Trifecta Gold Ltd. — Audit Report / Information 2022

Feb 23, 2023

Trifecta Gold Ltd. Financial Statements December 31, 2022 (Expressed in Canadian Dollars)

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Trifecta Gold Ltd.

Opinion

We have audited the accompanying financial statements of Trifecta Gold Ltd. (the “Company”), which comprise the statements of financial position as at December 31, 2022 and 2021, and the statements of changes in shareholders’ equity, loss and comprehensive loss, and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022 and 2021, 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 audit 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 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 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 audit is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation and Impairment of Mineral Property Interests (“mineral property interests”)

As described in Note 5 to the financial statements, the Company held mineral property interests of $3,223,282 as of December 31, 2022 relating to the cost of acquisition, exploration and evaluation of mineral properties in the Yukon Territory and the state of Nevada. As more fully described in Note 2 of the financial statements, management assesses mineral property interests for indicators of impairment at each reporting period.

The principal considerations for our determination that the valuation and impairment of mineral property interests is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the mineral property interests, specifically relating to the mineral property interests carrying amount which is impacted by the Company’s intent and ability to continue to explore and evaluate these mineral property interests. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the mineral property interests.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. Our audit procedures included, but were not limited to:

• Obtaining an understanding of the key controls associated with evaluating the mineral property interests for indicators of impairment;

• Evaluating management’s assessment of impairment indicators;

• Evaluating the intent for mineral property interests through discussion and communication with management;

• Testing the Company’s additions to mineral property interests for the year by evaluating a sample of recorded expenditures for consistency to underlying records, the capitalization requirements of the Company’s accounting policy and the requirements of the accounting standard;

• Reviewing the Company’s recent expenditure activity; and

• Obtained, on a test basis from government websites, confirmation of title to ensure mineral rights underlying the mineral properties are in good standing.

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 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 financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the 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 Financial Statements

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

In preparing the 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 Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 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 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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 Glenn Parchomchuk.

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Vancouver, Canada February 23, 2023

Chartered Professional Accountants

Trifecta Gold Ltd.

Statements of Financial Position

As at December 31, 2022 and December 31, 2021

		December 31,	December 31,
		2022	2021
	Note	$	$
Assets
Current assets
Cash and cash equivalents	3	1,032,168	1,746,016
Receivables and prepayments	4	37,882	72,287
		1,070,050	1,818,303
Non-current assets
Reclamation bond	5(d)	50,274	47,059
Mineral property interests	5	3,223,282	3,118,065
Total assets		4,343,606	4,983,427
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities		21,891	20,533
Accounts payable to related parties	8	17,358	21,572
Total liabilities		39,249	42,105
Shareholders' equity
Share capital	6	7,505,881	7,505,881
Contributed surplus	6	240,086	391,709
Deficit		(3,441,610)	(2,956,268)
Total shareholders' equity		4,304,357	4,941,322
Total liabilities and shareholders' equity		4,343,606	4,983,427

Nature of operations and going concern 1

Approved on behalf of the Board of Directors on February 23, 2023:

“Rachele Gordon”

Director

Director “Graham Downs”

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

2

Trifecta Gold Ltd.

Statements of Changes in Shareholders’ Equity

For the years ended December 31, 2022 and December 31, 2021

					Total
	Number of	Share	Contributed		shareholders'
	shares	capital	surplus	Deficit	equity
	#	$	$	$	$
January 1, 2021	57,886,897	5,348,691	238,593	(2,524,345)	3,062,939
Units issued for cash	20,000,000	2,000,000	-	-	2,000,000
Share issue costs - cash	-	(73,410)	-	-	(73,410)
Share issue costs - finders' warrants	-	(19,400)	19,400	-	-
Common shares issued for mineral property	2,212,389	250,000	-	-	250,000
Re-allocated on cancellation of options	-	-	(1,041)	1,041	-
Share-based payments	-	-	134,757	-	134,757
Loss and comprehensive loss for the year	-	-	-	(432,964)	(432,964)
December 31,2021	80,099,286	7,505,881	391,709	(2,956,268)	4,941,322
January 1, 2022	80,099,286 7,505,881		391,709	(2,956,268)	4,941,322
Re-allocated on expiration of options		- -	(197,270)	197,270		-
Share-based payments		- -	45,647	-	45,647
Loss and comprehensive loss for the year		- -	-	(682,612)	(682,612)
December 31, 2022	80,099,286 7,505,881		240,086	**(3,441,610) **	4,304,357

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

3

Trifecta Gold Ltd.

Statements of Loss and Comprehensive Loss

For the years ended December 31, 2022 and December 31, 2021

		December 31,	December 31,
		2022	2021
	Note	$	$
Expenses
Administration expenses		7,725	790
Insurance		26,224	16,871
Investor relations and shareholder information		15,926	53,452
Management, administrative and corporate development fees	8	90,559	120,082
Office rent	8	18,000	18,000
Professional fees	8	64,168	79,331
Share-based payments	6,8	45,647	134,757
Transferagentandfilingfees		16,566	14,608
Loss from operating expenses		(284,815)	(437,891)
Interest income		14,527	3,183
Foreign exchange gain		2,868	1,744
Mineralpropertyimpairments	5(b)	(415,192)	-
Loss and comprehensive loss for theyear		(682,612)	(432,964)
Loss per share
Weighted average number of common shares outstanding
- basic #	7	80,099,286	69,435,933
- diluted #	7	80,099,286	69,435,933
Basic loss per share $	7	(0.01)	(0.01)
Diluted lossper share$	7	(0.01)	(0.01)

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

4

Trifecta Gold Ltd.

