Skyharbour Resources Ltd. — Interim / Quarterly Report 2020

Feb 28, 2020

SKYHARBOUR RESOURCES LTD.

CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars)

FOR THE NINE MONTHS ENDED DECEMBER 31, 2019

UNAUDITED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited financial statements for the period ended December 31, 2019.

SKYHARBOUR RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited - Expressed in Canadian Dollars) AS AT

December 31, 2019	December 31, 2019	March 31, 2019
ASSETS Current Cash $ Receivables Due from related parties (Note 9) Prepaid expenses Equipment(Note 5) Exploration and evaluation assets(Note 6) $	1,611,053 21,373 21,559 142,945 1,796,930 828 9,816,719 11,614,477	$ 1,352,374 54,656 11,162 61,702 1,479,894 828 9,620,935 $ 11,101,657
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ Shareholders' equity Capital stock (Note 7) Reserves (Note 7) Deficit $	72,908 46,919,440 4,318,301 (39,696,172) 11,541,569 11,614,477	$ 313,714 45,149,974 4,305,029 (38,667,060) 10,787,943 $ 11,101,657

Nature and continuance of operations (Note 1)

Approved and authorized by the Board of Directors on February 28, 2020.

“Jordan Trimble” Director “Jim Pettit” Director

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

SKYHARBOUR RESOURCES LTD.

CONDENSED INTERIM STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Unaudited - Expressed in Canadian Dollars) PERIODS ENDED

	December 31, 2019	December 31, 2019	December 31, 2018 December 31, 2019 December 31, 2018	December 31, 2018 December 31, 2019 December 31, 2018	December 31, 2018 December 31, 2019 December 31, 2018
	GENERAL AND ADMINISTRATIVE EXPENSES Accounting and audit Consulting fees (Note 9) Legal Office and sundry Rent Shareholder information Share-based payments Telephone Transfer agent and filing fees Travel and promotion Wages and benefits Loss before other items OTHER ITEMS Unrealized gain (loss) on marketable securities (Note 4) Realized (loss) on sale of marketable securities (Note 4) Interest income Loss and comprehensive loss for the period	3 months $ 12,767 140,114 19,850 10,516 9,109 118,751 - 1,180 12,262 13,933 8,243 (346,725) 18,000 (22,042) 531 $ (350,236)	3 months $ 14,621 138,344 13,267 15,903 9,958 80,161 - 1,268 12,231 25,224 11,643 (322,620) - - 4,492 $ (318,128)	9 months $ 60,142 418,821 34,127 25,476 25,714 306,469 - 3,355 22,084 63,285 27,255 (986,728) - (47,572) 5,188 $ (1,029,112)	9 months $ 61,745 391,241 41,095 56,762 26,358 315,878 435,463 4,134 25,264 64,855 37,898 (1,460,693) - (80,994) 10,530 $ (1,531,157)
	Basic and diluted loss per common share	$ (0.005)	$ (0.005)	$ (0.016)	$ (0.026)
	Weighted average number of common shares outstanding	65,313,651	58,983,056	65,313,651	58,983,056

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

SKYHARBOUR RESOURCES LTD. CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited - Expressed in Canadian Dollars) NINE MONTHS ENDED DECEMBER 31

	2019	2018
CASH FLOWS FROM OPERATING ACTIVITIES Loss for the period Items not affecting cash: Share-based payments Realized loss on sale of marketable securities Changes in non-cash working capital items: (Increase) decrease in receivables (Increase) decrease in due from related parties (Increase) decrease in prepaid expenses Decrease in accounts payable and accrued liabilities Cash (used in) operating activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from capital stock issued Share issuance costs Cash provided by financing activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of marketable securities Option payments received Expenditures on exploration and evaluation assets Cash (used in) investing activities Increase (decrease) in cash during the period Cash, beginning of period Cash, end of period	$ (1,029,112) - 47,572 33,283 (10,397) (81,243) (271,027) (1,310,924) 1,844,333 (61,595) 1,782,738 52,428 50,000 (315,563) (213,135) 258,679 1,352,374 $ 1,611,053	$ (1,531,157) 435,463 80,994 27,325 (760) (30,934) (354,583) (1,373,652) 3,873,516 (64,788) 3,808,728 200,256 50,000 (1,619,111) (1,368,855) 1,066,221 1,292,313 $ 2,358,534

Supplemental disclosure with respect to cash flows (Note 11)

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

SKYHARBOUR RSOURCES LTD.

