Silver North Resources Ltd. — Interim / Quarterly Report 2021

Aug 19, 2021

ALIANZA MINERALS LTD.

Condensed Consolidated Interim Financial Statements

For the nine months ended June 30, 2021 and 2020

325 Howe Street, Suite 410, Vancouver B.C. V6C 1Z7, Canada, TSXV: ANZ; Tel: 604-687-3520

CONTENTS

	Page
Notice of No Auditor Review of Interim Financial Statements	3
Condensed Consolidated Interim Financial Statements:
Statements of Financial Position	4
Statements of Comprehensive Loss	5
Statements of Changes in Shareholders' Equity	6
Statements of Cash Flows	7
Notes to the Financial Statements	8 - 28

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

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

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

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

ALIANZA MINERALS LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Presented in Canadian Dollars)

		June 30,	September 30,
	Note	2021	2020
		(Unaudited)	(Audited)
Assets
Current assets
Cash		$1,731,744	$278,993
Restricted cash	4	-	83,070
Deferred financing costs		-	13,695
Due from alliance partner	4	40,668	-
Receivables		84,361	13,759
Prepaid expenses		78,753	90,420
		1,935,526	479,937
Non-current assets
Exploration and evaluation assets	4	6,812,547	4,325,562
Deposits	5	27,315	-
VAT receivables		37,240	42,079
		6,877,102	4,367,641
Total assets		$8,812,628	$4,847,578
Current liabilities
Accounts payable and accrued liabilities		$385,474	$191,727
Due to related parties	8	220,506	271,337
Funds held for optionee	4	-	83,070
Flow-through share premium liability	6	91,170	-
		697,150	546,134
Shareholders' equity
Share capital	6	24,277,287	20,068,707
Reserves	6,7	3,229,886	2,875,483
Accumulated other comprehensive loss		(63,514)	(24,239)
Deficit		(19,328,181)	(18,618,507)
		8,115,478	4,301,444
Total shareholders' equity and liabilities		$8,812,628	$4,847,578

Nature of operations and going concern (Note 1)

These consolidated financial statements are authorized for issue by the Board of Directors on August 19, 2021.

On behalf of the Board of Directors:

Director "Jason Weber" Director "Mark T. Brown"

ALIANZA MINERALS LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (Unaudited, presented in Canadian Dollars)

		Three months ended June 30		Nine months ended June 30
	Note	2021	2020	2021		2020
Expenses
Accounting and legal fees	8	$31,016	$64,002	$141,454	$	181,788
Depreciation		-	47	-		140
Investor relations and shareholder information	8	86,923	57,235	395,773		470,128
Office facilities and administrative services	8	4,500	4,500	13,500		13,500
Office expenses		3,485	1,928	12,104		16,258
Property investigation expenses		1,863	1,000	37,906		7,689
Share-based payments	8	-	-	202,304		-
Transfer agent, listing and filing fees		6,657	8,720	40,243		37,917
Travel		-	212	180		18,786
Wages, benefits and consulting fees	8	45,792	29,753	146,818		122,070
		(180,236)	(167,397)	(990,282)		(868,276)
Interest income and other income		494	250	1,052		1,527
Flow-through share premium recovery		131,470	-	291,556		21,459
Foreign exchange (loss)		(3,379)	(11,107)	(12,000)		(10,037)
Management fee from Hochschild		-	79,179	-		79,179
Net loss for the period		$(51,651) $	(99,075) $	(709,674) $		(776,148)
Other comprehensive income (loss)
Exchange difference arising on the translation offoreign subsidiary		(9,120)	3,487	(39,275)		(8,187)
Total comprehensive loss for the period		$(60,771) $	(95,588) $	(748,949) $		(784,335)
Basic and diluted loss per common share		$(0.00) $	(0.00) $	(0.01) $		(0.01)
Weighted average number of common sharesoutstanding - basic and diluted		140,052,029	104,682,354	136,074,172		92,633,736

ALIANZA MINERALS LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited, presented in Canadian Dollars)

		ShCaare	italp		Reserves		AclatedcumuOtherCorehsivmpeneInce (Loss)om
				Equityttledseloyempee		Finders'	Foreignhaexcnge
	Note	Numbofsherares	Amntou	benefits	Wantsrra	ntswarra	reserve	Deficit	Totaluityeq
BalanSeber 30,2019(Audited)temcep,		8243694,7,	$18481067,,	$950,6131,	$648481,	$310,607	$(26619)$,	(562,365)17,	$3,801901,
Prilacvattse pemen	6(b)(i)	22000,000,	1,100000,	-	-	-	-	-	1,100000,
Acisitionoflorationdluatiotsquexpn aevan asse	6(b)(ii)	125000,	11250,	-	-	-	-	-	11250,
Shissstsareueco		-	(111,550)	-	-	32665,	-	-	(78885),
Exiseoffinder'sntsercwarra		805,875	67290,	-	-	(26996),	-	-	40294,
Sh-basedtsarepaymen		-	-	-	-	-	-	-	-
Net loss		-	-	-	-	-	()8,187	(776,148	)(5)784,33
BalanJu302020(Undited)ceneau,,		105365,572,	19554,096,	1,950,613	641,848	316,276	(34806),	(18338,513),	4,089,514
Acisitionoflorationdluatiotsquexpn aevan asse	6(b)(iii)(iv)	1,200,000	133500,	-	-	-	-	-	133500,
Exiseoftioercopns	6(b)(v)	250,000	45125,	(20125,	)-	-	-	-	25000,
Exiseoffinder'sntsercwarra	6(b)(v)	397,150	32986,	-	-	()13129,	-	-	19857,
Exiseofntsercwarra	6(b)(v)	3,030,000	303,000	-	-	-	-	-	303,000
Net loss		-	-	-	-	-	10567,	(279,994)	(269,427)
BalanSeber 30,2020(Audited)temcep,		110242,722,	$20068,707,	$1,930,488	$641,848	$303,147	$(24239)$,	(18618,507),	$4,301,444
Prilacvattse pemen	6(b)(vi)(vii)	32061,833,	4,065,589	-	-	-	-	-	4,065,589
Acisitionoflorationdluatiotsquexpn aevan asse	6(b)(viii)	150000,	16500,	-	-	-	-	-	16500,
Shissstsareueco		-	(502,142)	-	-	153927,	-	-	(348,215)
Exiseoffinder'sntsercwarra	6(b)(ix)	56100,	4,633	-	-	(1,828)	-	-	2,805
ofExisentsercwarra	6(b)(ix)	6,240,000	624,000	-	-	-	-	-	624,000
Sh-basedtsarepaymen		-	-	202,304	-	-	-	-	202,304
Net loss		-	-	-	-	-	(39275),	(709,674)	(748,949)
BalanJu302021(Undited)ceneau,,		148750,655,	$24277,287,	$2,132,792	$641,848	$455,246	$$(63514),	(19328,181),	$8,115478,

