Silver Mountain Resources Inc.

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CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2021 and 2020

(EXPRESSED IN UNITED STATES DOLLARS)

Tel: 604-443-4736 BDO Canada LLP Fax: 604-688-5132 Unit 1100 - Royal Centre www.bdo.ca 1055 West Georgia Street Vancouver, BC V6C 3P3

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Independent Auditor’s Report

To the Shareholders of Silver Mountain Resources Inc.

Opinion

We have audited the consolidated financial statements of Silver Mountain Resources Inc. and its subsidiary (the Company), which comprise the consolidated statement of financial position as at December 31, 2021 and the consolidated statements of net and comprehensive loss, changes in shareholders’ equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2021, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

Other Matter

The financial statements of Silver Mountain Resources Inc. for the year ended December 31, 2020 were audited by another auditor who expressed an unmodified opinion on those statements on January 26, 2022.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the information included in the Management’s Discussion and Analysis for the year ended December 31, 2021.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained the Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

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

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

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms

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

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

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.

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

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

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

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BDO Canada LLP Chartered Professional Accountants

Vancouver, British Columbia April 29, 2022

Silver Mountain Resources Inc. Consolidated Statements of Financial Position (Expressed in United States Dollars)

			As at		As at
		December 31,		December 31,
			2021		2020
ASSETS
Current assets
	Cash and cash equivalents	$	6,990,383	$	203,610
	Amounts receivable		40,054		1,799
	Deferred share issue costs(Note 21)		393,370		-
			7,423,807		205,409
Non-current assets
	Property, plant and equipment (Note 7)		474,506		635,594
	Exploration and evaluation costs (Note 8)		8,290,830		6,996,140
	Tax credits(Note 9)		713,791		630,286
Total assets		$	16,902,934	$	8,467,429
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Amounts payable and other payables (Note 10)	$	720,547	$	15,636
	Loanpayable(Note 11)		1,279,713		541,409
			2,000,260		557,045
Non-current liabilities
	Loanpayable(Note 11)		1,137,652		2,038,415
Total liabilities			3,137,912		2,595,460
Shareholders' equity
	Share capital (Note 12)		18,301,457		8,379,239
	Contributed surplus (Note 13)		113,995		-
	Deficit		(4,650,430)		(2,507,270)
Total shareholders' equity			13,765,022		5,871,969
Total liabilities and shareholders' equity		$	16,902,934	$	8,467,429

Nature and continuance of operations (Note 1) Subsequent events (Note 21)

APPROVED ON BEHALF ON THE BOARD:

Signed: ALFREDO BAZO Alfredo Bazo Chief Executive Officer

Signed: JEAN PIERRE FORT Jean Pierre Fort Chief Financial Officer

The accompanying notes are an integral part of these consolidated financial statements. - 4 -

Silver Mountain Resources Inc. Consolidated Statements of Net and Comprehensive Loss (Expressed in United States Dollars)

Silver Mountain Resources Inc. Consolidated Statements of Net and Comprehensive Loss (Expressed in United States Dollars)
		Year	Ended
		December 31,
		2021		2020
Operating expenses
General and administrative (Note 17)	$	1,372,327	$	717,543
Extinguished mining rights (Note 8)		124,936		-
Share-based compensation(Note 13)		113,995		-
Operating loss before the following items		(1,611,258)		(717,543)
Financial expenses		(411,452)		(443,650)
Gain on modification of Trafigura loan (Note 11)		-		346,809
Foreign exchange loss		(120,450)		(4,085)
Net and comprehensive loss for the year	$	(2,143,160)	$	(818,469)
Basic and diluted lossper share(Note 15)	$	(0.02)	$	(0.01)
Weighted average number of common shares
outstanding - basic and diluted(Note 15)	113,158,117			74,999,890

The accompanying notes are an integral part of these consolidated financial statements. - 5 -

Silver Mountain Resources Inc. Consolidated Statements of Cash Flows (Expressed in United States Dollars)

Silver Mountain Resources Inc. Consolidated Statements of Cash Flows (Expressed in United States Dollars)
		Year Ended
		December 31,
		2021		2020
Operating activities
Net loss for the year	$	(2,143,160)	$	(818,469)
Items not affecting cash
Depreciation		184,489		182,251
Accretion on Trafigura loan payable		313,102		348,142
Gain on modification of Trafigura loan		-		(346,809)
Interest accrued on Trafigura loan		97,025		165,853
Share-based compensation		113,995		-
Extinguished mining rights		124,936		-
Changes in non-cash working capital items:
Amounts receivable and other assets		(121,760)		(95,420)
Amountspayable and otherpayables		66,548		29,151
Net cash and cash equivalents used in operating activities		(1,364,825)		(535,301)
Investing activities
Deferred share issue costs		(186,417)		-
Exploration cost additions		(1,046,829)		(641,023)
Purchase of mining concessions		(42,797)		(2,938)
Purchase ofproperty, plant and equipment		(23,401)		(13,000)
Net cash and cash equivalents used in investing activities		(1,299,444)		(656,961)
Financing activities
Cash acquired in RTO Transaction (Note 6)		9,523,628		-
Cash advanced before the RTO Transaction (Note 6)		500,000		-
Shareholder contributions		-		539,950
Repayment of loans		(572,586)		(186,686)
Repayment of financial obligations		-		(14,715)
Net cash and cash equivalentsprovided by financing activities		9,451,042		338,549
Net change in cash and cash equivalents		6,786,773		(853,713)
Cash and cash equivalents, beginning ofyear		203,610		1,057,323
Cash and cash equivalents, end ofyear	$	6,990,383	$	203,610
Non-cash investing and financing items not included in cash flows:
Deferred share issue costs accrued	$	206,953	$	-
Mineral acquisition costs accrued	$	330,000	$	-

The accompanying notes are an integral part of these consolidated financial statements. - 6 -

Silver Mountain Resources Inc. Consolidated Statements of Changes in Shareholders' Equity (Expressed in United States Dollars)

	Share Capital Shares to Contributed Number Amount be Issued Surplus Deficit Total
Balance, December 31, 2019 Shareholder's contributions Trade accounts payable settled for shares Shares issued Net loss for theyear	207,605,580 $ 6,475,939 $ 1,319,850 $ - $ (1,688,801) $ 6,106,988 17,126,210 539,950 - - - 539,950 435,000 43,500 - - - 43,500 41,857,720 1,319,850 (1,319,850) - - - - - - - (818,469) (818,469)
Balance, December 31, 2020 267,024,510 $ 8,379,239 $ - $ - $ (2,507,270) $ 5,871,969 Share adjustment for RTO (Note 6) (192,024,620) - - - - - Shareholders' equity after RTO adjustment (Note 6) 74,999,890 8,379,239 - - (2,507,270) 5,871,969 Shares issued in RTO Transaction, net of costs (Note 6) 58,519,970 9,922,218 - - - 9,922,218 Share-based compensation (Note 13) - - - 113,995 - 113,995 Net loss for theyear - - - - (2,143,160) (2,143,160)	267,024,510 $ 8,379,239 $ - $ - $ (2,507,270) $ 5,871,969 (192,024,620) - - - - -
Balance, December 31, 2021 133,519,860 $ 18,301,457 $ - $ 113,995 $ (4,650,430) $ 13,765,022

The accompanying notes are an integral part of these consolidated financial statements. - 7 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

1. Nature and continuance of operations

Silver Mountain Resources Inc. (the "Company") is incorporated under the Business Corporation Act (Ontario). The Company is primarily engaged in the acquisition, exploration and development of mineral resource properties in Peru. The address of the Company's corporate office and principal place of business is 82 Richmond Street East Toronto, Ontario, M5C 1P1.

The Company holds a NI 43-101 report showing historical resource estimates have been classified in accordance with the CIM Definition Standards, stating that historical resource estimates are not Mineral Reserves nor Mineral Resources and do not have demonstrated economic viability. The Company has not yet determined whether any of its properties contain mineral deposits that are economically recoverable. The recoverability of any amounts shown as mineral property interests is dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to execute future profitable production or proceeds from the disposition of its properties.

The Company’s continuation as a going concern is dependent upon the ability of the Company to properly execute the proposed use of proceeds from its recent closed Initial Public Offering (“IPO”) in order to develop the Castrovirreyna Project in Huancavelica, Peru, as well as on locating economically recoverable ore reserves in its mineral properties. Management believes the Company will be successful at completing its development plan towards the restart of production.

