period was 351 days (2021: 442 days).

Contributed surplus consists of the following:

||31 March||Page | 33
31 December
2021
16,960,163
86,403
(12,340)
(268,287)
16,765,939|
|---|---|---|---|
||2021|||
|Balance - Beginning of the year|16,765,939|||
|Share-based payments|2,976|||
|Exercised options|-|||
|Expired / Cancelled /Forfeited options|-|||
|Balance - End of the year |16,768,915|||
|||||

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

15. SHAREHOLDERS’ EQUITY (Continued)

Earnings per share

The calculation of the basic and diluted profit/(loss) per share attributable to the owners of the Group is based on the following data

	31 March	31 March
	2022	2021
Net Loss	(26,093,034)	(9,088,515)
Weighted averagenumberofshares usedinbasicEPS	678,089,825	674,332,931
Basicloss pershare	(0.04)	(0.01)
Exercisable stock options	22,433,333	22,751,000
Weighted averagenumberofshares usedindilutedEPS	700,523,158	697,083,931
Dilutedloss pershare	(0.04)	(0.01)

Diluted earnings per share equates to earning per share due to loss resulting in an anti-dilutive impact.

16. RELATED PARTY DISCLOSURES

(a) Financing transactions

The Group has entered into a series of financing transactions with major shareholders. As set out in Note 13.

(b) Purchases from related parties

As at 31 March 2022 the Group has a prepayment for construction materials to TechnoNicol, the company under common control, with Inflection in amount of $6,522 (2021: prepayment $7,218)

(c) Compensation of key management

Key management are the Group’s directors. Compensation awarded to key management comprised:

	2022	2021
Salaries, fees and short-term employee benefits	116,577	103,663
Share-based payments	3,069	19,050
	119,646	122,713

(d) Interest in other entities

Name of subsidiary undertaking	Registered address/ Principal place of business	Description of shares held	Proportion of	Proportion of
			nominal value of
			issued shares held by:
			Group	Company
			%	%
Silver Bear Resources Inc.	Suite 2500, 120 Adelaide Street West, Toronto, Ontario, Canada, M5H 1T1	Ordinary CAD 120,863,139 shares	100	100
AO Prognoz	36/1 Ordzhonikidze Street, Yakutsk, Republic of Sakha (Yakutia), 677000, Russian Federation	Ordinary RUB 10,000 shares	100	100

Page | 34

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

16. RELATED PARTY DISCLOSURES (Continued)

All subsidiary undertakings have been included in the consolidation. The voting rights in the subsidiary undertakings are in proportion to the amount of shares held.

The prinicipal activites of the Group’s subsidaries are as follows:
Silver Bear Resources Inc. – holding company; and
AO Prognoz - acquisition, exploration, evaluation and development of precious metal properties.

17. OTHER INCOME AND EXPENSES

OTHER INCOME

	2022	2021
Meals distribution	21,534	18,404
Rent	9,829	43,919
Income from fuel sales	44,546	29,247
Other income	1,715	54,757
	77,624	146,327
OTHER EXPENSES
	2022	2021
Property tax	(321,976)	(400,717)
Other expenses	(72,708)	(2,483)
	(394,684)	(403,200)

18. PRODUCTION COST, GENERAL AND ADMINISTRATIVE EXPENSES

Production cost:

	Production cost:
		2022 2021
	Employee compensation	(2,651,974) (2,227,657)
	Process reagents	(528,071) (577,458)
	Repair and maintenance	(990,395) (909,155)
	Fuel	(988,362) (1,003,405)
	Mining tax	(739,084) (1,067,579)
	Blasting	(483,316) (528,722)
	Energy	(608,366) (359,059)
	Refinery	(59,026) (86,303)
	Other	(634,553) (844,320)
	Changein finished goods andwork inprogress	1,185,251 (3,324,322)
		(6,497,896) (10,927,980)

Page | 35

Silver Bear Resources Plc Notes to Consolidated Financial Statements

For the years ended 31 March 2022 and 2021

18. PRODUCTION COST, GENERAL AND ADMINISTRATIVE EXPENSES (Continued)

General and administrative expenses:

		2022 2021 (517,259) (618,029) (53,730) (110,343) (91,170) (56,650) (6,204) (31,701) (2,111) (4,693) (11,968) (97,902) (10,173) (20,384) (8,850) (5,862) (20,700) (29,756) (48,834) (48,251) (21,946) (29,657) (34,149) (45,643) (827,094) (1,098,871)
	Employee compensation
	Professional fees
	Auditors' remuneration
	Office expenses
	Travel expenses
	Legal fees
	Investor relations expenses
	Depreciation
	Amortisation
	Rent
	IT and communications
	Other expenses

The average number of employees during the period was 445 (2021: 373).