Statements of Cash Flows

For the years ended December 31, 2022 and December 31, 2021

		December 31,	December 31,
		2022	2021
	Note	$	$
Operating activities
Loss for the year		(682,612)	(432,964)
Share-based payments		45,647	134,757
Interest income		(14,527)	(3,183)
Mineral property impairments		415,192	-
Net changein non-cash working capital items	10	21,816	(21,373)
		(214,484)	(322,763)
Financing activities
Units issued for cash		-	2,000,000
Shareissue costs		-	(73,410)
		-	1,926,590
Investing activities
Interest received		14,527	3,183
Reclamation bond		(3,215)	168
Exploration incentives received		39,706	-
Mineral property acquisition costs		(34,859)	(30,471)
Deferred explorationand evaluationexpenditures		(515,523)	(545,844)
		(499,364)	(572,964)
Net change in cash and cash equivalents		(713,848)	1,030,863
Cash and cash equivalents, beginning of year		1,746,016	715,153
Cash and cash equivalents, end ofyear		1,032,168	1,746,016

Supplemental cash flow information 10

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

5

Trifecta Gold Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

1. Nature of operations and going concern

Trifecta Gold Ltd. (the “Company” or “Trifecta”) was incorporated on October 4, 2016 under the laws of the Province of British Columbia, Canada and was registered extra-territorially in the Yukon Territory on January 6, 2017. The Company’s head office is located at 510 - 1100 Melville Street, Vancouver, BC, V6E 4A6. Its records office is located at 1710 - 1177 West Hastings Street, Vancouver, British Columbia, Canada, V6E 2L3. The Company is listed on the TSX Venture Exchange (“TSX-V”).

The Company’s principal business activity is the acquisition, exploration and evaluation of mineral properties. The Company has been exploring its mineral property interests and has not yet determined whether they contain mineral reserves that are economically recoverable. The Company's continuing operations and the underlying value and recoverability of the amounts shown for mineral property interests are entirely dependent upon the existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of the mineral property interests, obtaining the necessary permits to mine, and on future profitable production or proceeds from the disposition or option of the mineral property interests. The carrying amounts of mineral properties are based on costs incurred to date, and do not necessarily represent present or future values.

These financial statements are prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of operations. The Company does not have revenues and has incurred operating losses since incorporation. As at December 31, 2022, the Company had working capital of $1,030,801 (December 31, 2021 – $1,776,198), and shareholders’ equity of $4,304,357 (December 31, 2021 - $4,941,322). Management has assessed that this working capital is sufficient for the Company to continue as a going concern beyond one year. If the going concern assumption were not appropriate for these financial statements, it could be necessary to restate the Company’s assets and liabilities on a liquidation basis.

2. Significant accounting policies

(a) Basis of presentation

These financial statements have been prepared in accordance 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").

These financial statements have been prepared on an historical cost basis, except for financial instruments measured at fair value. In addition, these financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

All amounts on these financial statements are presented in Canadian dollars which is the functional currency of the Company.

(b) New accounting policies

Certain pronouncements have been issued by the IASB or IFRIC that are effective for accounting periods beginning on or after January 1, 2022. The Company has reviewed these updates and determined that many of these updates are not applicable or consequential to the Company and have been excluded from discussion within these significant accounting policies.

6

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

2. Significant accounting policies (continued)

(c) Financial instruments

The Company classifies its financial instruments in the following categories: as FVTPL, financial assets at amortized cost and financial liabilities at amortized cost. The classification depends on the purpose for which the financial assets or liabilities were acquired or incurred. Management determines the classification of financial assets and liabilities at initial recognition.

• (i) Non-derivative financial assets and liabilities

Recognition

The Company recognizes financial assets and financial liabilities on the date the Company becomes a party to the contractual provisions of the instruments.

Classification

The Company classifies its financial assets and financial liabilities using the following measurement categories:

• (a) Those to be measured subsequently at fair value (either through other comprehensive income (loss) or through profit or loss); and

• (b) Those to be measured at amortized cost.

The classification of financial assets depends on the business model for managing the financial assets and the contractual terms of the cash flows. Financial liabilities are classified as those to be measured at amortized cost unless they are designated as those to be measured subsequently at fair value through profit or loss (an irrevocable election at the time of recognition). For assets and liabilities measured at fair value, gains and losses are either recorded in profit or loss or other comprehensive income (loss).

The Company reclassifies financial assets when and only when its business model for managing those assets changes. Financial liabilities are not reclassified.

When the Company holds marketable securities, they are classified as FVTPL. Marketable securities held in companies with an active market are classified as current assets at fair value. Marketable securities held in non-public companies without an active market are classified as non-current assets and are valued at fair value. In situations where fair value is indeterminable or impracticable to determine, the shares are recorded at cost. This may occur when non-public company shares are received as payment for mineral property interests. In such situations cost is determined by reference to the issue price of similar shares issued by the non-public entity for cash, at or near the time of issue of the investment shares, and in similar volumes. When, at future measurement dates fair value is still indeterminable, or impracticable, cost is used as the measure of fair value. When there is evidence of impairment the shares are written-down to expected realizable value.

Cash and cash equivalents and reclamation bond are classified as FVTPL and are accounted for at fair value.

7

Trifecta Gold Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

2. Significant accounting policies (continued)

(c) Financial instruments (continued)

(ii) Derivative financial assets

Warrants are classified as derivative financial assets and are recorded at FVTPL. Warrants without an active market that are received as attachments to common share units are initially recorded at nominal amounts. At the time of purchase the total unit cost is allocated in full to each common share. Subsequent value is determined at measurement date using a valuation technique, such as the Black-Scholes option pricing model, or when the valuation technique input variables are not reliable, using the intrinsic value, which is equal to the higher of the market value of the underlying security, less the exercise price of the warrant, or zero. The Company does not own any warrants as at December 31, 2022 and 2021.

(iii) Financial liabilities

The Company has the following financial liabilities: accounts payable and accrued liabilities, and accounts payable to related parties.

Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Interest expense is recorded to profit or loss.

(d) Mineral property interests

The acquisition costs of mineral property interests and any subsequent exploration and evaluation costs are capitalized until the property to which they relate is placed into production, sold, allowed to lapse or abandoned. Exploration and evaluation costs incurred prior to obtaining ownership, or the right to explore a property, are expensed as incurred as property examination costs. Mineral property interests that have close proximity and have the possibility of being developed as a single mine are grouped as projects and are considered separate cash generating units (“CGU”) for the purpose of determining future mineral reserves and impairments.

The acquisition costs include the cash consideration paid and the fair value of any shares issued for mineral property interests being acquired or optioned pursuant to the terms of relevant agreements.

