Silver Wolf Exploration Ltd. — Annual Report 2021

Apr 16, 2021

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SILVER WOLF EXPLORATION LTD.

(formerly Gray Rock Resources Ltd.)

Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The consolidated financial statements of Silver Wolf Exploration Ltd. (the “Company”) are the responsibility of the Company’s management. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and reflect management’s best estimates and judgment based on information currently available.

Management has developed and is maintaining a system of internal controls to ensure that the Company’s assets are safeguarded, transactions are authorized and properly recorded and financial information is reliable.

The Board of Directors is responsible for ensuring management fulfills its responsibilities and reviews the results of the audit and the annual consolidated financial statements prior to their approval.

The consolidated financial statements as at December 31, 2020 and 2019, and for the years then ended, have been audited by Manning Elliott LLP, an independent registered public accounting firm, and their report outlines the scope of their examination, and gives their opinion on the consolidated financial statements.

“David Wolfin” David Wolfin President & CEO April 15, 2021

“Nathan Harte”

Nathan Harte, CPA Chief Financial Officer April 15, 2021

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INDEPENDENT AUDITORS’ REPORT

To the Shareholders and Directors of Silver Wolf Exploration Ltd.

Opinion

We have audited the consolidated financial statements of Silver Wolf Exploration Ltd. and its subsidiary (the “Company”) which comprise the consolidated statement of financial position as at December 31, 2020 and 2019, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years then ended, and the related notes comprising a summary of significant accounting policies and other explanatory information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

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 Auditors’ 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.

Emphasis of Matter - Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the accompanying consolidated financial statements, which describes matters and conditions that indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information, which comprises the information included in the Company’s Management Discussion & Analysis to be filed with the relevant Canadian securities commissions.

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.

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. 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 International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ 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 auditors’ 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 auditors’ 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 auditors’ 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 group audit. We remain solely responsible for our audit opinion.

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

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

The engagement partner on the audit resulting in this independent auditors’ report is Joseph Bonvillain.

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CHARTERED PROFESSIONAL ACCOUNTANTS Vancouver, Canada April 15, 2021

Silver Wolf Exploration Ltd. Consolidated Statements of Financial Position Expressed in Canadian Dollars

		December 31,	December 31,	December 31,	December 31,
	Note		2020		2019
ASSETS
Current Assets
Cash		$	26,027	$	101,846
Sales taxesreceivables and other			3,204		1,298
			29,231		103,144
Non-Current Assets
Investments	5		83,600		189,118
Exploration and evaluation assets	6		311,253		306,844
Right-of-use asset	7		56,046		30,969
Reclamation deposit	8		3,000		3,000
Otherassets			-		3,813
TOTAL ASSETS		$	483,130	$	636,888
LIABILITIES
Current Liabilities
Trade and other payables		$	28,416	$	16,272
Current portion of lease liability	7		10,516		6,942
Due torelated parties	10		73,090		-
			112,022		23,214
Non-Current Liabilities
Promissory notes issued to related parties	10		-		227,996
Lease liability	7		47,442		24,027
Siterestorationobligation			3,000		3,000
			162,464		278,237
EQUITY
Share capital	9		4,611,274		4,297,472
Contributed surplus			396,092		503,692
Accumulated other comprehensive income			(509,202)		(404,346)
Deficit			(4,177,498)		(4,038,167)
			320,666		358,651
TOTAL LIABILITIES AND EQUITY		$	483,130	$	636,888

Note 1 – Nature of operations and going concern Note 14 – Subsequent events

These consolidated financial statements are authorized for issue by the Board of Directors on April 15, 2021:

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

“David Wolfin” Director “Stephen Williams” Director

1

Silver Wolf Exploration Ltd. Consolidated Statements of Operations and Comprehensive Loss Expressed in Canadian Dollars

	Note		2020		2019
General and Administrative Expenses
Administrative salaries and benefits		$	23,592	$	29,612
Automobile			914		1,498
Consulting fees			34,555		30,200
Depreciation			9,620		3,813
Foreign exchange loss			123		120
Interest and bank charges			4,174		109
Listing and filing fees			22,624		7,664
Office and miscellaneous			19,032		27,661
Professional fees			48,566		18,485
Shareholder information			3,537		2,161
Transfer agent fees			6,436		5,561
Travel			-		344
Loss Before Other Items			(173,173)		(127,228)
Other Items
Realized gain on sale of investments	5		-		7,000
Fair value adjustment to promissory notes payable, net of
accretion	10		(80,556)		27,725
Net Loss For the Year			(253,729)		(92,503)
Other Comprehensive Income (Loss)
Items that will not subsequently be re-classified to net income
Unrealized gain (loss) on investments	5		(98,058)		6,468
Reclassificationofaccumulated gainon investments sold	5		6,798		18,200
Total Comprehensive Loss		$	(344,989)	$	(67,835)
Loss per Share	9(e)
Basic		$	(0.01)	$	(0.00)
Diluted		$	(0.01)	$	(0.00)
Weighted Average Number of Shares Outstanding	9(e)
Basic			22,729,764		22,260,461
Diluted			22,729,764		22,260,461

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

2

Silver Wolf Exploration Ltd. Consolidated Statements of Changes in Equity Expressed in Canadian Dollars

