Tres-Or Resources Ltd. — Annual Report 2021

Jun 28, 2021

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020

(Expressed in Canadian Dollars)

Tel: 1-604-688-8700 Email: info@tres-or.com Website: http://www.tres-or.com

Tres-Or trades on the TSX Venture Exchange under the symbol TRS

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Tres-Or Resources Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Tres-Or Resources Ltd. (the "Company"), which comprise the consolidated statements of financial position as at February 28, 2021 and February 29, 2020, and the consolidated statements of loss and comprehensive loss, changes in equity, and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at February 28, 2021 and February 29, 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our opinion.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company has a working capital at February 28, 2021 of $150,926 and a deficit of $16,669,261. The Company has not generated revenue from operations; additional financing will be required in the foreseeable future to fund the Company's established business plan. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We obtained Management's Discussion and Analysis prior to the date of this auditor's report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

The engagement partner on the audit resulting in this independent auditor's report is Catherine Tai.

June 28, 2021

Vancouver, Canada Chartered Professional Accountants

TRES-OR RESOURCES LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

	Note	February 28,2021		February 29,2020
ASSETS
Current assetsCashMarketable securitiesReceivables	34	$441,050-16,412	$	83,66544,14325,469
Prepaids		31,839		22,392
Total current assets		489,301		175,669
Non-current assetsExploration and evaluation assets	5	3,794,826		3,275,649
TOTAL ASSETS		$4,284,127	$	3,451,318
LIABILITIES
Current liabilities
Accounts payable and accrued liabilitiesDue to related parties	7	$218,850421,377	$	130,59660,337
Total current liabilities		640,227		190,933
Non-current liabilitiesLong term payablesDue to related partiesLoans payable	76,7	--174,267		31,140303,423151,483
TOTAL LIABILITIES		814,494		676,979
EQUITY
Share capital	8	17,891,191		16,999,311
Share subscriptions receivable		(24,750)		-
Equity reserves	8	2,272,453		2,272,453
Accumulated other comprehensive income		-		30,449
Deficit		(16,669,261)		(16,527,874)
TOTAL EQUITY		3,469,633		2,774,339
TOTAL LIABILITIES AND EQUITY		$4,284,127	$	3,451,318
Nature and continuance of operations (Note 1)Subsequent event (Note 15)

Approved by the Board of Directors on June 24, 2021:

"Gareth E. Mason " "Laura Lee Duffett"

Director Director

TRES-OR RESOURCES LTD. CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)

	Note	2021	Years endedFebruary 28 and 29,2020
GENERAL AND ADMINISTRATIVE EXPENSES
Consulting fees		$15,300	$-
Accretion and interest on loans payable	6,7	23,874	19,703
Management fees	7	65,000	55,500
Office and miscellaneous		12,725	21,572
Professional fees	7	109,626	86,307
Transfer agent and regulatory fees		24,240	26,268
Travel and promotion	7	44,456	103,036
		(295,221)	(312,386)
Allowance for doubtful accounts	4	-	(183,795)
Extinguishment of accounts payable		6,038	-
Settlement of flow through share premium
liabilities	9	30,000	30,939
Write-down of exploration and evaluation assets	5	-	(1,024)
Foreign exchange loss		2,241	-
Loss for the year		(256,942)	(466,266)
OTHER COMPREHENSIVE INCOME (LOSS)
Unrealized gain (loss) on marketable securities	3	-	21,445
Gain on marketable securities	3	85,106	-
Total comprehensive loss for the year		$(171,836)	$(444,821)
Basic and diluted loss per common share		$(0.02)	$(0.03)
Weighted average number of
common shares outstanding – basic and
diluted		14,887,363	14,000,828

TRES-OR RESOURCES LTD. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian Dollars)

			Share		AccumulatedOther
	Number ofshares	Share Capital	SubscriptionsReceivable	EquityReserves	ComprehensiveIncome	Deficit	Total
Balance –February 28, 2019	10,694,297	$16,378,631	$-	$2,272,453	$9,004	$(16,061,608)	$2,598,480
Private placement	3,306,531	659,180	-	-	-	-	659,180
Share issue costs	-	(7,561)	-	-	-	-	(7,561)
Flow-through share premium liability	-	(30,939)	-	-	-	-	(30,939)
Unrealized gainon marketable securities	-	-	-	-	21,445	-	21,445
Loss for the year	-	-	-	-	-	(466,266)	(466,266)
Balance –February 29, 2020	14,000,828	16,999,311	-	2,272,453	30,449	(16,527,874)	2,774,339
Private placement	6,577,435	911,615	-	-	-	-	911,615
Share subscription receivable		-	(24,750)				(24,750)
Share issue costs	-	(17,735)	-	-	-	-	(17,735)
Flow-through share premium liability	-	(30,000)	-	-	-	-	(30,000)
Shares issued for exploration and evaluation asset	400,000	28,000	-	-	-	-	28,000
Gain onmarketable securities	-	-	-	-	(30,449)	115,555	85,106
Loss for the year	-	-	-	-	-	(256,942)	(256,942)
Balance –February 28, 2021	20,978,263	$17,891,191	$(24,750)	$2,272,453	$-	$(16,669,261)	$3,469,633

