Talisker Resources - Interim / Quarterly Report 2021

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Condensed Interim Consolidated Financial Statements (Unaudited) For the three and six months ended June 30, 2021 and 2020

(in Canadian dollars)

Talisker Resources Ltd. Condensed Interim Consolidated Statements of Financial Position (Unaudited)

(Expressed in Canadian dollars)

		June 30,	December 31,
As at,	Notes	2021	2020
ASSETS
Current assets
Cash and cash equivalents	4	$ 25,444,763	$ 24,974,407
Amounts receivable	6	1,097,593	345,767
Inventory		58,660	64,212
Prepaid expenses		714,067	438,196
Total current assets		27,315,083	25,822,582
Reclamation deposits	12	1,248,300	1,190,000
Long term receivable	6	319,181	319,181
Property, plant and equipment	7	6,037,599	4,055,238
Exploration and evaluation assets	8, 12	24,583,561	24,532,611
Investment in associate	9	4,137,688	4,508,688
TOTAL ASSETS		$ 63,641,412	$ 60,428,300
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	10, 17	$ 4,549,930	$ 2,123,784
RSU Liability		86,622	8,619
Current portion of lease obligation	11	312,354	269,316
Total current liabilities		4,948,906	2,401,719
Provision for site reclamation and closure	12	14,725,124	14,592,950
Lease payable	11	441,774	422,865
Flow through premium liability	14	6,726,000	5,480,000
Total liabilities		26,841,804	22,897,534
Shareholders' equity
Issued capital	13	74,846,774	61,393,068
Share-based payment reserve	16	3,229,000	3,422,838
Warrant reserve	15	4,200,000	4,469,300
Accumulated deficit		(45,476,166)	(31,754,440)
Total shareholders'equity		36,799,608	37,530,766
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$ 63,641,412	$ 60,428,300

Events after the reporting period (note 20)

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

Talisker Resources Ltd.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited) (Expressed in Canadian dollars)

		Three months ended	Three months ended	Six months ended	Six months ended	Six months ended
		June 30,		June 30,
	Notes	2021	2020	2021		2020
Expenses
Exploration and evaluation expenditures		$ 8,081,057$	1,532,853 $	14,510,303	$	2,995,182
Mine care and maintenance costs		411,095	309,614	739,214		633,607
Consulting and wages	18	888,772	332,749	1,709,263		1,073,554
Administration		409,189	519,388	718,538		876,525
Share-based expense	16	29,915	-	59,502		225,847
Public company costs		215,605	93,494	704,506		326,482
Travel and other		53,802	21,844	84,171		162,323
Depreciation of property, plant and equipment	7	177,081	133,518	342,928		217,129
Total expenses		10,266,516	2,943,460	18,868,425		6,510,649
Other income and expense
Finance expense (income)		(10,765)	9,863	(20,979)		4,014
Foreign currency translation (gain) loss		(782)	756	1,715		426
Realized (gain) on marketable securities	5	-	(65,064)	-		(90,580)
Unrealized loss on marketable securities	5	-	(125,653)	-		-
Loss from investment in associate	9	352,000	-	371,000		-
Accretion on site reclamation and closure	12	66,452	81,552	132,174		171,970
		406,905	(98,546)	483,910		85,830
Loss before income taxes		10,673,421	2,844,914	19,352,335		6,596,479
Income tax recovery		-	-	(5,480,000)		(494,000)
Net loss and comprehensive loss		$ 10,673,421$	2,844,914 $	13,872,335	$	6,102,479
Lossper share - basic and diluted		$ 0.04 $	0.02 $ 0.06		$	0.04
Weighted average common shares outstanding		249,195,601 168,093,925		231,432,012		159,171,496

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

Talisker Resources Ltd.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Unaudited)

(Expressed in Canadian dollars)

				Share-based	Share-based				Retained
	Number of				Payment		Warrant		earnings
	Shares	Issued Capital			Reserve		Reserve		(deficit)		Total
			(Note 13)		(Note 16)		(Note 15)
Balance as at December 31, 2019	127,042,296	$	33,071,000	$	1,662,044	$	1,640,000	$	(16,064,824)	$	20,308,220
Issue of shares pursuant to private placement, net of issue costs	31,494,920		12,128,464		-		85,000		-		12,213,464
Flow through premium liability	-		(2,667,000)		-		-		-		(2,667,000)
Issue of shares for acquisition of mineral properties (Note 8)	2,200,000		677,000		-		-		-		677,000
Exercise of warrants	7,595,003		2,898,300		-		(987,100)		-		1,911,200
Exercise of options	75,000		26,045		(8,000)		-		-		18,045
Share-based expense - options	-		-		367,000		-		-		367,000
Expiry of stock options	-		-		(44,435)		-		44,435		-
Net loss for the period	-		-		-		-		(6,102,479)		(6,102,479)
Balance as at June 30, 2020	168,407,219	$	46,133,809	$	1,976,609	$	737,900	$	(22,122,868)	$	26,725,450
Issue of shares pursuant to private placement, net of issue costs	43,885,870		17,724,938		-		3,756,000		-		21,480,938
Flow through premium liability	-		(2,813,000)		-		-		-		(2,813,000)
Issue of shares for acquisition of mineral properties (Note 8)	475,000		169,125		-		-		-		169,125
Issue of shares for community relations	109,589		36,164		-		-		-		36,164
Exercise of warrants	390,171		136,261		-		(24,600)		-		111,661
Exercise of RSU's	41,220		5,771		(5,771)		-		-		-
Share-based expense - options	-		-		1,452,000		-		-		1,452,000
Net loss for the period	-		-		-		-		(9,631,572)		(9,631,572)
Balance as at December 31, 2020	213,309,069	$	61,393,068	$	3,422,838	$	4,469,300	$	(31,754,440)	$	37,530,766
Issue of shares pursuant to private placement, net of issue costs	37,366,932		18,406,263		-		-		-		18,406,263
Flow through premium liability	-		(6,726,000)		-		-		-		(6,726,000)
Issue of shares for acquisition of mineral properties (Note 8)	100,000		32,000		-		-		-		32,000
Exercise of warrants	4,531,674		1,626,214		-		(269,300)		-		1,356,914
Exercise of options	350,000		107,000		(35,000)		-		-		72,000
Exercise of RSU's	58,780		8,229		(8,229)		-		-		-
Expiry of stock options	-		-		(150,609)		-		150,609		-
Net loss for the period	-		-		-		-		(13,872,335)		(13,872,335)
Balance as at June 30, 2021	255,716,455	$	74,846,774	$	3,229,000	$	4,200,000	$	(45,476,166)	$	36,799,608

