Usha Resources Ltd. — Audit Report / Information 2021

Jul 30, 2021

USHA RESOURCES LTD.

CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars)

MARCH 31, 2021

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Usha Resources Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Usha Resources Ltd. (the “Company”), which comprise the statements of financial position as at March 31, 2021 and 2020 and the statements of loss and comprehensive loss, changes in shareholders’ 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 March 31, 2021 and 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 financial statements, which indicates that while the Company has been successful in obtaining its required financing in the past, there is no assurance that such financing will be available or be available on favorable terms. 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 Peter Maloff.

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Vancouver, Canada July 29, 2021

Chartered Professional Accountants

USHA RESOURCES LTD. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Expressed in Canadian Dollars) AS AT MARCH 31

	2021	2020
ASSETS Current Cash Receivables Prepaid expenses Exploration and evaluation assets(Note 4)	$ 221,758 20,223 19,885 261,866 939,622 $ 1,201,488	$ 427,529 2,420 - 429,949 161,568 $ 591,517
LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities Flow-through premium liability (Note 5b) Shareholders' equity Share capital (Note 5) Reserves (Note 5c) Deficit	$ 34,941 66,350 101,291 1,727,455 120,799 (748,057) 1,100,197 $ 1,201,488	$ 12,315 42,000 54,315 775,436 42,201 (280,435) 537,202 $ 591,517

Nature and continuance of operations (Note 1)

Approved and authorized for issue by the Board of Directors on July 29, 2021:

“Navin Varshney” Director “Deepak Varshney” Director Navin Varshney Deepak Varshney

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

USHA RESOURCES LTD. CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (Expressed in Canadian Dollars)

	Year Ended March 31, 2021	Year Ended March 31, 2020
EXPENSES Advertising and promotion Consulting fees (Note 7) Insurance expense Office and miscellaneous Professional fees Property investigation Rent and administration charges (Note 7) Regulatory fees Share-based payments (Note 5c) Shareholder communications Transfer agent fees Travel and entertainment Foreign exchange loss Interest income Loss and comprehensive loss for the year	$ 11,797 164,357 95 11,007 67,713 51,866 19,000 40,948 87,945 - 6,682 6,389 467,799 256 (433) $ 467,622	$ - 10,199 - 7,794 83,078 30,756 18,600 20,362 - 382 7,647 2,408 181,226 - (2,267) $ (178,959)
Basic and diluted loss per common share	$ 0.04	$ 0.04
Weighted average number of common shares outstanding –basic and diluted	11,263,868	4,135,430

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

USHA RESOURCES LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Expressed in Canadian Dollars)

		Share Capital (Note 5) Shares Amount	Share Capital (Note 5) Shares Amount	Share Capital (Note 5) Shares Amount	Reserves	Deficit	Total Shareholders’ Equity
		Shares
Balance, March 31, 2019 Qualifying transaction (Note 5b) Private placements (Note 5b) Share issue costs (Note 5b) Flow-through premium liability (Note 5b) Loss and comprehensive loss for the year Balance, March 31, 2020		4,200,000 1,500,000 4,527,000 - - - 10,227,000		$ 206,246 150,000 472,065 (10,875) (42,000) - $ 775,436	$ 42,201 - - - - - $ 42,201	$ (101,476) - - - - (178,959) $ (280,435)	$ 146,971 150,000 472,065 (10,875) (42,000) (178,959) $ 537,202
Shares issued for mineral claims (Note 5b) Private placements (Note 5b) Flow-through premium liability (Note 5b) Share based payments (Note 5c) Share issue costs (Note 5b) Warrants exercised (Note 5d) Fair value of agent’s options Loss and comprehensive loss for the year Balance, March 31, 2021		1,500,000 3,152,270 - - - 200,000 - - 15,079,270		295,000 654,804 (24,350) - (4,061) 20,000 10,626 - $1,727,455	- - - 87,945 1,279 - (10,626) - $120,799	- - - - - - - (467,622) $ (748,057)	295,000 654,804 (24,350) 87,945 (2,782) 20,000 - (467,622) $ 1,100,197