ALIANZA MINERALS LTD. CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30 (Unaudited, presented in Canadian Dollars)

	Nine months ended June 30
	2021		2020
Cash flows from (used in) operating activities
Net loss for the period	$(709,674) $		(776,148)
Items not affecting cash:
Depreciation	-		140
Flow-through share premium recovery	(291,556)		(21,459)
Share-based payments	202,304		-
Changes in non-cash working capital items:
Receivables	(70,929)		45,710
Due from alliance partner	(41,525)		-
VAT Receivables	(837)		(1,008)
Prepaid expenses	7,531		255,352
Accounts payable and accrued liabilities	(108,785)		(2,822)
Due to related parties	(43,831)		(34,006)
Funds held for optionee	(83,070)		(8,571)
Net cash (used in) operating activities	(1,140,372)		(542,812)
Cash flows from (used in) investing activities
Deposits	(27,576)		-
Exploration and evaluation assets	(2,193,585)		(306,772)
Net cash (used in) investing activities	(2,221,161)		(306,772)
Cash flows from (used in) financing activities
Proceeds from issuance of common shares	4,448,315		1,100,000
Proceeds from exercise of warrants	624,000		-
Proceeds from exercise of finder's warrants	2,805		40,294
Share issue costs	(343,215)		(92,386)
Net cash provided by financing activities	4,731,905		1,047,908
Effect of exchange rate changes on cash	(691)		(4,517)
Change in cash for the period	1,369,681		193,807
Cash, beginning of the period	362,063		352,530
Cash, end of the period	$1,731,744	$	546,337
Cash comprised of:
Cash	$1,731,744	$	525,362
Restricted Cash	-		20,975
	$1,731,744	$	546,337

Supplemental disclosure with respect to cash flows (Note 9)

Cash consists of $1,349,623 (September 30, 2020 - $Nil) held for flow-through expenditures, while $368,519 (September 30, 2020 - $Nil) included in accounts payable and accrued liabilities is related to flow-through expenditures.

1. NATURE OF OPERATIONS AND GOING CONCERN

Alianza Minerals Ltd. (the "Company" or "Alianza") was incorporated in Alberta on October 21, 2005 under the Business Corporations Act of Alberta and its registered office is Suite 410, 325 Howe Street, Vancouver, BC, Canada, V6C 1Z7. On April 25, 2008 the Company filed for a certificate of continuance and is continuing as a BC Company under the Business Corporations Act (British Columbia).

The Company is an exploration stage company and is engaged principally in the acquisition and exploration of mineral properties. The recovery of the Company's investment in its exploration and evaluation assets is dependent upon the future discovery, development and sale of minerals, upon the ability to raise sufficient capital to finance these activities, and/or upon the sale of these properties.

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The ability of the Company to continue as a going concern is dependent on obtaining additional financing through the issuance of common shares or obtaining joint venture or property sale agreements for one or more properties.

There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the condensed consolidated interim statement of financial position. The condensed consolidated interim financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

Adverse financial market conditions and volatility increase the uncertainty of the Company's ability to continue as a going concern given the need to both manage expenditures and to raise additional funds. The Company is experiencing, and has experienced, negative operating cash flows. The Company will continue to search for new or alternate sources of financing but anticipates that the current market conditions may impact the ability to source such funds. Accordingly, these material uncertainties may cast significant doubt upon the Company's ability to continue as a going concern.

As at June 30, 2021, the Company had working capital of $1,238,376 (September 30, 2020: working capital deficiency of $66,197) and shareholders' equity of $8,115,478 (September 30, 2020: $4,301,444).

2. BASIS OF PREPARATION

Statement of Compliance

These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" ("IAS 34") using accounting policies consistent with IFRS issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

2. BASIS OF PREPARATION - continued

Basis of preparation

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for marketable securities classified as available-for-sale, which are stated at fair value through other comprehensive income (loss). In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

The preparation of these condensed consolidated interim financial statements in conformity with IAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements.

These condensed consolidated interim financial statements, including comparatives, have been prepared on the basis of IFRS standards that are published at the time of preparation.

New accounting standards and interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for the June 30, 2021 reporting period. The Company has not early adopted the following new and revised standards, amendments and interpretations that have been issued but are not yet effective:

• Presentation of financial statements

An amendment to IAS 1 was issued in January 2020 and applies to annual reporting periods beginning on or after January 1, 2023. The amendment clarifies the criterion for classifying a liability as non-current relating to the right to defer settlement of a liability for at least 12 months after the reporting period.

The Company anticipates that the application of the above new and revised standards, amendments and interpretations will have no material impact on its results and financial position.

3. SIGNIFICANT ACCOUNTING POLICIES

These unaudited condensed consolidated interim financial statements have been prepared in accordance with IFRS as issued by the IASB on a basis consistent with those followed in the Company's most recent annual financial statements for the year ended September 30, 2020.

These unaudited condensed consolidated interim financial statements do not include all note disclosures required by IFRS for annual financial statements, and therefore should be read in conjunction with the annual financial statements for the year ended September 30, 2020. In the opinion of management, all adjustments considered necessary for fair presentation of the Company's financial position, results of operations and cash flows have been included. Operating results for the nine-month period ended June 30, 2021 are not necessarily indicative of the results that may be expected for the current fiscal year ending September 30, 2021.

4. EXPLORATION AND EVALUATION ASSETS

The Company follows the prospect generator model whereby it acquires projects on attractive terms, adds value through preliminary exploration efforts and then vends or options the project for further advancement.