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

Talisker Resources Ltd. Condensed Interim Consolidated Statements of Cash Flows (Unaudited) (Expressed in Canadian dollars)

For the six month periods ended June 30,	Notes		2021		2020
Cash provided by (used in):
Operating activities
Net loss for the period		$	(13,872,335)	$	(6,102,479)
Items not involving cash:
Income tax recovery	14		(5,480,000)		(494,000)
Loss from investment in associate	9		371,000		-
Share based payments	16		78,003		367,000
Accretion on site reclamation and closure	12		132,174		171,970
Depreciation of property, plant and equipment	7		342,928		217,129
Realized gain on marketable securities	5		-		(90,580)
Working capital changes
Change in amounts receivable			(751,826)		(59,348)
Change in inventory			5,552		-
Change in prepaid expenses			(275,871)		(416,894)
Change in accounts payable and accrued liabilities			2,426,146		(162,195)
Cash flows used in operating activities			(17,024,229)		(6,569,397)
Investing activities
Acquisition of exploration and evaluation assets			(18,950)		(150,000)
Acquisition of property, plant and equipment			(2,098,852)		(25,232)
Reclamation deposits			(58,300)		(1,200,000)
(Purchase) Sales of marketable securities, net			-		90,580
Cash flows used in investing activities			(2,176,102)		(1,284,652)
Financing activities
Issue of shares pursuant to private placement			19,057,135		13,059,988
Share issue costs			(650,872)		(846,524)
Issue of shares pursuant to exercise of warrants and options			1,428,914		1,929,245
Repayment of lease and equipment loans			(164,490)		(148,749)
Cash flows from financing activities			19,670,687		13,993,960
Net increase (decrease) in cash and cash equivalents for the period			470,356		6,139,911
Cash and cash equivalents, beginning of the period			24,974,407		9,702,490
Cash and cash equivalents, end of theperiod		$	25,444,763	$	15,842,401
Supplementary cash flow information
Interest received		$	52,344	$	12,325

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

Talisker Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the three and six month periods ended June 30, 2021 and 2020 (Expressed in Canadian dollars)

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1. NATURE OF OPERATIONS

Talisker Resources Ltd. (“Talisker” or the “Company”) is a publicly listed company incorporated in British Columbia and continued in the Province of Ontario. The Company is engaged in exploration and evaluation of mineral properties in British Columbia. The Company’s shares were listed on the Canadian Securities Exchange (the “CSE”) under the symbol “TSK” and the OTCQB Venture Market under the symbol “TSKFF” as at December 31, 2020. On October 14, 2020 the Company’s shares began trading on the Toronto Stock Exchange (the “TSX”) under the symbol TSK and the Company voluntarily delisted from the CSE. The head office and registered address of the Company is located at 350 Bay Street, Suite 400, Toronto, Ontario, M5H 2S6.

The business of acquiring, exploring, and developing precious mineral deposits involves a high degree of risk. Talisker is in the exploration stage and is subject to risks and challenges similar to companies in a comparable stage. These risks include, but are not limited to, the challenges of securing adequate capital, exploration, development and operational risks inherent in the mining industry; changes in government policies and regulations; the ability to obtain the necessary environmental permitting; challenges in future profitable production or, alternatively Talisker’s ability to dispose of its interest on an advantageous basis; as well as global economic and commodity price volatility; all of which are uncertain. There is no assurance that Talisker’s funding initiatives will continue to be successful. The underlying value of the mineral properties is dependent upon the existence and economic recovery of mineral reserves and is subject to, but not limited to, the risks and challenges identified above. Changes in future conditions could require material write-downs of the carrying value of mineral properties and deferred exploration.

These consolidated financial statements were approved and authorized for issuance by the Board of Directors of the Company on August 10, 2021.

2. BASIS OF PRESENTATION

Statement of Compliance

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

Basis of Measurement and Significant Accounting Policies

These condensed interim consolidated financial statements have been prepared on the basis of accounting policies and methods of computation consistent with those applied in the Company’s December 31, 2020 annual financial statements, other than as noted below.

Amendments to IAS 16

Amendments to IAS 16, Property, Plant and Equipment—Proceeds before Intended Use Effective on January 1, 2022, the amendments to IAS 16 require that entities are no longer able to deduct the net proceeds from selling any items from an asset’s carrying amount before it is capable of operating in the manner intended by management. Instead, the proceeds should be recognised in accordance with applicable standards and in particular applying the measurement requirements of IAS 2 for the cost of those items. The Amendments to IAS 16 may impact the Company’s development projects. The Company early adopted the amendment in January 2021. There was no impact to the current period or comparative periods presented as a result of the amendment.