Subsequent to December 31, 2021, on February 2, 2022, the Company successfully closed its IPO on the Toronto Stock Exchange Venture (“TSXV”), where the Company offered 52,900,000 units at $0.39 (C$0.50) for gross proceeds of $20,864,558 (C$26,450,000), comprised of one common share in the capital of the Company and one-half warrant. Each Warrant entitles the holder thereof to acquire one Common Share at an exercise price of $0.55 (C$0.70) per Common Share for a period of 24 months following the closing of the Offering.

These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

These consolidated financial statements of the Company for the year ended December 31, 2021 were approved and authorized for issue by the Board of Directors on April 29, 2022.

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation

(a) Statement of compliance

These consolidated financial statements, including comparatives, have been prepared in accordance with International Accounting Standards using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the IFRS Interpretations Committee ("IFRIC").

(b) Basis of preparation

These consolidated financial statements have been prepared on an accrual basis, except for cash flow information and are based on historical costs, modified where applicable for financial instruments measured at fair value. These financial statements are presented in U.S. dollars, which is the functional currency of the Company and its subsidiary.

(c) Basis of consolidation

These consolidated financial statements include the accounts of the Company and its 99.99%-owned subsidiary, Sociedad Minera Reliquias S.A.C. (“SMR Peru”), which was acquired on May 7, 2021 in conjunction with the RTO Transaction (Note 6). Pursuant to Peruvian General Corporate Law requirements that a Peruvian company have more than one shareholder, in September 2021, the Company issued 10 common shares in SMR Peru for $3.00 to a shareholder of the Company. Because this non-controlling interest in SMR is not material, it has not been recorded in the Company’s consolidated financial statements.

Inter-company balances and transactions, including unrealized income and expenses arising from inter-company transactions, are eliminated on consolidation.

(d) New accounting standards in force

The standards that became effective in 2021 and apply to the Company are summarized below but did not affect the consolidated financial statements.

Interest Rate Benchmark Reform – IBOR ‘phase 2’ (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

On August 27, 2020, the IASB published Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).

The changes relate to the modification of financial assets, financial liabilities and lease liabilities, specific hedge accounting requirements, and disclosure requirements applying IFRS 7 to accompany the amendments regarding modifications and hedge accounting.

Modification of financial assets, financial liabilities and lease liabilities : The IASB introduces a practical expedient for modifications required by the reform (modifications required as a direct consequence of the IBOR reform and made on an economically equivalent basis). These modifications are accounted for by updating the effective interest rate. All other modifications are accounted for using the current IFRS requirements. A similar practical expedient is proposed for lessee accounting applying IFRS 16.
Hedge accounting requirements : Under the amendments, hedge accounting is not discontinued solely because of the IBOR reform. Hedging relationships (and related documentation) must be amended to reflect modifications to the hedged item, hedging instrument and hedged risk. Amended hedging relationships should meet all qualifying criteria to apply hedge accounting, including effectiveness requirements.
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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(d) New accounting standards in force (continued)

Disclosures :

In order to allow users to understand the nature and extent of risks arising from the IBOR reform to which the entity is exposed to and how the entity manages those risks as well as the entity’s progress in transitioning from IBORs to alternative benchmark rates, and how the entity is managing this transition, the amendments require that an entity discloses information about:

How the transition from interest rate benchmarks to alternative benchmark rates is managed, the progress made at the reporting date, and the risks arising from the transition;
Quantitative information about non-derivative financial assets, non-derivative financial liabilities and derivatives that continue to reference interest rate benchmarks subject to the reform, disaggregated by significant interest rate benchmark; and
To the extent that the IBOR reform has resulted in changes to an entity’s risk management strategy, a description of these changes and how is the entity managing those risks.

The Company’s loan payable bore interest at LIBOR plus 3% however this loan was repaid in early 2022 so management considered that no additional information or disclosures as above was required.

The IASB also amended IFRS 4 to require insurers that apply the temporary exemption from IFRS 9 to apply the amendments in accounting for modifications directly required by IBOR reform.

The amendments are effective for annual periods beginning on or after January 1, 2021, with earlier application permitted.

(e) Foreign currency transactions

Functional currency and presentation currency

To express its consolidated financial statements, the Company has determined its functional currency, based on the main economic environment where it operates, which fundamentally influences the determination of the prices of the goods and services it acquires. These consolidated financial statements are presented in U.S. dollars, which is in turn, the functional currency and the presentation currency of the Company and its subsidiary. All transactions are measured in the functional currency, and on the contrary, foreign currency is anything other than the functional currency.

Transactions and balances in foreign currency

Operations in foreign currency are recorded in U.S. dollars by applying the exchange rates on the day of the transaction. Balances as of December 31, 2021 and 2020 are valued at the year-end exchange rate. The exchange differences that are generated between the exchange rate recorded at the beginning of an operation and thesettlement exchange rate of the operation or the year-end exchange rate are part of the financial income and expense items in the consolidated statements of net and comprehensive loss.

(f) Classification and measurement of financial instruments

Financial instruments are contracts that give rise simultaneously to a financial asset in one entity and a financial liability or a capital instrument in another. In the case of the Company, financial instruments correspond to primary instruments such as cash and cash equivalents, amounts receivable, loan payable, and amounts payable and other payables.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(f) Classification and measurement of financial instruments (continued)

Financial assets

Financial assets on initial recognition are measured at their fair value plus transaction costs that are directly attributable to the acquisition or issue of the asset.

An entity classifies financial assets as subsequently measured at amortized cost, at fair value through other comprehensive income, and at fair value through profit or loss. The classification depends on how an entity manages its financial assets according to its business model and the characteristics of the contractual cash flows that it expects to receive.

For the subsequent measurement of the Company’s financial assets, the following sections (i) and (ii) are applicable:

(i) Financial assets at amortized cost (debt instruments)

The Company measures financial assets at amortized cost when it meets the following conditions:

The objective of the business model is to maintain a financial asset to collect contractual cash flows; and
• According to the contract conditions, cash flows are received on specific dates that exclusively constitute payments of the principal plus interest on such principal.

The determination of the amortized cost for these financial assets is made using the effective interest rate method. These financial assets are subject to impairment. Gains and losses are recognized in the consolidated statements of net and comprehensive loss when the asset is written-off, modified, or impaired. The Company’s financial assets measured at amortized cost correspond to amounts receivable, which are short-term, and their nominal value is similar to their amortized cost.

(ii) Financial assets at fair value through profit or loss

An entity measures a financial asset at fair value through profit or loss unless it cannot be measured at amortized cost or fair value through other comprehensive income.

Financial assets at fair value through profit or loss correspond to cash and cash equivalents.

Cash and cash equivalents are a financial asset because it represents a means of payment, and therefore, it is the basis on which all transactions are measured and recognized in the consolidated financial statements.

Changes in the fair value of these assets are recorded in the consolidated statements of net and comprehensive loss.

Financial liabilities

Financial liabilities on initial recognition are measured at fair value minus transaction costs directly attributable to the acquisition of the liability.

An entity classifies financial liabilities and measures them either at amortized cost or at fair value through profit or loss.

The determination of the amortized cost of financial liabilities is made using the effective interest rate method. Gains and losses are recognized in the consolidated statements of net and comprehensive loss.

The Company’s financial liabilities measured at amortized cost correspond to amounts payable and other payables, and loan payable, which are short and long-term, and their nominal value is similar to their amortized cost.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(g) Write-off of financial assets and liabilities

Financial assets

A financial asset is written-off when: (i) the rights to receive cash flows from the asset have ended, or (ii) the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay all of the cash flows received immediately to a third party under a transfer agreement, and (iii) the Company has transferred substantially all the risks and benefits of the asset or, failing to transfer or retain substantially all the risks and benefits of the asset if having transferred control.

Financial liabilities

A financial liability is written-off when the payment obligation is terminated, cancelled, or expires.

When an existing financial liability is replaced by another of the same borrower under significantly different conditions or the conditions are significantly modified, such replacement or modification is treated as a write-off of the original liability, the new liability is recognized, and the difference between the two is reflected in the profit or loss of the period in the item of financial income (expenses), as appropriate.

