ValOre Metals Corp. — Interim / Quarterly Report 2021

May 6, 2021

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Consolidated Financial Statements Q1 2021

Since 1964, Tree Island Steel has been making products from steel wire for a diverse range of customers for industrial, construction, agricultural, and specialty applications.

Our products include welded wire mesh, fencing, galvanized wire, bright wire, a broad array of fasteners, stucco reinforcing products, and other fabricated wire products. We market these products under the Tree Island®, Halsteel®, True Spec®, K-Lath®, TI Wire®, Tough Strand® and ToughPanel® brand names.

Listed on the Toronto Stock Exchange (“TSX”), our shares trade under the symbol TSL.

INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ……………………………………. 3 SHAREHOLDER INFORMATION …………………………………………………………………………………………………… back cover

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Agricultural Fencing Products

Tree Island Steel Q1 2021

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INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 and 2020

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102 “Continuous Disclosure Obligation”, Part 4, Subsection 4.3(3a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying interim condensed consolidated financial statements of Tree Island Steel have been prepared by and are the responsibility of Tree Island Steel’s management.

Tree Island Steel’s independent auditor, KPMG LLP, has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditor.

May 6, 2021

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INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 and 2020

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

($'000 unless otherwise stated) Cash Accounts receivable Inventory Prepaid expenses	As at December 31, As at March 31,
	Notes 2021 2020
	5 6 2,929 1,245 32,035 24,819 48,695 46,808 3,879 3,209
Current assets Property, plant and equipment Right of use assets Other non-current assets	7 8.1 25,155 25,982 1,203 1,419 87,538 76,081 42,321 43,067
Total assets	156,217 146,549
Accounts payable and accrued liabilities Income taxes payable Other current liabilities Dividends payable Current portion of long-term borrowing Currentportion of ROU lease liability	9.2 8.2 854 570 2,807 2,825 1,629 1,599 17,652 17,770 1,524 1,383 89 97
Current liabilities Senior revolving facility Senior term loans ROU Lease liabilities Other non-current liabilities Deferred Income tax liabilities	9.1 9.2 8.2 543 491 3,581 3,583 12,415 13,215 27,841 28,549 24,555 24,244 30,734 25,398
Total liabilities Shareholders’ equity	56,548 51,069 99,669 95,480
Total liabilities and shareholders’ equity	156,217 146,549

See accompanying Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Approved on behalf of Tree Island Steel.

[Signed] "Amar S. Doman" Executive Chairman of the Board of Director

Tree Island Steel Q1 2021

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INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 and 2020

CONSOLIDATED STATEMENT OF OPERATIONS

CONSOLIDATED STATEMENT OF OPERATIONS
($'000 unless otherwise stated) Sales Cost of sales Depreciation	Three Months Ended March 31,
	Notes 2021 2020
	5, 12.1, 19.1 6 (52,748) (49,835) (1,467) (1,544) 66,842 57,993
Gross profit Selling, general and administrative expenses	12,627 6,614 (3,327) (3,858)
Operating income Foreign exchange gain (Ioss) Financingexpenses	10 (566) (951) 9,300 2,756 (113) 730
Income before income taxes Income tax expense	13 8,621 2,535 (2,157) (706)
Net income	6,464 1,829
Net income per share 17 Dividends per share Weighted average number of shares CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ($'000 unless otherwise stated) Net income for the period Unrealizedgain(loss)on foreign exchange translation 8 (210) 2021 2020 6,464 28,816,136 29,151,278 Three Months Ended March 31, 0.22 0.06 0.03 0.02 1,829
Comprehensive income 6,472 1,619

See accompanying Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Tree Island Steel Q1 2021

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INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 and 2020