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2. BASIS OF PRESENTATION (continued)

Principles of Consolidation

These condensed interim consolidated financial statements for the three and six month periods ended June 30, 2021 and 2020 include the financial position, financial performance and cash flows of the Company and its subsidiary detailed below:

Subsidiary	Country of Incorporation	Economic Interest	Basis of Accounting
Bralorne Gold Mines Ltd.	Canada	100%	Full consolidation

Subsidiaries - Subsidiaries are entities over which the Company has control, whereby control is defined as the power to direct activities of an entity that significantly affect the entity’s returns so as to obtain benefit from its activities. Control is presumed to exist where the Company has a shareholding of more than one half of the voting rights in its subsidiaries. The effects of potential voting rights that are currently exercisable are considered when assessing whether control exists. Subsidiaries are fully consolidated from the date control is transferred to the Company, and are de-consolidated from the date at which control ceases.

3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with IFRS requires the Company’s management to make judgments, estimates and assumptions about future events that affect the amounts reported in the financial statements. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results may differ from those estimates.

The areas which require management to make significant judgments, estimates and assumptions in determining carrying values include, but are not limited to:

Exploration and Evaluation Assets’ carrying values and impairment charges - The Company assesses its cash-generating units at each reporting date to determine whether any indication of impairment exists. Where an indicator of impairment exists, an estimate of the recoverable amount is made, which is the higher of the fair value less costs of disposal and value in use. The determination of the recoverable amount requires the use of estimates and assumptions such as long-term commodity prices, discount rates, future capital requirements, exploration potential and future operating performance. 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.
Share-based payments – The Company determines costs for share-based payments using marketbased valuation techniques. The fair value of the market-based and performance-based non-vested share awards are determined at the date of grant using generally accepted valuation techniques. Assumptions are made and judgment used in applying valuation techniques. These assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future employee turnover rates and future employee stock option exercise behaviors and corporate performance. Such judgments and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.

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3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Provision for site reclamation and closure – Provisions for site reclamation and closure have been created based on management estimates. Assumptions, based on the current economic environment, have been made which management believes are a reasonable basis upon which to estimate the future liability as shown in Note 12. These estimates take into account any material changes to the assumptions that occur when reviewed regularly by management and are based on current regulatory requirements. Significant changes in estimates of discount rate, contamination, restoration standards and techniques will result in changes to provisions from period to period. Actual reclamation and closure costs will ultimately depend on future market prices for the costs which will reflect the market condition at the time the costs are actually incurred. The final cost of the currently recognized rehabilitation provisions may be higher or lower than currently provided for.
Impairment of investments in associate – The Company follows the guidance of IAS 28, Investments in Associates and Joint Ventures to assess whether there are impairment indicators which may lead to the recognition of an impairment loss with respect to its net investment in an associate. This determination requires significant judgement in evaluating if a decline in fair value is significant or prolonged, which triggers a formal impairment test. In making this judgement, the Company’s management evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its carrying amount, the volatility of the investment and the financial health and business outlook for the investee, including factors such as the current and expected status of the investee’s exploration projects and changes in financing cash flows.
COVID-19 - The outbreak of the novel coronavirus (“COVID-19”), has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of nonessential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. The duration and impact of the COVID-19 pandemic is unclear at this time and as a result it is not possible for management to estimate the severity of the impact it may have on the financial results and operations of the Company in future periods. It is management’s assumption that the Company will continue to operate as a going concern. Based on current legislation, as of June 30, 2021, the Company is required to spend approximately $15,813,000 to be spent by December 31, 2021 in connection with its flow-through offerings (December 31, 2020 - $11,000,000). On July 7, 2020, the Department of Finance proposed to extend the flow-through funds spend period and the look-back rule by one year, including extending the filing requirement for the Part XII.6 tax for the same period. The amendments to enact these proposals were enacted on June 29, 2021. The Corporation will be required to spend $15,813,000 of flow-through funds by December 31, 2022, instead of December 31, 2021.

4. CASH AND CASH EQUIVALENTS

The balance at June 30, 2021 consists of cash on deposit with major Canadian banks in interest bearing accounts totaling $3,146,099 (December 31, 2020 - $13,169,564) and guaranteed investment certificates with major Canadian banks of $22,298,664 (December 31, 2020 - $11,804,843) for total cash and cash equivalents of $25,444,763 (December 31, 2020 - $24,974,407).

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5. MARKETABLE SECURITIES

During the six month period ended June 30, 2021, the Company recognized interest income related to the various investments of $52,344 (2020 - $12,325).

During the six month period ended June 30, 2021, the Company recognized a realized gain of $nil (2020 - $90,580) on sale of various common shares.

6. AMOUNTS RECEIVABLE

6. AMOUNTS RECEIVABLE
As at,	June 30, 2021 December 31, 2020
HST receivable $ Other receivables Promissory note receivable $	351,093 $ 345,767 346,500 - 400,000 -
	1,097,593 $ 345,767

At June 30, 2021, the Company anticipates full recovery of these amounts and therefore no expected credit loss has been recorded against these receivables. The Company holds no collateral for any receivable amounts outstanding as at June 30, 2021 and December 31, 2020.

Promissory Note Receivable

The promissory note receivable balance relates to a loan of $400,000 to an arm's-length third party. The loan is secured by a general security agreement over the assets of the third party, and, in certain circumstances and subject to regulatory approval, is convertible to shares of the company at a price of five cents per share at the option of either party. See note 20 for additional details.

As at June 30, 2021, the balance owing amounts to $400,000 (December 31, 2020 - $nil). The Company has determined expected credit losses are expected to be minimal and no provision has been recorded.