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited - Expressed in Canadian Dollars)

Capital Stock

	Number	Amount Reserves Subscriptions received in advance	Deficit	Total
Balance, as at March 31, 2018 Private placements Share issuance costs - cash Share issuance costs – finders’ warrants Escrow shares cancelled Warrants exercised Options exercised Options exercised Share-based payments Loss for the period Balance, as at December 31, 2018	54,620,176 7,500,285 - - (2,928) 1,720,263 100,000 - - - 63,937,796	$ 41,472,134 $ 3,914,477 $ - 3,189,893 - - (64,787) - - (7,376) 7,376 - - - - 644,623 - - 39,000 - - 24,736 (24,736) - - 435,463 - - - - $ 45,298,223 $ 4,332,580 $ -	$ (37,000,864) - - - - - - - - (1,531,157) $ (38,532,021)	$ 8,385,747 3,189,893 (64,787) - - 644,623 39,000 - 435,463 (1,531,157) $11,098,782
Balance, as at March 31, 2019 Private placements Share issuance costs - cash Share issuance costs – finders’ warrants Warrants exercised Loss for the period Balance, as at December 31, 2019	63,937,796 11,351,879 - - 70,000 - 75,359,675	$ 45,149,974 $ 4,305,029 $ - 1,823,933 - - (61,595) - - (13,272) 13,272 - 20,400 - - - - - $ 46,919,440 $ 4,318,301 $ -	$ (38,667,060) - - - - (1,029,112) $ (39,696,172)	$10,787,943 1,823,933 (61,595) - 20,400 (1,029,112) $11,541,569

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

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

1. NATURE AND CONTINUANCE OF OPERATIONS

Skyharbour Resources Ltd. (the "Company") was incorporated pursuant to the provisions of the British Columbia Business Corporations Act on July 24, 1970. The Company trades on the TSX Venture Exchange (“TSX-V”) and is principally engaged in acquisition, exploration and evaluation of resource properties.

The head office and records office of the Company are located at Suite #1610 - 777 Dunsmuir Street, Vancouver, British Columbia, Canada. The registered office is located at Suite #1710 - 1177 West Hastings Street, Vancouver, British Columbia, Canada.

The Company’s principal business activity is the acquisition and exploration of mineral property interests, at the present, principally in Saskatchewan, Canada. The Company is considered to be in the exploration stage and substantially all of the Company’s efforts are devoted to financing and exploring these property interests. There has been no determination whether the Company’s interests in unproven mineral properties contain mineral reserves which are economically recoverable.

The Company continues to be dependent upon its ability to finance its operations and exploration programs through financing activities that may include issuances of additional debt or equity securities. The recoverability of the carrying value of exploration projects, and ultimately, the Company’s ability to continue as a going concern, is dependent upon the existence and economic recovery of reserves, the ability to raise financing to complete the development of the properties, and upon future profitable production or, alternatively, upon the Company’s ability to dispose of its interest on an advantageous basis, all of which are uncertain.

While the Company has been successful in obtaining its required financing in the past, there is no assurance that such financing will be available or be available on favourable terms. An inability to raise additional financing may impact the future assessment of the Company as a going concern. The 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. These material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern.

2. BASIS OF PRESENTATION

Statement of Compliance

These condensed interim financial statements, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB (“International Accounting Standards Board”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, ‘Interim Financial Reporting’. The accounting policies followed in these condensed interim financial statements are the same as those applied in the Company’s annual financial statements for the year ended March 31, 2019.

The condensed interim financial statements have been prepared on a historical cost basis, except for financial instruments classified as financial instruments at fair value through profit and loss, which are stated at their fair value. In addition, these financial statements have been prepared using the accrual basis of accounting except for cash flow information.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES

Critical accounting estimates

The preparation of these financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported expenses during the period. Actual results could differ from these estimates.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that 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:

• i) The carrying value and the recoverability of exploration and evaluation assets, which are included in the statements of financial position. The cost model is utilized and the value of the exploration and evaluation assets is based on the expenditures incurred. At every reporting period, management assesses the potential impairment which involves assessing whether or not facts or circumstances exist that suggest the carrying amount exceeds the recoverable amount.