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

USHA RESOURCES LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Expressed in Canadian Dollars)

	Year Ended March 31, 2021	Year Ended March 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES Loss for the year Adjustment for item not involving cash: Share-based payments Changes in non-cash working capital items: Increase in receivables (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Exploration and evaluation assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of share capital Share issue costs Net cash provided by financing activities Increase in cash for the year Cash, beginning of year Cash, end of year	$ (467,622) 87,945 (17,803) (19,885) 22,627 (394,738) (483,054) (483,054) 674,804 (2,783) 672,021 (205,771) 427,529 $ 221,758	$ (178,959) - (1,332) 4,095 (23,276) (199,472) (10,890) (10,890) 472,065 (10,875)
		461,190 250,828 176,701 $ 427,529
Cash paid during the year for interest	$ -	$ -
Cash paid during the year for income taxes	$ -	$ -

Supplemental information:

During the year ended March 31, 2021, the Company issued 1,500,000 shares with a fair value of $295,000 as consideration for the additional exploration and evaluation interests.

For the year ended March 31, 2020, the Company issued 1,500,000 shares with a value of $150,000 as consideration for the exploration and evaluation interest purchased in its Qualifying Transaction.

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

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

1. NATURE AND CONTINUANCE OF OPERATIONS

Usha Resources Ltd. (the "Company") was incorporated as a private company by Certificate of Incorporation issued pursuant to the provisions of the Business Corporations Act on February 26, 2018. The Company was classified as a Capital Pool Company as defined in the TSX Venture Exchange (“TSX-V”) Policy 2.4 and its Qualifying Transaction was approved by the regulatory authorities during the year ended March 31, 2020 (Note 5).

The Company is listed for trading on the TSX-V under the symbol USHA.V. The Company’s head office address is 1575 Kamloops Street, Vancouver BC, V5K 3W1, Canada. The registered and records office address is 400 – 725 Granville Street, Vancouver BC, V7Y 1G5, Canada.

The Company's business is to acquire and explore interests in mineral properties located in North America, the first of which is its 85% interest in the Nicobat Project in Ontario, Canada that was acquired as part of its Qualifying Transaction.

The Company’s exploration and evaluation properties are at the exploration stage. The business of exploring for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Major expenses may be required to establish ore reserves, to develop metallurgical processes, to acquire construction and operating permits and to construct mining and processing facilities.

Although the Company has taken steps to verify title to the properties on which it is conducting exploration and in which it has an interest, in accordance with industry standards for the current stage of operations of such properties, these procedures do not guarantee the Company's title. Property title may be subject to government licensing requirements or regulations, unregistered prior agreements, unregistered claims, aboriginal claims, and noncompliance with regulatory and environmental requirements. The Company’s assets may also be subject to increases in taxes and royalties, renegotiation of contracts, political uncertainty and currency exchange fluctuations and restrictions.

These financial statements are presented in Canadian dollars, which is the functional currency of the Company.

These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation. While the Company has been successful in obtaining its required financing in the past, there is no assurance that such financing will be available or be available on favourable terms. An inability to raise additional financing may impact the future assessment of the Company as a going concern. The financial statements do not include adjustments to amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations. These material uncertainties may cast significant doubt upon the Company’s ability to continue as a going concern.

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, has 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 ability to raise funds.

2. BASIS OF PREPARATION

These consolidated financial statements, including comparatives, have been prepared using accounting policies consistent with IFRS as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). The consolidated financial statements have been prepared on a 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.

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

2. BASIS OF PREPARATION (cont’d…)

Critical accounting estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Uncertainty about these judgments, estimates and assumptions could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in future periods.