TRES-OR RESOURCES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

	For the years ended February 28 and 29,2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the year	$	(256,942)	$	(466,266)
Items not affecting cash
Allowance for doubtful accounts		-		183,795
Accretion on loans payable		22,784		19,703
Settlement of flow through share premium liability		(30,000)		(30,939)
Write-down of exploration and evaluation assets		-		1,024
Extinguishment of accounts payable		(6,038)		-
Changes in non-cash working capital items
Receivables		9,057		(20,593)
Prepaid expenses		(9,447)		(22,392)
Accounts payable and accrued liabilities		64,652		(61,005)
Due to related parties		55,638		(659)
Net cash used in operating activities		(150,296)		(397,332)
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and evaluation assets expenditures		(490,677)		(348,611)
Proceeds from sale of marketable securities		129,249		-
Option payments received		-		5,000
Recovery of exploration and evaluation assets expenditures		-		121,445
Net cash used in investing activities		(361,428)		(222,166)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from private placement		786,865		659,180
Share issuance costs		(17,756)		(7,406)
Proceeds from loan payable		100,000		-
Net cash provided by financing activities		869,109		651,774
Change in cash		357,385		32,276
Cash, beginning		83,665		51,389
Cash, end	$	441,050	$	83,665

Supplemental disclosure with respect to cash flows (Note 13)

TRES-OR RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020 (Expressed in Canadian Dollars)

1. NATURE AND CONTINUANCE OF OPERATIONS

Tres-Or Resources Ltd. (the "Company") was incorporated under the laws of the Province of British Columbia and is in the business of exploration and evaluation of mineral properties. To date, the Company has not earned significant revenues and is considered to be in the exploration stage.

The Company's head office and registered office address is Suite 1500 – 1055 West Georgia Street, Vancouver, BC, V6E 4N7, Canada.

The consolidated financial statements are presented in Canadian dollars unless otherwise indicated, which is the functional currency of the Company and its subsidiary.

The Company is in the process of exploring its exploration and evaluation assets and has not yet determined whether the properties contain reserves that are economically recoverable. The recoverability of the amounts shown for exploration and evaluation assets and related deferred exploration costs are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production.

These consolidated financial statements of the Company have been prepared using accounting policies applicable to a going concern, which contemplate the realization of assets and settlement of liabilities in the normal course of business as they fall due for the foreseeable future. The Company has a working capital deficiency at February 28, 2021 of $150,926 (February 29, 2020 – deficiency of $15,264) and a deficit of $16,669,261 (February 29, 2020 - $16,527,874). The Company has not generated revenue from operations; additional financing will be required in the foreseeable future to fund the Company's established business plan. These circumstances comprise a material uncertainty which may cast significant doubt as to the ability of the Company to continue as a going concern. The Company will continue to pursue opportunities to raise additional capital through equity markets and/or related party loans to fund its exploration and operating activities; however, there is no assurance of the success or sufficiency of these initiatives. The Company's ability to continue as a going concern is dependent upon it securing the necessary working capital and exploration requirements and eventually to generate positive cash flows either from operations or additional financing. These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and statement of financial position classifications that would be necessary if the going concern assumption was inappropriate, and these adjustments could be material.

In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, have adversely affected workforces, economies, and financial markets globally, potentially leading to an economic downturn. It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or results of operations at this time.

2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments that have been measured at fair value.

These consolidated financial statements, including comparatives have been prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). The significant accounting policies applied in these consolidated financial statements are based on the IFRS issued and outstanding as of February 28, 2021.

Basis of Consolidation

These consolidated financial statements include the accounts of the Company, which is incorporated under the laws of British Columbia, and its wholly owned subsidiary, Temagami-Diamonds Ltd. All significant intercompany balances and transactions have been eliminated upon consolidation.

Name ofsubsidiary	Incorporation	InterestFebruary 28,2021	InterestFebruary 29,2020
TemagamiDiamonds Ltd.	Canada	100%	100%

Significant Accounting Estimates and Judgments

The preparation of these consolidated 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 reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impact of such estimates is pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, 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. whether or not an impairment has occurred in its exploration and evaluation assets;
• ii. the inputs used in the accounting for share-based payments expense; and
• iii. the inputs used in the accounting for finders' warrants and compensation options in share capital and equity reserves.

Critical accounting judgments

Examples of significant judgments, apart from those involving estimation, include:

• the accounting policies for exploration and evaluation assets; and
• classification of financial instruments.

Exploration and Evaluation Assets

Pre-exploration costs are expensed in the period in which they are incurred.

All costs related to the acquisition and exploration of exploration and evaluation assets are capitalized by property. If economically recoverable ore reserves are developed, capitalized costs of the related property are reclassified as mining assets and amortized using the unit of production method. When a property is abandoned, all related costs are written-off to operations. If, after management review, it is determined that the carrying amount of an exploration and evaluation asset is impaired, that property is written-down to its estimated net realizable value. An exploration and evaluation asset is reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

Exploration and Evaluation Assets (Cont'd)

The amounts shown for exploration and evaluation assets 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 development, and future profitable production or proceeds from the disposition thereof.

Provisions for Environmental Rehabilitation

The Company recognizes the liabilities for statutory, contractual, constructive or legal obligations associated with the retirement of tangible long-lived assets in the period when the liability arises. The net present value of future rehabilitation costs is capitalized to the long-lived asset to which it relates with a corresponding increase in the rehabilitation provision in the period incurred. Discount rates using a pre-tax rate that reflects the time value of money are used to calculate the net present value.

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 the related assets with a corresponding entry to the rehabilitation provision. The increase in the provision due to the passage of time is recognized as interest expense.

The Company has no known restoration, rehabilitation or environmental costs related to its exploration and evaluation assets.

Impairment

The carrying amounts of the Company's non-financial assets, other than deferred tax assets if any, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit" or "CGU"). The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. 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.