(h) Impairment of financial assets

The Company recognizes an allowance for expected credit losses for all debt instruments that are not measured at fair value through profit or loss. Expected credit losses are based on the difference between the contractual cash flows in accordance with the contract and all the cash flows that the Company expects to receive, discounted at the original effective interest rate. The expected cash flows will include cash flows from the sale of maintained guarantees or other credit enhancements that are an integral part of the contractual terms.

For amounts receivable, the Company applies the general approach. The general approach defined in IFRS 9 is based on the analysis of the debtor’s credit quality. Unlike IAS 39, it requires provisioning for ECLs before there is objective evidence of impairment.

The general approach is structured through 3 phases based on the degree of credit risk and the circumstance that there has been a significant increase in it.

Phase 1, for credit exposures, that at the reporting date there has not been a significant increase in credit risk, expected credit losses are recognized for events of default that are possible within the next 12 months (an expected credit loss of 12 months).

Phase 2, for those credit exposures for which there has been a significant increase in credit risk since initial recognition, an allowance for expected credit loss is required over the remaining life of the exposure, regardless of the time of default (an expected lifetime credit loss).

Phase 3, for those credit exposures for which there has been a significant increase in credit risk since initial recognition, an allowance for expected credit loss is required over the remaining life of the exposure on a net interest basis, regardless of the time of default (an expected lifetime credit loss).

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(i) Property, plant, and equipment, and accumulated depreciation

Property, plant, and equipment are presented at acquisition cost minus accumulated depreciation and, if any, the accumulated amount of impairment losses. The depreciation of fixed assets is calculated following the straight-line method based on their estimated useful life minus their residual values, as follows:

d on their estimated useful life minus their residual	values, as follo
Building and facilities Mining equipment Office equipment and furniture Leased equipment	Useful life
	5 and 20 years 5 years 4 to 10 years 5 years

The historical acquisition cost includes the disbursements directly attributable to the acquisition of the assets. Maintenance and minor repairs are recognized as expenses as incurred. The useful life, residual values, and the depreciation method are periodically reviewed to ensure that the depreciation method and period are consistent with the expected pattern of future economic benefits. Subsequent disbursements and major renovations are recognizedas assets when it is probable that the Company will obtain future economic benefits derived from them, and their cost can be reliably valued.

By selling or retiring the property, plant, and equipment, the Company eliminates the cost and the corresponding accumulated depreciation. Any gain or loss resulting from their disposal is included in the consolidated statements of net and comprehensive loss.

(j) Exploration and evaluation costs

Mining concessions are recorded at acquisition cost and are not amortized until the start of their exploitation, and as long as the mineral reserves offer expectations of future production. If these expectations are not offered, they will be recognized as expenses in the profit or loss of the year.

Disbursements for exploration and evaluation of mineral resources are recognized at cost and are amortized from the beginning of the exploitation of the deposit, during the term of useful life that is estimated for it.

Exploration and evaluation costs are subject to periodic review for impairment when events or changes in circumstances indicate the project’s carrying value may not be recoverable.

(k) Impairment of non-financial assets

The carrying amount of the Company’s property, plant and equipment are periodically reviewed to determine if there is impairment when circumstances arise that indicate that the carrying amount may not be recoverable. If there are signs of impairment, the Company estimates the recoverable amount of the assets and recognizes an impairment loss in the consolidated statements of net and comprehensive loss if the carrying amount of an asset exceeds its estimated recoverable amount.

The recoverable amount of an asset is the higher of its fair value less cost to sell and its value in use. The value in use is the present value of the estimated future cash flows that will result from the continuous use of an asset and its disposal at the end of its useful life. Recoverable amounts are estimated for each asset or, if not possible, for the smallest cashgenerating unit identified. If there is a decrease in impairment losses determined in previous years, an income is recorded in the consolidated statements of net and comprehensive loss.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(l) Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease by determining whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. A right-of-use asset and lease liability is recognized at the lease commencement date. The right-of-use is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term, including periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date. The lease payments are discounted using the implicit interest rate in the lease. If the rate cannot be readily determined, the Company’s incremental rate of borrowing is used. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

If a right-of-use asset is re-leased, the corresponding right-of-use asset is derecognized and an investment asset is recorded at the present value of the lease income not paid at the commencement date discounted using the implicit rate in the lease or the Company’s incremental rate of borrowing.

As is permitted under IFRS16, the Company has elected not to recognize right-of-use assets and lease liabilities for leases for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

(m) Provisions

A provision is recognized only when the Company has any present obligation (legal or implicit) because of a past event, an outflow of resources will probably be required for its settlement, and a reliable allowance can be made of the amount of the obligation. Provisions are periodically reviewed and adjusted to reflect the best allowance available atthe date of the consolidated statements of financial position. The expense related to a provision is shown in the consolidated statements of net and comprehensive loss.

(n) Decommissioning or restoration provision

The Company records the fair value of estimated costs of legal and constructive obligations required to restore operating locations in the period in which the obligation is incurred. The nature of these restoration activities includes dismantling and removing structures, rehabilitating mines and tailings dams, dismantling operating facilities, closure of plant and waste sites, and restoration, reclamation, and re-vegetation of affected areas.

The estimated fair value of a liability, and corresponding increase in the related property, is reported in the year in which it is incurred and when a reasonable estimate of fair value can be made. The fair value is the amount at which that liability could be settled in a current transaction between willing parties, that is, other than in a forced or liquidation transaction and, in the absence of observable market transactions, is determined as the present value of expected cash flows. The Company subsequently allocates the cost to expense using a systematic and rational method over its useful life and records the accretion of the liability as a charge to the consolidated statements of net and comprehensive loss.

As the Company has not commenced any mining operations and is currently waiting for the approval of its Mine Closure Plan by the Peruvian mining authorities, no provision for decommissioning has been recognized in these consolidated financial statements. Upon approval of the Company’s Mine Closure Plan, a provision for decommissioning will be recognized.

14 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(n) Decommissioning or restoration provision

(o) Classification of items into current and non-current

The Company presents assets and liabilities in the consolidated statements of financial position, classified as current and non-current. An asset is classified as current when the Company:

Expects to realize the asset or intend to sell or consume it in its normal operating cycle;
Holds the asset primarily for trading purposes;
Expects to carry out the asset within twelve months of the reporting period; or
The asset is cash unless it is restricted and cannot be exchanged or used to cancel a liability for a minimum period of twelve months following the reporting period.

All other assets are classified as non-current.

A liability is classified as current when the Company:

Expects to settle the liability in its normal operating cycle;
Holds liabilities primarily for trading purposes;
The liability must be settled within the twelve months following the reporting period; or
There is no unconditional right to postpone the liability settlement for at least the twelve months following the reporting period.

All other liabilities are classified as non-current.

Deferred income tax assets and liabilities are classified as non-current assets and liabilities in all cases.

(p) Share capital

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

15 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(p) Share capital (continued)

Unit offerings

The Company follows the residual value method to allocate proceeds in unit offerings to the common share and warrant component, where both components are considered equity items. Under the residual value method, unit offering proceeds are allocated first to share capital up to the fair value of the common share with the residual amount of proceeds, if any, allocated to the reserve for warrants. If and when the warrants are exercised, consideration paid by the warrant holder, together with the amount previously recognized in warrant reserve, is recorded as an increase to share capital.

(q) Share-based compensation transactions

The fair value of share options granted to employees is recognized as an expense over the vesting period with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company. The fair value is measured at the grant date and recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option-pricing model, taking into account the terms and conditions upon which the options were granted. At the end of each reporting period, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

The fair value of share-based compensations to non-employees and other share-based compensations are based on the fair value of the goods or services received. If the Company cannot estimate reliably the fair value of the goods or services received, the Company is required to measure their value, and the corresponding increase in equity,indirectly, by reference to the fair value of the equity instruments granted at the date the Company receives the goods or services.

If and when the stock options are exercised, the applicable fair values are transferred from contributed surplus to share capital. When vested options are forfeited or not exercised at the expiry date, the amount previously recognized in sharebased compensations is revised from contributed surplus to deficit.

(r) Recognition of interest income, foreign exchange differences, and other income

Interest income is recognized based on the proportion of time elapsed, using the effective interest method.

Foreign exchange differences corresponding to the adjustment of monetary items represented in foreign currency favorable for the Company are recognized in the consolidated statements of net and comprehensive loss when the foreign exchange rate fluctuates.