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

($'000 unless otherwise stated) Balance as at December 31, 2020 Repurchase of shares Net income Dividends Other comprehensive income(loss)	Accumulated Other Shareholders' Comprehensive Capital(Note 11) Loss Total Earnings Retained
	- 8 8 - - 6,464 - (854) 223,363 51,069 (139) (139) (2,568) - - - (854) 6,464 - (169,726)
Balance as at March 31,2021	223,224 56,548 (2,560) (164,116)
Balance as at December 31, 2019 Repurchase of shares Net income Dividends Other comprehensive income(loss)	- (210) (210) - 1,829 - (576) - - - 223,994 48,653 (48) (48) (2,775) - (576) 1,829 - (172,566)
Balance as at March 31,2020	223,946 49,648 (2,985) (171,313)

See accompanying Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Tree Island Steel Q1 2021

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INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 and 2020

CONSOLIDATED STATEMENT OF CASH FLOWS

($'000 unless otherwise stated) Net income Depreciation Net financing costs Deferred income tax expense (recovery) Exchange revaluation of foreign denominated debt Working capital adjustments Accounts receivable Inventories Accounts payable and accrued liabilities Prepaid expenses Income and other taxes Other	Three Months Ended March 31,
	2021 2020
	(91) (454) (174) 140 252 (120) (1,887) 1,889 (86) 9,246 (113) 838 (8,075) 566 954 (2) 454 (7,216) 6,464 1,467 1,544 1,829
Net cashprovided by (used in)operatingactivities	(1,212) 8,637
Government rebates Purchase ofproperty,plant and equipment	- 650 (277) (2,019)
Net cash used in investingactivities	(277) (1,369)
Term loans payments Long-term debt payments Lease interest paid Lease principal payments Other interest paid Increase (repayment) of senior revolving facility Dividend paid Repurchase of common shares	(139) (48) 5,550 (986) (570) (576) (252) (475) (393) (431) - (295) (312) (346) (705) (496)
Net cashprovided by (used in)financingactivities	3,179 (3,653)
Effect of exchange rate change on cash	(6) 46
Increase in cash Cash - beginningofperiod	907 1,684 1,245 3,661
Cash - end ofperiod	4,568 2,929

See accompanying Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Tree Island Steel Q1 2021

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

1 NATURE OF BUSINESS

These interim unaudited condensed consolidated financial statements of Tree Island Steel (”Tree Island” or the “Company”) for the three months ended March 31, 2021 and 2020 were authorized for issue in accordance with a resolution of the Board of Directors on May 6, 2021. The Company is headquartered at 3933 Boundary Road, Richmond, British Columbia, Canada and the Shares are publicly traded on the Toronto Stock Exchange (“TSX”) under the symbol TSL. Tree Island Steel owns 100% of the shares of Tree Island Industries (“TI Canada”) (collectively “Tree Island”). TI Canada supplies a diverse range of steel wire and fabricated steel wire products to customers in Canada, the United States, and internationally.

2 BASIS OF PREPARATION

2.1 BASIS OF PREPARATION

The interim unaudited condensed consolidated financial statements as at and for the three months ended March 31, 2021 have been prepared in accordance with International Accounting Standard (“IAS” 34, “Interim Financial Reporting”). They should be read in conjunction with the annual consolidated financial statements and the notes thereto for the year ended December 31, 2020 and do not include all information required for the full annual financial statements. Certain comparative information has been reclassified to conform to the presentation adopted during the period.

These interim unaudited condensed consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments categorized as fair value through profit or loss. In addition, these interim unaudited condensed consolidated financial statements have been prepared using the accrual basis of accounting.

2.2 FUNCTIONAL CURRENCY AND PRESENTATION CURRENCY

The functional and presentation currency of the Company is the Canadian dollar. All currency amounts have been rounded to the nearest thousand, except as otherwise indicated.

3 SIGNIFICANT ACCOUNTING POLICIES, CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

The accounting policies, methods of application and critical judgements and estimates used in the preparation of these interim unaudited condensed consolidated financial statements are consistent with those disclosed in the annual consolidated financial statements as at December 31, 2020.

4 FUTURE IFRS STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

Tree Island prepares its interim unaudited condensed consolidated financial statements in accordance with IFRS standards. At this time, new standards, interpretations or amendments to existing accounting standards are either not applicable or not expected to have a significant impact on Tree Island’s interim unaudited condensed consolidated financial statements.