Long Term Receivable

As at June 30, 2021, the Company recognized a receivable of $319,181 (December 31, 2020 - $319,181) related to B.C. tax mining credits. The Company expects to receive the refund pending the standard review process by CRA which is expected to take longer than 12 months.

Talisker Resources Ltd.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited) For the three and six month periods ended June 30, 2021 and 2020 (Expressed in Canadian dollars)

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7. PROPERTY, PLANT AND EQUIPMENT

	Machinery and Equipment $ Buildings $ Land $ Water Treatment Facility $ Vehicles $ Right-of-Use Asset $ Total $
Balance at December 31, 2019 Additions Disposals Balance at December 31, 2020 Additions Disposals Balance at June 30, 2021	849,210 312,500 - 977,000 96,700 575,000 2,810,410 309,979 377,009 315,000 - 80,360 695,039 1,777,387 (11,136) - - - - - (11,136)
	1,148,053 689,509 315,000 977,000 177,060 1,270,039 4,576,661 68,321 2,159,946 - 15,121 - 226,437 2,469,825 (128,600) - - (800) (2,500) - (131,900)
	1,087,774 2,849,455 315,000 991,321 174,560 1,496,476 6,914,586
ACCUMULATED DEPRECIATION
Balance at December 31, 2019 Additions Disposals Balance at December 31, 2020 Additions Impairment Disposals Balance at June 30, 2021	5,021 2,133 - 2,739 778 3,264 13,935 140,516 54,357 - 65,922 19,723 227,096 507,614 (126) - - - - - (126)
	145,411 56,490 - 68,661 20,501 230,360 521,423 99,617 34,796 - 33,045 11,883 163,587 342,928 45,162 - - - - - 45,162 (31,885) - - (74) (567) - (32,526)
	258,305 91,286 - 101,632 31,817 393,947 876,987
NET BOOK VALUE
At December 31, 2020 At June 30, 2021	1,002,642 633,019 315,000 908,339 156,559 1,039,679 4,055,238 829,469 2,758,169 315,000 889,689 142,743 1,102,529 6,037,599

As at June 30, 2021, included under buildings is $2,146,170 (December 31, 2020 - $nil) in construction in process related to construction of a camp, which is not being amortized until ready for its intended use.

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8. EXPLORATION AND EVALUATION ASSETS

The exploration and evaluation assets for the Company are summarized as follows:

Six months ended June 30, 2021

Project	January 1, 2021	Additions	Disposals	June 30, 2021
Bralorne Gold Camp
Bralorne Gold Project	$ 17,376,462	$ -	$ (1,050)	$ 17,375,412
Royalle Property	243,000	-	-	243,000
NaiKun Wind Crown Grant	36,000	-	-	36,000
Congress Property	295,000	-	-	295,000
Big Sheep Property	120,000	-	-	120,000
Southern BC Properties
Spences Bridge	5,701,823	-	-	5,701,823
Blustry Mountain Property	30,000	-	-	30,000
Tulox Property	405,963	-	-	405,963
Merritt Property	70,150	26,500	-	96,650
WCGG Properties1	109,338	-	-	109,338
Golden Hornet Property	66,125	25,500	-	91,625
SC Property	78,750	-	-	78,750
	$ 24,532,611	$ 52,000	$ (1,050)	$ 24,583,561

During the six months ended June 30, 2021, the Company issued 100,000 shares with a value of $32,000 and made cash payments of $20,000 for property acquisitions.

1 WCGG Properties include the Tulameen South, Bluejay and Sauchi Creek properties.

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9. INVESTMENT IN ASSOCIATE

On December 11, 2020, The Company sold several properties located in the Toodoggone region of the Province of British Columbian to TDG Gold. The Properties being acquired by TDG Gold consist of: the Baker Project, the Shasta Mine and the Baker mill infrastructure and equipment; the Chappelle property, the Mets lease, and the Bot property. Pursuant to the Purchase Agreement, TDG Gold acquired the Properties by issuing to Talisker 18,973,699 TDG Gold Shares.

As a result of the issuance of 18,973,699 shares, Talisker held 33% of the issued and outstanding shares of TDG Gold as at December 11, 2020. Due to these shareholdings and the director it has appointed to the board of TDG Gold, the Company has determined that it has significant influence over TDG Gold and has accounted for its continuing investment as an Investment in Associate using the equity basis of accounting. The Company recorded a fair value of $4,553,688 for its interest in the 18,973,699 TDG Gold shares issued to Talisker on December 11, 2020 at a price of $0.24 per TDG Gold share, which resulted in a gain on sale of properties of $4,255,849 which was recognized in the statement of loss and comprehensive loss for the year ended December 31, 2020.

Fair value of the 18,973,699 TDG Gold shares ($4,553,688) was estimated using the specifics of the TDG Gold private placement completed on the same date Talisker received the 18,973,699 shares (“TDG Gold Private Placement”). The TDG Gold Private Placement consisted of a unit priced at $0.30 with each unit comprising of one common share and one half common share purchase warrant. The fair value calculation of $0.24 per share, included a deduction for the value of the warrants in the private placement of one half common share purchase warrant which was valued at $0.06 using the Black-Scholes option pricing model, with the following assumptions: dividend yield 0%; risk free interest 0.31%; volatility 100% and an expected life of 36 months.