Other income is recognized as they accrue.

(s) Recognition of interest expenses, foreign exchange differences, and other expenses

Interest expense is recognized in proportion to the time elapsed to reflect the effective cost of the financial instrument.

Foreign exchange differences corresponding to the adjustment of monetary items represented in foreign currency unfavorable for the Company are recognized in the consolidated statements of net and comprehensive loss when the foreign exchange rate fluctuates.

Other expenses are recognized as they accrue.

16 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(t) Income tax

Income tax includes a current and deferred component.

Current

The current income tax is considered as the amount payable to the tax authority. It is calculated based on the taxable income determined for tax purposes.

Deferred

Deferred income tax is calculated using the balance sheet liability method, which consists of determining the temporary differences between financial and tax assets and liabilities and applying the income tax rate to those differences.

Deferred tax assets are recognized for all deductible differences and tax loss carry forward, to the extent that it is probable that there is taxable profit against which temporary deductible differences can be compensated, and any carried forward tax loss can be used.

Deferred tax liabilities are recognized for all temporary taxable differences, in which the timing of reversals of temporary differences can be controlled, and it is probable that temporary differences will not be reversed in the foreseeable future.

The carrying amount of the deferred tax asset is reviewed on each date of the consolidated statements of financial position and is reduced to the extent that it is unlikely that there is sufficient taxable profit against which all or part of the deferred tax asset to be used can be compensated. Unrecognized deferred tax assets are revalued on each date of the consolidated statements of financial position and are recognized to the extent that it is probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are recognized regardless of the moment when it is estimated that the temporary differences are annulled.

Deferred tax assets and liabilities are measured at the legal rates expected to be applied in the year in which the asset is realized, or the liability is liquidated, based on the rates that have been promulgated or substantially promulgated on the date of the consolidated statements of financial position.

Deferred tax assets and liabilities are compensated if there is a legal right to compensate current taxes against current liabilities, and deferred taxes relate to the same entity and the same tax authority.

Uncertain positions

The Company assesses at each consolidated financial statement closing whether each uncertain tax treatment is considered separately or together with one or more uncertain tax treatment and uses the approach that best predicts the resolution of the uncertainty. The Company applies significant judgment when identifying uncertainties about income tax treatments.

(u) Contingencies

Contingencies are assets or liabilities that arise due to past events, the existence of which will be confirmed only if future events occur that are not entirely under the control of the Company.

Contingent assets are not recorded in the consolidated financial statements but are disclosed in notes to the consolidated financial statements when their degree of contingency is probable.

Contingent liabilities are not recorded in the consolidated financial statements and are disclosed in notes to the consolidated financial statements only when there is a possible obligation.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(v) Loss per share

The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share is determined by adjusting the loss attributable to common shareholders and the weighted average number of common shares outstanding for the effects of all warrants and options outstanding that may add to the total number of common shares.

(w) Future accounting pronouncements

The Company decided to adopt at the time of its effectiveness and not adopt early the accounting standards and interpretations issued by the IASB, and that will be effective as of January 1, 2022, or later.

The standards and amendments to IFRS that have been issued up to the date of issue of the consolidated financial statements and that apply to the Company, but are not yet in force, are described below. The impact that its initial application will have on the consolidated financial statements is unknown since its amount cannot be reasonably estimated. The Company intends to adopt these new and modified standards and interpretations, if applicable when they become effective.

Amendments to IAS 1: Classification of liabilities as current or non-current

In January 2020, the IASB published amendments to paragraphs 69-76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify:

What is understood by the right to postpone liquidation;
That there should be a right to defer at the end of the reporting period;
That classification is not affected by the probability that an entity will exercise its deferral right; and
That only if a derivative embedded in a convertible liability is itself an equity instrument, the terms of a liability would not affect its classification.

The amendments are effective for annual periods beginning on or after January 1, 2023, and must be applied retroactively.

Property, Plant, and Equipment: Product before Intended Use - Amendments to IAS 16

In May 2020, the IASB issued Property, Plant and Equipment: Product Before Intended Use, which prohibits entities from deducting from the cost of an item of property, plant, and equipment, any proceeds from the sale of items produced while bringing that asset to the location and condition necessary for it to operate in the manner intended by management. Instead, an entity recognizes the proceeds from the sale of those items and the costs of producing them, in profit or loss.

The amendment is effective for annual periods beginning on or after January 1, 2022, and must be applied retrospectively to items of property, plant, and equipment available for use on or after the beginning of the earliest period presented when the entity first applies the amendment.

The amendments are not expected to have a significant impact on the Company.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

2. Significant accounting policies and basis of presentation (continued)

(w) Future accounting pronouncements (continued)

Onerous contracts - Costs of fulfilling a contract - Amendments to IAS 37

In May 2020, the IASB issued amendments to IAS 37 to specify what costs an entity should include when assessing whether a contract is onerous or loss-making.

The amendments apply a “directly related cost approach.” Costs directly related to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs are not directly related to a contract and are excluded unless explicitly attributable to thecounterparty under the contract.

The amendments are effective for annual periods beginning on or after January 1, 2022. The Company will apply these modifications to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual period, to which it applies the modifications for the first time and does not expect these amendments to impact the Company’s financial reporting.

IFRS 9 Financial Instruments: Fees in the “10 percent” test for the write-off of financial liabilities

As part of its 2018-2020 annual improvement process to IFRS standards, the IASB issued an amendment to IFRS 9. The amendment clarifies the rates that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability. These fees include only those paid or received by the borrower or the lender, including the fees paid or received by the borrower or the lender on behalf of the other. An entity applies the modification to financial liabilities modified or exchanged on or after the beginning of the annual period in which the entity first applies the modification.

The amendment is effective for annual periods beginning on or after January 1, 2022, and early adoption is permitted. The Company will apply the modifications to financial liabilities that are modified or exchanged on or after the beginning of the annual reporting period in which the entity applies the modification for the first time.

The amendments are not expected to have a material impact on the Company.

3. Critical accounting estimates and judgments

The preparation of these consolidated financial statements in accordance with IFRS requires that management carry out estimates and judgments to determine the balances of assets, liabilities, income and expenses, the number of contingencies, and the exposure of significant events in notes to the consolidated financial statements.

Accounting estimates, by definition, will seldom equal the respective actual results. In management's opinion, these estimates were made based on its better knowledge of the relevant events and circumstances at the date of preparation of the consolidated financial statements. However, the final results may differ from the estimates included in the consolidated financial statements. Management does not expect that the variations will have a material effect on the consolidated financial statements, if any.

If these estimates and judgments vary in the future due to changes in the assumptions that supported them, the corresponding balances of the consolidated financial statements will be corrected on the date on which the change in estimates and judgments occurs.

19 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

3. Critical accounting estimates and judgments (continued)

Critical accounting estimates

The estimates and assumptions that have a risk of causing adjustments to the balances of reported assets and liabilities are presented below:

Taxes:

The determination of the obligations and expenses for taxes requires interpretations of the applicable tax legislation. The Company has professional advice on tax matters to make any decision on tax matters. Even when management considers that its estimates in tax matters are prudent and conservative, discrepancies may arisewith the tax administration in interpreting standards that require tax adjustments in the future.

Review of carrying amounts and allowance for impairment of non-financial assets:
The Company assesses on an annual basis whether a permanent asset requires an impairment allowance in accordance with the accounting policy outlined in Note 2(k). This determination requires the use of professional judgment by management to analyze the impairment indicators and the determination of use-value.

In the latter case, the application of judgment is required in the preparation of future cash flows that includes the projection of the level of future operations of the Company, projection of economic factors that affect its income and costs, as well as the determination of the discount rate to be used in this flow.

As a consequence of evaluating the internal and external indicators that could indicate impairment, the Company concluded that there are not sufficient indications that require the execution of an impairment test of property, plant, and equipment, and exploration and evaluation costs.

Share-based compensation:
Management determines costs for share-based compensations using market-based valuation techniques. The fair value of the market-based and performance-based non-vested share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.
Provision on IGV:

Determining an allowance for expected credit losses requires management to make assumptions about the Company’s ability to generate future revenue from mining operations, historical patterns for the probability of default, the timing of collection and the amount of incurred credit losses.

