6-K - GROY - Equibles

UNITEDSTATES

SECURITIESAND EXCHANGE COMMISSION

Washington,D.C. 20549

FORM6-K

Reportof Foreign Private IssuerPursuant to Rule 13****a-16or 15d-16UNDER the Securities Exchange Act of 1934

For the month of June 2022

Commission File No.: 001-40099

GOLDROYALTY CORP.

(Translation of registrant’s name into English)

1030West Georgia Street, Suite 1830

Vancouver,British Columbia, V6E 2Y3, Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

In connection with the anticipated filing of a Registration Statement on Form F-3, Gold Royalty Corp. (the “Company”) is filing this Form 6-K to provide (i) updated unaudited pro forma condensed combined financial information, giving effect to the August 23, 2021 acquisition by the Company of all the issued and outstanding common shares of Ely Gold Royalties Inc. and the November 5, 2021 acquisition by the Company of all the issued and outstanding common shares of Golden Valley Mines and Royalties Ltd. and the noncontrolling interests in Golden Valley’s subsidiary, Abitibi Royalties Inc., and (ii) updated financial statements for each of Ely Gold Royalties Inc., Abitibi Royalties Inc. and Golden Valley Mines and Royalties Ltd.

The updated unaudited pro forma financial information has been presented for informational purposes only. It does not purport to project the future financial position or operating results of the Company following the acquisitions of Ely Gold Royalties Inc., Golden Valley Mines and Royalties Ltd. and Abitibi Royalties Inc.

ExhibitIndex

Exhibit	Description
99.1	Unaudited<br>Pro Forma Condensed Combined Statements of Loss for the year ended September 30, 2021 and for the six months ended March 31, 2022
99.2	Ely Gold Royalties Inc. Consolidated Financial Statements for the years ended December 31, 2020 and 2019
99.3	Ely Gold Royalties Inc. Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2021 and 2020
99.4	Abitibi Royalties Inc. Audited Consolidated Financial Statements for the years ended December 31, 2020 and 2019
99.5	Abitibi Royalties Inc. Condensed Interim Consolidated Financial Statements for the three and six months ended June 30, 2021 and 2020
99.6	Golden Valley Mines and Royalties Ltd. (formerly Golden Valley Mines Ltd.) Consolidated Financial Statements for the year ended December 31, 2020 and 2019
99.7	Golden<br> Valley Mines and Royalties Ltd. Condensed Consolidated Interim Financial Statements for the three and nine months ended September<br> 30, 2021 and 2020

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Gold Royalty Corp.
Date:<br> June 13, 2022	By:	/s/ Josephine Man
	Name:	Josephine<br> Man
	Title:	Chief<br> Financial Officer

Exhibit99.1

UNAUDITEDPRO FORMA CONDENSED COMBINED STATEMENTS OF LOSS

The unaudited pro forma condensed combined statements of loss of Gold Royalty is presented to illustrate the pro forma effects of the following transactions: (i) the August 23, 2021 acquisition by Gold Royalty of all the issued and outstanding common shares of Ely Gold; and (ii) the November 5, 2021 acquisition by Gold Royalty of all the issued and outstanding common shares of Golden Valley and the noncontrolling interests in Golden Valley’s subsidiary Abitibi Royalties. We refer to the above transactions collectively as the “Acquisitions” and the entities subject to the Acquisitions as the “Acquired Entities.”

The unaudited pro forma condensed combined statements of loss for the year ended September 30, 2021 and the six months ended March 31, 2022 combines the historical consolidated statements of loss and condensed interim consolidated statements of loss of Gold Royalty and each of the Acquired Entities giving effect to the Acquisitions as if they had occurred on October 1, 2020.

The Acquisitions and basis of presentation of the unaudited pro forma condensed combined statements of loss are described in greater detail in Note 1 Basis of Presentation included in the notes to the unaudited pro forma condensed combined statements of loss and elsewhere herein.

The unaudited pro forma condensed combined statements of loss are based on various adjustments and assumptions and is not necessarily indicative of what Gold Royalty’s statement of operating results actually would have been if the Acquisitions occurred as of the dates indicated or will be for any future periods. The unaudited pro forma condensed combined statements of loss do not include adjustments to reflect any potential revenue, synergies or dis-synergies, or cost savings that may be achievable in connection with the Acquisitions, or the associated costs that may be necessary to achieve such revenues, synergies or cost savings. The unaudited pro forma condensed combined statements of loss do not give effects to events arising after March 31, 2022.