The information about significant areas of judgment considered by management in preparing the financial statements is as follows:

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

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

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

• iv) Deferred tax assets are recognized in respect of tax losses and other temporary differences to the extent it is probable that taxable income will be available against which the losses can be utilized. Judgment is required to determine the amount of deferred tax assets that can be recognized based upon the likely timing and level of future taxable income together with future tax planning strategies.

3. SIGNIFICANT ACCOUNTING POLICIES

Basis of consolidation

These consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiary, Usha Resources (USA) Corp. which was incorporated on June 1, 2020. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. All significant intercompany transactions and balances have been eliminated.

Foreign exchange

The functional currency is the currency of the primary economic environment in which the entity operates and has been determined for the Company and its subsidiaries to be the Canadian dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21, The Effects of Changes in Foreign Exchange Rates .

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Foreign exchange (cont’d…)

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, the monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the exchange rate at the reporting date, 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 the statement of operations in the period in which they arise.

Exploration and evaluation assets

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

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

Impairment

At the end of each reporting period, the Company’s assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than the carrying amount, the carrying amount of the asset is reduced to the recoverable amount and the impairment loss is recognized in the profit or loss for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Provision for environmental rehabilitation

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

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Provision for environmental rehabilitation (cont’d…)

The Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to mining assets with a corresponding entry to the rehabilitation provision. The Company’s estimates are reviewed annually for changes in regulatory requirements, discount rates, effects of inflation and changes in estimates. Changes in the net present value, excluding changes in the Company’s estimates of reclamation costs, are charged to profit and loss for the year. The Company had no provisions for environmental rehabilitation as at March 31, 2021.

Loss per share

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

Share-based payments

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

The fair value of stock options is measured on the date of grant, using the Black-Scholes option pricing model, and is recognized over the vesting period. 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 fair value of the share-based payment. Otherwise, share-based payments are measured at the fair value of goods or services received.

Flow-through common shares

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

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

Income taxes

Income tax on the profit or loss for the periods presented 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, in which case it is recognized in equity. Current tax expense is the expected tax payable on the 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 recorded by providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Income taxes (cont’d…)

not provided for: goodwill not deductible for tax purposes; the initial recognition of assets or liabilities which affect neither accounting nor taxable loss as well as differences relating to investments in subsidiaries to the extent that they will probably 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.

Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Financial instruments

IFRS 9 establishes three primary measurement categories for financial assets: fair value through profit and loss (“FVTPL”), fair value through other comprehensive income (“FVOCI”) and amortized cost. The basis for classification depends on the entity’s business model and the contractual cash flow characteristics of the instrument.

Classification

The Company determines the classification of its financial instruments at initial recognition. Upon initial recognition, a financial asset is classified as measured at: amortized cost, fair value through profit and loss (“FVTPL”), or fair value through other comprehensive income (loss) (“FVOCI”). The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. A financial liability is classified and measured at amortized cost or FVTPL.

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

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

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

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

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

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

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

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

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Classification (cont’d…)

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

The Company classifies its financial instruments as follows:

Company classifies its financial instruments as follows:
	IFRS 9
Asset or Liability	Classification
Cash	FVTPL
Receivables	Amortized cost
Accounts payable and accruedliabilities	Amortized cost

Measurement

Initial measurement

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

Subsequent measurement

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

Financial assets at FVTPL

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

Financial assets at amortized cost

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

Equity investments at FVOCI

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

Debt investments at FVOCI

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

Impairment of financial instruments

Impairment of financial assets at amortized cost: 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 the reporting

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Impairment of financial instruments (cont’d…)

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.

Leases

The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For new leases, a right-of-use asset is initially measured at the amount of the liability plus any initial direct costs. After lease commencement, the lessee shall measure the right-of-use asset at cost less accumulated depreciation and accumulated impairment.