The Company's corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.

Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. A reversal of an impairment loss is recognized immediately in profit or loss.

Share-based Payments

The Company grants stock options to buy 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.

Share-based Payments (Cont'd)

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. Consideration paid for the shares on the exercise of stock options is credited to share capital.

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 the fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of the goods and services rendered.

Loss per Share

The dilutive effect on earnings (loss) per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. For the periods presented, this calculation proved to be anti-dilutive. Basic earnings (loss) per common share is calculated using the weightedaverage number of shares outstanding during the period.

Warrants

The Company engages in equity financing transactions to obtain the funds necessary to continue operations and explore and evaluate exploration and evaluation assets. These equity financing transactions may involve issuance of common shares or units. Each unit comprises a certain number of common shares and a certain number of share purchase warrants. Depending on the terms and conditions of each equity financing agreement, the warrants are exercisable into additional common shares at a price prior to expiry as stipulated by the agreement. Warrants that are part of units are assigned a value based on the residual value of the unit after deducting the fair value of the common shares. Warrants that are issued as payment for agency fees or other transactions costs are accounted for as share-based payments.

Income Taxes

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

Deferred tax is recognized in respect of temporary differences, between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for relating to goodwill not deductible for tax purposes, the initial recognition of assets and liabilities that affect neither accounting nor taxable loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized.

Flow-Through Common Shares

The Company will from time to time, issue flow-through common shares to finance a significant portion of its exploration program. Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors. On issuance, the Company bifurcates the flowthrough 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 liability and recognizes a deferred tax liability for the amount of tax reduction renounced to the shareholders. The premium is recognized as other income and the related deferred tax recognized as a tax provision.

Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures within a two-year period.

The Company may also be subjected to a Part XII.6 tax on flow-through proceeds renounced under the Lookback Rule, in accordance with Government of Canada flow-through regulations. When applicable, this tax is accrued as a financial expense until paid.

Foreign Exchange

Items included in the financial statements of the Company's subsidiary are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The functional currency of the Company and its subsidiary is the Canadian dollar.

Transactions in currencies other than the Canadian dollar are recorded at exchange rates prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated at the period end exchange rate while non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at the exchange rates approximating those in effect on the date of the transactions. Exchange gains and losses arising on translation are included in profit or loss.

Financial Instruments

Classification

The Company classifies its financial instruments in the following categories: at fair value through profit and loss ("FVTPL"), at fair value through other comprehensive income (loss) ("FVTOCI"), or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company's business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-byinstrument basis) to designate them as at FVTOCI. 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 opted to measure them at FVTPL.

The Company classifies its financial instruments as follows:

Cash	FVTPL
Marketable securities	FVTOCI
Receivables	Amortized cost
Accounts payables and accrued liabilities	Amortized cost
Due to related parties	Amortized cost
Loans payable	Amortized cost

Measurement

Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

Financial assets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in profit or loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the consolidated statements of loss and comprehensive loss in the period in which they arise.

Financial assets at FVTOCI

Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses recognized in other comprehensive income (loss).

Impairment of financial assets at amortized cost

An 'expected credit loss' impairment model applies which requires a loss allowance to be recognized based on expected credit losses. The estimated present value of future cash flows associated with the asset is determined and an impairment loss is recognized for the difference between this amount and the carrying amount as follows: the carrying amount of the asset is reduced to estimated present value of the future cash flows associated with the asset, discounted at the financial asset's original effective interest rate, either directly or through the use of an allowance account and the resulting loss is recognized in profit or loss for the period.

In a subsequent period, if the amount of the impairment loss related to financial assets measured at amortized cost decreases, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in profit or loss.

Leases

The Company assesses whether a contract is or contains a lease at inception of the contract. A lease is recognized as a right-of-use ("ROU") asset and corresponding lease liability at the commencement date. Each lease payment included in the lease liability is apportioned between the repayment of the liability and an interest expense in profit or loss. Lease liabilities represent the net present value of fixed lease payments (including insubstance fixed payments); variable lease payments based on an index, rate, or subject to a fair market value renewal condition; amounts expected to be payable by the lessee under residual value guarantees, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if it is probable that the lessee will exercise that option.

Standards issued or amended but not yet effective

The Company has not applied the following revised IFRS that has been issued but was not yet effective at February 28, 2021. This accounting standard is not currently expected to have a significant effect on the Company's accounting policies or financial statements.

• IAS 16, Property, Plant and Equipment - Proceeds before Intended Use (effective January 1, 2022). The amendment prohibits deducting from the cost of property, plant and equipment amounts received from selling items produced while preparing the asset for its intended use. Instead, a company will recognize such sale proceeds and related cost in profit or loss.

3. MARKETABLE SECURITIES

Marketable securities are recorded at fair value through other comprehensive income and are comprised of the following:

	February 28, 2021			February 29, 2020
	Commonshares		Market value	Cost	Commonshares		Market value		Cost
Arctic Star Exploration Corp.	-	$	-	$-	1,389	$	63	$	50,000
Orla Mining (formerlyPershimco Resources Inc.)	-		-	-	19,000		44,080		67,250
Battery Mineral ResourcesPty Ltd.	30,000		-	-	30,000		-		-
		$	-	$-		$	44,143	$	117,250

During the year ended February 28, 2021, the Company sold its holdings of Arctic Star Exploration Corp. and Orla Mining, and realized a gain on sale of marketable securities of $85,106 (2020 - $Nil, $21,445 unrealized gain). The fair value of the shares from Battery Mineral Resources Pty Ltd. is determined to be $Nil.