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

5 REVENUE AND ACCOUNTS RECEIVABLE

Revenue is net of cost of freight associated with those sales to customers where the Company arranges the freight. For the three months ended March 31, 2021, this cost of freight amounts to $4.4 million ($3.4 million in 2020).

Below is the composition and aging of Tree Island’s accounts receivable:

		As at December 31, As at March 31,
	Current Over 30 dayspast due	2020 2021
		31,411 22,386 989 2,764
	Total accounts receivable Allowance for doubtful accounts	32,400 25,150 (365) (331)
	Net accounts receivable	32,035 24,819

Accounts receivable are non-interest bearing and are generally due on 30-day to 90-day terms. The credit risk that Tree Island was exposed to by way of its accounts receivable is equal to the net amount of $32.0 million as at March 31, 2021 ( $24.8 million as at December 31, 2020).

At the end of each reporting period a review of the allowance for bad and doubtful accounts is performed. It is an assessment of the expected credit loss associated with trade accounts receivable after the consolidated statement of financial position date. The assessment is made by reference to age, status and risk of each receivable, current economic conditions and historical information. The trade accounts receivable balance is reduced through the use of the allowance for doubtful accounts and the amount of the loss is recognized in the consolidated statement of operations. Reversals to the allowance for doubtful accounts occur when previously allowed for trade accounts receivable are collected. Individual trade accounts receivable, together with any associated allowance previously recognized, are written off when there is no realistic prospect of future recovery. Accounts receivable with related parties are discussed in Note 12.1.

The following table represents a summary of the movement of the allowance for doubtful accounts:

		As at December 31, As at March 31,
	Opening balance - beginning of period Additions during the period Reversals during the period Collections Write-offs during the period Foreign exchange revaluation	2020 2021
		580 103 169 - (20) (69) (36) - 4 331 - (366)
	Closingbalance - end ofperiod	365 331

See Note 15.1 on credit risk of trade receivables to understand how credit quality of accounts receivable that are neither past due nor impaired are managed and measured.

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

6 INVENTORIES

Tree Island had the following categories of inventory:

		As at March 31, As at December 31,
	Raw materials Finished and semi-finished products Consumable supplies and spareparts	2021 2020
		11,553 20,465 17,299 11,530 19,866 14,790
	Total inventory	46,808 48,695

For the three month period ended March 31, 2021 and 2020, Tree Island recognized, in income, inventory costs for the following:

		Three Months Ended
	Opening inventory Material costs Conversion costs Closinginventory	March 31,
		2020 2021
		(48,695) (53,182) 46,808 40,199 14,436 13,302 55,035 34,680
	Cost of sales	49,835 52,748

The reserves for slow moving inventory as at March 31, 2021 were $1.3 million ($1.4 million at March 31, 2020).

10

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

7 PROPERTY, PLANT AND EQUIPMENT

The carrying value of property, plant and equipment is reviewed each reporting period. For the purposes of testing for impairment, or the reversal of impairment, assets are grouped and tested at the Cash Generating Unit level. Tree Island considers both qualitative and quantitative factors when determining whether an asset may be impaired, or when a reversal of impairment is required. Where the carrying value of the assets is not expected to be recoverable from future cash flows, they are written down to their recoverable amount. Tree Island has noted no indicators of impairment for this reporting period.

From time to time the Company makes investments to update, replace or make additions to existing capital assets, which includes, but is not limited to, the buildings occupied and capital equipment. These investments are part of the normal course of business activity.