• ii) The inputs used in calculating the fair value for share-based payments expense included in profit or loss and share-based share issuance costs included in shareholders’ equity. The share-based payments expense is estimated using the Black-Scholes options-pricing model as measured on the grant date to estimate the fair value of stock options. This model involves the input of highly subjective assumptions, including the expected price volatility of the Company’s common shares, the expected life of the options, and the estimated forfeiture rate.

• iii) The valuation of shares issued in non-cash transactions. Generally, the valuation of non-cash transactions is based on the value of the goods or services received. When this cannot be determined, it is based on the fair value of the non-cash consideration. When non-cash transactions are entered into with employees and those providing similar services, the non-cash transactions are measured at the fair value of the consideration given up using market prices.

• iv) The recognition of deferred tax assets. The Company considers whether the realization of deferred tax assets is probable in determining whether or not to recognize these deferred tax assets.

Equipment

Equipment is recorded at cost less accumulated amortization. Amortization is recorded on a declining balance basis at the following annual rates:

e following annual rates:
Computer equipment	30%
Furniture and equipment	20%

Equipment that is withdrawn from use, or has no reasonable prospect of being recovered through use or sale, are regularly identified and written off. The assets' residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

Subsequent expenditures relating to items of equipment are capitalized when it is probable that future economic benefits from the use of the assets will be increased. All other subsequent expenditure is recognized as repairs and maintenance.

Gains and losses on disposal of an item of equipment are determined by comparing the net proceeds from disposal with the carrying amount of equipment and are recognized in profit or loss.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)

Exploration and evaluation assets

Pre-exploration costs are expensed as incurred. Costs related to the acquisition and exploration of mineral properties are capitalized by property until the commencement of commercial production. If commercially profitable ore reserves are developed, capitalized costs of the related property are reclassified as mining assets after an impairment test and amortized using the unit of production method. If, after management review, it is determined that capitalized acquisition, exploration and evaluation costs are not recoverable over the estimated economic life of the property, or the property is abandoned, or management deems there to be an impairment in value, the property is written down to its net realizable value.

Any option payments received by the Company from third parties or tax credits refunded to the Company are credited to the capitalized cost of the mineral property. If payments received exceed the capitalized cost of the mineral property, the excess is recognized as income in the year received. The amounts shown for mineral properties do not necessarily represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof.

Impairment

At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The 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 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 period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

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, but to an amount that does 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.

Provision for environmental rehabilitation

The Company recognizes liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of mineral properties and equipment, when those obligations result from the acquisition, construction, development or normal operation of the assets. The net present value of future rehabilitation cost estimates arising from the decommissioning of plant and other site preparation work is capitalized to mining assets along with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflect the time value of money are used to calculate the net present value. The rehabilitation asset is depreciated on the same basis as mining assets.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)

Provision for environmental rehabilitation (cont'd…)

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates.

Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss for the year. The Company had no provisions for environmental rehabilitation as at December 31, 2019.

Loss per share

The Company presents basic loss per share for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

Share-based payments

The Company grants stock options to acquire common shares of the Company to directors, officers, employees and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes, or provides services similar to those performed by an employee.

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. A corresponding increase in reserves is recorded when stock options are expensed. When stock options are exercised, capital stock is credited by the sum of the consideration paid and the related portion of share-based payments previously recorded in reserves. Consideration paid for the shares on the exercise of stock options is credited to capital stock.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.

Flow-through common shares

Resource expenditure deductions for income tax purposes related to exploration activities funded by flow-through share arrangements are renounced to investors in accordance with Canadian income tax legislation. On issuance, the Company bifurcates the flow-through share into i) a flow-through share premium, equal to the estimated premium, if any, investors pay for the flow-through feature, which is recognized as a liability and ii) share capital. Upon expenses being incurred, the Company derecognizes the flow-through premium liability for the amount of tax reduction renounced to the shareholders. The premium is recognized as other income.

Proceeds received from the issuance of flow-through shares are restricted to be used for only Canadian resource property exploration expenditures within a two-year period. The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the “Look-back” Rule, in accordance with the Government of Canada flowthrough regulations. When applicable, this tax is accrued as a financial expense until paid.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)

Financial instruments

The Company has adopted new accounting standard IFRS 9 – Financial Instruments, effective April 1, 2018. The new standard sets out requirements for classifying, recognizing and measuring financial assets and financial liabilities. This standard replaces IAS 39 – Financial Instruments: Recognition and Measurement.