Critical judgments in the application of accounting policies

The categorization of financial assets and liabilities and functional currency determination are accounting policies that requires management to make judgments or assessments.
Management's judgment is used in determining the eligible expenditures used in the recognition of tax credits receivable.
Significant judgments are used in management's assessment of the Company's ability to continue as a going concern as described in Note 1.
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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

4. Financial Instruments

Accounting standards define a financial instrument as any financial asset and liability of a company, considering as such cash, accounts receivable, and accounts payable, among others.

In the opinion of management, the fair value of its financial instruments is not significantly different from their respective carrying amounts as at December 31, 2021 and 2020. Therefore, the disclosure of such information does not affect the consolidated financial statements on those dates.

The following are the amounts of financial assets and liabilities in the consolidated statements of financial position, classified by category:

	As at December 31, 2021 At fair value through profit or loss At amortized cost Total	As at December 31, 2020 At fair value through profit or loss At amortized cost Total
ASSETS Cash Amounts receivable	$ - $ 6,990,383 $ 6,990,383 - 40,054 40,054	$ - $ 203,610 $ 203,610 - 1,799 1,799
	$ - $ 7,030,437 $ 7,030,437	$ - $ 205,409 $ 205,409
LIABILITIES Amounts payable and other payables Loanpayable	$ - $ 720,547 $ 720,547 - 2,417,365 2,417,365	$ - $ 15,636 $ 15,636 - 2,579,824 2,579,824
	$ - $ 3,137,912 $ 3,137,912	$ - $ 2,595,460 $ 2,595,460

(a) Fair value hierarchy

To increase the consistency and comparability of fair value measurements, a fair value hierarchy has been established that classifies the input data of valuation techniques used to measure fair value into three levels:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and will be used without adjustment to measure fair value whenever available; and

Level 2: The information is different from the quoted prices included in Level 1. Other techniques are used by which all the data that have a significant effect on the registered fair value are either directly (i.e. as prices) or indirectly (i.e. derived from prices) observable; and

Level 3: Techniques that use data that are not based on observable market data (unobservable inputs) and significantly affect fair value. The carrying amount of cash and cash equivalents corresponds to its fair value. The Company considers that the carrying amount of amounts receivable and amounts payable and other payables is similar to their fair values due to their maturity in the short-term. The fair value of loan payable approximates the carrying amount at amortized cost using the effective interest method. There were no transfers between levels 1, 2 or 3 during the twelve months ended December 31, 2021.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

4. Financial instruments (continued)

(b) Risk management policies

The Company’s activities expose it to a variety of financial risks. The main risks that may adversely affect the Company’s financial assets and liabilities, as well as its future cash flows, are liquidity, credit, interest, and exchange rates. The Company's risk management program tries to minimize potential adverse effects. Management is aware of the existing market conditions and, based on its knowledge and experience, reviews, agrees, and controls risks, following the policies approved by the Board of Directors.

A sensitivity analysis is included in the Company’s financial instruments (amounts receivable and amounts payable and other payables) to see their variability in the face of market changes and show the impact on the consolidated statements of net and comprehensive loss or net equity if it were the case.

The sensitivity has been prepared for the years ended December 31, 2021 and 2020, with the balances of financial assets and liabilities as of those dates. The Company does not hold derivative instruments for speculative purposes.

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

(c) Liquidity risk

Liquidity risk is the risk that cash may not be available to pay obligations when due at a reasonable cost. The Company controls the required liquidity through proper management of the maturities of assets and liabilities in such a way as to achieve a match between the flow of income and future payments. The liquidity risk is mainly covered with loan payable.

The following table shows the maturities of financial liabilities at their nominal value:

		Less than		More than
As at December 31, 2021		one year		one year		Total
Amounts payable and other payables	$	720,547	$	-	$	720,547
Loan payable		1,048,437		1,919,506		2,967,943
	$	1,768,984	$	1,919,506	$	3,688,490
		Less than		More than
As at December 31, 2020		one year		one year		Total
Amounts payable and other payables	$	14,964	$	-	$	14,964
Loan payable		443,551		3,004,444		3,447,995
	$	458,515	$	3,004,444	$	3,462,959

(d) Credit risk

The Company's financial assets potentially exposed to concentrations of credit risk consist mainly of bank deposits, amounts receivable and tax credits receivable. The Company reduces the probability of significant concentrations of credit risk because it maintains its deposits and places its cash investments in well-established financial institutions and limits the amount of exposure to credit risk in any of the financial institutions. The Company also believes that the risk of loss related to amounts receivable and tax credits receivable is minimal.

22 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

4. Financial instruments (continued)

(e) Interest risk

The Company’s exposure to this risk is due to changes in interest rates on its financial liabilities. The Company has financial liabilities, mainly due to its loan with Trafigura Pte Ltd. This loan has agreed interest at variable rates. Management has not entered into financial hedging instruments to minimize this risk.

The Company does not have a formal policy to determine how much of its exposure should be at a fixed rate or a variable rate. However, when assuming new loans or indebtedness, management exercises its criteria to decide whether a fixed or variable rate would be more favorable for the Company for a period of time until it becomes due.

The following shows the sensitivity of the consolidated statements of net and comprehensive loss for the possible effect of changes in the variable interest rate on financial expenses for one year, before income tax, assuming that financial liabilities as of December 31, 2021 and 2020, were renewed at the end and will be maintained for the remainder of the following year:

Changes in basispoints	Effect on net and comprehensive loss Year Ended December 31, 2021 2020
+ (-) 100 + (-) 200	$ (18,460) $ (19,635) $ (36,921) $ (39,270)

The interest rate sensitivities shown in the table above are illustrative only and are based on simplified scenarios. The figures represent the effect of the pro forma movements in the net financial expense based on the projected scenarios of the yield curve and the interest rate risk profile that the Company currently has.

However, this effect does not include the actions taken by management to mitigate the impact of this risk on interest rates.

(f) Exchange risk

Most transactions are made in U.S. dollars. Exposure to exchange rates comes from some supplier invoices and amounts receivable, and cash and cash equivalents balances, which are basically denominated in Soles. In the consolidated statements of financial position, these items are presented at the end-of-period exchange rate.

To mitigate exposure to foreign exchange risk, cash flows denominated in non-functional currencies are continually reviewed. In general, when the amounts to be paid for purchases in Soles exceed the amount available in that currency, a currency exchange operation is carried out.

Operations in foreign currencies are carried out at the available spot exchange rates. The Company has exposure to Peruvian Soles, Canadian Dollars, and US Dollars.

23 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

4. Financial instruments (continued)

(f) Exchange risk (continued)

The financial assets and liabilities in Soles are as follows:

	As at	As at
	December 31,	December 31,
	2021	2020
Cash and cash equivalents	15,217	198,610
Amounts receivable	2,853	4,197
Amounts payable and other payables	(601,440)	(35,031)
Net assets	(583,370)	167,776

As at December 31, 2021 and 2020, management has decided to assume the exchange risk generated by this position. Therefore, it has not carried out hedging operations with derivative products. During the year ended December 31, 2021, the Company recorded a net foreign exchange difference loss of $120,830 (year ended December 31, 2020 - $4,085).

A sensitivity analysis of the profit or loss for the years ended December 31, 2021 and 2020 has been carried out with respect to the effect of a reasonably possible variation in the exchange rate of the Sol on financial assets and liabilities denominated in that currency, considering that all other variables will remain constant. If the Sol exchange rate had increased or decreased with respect to the functional currency according to the percentages in the table below, these would have been the effects on the Company's loss before income tax:

Year Ended December 31, 2021 Percentage change Effect on profit or in exchange rate loss for the year + 5 $ 6,947 - 5 $ (6,947)	Year Ended December 31, 2020
	Percentage change Effect on profit or in exchange rate loss for the year
	+ 5 $ 2,399 - 5 $ (2,399)

5. Capital management

For capital management purposes, the Company considers the loan payable and share capital as such. The objective is to safeguard the Company's ability to continue as an ongoing business to provide returns to its shareholders and benefits for stakeholders and maintain an optimal structure that reduces the cost of capital.