4. RECEIVABLES

The Company's receivables arise from goods and services tax ("GST") and Quebec sales tax ("QST") receivable due from the Canadian taxation authorities.

	February 28,2021	February 29,2020
Current
GST and QST receivable	$16,412	$	25,469
	$16,412	$	25,469

During the year ended February 29, 2020, the Company recorded an allowance for doubtful accounts of $183,795 consisting of interest receivable and cost recoveries receivable due to uncertainty over the collectability of the amounts.

TRES-OR RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020 (Expressed in Canadian Dollars)

5. EXPLORATION AND EVALUATION ASSETS

	Fontana andDuvay GoldProjects,	Diamond
	Quebec	Projects	Total
Balance, February 28, 2019	$1,416,422	$1,670,634	$3,087,056
Expenditures
Acquisition costs	50,914	1,756	52,670
Assays, staking, mapping	815	1,377	2,192
Consulting	-	10,125	10,125
Drilling	17,850	123,775	141,625
Field work	2,290	12,722	15,012
Geological and geophysical	42,500	43,850	86,350
Office, misc. and travel	148	7,940	8,088
	114,517	201,545	316,062
Mining tax credits	(118,234)	(3,211)	(121,445)
Option Payments	(5,000)	-	(5,000)
Write-down	-	(1,024)	(1,024)
	(123,234)	(4,235)	(127,469)
Balance, February 29, 2020	1,407,705	1,867,944	3,275,649
Expenditures
Acquisition costs	253,075	6,741	259,816
Assays, staking, mapping	38	101,252	101,290
Consulting	-	21,500	21,500
Field work	315	1,084	1,399
Geological and geophysical	27,000	105,963	132,963
Office, misc. and travel	-	2,209	2,209
	280,428	238,749	519,177
Balance, February 28, 2021	$ 1,688,133	$2,106,693	$3,794,826

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 exploration and evaluation assets. The Company has investigated title to all of its exploration and evaluation assets and, to the best of its knowledge, title to all of its assets are in good standing.

a) Fontana and Duvay Gold Projects, Quebec, Canada

Fontana Gold Project

On November 9, 2011, the Company entered into an option agreement (the "Option") with Globex Mining Enterprises Inc. ("Globex") to acquire the interests of certain mineral claims in Quebec, being a 75% interest in 16 claims and a 100% interest in a further 7 claims, collectively known as the Fontana Gold Project ("Fontana"). The interests of Globex in Fontana are subject to a 3.0% Gross Metals Royalty ("GMR") and the 16 claims held by Globex as to 75% are also subject to a 15% Net Profits Interest ("NPI").

In order to exercise the option the Company is required to pay Globex $400,000 (paid) and is required to purchase the NPI from Globex for a total of $1,200,000, payable in increments over 84 months ($50,000 paid).

TRES-OR RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020 (Expressed in Canadian Dollars)

5. EXPLORATION AND EVALUATION ASSETS (Cont'd)

a) Fontana and Duvay Gold Projects, Quebec, Canada (Cont'd)

Fontana Gold Project (Cont'd)

During the year ended February 28, 2015, the Company and Globex made certain amendments to the Fontana Property Option Agreement dated November 9, 2011 which are subject to the satisfaction of certain conditions. The amended payment schedule under the Fontana NPI acquisition agreement terms is as follows:

• November 30, 2014 $50,000 cash payments (paid)
• November 30, 2015 $50,000 cash payments (paid)
• November 30, 2016 $50,000 cash payments (paid)
• November 30, 2017 $50,000 cash payments (paid)
• November 30, 2018 $50,000 cash payments (paid)
• November 30, 2019 $100,000 cash payments*
• November 30, 2020 $200,000 cash payments*
• November 30, 2021 $200,000 cash payments*

*These terms have been amended under the New Royalty Agreement

During the year ended February 29, 2012 and February 28, 2013, the Company purchased additional Duvay Gold Project claims. Certain of the claims have various underlying royalties.

In April 2012, the Company entered into an option agreement with Merrex Gold Inc. ("Merrex"), wherein the Company was granted an option to acquire Merrex's 25% interest in 16 mineral claims in Duverny Township, Quebec, forming part of the Fontana Gold Project. The claims are subject to a 15% NPI in favour of Globex. In order to exercise the option, the Company paid to Merrex a total of $300,000 as at February 28, 2014 and was required to make the final payment of $125,000 during fiscal 2016 to complete the acquisition of Merrex's 25% interest in the claims.

During the year ended February 29, 2020, the Company entered into a definitive option agreement (the "Option Agreement") with Kiboko Exploration Inc. ("Kiboko") to advance the Company's Fontana Gold Project. Under the terms of the Option Agreement, Kiboko can earn an initial 65% interest in the Fontana Gold Project, subject to underlying royalties, within a four-year period from the closing of the Transaction under the following conditions:

• i) Making total cash payments or subscribing for securities of the Company totaling $1,000,000 ($300,000 shares subscribed); and
• ii) Complete a technical report prepared in accordance with NI 43-101 that establishes a mineral resource estimate of no less than 1,000,000 ounces of gold of Inferred classification or higher, or incur expenditures on the Fontana Gold Project's claims totaling $4,000,000 of which $250,000 is a firm commitment (satisfied).