Although the Company has taken steps to verify title to its unproven mineral right interests, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

The Company has properties in Nevada, USA (the "USA Properties"), in British Columbia and Yukon Territory of Canada (the "Canada Properties") and in Peru (the "Peru Properties"). Following are summary tables of exploration and evaluation assets and brief summary descriptions of each of the exploration and evaluation assets:

Exploration and Evaluation Assets for the period ended June 30, 2021

			USA				Cadana			Peru
	Hothiefrse	TwinCanyon	Bellview	BP	Others	Haldane	KRL	Tim	Others	Yanac	Total
BalanSeber 30,2020attemcep	$178638,	$351,336	$97786,	$260,569	$23546,	$$1,627,078	$257,487	(9,949)	$1,114250,	$424,821	$4,325,562
Additions duritheriodnge p
Acisitionstsquco:
Claimkinstag	-		-	-	20555,	-	-		-	-	20555,
Prouisitiortypeacqn	-	18591,	-	-	-	41500,	-	-	-	-	60091,
	-	18591,	-	-	20555,	41500,	-	-	-	-	80646,
Exlorationditurpn expees:
Airft chartecrar	-	-	-	-	-	33058,	-	-	-	-	33058,
Cal and mls, trmpaveea	2,050	5,587	-	-	340	394,299	-	-	-	-	402,276
Drilling	-	-	-	-	-	1,193454,	-	-	-	-	1,193454,
Field eipmlt rentaquen	-	623	-	-	-	66809,	-	-	-	-	67432,
Field sliesd muppanaps	-	830	-	-	418	25756,	-	-	-	-	27004,
Gehemicaloc	37303,	13582,	-	-	-	11466,	-	-	-	-	62351,
Geoloical coltingnsug	12606,	100479,	708	-	15637,	560,474	6,924	-	1,347	19248,	717,423
Gehysicsop	3,353	-	-	-	-	-	-	-	-	-	3,353
Legal andntinaccoug	-	219	-	-	2,519	43	-		-	-	2,781
Licd pitsenceanerm	(7)1988,	578	-	-	20493,	8,640	2,500	-	3,570	5,811	21705,
Reclatioman	22756,	-	-	-	-	-	-	-	-	-	22756,
Rertindraftinlingdpog,g,sampan
alysisan	-	11408,	-	-	-	6,125	-	-	-	-	17533,
	58181,	133306,	708	-	39407,	2,300,124	9,424	-	4,917	25059,	2,571,126
Less:
Red elorationditurcoverexpn expees	(89579),	-	-	-	(40668),	-	-	-	-	-	(130247),
Nedditiot ans	(31398),	151,897	708	-	19294,	2,341,624	9,424	-	4,917	25059,	2,521,525
Foreignslatiotran currencyn	3,146	(0)2489,	281	1,828	-	-	-	-	-	(5)1490,	(0)3454,
BalanJu302021atcene,	$150386,	$8,34347	$98775,	$262,397	$42840,	$3,968,702	$266,91$1	(9,949)	$ 1119167,,	$43974,5	$6,812,547

Exploration and Evaluation Assets for the year ended September 30, 2020

			USA			Cadana				Peru
	Hothiefrse	TwinCanyon	Bellview	BP	Others	Haldane	KRL	Tim	Others	Yanac	Total
BalanSeber 30,2019attemcep	$173156,	$-	$85548,	$$248,975	23404,	$$1,433,291	$139847,	1	$ 1198997,,	$425,012	$3,728,231
Additions durithnge year
Acisitionstsquco:
Prortyuisitiopeacqn	-	185012,	-	-	-	31250,	101,000	-	-	-	317,262
	-	185012,	-	-	-	31250,	101,000	-	-	-	317,262
Exlorationditurpn expees:
Airft chartecrar	-		-	-	-	30366	-	-	-	-	30366
Cal and mls, trmpaveea	45929	16353	-	-	-	,11274	690	-	-	-	,74246
Coityrelatiommunns	,-	,-	-	-	-	,1,420	-	-	-	-	,1,420
Drilling	540,092	-	-	-	-	7,020	-	-	-	-	547,112
Field eipmlt rentaquen	13094,	-	-	-	-	6,788	4	-	-	-	19886,
Field sliesd muppanaps	12761,	3,266	-	-	-	5,397	-	-	-	-	21424,
Gehemicaloc	114324,	11375,	1,870	1,478	-	2,100	-	-	-	-	131,147
Geoloical coltingnsug	245,193	106014,	71	1,701	-	80548,	13816,	50	2,591	-	449,984
Gehysicsop	45753,	-	-	-	-	-	-	-	-	-	45753,
Legal andntinaccoug	3,335	-	-	-	-	38	500		-	-	3,873
Licd pitsenceanerm	43400,	29316,	10368,	33424,	3,501	5,335	-	-	-	5,885	131,229
t feManagemenes	121,169	-	-	-	-	-	-	-	-	-	121,169
ftinRertindralingdpog,g,sampan
alysisan	-	-	-	-	-	12251,	1,630	-	-	-	13881,
Trenching	31267,	-	-	-	-	-	-	-	-	-	31267,
	1,216,317	166324,	12309,	36603,	3,501	162537,	16640,	50	2,591	5,885	1,622,757
Less:
Red elorationditurcoverexpn expees	(3)1,210,47	-	-	(9)2500,	(9)3,35	-	-	(0)1000,	-	-	(1)1,248,84
Write-doofiesertwnprop	-		-	-	-	-	-		(87338),	-	(87338),
Nedditio/ (btrtio)t anssuacns	5,844	351,336	12309,	11594,	142	193787,	117640,	(9,950)	(84747),	5,885	603,840
Foreignslatiotran currencyn	(362)	-	(71)	-	-	-	-	-	-	(6,076)	(6,509)
SeBalanattember 30,2020cep	$178638,	$351,336	$97786,	$260,569	$23546,	$$1,627,078	$257,487	(9,949)	$ 1114250,,	$424,821	$4,325,562

USA

On January 27, 2015, the Company signed a binding agreement to acquire eight gold properties in Nevada, USA from Sandstorm Gold Ltd. ("Sandstorm") by issuing 150,000 shares to Sandstorm and granting a net smelter returns royalty ranging from 0.5% to 1.0%. The Company also granted Sandstorm a right of first refusal on any future metal streaming agreements on these properties. In 2015 and 2016, the Company dropped four of the gold properties. The properties retained are:

• Horsethief
• Bellview
• East Walker
• Ashby

a) Horsethief (Nevada)

The Horsethief property is located in Lincoln County Nevada, northeast of Pioche. A 2% NSR is payable to a previous owner of the property from production on certain claims on the property while a 1% NSR is payable to Sandstorm on all the claims on the property.

In 2017, the Company acquired new ground by staking an additional 33 BLM Iode mining claims at the Horsethief property.

On March 1, 2019 ("Effective Date"), the Company entered into an option agreement with Hochschild Mining (US) Inc. ("Hochschild") whereby Hochschild could earn up to a 70% undivided interest in the Horsethief property.

Under the terms of the agreement, Hochschild could earn an initial 60% interest in the project by US$5,000,000 in exploration on the property over a 5.5-year period.