The net book value of the Company’s property, plant and equipment is detailed below:

		Land & Building & Machinery & Capital in
	Cost As at December 31, 2019 Additions Disposals Foreign exchange translation	Improvement Improvement Equipment Progress Total
		(39) (194) (278) 13 (498) - - (109) - (109) 9,765 46,702 41,267 1,494 99,228 23 451 2,148 (763) 1,859
	As at December 31, 2020 Additions Disposals Foreign exchange translation	(26) (118) (175) (26) (345) - - - 334 334 - - - - - 9,749 46,959 43,028 744 100,480
	As at March 31,2021	9,723 46,841 42,853 1,052 100,469
	Depreciation and impairment As at December 31, 2019 Depreciation for the period Disposals Foreign exchange translation	(2) (130) - - - (108) - (108) (141) (273) 55 34,930 19,263 - 54,248 17 1,394 2,135 - 3,546
	As at December 31, 2020 Depreciation for the period Disposals Foreign exchange translation	(1) (71) (72) - (144) 4 349 526 - 879 - - - - - 70 36,194 - 57,413 21,149
	As at March 31,2021	73 36,472 21,603 - 58,148
	Net book value as at:
	December 31, 2020 March 31, 2021	9,679 10,765 21,879 744 9,650 10,369 21,250 1,052 42,321 43,067

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021 and 2020

8 LEASES

Below is a table of the carrying amounts of Tree Island’s right-of-use assets and lease liabilities and the related movements during the year:

8.1 RIGHT OF USE ASSETS

		Machinery & Total right-of-use
	Cost As at December 31, 2019 Additions Disposals Foreign exchange translation	Land & buildings equipment assets
		35,302 - 149 149 (467) (24) (491) (885) (403) (1,288) 2,477 32,825
	As at December 31, 2020 Additions Disposals Foreign exchange translation	- - - (285) (9) (294) 31,473 2,199 33,672 - - -
	As at March 31,2021	31,188 2,190 33,378
	Depreciation and impairment As at December 31, 2019 Depreciation for period Disposals Foreign exchange translation	(5,609) (993) (6,602) (2,033) (457) (2,490) 880 393 1,273 109 20 129
	As at December 31, 2020 Depreciation for period Disposals Foreign exchange translation	47 6 53 (482) (105) (587) - - - (6,653) (1,037) (7,690)
	As at March 31,2021	(7,088) (1,136) (8,224)
	Carryingvalue as at:
	December 31, 2020 March 31, 2021	24,820 1,162 24,100 1,054 25,982 25,154

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

8.2 LEASE LIABILITY

		Machinery & Total lease
	Lease liability As at December 31, 2019 New contracts and renewals Contract Disposal Interest adjustment Interest expense Payment of lease liability Foreign exchange translation	Land & buildings equipment liability
		30,614 1,471 32,085 - 143 143 - (9) (9) (10) - (10) (2,463) (488) 54 1,344 1,290 (2,951) (456) 2 (454)
	Lease liability as at December 31, 2020 Interest expense Payment of lease liability Foreign exchange translation (280) (5) (285) 301 11 312 (593) (112) (705) 28,975 1,173 30,148
	Lease liability as at March 31, 2021 Less: currentportion 28,403 1,067 29,470 (1,245) (384) (1,629)
	Total as at March 31,2021 27,158 683 27,841
9 SENIOR CREDIT FACILITY

The Company has a senior banking facility with Wells Fargo Capital Finance Corporation Canada (“Wells Fargo”). The five-year senior secured committed banking facility (the “Senior Credit Facility”) which matures in June of 2023, may be used for Tree Island’s financing requirements in Canadian and/or U.S. dollars, and

• $60 million of Senior Revolving Credit facility; and

• $20 million of Senior Term facility.

9.1 SENIOR REVOLVING CREDIT FACILITY

The amount advanced under the Senior Credit Facility at any time is limited to a defined percentage of inventories, accounts receivable, machinery and equipment, and real estate, less certain reserves. The Senior Credit Facility is secured by a first charge over Tree Island’s assets supported by the appropriate guarantees, pledges and assignments, and requires that certain covenants be met by Tree Island.

The Senior Credit Facility includes a $10.0 million Letter of Credit sub-facility which enables TI Canada and TI USA to open documentary and standby letters of credit for raw material purchases. There was a $163 thousand Letter of Credit outstanding as at March 31, 2021.