Upon earning a 65% interest, Kiboko will have the option to form a joint venture with the Company, or acquire an additional 25% interest, for an aggregate 90% interest. The additional 25% interest may be acquired by incurring additional exploration expenditures of $2,000,000 within a 6 year period from the date of the closing or by completing a preliminary economic assessment and a supporting technical report prepared in accordance with NI 43-101.

5. EXPLORATION AND EVALUATION ASSETS (Cont'd)

a) Fontana and Duvay Gold Projects, Quebec, Canada (Cont'd)

Fontana Gold Project (Cont'd)

Upon earning a 90% interest, Kiboko will have the option to form a joint venture with the Company. In the event of a formation of a joint venture, each party to the joint venture will be responsible for its pro rata share of project expenditures. Should any party to the joint venture fall below a 10% participating interest, their interest shall convert to a 1% Net Smelter Returns ("NSR") royalty on the first 1,000,000 ounces of gold production. The remaining participating party shall also have a customary 90-day right-of-first-refusal ("ROFR") on the sale of any portion of the NSR and the right to purchase one-half of the NSR for $1,000,000.

As part of the Option Agreement, Globex has agreed that its royalty agreements, as they pertain to certain claims that comprise the Fontana Gold Project, will be extinguished and replaced with a single 2% NSR royalty agreement for the entire Fontana Gold Project (the "New Royalty Agreement"). The New Royalty Agreement provides for a customary 90-day ROFR on the sale of any portion of the NSR in favour of the Company and Kiboko. The New Royalty Agreement will also provide for a customary option to buyout onehalf of the 2% NSR for $2,000,000 at any time prior to commercial production.

In addition, the Company and Kiboko have both agreed to recognize and confirm an additional 1.8% NSR on the Chenier claims (the "Chenier Family NSR") under the condition that Globex's right to purchase this royalty at any time for $360,000 be extended to the Company and Kiboko. The Company and Kiboko have been granted a customary 90-day ROFR on any potential sale of the Chenier Family NSR.

With respect to payments due to Globex, the current payments schedule will be extinguished and restated as follows:

On or about the closing of the Transaction	$100,000 (i)
On or before January 1, 2021	200,000 (paid)
On or before January 1, 2022	200,000
	$500,000

(i) On November 28, 2019, the Company entered into an amending agreement whereby the parties agreed the payment would be made in two equal instalments of $50,000; one instalment on or before November 30, 2019 (paid) and a second instalment being due on January 30, 2020. On January 30, 2020, the Company and Globex entered into a second amending agreement where the second instalment will be satisfied by making payments in cash and shares. Under the second amending agreement, the Company will make a cash payment of $25,000 on or before March 30, 2020 (paid), and issue 400,000 common shares of the Company to Globex (issued at a fair value of $28,000).

Duvay Gold Project

On May 23, 2010, the Company signed an option agreement to earn up to a 100% interest in the Duvay property in Quebec which comprises 4 contiguous claims in Duverny Township. The 4 claim property is subject to a GMR of 1.5% (where gold is US$800 per ounce or less) and 2% (where gold is greater than US$800 per ounce). As part of the 2019 Kiboko Option Agreement, Globex replaced its underlying royalty with a 2% NSR royalty agreement for Duvay (the "New Royalty Agreement").

During the year ended February 28, 2013, the Company earned a 65% interest in the Duvay property. The Company can earn a further 15% interest for a total 80% interest by incurring $4,000,000 in exploration expenditures. The Company has the right to acquire the remaining 20% interest by effecting a merger, amalgamation or other form of business combination with the optionor, or the Company can purchase any or all of the 20% interest by paying the sum of $1,000,000 for each 1% interest in the property to be purchased.

5. EXPLORATION AND EVALUATION ASSETS (Cont'd)

a) Fontana and Duvay Gold Projects, Quebec, Canada (Cont'd)

Duvay Gold Project (Cont'd)

The Company has a 100% interest in additional claims known as the Duvay Nord and East Mac Sud properties that form part of the Duvay Gold Project. The optionor retains a 2.0% net smelter return ("NSR") and the Company has the right to purchase 1.0% of the NSR for $1,000,000 and retains the first right of refusal to purchase the remaining 1.0% NSR.

During the year ended February 29, 2016, the Company and Secova Metals Corp. ("Secova") executed an option agreement to option up to a 90% interest in the Duvay Gold Project.

In November 2018, the Company gave Secova notice of termination of the option agreements on the basis that Secova failed to incur expenditures required to exercise the option within the time prescribed under the option agreement. Further, there remains $183,795 of outstanding indebtedness of Secova to the Company for expenditures incurred on behalf of Secova and interest income. During the year ended February 29, 2020, the Company recorded an allowance for doubtful account relating to this indebtedness due to uncertainty in collectability.

b) Diamond Projects

The Company owns a 100% interest in certain mineral claims including the Guigues Kimberlite claims, located in the Témiscamingue region of southwestern Quebec. In 2003, Tres-Or paid $133,920, completed $171,200 of exploration expenditures and issued 280,000 common shares with a value of $70,000 to earn its interest in certain of these claims including the Guigues Kimberlite. The vendors retain a 2.0% NSR. The Company may purchase 1% of the NSR for $1,000,000 at any time prior to commercial production of any mineral discovered on the claims and also retains the First Right of Refusal to buy-back the remaining 1.0% NSR. In addition, the Company agreed to deliver 100,000 common shares one day prior to the commencement of commercial production subject to regulatory approval.

The Company holds 2 mining licences in Sharpe and Savard townships, Ontario covering the Lapointe Kimberlite.

During the year ended February 29, 2020, the Company allowed certain claims lapse and accordingly, recorded an impairment loss totalling $1,024.

