Highbank Resources : Independent Auditor's Report To the Shareholders of Highbank Resources Ltd

HIGHBANK RESOURCES LTD.

Financial Statements

For the Years ended December 31, 2021 and 2020

Expressed in Canadian Dollars

Crowe MacKay LLP

1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5

Main [phone] Fax [phone]www.crowemackay.ca

Independent Auditor's Report

To the Shareholders of Highbank Resources Ltd.

Opinion

We have audited the financial statements of Highbank Resources Ltd. (the "Company"), which comprise the statements of financial position as at December 31, 2021 and December 31, 2020 and the statements of comprehensive loss, changes in shareholders' equity (deficit) and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and December 31, 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 to the financial statements which describes the material uncertainty 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 comprises:

• • Management's Discussion and Analysis

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

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

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

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

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

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

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

Auditor's Responsibilities for the Audit of the Financial Statements

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

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

• • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• • Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

The engagement partner on the audit resulting in this independent auditor's report is Hilda H. Leung.

"Crowe MacKay LLP"

Chartered Professional Accountants Vancouver, Canada

May 2, 2022

HIGHBANK RESOURCES LTD. Statements of Financial Position (Expressed in Canadian dollars)

NotesDecember 31, 2021

December 31, 2020

ASSETS Current assets Cash

Accounts receivable Due from related parties Prepaid expenses

$

2,204 $ 50,564

2,383 3,222

11

1,704 4,447

5,866 6,300

12,157

64,533

Non-current assets Property and equipment Reclamation bond

Exploration and evaluation assets

4 6 5

758 189,500 3 190,261

7,816,992 189,500 3 8,006,495

TOTAL ASSETS

$

202,418

$

8,071,028

LIABILITIES Current liabilities

Trade payables and accrued liabilities Promissory notes

Due to related parties Production loan Convertible debenture

10

• 7 $

2,139,161 $ 1,769,859 2,880,075 2,613,326

11

1,054,034 923,909

4, 10

900,000 900,000

10

- 6,973,270

4,000,000 10,207,094

Non-current liabilities Convertible debenture Reclamation obligation

10 6

2,592,094 94,750 2,686,844 9,660,114

- 94,750 94,750

TOTAL LIABILITIES

10,301,844

SHAREHOLDERS' EQUITY (DEFICIT)

Share capital

Share subscription advance (receivable) Equity component of convertible debenture Contributed surplus

8 10 9

17,189,233

17,188,433

(6,650) 1,207,205

(6,650)

-

• 1,509,658 1,509,658

Deficit

(29,357,142) (20,922,257)

TOTAL SHAREHOLDERS' EQUITY (DEFICIT)

(9,457,696) (2,230,816)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

$

202,418

$

8,071,028

Nature and continuance of operations (Note 1)

Commitments (Notes 4 and 11)

Contingency (Note 5)

Subsequent events (Note 15)

Approved on behalf of the Board:

"James H. Place"

Director

See accompanying notes to the financial statements

"Gary Musil"

Director

5