The amount available under the revolving portion of the Senior Credit Facility is limited to the amount of the calculated borrowing base as prescribed in the Senior Credit Facility, less issued Letters of Credit.

Interest payable on funds borrowed in Canadian or U.S. currency is at variable rates.

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

The following amounts are outstanding under the Senior Revolving Credit portion of the Senior Credit Facility:

		As at December 31, As at March 31,
	Revolving portion of the senior credit facility Deferred financingcosts	2020 2021
		30,734 25,398 (53) (56)
	Total	30,681 25,342

Deferred financing costs are included in other non-current assets on the consolidated statement of financial position.

The Senior Credit Facility has financial tests and other covenants with which the Company and its subsidiaries must comply, the primary one being that a certain amount of credit availability be maintained. Only if the availability test falls below a certain threshold then other covenants, which include a rolling four quarters defined fixed charge coverage ratio of 1:1, are tested. As well, the Senior Credit Facility contains restrictive covenants that limit the discretion of the Company’s management with respect to certain business matters. These covenants place restrictions on, among other things, the ability of the Company’s operating subsidiaries to incur additional indebtedness, to create liens or other encumbrances, to pay dividends or make certain other payments, investments, loans and guarantees and to sell or otherwise dispose of assets and merge or consolidate with another entity.

9.2 SENIOR TERM FACILITY

Under the terms of the Senior Credit Facility, the Company has designated portions up to a total of $20 million denominated in either Canadian or U.S. dollars.

The following amounts are outstanding under the Senior Term Facility:

		As at December 31, As at March 31,
	Senior term loans - beginning of period Advances Foreign exchange revaluation Payments	2020 2021
		(705) (2,124) 16,040 11,194 - 7,242 (113) (272)
	Senior term loans - end of period Less: currentportion	15,222 16,040 (2,807) (2,825)
	Total	12,415 13,215

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

10 FINANCING EXPENSES

		Three Months Ended March 31,
		Notes 2021 2020
	Accretion on long term debt Interest on senior revolving credit facility Interest on senior tem facility	9.1 9.2 - 164 119 287 74 89
	Interest on lease liability Other interest and financing costs Amortization of deferred financingcosts	3 8 312 342 58 61
	Total	566 951
11 SHAREHOLDERS' CAPITAL

Tree Island is authorized to issue an unlimited number of shares. The Shares have no par value.

		Shares Gross Issuance Cost Net
	Shareholders' capital - December 31, 2019 Repurchase of common shares	(328,123) (631) - (631) 28,831,637 235,394 11,400 223,994
	Shareholders' capital - December 31, 2020 Repurchase of common shares	(51,737) (139) - (139) 28,503,514 234,763 11,400 223,363
	Shareholders' capital - March 31,2021	28,451,777 234,624 11,400 223,224

The Company has an ongoing normal course issuer bid (the “Bid”). The current Bid is effective November 9, 2020 to November 8, 2021. The Bid allows the Company to purchase up to 1,427,000 Shares in the period. Tree Island has no obligation to purchase any Shares under the Bid.

For the period January 1, 2021 to March 31, 2021 the Company purchased 51,737 Shares under the Bid at a total cost of $139 thousand (at an average price of $2.69 per Share).

15

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

12 RELATED PARTY TRANSACTIONS

12.1 TRANSACTIONS WITH ASSOCIATED COMPANIES

The Futura Corporation (“Futura”) is considered to be a related party to the Company because of its share ownership interest and the fact that Mr. Doman, the sole shareholder and president of Futura, and Mr. Rosenfeld, the Executive Vice President of Futura, sit on the Board of Directors.

Based on Tree Island Steel’s outstanding Shares as at May 7, 2020, Futura owns 34.3% of the fully diluted Shares of the Company.

In addition, Mr. Doman is Chairman and CEO of CanWel Building Materials Group Ltd. (“CanWel”). For the three month ended March 31, 2021, Tree Island sold, net of rebates, approximately $0.9 million ($0.7 million in 2020) of goods to CanWel and trade accounts receivable owing from CanWel as at March 31, 2021 is approximately $0.3 million (approximately $0.2 million in 2020). Outstanding trade accounts receivable from CanWel at period end are unsecured, interest free and settlement occurs in cash (Note 5).