The following table provides the breakdown of Group’s employee compensation charged to the income statement:

	2022	2021
Salaries, fees and short-term employee benefits	(3,166,257)	(2,820,192)
Share-based payments	(2,976)	(25,494)
	(3,169,233)	(2,845,686)

19. FINANCE INCOME AND EXPENSE

Finance Expense

Finance Expense
	2022	2021
Interest accrued from loans	(4,028,044)	(4,079,353)
Interest accrued from lease obligations	(129,388)	(206,801)
Accretionexpenses	(64,496)	(58,780)
	(4,221,928)	(4,344,934)
Finance Income
	2022	2021
Interest from deposits	6,993	8,585
	6,993	8,585

Page | 36

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

20. NET CHANGE IN NON-CASH WORKING CAPITAL

Net change in non-cash working capital consists of the following:

	2022	2021
Receivables	(856,793)	(2,919,631)
Advances received	142,874	-
Inventories	(4,649,476)	(6,686,219)
Prepaid expenses	(23,816)	(2,583,530)
Accounts payable and accrued liabilities	4,127,488	8,376,331
	(1,259,723)	(3,813,049)

Net changes in non-cash working capital for cash flow statement calculated for each company of the Group in their functional currencies. Then translated to the reporting currency using the average rates and consolidated.

21. CAPITAL COMMITMENTS AND CONTINGENCIES

The Group is party to certain management contracts and severance obligations. These contracts contain clauses requiring that additional payments of up to $70,000 be made upon the occurrence of certain events such as a change of control. As the likelihood of these events taking place is not determinable, the contingent payments have not been reflected in these consolidated financial statements.

The Group may be involved in legal proceedings from time to time, arising in the ordinary course of its business. The amount of ultimate liability with respect to these actions will not, in the opinion of management, materially affect the Group’s financial position, results of operations or cash flows. There were no material outstanding legal proceedings as of 31 March 2022.

22. SEGMENTED INFORMATION

The Group has one operating segment based on geographical location being the property in the Russian Federation (Mangazeisky). The Corporate balances are provided below to allow reconciliation back to the primary statements.

					As at 31 March	2022
						Property
					Mineral	plant and		Interest	Loss before
Country/Property	Cash	Inventories	Prepaid	Receivables	Properties	equipment	Depreciation	expense	tax
Russia -
Mangazeisky	785,230	21,560,246	3,292,926	4,159,888	9,793,018	70,983,917	(2,762,086)	(4,221,928)	(26,135,309)
Corporate	99,875	-	153,039	-	-	-	-	-	43,367
	885,105	21,560,246	3,445,965	4,159,888	9,793,018	70,983,917	(2,762,086)	(4,221,928)	(26,091,942)

				As at 31 December	As at 31 December	2021
						Property
					Mineral	plant and		Interest		Loss before
Country/Property	Cash	Inventories	Prepaid	Receivables	Properties	equipment	Depreciation	expense		tax
Russia -
Mangazeisky	1,824,665	18,473,628	3,224,500	3,670,038	10,247,095	78,949,060	(10,237,558)	(18,098,949)		(27,219,124)
Corporate	54,782	-	141,250	-	-	-	-		-	(241,660)
	1,879,447	18,473,628	3,365,750	3,670,038	10,247,095	78,949,060	(10,237,558)	(18,098,949)		(27,460,784)

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

23. FINANCIAL INSTRUMENTS

Financial instruments measured at fair value on the consolidated statements of financial position are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
Level 3 – Inputs that are not based on observable market data.