4. EXPLORATION AND EVALUATION ASSETS

The Company entered into an agreement dated March 7, 2019 with Emerald Lake Development Corporation (the “Vendor”) for the right to purchase an undivided 51% interest in certain patented mining property (the “Property”), located in the Dobie Township, Northwest Ontario. The purchase price of the Property is the issuance of 1,500,000 common shares of the Company to the Vendor; the shares were issued during the year ended March 31, 2020 at a fair value of $150,000 (Note 5b). In addition, the Company and a third-party company that holds a 15% interest in the Property shall pay the Vendor a 2.0% net smelter returns royalty upon the commencement of commercial production from the Property. The Company and the third-party company shall have the right at any time to acquire up to 1.5% of the royalty from the Vendor for the price of USD $2,000,000 until the end of the five-year period commencing from the date that the Property is put into commercial production. This agreement constituted the Company’s Qualifying Transaction under the Capital Pool Companies policy of the TSX-V.

On May 11, 2020, the Company entered into an amendment agreement (the “Amendment Agreement”) with Emerald Lake Development Corporation (“Emerald Lake”) to the mineral property purchase agreement dated March 7, 2019, whereby Emerald Lake granted the Company the right to acquire an additional 34% interest in the Nicobat Property located in Northwest Ontario, for a total interest of 85%, in exchange for the issuance of 500,000 common shares valued at $95,000. The Amendment Agreement and issuance of the Shares to Emerald Lake was approved by the TSX-V on June 23, 2020.

On June 3, 2020, the Company entered into a binding Letter of Intent (“LOI”) with AJA Mining LLC and Gold Basin Mining EXP LLC (collectively, the “Optionors”) whereby the Optionors agreed to grant the Company the exclusive option to acquire 100% interest in certain mineral claims located in Arizona, USA in exchange for annual lease payments of US$25,000, issuance of 1,000,000 shares upon TSX-V approval of the transaction, and within three years make a final payment of US$3,000,000, which can be made in cash or with separate TSX-V approval in shares.

On June 24, 2020, pursuant to the terms of the binding LOI with AJA Mining, LLC, the Company advanced US$25,000 converted into Canadian $34,592 to the Optionors towards the annual lease payment of the mineral claims in an interest-free loan. The LOI was approved by the TSX-V on August 19, 2020 and the shares were issued on August 26, 2020 at a fair value of $200,000.

The Company has incurred expenditures on the properties as follows:

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

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

Acquisition Costs for Nicobat property, Ontario: Balance, March 31, 2019 Issuance of common shares Balance, March 31, 2020 Issuance of common shares Balance, March 31, 2021 Exploration Expenditures: Balance, March 31, 2019 Geological consulting and reports Balance, March 31, 2020 Geological consulting and reports Field Expenses Assay Sampling Drilling Expenses Titles Claims Fees Total costs, March 31, 2021 Acquisition Costs for Dease Lake Project (British Columbia) Exploration Expenditures: Balance, March 31, 2019 and March 31, 2020 Consulting fees Total costs, March 31, 2021 Acquisition Costs for Lost Basin, Arizona: Balance, March 31, 2019 and March 31, 2020 Lease payment of USD 25,000 Issuance of common shares Balance, March 31, 2021 Exploration Expenditures: Balance, March 31, 2020 Consulting fees Geological consulting and reports Field expenses Assay sampling Exploration Equipment Legal fees for acquisition Total costs, March 31, 2021 Exploration and evaluation assets, all properties		$	- 150,000	- 150,000
			150,000 95,000
			245,000
		$	- 11,568 11,568 32,350 9,357 23,313 197,229 2,073 275,890	- 11,568
	$ $ $ $ $ $ $	$
		$	- 625
		$	625
			- 34,592 200,000
			234,592
			- 13,629 45,056 76,785 24,113 9,638 14,294
		$	183,515
		$	939,622

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

5. SHARE CAPITAL

a) Authorized:

Unlimited common shares with no par value and unlimited preferred shares with no par value.

b) Issued:

During the year ended March 31, 2020, the Company issued 1,500,000 common shares at a price of $0.10 per share valued at $150,000 upon the completion of its Qualifying Transaction (Note 4). Concurrent to the completion of the Qualifying Transaction, the Company completed a non-brokered private placement of 4,527,000 units, consisting of 1,200,000 flow-through units at $0.13 per flow-through unit and 3,327,000 non-flow through units at $0.095 per unit.