IFRS 9 is effective for annual periods beginning on or after January 1, 2018. IFRS 9 allows for an exemption from restating prior periods in respect of the standard’s classification and measurement requirements. The Company has chosen to apply this exemption upon initial adoption, although it was determined that the adoption of IFRS 9 had no impact on the comparative period’s financial statements.

IFRS 9 establishes three primary measurement categories for financial assets: fair value through profit and loss (“FVTPL”), fair value through other comprehensive income (“FVOCI”) and amortized cost. The basis for classification depends on the entity’s business model and the contractual cash flow characteristics of the instrument. For financial liabilities, the new standard retains most of the requirements of IAS 39, except that fair value changes due to changes in an entity’s own credit risk are recorded in other comprehensive Income rather than in net earnings.

Upon adoption of IFRS 9, the Company has changed its accounting policy for financial instruments as follows:

Classification

The Company determines the classification of its financial instruments at initial recognition. Upon initial recognition, a financial asset is classified as measured at: amortized cost, fair value through profit and loss (“FVTPL”), or fair value through other comprehensive income (loss) (“FVOCI”). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The adoption of IFRS 9 has not had a significant effect on the Company's accounting policies related to financial liabilities and derivative financial instruments. A financial liability is classified as measured at amortized cost or FVTPL.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

• • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

An equity investment that is held for trading is measured at FVTPL. For other equity investments that are not held for trading, the Company may irrevocably elect to designate them as FVOCI. This election is made on an investment-byinvestment basis.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)

Financial instruments (cont’d...)

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has elected to measure them at FVTPL.

The Company completed an assessment of its financial assets and liabilities as at March 31, 2019. The adoption of IFRS 9 had no quantitative impact on the Company’s financial instruments as at March 31, 2019.

However, it has an impact on the classification of the Company’s financial instruments compared to the old standard IAS 39 as follows:

39 as follows:
	Original classification	New
Asset or Liability	IAS 39	classification
		IFRS 9
Cash	FVTPL	FVTPL
Marketable securities	FVTPL	FVTPL
Receivables	Loans and receivables	Amortized cost
Due from related parties	Loans and receivables	Amortized cost
Accounts payables and accrued liabilities	Other liabilities	Amortized cost

Measurement

Initial measurement

On initial recognition, all financial assets and financial liabilities are measured at fair value adjusted for directly attributable transaction costs except for financial assets and liabilities classified as FVTPL, in which case the transaction costs are expensed as incurred.

Subsequent measurement

The following accounting policies apply to the subsequent measurement of financial instruments:

Financial assets at FVTPL

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)

Financial instruments (cont’d...)

Equity investments at FVOCI

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

Debt investments at FVOCI

These assets are subsequently measured at fair value. Interest income is calculated using the effective interest rate method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Impairment of financial instruments

The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

For financial assets measured at amortized cost, and debt investments at FVOCI, the Company applies the expected credit loss impairment model. On adoption of the expected credit loss model there was no material adjustment.

Impairment of financial instruments (cont’d...)

At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to the twelve month expected credit losses. The Company shall recognize in the financial statements of profit or loss, as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

The adoption of the new "expected credit loss" impairment model under IFRS 9, as opposed to an incurred credit loss model under IAS 39, had a negligible impact on the carrying amounts of the Company's financial assets on the transition date given the Company transacts exclusively with large international financial institutions and other organizations with strong credit ratings and the negligible historical level of customer default.

Financial instrument disclosures

The Company provides disclosures that enable users to evaluate (a) the significance of financial instruments for the entity’s financial position and performance; and (b) the nature and extent of risks arising from financial instruments to which the entity is exposed during the year and at the date of the statement of financial position, and how the entity manages these risks.

The Company provides information about its financial instruments measured at fair value at one of three levels according to the relative reliability of the inputs used to estimate the fair value:

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

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

3. SIGNIFICANT ACCOUNTING POLICIES (cont'd…)

Financial instruments (cont’d...)

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).

New standards, interpretations and amendments

Certain new standards, interpretations and amendments to existing standards have been issued by the IASB or IFRIC that are mandatory for accounting periods beginning after January 1, 2019, or later periods. Updates that are not applicable or are not consequential to the Company have been excluded in the standards listed below.

IFRS 16 Leases

IFRS 16 – Leases , was issued in January 2016 with the objective to recognize all leases on the balance sheet. IFRS 16 requires lessees to recognize a “right of use” asset and a lease liability calculated using a prescribed methodology. The mandatory effective date of IFRS 16 is for annual periods beginning on or after January 1, 2019.