GOLDROYALTY CORP.

PROFORMA CONDENSED COMBINED STATEMENTS OF LOSS

(Expressed in thousands of United States Dollars)

(Unaudited)

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GoldRoyalty Corp.

ProForma Condensed Combined Statement of Loss

For the year ended September 30, 2021

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)


Revenue
Royalty income	192		2,963		(1,086	)	(a)	1,907		(335	)	(a)	3,641
Cost of sales
Depletion of royalties	(164	)	(2,420	)	(587	)	(b)	-		(529	)	(b)	(3,700	)
Gross profit (loss)	28		543		(1,673	)		1,907		(864	)		(59	)
Expenses
Consulting fees	2,677		2,798		-			-		-			5,475
Depreciation	5		33		-			-		-			38
Management and directors’ fees	1,172		4,355		-			132		-			5,659
General and administrative	2,937		570		-			1,816		-			5,323
Professional fees	2,481		1,168		-			1,198		-			4,847
Share-based compensation	3,324		129		-			37		-			3,490
Exploration and evaluation expenses	13		-		-			86		-			99
Royalty interests	-		-		-			47		-			47
Operating loss for the year	(12,581	)	(8,510	)	(1,673	)		(1,409	)	(864	)		(25,037	)
Other items
Interest and finance expenses	-		(110	)	-			(131	)	-			(241	)
Change in fair value of derivative liability	(1,511	)	-		1,926		(c)	9,700		-			10,115
Change in fair value of short-term investments	(168	)	110		-			(18,010	)	-			(18,068	)
Foreign exchange loss	(812	)	(37	)	-			(246	)	-			(1,095	)
Share of loss of associates	-		-		-			(110	)	-			(110	)
Gain on sale of mineral property	-		-		-			107		-			107
Gains on dilution of equity investments	-		-		-			91		-			91
Gain on loss of significant influence	-		-		-			307		-			307
Interest income	67		19		-			3		-			89
Others	-		(1,654	)	1,507		(d)	-		-			(147	)
Net loss before income taxes for the year	(15,005	)	(10,182	)	1,760			(9,698	)	(864	)		(33,989	)
Current tax expense	-		-		-			(899	)	-			(899	)
Deferred tax recovery	-		-		2,693		(e)	2,396		716		(c)	5,805
Net loss after income taxes for the year	(15,005	)	(10,182	)	4,453			(8,201	)	(148	)		(29,083	)
Other comprehensive income (loss)
Item that may be reclassified subsequently to net income:
Foreign currency translation differences	441		-		-			-		-			441
Total comprehensive loss for the year	(14,564	)	(10,182	)	4,453			(8,201	)	(148	)		(28,642	)
Net loss for the year attributable to:
Shareholders of Parent	(15,005	)	(10,182	)	4,453			(3,659	)	(4,690	)	(d)	(29,083	)
Non-controlling interest	-		-		-			(4,542	)	4,542		(d)	-
Net loss for the year attributable to Gold Royalty Corp.	(15,005	)	(10,182	)	4,453			(8,201	)	(148	)		(29,083	)
Net loss per share, basic and diluted (Note 6)	(0.45	)											(0.25	)
Weighted average number of common shares outstanding - basic and diluted	33,555,265												115,548,752

Seeaccompanying notes to the unaudited pro forma condensed combined statements of loss.

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GoldRoyalty Corp.

Pro Forma Condensed Combined Statement of Loss

For six months ended March 31, 2022

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)


