Temas Resources Corp. — Interim / Quarterly Report 2020

Aug 26, 2020

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CONDENSED INTERIM FINANCIAL STATEMENTS (Unaudited and expressed in Canadian dollars)

For the Six Months Ended June 30, 2020 and 2019

NOTICE OF NO AUDITOR REVIEW NOTICE TO READERS

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

The condensed interim financial statements of Temas Resources Corp. are the responsibility of the Company’s management. The condensed interim financial statements are prepared in accordance with standards established by the Chartered Professional Accountants of Canada and reflect management’s best estimates and judgment based on information currently available.

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

The Board of Directors is responsible for ensuring management fulfills its responsibilities for financial reporting and internal controls through an audit committee, which is comprised primarily of non-management directors.

The Company’s independent auditors have not performed an audit or review of these condensed interim financial statements.

“Kyler Hardy” “David Robinson” Kyler Hardy David Robinson Chief Executive Officer Chief Financial Officer

Vancouver, British Columbia August 26, 2020

Temas Resources Corp. Condensed Interim Statements of Financial Position As at June 30, 2020 and 2019

(Unaudited and expressed in Canadian dollars)

As at June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)
		June 30,		December 31,
		2020		2019
Assets
Cash	$	38,772	$	137,101
Accounts receivable (Note 8)		2,950		855
Taxes receivable		9,272		-
Loans receivable (Note 4, 8)		60,000		60,000
Prepaids		10,474		-
Total Assets		121,468		197,956
Liabilities
Accounts Payable & accrued liabilities		21,201		10,914
Loan payable (Notes 6, 8)		61,000		61,000
Total Liabilities		82,201		71,914
Shareholders’ Equity
Share capital_(net of issuance costs)_ (Note 7)		937,487		383,501
Reserves(Note 7)		188,365		-
Subscription receivable		-		(100,000)
Deficit		(1,086,585)		(157,459)
Total Shareholders’ Equity		39,267		126,042
Total Liabilities and Shareholders’ Equity	$	121,468	$	197,956

Nature and Continuance of Operations (Note 1) Subsequent Events (Notes 10)

Approved on behalf of the Board on August 26, 2020:

“K ler Hard ” “Konstantin Lichetenwald” y y Director Director

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

Temas Resources Corp. Condensed Interim Statements of Loss and Comprehensive Loss For the Three and Six Months Ended June 30, 2020 and 2019

(Unaudited and expressed in Canadian dollars)

	Three-month	Three-month	Three-month	Six-month	Six-month
	Period Ended	Period Ended		Period Ended	Period Ended
	June 30, 2020	June 30, 2019		June 30, 2020	June 30, 2019
Expenses
Exploration expenditures(Note 5)	$ -	$	-	$500,000	$-
General Administration	1,484		-	5,911	-
Insurance	3,500		-	3,990	-
Interest and bank charges	138		24	328	48
Investor relations(Note 7)	6,140		-	6,140	-
Professional fees(Note 8)	125,614		386	150,867	2,032
Share-based payments(Note 7)	9,435		-	188,365	-
Transfer Agent and filing fees	71,896		-	71,896	-
Travel	1,629		-	1,629	-
Total expenses	219,836		410	929,126	2,080
Net loss and comprehensive loss or the
period	(219,836)		(410)	(929,126)	(2,080)
Basic and diluted lossper common share	(0.01)		(410)	(0.03)	(2,080)
Weighted average number of common
shares outstanding	35,728,156		1	35,005,933	1

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

Temas Resources Corp.

Condensed Interim Statements of Changes in Shareholders’ Equity As at June 30, 2020 and 2019

(Unaudited and expressed in Canadian dollars)

	Number of					Total
	Common	Share Capital	Subscription	Reserves		Shareholders’
	Shares	Amount	Receivable	Options	Deficit	Equity
		($)	($)	($)	($)	($)
Balance, December 31, 2018	1	1	‐	-	(41)	(40)
Net loss for theperiod	‐	‐	‐	-	(2,080)	(2,080)
Balance, June 30, 2019	1	1	‐	-	(2,121)	(2,120)
Balance, December 31, 2019	25,550,001	383,501	(100,000)	-	(157,459)	126,042
Common shares issued(Note 7)	10,763,520	576,352	-	-	-	576,352
Share issuance costs(Note 7)	-	(22,366)	-	-	-	(22,366)
Receipts for Subscription
receivable	-	-	100,000			100,000
Share based payments(Note 7)	-	-	-	188,365	-	188,365
Net loss for the period	‐	-	‐	-	(929,126)	(929,126)
Balance, June 30, 2020	36,313,521	937,487	-	188,365	(1,086,585)	39,267