The Company adopted IFRS 16, Leases (“IFRS 16”) on April 1, 2019. The Company anticipates the standard will have no significant impact on its financial statements.

4. MARKETABLE SECURITIES

During the current period, the Company sold marketable securities in a publicly traded company with an initial value of $100,000. The Company received net proceeds of $52,428 with respect to the sale of the shares and realized a loss on sale of marketable securities of $47,572, which was recorded in profit or loss. These shares were received in the current period, pursuant to an option agreement relating to the Preston Uranium Project (Note 6).

As at December 31, 2018, the Company sold marketable securities in a publicly traded company with an initial value of $382,500. The Company received net proceeds of $200,256 with respect to the sale of the shares and realized a loss on sale of marketable securities of $80,994, which was recorded in profit or loss.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

SKYHARBOUR RESOURCES LTD.

5. EQUIPMENT

Furniture and Equipment	Furniture and Equipment
Cost Balance, March 31, 2018, 2019 and December 31, 2019	$ 19,850
Accumulated amortization Balance, March 31, 2018 Amortization Balance, March 31, 2019 and December 31, 2019	$ 15,714 3,308 $ 19,022
Carrying amounts As at March 31, 2019 As atDecember31,2019	$ 828 $ 828

SKYHARBOUR RESOURCES LTD.

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

6. EXPLORATION AND EVALUATION ASSETS

	December 31, 2019 9 months	Falcon Point and Yurchison Moore Lake, Sask.	Mann Lake, Sask. Preston, Sask.	Total
	Acquisition costs: Balance, beginning of period Additions Balance, end of period Exploration costs: Balance, beginning of period Additions Accommodation/food Assaying/sampling Camp Consulting & geologist Equipment & other rental GIS/technical logistics Mileage/gas Office/miscellaneous Staking/line-cutting Supplies Travel Option payments received Balance, end of period Total costs, December 31, 2019	$ 220,787 $ 2,210,000 - - 220,787 2,210,000 652,068 6,083,198 72,327 1,137 7,709 31,324 - 11,625 79,108 42,300 7,444 3,545 4,029 - 580 - 28 969 33,871 - 1,260 1,635 6,903 33,090 213,259 125,625 - - 865,327 6,208,823 $ 1,086,114$ 8,418,823	$ 170,340 $ 5,200 - - 170,340 5,200 62,707 216,635 - - - - - - 6,900 - - - - - - - - - - - - - - - 6,900 - - (150,000) 69,607 66,635 $239,947 $ 71,835	$ 2,606,327 - 2,606,327 7,014,608 73,464 39,033 11,625 128,308 10,989 4,029 580 997 33,871 2,895 39,993 345,784 (150,000) 7,210,392 $ 9,816,719

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

6. EXPLORATION AND EVALUATION ASSETS (cont’d…)

March 31, 2019 12 months	Falcon Point and Yurchison Moore Lake, Sask.	Mann Lake, Sask. Preston, Sask.	Total
Acquisition costs: Balance, beginning of year Additions Balance, end of year Exploration costs: Balance, beginning of year Additions Accommodation/food Assaying/sampling Camp Consulting & geologist Drilling Equipment & other rental GIS/technical logistics Mileage/gas Mobilization/demobilization Office/miscellaneous Supplies Transportation/shipping Travel Option payments received Balance, end of year Total costs, March 31, 2019	$ 213,723 $ 1,910,000 7,064 300,000 220,787 2,210,000 637,741 3,858,131 - 45,235 - 89,206 - 165,405 11,900 292,874 - 896,910 - 109,919 - 27,480 - 151,553 - 142,676 2,427 1,623 - 16,012 - 7,063 - 279,111 14,327 2,225,067 - - 652,068 6,083,198 $ 872,855 $ 8,293,198	$ 170,340 $ 5,200 - - 170,340 5,200 50,807 266,635 - - - - - - 11,900 - - - - - - - - - - - - - - - - - - - 11,900 - - (50,000) 62,707 216,635 $233,047 $221,835	$ 2,299,263 307,064 2,606,327 4,813,314 45,235 89,206 165,405 316,674 896,910 109,919 27,480 151,553 142,676 4,050 16,012 7,063 279,111 2,251,294 (50,000) 7,014,608 $ 9,620,935

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

6. EXPLORATION AND EVALUATION ASSETS (cont’d…)

Title to exploration and evaluation assets

Title to exploration and evaluation assets involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing.