Proceeds received from a partial sale or option of any interest in a property are credited against the carrying value of the property. When the proceeds exceed the carrying costs the excess is recorded in profit or loss in the period the excess is received. When all of the interest in a property is sold, subject only to any retained royalty interests which may exist, the accumulated property costs are written-off, with any gain or loss included in profit or loss in the period the transaction takes place. No initial value is assigned to any retained royalty interest. The royalty interest is subsequently assessed for value by reference to developments on the underlying mineral property.

Management reviews its mineral property interests at each reporting period for signs of impairment and annually after each exploration season to consider if there is impairment in value taking into consideration current year exploration results, or likely gains from the disposition or option of the property. If a property is abandoned or inactive for a prolonged period, or considered to have no future economic potential, the acquisition and deferred exploration and evaluation costs are written-off to profit or loss.

Once an economically viable resource has been determined for an area and the decision to proceed with development has been approved, mineral property interests attributable to that area are first tested for impairment and then reclassified to property and equipment. Subsequent recovery of the resulting carrying value depends on successful development or sale of the undeveloped project. Should a project be put into production, the costs of acquisition, exploration and evaluation will be amortized over the life of the project based on estimated economic reserves. If the carrying value of a project exceeds its estimated net realizable value or value in use, an impairment provision is recorded.

When entitled, the Company records refundable mineral exploration tax credits or incentive grants on an accrual basis and as a reduction of the carrying value of the mineral property interest. When the Company is entitled to non-refundable exploration tax credits, and it is probable that they can be used to reduce future taxable income, a deferred income tax benefit is recognized.

8

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

2. Significant accounting policies (continued)

(e) Impairment

(i) Financial assets

The Company assesses all information available, including on a forward-looking basis, the expected credit losses associated with its assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as of the reporting date, with the risk of default as at the date of initial recognition, based on all information available, and reasonable and supportive forward-looking information.

(ii) Non-financial assets

Non-financial assets are reviewed quarterly by management for indicators that carrying value is impaired and may not be recoverable. When indicators of impairment are present the recoverable amount of an asset is evaluated at the CGU level, which is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of a CGU is the greater of the CGU’s fair value less costs to sell and its value in use. An impairment loss is recognized in profit or loss to the extent that the carrying amount exceeds the recoverable amount. The Company’s mineral property interest impairment policy is more specifically discussed in note 2(d) above.

(f) Share capital

Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares issued for consideration other than cash are valued based on their fair value at the date the shares are issued.

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in a private placement to be the more easily measurable component and the common shares are valued at their fair value, as determined by the closing quoted bid price on the issue date. The balance, if any, is allocated to the attached warrants. Any value attributed to the warrants is recorded as contributed surplus.

(g) Flow-through share private placements

As an incentive to complete private placements the Company may issue common shares, which by agreement are designated as flow-through shares. Such agreements require the Company to spend the funds from these placements on qualified exploration expenditures and renounce the expenditures and income tax benefits to the flow-through shareholders, resulting in no exploration deductions to the Company.

The shares are usually issued at a premium to the trading value of the Company’s common shares at the date the private placement is announced. The premium is a reflection of the value of the income tax benefits that the Company must pass on to the flow-through shareholders. On issue, share capital is increased only by the nonflow-through share equivalent value. Any premium is recorded as a flow-through share premium liability.

The loss of the tax benefit is recorded as a deferred income tax liability and eliminates the original flow-through share premium liability, with the difference, if any, recorded as a deferred income tax expense. In instances where the Company has unused temporary income tax benefits, or unused non-capital losses or tax credits available to offset the deferred income tax liability, the realization of these income tax benefits is shown as a recovery in profit or loss in the period the deferred income tax liability is recorded.

The deferred income tax liability and reversal of the flow-through share premium liability are recorded on a prorata basis as the required exploration expenditures are completed and renounced to the flow-through shareholders.

9

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

2. Significant accounting policies (continued)

(h) Share-based payment transactions

The Company has a stock option plan that provides for the granting of options to Officers, Directors, related company employees and consultants to acquire shares of the Company. The fair value of the options is measured on grant date and is recognized as an expense with a corresponding increase in contributed surplus as the options vest.

Options granted to employees and others providing similar services are measured at the grant date at the fair value of the instruments issued. Fair value is determined using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. The amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. Each tranche in an award with graded vesting is considered a separate grant with a different vesting date and fair value. Each grant is accounted for on that basis.

Options granted to non-employees are measured at the fair value of the goods or services received, unless that fair value cannot be estimated reliably, in which case the fair value of the equity instruments issued is used. The value of the goods or services is recorded at the earlier of the vesting date, or the date the goods or services are received.

Over the vesting period, share-based payments are recorded as a general and administrative expense and as contributed surplus. When options are exercised the consideration received is recorded as share capital. In addition, the related share-based payments originally recorded as contributed surplus are transferred to share capital. When an option is cancelled or expires, the initial recorded value is reversed from contributed surplus and credited to deficit.

(i) Environmental rehabilitation

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration, development or ongoing production of a mineral property interest. The estimated costs arising from the decommissioning of plant and other site preparation work, discounted to their net present value, are determined, and capitalized at the start of each project to the carrying amount of the asset, as soon as the obligation to incur such costs arises. Discount rates, using a pre-tax rate that reflects the time value of money, are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production or the straight-line method. The related liability is adjusted at each reporting date for the unwinding of the discount rate, for changes to the current market-based discount rate, and for changes to the amount or timing of the underlying cash flows needed to settle the obligation. Costs for restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their net present values and charged against profits as extraction progresses.

The Company has no known restoration, rehabilitation or environmental costs, of any significance, related to its mineral property interests.

(j) Income taxes

Income tax expense is comprised of current and deferred income taxes. Current income tax and deferred income tax are recognized in profit or loss, except to the extent that they relate to items recognized directly in equity or equity investments.

Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

10

Trifecta Gold Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

2. Significant accounting policies (continued)

• (j) Income taxes (continued)

Deferred income 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. Deferred income tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred income tax assets and liabilities are offset if there is a legally enforceable right to offset current income tax liabilities and assets, and they relate to income taxes levied by the same tax authority for the same taxable entity. A deferred income tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable income will be available against which they can be utilized. Deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related income tax benefit will be realized.