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

Temas Resources Corp. Condensed Interim Statements of Cash Flows For the Six Months Ended June 30, 2020 and 2019

(Unaudited and expressed in Canadian dollars)

		Six Month		Six Month
		Period Ended		Period Ended
		June 30, 2020		June 30, 2019
Cash Provided By (Used For):
Operating Activities
Net Loss for the period	$	(929,126)	$	(2,080)
Non-cash items
Exploration expenditures		500,000		-
Share-based payments		188,365		-
Changes in non‐cash working capital:
Accounts receivable		(2,095)		-
Taxes receivable		(9,272)		-
Prepaids		(10,474)		-
Accounts payable & accrued liabilities		10,287		2,132
Cash flows used in operating activities		(252,315)		52
Financing Activities:
Proceeds from subscription of special warrants
(net of issuance costs)		53,986		-
Payment of subscription		100,000		-
Loan payable		-		(100)
Cash flows from financing activities		153,986		(100)
Decrease in cash		(98,329)		(48)
Cash, beginning of period		137,101		60
Cash, end ofperiod	$	38,772		$ 12

No cash was paid for interest or income taxes during the year.

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

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

1. Nature and Continuance of Operations

Temas Resources Corp. (formerly Clean Earth Chemical Corp. ‐ the “Company”) was incorporated pursuant to the provisions of the British Columbia Business Corporations Act on June 25, 2018 under the name “Clean Earth Chemical Corp.” On August 12, 2019, the Company changed its name to Temas Resources Corp. The Company is in the exploration stage with respect to its mineral property interest and has not yet achieved commercial production. The Company’s shares are listed on the Canadian Stock Exchange under the ticker TMAS and on the OTCQB under the ticker TMASF.

The Company’s head office is located at 890‐1140 West Pender Street, Vancouver, British Columbia, V6E 4G1, and its registered and records office address is at Suite 1050 – 400 Burrard Street, British Columbia, Canada V6C 3A6.

The Company has an accumulated deficit of $1,086,585 as at June 30, 2020. The Company currently has sufficient liquidity to meet its operational requirements for the next fiscal year. However, the Company’s continued operations are dependent upon its ability to obtain the necessary financing to complete the development of its DAB mineral property and to bring it into future profitable production or realizing proceeds from its disposition. The Company has not yet determined whether the DAB mineral property contains reserves that are economically recoverable. All of the preceding indicates the existence of a material uncertainty that may cast substantial doubt about the Company’s ability to continue as a going concern. These condensed interim financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying condensed interim financial statements.

These condensed interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.

These condensed interim financial statements were authorized by the Board of Directors on August 26, 2020.

2. Basis of Presentation

Statement of Compliance

The condensed interim financial statements for the six months ended June 30, 2020 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the presentation of interim statements including IAS 34, Interim Financial Reporting.

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

3. Significant Accounting Policies

Basis of Measurement

These condensed interim financial statements have been prepared on a historical cost basis, except for financial instruments classified in accordance with measurement standards under IFRS. All dollar amounts presented are in Canadian dollars unless otherwise specified. These condensed interim financial statements have been prepared using IFRS principles applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they come due.

Significant Accounting Judgments and Estimates

The preparation of condensed interim financial statements in conformity with IFRS requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim financial statements and the reported revenues and expenses during the year. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates. The most significant accounts that require estimates as the basis for determining the stated amounts include valuation of share‐based payments and recognition of deferred income tax amounts and provision for restoration, rehabilitation and environmental costs.

Income Taxes

Income tax is recognized in profit or loss except to the extent that it relates to items recognized in other comprehensive income of loss or directly in equity, in which case it is recognized in other comprehensive income or loss or equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the end of the reporting period applicable to the period of expected realization or settlement. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the assets and liabilities on a net basis.

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

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

3. Significant Accounting Policies (Continued)

Financial Instruments

Recognition and Measurement

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of a financial instrument.