Revenue
Royalty and option income	1,171		102		-			1,273
Cost of sales
Depletion	(775	)	-		(28	)	(b)	(803	)
Gross profit	396		102		(28	)		470
Expenses
Consulting fees	(3,729	)	-		-			(3,729	)
Depreciation	(24	)	-		-			(24	)
Management and directors’ fees	(562	)	(2,820	)	-			(3,382	)
Salaries, wages and benefits	(464	)	(145	)	-			(609	)
Investor communications and marketing expenses	(676	)	-		-			(676	)
Office and technology expenses	(393	)	(22	)	-			(415	)
Transfer agent and regulatory fees	(311	)	-		-			(311	)
Insurance fees	(1,105	)	-		-			(1,105	)
Professional fees	(3,181	)	(5,373	)	-			(8,554	)
Share-based compensation	(2,047	)	-		-			(2,047	)
Exploration and evaluation expenses	(111	)	(17	)	-			(128	)
Share of loss in associate	(251	)	132		-			(119	)
Dilution gain in associate	80		-		-			80
Impairment on royalties	(3,821	)	-		-			(3,821	)
Operating loss for the period	(16,199	)	(8,143	)	(28	)		(24,370	)
Other items
Change in fair value of derivative liabilities	1,888		592		-			2,480
Change in fair value of short-term investments	3,249		(246	)	-			3,003
Gain on disposition of short-term investments	1,168		-		-			1,168
Foreign exchange gain/(loss)	36		(291	)	-			(255	)
Interest expense	(105	)	(9	)	-			(114	)
Other income	249		-		-			249
Net loss before income taxes for the period	(9,714	)	(8,097	)	(28	)		(17,839	)
Current tax expense	-		1,751		-			1,751
Deferred tax (expense) recovery	485		(22	)	2,108		(c)	2,571
Net loss after income taxes for the period	(9,229	)	(6,368	)	2,080			(13,517	)
Other comprehensive income
Item that may be reclassified subsequently to net income:
Foreign currency translation differences	5		-		-			5
Total comprehensive loss for the period	(9,224	)	(6,368	)	2,080			(13,512	)
Net loss for the period attributable to:
Shareholders of Parent	(9,229	)	(2,864	)	(1,424	)	(d)	(13,517	)
Non-controlling interest	-		(3,504	)	3,504		(d)	-
Net loss for the period attributable to Gold Royalty Corp.	(9,229	)	(6,368	)	2,080			(13,517	)
Net loss per share, basic and diluted (Note 6)	(0.08	)						(0.11	)
Weighted average number of common shares outstanding - basic and diluted	121,830,956							127,690,263

Seeaccompanying notes to the unaudited pro forma condensed combined statements of loss.

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GoldRoyalty Corp.

Notesto the Pro Forma Condensed Combined Statements of Loss

For year ended September 30, 2021 and the six months ended March 31, 2022

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)

1.	BASIS OF PRESENTATION

These unaudited pro forma condensed combined statements of loss have been prepared in connection with the Company’s ongoing Form F-3 filing as a result of the Company’s significant business acquisitions completed during its year ended September 30, 2021 and the six months ended March 31, 2022.

On November 5, 2021, the Company acquired all the issued and outstanding common shares of Golden Valley Mines and Royalties Ltd. (“GZZ”) and the non-controlling interest in GZZ’s non-wholly owned subsidiary Abitibi Royalties Inc. (“RZZ”) (together, “Consolidated Golden Valley”) by way of statutory plans of arrangement (the “Golden Valley Transaction”). The Company also acquired Ely Gold Royalties Inc. (“Ely”) on August 23, 2021 (the “Ely Transaction”) by way of a statutory plan of arrangement. These unaudited pro forma condensed combined statements of loss incorporate pro forma adjustments associated with the Ely Transaction (see note 4) and the Golden Valley Transaction (see note 5) from October 1, 2020 to the date of their actual acquisition after which they have been consolidated into the financial statements of the Company.

These unaudited pro forma condensed combined statements of loss have been prepared from information derived from, and should be read in conjunction with the financial statements of the Company, Ely, and Consolidated Golden Valley, each prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), specifically:

(i)	the<br> unaudited condensed interim consolidated financial statements of the Company as at and for the six months ended March 31, 2022;
(ii)	the<br> audited consolidated financial statements of the Company for the year ended September 30, 2021;
(iii)	the<br> condensed consolidated statements of net loss and comprehensive loss for the nine months ended September 30, 2021 and 2020 and the<br> condensed consolidated financial information for the period from October 1, 2021 to November 4, 2021 of Consolidated Golden Valley<br> prepared by management;
(iv)	the<br> condensed interim consolidated financial information of Ely for the period January 1, 2021 through August 22, 2021 prepared by management<br> and the nine months ended September 30, 2020;
(v)	the<br> audited consolidated financial statements of Consolidated Golden Valley and Ely as at and for the year ended December 31, 2020; and
(vi)	the<br> continuous disclosure documents of the Company, Ely, and Consolidated Golden Valley, available under their respective profiles on<br> SEDAR, updating the respective company’s financial information subsequent to the date of the financial information referenced<br> above.