(k) Earnings (loss) per share

The Company presents basic and diluted earnings (loss) per share (“EPS”) data for its common shares. Basic EPS is calculated by dividing the profit or loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year, adjusted for own shares held. Diluted EPS is determined by dividing the profit or loss attributable to common shareholders by the weighted average number of common shares outstanding, adjusted for own shares held and for the effects of all potential dilutive common shares related to outstanding stock options and warrants issued by the Company for the years presented, except if their inclusion proves to be anti-dilutive.

(l) Use of estimates and critical judgments

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates and judgments. Those areas requiring the use of management estimates and judgments include:

Estimates

• (i) Option or sale agreements, under which the Company may receive shares as payment, require the Company to determine the fair value of the shares received. Many factors can enter into this determination, including, if public shares, the number of shares received, the trading value of the shares, and volume of shares, and if non-public shares, the underlying asset value of the shares, or value of the claims under option or sale. This determination is subjective and does not necessarily provide a reliable single measure of the fair value of the shares received.

• (ii) Recorded costs of flow-through share premium liabilities reflect the premium received by the Company on the issue of flow-through shares. The premium is subject to measurement uncertainly and requires the Company to assess the value of non-flow through shares. This determination is subjective and does not necessarily provide a reliable single measure of the fair value of the premium liability.

• (iii) The determination of the fair value of stock options or compensatory warrants using stock pricing models requires the input of highly subjective variables, including expected price volatility. Wide fluctuations in the variables could materially affect the fair value estimate; therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s stock options and warrants.

Judgments

• (i) Recorded costs of mineral property interests and deferred exploration and evaluation costs are not intended to reflect present or future values of these properties. The recorded costs are subject to measurement uncertainty and it is reasonably possible, based on existing knowledge, that change in future conditions could require a material change in the recognized amount. Management is required, at each reporting date, to review its mineral property interests for signs of impairment. This is a highly subjective process taking into consideration exploration results, metal prices, economics, financing prospects and sale or option prospects. Management makes these judgments based on information available, but there is no certainty that a property is or is not impaired. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

11

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

2. Significant accounting policies (continued)

(l) Use of estimates and critical judgments (continued)

Judgments (continued)

• (ii) The determination of deferred income tax assets or liabilities requires subjective assumptions regarding future income tax rates and the likelihood of utilizing tax carry-forwards. Changes in these assumptions could materially affect the recorded amounts, and therefore do not necessarily provide certainty as to their recorded values.

(m) Standards issued but not yet effective

Certain pronouncements have been issued by the IASB or IFRIC that are effective for accounting periods beginning on or after January 1, 2023. The Company has reviewed these updates and determined that none of these updates are applicable or consequential to the Company and have been excluded from discussion within these significant accounting policies.

3. Cash and cash equivalents

Cash and cash equivalents consist of the following:

Cash and cash equivalents consist of the following:
	December 31,	December 31,
	2022	2021
	$	$
Bank and broker balances	67,096	243,831
Cashable investment certificates	965,072	1,502,185
	1,032,168	1,746,016

4. Receivables and prepayments

Receivables and prepayments consist of the following:

Receivables and prepayments Receivables and prepayments consist of the following:
	December 31,	December 31,
	2022	2021
	$	$
Prepaid expenses	7,685	29,080
Sales tax recoverable	2,074	3,501
Yukon mineral explorationgrant receivable(note 5(a)(i),(ii))	28,123	39,706
	37,882	72,287

12

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

5. Mineral property interests

The Company’s mineral property interests consist of exploration stage properties located in Canada (Yukon Territory and British Columbia) and the United States (Nevada). The properties have been grouped into those which are whollyowned projects, wholly-owned and under option, project under option from other parties and others. Properties which are in close proximity and could be developed as a single economic unit are grouped into projects.

Changes in the project carrying amounts for the year ended December 31, 2021 are summarized as follows:

		Acquisitions/	Acquisitions/	Exploration	Exploration
	January 1,	staking/		and		December 31,
	2021	assessments		evaluation			2021
	$	$			$		$
Wholly-owned projects
Eureka	1,224,315		916		45,081		1,270,312
Treble	156,010		-		179		156,189
Yuge	589,427	279,555		407,389			1,276,371
Total	1,969,752	280,471		452,649			2,702,872
Wholly-owned and under option project
Trident - wholly-owned claims
Squid	301,175		-		1,943		303,118
Trident - under option claims
CH	112,075		-		-		112,075
	413,250		-		1,943		415,193
Total allprojects	2,383,002	280,471		454,592			3,118,065
Exploration and evaluation expenditures on the projects	consisted of the following:
	Eureka	Treble	Trident		Yuge		Total
Year ended December 31, 2021	$	$	$		$		$
Assays	1,040	-		-	50,033		51,073
Field	19,926	-		-	234,421		254,347
Labour	57,291	179		1,943	99,779		159,192
Surveys	-	-		-		1,276	1,276
Travel and accomodation	6,530	-		-	21,880		28,410
Total	84,787	179		1,943	407,389		494,298
Less: mineral exploration credits(note 5(a)(i))	(39,706)	-		-		-	(39,706)
	45,081	179		1,943	407,389		454,592

13

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

5. Mineral property interests (continued)

Changes in the project carrying amounts for the year ended December 31, 2022 are summarized as follows:

		Acquisitions/
	January 1,	staking/	Exploration and		December	31,
	2022	assessments	evaluation	Impairment	2022
	$	$	$	$	$
Wholly-owned projects
Eureka	1,270,312	3,951	65,984	-	1,340,247
Treble	156,189	10,032	47,494	-	213,715
Yuge	1,276,371	20,876	372,072	-	1,669,319
Total	2,702,872	34,859	485,550	-	3,223,281
Wholly-owned and under option project
Trident - wholly-owned claims
Squid	303,118	-	-	(303,117)		1
Trident - under option claims
CH	112,075	-	-	(112,075)		-
	415,193	-	-	(415,192)		1
Total allprojects	3,118,065	34,859	485,550	(415,192)	3,223,282

Exploration and evaluation expenditures on the projects consisted of the following:

	Eureka	Treble	Yuge	Total
Year ended December 31, 2022	$	$	$	$
Assays	3,288	9,309	70,719	83,316
Drilling	-	-	117,000	117,000
Field	3,521	7,539	76,563	87,623
Helicopter and fixed wing	273	9,221	-	9,494
Labour	51,625	47,840	87,935	187,400
Resource and environmental	5,235	-	-	5,235
Travel and accomodation	2,042	1,708	19,855	23,605
Total	65,984	75,617	372,072	513,673
Less: mineral exploration credits(note 5(a)(ii))	-	(28,123)	-	(28,123)
Total	65,984	47,494	372,072	485,550

14

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

5. Mineral property interests (continued)

(a) Wholly-owned projects

(i) Eureka

The Eureka project consists of a 100% interest in the Eureka mineral claims located in the Dawson Mining District, Yukon Territory. The project was acquired in December 2016 by the issue of 11,250,000 common shares at $0.10 per share for an aggregate cost of $1,125,000. The claims are subject to a 1% net smelter return royalty (“NSR”).