At initial recognition, financial assets are measured at fair value and classified as subsequently measured at amortized cost, fair value through other comprehensive income (“FVTOCI”) or fair value through profit or loss (“FVTPL”). At initial recognition, financial liabilities are measured at fair value and classified as, subject to certain exceptions, subsequently measured at amortized cost. For financial assets and financial liabilities not at FVTPL, fair value is adjusted for transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in the condensed interim statement of comprehensive loss.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: (i) it is held within a business model whose objective is to hold assets to collect contractual cash flows, and (ii) 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 financial asset is measured at FVTOCI if it meets both of the following conditions and is not designated as at FVTPL: (i) it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and (ii) 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 financial asset is measured at FVTPL unless it is measured at amortized cost or FVTOCI. However, an irrevocable election can be made at initial recognition for particular investments in equity instruments that would otherwise be measured at FVTPL to present subsequent changes in fair value through other comprehensive income.

The Company’s cash, accounts receivable, accrued liabilities and loan payable are classified as subsequently measured at amortized cost.

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 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.

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

3. Significant Accounting Policies (Continued)

Financial Instruments (continued)

Impairment (continued)

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 and the impairment loss is recognized in 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 reverse, 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 year. A reversal of an impairment loss is recognized immediately in profit or loss.

Exploration and Evaluation Assets

Exploration and evaluation assets include the cost of acquiring mining rights and any expenses directly related to the exploration and evaluation activities. These costs are capitalized as intangible assets and are carried at cost less any impairment loss recognized.

Costs incurred before the legal right to undertake exploration and evaluation activities on a project was acquired are expensed in the condensed interim statements of loss and comprehensive loss.

Mining rights and expenses related to exploration and evaluation activities are capitalized on a property by property basis pending determination of the technical feasibility and commercial viability of the project. No amortization is recognized during the exploration and evaluation phase. Costs capitalized include acquisition costs, drilling, project consulting, geophysical, geological and geochemical studies, as well as other costs related to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource.

Whenever a project is considered no longer viable or is abandoned, the capitalized amounts are written down to fair value less cost of disposal.

When technical feasibility and commercial viability of extracting a mineral resource are demonstrable, mining rights and expenses related to exploration and evaluation activities of the related mining property are transferred to mining assets under construction. Before the reclassification, exploration and evaluation assets are tested for impairment and any impairment loss is recognized in profit or loss before reclassification.

Upon transfer of exploration and evaluation assets into mining assets under construction, all subsequent expenditures on the construction, installation or completion of infrastructure facilities are capitalized with mining assets under construction. After the development stage, all assets included in mining assets under construction are transferred to mining assets and amortized over the expected productive lives of the assets.

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

3. Significant Accounting Policies (Continued)

Related Parties

Related parties are parties that have the ability to control or to exercise significant influence over the Company.

Share Capital

Common shares are classified as shareholders’ equity. Incremental costs directly attributable to the issue of common shares and other equity instruments are recognized as a deduction from shareholders’ equity. Common shares issued for consideration other than cash are valued based on their market value at the date the shares are issued.

Proceeds from issuances by the Company of units consisting of shares and warrants are allocated based on the residual method, whereby the carrying amount of the warrants is determined based on any difference between gross proceeds and the estimated fair market value of the shares. If the proceeds from the offering are less than or equal to the estimated fair market value of shares issued, a nil carrying amount is assigned to the warrants.

Loss Per Share

Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the year. Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity. In a loss year, potentially dilutive common shares are excluded from the loss per share calculation as the effect would be anti‐ dilutive. Basic and diluted loss per share are the same for the periods presented.

4. Loans receivable

As at June 30, 2020, the Company had advanced $60,000 (December 31, 2019 – $60,000) to a company with a common director. The amount advanced is non‐interest bearing, unsecured and due on demand

5. Exploration and Evaluation Assets

La Blache Property, Quebec, Canada

On June 18, 2020, the Company entered into a definitive agreement with Cloudbreak Discovery Corp. and Cronin Services Ltd. (collectively known as “Vendors”) for the purchase of 100% interest in the La Blache property in Core-Nord, Quebec for an aggregate of 20,000,000 shares in the Company, $60,000 in cash payments and deliver an NSR royalty of 2%, subject to the right of the Company to repurchase one-half of the NSR royalty (1%) for $2,500,000 at any time. The acquisition is subject to Exchange and shareholder approval. The 20,000,000 shares that will be issued will be subject to pooling restrictions as follows: 25% will be released from the pool six months after the closing of the transaction and the balance will be released 12 months thereafter. As at the date of these financial statements, the transaction had not yet closed.