Each of the condensed interim consolidated financial statements has been prepared in accordance with IFRS relevant to the preparation of interim financial statements including IAS 34 Interim Financial Reporting.

Prior to the closing of the Golden Valley Transaction on November 5, 2021, GZZ owned approximately 45% of RZZ. GZZ’s consolidated financial statements referred to above include RZZ as a consolidated subsidiary and, accordingly, both GZZ and RZZ are represented in the historical financial statements of GZZ in these unaudited pro forma condensed combined statements of loss.

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GoldRoyalty Corp.

Notesto the Pro Forma Condensed Combined Statements of Loss

For year ended September 30, 2021 and the six months ended March 31, 2022

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)

These unaudited pro forma condensed combined statements of loss have been compiled from and include:

(a)	An<br> unaudited pro forma condensed combined statement of loss for the twelve months ended September 30, 2021 combining:
(i)	The<br> audited consolidated statement of loss of the Company for the year ended September 30, 2021;
---	---
(ii)	The<br> unaudited consolidated statement of loss and comprehensive loss of Ely for the period from October 1, 2020 to August 22, 2021 (the<br> day prior to the Ely Transaction closing date), which has been constructed by combining the statements of loss for (a) each of the<br> three months ended December 31, 2020 (constructed by subtracting the results from the nine months ended September 30, 2020 from the<br> results for the year ended December 31, 2020), March 31, 2021, and June 30, 2021; and (b) the period from July 1, 2021 to August<br> 22, 2021;
(iii)	The<br> unaudited consolidated statement of net loss of Consolidated Golden Valley for the twelve months ended September 30, 2021, which<br> has been constructed by combining the statements of net income (loss) for the three months ended December 31, 2020 (constructed by<br> subtracting the results from the nine months ended September 30, 2020 from the results for the year ended December 31, 2020) and<br> the nine months ended September 30, 2021; and
(iv)	The<br> adjustments described in Notes 4 and 5.

This statement assumes that the Golden Valley Transaction and the Ely Transaction occurred on October 1, 2020.

(b)	An<br> unaudited pro forma condensed combined statement of loss for the six months ended March 31, 2022 combining:
(i)	The<br> unaudited condensed interim consolidated statement of loss and comprehensive loss of the Company for the six months ended March 31,<br> 2022;
---	---
(ii)	The<br> unaudited consolidated statement of loss and comprehensive loss of Consolidated Golden Valley from October 1, 2021 to November 4,<br> 2021 (the day prior to the Golden Valley Transaction closing date) prepared by management; and
(iii)	The<br> adjustments described in Note 5.

This statement assumes that the Golden Valley Transaction occurred on October 1, 2020.

The constructed historical income statements of Ely and Consolidated Golden Valley described above were prepared for the purpose of the unaudited pro forma condensed combined statements of loss and do not necessarily conform with the consolidated financial statements of Ely and Consolidated Golden Valley filed on SEDAR.

In combining Ely’s and Consolidated Golden Valley’s consolidated financial statements with those of the Company, the Company has:

●	Converted<br> Ely’s consolidated statements of loss from C$ to $ using the average exchange rate in effect for the relevant reporting period<br> (0.7676, 0.7899, 0.8144 and 0.7926 $ per C$ for the three months ended, December 31, 2020, March 31, 2021, June 30, 2021 and the<br> period from July 1, 2021 to August 22, 2021, respectively);
●	Converted<br> Consolidated Golden Valley’s consolidated statements of net income (loss) from C$ to $ using the average exchange rate in effect<br> for the relevant reporting period (0.7676, 0.7994 and 0.8151 $ per C$ for the three months ended December 31, 2020, for the nine<br> months ended September 30, 2021 and the period from October 1, 2021 to November 4, 2021); and
●	Reclassified<br> line items on Ely’s and Consolidated Golden Valley’s consolidated financial statements to conform with the Company’s<br> financial statement presentation.

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GoldRoyalty Corp.