									Accumulated	Accumulated
		Number of								Other
		Common				Contributed		Accumulated	Comprehensive
	Note	Shares	Share Capital			Surplus		Deficit	**Income(Loss) **			Total Equity
Balance, January 1, 2019		22,260,461	$	4,297,472	$	576,092	$	(3,999,864)	$	(429,014)	$	444,686
Stock options cancelled or expired		-		-		(72,400)		72,400		-		-
Net loss for the year		-		-		-		(92,503)		-		(92,503)
Reclassification of accumulated
losses on investments sold		-		-		-		(18,200)		18,200		-
Other comprehensive gain for the
year		-		-		-		-		6,468		6,468
Balance, December 31, 2019		22,260,461	$	4,297,472	$	503,692	$	(4,038,167)	$	(404,346)	$	358,651
Balance, January 1, 2020		22,260,461	$	4,297,472	$	503,692	$	(4,038,167)	$	(404,346)	$	358,651
Common shares issued for debt
settlement	10(c)	1,651,587		313,802								313,802
Stock options cancelled or expired	9(d)	-		-		(107,600)		107,600		-		-
Net loss for the year		-		-		-		(253,729)		-		(253,729)
Reclassification of accumulated
gains on investments sold		-		-		-		6,798		(6,798)		-
Other comprehensive loss for the
year		-		-		-		-		(98,058)		(98,058)
Balance, December 31, 2020		23,912,048	$	4,611,274		$ 396,092	$	(4,177,498)	$	(509,202)	$	320,666

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

3

Silver Wolf Exploration Ltd. Consolidated Statements of Cash Flows Expressed in Canadian Dollars

Silver Wolf Exploration Ltd. Consolidated Statements of Cash Flows Expressed in Canadian Dollars	Silver Wolf Exploration Ltd. Consolidated Statements of Cash Flows Expressed in Canadian Dollars
Consolidated Statements of Cash Flows
		2020		2019
Cash provided by (used in):
Operating Activities
Net Loss	$	(253,729)	$	(92,503)
Items not involving cash:
Depreciation		9,620		3,813
Fair value adjustment on promissory notes payable		80,556		(27,725)
Interest charges		3,455		-
Realized gain on sale of investments		-		(7,000)
Changes in non-cash working capital items:
Sales taxes recoverable and other		(1,906)		(209)
Trade and other payables		12,144		378
Due torelated parties		78,340		-
		(71,520)		(123,246)
Financing Activities
Finance lease payments		(7,350)		-
Promissorynotesissued (repaid) torelated parties		-		92,846
		(7,350)		92,846
Investing Activities
Proceeds from disposition of investments		7,460		20,000
Explorationand evaluationexpenditures		(4,409)		(2,996)
		3,051		17,004
Change in Cash		(75,819)		(13,396)
Cash, Beginning of Year		101,846		115,242
Cash, End of Year	$	26,027	$	101,846
Supplementary Disclosure of Cash Flow Information
Interest paid	$	-	$	-
Income taxes paid	$	-	$	-
Sharesissuedforsettlement ofpromissorynotes	$	313,802	$	-

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

4

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

1. NATURE OF OPERATIONS AND GOING CONCERN

Silver Wolf Exploration Ltd. (formerly Gray Rock Resources Ltd.) (“Silver Wolf” or the “Company”) was incorporated under the laws of the Province of British Columbia, Canada. The Company changed its name to Silver Wolf Exploration Ltd. on September 16, 2020. It is in the exploration stage with regards to its business of exploration and development of mineral properties. The Company owns the Silver Stream mineral claims in British Columbia, Canada. The Company’s head office and principal place of business is Suite 900, 570 Granville Street, Vancouver, BC, Canada.

Silver Wolf is in the exploration stage and has not yet determined whether the properties contain ore reserves which are economically recoverable. The underlying carrying value of the mineral property interest and related exploration and evaluation assets is dependent upon the existence of economically recoverable reserves, confirmation of Silver Wolf’s interest in the mineral claims, the ability of Silver Wolf to obtain necessary financing to complete the exploration and development, and future profitable production or proceeds from the sale of all or an interest in its mineral claims.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2020, the Company has a working capital deficit of $82,791 and accumulated losses of $4,177,526. The Company has not yet generated any revenues from its operations, and requires financing through the sale of shares or issuance of debt to continue with its operations and to develop its mineral properties. Although management intends to secure additional financing, there is no assurance that management will be successful in its efforts to secure additional financing, or that it will ever develop a selfsupporting business. These factors together form a material uncertainty that may raise significant doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Risks associated with Public Health Crises, including COVID-19

The Company's business, operations and financial condition could be materially adversely affected by the outbreak of epidemics, pandemics or other health crises, such as the outbreak of COVID-19 that was designated as a pandemic by the World Health Organization on March 11, 2020. The international response to the spread of COVID-19 has led to significant restrictions on travel, temporary business closures, quarantines, global stock market volatility and a general reduction in consumer activity. Such public health crises can result in operating, supply chain and project development delays and disruptions, global stock market and financial market volatility, declining trade and market sentiment, reduced movement of people and labour shortages, and travel and shipping disruption and shutdowns, including as a result of government regulation and prevention measures, or a fear of any of the foregoing, all of which could affect commodity prices, interest rates, credit risk and inflation. In addition, the current COVID-19 pandemic, and any future emergence and spread of similar pathogens could have an adverse impact on global economic conditions which may adversely impact the Company's operations, and the operations of suppliers, contractors and service providers, including smelter and refining service providers, and the demand for the Company's production.