During the option period, Hochschild had forwarded a total of $1,601,766 (US$1,200,814) for the Horsethief property.

On November 20, 2020, Hochschild terminated the earn-in on the Horsethief project. Thus, the Company retains 100% interest in the Horsethief project.

b) Bellview (Nevada)

The Bellview property is located in White Pine County Nevada, near the Bald Mountain Gold Mine. A 2% NSR is payable to a previous owner of the property and a 1% NSR is payable to Sandstorm from production from all the claims on the property.

On February 7, 2019 ("Effective Date"), the Company entered into an option agreement with Hochschild whereby Hochschild could earn up to a 70% undivided interest in the Bellview property.

Under the terms of the agreement, Hochschild could earn an initial 60% interest in the project by US$3,500,000 in exploration on the property over a 5.5-year period.

During the option period, Hochschild had forwarded a total of $124,502 (US$94,014) for the Bellview property.

On November 25, 2019, Hochschild terminated the earn-in on the Bellview project. Thus, the Company retains 100% interest in the Bellview project.

USA – continued

c) BP (Nevada)

On June 10, 2013, the Company purchased from Almaden Minerals Ltd. ("Almaden") the BP property in Nevada, USA. A 2% NSR is payable to Almadex Minerals Limited ("Almadex") on future production on the property after Almaden transferred the NSR right to Almadex.

In 2017, the Company acquired new ground by staking an additional 48 BLM Iode mining claims at the BP property.

On March 1, 2019 ("Effective Date"), the Company entered into an option agreement with Hochschild whereby Hochschild could earn up to a 70% undivided interest in the BP property.

Under the terms of the agreement, Hochschild could earn an initial 60% interest in the project by US$2,500,000 in exploration on the property over a 4.5-year period.

During the option period, Hochschild had forwarded a total of $179,343 (US$138,267) for the BP property.

On November 25, 2019, Hochschild terminated the earn-in on the BP project. Thus, the Company retains 100% interest in the BP project.

	June 30, 2021	September 30, 2020
Restricted cash & Funds held for optioneeHorsethief - Hochschild	$-	$	83,070
	$-	$	83,070

d) Twin Canyon (Colorado)

On June 17, 2020, the Company acquired a lease of the Twin Canyon gold property in southwest Colorado under the following terms:

• Make cash payments of US$26,000 ($34,681) to Myron Goldstein and US$32,000 ($42,685) to Jon Thorson (paid) and issue 250,000 shares to Myron Goldstein and 250,000 shares to Jon Thorson (shares issued);
• 500,000 shares on the date that is five business days following the date that the Company, directly or indirectly, stakes any mineral claims adjacent to the property (shares issued);
• 500,000 shares on the date that is five business days following the date that the Company enters into a joint venture, option or similar agreement with a third party in respect of the property; and
• 500,000 shares on the date that is five business days following the date that the Company, directly or indirectly, commence a drill program in respect of the property.

The Company agreed to assume the terms of Myron Goldstein and Jon Thorson commitments under the lease, namely the annual lease payments of US$15,000 for ten years (paid up to 2021's annual lease payment), with the right to extend the lease for 2 additional terms of ten years each. The original property owner has a 1.5% NSR on the property, two-thirds (1%) of which is purchasable at any time for US$1,000,000. If annual NSR payments exceed US$20,000 in a given year, the Company will not have to make the annual US$15,000 lease payment for that year.

USA – continued

d) Twin Canyon (Colorado) – continued

As of June 30, 2021, the Company had spent $478,343 on advancing this property, including the acquisition costs.

e) Others – Klondike (Colorado)

The Company acquired the Klondike property by staking a 100% interest in this property in Colorado.

On June 7, 2021, the Company and Cloudbreak Discovery PLC ("Cloudbreak") entered into an Alliance Agreement. Under the terms of the Alliance Agreement, either company can introduce projects to the Strategic Alliance. Projects accepted into the alliance will be held 50/50 but funding of the initial acquisition and any preliminary work programs will be funded 40% by the introducing partner and 60% by the other party. The initial term of the Alliance Agreement is two years and may be extended for an additional two years.

The Company and Cloudbreak agreed to accept the Klondike property as part of the Strategic Alliance and thus, Cloudbreak will reimburse the Company $32,886 as of June 30, 2021.

f) Others – Sinbad (Colorado)

The Company acquired the Sinbad property by staking a 100% interest in this property in Colorado.

Even though the Sinbad property did not get accepted as part of the Strategic Alliance, Cloudbreak agreed to reimburse the Company $7,782 for the amounts spent on obtaining this property.

g) Others – Ashby (Nevada)

On August 2, 2017, the Company signed an exploration lease agreement to lease the Ashby gold property to Nevada Canyon Gold Corp. ("Nevada Canyon"). Under the terms of the agreement, Nevada Canyon made a US$1,000 payment on signing, will make annual payments of US$2,000 and will grant a 2% Net Smelter Royalty ("NSR") on future production from the Lazy 1-3 claims comprising the Ashby property. Nevada Canyon will also be responsible for all claim fees and certain reclamation work to be undertaken on the property. The initial term of the lease is 10 years and can be extended for an additional 20 years.

During the year ended September 30, 2020, Nevada Canyon reimbursed the Company $3,359 which includes US$543 for the 2020 annual property claim fee and US$2,000 for the 2020 annual payment.

h) Others – East Walker (Nevada)

The East Walker property is located in Lyon County, west of Hawthorne. A 2% NSR is payable to a previous owner of the property from production from some claims on the property.

As of June 30, 2021, the Company had spent $27,056 on advancing this property.

Canada

a) Haldane (Yukon)

On March 2, 2018, the Haldane property was purchased from Equity Exploration Consultants Ltd. ("Equity"), and is located in Yukon Territory, Canada. Equity has a 2% NSR royalty on the Haldane property.

The Company purchased the Haldane property from Equity for the following consideration:

• issue 2 million shares to Equity upon receipt of TSX-Venture approval (shares issued);
• make two staged cash payments of $50,000 each to Equity by June 30, 2018 (paid) and June 30, 2019 (paid);
• make a final $100,000 cash payment or issue the number of shares of equivalent value at the Company's election, on June 30, 2019 ($25,000 paid and shares of $75,000 issued); and
• make bonus share payments to Equity:
  • o issue 250,000 shares to Equity upon the public disclosure of a Measured Mineral Resource (as such term is defined in National Instrument 43-101- Standards of Disclosure for Mineral Projects) of 5 million oz silver-equivalent at 500g/t silver-equivalent; and
  • o 500,000 shares to be issued upon the decision to commence construction of a mine or processing plant.