Fair value of one TDG Gold share as at June 30, 2021 was $0.44. The shares are subject to release based on the following schedule:

on the following schedule:
	Shares	Cumulative
	Released	Released
April 12, 2021	4,743,425	4,743,425
June 14, 2021	4,743,425	9,486,850
December 14, 2021	4,743,425	14,230,275
June 14, 2022	4,743,424	18,973,699
	18,973,699	18,973,699

Changes in the investment in associate for the six month period ended June 30, 2021 and year ended December 31, 2020 were as follows:

December 31, 2020 were as follows:
Acquisition December 11, 2020, at fair value	$ 4,553,688
Proportionate share of net loss	(45,000)
Balance – December 31, 2020	$ 4,508,688
Proportionate share of net loss	(371,000)
Balance – June 30, 2021	$ 4,137,688

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10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at,	June 30, 2021 December 31, 2020
Accounts payable Accrued liabilities	$ 2,197,815 $ 1,306,538 2,352,115 817,246
	$ 4,549,930 $ 2,123,784

11. LEASES PAYABLE

The Company has entered into equipment leases expiring between 2020 and 2023, with interest rates ranging from 4.95% to 5.90% per annum. The Company has the option to purchase the equipment at the end of the lease term for a nominal amount. The Company’s obligations under finance leases are secured by the lessor’s title to the leased assets.

The contractual maturities and interest charges in respect of the Company’s finance lease obligations are as follows:

		June 30, 2021 December 31, 2020
Not later than one year Later than one year and not later than five years Less: Future interest charges Present value of lease payments Less: current portion Non-current portion	$	360,925 $ 315,534 468,706 454,576 (75,503) (77,929)
	$	754,128 692,181 (312,354) (269,316)
		441,774 $ 422,865

Reconciliation of debt arising from lease liabilities:

		June 30,	December 31,
		2021	2020
Lease liability at beginning of year	$	692,181 $	216,213
Principal payments on lease liabilities		(164,490)	(219,071)
Additions to lease liabilities		226,437	695,039
	$	754,128 $	692,181

12. PROVISION FOR SITE RECLAMATION AND CLOSURE

Provincial laws and regulations concerning environmental protection affect the Company’s exploration and operations. Under current regulations, the Company is required to meet performance standards to minimize the environmental impact from its activities and to perform site restoration and other closure activities. The Company’s provision for future site closure and reclamation costs is based on known requirements.

The breakdown of the provision for site reclamation and closure is as per below:

Balance, beginnning of period/year Acquisition of properties Disposition of properties (Note 8) Change in estimate Accretion Balance,end ofperiod/year	Talisker Bralorne Total Talisker Bralorne Total - 14,592,950 14,592,950 1,157,832 14,194,124 15,351,956 - - - - - - - - - (1,157,832) - (1,157,832) - - 61,958 61,958 - 132,174 132,174 - 336,868 336,868 - 14,725,124 14,725,124 - 14,592,950 14,592,950 June 30, 2021 December 31,2020

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12. PROVISION FOR SITE RECLAMATION AND CLOSURE (continued)

The Company’s determination of the environmental rehabilitation provision arising from its activities at the Baker, Bot, and Tulox projects (Sable Resources) at June 30, 2021 was $nil (December 31, 2020: $nil). The environmental rehabilitation provision was eliminated upon the sale of the properties to TDG Gold, see note 9. As part of the Company’s agreement with Sable, Sable is required to cover any environmental liability in excess of the agreed upon amount of $316,266. As at June 30, 2021, the excess over this amount is equal to $841,566 which was assigned to TDG Gold upon sale.

The present value of the obligation for Bralorne of $14,725,124 (December 31, 2020 – $14,592,950) is based on an undiscounted obligation of $54,054,730, out of which $8,537,452 is expected to be incurred in 2027 with the remaining $45,517,278 to be incurred on water treatment and quality monitoring throughout 2126. The provision was calculated using a weighted average risk-free interest rate of 0.58% (December 31, 2020 – 0.58%) and a weighted average inflation rate of 1% (December 31, 2020 – 1%). Reclamation activities are estimated to begin in 2027 and are expected to be incurred over a period of 100 years.

Reclamation Deposits

The Company is required to make reclamation deposits in respect of its expected site reclamation and closure obligations. The reclamation deposits represent collateral for possible reclamation activities necessary on mineral properties in connection with the permits required for exploration activities by the Company.

Balance, beginnning of period/year Additions Disposals Balance,end ofperiod/year	Talisker Bralorne Total - 1,190,000 1,190,000 58,300 - 58,300 - - - 58,300 1,190,000 1,248,300 June 30, 2021	December 31,2020
		Talisker Bralorne Total
		50,437 25,000 75,437 14,963 1,165,000 1,179,963 (65,400) -(65,400)
		- 1,190,000 1,190,000

Under the Ministry of Energy, Mines and Petroleum Resources (“MEM”), the Company is required to hold reclamation bonds that cover the estimated future cost to reclaim the ground disturbed. Bralorne is required to pay $250,000 every six months until a cumulative security equal to $12,300,000. At June 30, 2021, the surety amounted to $2,400,000 and the Company has placed $1,190,000 in cash (December 31, 2020 - $1,190,000), totalling $3,590,000 to cover estimated future costs related to the ground disturbance at the Company’s Bralorne project. As at June 30, 2021 the Company is current with all its obligations with the MEM.

13. ISSUED CAPITAL

Authorized Unlimited common shares without par value

Authorized Unlimited common shares without par value
	June 30, 2021 December 31, 2020
Issued capital Fully paid common shares(1)	$ 74,846,774 $ 61,393,068
	255,716,455 213,309,069

(1) As at June 30, 2021 and December 31, 2020, there are 250,000 shares awaiting issuance, the proceeds for which were received in 2008 and are included in share capital.