The Company may experience business interruptions, including suspended (whether government mandated or otherwise) or reduced operations relating to COVID-19 and other such events outside of the Company's control, which could have a material adverse impact on its business, operations and operating results, financial condition and liquidity.

As at the date of the consolidated financial statements, the duration of the business disruptions internationally and related financial impact of COVID-19 cannot be reasonably estimated. It is unknown whether and how the Company may be affected if the pandemic persists for an extended period of time. In particular, the region in which we operate may not have sufficient public infrastructure to adequately respond or efficiently and quickly recover from such event, which could have a materially adverse effect on the Company's operations. The Company's exposure to such public health crises also includes risks to employee health and safety. Should an employee, contractor, community member or visitor become infected with a serious illness that has the potential to spread rapidly, this could place the Company's workforce at risk.

5

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

2. BASIS OF PRESENTATION

Statement of compliance

These consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

Functional Currency

The presentation and functional currency of the Company and its subsidiary is the Canadian dollar.

Foreign Currency Translation

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on dates of transactions. At each financial position reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the consolidated statement of financial position. Non-monetary items that denominated in foreign currencies are translated at historical rates.

Basis of Consolidation

• The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: • Cortez, a company incorporated on June 21, 2006 in Nevada, USA.

• Compania Minera Mexicana de Gray Rock, S.A. de C.V., a company incorporated under the Mexican United States law on July 21, 2020.

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

Significant Accounting Judgments and Estimates

The preparation of these consolidated financial statements requires management to make judgements and estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these judgements and estimates. The consolidated financial statements include judgements and estimates, which, by their nature, are uncertain. The impacts of such judgements and estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period, in which the estimate is revised, and may affect both current and future periods.

Significant assumptions about the future and other sources of judgements and estimates that management has made at the statement of financial position date, which could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Exploration and Evaluation Expenditures

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

6

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Site Closure and Reclamation Provisions

The Company assesses its reclamation provision at each reporting date or when new material information becomes available. Exploration, development, and mining activities are subject to various laws and regulations governing the protection of the environment. In general, these laws and regulations are continually changing and the Company has made, and intends to make in the future, expenditures to comply with such laws and regulations. Accounting for reclamation obligations requires management to make estimates of the future costs that the Company will incur to complete the reclamation work required to comply with existing laws and regulations at each location. Actual costs incurred may differ from those amounts estimated. The Company’s exploration work to date has resulted in no significant site disturbance and therefore the Company’s reclamation provision is limited to the amount posted as a reclamation bond.

Also, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by the Company. Increases in future costs could materially impact the amounts charged to operations for reclamation and remediation. The provision represents management’s best estimate of the present value of the future reclamation and remediation obligation. The actual future expenditures may differ from the amounts currently provided.

Title to Mineral Properties

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

Share-Based Payments

Management uses valuation techniques in measuring the fair value of share options granted. The fair value is determined using the Black Scholes option pricing model which requires management to make certain estimates, judgements, and assumptions in relation to the expected life of the share options, expected volatility, expected risk-free rate, and expected forfeiture rate. Changes to these assumptions for any share options granted could have a material impact on the Company’s consolidated financial statements.

Deferred Income Taxes

Judgement is required to determine which types of arrangements are considered to be a tax on income in contrast to an operating cost. Judgement is also required in determining whether deferred tax liabilities are recognized in the consolidated statement of financial position. Deferred tax assets, including those potentially arising from un-utilized tax losses, require management to assess the likelihood that the Company will generate sufficient taxable income in future periods, in order to recognise deferred tax assets. Assumptions about the generation of future taxable income depend on management’s estimates of future operations and cash flows. These estimates of future taxable income are based on forecast cash flows from operations (which are impacted by production and sales volumes, commodity prices, reserves, operating costs, closure and rehabilitation costs, capital expenditure, and other capital management transactions) and judgement about the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize deferred tax assets or offset these against any deferred tax liabilities recorded at the reporting date could be impacted.

Going Concern

The assessment of the Company’s ability to continue as a going concern involves judgement regarding future funding available for its projects and working capital requirements and whether there are events or conditions that may give rise to significant uncertainty.

7

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

3. SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents in the statement of consolidated financial position comprise cash at banks and on hand, and short-term deposits with an original maturity of three months or less, which are readily convertible into a known amount of cash. The Company does not hold any cash equivalents as at December 31, 2020 and 2019.

Financial Instruments

Measurement – initial recognition

All financial assets and financial liabilities are initially recorded on the Company’s consolidated statement of financial position when the Company becomes a party to the contractual provisions of the instrument. All financial asset and liabilities are initially recorded at fair value, net of attributable transaction costs, except for those classified as fair value through profit or loss (“FVTPL”). Subsequent measurement of financial assets and financial liabilities depends on the classifications of such assets and liabilities.

Classification – financial assets

Amortized cost

Financial assets that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows, and that the contractual terms of the financial assets give rise on specified date to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured subsequent to initial recognition at amortized cost.

The amortized cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance.

Interest income is recognized using the effect interest method, and is recognized in interest and other income, on the consolidated statements of operations and comprehensive income (loss).