During the year ended December 31, 2021, the Company was approved to receive financial assistance from the Yukon Government on qualified exploration expenditures on this project. An amount of $39,706 was earned, which was recorded as a reduction of 2021 exploration expenditures. The amount was received during the year ended December 31, 2022.

(ii) Treble

The Treble project consists of a 100% interest in the LLL mineral claims located in the Dawson Mining District, Yukon Territory. The project was acquired in December 2016 by the issue of 1,150,000 common shares at $0.10 per share for an aggregate cost of $115,000. The claims are not subject to any royalty interests.

During the year ended December 31, 2022, the Company was approved to receive financial assistance from the Yukon Government on qualified exploration expenditures on this project. An amount of $28,123 was earned, which was recorded as a reduction of 2022 exploration expenditures. The amount has been accrued as receivable as at December 31, 2022 (note 4).

(iii) Yuge

On February 27, 2018, the Company signed a letter of intent, which was subsequently replaced with a definitive agreement (the “Option Agreement”), to option from Silver Range Resources Ltd. (“Silver Range”) up to a 75% interest in Silver Range’s Yuge property, which is located in Nevada, USA.

Under the agreement, the Company reimbursed Silver Range staking and recording costs of $9,066.

On July 7, 2020, the Option Agreement was replaced with a Property Purchase Agreement (the “PP Agreement”). Pursuant to the terms of the PP Agreement, and during the year ended December 31, 2021, the Company acquired a 100% interest in the Yuge Property by:

• Issuing to Silver Range that number of common shares equal to 9.9% of the total number of issued and outstanding common shares of the Company immediately following the closing of the first $500,000 of a financing (issued 4,797,611 shares at a fair value of $359,821);

• Reimbursing Silver Range for property maintenance payments, rentals and filing fees made to maintain the property in good standing until September 1, 2021 (paid, $15,734); and

• Paying Silver Range $250,000, in cash or deemed value in shares, on or before July 7, 2021 (issued 2,212,389 shares at a fair value of $250,000).

On completion of the PP Agreement, Silver Range retained a 2% NSR from the commercial production of any mineral products on the property. The Company has the right to purchase one-half of the NSR for $1,000,000. Additionally, Silver Range is entitled to receive a one-time cash payment of US$2 per ounce of gold or equivalent identified in NI 43-101 compliant technical report of a measured or indicated mineral resource, or proven or probable mineral reserve, as applicable, to the property.

15

Trifecta Gold Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

5. Mineral property interests (continued)

(b) Wholly-owned and under option project

Trident

The Trident project consists of the Squid claims, which are wholly-owned, and the CH claims which are being acquired under an option agreement.

Wholly-owned claims

The Squid claims are located in the Dawson Mining District, Yukon Territory, and were acquired by staking. During the year ended December 31, 2022, the Company recorded an impairment charge of $303,117 on these claims, as management has no current or future budgeted exploration programs in place.

Under option claims

By an agreement dated December 8, 2016, and amended on April 27, 2017, December 3, 2020, and December 7, 2021, the Company had the right acquire a 100% interest in the CH mineral claims located in the Dawson Mining District, Yukon Territory from Coureur Des Bois Ltee Ltd. (“Coureur”), for consideration of:

• The issuance of 1,500,000 common shares to Coureur as follows:

• 150,000 shares upon completion of a TSX-V listing (issued June 15, 2017);

• 150,000 shares on or before December 8, 2017 (issued December 8, 2017);

• 200,000 shares on or before December 8, 2018 (issued December 6, 2018);

• 300,000 shares on or before December 8, 2019 (issued December 2, 2019);

• 200,000 shares on or before December 8, 2020 (issued December 3, 2020); and

• issued).

Upon completion of the agreement, the Company would have attained a 100% interest in the claims and Coureur will retain a 2% NSR from any precious metal commercial production and a 1% NSR from any nonprecious metal commercial production. The Company would have the right at any time to purchase one-half of the NSR for $1,000,000.

During the year ended December 31, 2022, the Company provided a termination notice with respect to the agreement and accordingly, recorded an impairment charge of $112,075 on these claims.

(c) Others

(i) Triple Crown

The Company retains a 0.5% NSR on the Triple Crown Project which consists of the OOO mineral claims located in Dawson Mining District, Yukon Territory. The NSR can be purchased by the claim owner at any time for a cash payment of $500,000.

(ii) Handsome Jack

The Company retains a 1% NSR on the Handsome Jack project which consists of the Never Sweat mineral claims located in the Golden Triangle region of British Columbia. One-half of the NSR can be purchased by the claim owner at any time for a cash payment of $500,000.

(d) Reclamation bond

The reclamation bond is pledged to the Bureau of Land Management (Nevada) to ensure specified properties are properly restored after exploration. Management has determined that the Company has no material reclamation work related to the properties requiring the deposit.

16

Trifecta Gold Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

6. Share capital

The authorized share capital of the Company consists of an unlimited number of common shares without par value. All issued shares are fully paid.

Transactions for the issue of share capital during the year ended December 31, 2022:

There were no transactions for the issue of share capital during the year ended December 31, 2022.