Notesto the Pro Forma Condensed Combined Statements of Loss

For year ended September 30, 2021 and the six months ended March 31, 2022

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)

The unaudited pro forma condensed combined statements of loss are not intended to reflect the financial performance of the Company which would have resulted had Golden Valley Transaction and the Ely Transaction been consummated on the dates indicated. The unaudited pro forma condensed combined statements of loss do not give effect to events arising after March 31, 2022. Further, the unaudited pro forma condensed combined statements of loss are not necessarily indicative of the results of operations that may be obtained in the future.

2.	SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in preparing the unaudited pro forma condensed combined statements of loss are set out in the Company’s audited consolidated financial statements as at and for the year ended September 30, 2021. For purposes of these unaudited pro forma condensed combined statements of loss, where the Company did not previously have an accounting policy for transactions undertaken by Consolidated Golden Valley or Ely during the relevant periods, it has retained the policy and elections taken by Consolidated Golden Valley or Ely.

3.	USE OF ESTIMATES

As disclosed in Gold Royalty’s audited consolidated financial statements as at and for the year ended September 30, 2021, Gold Royalty has been identified as the acquirer in the Ely Transaction on the basis that Gold Royalty shareholders retained a majority of shares of the combined entity on both a basic and fully diluted basis, Gold Royalty offered a premium over the trading price of Ely’s shares prior to the offer, and all members of Gold Royalty executive management and directors continued with the combined entity.

As disclosed in Gold Royalty’s unaudited condensed interim consolidated financial statements as at and for the six months ended March 31, 2022, Gold Royalty has been identified as the acquirer in the Golden Valley Transaction on the basis that Gold Royalty shareholders retained a majority of shares of the combined entity on both a basic and fully diluted basis, Gold Royalty offered a premium over the trading price of GZZ and RZZ’s shares prior to the offer, and all members of Gold Royalty executive management and directors continued with the combined entity.

The Company’s preliminary purchase accounting was based on preliminary valuations performed to determine the fair value of the net assets as of the acquisition date and is subject to adjustments for up to one year after the closing date of the acquisition to reflect the final valuations. The Company is currently in the process of completing its valuation work related to the estimation of the fair values of royalty interests and exploration and evaluation assets. The final valuations could have a material impact on the preliminary purchase accounting and could result in differences to the pro forma adjustments reflected in these unaudited pro forma condensed combined statements of loss.

4.	ELY TRANSACTION PRO FORMA ASSUMPTIONS AND TRANSACTION ACCOUNTING ADJUSTMENTS

On August 23, 2021, the Company acquired all of the issued and outstanding Ely common shares, resulting in Ely becoming a wholly-owned subsidiary of Gold Royalty included in the Company’s consolidated financial statements from the acquisition date forward.

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GoldRoyalty Corp.

Notesto the Pro Forma Condensed Combined Statements of Loss

For year ended September 30, 2021 and the six months ended March 31, 2022

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)

The Company is not aware of any additional reclassifications that would have a material impact on the unaudited pro forma condensed combined statements of loss. Pro forma assumptions and transaction adjustments made are as follows:

a)	The reduction in revenue related to option income on<br> exploration properties that had no historical carrying value in Ely’s financial statements. Preliminary fair value adjustments<br> were allocated to these properties as a result of the Ely Transaction. Option proceeds after the Ely Transaction will first be applied<br> as a reduction of the new carrying value and will be recorded as income only after the new carrying value has been reduced to nil.
b)	The<br> increase in cost of sales represents the increase in depletion caused by the fair value adjustments to Ely’s royalties that<br> generated royalty payments as a result of production or advance minimum royalties. The increase in depletion was calculated using<br> the preliminary allocation of the fair value of the acquired royalties as disclosed in the Company’s audited financial statements<br> as at and for the year ended September 30, 2021.
c)	The<br> change in fair value on the warrant derivative liabilities has been recorded as gain (loss) on warrant derivatives in the unaudited<br> pro forma condensed combined statements of loss using the share price of the Company’s shares, the applicable exchange rates<br> and volatility of 37%, determined based on a peer group of companies. For periods prior to the Company’s initial public offering<br> (“IPO”), the IPO price was assumed to represent the Company’s share price. The Company’s share price was<br> used for periods subsequent to the IPO.
d)	The<br> elimination of deferred charges amortization expense related to Ely’s credit facility cancelled prior to the close of the Ely<br> Transaction.
e)	An<br> adjustment to income tax benefit (expense) based on US and Canadian tax rates applied to Ely’s pre-tax income after permanent<br> differences.
5.	GOLDEN VALLEY PRO FORMA ASSUMPTIONS AND TRANSACTION ACCOUNTING ADJUSTMENTS
---	---