The Company has no financial assets recognized at amortized costs.

Fair value through other comprehensive income (“FVTOCI”)

Financial assets that are held within a business model whose objective is to hold financial assets in order to both collect contractual cash flows and selling financial assets, and that the contractual terms of the financial assets give rise on specified date to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Upon initial recognition of equity securities, the Company may make an irrevocable election (on an instrumentby-instrument basis) to designate its equity securities that would otherwise be measured at FVTPL to present subsequent changes in fair value in other comprehensive income. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination. Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in other OCI. The cumulative gain or loss is not reclassified to profit or loss on disposal of the instrument; instead, it is transferred to deficit.

The Company financial assets designated as FVTOCI includes investments.

8

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Fair value through profit or loss (“FVTPL”)

By default, all other financial assets are measured subsequently at FVTPL, which includes cash, and reclamation deposit.

Classification – financial liabilities

Financial liabilities that are not contingent consideration of an acquirer in a business combination, held for trading or designated as at FVTPL, are measured at amortized cost using the effective interest method.

Financial liabilities at amortized cost include trade and other payables, promissory notes payable to related parties and due to related parties.

Financial liabilities classified FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Fair value changes on financial liabilities classified as FVTPL are recognized in the consolidated statements of operations. The Company has no financial liabilities designated at FVTPL.

The Company has no hedging arrangements and does not apply hedge accounting.

Impairment

The Company recognizes a loss allowance for expected credit losses on its financial assets when necessary. The amount of expected credit losses is updated at each reporting period to reflect changes in credit risk since initial recognition of the respective financial instruments.

Exploration and Evaluation Assets

The Company is in the exploration stage with respect to its investment in mineral properties and accordingly follows the practice of capitalizing all costs relating to the acquisition of, exploration for, and development of mineral claims and crediting all proceeds received against the cost of the related claims. Such costs include, but are not exclusive to, geological, geophysical studies, exploratory drilling and sampling. At such time as production commences at levels intended by management, these costs will be charged to operations on a unitof-production method based on proven and probable reserves. General exploration costs not related to specific mineral property are expensed as incurred. The aggregate costs related to abandoned mineral claims are charged to operations at the time of any abandonment, or when it has been determined that there is evidence of a permanent impairment.

An impairment charge relating to a mineral property is subsequently reversed when new exploration results or actual or potential proceeds on sale or farm-out of the property result in a revised estimate of the recoverable amount, but only to the extent that this does not exceed the original carrying value of the property that would have resulted if no impairment had been recognized.

The recoverability of amounts shown for exploration and evaluation assets is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties, and on future production or proceeds of disposition.

Incidental revenues and operating costs are included in mineral properties and development costs prior to production at levels intended by management. Accrued tax credits on eligible exploration expenditures are accounted for as deduction from mineral properties and development costs, on a property by property basis, and will be charged to operations on the same basis as the acquisition, exploration, and development expenditures. The exploration tax credits are accrued in the year when the exploration expenditures are incurred and the tax credit is applied for provided there is reasonable assurance that the tax credits will be realized.

9

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining properties under development.

All capitalized exploration and evaluation expenditures are monitored for indications of impairment. Where a potential impairment is indicated, assessments are performed for each area of interest. To the extent that exploration expenditure is not expected to be recovered, it is charged to operations.

The amounts shown for exploration and evaluation assets represent net costs incurred to the date of the consolidated financial statements and do not necessarily reflect present or future values.

Impairment

At each financial position reporting date, the carrying amounts of the Company’s assets are reviewed to determine whether there is any indication that those assets are impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. Where the asset does not generate cash flows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

An asset’s recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for the year.

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

Share Capital

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

Share-Based Payment Transactions

The share option plan allows employees and consultants to acquire shares of the Company. The fair value of options granted is recognized as an employee or consultant expense 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.

The fair value is measured at grant date, and each tranche is recognized on the graded vesting method over the period during which the options vest. The fair value of the options granted is measured using the BlackScholes option pricing model taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest.

Income Taxes

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

10

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

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

Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affect neither accounting or taxable profit; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a future tax asset will be recovered, it provides a valuation allowance against that excess.

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.

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

Provisions

Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events; it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation; and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as accretion expense.

Site Restoration Obligation

An obligation to incur restoration, rehabilitation, and environmental costs arises when environmental disturbance is caused by the exploration, development, or ongoing production of a mineral property interest. Such costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates using a pre-tax rate that reflects the time value of money are used to calculate the net present value.

These costs are charged against profit or loss over the economic life of the related asset, through deprecation using either the unit-of-production or the straight-line method. The related liability is adjusted for each year for the unwinding of the discount rate and for changes to the current market-based discount rate, amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage, which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses. The Company evaluated its site restoration obligation to be $3,000 as at December 31, 2020 (2019 - $3,000).

Earnings or Loss per Share

The Company presents basic and diluted earnings or loss per share data for its common shares, calculated by dividing the earnings or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted earnings or 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 dilutive potential common shares. Diluted earnings or loss per share excludes all dilutive potential common shares if their effect is anti-dilutive.