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13. ISSUED CAPITAL (continued)

13. ISSUED CAPITAL (continued)
Common Shares Issued
Balance as at December 31, 2019	127,042,296	$	33,071,000
Issue of shares pursuant to private placement, net of issue costs	75,380,790		29,853,402
Flow through premium liability	-		(5,480,000)
Issue of shares for acquisition of mineral properties (Note 8)	2,675,000		846,125
Issue of shares for community relations	109,589		36,164
Exercise of warrants	7,985,174		3,034,561
Exercise of RSU's	41,220		5,771
Exercise of options	75,000		26,045
Balance as at December 31, 2020	213,309,069	$	61,393,068
Issue of shares pursuant to private placement, net of issue costs	37,366,932		18,406,263
Flow through premium liability	-		(6,726,000)
Exercise of warrants	4,531,764		1,626,214
Exercise of options	350,000		107,000
Exercise of RSU's	58,780		8,229
Issue of shares for acquisition of mineral properties (Note 8)	100,000		32,000
Balance as at June 30,2021	255,716,545	$	74,846,774

Financings

On April 15, 2021, the Company closed a non-brokered private placement raising total gross proceeds of $19,057,135. The private placement consisted of 37,366,932 common shares of the Company, which qualify as "flow-through shares" within the meaning of the Income Tax Act (Canada), at a price of $0.51 per flow through share.

In consideration for their services, the Company has paid the Agents a cash commission and incurred other closing costs totalling $650,872.

Diluted Weighted Average Number of Shares Outstanding

Basic weighted average shares outstanding: Effect of outstanding securities Diluted weighted average shares outstanding	Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020
	249,195,601 168,093,925 231,432,012 159,171,496 - - - -
	249,195,601 168,093,925 231,432,012 159,171,496

During the three and six month periods ended June 30, 2021 and 2020, the Company had a net loss, as such, the diluted loss per share calculation excludes any potential conversion of options and warrants that would decrease loss per share.

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14. FLOW-THROUGH PREMIUM LIABILITY

For the purposes of calculating the tax effect of any premium related to the issuances of the flow-through shares, the Company reviewed the share price of the Company’s common shares and compared it to determine if there was a premium paid on the shares.

Six month period ended June 30, 2021

For the six month period ended June 30, 2021, the Company recognized a $6,726,000 as a flow-through premium liability on issuance in connection with private placements closed during the six month period ended June 30, 2021. The amount will be reduced upon filing of renunciation documents with the Canada Revenue Agency.

For the six month period ended June 30, 2021, the Company recognized an amount of $5,480,000, in relation to flow-through private placements closed in the prior year and has recorded the gain as income tax recovery upon filing of renunciation documents with the Canada Revenue Agency which occurred during the six month period ended June 30, 2021.

Year ended December 30, 2020

For the year ended December 31, 2020, the Company recognized a $5,480,000 as a flow-through premium liability on issuance in connection with private placements closed during the year ended December 31, 2020. The amount will be reduced upon filing of renunciation documents with the Canada Revenue Agency.

15. WARRANTS RESERVE

The following is a summary of changes in warrants from January 1, 2020 to June 30, 2021:

	Number of Warrants Weighted average exercise price per warrant Amount
	Balance, December 31, 2019 18,538,566 $ 0.28 $ 1,640,000
	Exercise of warrants (7,985,174) 0.25 (1,011,700)
	Issue of broker warrants (Note 13) 620,817 0.33 85,000
	Issue of warrants 21,942,935 0.70 3,756,000
	Balance, December 31, 2020 33,117,144 $ 0.56 $ 4,469,300
	Exercise of warrants (4,515,500) 0.30 (268,000)
	Expiry of warrants (5,895,000) 0.30 -
	Exercise of broker warrants (16,174) 0.14 (1,300)
	Balance, June 30, 2021 22,690,470 $ 0.69 $ 4,200,000
	As at June 30, 2021, the Company had outstanding warrants as follows:
	Expiry Date Exercise Price Outstanding and exercisable
	August 13, 2021 $0.70 21,942,935 August 29, 2021 $0.14 136,807 February 4, 2022 $0.33 610,728
	Balance, June 30, 2021 22,690,470

As at June 30, 2021, the Company had outstanding	warrants as follows:
	Exercise	Outstanding and
Expiry Date	Price	exercisable
August 13, 2021	$0.70	21,942,935
August 29, 2021	$0.14	136,807
February 4, 2022	$0.33	610,728
Balance, June 30, 2021		22,690,470

During the six month period ended June 30, 2021, 4,515,500 warrants were exercised for proceeds of $1,354.650 as well as 16,174 broker warrants for proceeds of $2,264. During the year ended December 31, 2020, 7,985,174 warrants were exercised for proceeds of $2,022,861.

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16. SHARE-BASED PAYMENT RESERVE

Stock Option Plan

The Board of Directors of the Company adopted a stock option plan (the “Plan") whereby the aggregate number of common shares reserved for issuance under the Plan, including common shares reserved for issuance under any other share compensation arrangement granted or made available by the Company from time to time, may not exceed 10% of the Company's issued and outstanding common shares. The Plan is administered by the Board of Directors and grants made pursuant to the Plan must at all times comply with regulatory policies.

The terms of any options granted under the Plan are fixed by the Board of Directors and may not exceed a term of five years. The exercise price of the options granted under the Plan is set at the last closing price of the Company’s common shares before the date of grant or in accordance with regulatory requirements.