On April 12, 2018, the Company purchased the Nur, Clarkston and Fara claims which are contiguous to and grouped with the Haldane property from the estate of Yukon prospector John Peter Ross (the "Estate") for the following consideration:

• issue 100,000 shares to the Estate upon receipt of TSX-Venture approval (shares issued);
• make cash payment of $10,000 to the Estate by June 30, 2018 (paid);
• make cash payment of $20,000 (paid) and issue 125,000 shares (issued) to the Estate by April 12, 2019;
• make cash payment of $20,000 (paid) and issue 125,000 shares (issued) to the Estate by April 12, 2020;
• make cash payment of $25,000 (paid) and issue 150,000 shares (issued) to the Estate by April 12, 2021; and
• make bonus share payments to the Estate as follows:
  • o issue 250,000 shares to the Estate upon the public disclosure of a Measured Mineral Resource (as such term is defined in National Instrument 43-101- Standards of Disclosure for Mineral Projects) of 5 million oz silver-equivalent at 500g/t silver-equivalent; and
  • o 500,000 shares to be issued upon the decision to commence construction of a mine or processing plant.

As of June 30, 2021, the Company had spent $3,968,702 on advancing this property.

Canada – continued

b) KRL (British Columbia)

On September 1, 2018, the Company optioned the KRL property from prospector Bernie Kreft ("Kreft"), and is located in British Columbia's prolific Golden Triangle, Canada. Kreft has a 1% NSR royalty on the KRL property.

The Company optioned the KRL property from Kreft for the following consideration:

• make cash payments of $10,000 (paid) and issue 100,000 shares to Kreft upon receipt of TSX-Venture approval (issued);
• make cash payments of $15,000 to Kreft by October 15, 2018 (paid);
• make cash payments of $5,000 by October 31, 2019 (paid) and a further $20,000 by January 1, 2020 (paid) and issue 100,000 shares (issued) to Kreft by September 30, 2019;
• make cash payments of $50,000 (paid) and issue 200,000 shares (issued) to Kreft by September 30, 2020;
• make cash payments of $50,000 and issue 200,000 shares to Kreft by September 30,2021;
• make cash payments of $100,000 and issue 200,000 shares to Kreft by September 30,2022; and
• make bonus share payments to Kreft as follows:
  • o issue additional shares upon the disclosure of an NI43-101 inferred resource estimate equal to 1 share per ounce of inferred resource, to a maximum of 350,000 shares; and
  • o 500,000 shares to be issued on the commencement of commercial production.

As of June 30, 2021, the Company had spent $266,911 on advancing this property.

c) Tim property (Yukon)

On January 24, 2020, the Company entered into an option agreement with a wholly owned subsidiary of Coeur Mining Inc. ("Coeur") to explore the Tim property in southern Yukon.

Coeur can earn an initial 51% interest in the Tim property by (i) financing $3.55-million in exploration over five years and (ii) making scheduled cash payments totalling $275,000 over five years as follows.

Date/Period	Expenditures	Option Payment
On the Effective Date	None	$10,000 (received)
On or before 1st anniversary of the Class 1 Notification Date	$50,000	$15,000
On or before 2nd anniversary of the Class 1 Notification Date	$500,000	$25,000
On or before 3rd anniversary of the Class 1 Notification Date	$500,000	$50,000
On or before 4th anniversary of the Class 1 Notification Date	$1,000,000	$75,000
On or before 5th anniversary of the Class 1 Notification Date	$1,500,000	$100,000
(*) Class 1 Notification Date is December 16, 2020.

After earning an initial 51% interest in the property, to increase its interest to 80%, Coeur must finance a feasibility study and notify the Company of its intention to develop a commercial mine on the property on or before the eighth anniversary from the date of notification of the Class 1 exploration permit, as well as pay an additional $300,000 to the Company as follows:

c) Tim property (Yukon) – continued

Date/Period	Option Payment
On or before 6th anniversary of the Class 1 Notification Date	$100,000
On or before 7th anniversary of the Class 1 Notification Date	$100,000
On or before 8th anniversary of the Class 1 Notification Date	$100,000

d) Others

In 2010, the Company acquired the White River property through staking. The White River property is located in the Yukon Territory, northwest of Whitehorse.

On July 23, 2007, the Company purchased from Almaden certain properties in the Yukon and Almaden assigned the 2% NSR royalty on future production from these mineral claims to Almadex:

• Goz Creek located 180 kilometers north east of Mayo, Yukon.
• MOR located 35 kilometers east of Teslin, Yukon and is 1.5 kilometers north of the paved Alaska Highway.

As of June 30, 2021, the Company had spent $1,119,167 on advancing these properties.

On June 10, 2008, the Company signed another agreement with Almaden to acquire a 100% interest in the Prospector Mountain gold-silver-copper property, located in central Yukon. Almaden assigned the 2% NSR over any minerals produced from the property to Almadex. Half of the NSR may be purchased by the Company at any time after the production commences for fair value as determined by an independent valuator. The Company will also issue to Almadex 50,000 fully paid common shares upon receipt of a positive bankable feasibility study for the property. During the year ended September 30, 2020, the Company dropped the Prospector Mountain property and wrote off $87,338.

Peru

On April 29, 2015, the Company acquired the Yanac property which is located in Chincha region of the Department of Ica, south-central Peru.

Yanac

On February 27, 2013, Cliffs Natural Resources Exploration Inc., a wholly owned subsidiary of Cliffs Natural Resources Inc. ("Cliffs") and the Company's wholly-owned subsidiary entered into a Limited Liability Company Membership Agreement ("agreement") in respect of the Yanac property. In December 2015, Cliffs' interest in Yanac was acquired by 50 King Capital Exploration Inc. ("50 King"), a private company, which took over all previous obligations of Cliffs.

On July 6, 2016, 50 King terminated the agreement, retaining only a 0.5% net smelter royalty ("NSR") on the Yanac property based on prior expenditures and transferred the ownership of the property back to the Company.

As of June 30, 2021, the Company had spent $434,975 on advancing this property.

Mexico

The Company holds a 1% Net Smelter Royalty on certain Mexican properties which is capped at $1,000,000.

5. DEPOSITS

As of June 30, 2021, the Company has a US$10,000 ($12,394) performance bond with the State of Colorado Board of Land Commissioners for the Klondike property (September 30, 2020 - $Nil) and a $14,921 reclamation bond with the Ministry of Energy, Mines and Low Carbon Innovation for the KRL property (September 30, 2020 - $Nil).