11

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Comprehensive Income (Loss)

Comprehensive income (loss) is the change in the Company’s net assets that results from transactions, events and circumstances from sources other than the Company’s shareholders and includes items that are not included in net profit such as unrealized gains or losses on investments, gains or losses on certain derivative instruments, and foreign currency gains or losses related to self-sustaining operations. The Company’s comprehensive income and (loss), components of other comprehensive income and (loss) and cumulative translation adjustments are presented in the consolidated statements of operations and comprehensive loss and the consolidated statements of changes in equity.

4. RECENT ACCOUNTING PRONOUNCEMENTS

Application of new and revised accounting standards:

IFRS 3 – Definition of a Business

In October 2018, the IASB issued amendments to IFRS 3 – Definition of a Business which:

• Clarify that to be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs;

• Narrow the definitions of a business and of outputs by focusing on goods and services provided to customers and by removing the reference to an ability to reduce costs;

• Add guidance and illustrative examples to help entities assess whether a substantive process has been acquired;

• Remove the assessment of whether market participants are capable of replacing any missing inputs or processes and continuing to produce outputs; and

• Add an option concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business.

The amendments are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020, and to asset acquisitions that occurred on or after the beginning of that period. The Company adopted IFRS 3 with no material impact on the consolidated financial statements.

5. INVESTMENTS

Investments consist of the following:

			Accumulated	December	December 31,
	Number of Shares	Cost	Unrealized Gain/(Loss)	31, 2020 Fair Value	2019 Fair Value
Garibaldi Resources Corp	190,000	$ 592,800	$ (509,200)	$ 83,600	$ 186,200
Discovery Metals Corp.	-	-	-	-	2,323
SciVacTherapeuticsInc.	-	-	-	-	595
		$592,800	$ (509,200)	$83,600	$189,118

During the year ended December 31, 2020, the Company disposed of 3,250 shares of Discovery Metals Corp. and recognized a gain on sale $Nil (2019 - $Nil).

During the year ended December 31, 2020, the Company disposed of 332 shares of SciVac Therapeutics Inc. and recognized a gain on sale $Nil (2019 - $Nil).

During the year ended December 31, 2019, the Company disposed of 10,000 shares of Garibaldi Resources Corp. and recognized a gain on sale $7,000.

12

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

6. EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation assets consist of the following:

Exploration and evaluation assets consist of the	following:
	Ana Maria & El	Silver Stream
	Laberinto Option	Claims	Total
Balance, January 1, 2019	$ -	$ 303,848	$ 303,848
Exploration costs incurred during the year:
Taxes and licensing	-	500	500
Geological	-	2,496	2,496
Balance, December 31, 2019	-	306,844	306,844
Exploration costs incurred during the year:
Acquisition costs	4,409	-	4,409
Balance,December 31,2020	$4,409	$306,844	$311,253

a) Ana Maria & Laberinto Properties

During 2020, the Company announced the signing of an option agreement (the “Option Agreement”) with Avino Silver & Gold Mines Ltd. (“Avino”), a company that is considered to be a related party as it has directors and management in common. Pursuant to the terms of the Option Agreement, the Company was granted the exclusive right to acquire an 100% interest in the Ana Maria and El Laberinto properties in Mexico (the “Option”), in consideration of the issuance to Avino of share purchase warrants to acquire 300,000 common shares of the Company at an exercise price of $0.20 per share for a period of 36 months from the date of the TSX Venture Exchange’s final acceptance of the Option Agreement (the “Approval Date”).

The Company received final acceptance from the TSX Venture Exchange on March 11, 2021, and issued to Avino the share purchase warrants to acquire 300,000 common shares.

In order to exercise the Option, the Company will:

1. Pay or issue to Avino a total of $600,000 in cash or common shares of the Company as follows: a. $50,000 in common shares of the Company within 30 days of the Approval Date;

2. b. A further $50,000 on or before the first anniversary of the Approval Date;

3. c. A further $100,000 on or before the second anniversary of the Approval Date;

4. d. A further $200,000 on or before the third anniversary of the Approval Date; and

5. e. A further $200,000 on or before the fourth anniversary of the Approval Date; and

6. Incur a total of $750,000 in exploration expenditures on the properties, as follows:

7. a. $50,000 on or before the first anniversary of the Approval Date;

8. b. A further $100,000 on or before the second anniversary of the Approval Date; and

9. c. A further $600,000 on or before the fourth anniversary of the Approval Date.

All share issuances will be based on the average volume weighted trading price of the Company’s shares on the TSX Venture Exchange for the ten (10) trading days immediately preceding the date of issuance of the shares, and the shares will be subject to resale restrictions under applicable securities legislation for 4 months and a day from their date of issue. Under the Option Agreement, the parties intend that the first two year’s payments ($200,000 in cash or shares), and first $150,000 in exploration work will be firm commitments by the Company.

13

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Any exploration expenditures in excess of any period stated above will be applied towards the next succeeding period’s minimum requirements. During the option period, the Company will also assume liability and be responsible for all required semi-annual property payments required to maintain the properties in good standing.

The Company also granted to Avino a right of first refusal on 60 days’ notice to Avino to purchase and process any ore or concentrate extracted from the properties under a custom milling contract at Avino’s mine facilities.

Subsequent to December 31, 2020, the Company issued 131,718 common shares at an average price of $0.3796, valued at $50,000, to satisfy the terms laid out in Item 1 a) of the Option Agreement.