On November 5, 2021, the Company acquired all of the outstanding shares of GZZ and RZZ under the terms of the Golden Valley Transaction resulting in Consolidated Golden Valley becoming wholly-owned subsidiaries of Gold Royalty included in the Company’s consolidated financial statements from the acquisition date forward.

a)	The reduction in revenue related to option income on<br> exploration properties that had no historical carrying value in the Consolidated Golden Valley financial statements. Preliminary<br> fair value adjustments were allocated to these properties as a result of the Golden Valley Transaction. Option proceeds after the<br> Golden Valley Transaction will first be applied as a reduction of the new carrying value and will be recorded as revenue only after<br> the new carrying value has been reduced to nil.
b)	The<br> increase in cost of sales represents the increase in depletion caused by the fair value adjustments to the Consolidated Golden Valley’s<br> royalties that generated royalty payments. The increase in depletion was calculated using the allocation of the fair value of the<br> acquired royalties as disclosed in the Company’s unaudited condensed interim consolidated financial statements as at and for<br> the six months ended March 31, 2022.
c)	Adjustment<br> to income tax benefit (expense) based on Canadian tax rates applied to the Consolidated Golden Valley pre-tax income after permanent<br> differences.
d)	The<br> elimination of income attributable to non-controlling interests of RZZ.

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GoldRoyalty Corp.

Notesto the Pro Forma Condensed Combined Statements of Loss

For year ended September 30, 2021 and the six months ended March 31, 2022

(Unaudited, expressed in thousands of United States Dollars unless otherwise stated)

6.	PRO FORMA LOSS PER SHARE

Pro forma basic and diluted loss per share has been calculated based on the actual weighted average number of Gold Royalty common shares outstanding for the respective periods as well as the number of shares issued in connection with the Acquisitions as if such shares had been outstanding since the date the associated equity was originally issued or assumed to be issued:

	Twelve months ended<br><br> September 30, 2021		Six months ended<br><br> March 31, 2022
Actual weighted average number of Gold Royalty common shares outstanding		33,555,265		121,830,956
Pro forma adjustment weighted average number of Gold Royalty common shares, issued in exchange for Ely shares		27,139,364		-
Weighted average number of Gold Royalty common shares, issued in exchange for GZZ shares and RZZ shares not owned by GZZ		54,854,123		5,859,307
Pro forma weighted average number of Gold Royalty common shares outstanding		115,548,752		127,690,263
Pro forma net loss attributable to shareholders of the combined Company	$	29,083	$	13,517
Pro forma basic and diluted net loss per share	$	0.25	$	0.11

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Exhibit 99.2

CONSOLIDATEDFINANCIAL STATEMENTS

(Expressedin Canadian Dollars)

YEARSENDED DECEMBER 31, 2020 AND 2019

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REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TOTHE SHAREHOLDERS AND DIRECTORS OF ELY GOLD ROYALTIES INC. AND GOLD ROYALTY CORP.

Opinionon the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Ely Gold Royalties Inc. (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of loss and comprehensive loss, cash flows and changes in equity for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board.

Basisfor Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

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CriticalAudit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accountingfor the Acquisition of VEK Associates

As discussed in notes 9 and 18, the Company completed the acquisition of 100% of VEK Associates (“VEK”). In exchange for the outstanding shares of VEK, the Company paid US $5,000,000 and issued 2,005,164 share purchase warrants, exercisable over a 24-month term to purchase one common share of the Company at an exercise price of $0.62. Management assessed the acquisition of VEK to be accounted for as an asset acquisition, as the underlying transaction does not meet the definition of a business combination under the applicable accounting standards. The allocation of the consideration was determined by estimating the present value of expected future revenues from each acquired asset.

We identified the accounting for the acquisition of VEK as a critical audit matter as accounting for these transactions is complex and requires management to exercise judgment to determine the appropriate accounting treatment, including whether the acquisitions should be accounted for as asset acquisitions or business combinations, and estimating the fair value of the net assets acquired. The estimates and assumptions with the highest degree of subjectivity and impact on the fair value of the assets are the expected future royalties, expected production, and discount rate.