Transactions for the issue of share capital during the year ended December 31, 2021:

On May 3, 2021, the Company issued 2,212,389 common shares at a fair value of $0.113 per share as the final $250,000 payment due to Silver Range on or before July 7, 2021 to acquire a 100% interest the Yuge project (note 5(a)(iii)). The number of shares to be issued was determined based on the 30-day weighted average price of the Company’s common shares.

Silver Range had agreed not to sell any of these shares for a period of twelve months from the date of their issue. The issuance of the shares was subject to regulatory acceptance, which was received on April 30, 2021.

On June 30, 2021, the Company completed a private placement consisting of the issue of 20,000,000 units (the “Units”) at a price of $0.10 per Unit for gross proceeds of $2,000,000. Each Unit was comprised of one common share and one share purchase warrant exercisable at a price of $0.20 until June 30, 2023, subject to an accelerator clause. The Company shall have the right to accelerate the expiry period of the warrants after the four-month hold has expired and its common shares close at or above $0.40 for a period of 10 consecutive trading days. If the Company exercises such right, the Company will give a 30-day notice to the holders that the warrants will expire. No residual value was allocated to the warrant component of the Units sold.

Finders’ fees totaling $42,910 were incurred in respect of the Unit offering, along with the issuance of 397,600 finders’ warrants having a fair value of $19,400. Legal and filing fees amounted to $30,500 in connection with the financing. The share issue costs were recorded as share issue costs and deducted from share capital.

Stock options

The Company has an incentive stock option plan (the “Plan”), under which the maximum number of stock options issued cannot exceed 10% of the Company’s currently issued and outstanding common shares. The exercise period for any options granted under the Plan cannot exceed ten years. The exercise price of options granted under the Plan cannot be less than the “discounted market price” of the common shares (defined as the last closing market price of the Company’s common shares immediately preceding the issuance of a news release announcing the granting of the options, or the date of grant in respect of options granted to consultants, less a discount of from 15% to 25%), unless otherwise agreed to by the Company and accepted by the TSX-V.

A participant who is not a consultant conducting investor relations activities, who is granted an option under the plan with exercise prices at or above “Market Price” will have their options vest immediately, unless otherwise determined by the Board of Directors. A participant who is granted an option under the plan with exercise prices below “Market Price” will become vested with the right to exercise one-sixth of the option upon conclusion of every three months subsequent to the grant date. A participant who is a consultant conducting investor relations activities who is granted options under the plan will become vested with the right to exercise one-quarter of the options upon conclusion of every three months subsequent to the grant date.

17

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

6. Share capital (continued)

Stock options (continued)

A summary of the status of the Company’s stock options as at December 31, 2022 and December 31, 2021 and changes during the years then ended is as follows:

during the years then ended is as follows:
	Year ended		Year ended
	December 31, 2022		December31,2021
	Weighted average		Weighted average
	Options exercise price		Options exercise price
	#	$	#	$
Options outstanding, beginning of year	4,620,000	0.15	4,230,000	0.16
Granted	500,000	0.08	400,000	0.10
Expired	(1,895,000)	0.25	-	-
Cancelled	-	-	(10,000)	0.25
Options outstanding, end ofyear	3,225,000	0.08	4,620,000	0.15

As at December 31, 2022, the Company has stock options outstanding and exercisable as follows:

Options	Options	Exercise	Weighted average
outstanding	exercisable	price	remaining life	Expiry date
#	#	$	(years)
2,325,000	2,325,000	0.08	2.88	November 17, 2025
400,000	400,000	0.10	3.52	July 6, 2026
250,000	187,500	0.08	4.07	January 25, 2027
250,000	187,500	0.08	4.21	March 16,2027
3,225,000	3,100,000		3.16

On January 25, 2022, the Company granted 250,000 stock options to a Director. The stock options vest quarterly over a period of one year and are exercisable at $0.08 until January 25, 2027. The Company has recorded the fair value of all options granted using the Black-Scholes option pricing model. Share-based payment costs were calculated using the following weighted average assumptions: expected life of options - five years, expected stock price volatility – 125.00%, no dividend yield, and a risk-free interest rate yield – 1.56%. The fair value is particularly impacted by the Company’s stock price volatility. Using the above assumptions, the fair value of options granted during the year ended December 31, 2022 was $0.07 per option, for a total of $16,879.

On March 16, 2022, the Company granted 250,000 stock options to an Officer. The stock options vest quarterly over a period of one year and are exercisable at $0.08 until March 16, 2027. The Company has recorded the fair value of all options granted using the Black-Scholes option pricing model. Share-based payment costs were calculated using the following weighted average assumptions: expected life of options - five years, expected stock price volatility – 125.00%, no dividend yield, and a risk-free interest rate yield – 2.00%. The fair value is particularly impacted by the Company’s stock price volatility. Using the above assumptions, the fair value of options granted during the year ended December 31, 2022 was $0.06 per option, for a total of $14,612.

During the year ended December 31, 2021, the Company granted 400,000 stock options to a consultant. The stock options vest quarterly over a period of one year and are exercisable at $0.10 until July 6, 2026. The Company has recorded the fair value of all options granted using the Black-Scholes option pricing model. Share-based payment costs were calculated using the following weighted average assumptions: expected life of options - five years, expected stock price volatility – 125.00%, no dividend yield, and a risk-free interest rate yield – 0.85%. The fair value was particularly impacted by the Company’s stock price volatility. Using the above assumptions, the fair value of options granted during the year ended December 31, 2021 was $0.08 per option, for a total of $33,647.

18

Trifecta Gold Ltd. Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

6. Share capital (continued)

Stock options (continued)

The total share-based payment expense for the year ended December 31, 2022 was $45,647 (2021 - $134,757), which is presented as an operating expense, and includes only options that vested during the year.

During the year ended December 31, 2022, 1,895,000 stock options expired unexercised. As a result, the original sharebased payment expense of $197,270 was reversed from contributed surplus and credited to deficit.

During the year ended December 31, 2021, 10,000 stock options were cancelled. As a result, the original share-based payment expense of $1,041 was reversed from contributed surplus and credited to deficit.

Warrants

As an incentive to complete private placements, the Company may issue units which consist of common shares and common share purchase warrants. Using the residual value method, the Company determines whether a value should be allocated to the warrants attached to private placement units.