Ana Maria Property

The Ana Maria property is located 21 kilometres (km) northwest of the City of Gómez Palacio and the adjacent City of Torreón, and 1 km north of the town of Dinimita, in the municipality of Gómez Palacio, Durango, Mexico. The claims are located in the Minitas mining district in the Guadalupe Victoria mining region. The property consists of 9 mining concessions encompassing 2,549 hectares (“ha”).

Laberinto Project

The Laberinto Project is located in the “Sierra de la Silla” northwest of the town of Francisco I. Madero in the municipality of Panuco de Coronado. It is approximately 60 kilometres northeast of the city of Durango City, México. The property consists of mining concession encompassing 91.7 ha.

b) Silver Stream Claims

The Company has a 100% interest in two mineral claims in the Lillooet mining district of British Columbia, subject to a 3% net smelter returns royalty, known as Silver Stream 1 and Silver Stream 2 claims, collectively the Silver Stream Claims.

The claims comprising the Silver Stream Claims remain in good standing until July 29, 2021.

14

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

7. LEASE LIABILITY & RIGHT-OF-USE ASSET

• (a) Right-of-use asset

The Company shares office space with other companies related to it by virtue of certain directors and management in common (Note 10(d)). During the year ended December 31, 2020, as a result of the adoption of IFRS 16, the Company recognized a right-of-use asset in relation to its share of office space lease allocated through Oniva International Services Corp. (“Oniva”)

		December 31,	December 31,
		2020	2019
Balance, beginning	$	30,969 $	-
Additions		30,884	30,969
Changes to lease terms		-	-
Depreciation		(5,807)	-
Balance,ending	$	56,046$	30,969

(b) Lease liability

The contractual maturities and interest charges in respect of the Company’s lease obligations in connection with its share of the office lease are as follows:

	December 31,	December 31,		December 31,
		2020		2019
Not later than one year	$	16,739	$	7,351
Later than one year and not later than five years		57,320		31,865
Later than five years		-		2,686
Less: futureinterest charges		(16,101)		(10,933)
Present value of lease payments		57,958		30,969
Less:current portion		(10,516)		(6,942)
Non-currentportion	$	47,442	$	24,027

During the year ended December 31, 2020, the Company and Oniva amended the share of rental expense allocated to Silver Wolf. As a result, the Company recognized a lease modification and adjusted the rightof-use asset and lease liability accordingly as noted above.

• (c) Amounts Recognized in Statement of Operations and Comprehensive Loss

Payments relating to short-term leases recognized as an expense during the year ended December 31, 2020, totalled $Nil (2019 - $2,794).

Amounts Recognized in Statement of Cash Flows

Cash payments relating to short-term leases during the year ended December 31, 2020, totalled $Nil (2019 - $2,794).

8. RECLAMATION DEPOSIT

As at December 31, 2020 and 2019, the Company has hypothecated a term deposit in the amount of $3,000 as security to the Province of British Columbia for future mineral claims site reclamation costs.

15

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

9. SHARE CAPITAL

• (a) Authorized: Unlimited common shares without par value.

• (b) Issued during 2020 and 2019:

During the year ended December 31, 2020, 1,651,587 common shares were issued to settle promissory notes payable. For further details, see Note 10(c).

No common shares were issued in 2019.

• (c) Share purchase warrants

At December 31, 2020, the Company had 1,225,250 (2019 – 1,725,250) share purchase warrants outstanding and exercisable. Continuity of share purchase warrants is as follows:

		Weighted Average
	Numberof Warrants	ExercisePrice
Outstanding and exercisable, January 1 and
December 31, 2019	1,725,250	$0.31
Expired	(500,000)	$0.50
Outstandingand exercisable,December 31,2020	1,225,250	$0.23

At December 31, 2020, weighted average remaining contractual life of warrants outstanding was 0.91 years (2019 – 0.50 years).

The following table summarizes information about the Company’s warrants outstanding at December 31, 2020:

2020:
		Warrants Outstanding
ExpiryDate	ExercisePrice	andExercisable
August 15, 2021	$0.10	905,000
September 15,2022	$0.60	320,250
		1,225,250

• (d) Stock option plan

The Company established a stock option plan, under which it may grant stock options totalling in aggregate up to 10% of the Company’s total number of shares issued and outstanding on a non-diluted basis, and to any one optionee in a 12 month period not to exceed 5% of the total number of shares issued and outstanding on a non-diluted basis. The stock option plan limits the options issuable within a one-year period to regular employees and persons providing investor-relation or consulting services to 5% and 2% respectively of the Company’s total number of issued and outstanding shares on a non-diluted basis on the date of grant.

The stock options are fully vested on the date of grant. The option price must be greater or equal to the discounted market price on the grant date, and the option expiry date can not exceed five years after the grant date.

16

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Continuity of stock options is as follows:

Continuity of stock options is as follows:
		Weighted Average
	Number of Options	Exercise Price
Outstanding and exercisable, January 1, 2019	1,715,000	$0.40
Cancelled	(100,000)	$0.39
Forfeited	(120,000)	$0.44
Outstanding and exercisable, December 31, 2019	1,495,000	$0.40
Cancelled	(305,000)	$0.42
Outstandingand exercisable,December 31,2020	1,190,000	$0.40

Details of stock options outstanding and exercisable are as follows:

			Options Outstanding
	ExpiryDate	Exercise Price	and Exercisable
February 23, 2022		$0.39	990,000
June 23, 2022		$0.44	200,000
			1,190,000

As at December 31, 2020, the weighted average remaining contractual life of stock options outstanding was 1.20 years (December 31, 2019 – 2.24 years).