The primary audit procedures we performed to address this critical audit matter included, among others, the following:

●	Obtaining an understanding of the transaction, including<br> an assessment of whether the transaction constituted an asset acquisition or business combination;
●	Reviewing the sale and purchase agreement to understand<br> key terms and conditions;
●	Agreeing the consideration to supporting documentation<br> and evaluating the fair value of the warrants issued as part of the consideration;
●	Evaluating management’s assessment of the fair<br> value of the net assets acquired; and
●	Evaluating whether the significant assumptions used,<br> such as expected future royalty revenue, expected production, and discount rate were reasonable.

/s/ Smythe LLP

Chartered Professional Accountants

We have served as the Company’s auditor since 2003.

Vancouver, Canada

January 6, 2022

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ELYGOLD ROYALTIES INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

		December 31,			December 31,
As<br> at	Notes	2020			2019
ASSETS	11
Current
Cash and cash equivalents	4	$	7,381,784		$	2,973,520
Marketable securities	6		1,192,572			1,248,828
Receivables	7		348,881			137,902
Prepaid<br> expenses			218,974			71,946
			9,142,211			4,432,196
Non-Current
Reclamation bond			27,902			28,463
Right-of-use lease asset	8		92,322			48,549
Royalty assets	9		30,278,390			2,961,135
Mineral property interests	10		1,463,863			896,530
Deferred<br> charges	11		1,491,411			3,135,556
		$	42,496,099		$	11,502,429
LIABILITIES
Current
Accounts payable and accrued<br> liabilities	14	$	889,075		$	281,109
Current portion of lease obligation	12		48,192			23,363
Current<br> portion of obligation under royalty acquisition	9		394,789			1,178,901
			1,332,056			1,483,373
Non-Current
Lease obligation	12		49,785			30,757
Obligation under royalty acquisition	9		71,535			264,742
Promissory<br> note	11		-			1,000,000
			1,453,376			2,778,872
EQUITY
Share capital	13		66,968,929			30,055,890
Share-based payment reserve	13		10,308,499			4,988,492
Cumulative translation adjustment			(2,171,533	)		93,686
Deficit			(34,063,172	)		(26,414,511	)
			41,042,723			8,723,557
		$	42,496,099		$	11,502,429

Approved and authorized by the Board:

“David Garofalo”	Director	“Josephine Man”	Director
David<br> Garofalo		Josephine<br> Man

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

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ELYGOLD ROYALTIES INC.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Expressed in Canadian Dollars)

	Notes	December<br> 31, 2020			December<br> 31, 2019
ROYALTY AND MINERAL OPERATIONS
Revenue
Royalties		$	2,216,329		$	-
Option<br> proceeds			1,014,878			1,164,415
Gain<br> on disposal of mineral interest			118,243			918,415
			3,349,450			2,082,830
Expenses
Amortization<br> of royalty assets			1,885,746			92,393
Project<br> and royalty generation and maintenance costs			550,513			407,158
Maintenance<br> cost reimbursements			(239,800	)		(75,160	)
			2,196,459			424,391
GROSS PROFIT			1,152,991			1,658,439
EXPENSES
Amortization			47,837			42,777
Consulting fees			431,942			169,694
Management fees	14		1,421,813			880,220
Office and administration			192,569			118,763
Professional fees			666,992			340,219
Share-based payments	13, 14		2,420,447			559,207
Transfer agent and filing<br> fees			172,308			57,385
Travel<br> and promotion			919,576			929,851
			(6,273,484	)		(3,098,116	)
OTHER INCOME (EXPENSE)
Interest expense	11		(308,714	)		(185,372	)
Accretion of deferred charges	11		(1,644,145	)		-
Interest income			54,994			13,580
(Loss)<br> gain on disposal of marketable securities	6		(170,084	)		12,423
Change in fair value of marketable securities	6		(484,009	)		81,941
Gain (loss) on foreign exchange			142,832			(30,704	)
Bad<br> debt			(119,042	)		-
			(2,528,168	)		(108,132	)
Loss for the year			(7,648,661	)		(1,547,809	)
Other comprehensive income (loss)
Currency<br> translation adjustment			(2,278,843	)		(64,516	)
Comprehensive loss		$	(9,927,504	)	$	(1,612,325	)
Basic and diluted loss per share		$	(0.05	)	$	(0.02	)
Weighted average number of common shares outstanding			141,232,310			95,343,280