6. LOANS PAYABLE

WMJ Metals Ltd.

On December 30, 2014, the Company received a non-interest bearing loan from WMJ Metals Ltd. ("WMJ"), a company controlled by a Director of the Company, in the amount of $50,000 to complete the Globex acquisition (Note 5). It is a demand loan and shall be repaid within 90 days of demand for repayment being made by WMJ. During the year ended February 28, 2017, the Company made a repayment of $20,000. As at February 28, 2021, $30,000 remained outstanding.

During the year ended February 29, 2016, the Company and WMJ entered into an agreement whereby WMJ advanced additional non-interest bearing funds totaling $125,000 to finance the purchase of the Merrex Gold interest (Note 5). The loan and the associated service charge of 5% ($6,250) will be repaid by June 30, 2015 (not paid). Any balance of the loan outstanding after June 30, 2015 shall be subject to a further service charge of 10% ($13,125). The Company shall pay any outstanding balance inclusive of service charges by November 30, 2015 (not paid).

6. LOANS PAYABLE (Cont'd)

On November 23, 2015, the Company and WMJ entered into an amended agreement whereby the maturity date of the loan and related service charges was extended to March 31, 2017 (not paid). No additional interest or service charges were incurred as a result of the extension. In February 2019, the loan was transferred to a term loan with an expiry date of March 1, 2021, and since it is below the Company's estimated market borrowing rate of 15%, a contribution benefit of $43,027 was recorded in reserves. During the year ended February 28, 2021, the Company incurred $22,784 (2020 - $19,703) in accretion expense.

Other

During the year ended February 28, 2021, the Company received a $100,000 loan with 2% annual interest from a third party. A share subscription of $100,000 towards the Company's private placement was applied as a loan repayment (Note 8), and $1,090 interest was paid.

7. RELATED PARTY TRANSACTIONS

Total amounts due to related parties of $421,377 (February 29, 2020 - $363,760) consists of amounts due to private companies controlled by a director and to a law firm in which a director of the Company is a retired partner.

During the year ended February 28, 2021, the Company entered into the following transactions with related parties:

(a) Incurred $77,800 (2020 - $56,500) to a company controlled by a director for geological services which have been capitalized to exploration and evaluation costs and incurred $65,000 (2020 - $55,500) for management services. At February 28, 2021, there was $348,055 (February 29, 2020 - $303,423) owing to this company.

During the year ended February 29, 2020, this company agreed to postpone the payment due date of $303,423 until October 2021 ($41,317 paid). The amounts owing by the Company are non-interest bearing. Notwithstanding such postponement, the Company may pre-pay all or any part of the debt without penalty before such payment due date. The amounts have been classified as current liabilities on the statements of financial position.

• (b) Incurred $nil (2020 $21,692) in professional fees to a law firm in which a director is a retired partner. At February 28, 2021, there was $73,322 (February 29, 2020 - $60,337) owing to this law firm.
• (c) Incurred $10,200 (2020 $10,200) as automobile allowance (included in travel and promotion) to a private company controlled by a director.
• (d) As at February 28, 2021, the Company owed $174,267 in loans payable (February 29, 2020 $151,483) to a company controlled by a director. The Company incurred $22,784 (2020 - $19,703) of accretion expense relating to the loan.

8. SHARE CAPITAL AND EQUITY RESERVES

The authorized share capital of the Company consists of an unlimited number of common shares without par value and unlimited number of Class A preferred shares without par value.

Share transactions for the year ended February 28, 2021:

a) Issued 400,000 common shares valued at $28,000 in connection with the Globex royalty agreement on the Fontana property (Note 5).

TRES-OR RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020 (Expressed in Canadian Dollars)

8. SHARE CAPITAL AND EQUITY RESERVES (Cont'd)

• b) Closed a private placement of 1,500,000 flow-through units (the "FT Units") at a price of $0.10 per FT Unit for total proceeds of $150,000. Each FT Unit consists of one flow-through common share (a "FT Share") and one-half of one common share purchase warrant (a "FT Warrant"). Each whole FT Warrant entitles the holder to purchase one non-flow-through common share of the Company at an exercise price of $0.15 for a period of two years from the date of issue. The Company recorded a share premium liability of $30,000 in relation to the FT Units. The Company also recorded cash share issuance costs of $3,928 in relation to the private placement.
• c) Closed a private placement of 1,246,433 flow-through units (the "FT Units") at a price of $0.15 per FT Unit for total proceeds of $186,965. Each FT Unit consists of one flow-through common share (a "FT Share") and one-half of one common share purchase warrant (a "FT Warrant"). Each whole FT Warrant entitles the holder to purchase one non-flow-through common share of the Company at an exercise price of $0.20 for a period of two years from the date of issue.
• d) Closed a private placement of 1,470,001 non flow-through units (the "NFT Units") at a price of $0.15 per NFT Unit for total proceeds of $220,500. Each NFT Unit consists of one non flow-through common share (a "NFT Share") and one-half of one common share purchase warrant (a "NFT Warrant"). Each whole NFT Warrant entitles the holder to purchase one non-flow-through common share of the Company at an exercise price of $0.20 for a period of two years from the date of issue.
• e) Closed a private placement of 2,361,002 non flow-through units (the "NFT Units") at a price of $0.15 per NFT Unit for total proceeds of $354,150. Each NFT Unit consists of one non flow-through common share (a "NFT Share") and one-half of one common share purchase warrant (a "NFT Warrant"). Each whole NFT Warrant entitles the holder to purchase one non-flow-through common share of the Company at an exercise price of $0.20 for a period of two years from the date of issue. The Company recorded cash share issuance costs of $13,807 in relation to the private placement.