Option pricing requires the use of highly subjective estimates and assumptions including the expected stock price volatility. The expected volatility used in valuing stock options is based on volatility observed in historical periods. Changes in the underlying assumptions can materially affect the fair value estimates.

(e) Earnings per share

The calculations for basic and diluted earnings per share are as follows:

		2020			2019
Netlossforthe year	$	(253,729)	$		(92,503)
Basic weighted average number of shares outstanding	22,729,764			22,260,461
Effect ofdilutive share options andwarrants		-			-
Dilutedweighted averagenumberofshares outstanding	22,729,764			22,260,461
Basicloss pershare	$	(0.01)		$	(0.00)
Diluted lossper share	$	(0.01)		$	(0.00)

17

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

10. RELATED PARTY TRANSACTIONS AND BALANCES

• (a) Key management compensation

The Company has identified its directors and certain senior officers as its key management personnel. The compensation costs for key management personnel are as follows:

		2020		2019
Consultingfees,wages and benefits	$	15,222	$	40,718
	$	15,222	$	40,718

• (b) Amounts due to related parties

In the normal course of operations the Company transactions with companies related to its directors or officers. All amounts payable are non-interest bearing, unsecured, and due on demand. As at December 31, 2020 and 2019 the following amounts were due to related parties:

2020 and 2019 the following amounts were due to	related parties:	related parties:
	December 31,		December 31,
		2020		2019
OnivaInternationalServices Corp.	$	73,090	$	-
	$	73,090	$	-

• (c) Promissory notes issued to related parties

	Intermark Capital Corp. Oniva
	December 31,2020 December 31, 2019 December 31,2020 December 31, 2019
Beginning balance Borrowing Shares issued to settle debt Unwinding of the discount Fair market value adjustment and loss on settlement	$ 29,458 $ 7,364 $ 198,538 $ 155,512 5,250 31,500 - 61,345 (44,888) - (268,914) - 1,794 924 12,091 19,518 8,386 (10,330) 58,285 (37,837)
Endingbalance	$- $29,458 $- $198,538

On August 14, 2020 the Company announced that it has entered into debt settlement agreements with two of its principal creditors, Oniva International Services Corp., which provides administrative services to the Company, and Intermark Capital Corp., which provides management services to the Company, through the Company’s President & CEO, David Wolfin.

The Company settle an aggregate of $330,318 in indebtedness in exchange for the issuance of a total of 1,651,587 common shares at a deemed price of $0.20 per share. The shares were issued on September 18, 2020 and were valued at $0.19 per share. The shares were subject to resale restrictions for a period of 4 months and a day from their issuance. As a result if the settlement, the Company recognized a loss on settlement of $66,671.

(d) Related party transactions

During the year ended December 31, 2020, $67,854 (2019 - $59,500) was charged for office, occupancy, miscellaneous costs and salaries, and administrative services paid on behalf of the Company by Oniva. Further, the Company paid $1,717 of administrative fees during the year ended December 31, 2020 (2019 - $1,425) to Oniva and $Nil (2019 - $500) for reimbursement of mineral claim taxes, license fees, and staking.

18

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

The Company takes part in a cost-sharing arrangement to reimburse Oniva for a variable percentage of its overhead expenses, to reimburse 100% of its out-of-pocket expenses incurred on behalf of the Company, and to pay a percentage fee based on the total overhead and corporate expenses. The arrangement may be terminated with one-month notice by either party.

11. FINANCIAL INSTRUMENTS

The fair values of the Company’s cash, promissory notes payable to related parties, trade and other payables, and amounts due to related party approximate their carrying values because of the short-term nature of these instruments. The fair value of the Company’s investments is detailed in Note 5, and promissory notes payable are detailed in Note 10.

The Company’s financial instruments are exposed to certain financial risks comprising credit risk, liquidity risk and market risk.

(a) Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s cash is exposed to credit risk. The Company manages credit risk, in respect of cash, by maintaining the majority of cash at high credit rated Canadian financial institutions. Concentration of credit risk exists with respect to the Company’s cash, as the majority of the amounts are held with a single Canadian financial institution.

(b) Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities. At December 31, 2020, the Company had cash in the amount of $26,027 (December 31, 2019 - $101,846) in order to meet short-term business requirements. At December 31, 2020, the Company had current liabilities of $112,022 (2019 – $23,214). Trade and other payable have contractual maturities of approximately 30 to 90 days, or are due on demand and are subject to normal trade terms.

The maturity profiles of the Company’s contractual obligations and commitments as at December 31, 2020, are summarized as follows:

e summarized as follows:
		Less Than		More Than
	Total	1 Year	1-5years	5 Years
Trade and other payable	$ 28,416	$ 28,416	$ -	$ -
Finance lease obligations	57,958	10,516	47,442	-
Due torelated parties	73,090	73,090	-	-
Total	$159,464	$112,022	$47,442	$-

(c) Market Risk

Market risk consists of interest rate risk, foreign currency risk, and other price risk. These are discussed further below.