The Group’s current financial instruments consist of cash, accounts receivable, short-term loans, lease liabilities and accounts payable and accrued liabilities. These financial assets and liabilities are measured at amortised cost. The fair value of these financial instruments approximates their carrying values due to the short-term nature of these instruments. The Group’s non-current financial instruments consist of long-term loans and lease liabilities. The fair value of these instruments approximates their carrying values as any differences are not material. Financial assets and financial liabilities as at 31 March 2022 and 31 December 2021 were as follows:

31 March 2022	Cash and receivables	Loans and other liabilities	TOTAL
Cash and cash equivalents	885,105	-	885,105
Accounts receivable	1,224,351	-	1,224,351
Short-term loans	-	(202,644,325)	(202,644,325)
Long-term loans	-	-	-
Advances received	-	(153,174)	(153,174)
Accounts payables and accrued liabilities	-	(6,824,871)	(6,824,871)
Lease liabilities	-	(4,132,525)	(4,132,525)
	2,109,456	(213,754,895)	(211,645,439)
31 December 2021	Cash and receivables	Loans and other liabilities	TOTAL
Cash and cash equivalents	1,879,447	-	1,879,447
Accounts receivable	1,244,898	-	1,244,898
Short-term loans	-	(27,925,556)	(27,925,556)
Long-term loans	-	(167,639,194)	(167,639,194)
Advances received	-	(639)	(639)
Accounts payables and accrued liabilities	-	(2,643,658)	(2,643,658)
Lease liabilities	-	(5,209,181)	(5,209,181)
	3,124,345	(203,418,228)	(200,293,883)

The carrying value of cash equivalents, amounts receivable, short-term loans, long-term loans, accounts payable and accrued liabilities and lease liabilities reflected in the consolidated statement of financial position approximate fair value.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

24. NET DEBT RECONCILIATION

	Long and short- term loans	Long and short-term lease obligation	Subtotal	Cash and cash equivalents	Total
Net Debt as 31 December 2019	(168,147,966)	(2,926,166)	(171,074,132)	1,302,165	(169,771,967)
Cash flow	(12,053,382)	4,067,357	(7,986,025)	261,380	(7,724,646)
Non-cash changes:
New leases	-	(5,582,944)	(5,582,944)	-	(5,582,944)
Accrual of interest	(16,946,215)	(832,243)	(17,778,458)	-	(17,778,458)
Modification gain	-	-	-	-	-
FX differences	(1,349,664)	13,891	(1,335,773)	1,227	(1,334,546)
Translation differences	2,932,477	50,924	2,983,401	314,675	3,298,077
Net Debt as 31 December 2020	(195,564,750)	(5,209,181)	(200,773,931)	1,879,447	(198,894,484)
Cash flow	168,731	869,019	1,037,750	(815,639)	222,111
Non-cash changes:			-		-
New leases	-	-	-	-	-
Accrual of interest	(4,028,044)	(133,383)	(4,161,427)	-	(4,161,427)
Modification gain	-	-	-	-	-
FX differences	(20,804,002)	(173,377)	(20,977,379)	(2,680)	(20,980,060)
Translation differences	17,583,740	514,397	18,098,137	(176,022)	17,922,115
Net Debt as 31 March 2022	(202,644,325)	(4,132,525)	(206,776,850)	885,105	(205,891,745)

25. INCOME TAXES

		2022 2021
Current taxexpense		(1,092) 1,843
Total tax expense		(1,092) 1,843

Reconciliation between tax expense and the product of accounting loss multiplied by the Corporation's domestic tax rate is as follows:

		2022 2021
Profit/(Loss) before taxation		(26,091,942) (9,090,358)
Statutory tax rate		20.00% 20.00%
Tax benefit of statutory rate		5,218,388 1,818,072
Expenses not deductible for income tax purposes		(444,405) (488,589)
Recognition of previously written off deferred tax asset		- -
Deferred taxes not recognized for the period		(366,540) (398,607)
Tax losses carried forward not recognized		(4,408,535) (929,033)
Total tax expense		(1,092) 1,843

The Group offsets tax assets and liabilities if and only if it has a legally enforceable right to set off the current tax assets and current tax liabilities or deferred tax assets and liabilities and they relate to taxes levied by the same tax authority.

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Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

26. CONTROLLING AND ULTIMATE CONTROLLING PARTY

The controlling and ultimate controlling party is Kolesnikov Sergei Anatolievich.