12.2 TRANSACTION WITH KEY MANAGEMENT PERSONNEL

Included in the definition of key management for purposes of disclosure of related party transactions are members of Board of Directors and officers of Tree Island Steel. Amounts for key management personnel for the three months ended March 31, 2021 was approximately $0.3 million ($0.3 million approximately in 2020) which includes wages, salaries and retirement contributions, paid annual and sick leave, vehicle costs and also includes directors’ fees paid to members of the Board.

13 INCOME TAXES

The income tax recovery (expense) is divided between current and deferred taxes as follows:

		Three Months Ended
	Current tax expense Deferred tax recovery (expense)	2021 2020 March 31,
		2 (454) (2,159) (252)
	Total in the Consolidated Statement of Operations	(2,157) (706)

16

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

14 FINANCIAL INSTRUMENTS

14.1 FAIR VALUE OF FINANCIAL INSTRUMENTS

Tree Island records certain of its financial instruments at fair value using various techniques. These include estimates of fair values based on prevailing market rates (bid and ask prices, as appropriate) for instruments with similar characteristics and risk profiles or internal or external valuation models, such as discounted cash flow analysis and option pricing models, using, to the extent possible, observable market-based inputs.

The fair values of the financial assets and financial liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

• Cash, accounts receivable and accounts payable and accrued liabilities approximate their carrying amounts largely due to the short-term nature of these instruments and interest rates being variable for the senior credit facility;

• Fair value on amounts under the Company's Senior Term Facility are based on estimated market interest rate on similar borrowings. The carrying value approximates fair value as the interest rates approximate market. A 1% change in the market interest rate would change the fair value of Senior Term Facility by $0.3 million.

• Fair value of the forward exchange forward contracts is estimated using observable foreign exchange spot and forward rates. The Company does not consider interest rates or the credit quality of counterparties as significant inputs to the valuation; and

• Fair value on the Company's lease liabilities are based on estimated market interest rate on similar borrowings. The carrying value of the lease liabilities approximates fair value as the interest rates approximate market.

	approximate market.
		As at March 31,		As at December 31,
	Cash and cash equivalent Accounts receivable	2021		2020
		32,035 2,929 Carrying Amount	32,035 2,929 Fair Value	24,819 Carrying Amount 1,245	Fair Value
					24,819 1,245
	Total financial assets	34,964	34,964	26,064	26,064
	Senior revolving facility Accounts payable, accrued and other current liabilities Senior term loans Lease Liabilities	29,470 15,222 17,652 30,734	29,470 15,222 17,652 30,734	30,148 16,040 17,770 25,398	30,148 16,040 17,770 25,398
	Total financial liabilities	93,078	93,078	89,356	89,356

17

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

14.2 FAIR VALUE HIERARCHY

The financial instruments have been categorized on a fair value hierarchy based on whether the inputs to those valuation techniques are observable (inputs reflect market data obtained from independent sources) or unobservable (inputs reflect the Company’s market assumptions).

The three levels of fair value estimation are:

• Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

• Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

• Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

15 RISK EXPOSURE AND MANAGEMENT

Tree Island is exposed to various risks associated with its financial instruments. These risks are categorized as credit risk, liquidity risk and market risk.

15.1 CREDIT RISK

Credit risk consists of credit losses arising in the event of non-payment of accounts receivable of customer accounts. However, the credit risk is minimized through selling to well-established customers of high-credit quality. The credit worthiness of customers is assessed using credit scores supplied by a third party and through direct monitoring of their financial well-being on a continual basis. Management establishes guidelines for customer credit and appropriate precautions are taken to manage credit risk. Provisions for potential credit losses (allowance for doubtful accounts) are maintained and any such losses to date have been within management’s expectations.

15.2 LIQUIDITY RISK

Liquidity arises from our financial obligations and in the management of our assets, liabilities and capital structure. This risk is managed by regular evaluation of our liquid financial resources to fund current and long-term obligations and to meet its capital commitments in a cost-effective manner.