DAB Property, Quebec, Canada

During the six months ended June 30, 2020, the Company had incurred the following exploration

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

5. Exploration and Evaluation Assets (continued)

expenditures in relation to the DAB Property, located in Quebec, Canada:

Exploration expenditures:
Optionpayment	$	500,000
Total exploration expenditures	$	500,000

On January 15, 2020, the Company entered into an option agreement with Contigo Resources Ltd. (“Contigo”) to acquire a 100% interest in the 124 claims comprising the DAB property. Under the terms of the option agreement, the Company needs to undertake the following to exercise its option:

• make cash payments of $25,000 on January 15, 2020 (paid) and $50,000 on January 15, 2021; and

• issue 10,000,000 common shares of the Company to Contigo on January 15, 2020 (issued)

Per the terms of the option agreement, Contigo retains a 2% net smelter royalty (“NSR”) on the DAB property. The Company can purchase 50% of the NSR at any time for a cash payment of $1,500,000.

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 conveyance history characteristic of many mineral properties. The Company has investigated title to its exploration and evaluation assets and, to the best of its knowledge, title to its property is in good standing.

6. Loan Payable

As at June 30, 2020, the Company has a $61,000 (2019 ‐ $61,000) loan payable. This amount is due on demand and non‐interest bearing.

7. Share Capital and Reserves

Authorized

The Company’s authorized share capital consisted of unlimited number of common shares without par value.

Issued and outstanding – Common Shares

As at June 30, 2020, total outstanding and issued common shares: 36,313,521 (December 31, 2019: 25,550,001).

On May 19, 2020, the Company issued 763,520 common shares in relation to the conversion of special warrants issued on February 25, 2020 and February 28, 2020.

On January 15, 2020, the Company issued 10,000,000 common shares to Contigo Resources Ltd. in relation to the Option Agreement to acquire 100% interest in the DAB property (Note 5). These shares are subject to a 12-month escrow commencing May 19, 2020.

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

7. Share Capital and Reserves (continued)

Fiscal 2019

On August 30, 2019, the Company issued 8,500,000 units for gross proceeds of $42,500. Each unit contained one common share, and one‐half common share purchase warrant. Each full warrant is exercisable into one common share at a price of $0.10 per share and expires on August 30, 2022.

On November 30, 2019, the Company issued 17,050,000 units for gross proceeds of $341,000. Each unit contained one common share, and one‐half common share purchase warrant. Each full warrant is exercisable into one common share at a price of $0.10 per share and expires on November 30, 2022.

Fiscal 2018

On June 25, 2018, the Company issued one incorporation share for $1.

Options

As at June 30, 2020, total outstanding options: 2,950,000 (December 31, 2019: Nil) summarized as follows:

			Remaining Life
Number of Options	Exercise Price		(In Years)	Expiry Date
2,900,000	$	0.10	2.74	March 26, 2023
50,000	$	0.105	1.46	December 15,2021
2,950,000

On June 3, 2020, the company entered into an agreement with CorpComm Limited to provide investor relations services to the Company for a period of 12 months commencing June 15, 2020. Compensation for the agreement consists of a $10,000 per month plus the Company issuing an option to acquire 600,000 shares of the Company at a price of $0.105 per share vesting evenly over 12 months with expiration date on December 15, 2021.

As at June 30, 2020, a total of 50,000 options have vested and been issued in relation to this agreement. Share-based payments of $9,435 has been recorded in connection with the issuance of these options. The options were fair valued using Black Scholes Option Pricing Model with the following assumptions: average risk-free rate - 0.30%; expected life – 1.5 years; expected volatility – 100%; forfeiture rate – Nil and expected dividends – Nil.

On March 26, 2020, the Company issued 2,900,000 stock options to directors, officers, employees and consultants of the Company. Each option is exercisable at $0.10 per share and has a three‐year term. All the options were vested immediately. Share-based payments of $178,930 have been recorded in connection with the issuance of these options.

The options were fair valued using Black-Scholes Option Pricing Model using the following assumptions average risk-free interest rate - 0.68%; expected life - 3 years; expected volatility - 100.00%; forfeiture rate - Nil and expected dividends - Nil.

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

7. Share Capital and Reserves (continued)

Special Warrants

As at June 30, 2020, total outstanding and issued special warrants: Nil (December 31, 2019: Nil). The 763,520 special warrants previously outstanding were converted to common shares May 19, 2020 upon listing of the Company’s shares on the Canadian Stock Exchange (CSE).

On February 28, 2020, the Company issued 268,520 special warrants at a price of $0.10 per special warrant, for gross proceeds of $26,852. Upon exercise, each special warrant will entitle the holder to one common share of the Company, without payment of additional consideration. Each special warrant, if not exercised earlier, will be deemed exercised on the date that is the earlier of:

• (i) the fifth business day following approval by the applicable securities commissions for listing as a publicly traded entity; or

• (ii) June 29, 2020.