Each share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

The following options were outstanding as at June 30, 2021:

Number of	Number of
options	exercisable				Exercise	Fair value at
outstanding	options	Grant date	Expiry date		price	grant date
50,000	50,000	August 22, 2018	August 22, 2023	$	0.24	5,000
3,100,000	3,100,000	June 18, 2019	June 18, 2024	$	0.20	303,000
5,000,000	5,000,000	December 27, 2019	December 27, 2024	$	0.295	1,102,000
1,100,000	1,100,000	February 14, 2020	February 14, 2025	$	0.390	367,000
1,100,000	1,100,000	August 20, 2020	August 20, 2025	$	0.460	339,000
200,000	200,000	August 20, 2020	August 20, 2022	$	0.460	32,000
4,425,000	4,425,000	December 11, 2020	December 11, 2025	$	0.330	1,081,000
14,975,000	14,975,000					3,229,000

The share options outstanding as at June 30, 2021 had a weighted exercise price of $0.31 (December 31, 2020: $0.31) and a weighted average remaining contractual life of 3.69 years (December 31, 2020: 4.10 years).

All options vested on their date of issue and expire within five years of their issue, or 90 days after the resignation of the director, officer, employee or consultant.

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16. SHARE-BASED PAYMENT RESERVE (continued)

Movements in Share Options During the Period

The following reconciles the share options outstanding for the six month period ended June 30, 2021 and year ended December 31, 2020:

year ended December 31, 2020:
		Weighted average
	Number of options	exercise price
Balance as at December 31, 2019	9,031,250	$ 0.27
Granted	7,025,000	$ 0.37
Exercised	(75,000)	$ 0.24
Expired	(93,750)	$ 0.52
Forfeited	(318,750)	$ 0.47
Balance as at December 31, 2020	15,568,750	$ 0.31
Exercised	(350,000)	$ 0.21
Expired	(243,750)	$ 0.60
Balance as at June 30,2021	14,975,000	$ 0.31

Restricted Share Units

The Restricted Share Unit Plan (RSU Plan) provides for the grant of restricted share units (each, an “ RSU ”) convertible into a maximum number of common shares equal to ten percent (10%) of the number of common shares then issued and outstanding, provided, however, the number of common shares reserved for issuance from treasury under the RSU Plan and pursuant to all other security-based compensation arrangements of the Company shall, in the aggregate, not exceed ten percent (10%) of the number of common shares then issued and outstanding. Any common shares subject to a RSU which has been cancelled or terminated in accordance with the terms of the RSU Plan without settlement will again be available under the RSU Plan. When vested, each RSU entitles the holder to receive, subject to adjustments as provided for in the RSU Plan, one common Share or payment in cash for the equivalent thereof based on the volume weighted average trading price of the common shares on the five trading days immediately preceding the redemption date. The terms and conditions of vesting (if applicable) of each grant are determined by the Board at the time of the grant, subject to the terms of the RSU Plan. RSU awards may, but need not, be subject to performance incentives to reward attainment of annual or longterm performance goals. Any such performance incentives or long term performance goals are subject to determination by the Board and specified in the award agreement.

The Company uses the fair value method to recognize the obligation and compensation expense associated with the RSUs. The fair value of RSUs issued is determined on the grant date based on the market price of the common shares on the grant date multiplied by the number of RSUs granted. The fair value is expensed over the vesting term. Upon redemption of the RSU the carrying amount is recorded as an increase in common share capital and a reduction in the liability.

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16. SHARE-BASED PAYMENT RESERVE (continued)

The following table summarizes changes in the number of RSUs outstanding:

	Number of RSU’s	Weighted average
		fair value
Balance, December 31, 2019	100,000	$ 0.14
Granted	780,000	$ 0.33
Exercised	(41,220)	$ 0.14
Balance, December 31, 2020	838,780	$ 0.33
Exercised	(58,780)	$ 0.14
Balance, June 30,2021	780,000	$ 0.33

RSU liability:

As at June 30, 2021 a liability of $86,623 (December 31, 2020 - $8,619) has been recorded for RSUs.

The following table summarizes information about share-based payment reserve:

Balance as at December 31, 2019	$	1,662,044
Share-based expense - options		1,819,000
Exercise of stock options		(8,000)
Exercise of RSU's		(5,771)
Expiry of stock options		(44,435)
Balance as at December 31, 2020	$	3,422,838
Exercise of stock options		(35,000)
Exercise of RSU's		(8,229)
Expiry of stock options		(150,609)
Balance as at June 30,2021	$	3,229,000

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17. FINANCIAL INSTRUMENTS

Financial assets and financial liabilities as at June 30, 2021 and December 31, 2020 were as follows:

		Fair value			Other
		through	Amortized		financial
	profit of loss		cost		liabilities		Total
As at June 30, 2021
Cash and cash equivalents	$	-	$ 25,444,763	$	-	$	25,444,763
Amounts receivable		746,500	-		-		746,500
Reclamation deposits		-	1,248,300		-		1,248,300
Accounts payable and accrued liabilities		-	-		4,549,930		4,549,930
Leases payable		-	-		754,128		754,128
As at December 31, 2020
Cash and cash equivalents	$	-	$ 24,974,407	$	-	$	24,974,407
Reclamation deposits		-	1,190,000		-		1,190,000
Accounts payable and accrued liabilities		-	-		2,123,784		2,123,784
Leases payable		-	-		692,181		692,181

The Company classifies its financial instruments carried at fair value according to a three level hierarchy that reflects the significance of the inputs used in making the fair value measurements. The three levels of fair value hierarchy are as follows:

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

The carrying value of cash and cash equivalents, amounts receivable, reclamation deposits, accounts payable and accrued liabilities and leases and loan payables approximate fair value because of the limited terms of these instruments.

18. RELATED PARTY DISCLOSURES

The following is a summary of the Company’s related party transactions during the six month periods ended June 30, 2021 and 2020:

The Company incurred administrative and operations costs in the amount of $nil for the six month period ended June 30, 2021 (2020 - $28,957) paid to Sable Resources Ltd., a company with certain common directors and officers.