Under the flow-through units offering (each unit consisting of one flow-through share and one common share purchase warrant) the Company issued 1,200,000 flow-through units at a price of $0.13 per unit for proceeds of $156,000. Each warrant is exercisable to purchase an additional non-flow-through common share at $0.26 per share for a period of two years from the date of issuance. The Company calculates the tax effect of any premium related to the issuance of flow-through shares by reviewing the value of corresponding common shares and warrants issued in connection with the issuance. As a result, the Company recognized a premium of $42,000 as a flow-through premium liability on the issuance of the flow-through shares.

Under the non-flow-through units offering (each unit consisting of one common share and one common share purchase warrant) the Company issued 3,327,000 non-flow through units at $0.095 per unit for gross proceeds of $316,065. $10,875 was paid as shares issue cost. Each warrant is exercisable to purchase an additional non-flow-through common share at $0.19 per share for a period of two years from the date of issuance. No value was attributed to the warrant component of the units.

During the year ended March 31, 2021, the Company issued 500,000 common shares valued at $95,000 pursuant to the Emerald Lake agreement and issued 1,000,000 common shares valued at $200,000 pursuant to the agreement with AJA Mining LLC and Gold Basin Mining EXP LLC (Note 4).

During the year ended March 31, 2021, the Company issued 200,000 common shares for proceeds of $20,000 pursuant to the exercise of agent’s warrants.

On October 21, 2020, the Company closed the first tranche of the Company's non-brokered private placement, issuing an aggregate of 2,065,830 non-flow through units at $0.20 per unit raising gross proceeds of $413,166. On November 23, 2020, the Company closed the second tranche of the Company's non-brokered private placement, issuing an aggregate of 100,000 non-flow through units at $0.20 per unit raising gross proceeds of $20,000. On December 2, 2020, the Company closed the final tranche of its non-brokered private placement, issuing an aggregate of 499,440 units at $0.20 per unit and 487,000 flow through units at $0.25 per flow through unit raising gross proceeds of $221,638. During the year ended March 31, 2021, the Company recorded shares issuance costs in the amount of $4,061.

Each non-flow through unit consists of one common share and one-half of one transferable share purchase warrant. Each warrant is exercisable to purchase one warrant share of the Company at $0.30 per warrant share for a period of two years from the date of issuance of the units, provided that in the event that the closing price of the Company’s shares on the TSX Venture Exchange (or such other exchange on which the Company’s shares may become traded) is $0.75 or greater per share during any thirty (30) consecutive trading day period at any time subsequent to four months and one day after the closing date, the warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day after the date on which the Company provides notice of such accelerated expiry to the holders of the warrants (the “ Accelerated Expiry Provisions ”). No value was attributed to the warrant component of the units.

The Company calculates the tax effect of any premium related to the issuance of flow-through shares by reviewing the value of corresponding common shares and warrants issued in connection with the issuance. As a result, the Company recognized a premium of $24,350 as a flow-through premium liability on the issuance of the flow-through shares.

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

5. SHARE CAPITAL (cont’d…)

• c) Stock options

The Company maintains a Stock Option Plan (the “Plan”) under which it is authorized to grant stock options to executive officers, directors, employees, and consultants. Under the Plan, the number of options that may be issued is limited to no more than 10% of the Company’s issued and outstanding shares immediately prior to the grant.

The exercise price of each stock option shall equal the market price of the Company's shares, less any applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of five years and vest at the discretion of the Board of Directors. The Company approved the stock option plan during the year ended March 31, 2019. Upon the closing of the Offering, the Company approved the grant to directors and officers of stock options to purchase 420,000 common shares exercisable at $0.10 per share expiring five years from the date of grant (until October 12, 2023).