6. SHARE CAPITAL

a) Authorized:

As at June 30, 2021, the authorized share capital is comprised of an unlimited number of common shares without par value and an unlimited number of preferred shares issuable in series. All issued shares are fully paid.

b) Issued:

During the year ended September 30, 2020, the Company:

• i) Completed a non-brokered private placement on February 25, 2020 by issuing 22,000,000 units ("Unit") at a price of $0.05 per Unit for gross proceeds of $1,100,000. Each Unit consists of one common share and one common share purchase warrant. Each warrant entitles the holder to purchase one additional common share for a 36-month period at a price of $0.10. In connection with the financing, the Company paid $50,100 as a cash finder's fee and issued 1,002,000 finder's warrants, each of which is exercisable into one common share at a price of $0.05 for a period of 12 months. The value of the finder's warrants was determined to be $32,665 and was calculated using the Black-Scholes option pricing model. Under the residual value approach, no value was assigned to the warrant component of the Units. The Company incurred additional share issue costs of $28,785 in connection with this financing.
• ii) Issued 125,000 common shares to the Estate at a price of $0.09 per share for a total consideration of $11,250 to pay for the Haldane property (see Note 4).
• iii) Issued 500,000 common shares at a price of $0.085 per share for a total consideration of $42,500 and issued 500,000 common shares at a price of $0.13 per share for a total consideration of $65,000 to pay for the Twin Canyon property (see Note 4).
• iv) Issued 200,000 common shares to Kreft at a price of $0.13 per share for a total consideration of $26,000 to pay for the KRL property (see Note 4).
• v) Issued common shares pursuant to the exercise of 250,000 stock options, 1,203,025 finder's warrants and 3,030,000 warrants for cash proceeds of $388,151.

6. SHARE CAPITAL – continued

During the nine months ended June 30, 2021, the Company:

• vi) Completed a non-brokered private placement on October 9, 2020 by issuing 7,670,370 non-flowthrough units ("Unit") at a price of $0.135 per Unit for gross proceeds of $1,035,500 and 13,881,130 flow-through shares ("FT Share") at a price of $0.155 per FT Share for gross proceeds of $2,151,575. Each Unit consists of one common share and one-half common share purchase warrant. Each warrant entitles the holder to purchase one additional common share for a 24-month period at a price of $0.20. In connection with the financing, the Company paid $199,868 as a cash finder's fee and issued 1,339,036 finder's warrants, each of which is exercisable into one common share at a price of $0.135 for a period of 24 months. The value of the finder's warrants was determined to be $109,533 and was calculated using the Black-Scholes option pricing model. Under the residual value approach, no value was assigned to the warrant component of the Units. The Company recorded a flow-through premium liability of $277,623 and incurred additional share issue costs of $41,371 in connection with this financing.
• vii) Completed a non-brokered private placement on June 14, 2021 by issuing 10,510,333 flowthrough shares ("FT Share") at a price of $0.12 per FT Share for gross proceeds of $1,261,240. In connection with the financing, the Company paid $79,870 as a cash finder's fee and issued 665,583 finder's warrants, each of which is exercisable into one common share at a price of $0.12 for a period of 24 months. The value of the finder's warrants was determined to be $44,394 and was calculated using the Black-Scholes option pricing model. The Company recorded a flowthrough premium liability of $105,103 and incurred additional share issue costs of $27,106 in connection with this financing.
• viii) Issued 150,000 common shares to the Estate at a price of $0.11 per share for a total consideration of $16,500 to pay for the Haldane property (see Note 4).
• ix) Issued common shares pursuant to the exercise of 56,100 finder's warrants and 6,240,000 warrants for cash proceeds of $626,805.

7. STOCK OPTIONS AND WARRANTS

a) Stock option compensation plan

The Company grants stock options to directors, officers, employees and consultants pursuant to the Company's Stock Option Plan (the "Plan"). The number of options that may be issued pursuant to the Plan are limited to 10% of the Company's issued and outstanding common shares and to other restrictions with respect to any single participant (not greater than 5% of the issued common shares) or any one consultant (not greater than 2% of the issued common shares).

Options granted to consultants performing investor relations activities will contain vesting provisions such that vesting occurs over at least 12 months with no more than one quarter of the options vesting in any 3-month period.

Vesting provisions may also be applied to other option grants, at the discretion of the directors. Options issued pursuant to the Plan will have an exercise price as determined by the directors, and permitted by the TSX-V, at the time of the grant. Options have a maximum expiry date of 5 years from the grant date.

7. STOCK OPTIONS AND WARRANTS - continued

a) Stock option compensation plan - continued

Stock option transactions and the number of stock options for the nine months ended June 30, 2021 are summarized as follows:

Expiry date	Exercise	September 30,			Expired /	June 30,
	GrantedExercisedprice2020		cancelled	2021
April 29, 2021	$0.25	100,000	-	-	(100,000)	-
September 30, 2021	$0.15	1,245,000	-	-	-	1,245,000
March 14, 2023	$0.10	840,000	-	-	-	840,000
July 30, 2024	$0.10	1,725,000	-	-	-	1,725,000
October 15, 2025	$0.14	-	2,005,000	-	-	2,005,000
Options outstanding		3,910,000	2,005,000	-	(100,000)	5,815,000
Options exercisable		3,910,000	2,005,000	-	(100,000)	5,815,000
Weighted average
exercise price		$0.12	$0.14	$Nil	$0.25	$0.12

As at June 30, 2021, the weighted average contractual remaining life of options is 2.70 years (September 30, 2020 – 2.55 years). The weighted average fair value of stock options granted during the nine months ended June 30, 2021 was $0.10 (2020 - $Nil).