Management manages its capital structure and makes adjustments to face changes in the economic market conditions. The Company's policy is to finance all its short and medium-term projects with the contributions from shareholders and long-term third-party loan. To maintain or adjust the capital structure, the Company may adjust the payment of dividends to shareholders, return capital to its shareholders, or issue new shares. There have been no changes in objectives, policies, or procedures during the years ended December 31, 2021 and 2020.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

6. Reverse takeover

On May 7, 2021, there was an RTO Transaction between SMR Peru and SMR. In connection with the completion of the RTO Transaction, SMR acquired all the issued and outstanding shares of SMR Peru in exchange for 74,999,890 shares of the Company. In substance, the transaction involves SMR Peru shareholders obtaining control of SMR; accordingly, the transaction is considered to be a reverse acquisition transaction in which SMR Peru is identified as the accounting acquirer.

At the time of the transaction, SMR was a non-operating entity and did not meet the definition of a business under IFRS 3 - Business Combinations , the acquisition was accounted for as a purchase of SMR's net assets. The consideration paid was determined as an equity-settled share-based payments under IFRS 2, at the fair value of the net assets received at the date of closing. IFRS 2 requires the shares issued for the acquisition of the net assets of SMR to be measured at the fair value of the net assets, unless the fair value cannot be reliably estimated.

As SMR Peru was deemed to be the acquirer for accounting purposes, the Company's consolidated financial statements present the historical financial information to the date of the RTO Transaction are those of SMR Peru presented as a continuation of SMR Peru.

The following represent the preliminary fair value allocation to identifiable net assets acquired.

Consideration
Fair value of 58,519,970 common shares of SMR(1)	$	9,922,218
Net assets acquired
Cash	$	9,523,628
Cash advanced before RTO Transaction		500,000
Accountspayable and accrued liabilities		(101,410)
	$	9,922,218

(1) The common shares issued were valued based on the fair value of net assets acquired.

Before the RTO Transaction, SMR closed a private placement of 33,333,330 units at a price of $0.30 for gross proceeds of $9,999,999. Each unit was comprised of one common share and one-half of one common share purchase warrant. Each warrant will be exercisable to acquire one common share at an exercise price of $0.90 per share for a period of 36 months from the closing.

In connection with the private placement, the SMR issued 186,640 compensation units and incurred professional costs of $91,784. Each unit is comprised of one common share and one-half of one common share purchase warrant. The warrants have the same terms as those of the private placement.

Using the residual value method, management determined that all of the proceeds received related to the common share component of the units issued. As such, $nil was allocated to the 16,759,870 warrants included in the units issued.

25 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

7. Property, plant, and equipment

								Office
				Building		Mining	equipment			Leased
Cost		Land	and facilities		equipment		and furniture		equipment			Total
Balance, December 31, 2019	$	36,041	$	151,544	$	763,039	$	36,310	$	28,305	$	1,015,239
Additions duringtheyear		-		-		13,000		-		-		13,000
Balance, December 31, 2020		36,041		151,544		776,039		36,310		28,305		1,028,239
Additions duringtheyear		-		-		13,300		10,101		-		23,401
Balance, December 31, 2021	$	36,041	$	151,544	$	789,339	$	46,411	$	28,305	$	1,051,640
Accumulated depreciation
Balance, December 31, 2019	$	-	$	1,665	$	196,600	$	4,581	$	7,548	$	210,394
Additions duringtheyear		-		16,609		153,475		6,506		5,661		182,251
Balance, December 31, 2020		-		18,274		350,075		11,087		13,209		392,645
Additions duringtheyear		-		16,609		155,650		6,569		5,661		184,489
Balance, December 31, 2021	$	-	$	34,883	$	505,725	$	17,656	$	18,870	$	577,134
Carrying value
Balance, December 31, 2020	$	36,041	$	133,270	$	425,964	$	25,223	$	15,096	$	635,594
Balance, December 31, 2021	$	36,041	$	116,661	$	283,614	$	28,755	$	9,435	$	474,506

8. Exploration and evaluation costs

In 2018, the Company acquired certain liquidated assets from Corporación Minera Castrovirreyna ("CMC") that comprised the Castrovirreyna Project (“the Project”). The Project is located near the town of Castrovirreyna, department of Huancavelica, province of Castrovirreyna, Peru. The Project includes mine infrastructure that supported the Reliquias and Caudalosa Grande underground operations, which were operated by CMC from 2005–2015.

In 2019, 26 mining concessions were acquired, of which 2 concessions with a total of 28 hectares ("ha") are located in the province of San Genaro, 3 concessions with a total of 1,400 ha are located in the province of Huaytara, and 21 concessions with a total of 15,060 ha are located in the province of Castrovirreyna, all in the department of Huancavelica.

SMR has a total mining concession rights of 27,059 ha. The total concessions are divided among the Castrovirreyna Project mining concessions (Reliquias and Dorita Blocks) with mineralization potential (26,650 ha), the plants and tailings associated to the Castrovirreyna Project (139 ha), and other concessions with mineralization potential (270 ha).

SMR has two sub-areas, referred to as Reliquias (12,972 ha) and Dorita (13,678 ha), and the Company holds all mineral concessions in these blocks. The Project acquired included the Reliquias and Caudalosa Grande underground mines and associated infrastructure, the Jose Picasso Perata processing plant and a tailings storage facility. SMR owns 100% of its concessions which are currently held in name of its subsidiary, Sociedad Minera Reliquias S.A.C.

SMR agreed to acquire the Project for $7,160,000 and as consideration for the acquisition, the Company entered into a loan arrangement with Trafigura Pte. Ltd. (“Trafigura”), a creditor of CMC at the time of its liquidation. The loan arrangement and the acquisition fair value of the committed future cash flows under the Trafigura loan arrangement are outlined in Note 12. This acquisition date fair value was allocated based on the relative fair values of the acquired mining concessions and mining property plant and equipment.

26 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

8. Exploration and evaluation costs (continued)

Reliquias

After the acquisition of the Project, SMR Peru has conducted exploration work that consisted of geological mapping, rock chip and soil sampling, induced polarization geophysical surveys and a reconstruction of historical geologicaldata. Geological evaluation also included preliminary non-compliant mineral resource assessments for the historic Reliquias and Caudalosa Grande underground mines.

Dorita

At the Dorita block of properties, exploration work consisted of geological mapping, rock and soil sampling, induced polarization and magnetic geophysical surveys. The Dorita block of properties includes mining concessions that contain historic small scale underground operations in veins with polymetallic ore. These concessions were previously exploited when they were under the ownership of CMC however, these operations were suspended when CMC entered into a liquidation process.

	As at December 31, 2021 Acquisition Costs Exploration Costs Total	As at December 31, 2020 Acquisition Costs Exploration Costs Total
Brownfield - Reliquias Greenfield - Dorita Other	$ 2,664,405 $ 2,492,239 $ 5,156,644 1,335,581 1,224,401 2,559,982 382,724 191,480 574,204	$ 2,749,742 $ 1,724,677 $ 4,474,419 1,340,537 635,072 1,975,609 374,570 171,542 546,112
	$ 4,382,710 $ 3,908,120 $ 8,290,830	$ 4,464,849 $ 2,531,291 $ 6,996,140
	Brownfield - Greenfield - Reliquias Dorita Other Total
Balance at December 30, 2019 $ 4,030,209 $ 1,806,962 $ 515,008 $ 6,352,179
Exploration costs General on-site expenses 44,740 11,991 5,965 62,696 Geology 153,099 - - 153,099 Right of use 243,433 156,656 25,139 425,228
441,272 168,647 31,104 641,023
Acquisition costs Miningrights 2,938 - - 2,938
Balance at December 31, 2020 $ 4,474,419 $ 1,975,609 $ 546,112 $ 6,996,140
Exploration costs General on-site expenses 48,939 93,995 - 142,934 Geology 82,247 13,906 - 96,153 Environmental Fees 127,900 - - 127,900 Outsourced geological studies 110,326 137,494 - 247,820 Right of use 364,520 302,278 19,938 686,736 Salaries and benefits 33,630 41,656 - 75,286
767,562 589,329 19,938 1,376,829
Acquisition costs Mining rights 23,496 11,556 7,745 42,797 Extinguished rights(i) (108,833) (16,512) 409 (124,936)
Balance at December 31, 2021 $ 5,156,644 $ 2,559,982 $ 574,204 $ 8,290,830

27 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

8. Exploration and evaluation costs (continued)

(i) The Company decided to withdraw six mining concessions in Reliquias (3,000 ha) and five mining concessions in Dorita (4,600 ha) totaling eleven mining concessions (7,600 ha) that had minimal or non-geological potential. The local authorities confirmed the withdrawal by the end of 2021.