During the year ended March 31, 2021, the Company granted 552,700 incentive stock options with a fair value of $79,605 using the Black-Scholes option pricing model assuming a life expectancy of five years, a risk free interest rate of 0.36%, a forfeiture rate of nil, and volatility of 96.15%, the Company granted 100,000 incentive stock options with a fair value of $10,098 using the Black-Scholes option pricing model assuming a life expectancy of two years, a risk free interest rate of 0.27%, a forfeiture rate of nil, and volatility of 107.77%. The Company expensed $86,277 as share-based compensation for stock options.

Stock option transactions are summarized as follows:

	Number	Weighted Average Exercise Price
Outstanding, March 31, 2019 Granted Outstanding, March 31, 2020 Granted Granted Outstanding,March31,2021	420,000 - 420,000 552,700 100,000 1,072,700	$ 0.10 - $ 0.10 0.20 0.25 $ 0.17

The following stock options were outstanding at March 31, 2021:

	Number of			Remaining
	options	Exercise		contractual
	outstanding	Price	Expiry Date	life (years)
Options	420,000	$ 0.10	October 12, 2023	2.53
Options	552,700	$ 0.20	September 17, 2025	4.47
Options	100,000	$ 0.25	December 02, 2022	1.68

The following stock options were exercisable at March 31, 2021:

	Number of			Remaining
	options	Exercise		contractual
	outstanding	Price	Expiry Date	life (years)
Options	420,000	$ 0.10	October 12, 2023	2.53
Options	552,700	$ 0.20	September 17, 2025	4.47
Options	50,000	$ 0.25	December 02, 2022	1.68

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

5. SHARE CAPITAL (cont’d…)

• d) Warrants

During the year ended March 31, 2021, 200,000 Agent’s warrants were exercised at a price of $0.10 per share for aggregate proceeds of $20,000.

As at March 31, 2021, the Company had 6,115,735 warrants outstanding.

A summary of changes in outstanding warrants is as follows:

	Warrants outstanding Weighted Average Exercise Price
Outstanding and exercisable at March 31, 2019 and 2020 Warrants issued Warrants exercised Outstanding and exercisable atMarch31,2021	4,727,000 $ 0.20 1,588,735 0.31 (200,000) 0.10
	6,115,735 $ 0.23

The fair value of the agent’s warrants granted was calculated using the Black-Scholes pricing model with the following weighted-average assumptions:

During the year ended March 31, 2021, 5,250 agent’s warrants were issued for an exercise price of $0.30 per share, the fair value of these agent’s warrants granted were calculated using the Black-Scholes pricing model with the following weighted-average assumptions:

	2021
Weighted average fair value	$0.12
Risk-free interest rate	0.23%
Expected life	2 years
Annualized volatility	106%
Dividend rate	0%

During the year ended March 31, 2021, 3,150 and 4,200 agent’s warrants were issued for an exercise price of $0.30 and $0.35 per share, respectively, the fair value of these agent’s warrants granted were calculated using the Black-Scholes pricing model with the following weighted-average assumptions:

	2021
Weighted average fair value	$0.09
Risk-free interest rate	0.27%
Expected life	2 years
Annualized volatility	107%
Dividendrate	0%

The following warrants were outstanding at March 31, 2021:

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

5. SHARE CAPITAL (cont’d…)

Warrants (cont’d…)

	Number of	Exercise
	Shares	Price	Expiry Date
Warrants:
Agent’s warrants	5,250	$ 0.30	October 21, 2022
Agent’s warrants	3,150	0.30	December 2, 2022
Agent’s warrants	4,200	0.35	December 2, 2022
Flow-through warrants	1,200,000	0.26	December 6, 2021
Non-flow through warrants	3,327,000	0.19	December 6, 2021
Non-flow through warrants	1,032,915	0.30	October 20, 2022
Non-flow through warrants	50,000	0.30	November 22, 2022
Flow-through warrants	243,500	0.35	December 1, 2022
Non-flow through warrants	249,720	0.30	December 1, 2022