The main factors that affect liquidity include realized sales prices, production levels, cash production costs, working capital requirements, future capital expenditure requirements, scheduled payments on financial liabilities and lease obligations, credit capacity and expected future debt and equity capital market conditions.

Liquidity requirements are met through a variety of sources including cash balances on hand, cash generated from operations, existing credit facilities, and debt and equity capital markets. Management monitors and manages liquidity risk by preparing annual budgets, monthly projections to the end of the fiscal year and regular monitoring of financial liabilities against the constraints of the available revolving credit facilities.

18

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

The table below summarizes the future undiscounted contractual cash flow requirements for financial liabilities (including scheduled interest payments on interest bearing liabilities) as at March 31, 2021 and December 31, 2020:

December 31, 2020:	December 31, 2020:
		Carrying Contractual Less 1 - 2 Greater
		Amount Cash Flow Than 1 Years Than 2
As at March 31, 2021
	Senior revolving facility Accounts payable, accrued and other liabilities Senior term loans (principal) Senior term loans (interest) Lease liability	29,470 43,562 2,832 2,778 37,952 15,222 15,222 2,807 5,614 6,801 - 1,195 308 252 635 30,734 30,734 - - 30,734 17,741 17,741 17,741 - -
		93,167 108,454 23,688 8,644 76,122
As at December 31, 2020
	Senior revolving facility Accounts payable, accrued and other liabilities Senior term loans (principal) Senior term loans (interest) Lease liability	- 1,216 408 322 486 25,398 25,398 - - 25,398 17,867 17,867 17,867 - - 16,040 14,708 2,825 5,650 6,233 2,888 39,000 30,148 44,725 2,837
		23,937 8,860 71,117 89,453 103,914
15.3 FOREIGN CURRENCY RISK

Tree Island’s U.S. dollar-denominated cash, accounts receivable, accounts payable and accrued liabilities, and Senior Credit Facility are exposed to foreign currency exchange rate risk because the value of these financial instruments will fluctuate with changes in the U.S./Canadian dollar exchange rate. The Company may enter into U.S. dollar currency forward contracts for periods consistent with a portion of U.S. dollar currency transaction exposures, generally from one to three months. These are not designated as cash flow, fair value or net investment hedges. As of March 31, 2021, the Company had no outstanding U.S. dollar currency forward contracts.

For the three months ended March 31, 2021, a $0.01 change in the Canadian dollar to U.S. dollar exchange rate will increase (decrease) net comprehensive income by $0.2 million.

19

NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

15.4 INTEREST RATE RISK

Tree Island is exposed to interest rate risk on its Senior Credit Facility. Interest payable on the funds advanced under the Senior Credit Facility are based on variable rates.

A one percent increase in the interest rates charged on the Senior Credit Facility would increase financing expenses by $0.3 million annually. Tree Island does not use derivative instruments to manage the interest rate risk.

15.5 RAW MATERIAL PRICE RISK

Tree Island is exposed to changes in the price of the materials used in its production process and, from time to time, enters into forward contracts to purchase a portion of the zinc used. These are not designated as cash flow or fair value hedges. As at March 31, 2021 the Company had no outstanding zinc forward contracts.

16 MANAGEMENT OF CAPITAL

The Company’s objectives when managing its capital are:

• To maintain a capital base so as to preserve and enhance investor, creditor, and market confidence and to sustain viability and future development of the business; and

• To manage capital in a manner that will comply with the financial covenants on the Senior Credit Facility and Senior Term Loan agreements as described further in Notes 9.1 and 9.2.

The Company manages the capital structure in accordance with these objectives, with considerations given to changes in economic conditions and the risk characteristics of the underlying assets in particular, by closely monitoring cash flows and compliance with external debt covenants. The table below is what management considers capital:

		As at December 31, As at March 31,
	Total shareholders' equity Senior revolving facility Lease liabilities Senior term loans	2021 2020
		51,069 30,734 56,548 16,040 15,222 30,148 25,398 29,470
	Total capital	131,974 122,655

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

17 NET INCOME PER SHARE

Basic earnings per Share amount is calculated by dividing net income for the year by the weighted average number of Shares outstanding during the year.