9. Tax credits

As at December 31, 2021, the Company maintains in its non-current assets a tax credit for general sales tax (IGV, Impuesto General a las Ventas, in Spanish) of $713,791 (December 31, 2020 - $630,286), that will be applied to the IGV generated by local sales. Otherwise if sales are exported, the Company has the right to request the refund of the valueadded tax as a Balance in Favor Matter of Benefit of the Exporter with a limit of 18 percent of the exported freight on board value. According to Peruvian Tax Legislation IGV does not have an expiration date. The Company estimates that it will be applied during its first year of production which is planned to start during the third quarter of the year 2023.

10. Amounts payable and other payables

		As at		As at
		December 31,		December 31,
		2021		2020
Trade accounts payable	$	154,800	$	14,716
Taxes payable		10,875		672
Accrued liabilities		536,953		-
Other amountspayable		17,919		248
	$	720,547	$	15,636

28 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

11. Loan payable

On May 6, 2018, the Company and Trafigura Pte Ltd ("Trafigura"), domiciled in the Republic of Singapore, signed a contract for the assignment of credit rights for $7,160,000 for the acquisition of assets (property, plant and equipment (Note 7), and mining concessions (Note 8)) from CMC in liquidation.

The Company made an initial payment of $2,620,000 and the remaining balance was to be paid in 36 monthly installments totaling $3,380,000, with a single final payment of $1,160,000. This loan bore interest at the 3-month Libor rate + 2.25% per annum. The final payment of $1,160,000 was to be forgiven as long as the Company made the initial payment of $2,620,000 and the 36 monthly installments. The 36 monthly installment payments were to commence in the month following the month in which the “José Picasso Perata” concentrator plant attained a minimum average monthly treatment rate of 1000 mtpd. If this rate was not attained by January 1, 2020, the payment period was to commence in October 2020.

On November 2, 2019, when the Company entered into an offtake agreement for the sale of concentrates with Trafigura, the Company and Trafigura signed an addendum to the foregoing loan agreement where Trafigura agreed to forgive the final payment of $1,160,000 leaving a remaining loan balance of $3,380,000. Additionally, the interest rate on the loan was increased to a 3-month Libor rate + 3% per annum.

On August 13, 2020, the Company and Trafigura entered into a second addendum where the parties agreed to extend the start of the 36 debt payments on the $3,380,000 portion of the loan until October 1, 2021.

On June 1, 2021, the Company and Trafigura entered into a third addendum agreement whereby the parties agreed to an amended repayment schedule for the $3,380,000 outstanding balance that consisted of the following payments:

A payment of $375,555 in equal monthly payments over a period of four months from June 2021 to September 2021, plus interest.
A payment of $3,004,444 in equal monthly payments over a period of 36 months from October 2021 to September 2024 plus interest.

The assets acquired under this loan arrangement maintain a negative pledge for $6,000,000 in favor of Trafigura until the total repayment of the debt.

The fair value of the loan was calculated as the discounted future contractual cash payments under the loan agreement using an effective interest rate of 20% per annum. The debt component has been accreted systematically to its face value over the term of the loan by recording of additional interest. The November 2, 2019 and August 13, 2020 amendments to the Trafigura loan arrangement were determined to be substantial modifications and therefore were accounted for as an extinguishment. The June 1, 2021 amendment was determined not to be a substantial modification and therefore was not accounted for as an extinguishment.

Subsequent to year-end, on March 1, 2022, the Company fully repaid the outstanding balance of its loan payable to Trafigura with a cash payment of $2,851,535.

		As at		As at
		December 31,		December 31,
		2021		2020
Principal payable – Trafigura – current portion	$	1,232,758	$	473,412
Interestpayable – Trafigura		46,955		67,997
Principal and interest payable – current portion		1,279,713		541,409
Principalpayable – Trafigura – long-termportion		1,137,652		2,038,415
	$	2,417,365	$	2,579,824

29 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

12. Share capital

a) Authorized share capital

The authorized share capital consists of an unlimited number of common shares.

b) Issued share capital
(i) On January 2, 2020, the Company received shareholder contributions of $80,000 for 2,537,220 common shares to be issued on September 24, 2020.
(ii) On February 18, 2020, the Company received shareholder contributions of $200,000 for 6,343,040 common shares to be issued on September 24, 2020.
(iii) On June 30, 2020, the Company received shareholder contributions of $60,000 for 1,902,910 common shares to be issued on September 24, 2020.
(iv) On July 2, 2020, the Company received shareholder contributions of $100,000 for 3,171,520 common shares to be issued on September 24, 2020.
(v) On July 16, 2020, the Company received shareholder contributions of $100,000 for 3,171,520 common shares to be issued on September 24, 2020.
(vi) On August 18, 2020, $12,794 of trade accounts payable were settled for 435,000 common shares to be issued on September 24, 2020. Additionally, the Company settled $30,706 of trade accounts payable as an increase of share premium, which is the additional value paid by a new shareholder for the shares acquired.
(vii) On September 24, 2020, the Company issued the 17,126,210 common shares for the shareholder contributions received and 435,000 common shares for the trade accounts payable settled during the year ended December 31, 2020, as well as 41,857,720 common shares of the Company for cash considerations received in fiscal 2019 of $1,319,850.
(viii) See Note 6.
(ix) On November 15, 2021, the Company’s Board of Directors approved a ten-for-one stock split of the Company’s issued and outstanding common shares. Shareholders of record at the close of business on November 15, 2021 received nine additional common shares for every common share owned. All share data contained in these consolidated financial statements and notes has been adjusted to reflect this share split retrospectively.

13. Stock options

On September 17, 2021, the Board of Directors of the Company approved the establishment of the Company's stock option plan relating to the Company's directors, officers, employees and consultants, and to reserve up to 10% of the common shares in the capital of the Company issued and outstanding from time to time for issuance thereunder.

The following table reflects the continuity of stock options for the years ended December 31, 2021 and 2020:

	Number of	Weighted average
	stock options	exerciseprice
Balance, December 31, 2020	-	$ -
Granted(1)	5,900,000	0.30
Balance, December 31, 2021	5,900,000	$ 0.30

30 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

13. Stock options (continued)

(1) On September 17, 2021, the Company granted stock options to certain directors and officers of the Company and its subsidiaries to purchase up to 5,900,000 common shares of the Company, exercisable at a price of $0.30 per share and expiring on April 30, 2025. These options will vest over the span of three years, with 2,950,000 to be vested on the first anniversary of the date of grant, 1,475,000 to be vested on the second anniversary of the date ofgrant, and the remaining 1,475,000 to be vested on the third anniversary of the date of grant.

The fair value was determined to be $559,497 using the Black-Scholes option pricing model with the following assumptions: stock price of $0.169, dividend yield of 0%, expected volatility of 100%, risk free interest rate of 0.84% and expected life of 3.62 years.

During the year ended December 31, 2021, the Company recorded share-based compensation expense of $113,995 (year ended December 31, 2020 - $nil) related to stock options.

The following table reflects the actual stock options issued and outstanding as of December 31, 2021:

				Number of
		Remaining	Number of	Options	Number of
	Exercise	Contractual	Options	Vested	Options
Expiry Date	Price	Life(years)	Outstanding	(exercisable)	Unvested
April 30, 2025	$0.30	3.33	5,900,000	-	5,900,000

14. Warrants

The following table reflects the continuity of warrants for the years ended December 31, 2021 and 2020:

	Number of	Weighted average	Weighted average
	warrants	exerciseprice
Balance, December 31, 2019 and December 31, 2020	-	$	-
Balance, December 31, 2020	-	$	-
Acquired in RTO Transaction(Note 6)	16,759,870		0.90
Balance, December 31, 2021	16,759,870	$	0.90

The following table reflects the actual warrants issued and outstanding as of December 31, 2021:

Number of Warrants	Exercise	Price	Expiry Date
16,759,870	$	0.90	April 15, 2024

15. Net loss per common share

The calculation of basic and diluted loss per share for the year ended December 31, 2021 was based on the loss attributable to common shareholders of $2,143,160 (year ended December 31, 2020 - $818,469) and the weighted average number of basic common shares outstanding of 113,158,117 for the year ended December 31, 2021 (year ended December 31, 2020 - 74,999,890). Diluted loss per share did not include the effect of 22,659,870 stock options and warrants (year ended December 31, 2020 - nil stock options and warrants) as they are anti-dilutive.