27. SUBSEQUENT EVENTS

Geopolitical situation

In the first half of 2022, due to the geopolitical situation between Russia and Ukraine multiple sanctions were declared against Russia by Western countries. There are no sanctions against the Group, however sanctions that were implemented against Russia meant some brands ceased their operations in Russia. Management has prepared a plan to respond to this risk such as diversifying revenue channels and considering the use of aftermarket spare parts for mining equipment that can no longer be sourced directly from suppliers. While the effect from the sanctions to date has had minimal impacts on the Group’s operations, there is no certainty over the future impacts of sanctions imposed against Russia.

Also, in the first half of 2022 Russia implemented sanctions against Western countries. Since the Russian sanctions have been implemented, capital controls have been put in place that put restrictions on payments outside of Russia. Given the parent Company is reliant on cash from its Russian subsidiaries, this temporarily prevented the Parent Company fulfilling its obligation to creditors. Subsequently the Parent Company has received cash from its subsidiary through management service contracts which has enabled it to resume fulfilling its obligations to creditors. While the sanctions are in effect, the Group will be unable to pay dividends from Russia to UK and further to shareholders. There is no certainty over the future impact of sanctions imposed by Russia or Russian imposed capital controls.

Cease trade order

On 01 April 2022 the Company announced that it had been issued a cease trade order (“CTO”) by the Ontario Securities Commission (“OSC”) for not filing the following periodic disclosure documents (collectively “Annual Filings”) by the filing deadline of 31 March 2022.

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AI assistant

Silver Bear Resources Plc — Interim / Quarterly Report 2022

47458_rns_2022-07-28_ad57310e-d8cc-4f60-9dfb-7326c439698f.pdf

NOTICE OF NO REVIEW OF INTERIM FINANCIAL STATEMENTS

Silver Bear Resources Plc

Consolidated Statement of Financial Position

Silver Bear Resources Plc

Silver Bear Resources Plc Consolidated Statement of Changes in Equity

Silver Bear Resources Plc Consolidated Statement of Cash Flow

1. NATURE OF OPERATIONS

2. BASIS OF PREPARATION

Basis of consolidation

2. BASIS OF PREPARATION (Continued)

Basis of consolidation (Continued)

Going Concern

2. BASIS OF PREPARATION (Continued)

Going concern (Continued)

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies

Foreign currency translation

Mineral properties

Intangible assets

Property, plant and equipment

BASIS OF PREPARATION (Continued)

Exploration and development assets

Impairment of non-financial assets

Provision for decommissioning and restoration liability

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Financial instruments

Financial assets:

Financial liabilities:

Cash and cash equivalents

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Revenue recognition

Current and deferred income Taxes

Earnings per share

Share-based payments

Borrowing costs

Prepaid expenses

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Inventories

Leases

2. BASIS OF PREPARATION (Continued)

Accounting estimates and management judgments

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

2. BASIS OF PREPARATION (Continued)

Significant Accounting Policies (Continued)

Accounting developments not yet adopted

Silver Bear Resources Plc Notes to Consolidated Financial Statements

2. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS

FINANCIAL RISK FACTORS

Market risk

Credit risk

Silver Bear Resources Plc Notes to Consolidated Financial Statements

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS (Continued)

Liquidity risk

3. CAPITAL MANAGEMENT AND FINANCIAL RISK FACTORS (Continued)

Interest rate risk

Foreign currency risk

Silver Bear Resources Plc Notes to Consolidated Financial Statements For the years ended 31 March 2022 and 2021

4. RECEIVABLES

5. INVENTORIES

Silver Bear Resources Plc Notes to Consolidated Financial Statements

6. PREPAID EXPENSES AND NON-CURRENT ASSETS

7. OTHER NON-CURRENT ASSETS

8. INTANGIBLE ASSETS

Silver Bear Resources Plc Notes to Consolidated Financial Statements

9. MINERAL PROPERTY

10. PROPERTY, PLANT AND EQUIPMENT

Silver Bear Resources Plc Notes to Consolidated Financial Statements

10. PROPERTY, PLANT AND EQUIPMENT (Continued)

Silver Bear Resources Plc Notes to Consolidated Financial Statements

11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

12. LEASES

Silver Bear Resources Plc Interim / Quarterly Report 2022