A summary of the status of the Company’s warrants as at December 31, 2022 and December 31, 2021, and changes during the years then ended is as follows:

	Year	ended	Year	ended
	December 31, 2022		December 31, 2021
		Weighted average		Weighted average
	Warrants	exercise price	Warrants	exercise price
	#	$	#	$
Warrants outstanding, beginning of year	20,397,600	0.20	11,571,429	0.14
Private placement warrants issued	-	-	20,000,000	0.20
Finders' warrants issued	-	-	397,600	0.10
Privateplacement warrants expired	-	-	(11,571,429)	0.14
Warrants outstanding, end ofyear	20,397,600	0.20	20,397,600	0.20

As at December 31, 2022, the Company had warrants outstanding and exercisable as follows:

(1)	Warrants Exercise Weighted average outstanding price remaining life Expiry date # $ (years)
	20,000,000 0.20 0.50 June 30, 2023 397,600 0.10 0.50 June 30, 2023
	20,397,600 0.20 0.50
(1)	Exercisable into units comprising one common share and one share purchase warrant.

During the year ended December 31, 2021, the Company issued 397,600 finders’ warrants in connection with a completed private placement. Each warrant is exercisable into a Unit at an exercise price of $0.10 until June 30, 2023. The value of the finders’ warrants was determined to be $19,400 using the Black-Scholes option pricing model with the following weighted average assumptions: expected life of warrants – two years, expected stock price volatility – 125.00%, no dividend yield, and a risk-free interest rate yield – 0.35%.

Contributed surplus

Contributed surplus, when applicable, includes the accumulated fair value of stock options recognized as share-based payments and the fair value of warrants issued on private placements. Contributed surplus is increased by the fair value of these items on vesting and is reduced by corresponding amounts when the options or warrants expire or are exercised or cancelled.

19

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

7. Loss per share

The calculation of basic and diluted loss per share for the year ended December 31, 2022 is based on the loss attributable to common shareholders of $682,612 (2021 - $432,964) and a weighted average number of common shares outstanding of 80,099,286 (2021 – 69,435,933).

All stock options and warrants were excluded from the diluted weighted average number of shares calculation, as their effect would have been anti-dilutive.

8. Related party payables and transactions

The Company’s related parties include key management personnel and Directors, and companies in which they have control or significant influence over the financial or operating policies of those entities. There were no loans to key management personnel or Directors, or entities over which they have control or significant influence during the years ended December 31, 2022 and December 31, 2021.

No key management personnel or Directors receive salaries, non-cash benefits (other than incentive stock options), or other remuneration directly from the Company, other than noted below, and there are no contracts with them that cannot be terminated without penalty on thirty days’ notice. Key management personnel and Directors participate in the Company’s stock option plan.

During the year ended December 31, 2022, 250,000 stock options were granted to a Director having a fair value on issue of $16,879. These options are exercisable at $0.08 until January 25, 2027, and vest over a one-year period ending January 25, 2023. Further, on March 16, 2022, 250,000 stock options were granted to an Officer having a fair value on issue of $14,612. These options are exercisable at $0.08 until March 16, 2027, and vest over a one-year period ending March 16, 2023.

There were no stock options granted to key management personnel and Directors during the year ended December 31, 2021.

The Company transacted with the following related parties:

• (a) Archer Cathro & Associates (1981) Limited (“Archer Cathro”) is a geological consulting firm that is a related party through its management contracts, which confer significant influence over operations. Charges are for mineral property management, office rent and administration.

• (b) Glenn Yeadon is the Company’s Secretary. He controls Glenn R. Yeadon Personal Law Corporation (“Yeadon Law Corp”), which provides the Company with legal services.

• (c) Larry Donaldson was the Company’s CFO through to March 16, 2022. He is a principal of Donaldson Brohman Martin CPA Inc. (“DBM CPA”) a firm in which he has significant influence. DBM CPA provides the Company with accounting and tax services. Effective March 16, 2022, the Company appointed Quinn Martin as the Company’s new CFO, who is also a principal of DBM CPA.

• (d) Richard Drechsler is the Company’s President and CEO. He controls Drechsler Consulting Ltd. (“Drechsler Consulting”), which since July 1, 2020, charges the Company for the management, administrative and corporate development services of Richard Drechsler.

20

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

8. Related party payables and transactions (continued)

The aggregate value of transactions and outstanding balances with related parties are as follows:

		Transactions	Transactions	Balances	Balances
		Year ended	Year ended	outstanding,	outstanding,
		December 31,	December 31,	December 31,	December 31,
		2022	2021	2022	2021
		$	$	$	$
	Archer Cathro
	- geological services	217,882	202,431	1,288	3,138
	-office and administration	22,798	26,573	1,640	2,529
		240,680	229,004	2,928	5,667
(1)	Yeadon Law Corp	21,692	57,873	6,430	7,905
	DBM CPA	23,750	24,750	8,000	8,000
	Drechsler Consulting	50,220	62,595	-	-
		336,342	374,222	17,358	21,572

(1) Transactions include share issue costs of $nil (2021 - $20,500) for the year ended December 31, 2022.

All related party balances are unsecured and are due within thirty days without interest. The related party transactions do not include expense reimbursements or recoverable sales tax amounts that are included in the year end related party payable balances. The transactions with the key management personnel and Directors are included in operating expenses as follows:

• (a) Management, administrative and corporate development fees

• Includes charges by Archer Cathro for administrative personnel.

• Includes services provided by Drechsler Consulting.

• (b) Office rent

• Charged by Archer Cathro.

• (c) Professional fees

• Includes the legal services of the Company’s Secretary, Glenn Yeadon, charged to the Company by Yeadon Law Corp.

• Includes the accounting and tax services charged to the Company by DBM CPA.