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Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

16. Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties include key management personnel and may be individuals or corporate entities. A transaction is considered to be a related party transaction when there isa transfer of resources or obligations between related parties. Related party transactions are recorded at the exchange amount, being the amount agreed to between the related parties.

Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers and members of the Board of Directors.

Remuneration of key management personnel of the Company was as follows:

		Year	Ended	Ended
		December		31,
		2021		2020
Management salaries(1)	$	370,983	$	-
Share-based compensation(Note 13)		101,243		-
	$	472,226	$	-

(1) During the year ended December 31, 2021, management salaries of $297,648 (year ended December 31, 2020 - $nil) was expensed as salaries and benefits, and $73,335 (year ended December 31, 2020 - $nil) was capitalized as exploration and evaluation costs.

17. General and administrative

17. General and administrative
		Year Ended
		December	31,
		2021	2020
Administrative expenses	$	134,463$	141,530
Depreciation (Note 7)		184,489	182,251
Contractor fees		146,335	123,968
Environmental fees		92,042	86,624
Equipment rental		20,206	16,312
Filing fees		95	-
Insurance		113,059	3,791
Meals and entertainment		32,780	34,062
Operational expenses		94,548	96,873
Professional fees		186,029	26,589
Salaries and benefits (Note 16)		346,622	-
Travel expenses		21,659	5,543
	$	1,372,327$	717,543

18. Segmented information

The Company operates in one reportable operating segment, being mineral exploration in Peru. The Company has an administrative office in Toronto, Canada.

32 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

19. Income taxes

The Company’s provision for income taxes differs from the amounts computed by applying the basic current rate of 26.5% for Canada to income (loss) for the year before taxes as shown in the following table:

		Year	Ended	Ended
		December		31,
		2021		2020
Loss before income taxes	$	(2,143,160)	$	(818,469)
Expected income tax recovery based on statutory rate		(567,937)		(216,894)
Adjustments to expected income tax recovery:
Stock based compensation		30,209		-
Unrealized losses		1,851		-
Other permanent and temporary differences		150,879		41,852
Share issue costs reported in equity		(68,568)		-
Rate differential		(34,236)		-
Change in deferred income tax asset not recognized		487,802		175,042
Income tax expense(recovery)	$	-	$	-

Deferred Income Taxes

December 31,		2021		2020
Capital assets	$	17	$	-
Share issuance costs and other		68,568		-
Canadian non-capital losses carried forward		94,470		-
Foreign losses carried forward		591,754		267,007
Deferred tax assets		754,809		267,007
Less: Deferred tax assets not recognized		(754,809)		(267,007)
Net deferred tax assets(liabilities)	$	-	$	-

Certain deferred tax assets have not been recognized because it is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.

Tax Loss Carry Forward Balances

As of December 31, 2021, the non-capital losses expire as follows:

Year		Amount
2041	$	356,489

20. Contingencies

The Company's exploration activities are subject to government laws and regulations, including tax laws and laws and regulations governing the protection of the environment. The Company believes that its operations comply in all material respects with all applicable past and present laws and regulations. The Company records provisions for any identified obligations, based on management's estimate at the time. Such estimates are, however, subject to changes in laws and regulations.

33 -

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

21. Subsequent events

On January 26, 2022, the Company filed a final long-form prospectus with the securities regulatory authorities in each of the provinces of Canada other than Quebec.

On February 2, 2022, the Company closed the initial public offering (the “Offering”) of 46,000,000 units of the Company (the “Units”) at a price of $0.39 (C$0.50) per Unit (the “Offering Price”), for gross proceeds of $18,143,094 (C$23,000,000). The Company also issued an additional 6,900,000 Units at the Offering Price, for additional gross proceeds of $2,721,464 (C$3,450,000), in connection with the exercise in full of the over-allotment option.

Each Unit is comprised of one common share (a “Common Share”) and one half of one common share purchase warrant of the Company (each whole warrant, a “Warrant”). Each Warrant is exercisable into one Common Share at a price of $0.55 (C$0.70) per Common Share and expire on February 2, 2024. Furthermore, the Company issued 2,310,000 stock options with an exercise price of $0.39 (C$0.50).

The Company received net proceeds of $18,849,582 (C$23,895,616) net of underwriters’ commissions of $1,440,364 (C$1,825,950) and other costs of $574,611 (C$728,434). $393,370 (C$499,553) of the share issuance costs were incurred in 2021 and have been accounted for as deferred share issue costs.

The Common Shares commenced trading on the TSX Venture Exchange (the “TSXV”) on February 2, 2022 under the symbol “AGMR”.

On March 9, 2022, the TSXV has accepted for listing 26,450,000 Warrants issued in connection with the Offering, for trading on the TSXV. The Warrants commenced trading on the TSXV at the open of markets on March 11, 2022 under the symbol “AGMR.WT”.

34 -

AI assistant

Silver Mountain Resources Inc. — Audit Report / Information 2021

48123_rns_2022-04-29_f68e86a0-8e65-429b-abb1-f9fe65f6650a.pdf

SILVER MOUNTAIN RESOURCES INC.

CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditor’s Report

Opinion

Other Matter

Basis for Opinion

Other Information

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

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

Silver Mountain Resources Inc. Consolidated Statements of Financial Position (Expressed in United States Dollars)

APPROVED ON BEHALF ON THE BOARD:

Silver Mountain Resources Inc. Consolidated Statements of Net and Comprehensive Loss (Expressed in United States Dollars)

Silver Mountain Resources Inc. Consolidated Statements of Cash Flows (Expressed in United States Dollars)

Silver Mountain Resources Inc. Consolidated Statements of Changes in Shareholders' Equity (Expressed in United States Dollars)

1. Nature and continuance of operations

2. Significant accounting policies and basis of presentation

(a) Statement of compliance

(b) Basis of preparation

(c) Basis of consolidation

2. Significant accounting policies and basis of presentation (continued)

Functional currency and presentation currency

Transactions and balances in foreign currency

(f) Classification and measurement of financial instruments

2. Significant accounting policies and basis of presentation (continued)

Financial assets

Financial liabilities

2. Significant accounting policies and basis of presentation (continued)

(g) Write-off of financial assets and liabilities

Financial assets

Financial liabilities

(h) Impairment of financial assets

2. Significant accounting policies and basis of presentation (continued)

(i) Property, plant, and equipment, and accumulated depreciation

(j) Exploration and evaluation costs

(k) Impairment of non-financial assets

2. Significant accounting policies and basis of presentation (continued)

(l) Leases

(m) Provisions

(n) Decommissioning or restoration provision

2. Significant accounting policies and basis of presentation (continued)

(n) Decommissioning or restoration provision

(o) Classification of items into current and non-current

(p) Share capital

2. Significant accounting policies and basis of presentation (continued)

(p) Share capital (continued)

Unit offerings

(q) Share-based compensation transactions

(r) Recognition of interest income, foreign exchange differences, and other income

(s) Recognition of interest expenses, foreign exchange differences, and other expenses

2. Significant accounting policies and basis of presentation (continued)

Current

Deferred

Uncertain positions

(u) Contingencies

2. Significant accounting policies and basis of presentation (continued)

(v) Loss per share

Amendments to IAS 1: Classification of liabilities as current or non-current

Property, Plant, and Equipment: Product before Intended Use - Amendments to IAS 16

2. Significant accounting policies and basis of presentation (continued)

3. Critical accounting estimates and judgments

3. Critical accounting estimates and judgments (continued)

Critical accounting estimates

Critical judgments in the application of accounting policies

4. Financial Instruments

4. Financial instruments (continued)

(b) Risk management policies

(c) Liquidity risk

(d) Credit risk

4. Financial instruments (continued)

(e) Interest risk

(f) Exchange risk

4. Financial instruments (continued)

5. Capital management

6. Reverse takeover

Silver Mountain Resources Inc. Notes to the Consolidated Financial Statements Years Ended December 31, 2021 and 2020 (Expressed in United States Dollars)

7. Property, plant, and equipment

8. Exploration and evaluation costs

Silver Mountain Resources Inc. Audit Report / Information 2021