In addition, the Company issued 200,000 special warrants as compensation in connection with the offering. These warrants have the same terms as those issued on February 28, 2020 and have been recorded as issuance costs.

On February 25, 2020, the Company issued 295,000 special warrants at a price of $0.10 per special warrant, for gross proceeds of $29,500. Upon exercise, each special warrant will entitle the holder to one common share of the Company, without payment of additional consideration. Each special warrant, if not exercised earlier, will be deemed exercised on the date that is the earlier of:

• (i) the fifth business day following approval by the applicable securities commissions for listing as a publicly traded entity; or

• (ii) June 26, 2020.

Share Purchase Warrants:

Details of common share purchase warrants outstanding at June 30, 2020 are as follows:

			Remaining Life
Number of Warrants	Exercise Price		(In Years)	Expiry Date
4,250,000	$	0.10	2.17	August 30, 2022
8,525,000	$	0.10	2.42	November 30,2022
12,775,000

8. Related Party Transactions

Key management personnel at the Company are the directors and officers of the Company. Other than the share-based payments of $188,365 granted to key management during the six months ended June 30, 2020, there was no other compensation paid directly to directors or officers of the Company.

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

8. Related Party Transactions (continued)

As at June 30, 2020, accounts receivable includes:

• $Nil (2019 – $855) due from director of the Company.

As at June 30, 2020, loans receivable includes:

• $60,000 (2019 – $Nil) due from a company owned by a director of the Company

As at June 30, 2020, loan payable includes:

• $Nil (2019 – $61,000) due to a company with common director; and

All loans are non‐interest bearing and due on demand.

As at June 30, 2020, accounts payable and accrued liabilities include:

• $2,337 (2019 – $Nil) due to a company owned by a director of the Company

For the six months ended June 30, 2020, the Company incurred total professional fees of $80,000 (2019 - $21,000) to a company owned by a director of the Company.

All related party transactions are in the normal course of operations and have been measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

9. Financial and Capital Risk Management

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are described below.

Level 1 ‐ unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 ‐ inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

Level 3 ‐ inputs that are not based on observable market data.

The Company enters into financial instruments to finance its operations in the normal course of business.

The Company has no financial instruments carried at fair value. The Company’s cash, accounts receivable, accounts payable and accrued liabilities and loan payable are initially recorded at fair value and subsequently measured at amortized cost.

The Company is exposed to varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes. The type of risk exposure and the way in way in which such exposure in managed is provided as follows:

Foreign exchange risk

The Company’s functional and reporting currency is the Canadian dollar and major purchases are

Temas Resources Corp. Notes to the Condensed Interim Financial Statements Six Months ended June 30, 2020 and 2019 (Unaudited and expressed in Canadian dollars)

9. Financial and Capital Risk Management (continued)

transacted in Canadian dollars. As a result, the Company’s exposure to foreign currency risk is minimal.

Credit risk

The Company’s cash is largely held in large Canadian financial institutions. The Company does not have any asset‐backed commercial paper. The Company maintains cash deposits with Schedule A financial institution, which from time to time may exceed federally insured limits. The

Company has not experienced any significant credit losses and believes it is not exposed to any significant credit risk.

Interest rate risk

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Financial assets and liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company does not hold any financial liabilities with variable interest rates. The Company does maintain bank accounts which earn interest at variable rates, but it does not believe it is currently subject to any significant interest rate risk.

Liquidity risk

The Company’s ability to continue as a going concern is dependent on management’s ability to raise the required funding through future equity issuances and through short‐term borrowing. The Company manages its liquidity risk by forecasting cash flows from operations and anticipating any investing and financing activities. Management and the Board of Directors are actively involved in the review, planning and approval of significant expenditures and commitments.

Price risk

The ability of the Company to explore its mineral properties and the future profitability of the Company are directly related to the market price of precious metals. The Company monitors precious metals prices to determine the appropriate course of action to be taken by the Company.

10. Subsequent Events

On August 13, 2020 the Company exercised 1,000,000 warrants at $0.10 for gross proceeds of $100,000.

On August 5, 2020 the Company was approved for trading on the OTCQB Venture Market under the ticker symbol “TMASF”.

On July 7, 2020 the Company entered into a Letter of Intent (LOI) for an equity investment facility of CAD $5 million with Crescita Capital LLC. The Company will have 3 years to utilize the CAD $5 million equity investment facility.