Stock option transactions and the number of stock options for the year ended September 30, 2020 are summarized as follows:

Expiry date	Exerciseprice	September 30,2019	Granted	Exercised	Expired /cancelled	September 30,2020
April 29, 2020	$0.25	1,264,500	-	-	(1,264,500)	-
April 29, 2021	$0.25	100,000	-	-	-	100,000
September 30, 2021	$0.15	1,270,000	-	-	(25,000)	1,245,000
March 14, 2023	$0.10	850,000	-	-	(10,000)	840,000
July 30, 2024	$0.10	2,015,000	-	(250,000)	(40,000)	1,725,000
Options outstanding		5,499,500	-	(250,000)	(1,339,500)	3,910,000
Options exercisable		5,499,500	-	(250,000)	(1,339,500)	3,910,000
Weighted averageexercise price		$0.15	$Nil	$0.10	$0.24	$0.12

The weighted average assumptions used to estimate the fair value of options for the nine months ended June 30, 2021 and 2020 were as follows:

	June 30, 2021	June 30, 2020
Risk-free interest rate	1.29%	n/a
Expected life	5 years	n/a
Expected volatility	101.56%	n/a
Expected dividend yield	nil	n/a

7. STOCK OPTIONS AND WARRANTS – continued

b) Warrants

The continuity of warrants for the nine months ended June 30, 2021 is as follows:

	Exercise	September 30,				June 30,
Expiry date	price	2020	Issued	Exercised	Expired	2021
December 24, 2020	$0.10	4,400,000	-	(3,300,000)	(1,100,000)	-
July 9, 2022	$0.10	12,600,000	-	(1,250,000)	-	11,350,000
February 25, 2023	$0.10	20,790,000	-	(1,690,000)	-	19,100,000
October 9, 2022	$0.20	-	3,835,186	-	-	3,835,186
Outstanding		37,790,000	3,835,186	(6,240,000)	(1,100,000)	34,285,186
Weighted average
exercise price		$0.10	$0.20	$0.10	$0.10	$0.11

As at June 30, 2021, the weighted average contractual remaining life of warrants is 1.41 years (September 30, 2020 – 1.94 years).

The continuity of warrants for the year ended September 30, 2020 is as follows:

	Exercise	September 30,				September 30,
Expiry date	price	2019	Issued	Exercised	Expired	2020
March 6, 2020	$0.20	2,500,000	-	-	(2,500,000)	-
March 8, 2020	$0.15	7,221,875	-	-	(7,221,875)	-
April 7, 2020	$0.15	3,255,000	-	-	(3,255,000)	-
April 25, 2020	$0.15	5,000,000	-	-	(5,000,000)	-
August 16, 2020	$0.20	892,857	-	-	(892,857)	-
December 24, 2020	$0.10	5,000,000	-	(600,000)	-	4,400,000
July 9, 2022	$0.10	13,820,000	-	(1,220,000)	-	12,600,000
February 25, 2023	$0.10	-	22,000,000	(1,210,000)	-	20,790,000
Outstanding		37,689,732	22,000,000		(3,030,000) (18,869,732)	37,790,000
Weighted average
exercise price		$0.13	$0.10	$0.10	$0.16	$0.10

(i) Subsequently, a total of 6,100,00 warrants were exercised.

(ii) Subsequently, 1,100,000 warrants expired unexercised.

b) Finder's warrants

The continuity of finder's warrants for the nine months ended June 30, 2021 is as follows:

	Exercise	September 30,				June 30,
Expiry date	price	2020	Issued	Exercised	Expired	2021
February 25, 2021	$0.05	806,100	-	(56,100)	(750,000)	-
October 9, 2022	$0.135	-	1,339,036	-	-	1,339,036
June 14, 2023	$0.12	-	665,583	-	-	665,583
Outstanding		806,100	2,004,619	(56,100)	(750,000)	2,004,619
Weighted average
exercise price		$0.05	$0.130	$0.05	$0.15	$0.13

As at June 30, 2021, the weighted average contractual remaining life of finder's warrants is 1.50 years (September 30, 2020 – 0.41 years).

7. STOCK OPTIONS AND WARRANTS – continued

c) Finder's warrants - continued

The continuity of finder's warrants for the year ended September 30, 2020 is as follows:

	Exercise	September 30,				September 30,
Expiry date	price	2019	Issued	Exercised	Expired	2020
December 24, 2019	$0.05	887,250	-	-	(887,250)	-
April 25, 2020	$0.10	240,000	-	-	(240,000)	-
July 9, 2020	$0.05	1,007,125	-	(1,007,125)	-	-
August 16, 2020	$0.14	26,100	-	-	(26,100)	-
February 25, 2021	$0.05	-	1,002,000	(195,900)	-	806,100
Outstanding		2,160,475	1,002,000	(1,203,025)	(1,153,350)	806,100
Weighted average
exercise price		$0.06	$0.05	$0.05	$0.06	$0.05

The weighted average assumptions used to estimate the fair value of finder's warrants for the nine months ended June 30, 2021 and 2020 were as follows:

	June 30, 2021	June 30, 2020
Risk-free interest rate	1.09%	1.58%
Expected life	2 years	1 year
Expected volatility	120.96%	110.77%
Expected dividend yield	nil	nil

8. RELATED PARTY TRANSACTIONS

The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows:

	Short-term	Post
	employee		employment		Other long		Termination		Share-based
	benefits		benefits		term benefits		benefits		payments		Total
Jason Weber
Chief Executive Officer,
Director	$121,500	$	Nil $		Nil	$	Nil	$	30,270	$	151,770
Rob Duncan
VP of Exploration	$112,500	$	Nil $		Nil	$	Nil	$	30,270	$	142,770
Winnie Wong
Chief Financial Officer	$Nil $		Nil $		Nil	$	Nil	$	20,180	$	20,180
Marc G. Blythe
Director	$Nil $		Nil $		Nil	$	Nil	$	20,180	$	20,180
Mark T. Brown
Director	$Nil $		Nil $		Nil	$	Nil	$	30,270	$	30,270
Craig Lindsay
Director	$Nil $		Nil $		Nil	$	Nil	$	20,180	$	20,180
John Wilson
Director	$Nil $		Nil $		Nil	$	Nil	$	20,180	$	20,180

8. RELATED PARTY TRANSACTIONS – continued

	Short-term	Post
	employee	employment	Other long	Termination	Share-based
	benefits	benefits	term benefits	benefits	payments		Total
Jason Weber
Chief Executive Officer,
Director	$108,000	$Nil $	Nil	$Nil	$	Nil	$108,000

For the nine months ended June 30, 2020

Related party transactions and balances

		Nine months ended					Balance due
	Services		June 30,2021		June 30,2020		As atJune 30,2021		As atSeptember 30,2020
Amounts due to:
Jason Weber	Consulting fee andshare-based payment	$	151,770	$	108,000	$	Nil	$	Nil
Rob Duncan	Consulting fee andshare-based payment	$	142,770	$	Nil	$	Nil	$	Nil
Pacific OpportunityCapital Ltd. (a)	Accounting, financing,and shareholdercommunicationservices	$	146,745	$	173,030	$	220,506	$	271,337
TOTAL:		$	441,285	$	281,030	$	220,506	$	271,337

(a) The president of Pacific Opportunity Capital Ltd., a private company, is a director of the Company.