Diluted earnings per Share amount is calculated by dividing the net income for the year by the weighted average number of Shares outstanding during the year plus the weighted average number of Shares that would be issued on conversion of all the dilutive potential units into Shares. As at March 31, 2021 the Company does not have any instruments issued that could be dilutive.

The following reflects the income and Share data used in the earnings per Share computations:

		Three Months Ended March 31,
		2021 2020
	Net income for the period	6,464 1,829
	Weighted average number of Shares outstanding:	28,816,136 29,151,278
	Net incomeper share($/share)	0.22 0.06

18 PROVISIONS AND COMMITMENTS

18.1 LITIGATION AND CLAIMS

From time to time Tree Island is party to certain legal actions, claims and tax audits. In the period there are no known claims which individually, or in the aggregate, are expected to have a material adverse effect on its financial position, consolidated statement of operations or cash flows. As more information becomes known with respect to any claims, actions or tax audits, the Company then establishes provisions in the period. The Company received a proposal letter from the Canada Revenue Agency (“CRA”) wherein the CRA stated that it proposed to disallow certain intercompany bad debt and capital losses for the year ended December 31, 2015. A Notice of Reassessment has not been issued. The Company disagrees with the CRA’s position and believes that no provisions are necessary with respect to this matter at this time.

18.2 PURCHASE COMMITMENTS

As at March 31, 2021, Tree Island’s wholly owned subsidiaries have committed to material purchases (including finished goods) totaling $44.0 million ($34.5 million - March 31, 2020).

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NOTES TO THE INTERIM UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 2021 and 2020

19 SEGMENTED INFORMATION

19.1 MARKET SEGMENTS

Revenues for each group for the three months ended March 31, 2021 and 2020 were as follows:

		Three Months
		Ended March 31,
	Industrial Commercial Agricultural Residential	2021 2020
		17,509 15,149 22,429 19,210 12,829 13,289 14,075 10,345
	Total revenue	66,842 57,993

Tree Island operates primarily within one industry, the steel wire products industry, with no separately reportable operating segments. Tree Island groups its products into the following: Industrial, Commercial, Agricultural and Residential Construction. No one customer is more than 10% of total revenue.

19.2 GEOGRAPHIC SEGMENTS

The products are sold primarily to customers in the United States and Canada and are attributed to geographic areas based on the location of customers:

		Three Months
		Ended March 31,
	United States Canada International	2021 2020
		1,199 2,380 22,995 21,230 42,648 34,383
	Total revenue	66,842 57,993

Non-current assets for this purpose consist of property, plant and equipment, right-of-use assets and other non-current assets. These assets are attributed to geographic areas based on the locations of the subsidiary Company owning the assets.

		As at March 31, As at December 31,
		2021 2020
	United States Canada	35,184 36,380 34,088 33,495
	Total non-current assets	68,679 70,468

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Executive Officers:

SHAREHOLDER INFORMATION

INFORMATION Remy Stachowiak President, TREE ISLAND STEEL Chief Operating Officer

Nancy Davies Chief Financial Officer and Vice President, Finance

Board of Directors:

Amar S. Doman – Executive Chairman of the Board

Peter Bull Harry Rosenfeld Sam Fleiser Theodore A. Leja Joe Downes

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Shares:

Market Information

Tree Island Steel is listed on the Toronto Stock Exchange trading symbol: TSL.

Registrar and Transfer Agent

Computershare Investor Services Inc.

Corporate Head Office:

3933 Boundary Road Richmond, B.C. Canada, V6V 1T8

Website:

www.treeisland.com

Investor Relations :

Ali Mahdavi Investor Relations (416)‐962‐3300 or amahdavi@treeisla nd.com

Auditors:

KPMG LLP Vancouver, B.C.