19

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

Interest Rate Risk

Interest rate risk consists of two components:

• (i) To the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing market interest rates, the Company is exposed to interest rate cash flow risk.

• (ii) To the extent that changes in prevailing market rates differ from the interest rate in the Company’s monetary assets and liabilities, the Company is exposed to interest rate price risk.

The Company’s cash is currently held in highly liquid short-term investments and therefore management considers the interest rate risk to be minimal.

Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Company is exposed to foreign currency risk to the extent that monetary assets and liabilities are denominated in foreign currency.

At this time, the Company is not exposed to significant foreign currency risk, as the company currently has minimal transactions and balances in currencies other than the Canadian dollars.

Other Price Risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk or foreign currency risk.

The Company is exposed to other price risk with respect to its investment in marketable securities, as they are carried at fair value based on quoted market prices.

• (d) Classification of Financial instruments

IFRS 7 ‘Financial Instruments: Disclosures’ 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 fair value on a recurring basis by level within the fair value hierarchy as at December 31, 2020:

		Level 1		Level 2		Level 3
Cash	$	26,027	$	-	$	-
Investments		83,600		-		-
	$	109,627	$	-	$	-

20

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

12. CAPITAL MANAGEMENT

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 exploration and expansion of its properties and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. In the management of capital, the Company considers equity, comprising of all issued share capital, accumulated deficit, and accumulated other comprehensive income, as well as its promissory notes payable and lease liability, as follows:

	December 31,	December 31,
	2020	2019
Equity	$ 320,666	$ 358,651
Lease liability	57,958	30,969
Promissorynotes issued to relatedparties	-	227,996
	$378,624	$617,616

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 or adjust the amount of cash. Management reviews the capital structure on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. At December 31, 2020, the Company is not subject to any externally imposed capital requirements.

13. INCOME TAXES

The potential benefit of net operating loss carry forwards has not been recognized in the consolidated financial statements since the Company cannot be assured that it is probable that such benefit will be utilized in future years.

The components of the deferred tax asset, the statutory tax rate, the effective tax rate and the unrecognized deferred income tax asset are as follows:

deferred income tax asset are as follows:
		2020			2019
Loss before income taxes	$	(253,729)	$		(92,503)
Corporate tax rate		27%			27%
Expected tax recovery		(69,000)			(25,000)
Decrease resulting from:
Non-deductible items for tax purposes and other items		(17,000)			(56,000)
Change in future tax rate		-			-
Change in unrecognized deferred income tax assets		86,000			81,000
Deferred income tax expense(recovery)	$	-		$	-

21

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

The Company’s tax-effected deferred income tax assets and liabilities are estimated as follows:

		2020		2019
Unrecognized deferred income tax assets include:
Non-capital losses	$	472,000	$	426,000
Investments		69,000		55,000
Promissory notes payable to related parties		-		(26,000)
Exploration and evaluation assets		372,000		374,000
Share issuance costs		2,000		2,000
Capital assets and other		7,000		5,000
		922,000		836,000
Unrecognized deferred income tax assets		(922,000)		(836,000)
	$	-	$	-

At December 31, 2020, the Company has non-capital losses of approximately $1,675,000 (2019 - $1,506,000) for Canadian income tax purposes which are available to reduce future taxable income. If not utilized, the losses expire through 2038 as follows:

	$
2026	177,000
2027	126,000
2028	112,000
2029	147,000
2030	102,000
2031	118,000
2032	54,000
2033	70,000
2034	59,000
2035	-
2036	81,000
2037	186,000
2038	142,000
2039	132,000
2040	169,000
	1,675,000

As at December 31, 2020, the Company’s U.S. subsidiary has U.S.-based non-capital tax losses of approximately US$55,000 (2019 - US$55,000) available to reduce future taxable income. These losses begin to expire in 2029.

In addition, the Company has accumulated Canadian Exploration Expenses, Canadian Development Expenses and Foreign Exploration and Development Expenses for income tax purposes of $1,670,000 (2019 - $1,693,000. The expenditures pools can be carried forward indefinitely to be applied against income of future years.

22

Silver Wolf Exploration Ltd. Notes to the consolidated financial statements For the years ended December 31, 2020 and 2019 Expressed in Canadian Dollars

14. SUBSEQUENT EVENTS

Warrant Exercises – Subsequent to December 31, 2020, the Company issued 100,000 common shares through the early exercise of share purchase warrants for proceeds of $10,000 at an average price per share of $0.10.

Non Brokered Private Placement – Subsequent to December 31, 2020, the Company issued 5,000,000 common shares at an offering price of $0.20 for gross proceeds of $1,000,000. No commissions or finder’s fees are payable in connection with this financing.

Option Grant – Subsequent to December 31, 2020, the Company granted 1,000,000 options, exercisable at $0.20 per share for a period of 5 years from the grant date.

First Payment – Option Agreement – Subsequent to December 31, 2020, the Company issued 131,718 common shares at an average price of $0.3796, valued at $50,000, to satisfy the terms laid out in Item 1 a) of the Option Agreement. For full details of the Option Agreement, see Note 6.

Share Purchase Warrant Issuance – Option Agreement – Subsequent to December 31, 2020, the Company issued share purchase warrants to acquire 300,000 common shares at a price of $0.20, as per the terms of the Option Agreement. For full details of the Option Agreement, see Note 6.

23