9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

The significant non-cash investing and financing transactions during the nine months ended June 30, 2021 were as follows:

• As at June 30, 2021, a total of $378,866 in exploration and evaluation asset costs was included in accounts payable and accrued liabilities; and a total of $8,568 in exploration and evaluation costs was included in prepaid expenses;
• As at June 30, 2021, a total of $57,750 in share issue costs was included in due to related parties;
• The Company recorded $153,927 in share issue costs related to the issue of finder's warrants pursuant to the private placement financing completed;
• The Company recorded $16,500 in share capital related to the issue of common shares pursuant to the acquisition of exploration and evaluation assets; and
• The Company recorded $1,828 in share capital related to the reclassification of the fair values of finder's warrants exercised from reserves.

9. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS – continued

The significant non-cash investing and financing transactions during the nine months ended June 30, 2020 were as follows:

• As at June 30, 2020, a total of $220,552 in exploration and evaluation asset costs was included in accounts payable and accrued liabilities;
• As at June 30, 2020, a total of $57,750 in share issues costs was included in due to related parties;
• The Company recorded $32,665 in share issue costs related to the issue of finder's warrants pursuant to the private placement financing completed;
• The Company recorded $11,250 in share capital related to the issue of common shares pursuant to the acquisition of exploration and evaluation assets;
• The Company recorded $26,997 in share capital related to the reclassification of the fair values of finder's warrants exercised from reserves; and
• The Company recorded $310,499 in prepaid expenses related to exploration and evaluation assets.

10. SEGMENTED INFORMATION

The Company has one reportable operating segment, that being the acquisition and exploration of mineral properties. Geographical information is as follows:

	June 30, 2021	September 30, 2020
Non-current assets
USA	1,045,135	911,875
Peru	472,215	466,900
Canada	5,359,752	2,988,866
	$6,877,102	$4,367,641

11. FINANCIAL INSTRUMENTS

The Company's financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk, market risk and commodity price risk.

(a) Currency risk

The Company's property interests in Peru and USA make it subject to foreign currency fluctuations and inflationary pressures which may adversely affect the Company's financial position, results of operations and cash flows. The Company is affected by changes in exchange rates between the Canadian Dollar and foreign functional currencies. The Company does not invest in foreign currency contracts to mitigate the risks. The Company's exploration program, some of its general and administrative expenses and financial instruments denoted in a foreign currency are exposed to currency risk. A 10% change in the Peruvian nuevo sol and US dollar over the Canadian dollar would change the results of operations by approximately $4,400.

(b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to the liquidity of its cash. The Company limits exposure to credit risk by maintaining its cash with a large Canadian financial institution.

11. FINANCIAL INSTRUMENTS – continued

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company ensures there is sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company's holdings of cash. The Company does not have sufficient cash to settle its current liabilities, and further funding will be required to meet the Company's short-term and long-term operating needs. The Company manages liquidity risk through the management of its capital structure.

Accounts payable and accrued liabilities are due within the current operating period.

(d) Market risk

Market risks to which the Company is exposed include unfavorable movements in commodity prices, interest rates, and foreign exchange rates. As at June 30, 2021, the Company has no producing assets and holds the majority of its cash in secure, Canadian dollar-denominated deposits. Consequently, its exposure to these risks has been significantly reduced, but as the Company redeploys its cash, exposure to these risks may increase. The objective of the Company is to mitigate exposure to these risks while maximizing returns.

The Company may from time-to-time own available-for-sale marketable securities, in the mineral resource sector. Changes in the future pricing and demand of commodities can have a material impact on the market value of the investments. The nature of such investments is normally dependent on the invested company being able to raise additional capital to further develop and to determine the commercial viability of its resource properties. Management mitigates the risk of loss resulting from this concentration by monitoring the trading value of the investments on a regular basis.

i) Interest rate risk

As at June 30, 2021, the Company's exposure to movements in interest rates was limited to potential decreases in interest income from changes to the variable portion of interest rates for its cash. Market interest rates in Canada are at historically low levels, so management does not consider the risk of interest rate declines to be significant, but should such risks increase the Company may mitigate future exposure by entering into fixed-rate deposits. A 1% change in the interest rate, with other variables unchanged, would not significantly affect the Company.

ii) Foreign exchange risk

The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company may maintain cash and other financial instruments, or may incur revenues and expenditures in currencies other than the Canadian dollar. Significant changes in the currency exchange rates between the Canadian dollar relative to these foreign currencies, which may include but are not limited to US dollars and Peruvian nuevo sol, could have an effect on the Company's results of operations, financial position or cash flows. The Company has not hedged its exposure to currency fluctuations.

11. FINANCIAL INSTRUMENTS – continued

(e) Commodity price risk

The ability of the Company to develop its mineral properties and the future profitability of the Company are directly related to the market price of minerals such as gold, zinc, lead and copper. The Company's input costs are also affected by the price of fuel. The Company closely monitors mineral and fuel prices to determine the appropriate course of action to be taken by the Company.

IFRS 7 establishes a fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table sets forth the Company's financial assets measured at amortized cost by level within the fair value hierarchy.

As at June 30, 2021	Level 1	Level 2	Level 3	Total
Assets:
Cash	$1,731,744	$-	$-$	1,731,744
As at September 30, 2020	Level 1	Level 2	Level 3	Total
Assets:
Cash	$278,993	$-	$-$	278,993

12. MANAGEMENT OF CAPITAL RISK

The Company considers items included in shareholders' equity as capital. The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents.

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.

In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company's approach to managing capital remains unchanged from the year ended September 30, 2020.

13. CONTINGENT LIABILITIES

As a result of the administrative practices with respect to mining taxation in Mexico, there can be significant uncertainty, in regards to when, or if, taxes are payable and the amount that may ultimately be payable. As at September 30, 2015, Mexican claim taxes totalling approximately $766,000 had been levied. Of this amount, $563,000 ($193,000 for 2014 and $370,000 for 2015) related to properties that were held by Minera Tarsis, S.A. de C.V., which the Company had applied to wind up, and $203,000 ($63,000 for 2014 and $140,000 for 2015) related to properties being acquired. On February 16, 2016, the Company sold all its Mexican properties, Yago, Mezquites and San Pedro, to Almadex, and reduced the claim taxes to $173,783. These taxes will never be paid in full and any amount that will, or might, be payable cannot realistically be determined at this time. Accordingly, these taxes have been disclosed as a contingent liability, and not recognized as a liability or provision.