Share transactions for the year ended February 29, 2020:

a) Closed the first tranche of a private placement of 773,478 FT Units at a price of $0.23 per FT Unit and 2,533,053 non flow-through units (the "NFT Units") at a price of $0.19 per NFT Unit, for total proceeds of $659,180. Each NFT Unit consists of one common share and one common share purchase warrant (a "Warrant"). Each Warrant entitles the holder to purchase one additional common share of the Company at an exercise price of $0.28 for a period of three years from the date of issue. Each FT Unit consists of one flow-through common share (a "FT Share") and one-half of one common share purchase warrant (a "FT Warrant"). Each whole FT Warrant entitles the holder to purchase one non-flow-through common share of the Company at an exercise price of $0.40 for a period of one year from the date of issue. The Company recorded a share premium liability of $30,939 in relation to the FT Units. The Company also recorded cash share issuance costs of $7,561 in relation to the private placement.

8. SHARE CAPITAL AND EQUITY RESERVES (Cont'd)

Warrants

Warrant transactions are summarized as follows:

		Weighted
	Outstanding	average exercise
	Warrants	price
Balance, February 28, 2019	230,000	$0.80
Expired	(230,000)	0.80
Granted	2,919,792	0.30
Balance, February 29, 2020	2,919,792	0.30
Expired	(386,739)	0.40
Granted	3,288,717	0.19
Balance, February 28, 2021	5,821,770	$ 0.23

Additional information regarding the warrants outstanding as at February 28, 2021 is as follows:

Number of Warrants	Exercise Price ($)	Expiry Date
750,000	0.15	May 26, 2022*
2,533,053	0.28	July 19, 2022
1,358,216	0.20	December 31, 2022
1,180,501	0.20	January 29, 2023
5,821,770

*50,000 exercised subsequent to February 28, 2021

Stock options

The Company has adopted a formal stock option plan which follows the TSX Venture Exchange ("TSX-V") policy under which it is authorized to grant options to officers, directors and employees to acquire up to 10% of issued and outstanding common stock. Under the plan, the exercise price of each option shall be fixed by the board of directors but shall be not less than the minimum price permitted by the TSX-V. The options can be granted for a maximum term of 10 years and vest as determined by the board of directors.

A summary of the Company's outstanding share purchase options as at February 28, 2021 and the changes during the year are presented below:

	Number ofOptions	Weighted averageexercise price
Balance – February 28, 2019, February 29, 2020 and February 28,2021 - outstanding and exercisable	1,055,000	$0.52

Additional information regarding the stock options outstanding as at February 28, 2021 is as follows:

Number of Options	Exercise Price ($)	Expiry Date
650,000	0.50	October 5, 2021
355,000	0.55	December 1, 2021
50,000	0.50	January 18, 2022
1,055,000

9. FLOW-THROUGH SHARE PREMIUM LIABILITY

	Issued inMay 2020			Total
Balance at February 28, 2020	$	-	$	-
Liability incurred on flow-through shares issued		30,000		30,000
Settlement of flow-through share premiumliability on expenditures incurred	(30,000)		(30,000)
Balance at February 28, 2021	$	-	$	-

On May 26, 2020, the Company raised $150,000 through the issuance of 1,500,000 flow-through common share at a price of $0.10 per share. A flow-through liability of $30,000 was recognized on the issuance date. As at February 28, 2021, the Company has satisfied its flow-through obligation.

On December 31, 2020, the Company raised $186,965 through the issuance of 1,246,433 flow-through common share at a price of $0.15 per share. $Nil flow-through liability was recognized for this issuance. As at February 28, 2021, $135,386 remains to be spent on qualifying expenditures.

10. MANAGEMENT OF CAPITAL

The Company's capital structure consists of items in equity. The Company's objective when managing capital is to maintain adequate levels of funding to support the development of its businesses and maintain the necessary corporate and administrative functions to facilitate these activities. This is done primarily through equity financing. Future financings are dependent on market conditions and there can be no assurance the Company will be able to raise funds in the future. The Company invests all capital that is surplus to its immediate operational needs in short-term, highly-liquid, high-grade financial instruments. There were no changes to the Company's approach to capital management during the year. The Company is not subject to externally imposed capital requirements. The Company does not currently have adequate sources of capital to complete its exploration plan and ultimately the development of its business, and will need to raise adequate capital by obtaining equity financing through private placement or debt financing.

11. FINANCIAL INSTRUMENTS

The Company is exposed to various financial instrument risks and assesses the impact and likelihood of this exposure. These risks include liquidity, credit, currency, interest rate, and price risks. Where material, these risks are reviewed and monitored by the Board of Directors.

TRES-OR RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 28, 2021 AND FEBRUARY 29, 2020 (Expressed in Canadian Dollars)

11. FINANCIAL INSTRUMENTS (Cont'd)

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its obligations associated with its financial liabilities. The Company has historically relied upon equity financings to satisfy its capital requirements and will continue to depend heavily upon equity capital to finance its activities. There can be no assurance the Company will be able to obtain required financing in the future on acceptable terms. The Company anticipates it will need additional capital in the future to finance ongoing exploration of its properties, such capital to be derived from the exercise of outstanding stock options and/or the completion of other equity financings. The Company has limited financial resources, has no source of operating income and has no assurance that additional funding will be available to it for future exploration and development of its projects, although the Company has been successful in the past in financing its activities through the sale of equity securities. The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions and exploration success. In recent years, the securities markets in Canada has experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continual fluctuations in price will not occur. Any quoted market for the common shares may be subject to market trends generally, notwithstanding any potential success of the Company in creating revenue, cash flows or earnings.