The Company incurred operations costs in the amount of $56,508 for the six month period ended June 30, 2021 (2020 - $nil) paid to JDS Energy & Mining Inc., a company with certain common directors.

Compensation of Key Management Personnel of the Company

In accordance with IAS 24, key management personnel, including companies controlled by them, are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company.

The remuneration of directors and key executives is determined by the compensation committee.

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18. RELATED PARTY DISCLOSURES (continued)

The remuneration of directors and other members of key management personnel during the six month periods ended June 30, 2021 and 2020 were as follows:

periods ended June 30, 2021 and 2020 were as follows:
	June 30, 2021 June 30, 2020
Short term employee benefits, director fees Share based payments	$ 1,134,569 $ 481,636 78,004 169,000
	$ 1,212,573 $ 650,636

As at June 30, 2021, an amount of $176,995 (December 31, 2020 - $279,973) due to key management personnel, was included in accounts payable and accrued liabilities. This amount is unsecured, noninterest bearing and without fixed terms of repayment.

19. COMMITMENTS AND CONTINGENCIES

Flow-Through Shares

As at June 30, 2021, the Company is committed to spending approximately $15,813,000 to be spent by December 31, 2021 in connection with its flow-through offerings (December 31, 2020 - $11,000,000). On July 7, 2020, the Department of Finance proposed to extend the flow-through funds spend period and the look-back rule by one year, including extending the filing requirement for the Part XII.6 tax for the same period. The amendments to enact these proposals were enacted on June 29, 2021. The Corporation is required to spend $15,813,000 of flow-through funds by December 31, 2022.

Due to the size, complexity and nature of the Company’s operations, various legal, tax, environmental and regulatory matters are outstanding from time to time. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.

20. EVENTS AFTER THE REPORTING PERIOD

On July 26, 2021, the Company entered into a definitive agreement with New Carolin Gold Corp. (“New Carolin”), whereby the Company will acquire all of the issued and outstanding common shares of New Carolin pursuant to a court-approved plan of arrangement.

Under the terms of the transaction, each of the issued and outstanding common shares of New Carolin will be exchanged for 0.3196 of a common share of the Company. New Carolin's 22,267,039 outstanding warrants and 3,880,000 outstanding options will be adjusted so that on exercise the holders will receive Talisker common shares adjusted to reflect the same exchange ratio.

In connection with the transaction, New Carolin entered into agreements to settle approximately $500,000 of New Carolin's outstanding payables following closing of the transaction. In support of the transaction, Talisker advanced $400,000 to New Carolin as at June 30, 2021. The proceeds of the loan were used to repurchase a 5-per-cent net profit interest on the Ladner gold project and for general corporate purposes.

The transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), requiring the approval of: (i) at least 66-2/3rds per cent of the votes cast by the shareholders of New Carolin, and (ii) at least 66-2/3rds per cent of the votes cast by the shareholders of New Carolin and the holders of options and warrants, voting together as a single class, at a special meeting of New Carolin security holders that has been called for September 9, 2021 to consider the transaction. In addition to New Carolin shareholder approval and approval by the court, the transaction is subject to applicable regulatory approvals including, but not limited to, Toronto Stock Exchange and TSX Venture Exchange approval and the satisfaction of certain other closing conditions customary in transactions of this nature.

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Talisker Resources — Interim / Quarterly Report 2021

43814_rns_2021-08-10_490b4783-7228-4d4e-a4f5-48e53ef54781.pdf

Talisker Resources Ltd. Condensed Interim Consolidated Statements of Financial Position (Unaudited)

(Expressed in Canadian dollars)

Talisker Resources Ltd.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited) (Expressed in Canadian dollars)

Talisker Resources Ltd.

Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Unaudited)

Talisker Resources Ltd. Condensed Interim Consolidated Statements of Cash Flows (Unaudited) (Expressed in Canadian dollars)

1. NATURE OF OPERATIONS

2. BASIS OF PRESENTATION

Statement of Compliance

Basis of Measurement and Significant Accounting Policies

Amendments to IAS 16

2. BASIS OF PRESENTATION (continued)

Principles of Consolidation

3. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

4. CASH AND CASH EQUIVALENTS

5. MARKETABLE SECURITIES

6. AMOUNTS RECEIVABLE

Promissory Note Receivable

Long Term Receivable

Talisker Resources Ltd.

7. PROPERTY, PLANT AND EQUIPMENT

8. EXPLORATION AND EVALUATION ASSETS

Six months ended June 30, 2021

9. INVESTMENT IN ASSOCIATE

10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

11. LEASES PAYABLE

12. PROVISION FOR SITE RECLAMATION AND CLOSURE

12. PROVISION FOR SITE RECLAMATION AND CLOSURE (continued)

Reclamation Deposits

13. ISSUED CAPITAL

13. ISSUED CAPITAL (continued)

Financings

Diluted Weighted Average Number of Shares Outstanding

14. FLOW-THROUGH PREMIUM LIABILITY

Six month period ended June 30, 2021

Year ended December 30, 2020

15. WARRANTS RESERVE

16. SHARE-BASED PAYMENT RESERVE

Stock Option Plan

16. SHARE-BASED PAYMENT RESERVE (continued)

Movements in Share Options During the Period

Restricted Share Units

16. SHARE-BASED PAYMENT RESERVE (continued)

RSU liability:

17. FINANCIAL INSTRUMENTS

18. RELATED PARTY DISCLOSURES

Compensation of Key Management Personnel of the Company

18. RELATED PARTY DISCLOSURES (continued)

19. COMMITMENTS AND CONTINGENCIES

Flow-Through Shares

20. EVENTS AFTER THE REPORTING PERIOD

More from Talisker Resources

Talisker Resources Interim / Quarterly Report 2021