6. INCOME TAXES

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

	2021	2020
Loss before income taxes	$ (467,622)	$ (178,959)
Combined Canadian federal and provincial statutory rate	27%	27%
Expected income tax recovery Change in statutory, foreign tax, foreign exchange rates and other Permanent difference Share issue cost Change in unrecognized deductible temporary differences Net income tax recovery	$ (126,000) (198,000) 1,000 (1,000) 324,000 $ -	$ (48,000) - (3,000) 51,000 $ -

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

	March 31, 2021	March 31, 2020
Deferred tax assets (liabilities): Exploration and evaluation assets Share issue costs Non-capital losses available for future period Totalunrecognized deferred taxassets	$ 230,000 12,000 177,000 $ 419,000	$ - 18,000 77,000 $ 95,000

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

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

6. INCOME TAXES (cont’d…)

		2021	Expiry Date		2020	Expiry Date
			Range			Range
Temporary differences
Exploration and evaluation assets	$	790,000	No expiry date	$	-	No expiry date
Investment tax credit		22,000	2021 to 2041		-
Share issue costs		46,000	2042 to 2045		65,000	2040 to 2043
Non-capital losses available for future		654,000	2026 to 2041		287,000	2038 to 2040
period

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

7. RELATED PARTY TRANSACTIONS

The aggregate amount of expenditures paid or payable to key management personnel consisting of directors, former directors or companies with common directors was as follows:

Name of the	Company’s Name	Nature of		Year ended		Year ended
Key management		Transaction		March 31,		March 31,
personnel				2021		2020
Deepak Varshney,	Castello Q	Consulting fees	$	92,000	$	-
CEO	Development
	Corporation
Navin Varshney,	N.K.V. Engineering	Rent and administration		19,000		18,600
Director	& Consulting Ltd	charges
Khalid Naeem,	KN Consulting Inc.	Accounting Fees		20,000		2,000
CFO

• a) These transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

• b) Accounts payable included $17,253 (2020: $2,108) owed to directors and officers of the Company for operating expenses paid on behalf of the Company during the year ended March 31, 2021.

8. FINANCIAL INSTRUMENTS

Fair value

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.

Cash is carried at fair value using a level 1 fair value measurement. The recorded values of receivables and accounts payable and accrued liabilities approximate their fair values due to their short-term to maturity.

USHA RESOURCES LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Canadian Dollars) MARCH 31, 2021

8. FINANCIAL INSTRUMENTS (cont’d…)

Financial risk management

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

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Company limits its exposure to credit risk by placing its cash with a major financial institution. Management feels that the Company’s credit risk with respect to cash is remote.

Interest rate risk

The Company is exposed to interest rate risk to the extent that the cash maintained at the financial institutions is subject to a floating rate of interest. The interest rate risk on cash is not considered significant.

Liquidity risk

All of the Company’s financial liabilities are classified as current and are anticipated to mature within the next fiscal year. The Company intends to settle these with funds from its positive working capital position.

Foreign currency risk

Currency risk is the risk that the fair value or future cash flows from a financial instrument will fluctuate due to changes in foreign exchange rates. As at March 31, 2021, the Company did not have any financial instruments denominated in foreign currencies and considers foreign currency risk to be insignificant.

Price risk

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. The Company closely monitors individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company.

9.

CAPITAL MANAGEMENT

Capital is comprised of all the components of the Company’s shareholders’ equity. As at March 31, 2021 and March 31, 2020, the Company’s shareholders’ equity was $1,100,197 and $537,202 respectively and there was no long-term debt outstanding. The Company manages its capital structure to maximize its financial flexibility making adjustments to it in response to changes in economic conditions and the risk characteristics of the underlying assets and business opportunities. The Company does not presently utilize any quantitative measures to monitor its capital. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable given the relative size of the Company. The Company is not subject to any externally imposed capital requirements or debt covenants. There were no changes in the Company’s approach to capital management during the year ended March 31, 2021.