Preston Uranium Project in the Athabasca Basin, Saskatchewan

The Company and Clean Commodities Corp. (“Clean”) each own a 50% interest in the Preston Uranium Project located in the Athabasca area of the province of Saskatchewan.

The Company and Clean entered into an option agreement on March 7, 2017 whereby the optionee, Orano Canada Inc. (formerly Areva Resources Canada Inc.), may earn a 70% working interest in a portion of the Preston Uranium Project. To earn the first option of 51%, the optionee is required to contribute $100,000 in cash to each of the Company and Clean ($100,000 to each company was received as of December 31, 2019) and incur $2,800,000 in exploration expenditures over a three-year period. The optionee may earn an additional 19% interest for a total of 70% over another three years by funding exploration expenditures in the total amount of $4,500,000 and making cash payments totaling $250,000 to each of Skyharbour and Clean.

On March 27, 2017, the Company and Clean entered into an option agreement which allows the optionee, Azincourt Energy Corp. (formerly Azincourt Uranium Inc.), to acquire a 70% working interest in a portion of the Preston Uranium Project known as the East Preston Property. Under the agreement, the optionee will issue 4,500,000 listed common shares (2,250,000 shares issued to each optionor) and contribute cash of $1,000,000 ($500,000 to each optionor) and incur exploration expenditures totaling up to $2,500,000 over the three year option agreement. As of December 31, 2019, the Company received 4,250,000 common shares (valued at $482,500) (Note 4) and $200,000 in cash from the optionee.

During the current period, the Company entered into a debt settlement agreement whereby the debtor, Azincourt issued 2,000,000 of its common shares in lieu of paying $100,000 in cash to the Company, on or before 24 months following the execution date. The Company also received $50,000 pursuant to the original option agreement.

Falcon Point in the Athabasca Region, Saskatchewan

The Company holds a 100% interest in the Falcon Point uranium project as well as the Yurchison Lake project, together “Falcon Point and Yurchison Projects”, both located on the eastern flank of the Athabasca basin, Saskatchewan. Denison Mines Corp. (“Denison”) will retain a 2% NSR in the projects of which 1% may be purchased by the Company for $1,000,000.

Moore Lake Uranium Project, in the Athabasca Region, Saskatchewan

On July 13, 2016, the Company entered into an agreement with Denison whereby the Company has an option to acquire a 100% interest in Denison's 100% interest in the Moore Lake uranium project located in the eastern Athabasca Basin, in Saskatchewan, Canada.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

6. EXPLORATION AND EVALUATION ASSETS (cont’d…)

Moore Lake Uranium Project, in the Athabasca Region, Saskatchewan (cont’d…)

Under the terms of the option agreement, the Company is required to issue 4,500,000 common shares (issued at a fair value of $1,710,000) and make staged cash payments over five years totaling $500,000 (paid as of December 31, 2019) to Denison as well as incur $3,500,000 in exploration expenditures over five years (incurred as of December 31, 2019) (“Option Period”) to complete its acquisition of a 100% interest in the property. During the Option Period, the Company is the operator of the project and recognizes an administration fee of 10% of all direct and indirect expenses for the calculation of the required exploration expenditures incurred.

Denison may exercise a buyback option (“Buyback Option”) to repurchase a 51% interest in the property by making a cash payment of $200,000 and spending $6,750,000 in exploration expenditures on the property over the following three year period. The parties would then form a joint venture. If Denison fails to complete the Buyback Option, the Company would retain 100% ownership in the property.

Provided this first Buyback Option is not exercised by Denison, the Company would retain 100% ownership of the property and would have an additional five year period to incur an additional $3,000,000 in exploration expenditures on the project. At this point, Denison may elect to exercise a second buyback option to repurchase a 51% interest in the property by making a cash payment of $500,000 and spending $16,500,000 in exploration expenditures on the property over the following four year period. The parties would then form a joint venture. If Denison fails to complete this second buyback option, the Company would retain 100% ownership in the property.

Provided the first Buyback Option was not exercised by Denison and the Company does not complete the additional expenditures within the allotted five year period, Denison may elect to exercise a buyback option at any time to repurchase a 51% interest in the property by making a cash payment of $500,000 and spending at least 2.5 times the expenditures incurred by the Company since the beginning of the option agreement. The parties would then form a joint venture.

The Company now holds 100% interest in the property.