Credit risk

Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company's credit risk is primarily attributable to its liquid financial assets including cash, marketable securities and receivables. The Company limits exposure to credit risk on liquid financial assets through maintaining its cash with high-credit quality financial institutions.

The Company's cash is held with major Canadian based financial institutions.

Receivables mainly consist of sales tax refunds due from the governments of Canada.

Currency risk

The Company operates mainly in Canada. The Company mitigates its exposure to foreign currency risk by minimizing the amount of funds in currencies other than the Canadian dollar. The Company does not undertake currency hedging activities but continuously monitors its exposure to foreign exchange risk to determine if any mitigation strategies warrant consideration.

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Cash is generally not exposed to interest rate risk because of its short-term maturity. The loan payable does not bear interest and is therefore not subject to interest rate risk.

Price Risk

The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company's earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company's investment in marketable securities is classified as FVTOCI. The Company closely monitors its marketable securities, stock market movements and commodity prices of precious metals, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

11. FINANCIAL INSTRUMENTS (Cont'd)

Fair Value

The Company's financial instruments consist of cash, marketable securities, receivables, accounts payable and accrued liabilities, loan payable and due to related parties. The fair value of these financial instruments approximates their carrying values due to their short term to maturity. 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:

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 fair value of cash and marketable securities are based on level 1 inputs of the fair value hierarchy.

12. SEGMENTED INFORMATION

The Company primarily operates in one reportable operating segment, being the acquisition and development of exploration and evaluation assets in Canada.

13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Significant non-cash transactions of the Company for the year ended February 28, 2021 were as follows:

• (a) Included in exploration and evaluation assets is $90,000 which relates to due to related parties.
• (b) Included in exploration and evaluation assets is $18,944 which relates to accounts payable and accrued liabilities.
• (c) Recorded $30,000 flow-through share premium liability in relation to a private placement.
• (d) Issued 400,000 shares with a fair value of $28,000 in relation to an exploration and evaluation asset.
• (e) Applied share subscriptions of $100,000 to settle a loan from a third party.
• (f) Transferred cumulative gain of $115,555 in marketable securities into deficit.
• (g) Included in accounts payable are share issuance costs of $2,352.
• (h) Included in due to related parties are share issuance costs of $4,741.

Significant non-cash transactions of the Company for the year ended February 29, 2020 were as follows:

• (a) Included in exploration and evaluation assets is $88,000 which relates to due to related parties.
• (b) Included in exploration and evaluation assets is $20,444 which relates to accounts payable and accrued liabilities.
• (c) Included in due to related parties are share issuance costs of $7,072.
• (d) Recorded $30,939 flow-through share premium liability in relation to a private placement.

14. INCOME TAXES

A reconciliation of income taxes at statutory rates with the reported tax is as follows:

	Year ended
	February 28,		February 29,
		2021		2020
Loss for the year	$	(256,942)	$	(466,266)
Expected income tax recovery	$	(69,000)	$	(126,000)
Change in statutory, foreign tax, foreign exchange rates and other		30,000		8,000
Permanent differences		(8,000)		(8,000)
Impact of flow through shares		54,000		48,000
Share issue costs		(5,000)		(2,000)
Adjustment to prior years provision versus statutory tax returns		(5,000)		(111,000)
Expiry of non-capital losses		-		100,000
Change in unrecognized deductible temporary differences		3,000		91,000
Total income tax expense (recovery)	$	-	$	-

The significant components of the Company's unrecorded deferred tax assets are as follows:

	2021	2020
Deferred tax assets
Exploration and evaluation assets	$246,000	$407,000
Share issue costs	6,000	4,000
Marketable securities	-	23,000
Allowable capital losses	129,000	131,000
Non-capital losses available for future periods	1,657,000	1,469,000
Net unrecognized deferred tax asset	$2,038,000	$2,034,000

No net deferred tax asset has been recognized in respect of the above for the years ended February 28, 2021 and February 29, 2020 because the amount of future taxable profit that will be available to realize such assets is not probable.

The significant components of the Company's unused temporary differences and tax losses are as follows:

		Expiry Date		Expiry Date
	2021	Range	2020	Range
Temporary Differences
Exploration and evaluation assets	$773,000	No expiry date	$1,353,000	No expiry date
Investment tax credit	51,000	2031 - 2034	58,000	2031 - 2040
Share issue costs	21,000	2041 - 2045	14,000	2041 - 2044
Marketable securities	-	No expiry date	168,000	No expiry date
Allowable capital losses	478,000	No expiry date	484,000	No expiry date
Non-capital losses available for
future periods	6,136,000	2026 - 2040	5,440,000	2026 - 2040

Tax attributes are subject to review, and potential adjustment, by tax authorities.

15. SUBSEQUENT EVENT

Subsequent to the year ended February 28, 2021, the Company closed a private placement of 564,000 flowthrough units (the "FT Units") at a price of $0.15 per FT Unit for total proceeds of $84,600. Each FT Unit consists of one flow-through common share (a "FT Share") and one-half of one common share purchase warrant (a "FT Warrant"). Each whole FT Warrant entitles the holder to purchase one non-flow-through common share of the Company at an exercise price of $0.20 for a period of two years from the date of issue.