9. Income taxes

Income tax recovery varies from the amount that would be computed from applying the combined federal and provincial income tax rate to loss before income taxes as follows:

income tax rate to loss before income taxes as follows:
	December 31,	December 31,
	2022	2021
	$	$
Loss for the year before income taxes	(682,612)	(432,964)
Statutory Canadian corporate tax rate	27.00%	27.00%
Anticipated income tax recovery	184,305	116,900
Change in tax resulting from:
Share issue costs incurred	-	19,821
Unrecognized items for tax purposes	(12,326)	(36,384)
Tax benefits unrecognized	(171,979)	(100,337)
Income tax recovery	-	-

21

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

9. Income taxes (continued)

The significant components of the Company’s unrecognized deferred income tax assets are as follows:

	December 31,	December 31,
	2022	2021
	$	$
Mineral property interests	227,673	155,230
Capital loss carry forwards	3,143	3,143
Non-capital loss carry forwards	573,135	467,325
Share issue costs	15,427	21,701
Taxbenefits unrecognized	(819,378)	(647,399)
Net deferred tax assets	-	-

As at December 31, 2022, the Company has unused non-capital losses of approximately $2,123,000 (December 31, 2021 – $1,731,000) of which $43,000 expire in 2036, $305,000 in 2037, $355,000 in 2038, $337,000 in 2039, $243,000 in 2040, $448,000 in 2041 and $392,000 in 2042.

As at December 31, 2022, the Company has unused capital losses of approximately $12,000 (December 31, 2021 - $12,000), which have no expiry dates and can only be used to reduce future income from capital gains.

As at December 31, 2022, the Company has unclaimed resource deductions in the amount of approximately $4,067,000 (December 31, 2021 – $3,693,000), which may be deductible against future taxable income.

As at December 31, 2022, there are share issue costs totaling approximately $57,000 (December 31, 2021 – $80,000), which have not been claimed for tax purposes.

Income tax attributes are subject to review, and potential adjustments, by tax authorities.

10. Supplemental cash flow information

Changes in non-cash operating working capital during the year ended December 31, 2022 and December 31, 2021 were comprised of the following:

were comprised of the following:
	December 31,	December 31,
	2022	2021
	$	$
Receivables and prepayments	22,822	(20,855)
Accounts payable and accrued liabilities	1,358	(1,128)
Accounts payabletorelated parties	(2,364)	610
**Net change **	21,816	(21,373)

22

Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

10. Supplemental cash flow information (continued)

The Company incurred non-cash financing and investing activities during the years ended December 31, 2022 and December 31, 2021 as follows:

December 31, 2021 as follows:
	December	31,	December 31,
	2022		2021
	$		$
Non-cash financing activities:
Contributed surplus on finders' warrants issued		-	19,400
Share issue costs on finders' warrants issued		-	(19,400)
Share capital issuedfor mineralproperty acquisition		-	250,000
		-	250,000
Non-cash investing activities:
Acquisition of mineral property interests by issue of share capital		-	(250,000)
Deferred exploration expenditures included in accounts payable and
related party payables		1,288	3,138
Deferred exploration expenditures included in Yukon mineral
explorationgrantreceivable	(28,123)		(39,706)
	(26,835)		(286,568)

During the years ended December 31, 2022 and December 31, 2021, no amounts were paid for interest or income tax expenses.

11. Financial risk management

Capital management

The Company is a resource exploration company and considers items included in shareholders’ equity as capital. The Company has no debt and does not expect to enter into debt financing. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust its capital structure, the Company may issue new shares, purchase shares for cancellation pursuant to normal course issuer bids or make special distributions to shareholders. The Company is not subject to any externally imposed capital requirements and does not presently utilize any quantitative measures to monitor its capital. The Company’s capital structure as at December 31, 2022 is comprised of shareholders’ equity of $4,304,357 (December 31, 2021 - $4,941,322).

The Company currently has no source of revenues. In order to fund future projects and pay for operating costs, the Company will spend its existing working capital and raise additional funds as needed. The Company's ability to continue as a going concern on a long-term basis and realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation is primarily dependent upon its ability to sell or option its mineral properties and its ability to borrow or raise additional financing from equity markets (see note 1).

There were no changes to the Company’s capital management approach during the year ended December 31, 2022.

Financial instruments - fair value

The Company’s financial instruments consist of cash and cash equivalents, reclamation bond, accounts payable and accrued liabilities, and accounts payable to related parties. The carrying value of accounts payable and accrued liabilities, and accounts payable to related parties approximates their fair value because of the short-term nature of these instruments.

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Trifecta Gold Ltd.

Notes to the Financial Statements

For the years ended December 31, 2022 and December 31, 2021

11. Financial risk management (continued)

Financial instruments - fair value (continued)

Financial instruments measured at fair value on the statements of financial position are summarized into the following fair value hierarchy levels:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

	Level 1 Level 2 Level 3 Total $ $ $ $
December 31, 2022 Cash and cash equivalents Reclamation bond	1,032,168 - - 1,032,168 50,274 - - 50,274
	1,082,442 - - 1,082,442
December 31, 2021 Cash and cash equivalents Reclamation bond	1,746,016 - - 1,746,016 47,059 - - 47,059
	1,793,075 - - 1,793,075

Financial instruments - risk

The Company’s financial instruments can be exposed to certain financial risks, including credit risk, interest rate risk, liquidity risk, and market and currency risk.

(a) Credit risk

The Company is exposed to credit risk by holding cash. All of the Company’s cash is held in financial institutions in Canada, and management believes the exposure to credit risk with respect to such institutions is not significant. The Company has minimal receivables exposure as its refundable credits are due from the Canadian government.

(b) Interest rate risk

The Company is exposed to interest rate risk because of fluctuating interest rates. Fluctuations in market rates do not have a significant impact on the Company’s operations due to the short term to maturity and no penalty cashable feature of its cash equivalents. For the year ended December 31, 2022, every 1% fluctuation in interest rates up or down would have impacted loss for the year, up or down, by approximately $13,000 (2021 - $11,000).

(c) Liquidity risk

Liquidity risk is the risk that the Company is unable to meet its financial obligations as they come due. The Company manages this risk by careful management of its working capital to ensure its expenditures will not exceed available resources. See note 1 for further details.

(d) Market and currency risk

The Company is not exposed to market risk as it does not hold marketable securities.

The Company is exposed to currency risk because it holds funds in United States Dollars (“USD”), which, because of fluctuating exchange rates can create gains or losses at the time the funds are converted to Canadian dollars. The Company has no control over these fluctuations and does not hedge its foreign currency holdings. Based on its December 31, 2022 USD holdings, every 10% increase or decrease in the exchange rate would have had an insignificant impact on loss for the year.

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