Mann Lake in the Athabasca Region, Saskatchewan

The Company holds a 100% interest in the Mann Lake uranium project. The Company has an option to purchase 1.5% of the property's underlying 2.5% NSR for $1,500,000.

7. CAPITAL STOCK AND RESERVES

Escrow shares

Included in issued capital stock are nil (March 31, 2019 – nil) common shares that are subject to an escrow agreement and may not be transferred, assigned or otherwise dealt with, without the consent of the regulatory authorities. The escrow shares were cancelled and returned to treasury on May 7, 2018.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

7. CAPITAL STOCK AND RESERVES (cont’d…)

Private placements

On November 29, 2019, the Company raised gross proceeds of $1,823,933 from a non-brokered private placement of 4,038,380 FT units at a price of $0.18 per FT unit as well as 7,313,499 non-FT units at a price of $0.15 per non-FT unit. Each FT unit consists of one common share and one-half of a share purchase warrant. Each whole warrant will entitle the holder to purchase one common share for a period of three years at a price of $0.22 per common share. Each non-FT unit consists of one common share and one share purchase warrant. Each warrant will entitle the holder to purchase one common share for a period of three years at a price of $0.22 per common share. The Company issued 250,837 finder’s warrants with an exercise price of $0.22 for three years and paid cash finders’ fees of $51,225 with respect to the private placement.

The 250,837 finders’ warrants were valued at $13,272 using the Black-Scholes option pricing model using an expected life of 3 years, volatility of 59.2%, a dividend rate of 0% and risk free interest rate of 1.62%.

The Company incurred additional share issue costs of $10,370 associated with these private placements.

During fiscal 2019, the Company issued capital stock as follows:

On December 7, 2018, the Company raised gross proceeds of $600,000 from a non-brokered flow-through (“FT”) private placement of 1,333,333 FT shares at a price of $0.45 per FT share. The Company recognized a FT premium liability of $53,333 as a result of the premium price on the FT shares. As at March 31, 2019, the Company had incurred the $600,000 in eligible expenditures and recognized other income of $53,333 through profit or loss.

On August 2, 2018, the Company raised gross proceeds of $2,589,894 from a non-brokered private placement of 2,462,256 FT units at a price of $0.45 per FT unit as well as 3,704,696 non-FT units at a price of $0.40 per non-FT unit. Each FT unit consists of one common share and one-half of a share purchase warrant. Each whole warrant will entitle the holder to purchase one common share for a period of two years at a price of $0.60 per common share. Each non-FT unit consists of one common share and one share purchase warrant. Each warrant will entitle the holder to purchase one common share for a period of two years at a price of $0.60 per common share. The Company issued 79,097 finder’s warrants with an exercise price of $0.60 for two years and paid cash finders’ fees of $40,059 with respect to the private placement. The Company recognized a FT premium liability of $123,113 as a result of the premium price on the FT shares. As at March 31, 2019, the Company had incurred the $1,105,553 in eligible expenditures and recognized other income of $123,113 through profit or loss.

The 79,097 finders’ warrants were valued at $7,376 using the Black-Scholes option pricing model using an expected life of 2 years, volatility of 59%, a dividend rate of 0% and risk free interest rate of 2.08%.

The Company incurred additional share issue costs of $24,082 associated with these private placements.

8. STOCK OPTIONS AND WARRANTS

The Company has a stock option plan approved by shareholders to grant options to directors, officers, employees and consultants, to acquire up to 10% of issued and outstanding common stock. The exercise price of each option equals the market price of the Company's stock as calculated on the date of grant. The options can be granted for a maximum term of 5 years and vest at the discretion of the board of directors.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

8. STOCK OPTIONS AND WARRANTS (cont’d…)

The following incentive stock options were outstanding at December 31, 2019:

	Number ofShares Exercise Price Expiry Date
Stock options	427,500 0.30 March 16, 2020 202,500 0.30 July 9, 2020 1,887,500 0.30 September 29, 2021 100,000 0.35 December 22, 2021 390,000 0.63 February 13, 2022 1,425,000 0.42 August 17, 2023 100,000 0.42 August 28, 2023 4,532,500

The following share purchase warrants were outstanding at December 31, 2019:

		Number ofShares Exercise Price Expiry Date 4,654,048 0.30 March 2, 2020 1,527,500 0.40 June 26, 2020 5,014,920 0.60 August 2, 2020 14,349,200 0.27 August 10, 2021 9,583,526 0.22 November 29, 2022 35,129,194
	Warrants:

Stock option and share purchase warrant transactions are summarized as follows:

Outstanding March 31, 2019 Granted Exercised Cancelled/expired Outstanding December 31, 2019 Numbercurrently exercisable		Warrants Number Weighted Average Exercise Price 26,441,990 $ 0.36 9,583,526 0.22 (70,000) 0.29 (826,322) 0.75 35,129,194 $ 0.31	Warrants Number Weighted Average Exercise Price 26,441,990 $ 0.36 9,583,526 0.22 (70,000) 0.29 (826,322) 0.75 35,129,194 $ 0.31		StockOptions	StockOptions
		Number			Number	Weighted Average Exercise Price
		26,441,990 9,583,526 (70,000) (826,322) 35,129,194			4,796,875 - - (264,375) 4,532,500	$ 0.37 - - 0.40 $ 0.37
		35,129,194	$ 0.31		4,532,500	$ 0.37

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

9. RELATED PARTY TRANSACTIONS

The key management personnel of the company are the Directors, Chief Executive Officer, and the Chief Financial Officer.

Compensation of the Company’s key management personnel is comprised of the following:

		December 31, 2019 December 31, 2018 208,931 $ 190,938 70,500 99,690 - 231,779 279,431 $ 522,407	December 31, 2019 December 31, 2018 208,931 $ 190,938 70,500 99,690 - 231,779 279,431 $ 522,407
	Charged to profit and loss for consulting fees $ Capitalized to exploration and evaluation assets Share-based payments Totalexpense $	208,931 $ 70,500 - 279,431 $
			522,407

Included in accounts payable and accrued liabilities at December 31, 2019 is $12,285 (March 31, 2019 - $6,720) due to directors and/or their companies.

Due from related parties at December 31, 2019 is $21,559 (March 31, 2019 - $11,162) and is non-interest bearing with no specific terms of repayment.

10. ADMINISTRATIVE AGREEMENT

The Company operates from the premises of a private company that provides office and administrative services to the Company and various other public companies on a short-term contract basis. The private company incurs costs which are reimbursed by the Company. No administrative fees are charged for this service.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

11. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

	December 31,	December 31,	December 31,	December 31,
		2019		2018
Cashpaid oraccrued during the periodfor interest	$	-	$	-
Cashpaid duringtheperiod for income taxes	$	-	$	-

During the period ended December 31, 2019, the Company:

• a) Received 2,000,000 shares of a public company, valued at $100,000 pursuant to an exploration and evaluation option agreement (Note 6).

• b) Accrued $30,221 in exploration and evaluation assets through accounts payable and accrued liabilities.

During the period ended December 31, 2018, the Company:

• a) Accrued $19,811 in exploration and evaluation assets through accounts payable and accrued liabilities.

12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

Cash and marketable securities are carried at fair value using a level 1 fair value measurement. The fair values of due from related parties, receivables and accounts payable and accrued liabilities approximate their book values due to the short-term nature of the instruments.

Financial risk factors

The Company’s risk exposures and the impact on the Company’s financial instruments are summarized below:

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to cash and receivables. Management believes that the credit risk concentration with respect to financial instruments included in receivables is remote because these instruments are due primarily from government agencies and cash is held with reputable financial institutions.

SKYHARBOUR RESOURCES LTD. NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited - Expressed in Canadian Dollars) DECEMBER 31, 2019

12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont’d…)

Liquidity risk

The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when they come due. At December 31, 2019, the Company had a cash balance of $1,611,053 to settle current liabilities of $72,908.

Market risk

Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. These fluctuations may be significant. The Company’s marketable securities are exposed to market risk.

(a) Interest rate risk

The Company has cash balances held with financial institutions. The Company’s current policy is to invest excess cash in short-term demand treasury bills issued by the Government of Canada and its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks.

(b) Foreign currency risk

The Company is not currently exposed to significant foreign currency risk as most transactions are denominated in Canadian dollars.

(c) Price risk

The company is exposed to price risk with respect to commodity prices. Changes in commodity prices will impact the economics of development of the Company’s mineral properties. The Company closely monitors commodity prices to determine the appropriate course of action to be taken.

13. CAPITAL MANAGEMENT

The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition and exploration of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business. The Company defines capital that it manages as shareholders’ equity.

The properties in which the Company currently has an interest are in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to any externally imposed capital restrictions.