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

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ELYGOLD ROYALTIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars)

For<br> the year ended	December<br> 31, <br>2020			December<br> 31, <br>2019
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the year	$	(7,648,661	)	$	(1,547,809	)
Items not affecting cash
Interest<br> expense		58,530			6,134
Accretion<br> of deferred charges		1,644,145			143,750
Amortization		1,933,583			135,170
Option<br> proceeds paid in marketable securities		(199,637	)		(367,767	)
Change<br> in fair value of marketable securities		484,009			(81,941	)
Loss (gain)<br> on disposal of marketable securities		170,084			(12,423	)
Gain on<br> disposal of mineral interest		(118,243	)		(918,415	)
Share-based<br> payments		2,420,447			559,207
Unrealized<br> foreign exchange		85,532			70,387
Bad<br> debt		119,042			-
		(1,051,169	)		(2,013,707	)
Changes in non-cash working<br> capital items
Receivables		(346,876	)		(33,805	)
Prepaid<br> expenses		(147,028	)		(4,688	)
Accounts<br> payable and accrued liabilities		611,317			53,628
Net<br> cash used in operating activities		(933,756	)		(1,998,572	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments<br> for acquisition of mineral property interests		(1,127,990	)		(198,859	)
Payments<br> for acquisition of royalty assets		(15,044,487	)		(1,343,042	)
Proceeds<br> received from properties under option		605,118			228,051
Proceeds<br> on disposal of marketable securities		275,349			56,423
Payments<br> for acquisition of marketable securities		(636,100	)
Proceeds<br> on disposal of mineral and royalty interest		-			1,635,251
Net<br> cash provided by (used in) investing activities		(15,928,110	)		377,824
CASH FLOWS FROM FINANCING ACTIVITIES
Shares<br> issued for cash, net of issuance costs		16,450,990			1,231,502
Proceeds<br> (repayment of) on promissory note		(1,000,000	)		1,000,000
Repayment<br> of loans payable		(1,237,154	)		(183,934	)
Lease<br> payments		(55,843	)		(48,781	)
Proceeds<br> received from the exercise of options and warrants		7,241,638			209,350
Net<br> cash provided by financing activities		21,399,631			2,208,137
Effect<br> on cash of foreign exchange		(129,501	)		(51,605	)
Change in cash and cash equivalents<br> for the year		4,408,264			535,784
Cash<br> and cash equivalents, beginning of year		2,973,520			2,437,736
Cash<br> and cash equivalents, end of year	$	7,381,784		$	2,973,520
Cash and cash equivalents consist of:
Cash	$	6,356,784		$	2,198,520
Term<br> deposits		1,025,000			775,000
	$	7,381,784		$	2,973,520

Supplementaldisclosure with respect to cash flows (Note 15)

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

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ELYGOLD ROYALTIES INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in Canadian Dollars)

	Note		Share<br> capital		Share-<br> <br>based <br>payment <br>reserve			Cumulative<br> <br>translation <br>adjustment			Subscriptions<br> <br>received			Deficit			Total
Balance,<br> December 31,2018		90,105,475		28,519,610		998,942			158,202			47,315			(24,866,870	)		4,857,199
Adjustment<br> on adoption of IFRS 16		-		-		-			-			-			(6,003	)		(6,003	)
Private<br> placement, net of issuance costs	13(b)	8,615,454		1,202,125		76,692			-			(47,315	)		-			1,231,502
Share-based<br> payments	13(c)	-		-		559,207			-			-			-			559,207
Fair<br> value of warrants issued for mineral and royalty interests	9,<br> 13(d)	-		-		205,321			-			-			-			205,321
Fair<br> value of warrants issued as consideration for Line of Credit	11,<br> 13(d)	-		-		3,279,306			-			-			-			3,279,306
Shares<br> issued on exercise of options	13(c)	750,000		79,500		-			-			-			-			79,500
Shares<br> issued on exercise of warrants	13(d)	810,000		129,850		-			-			-			-			129,850
Reallocation<br> of reserves of expired options	13(c)	-		-		(6,171	)		-			-			6,171			-
Reallocation<br> of reserves of exercised options and warrants	13(c),<br> 13(d)	-		124,805		(124,805	)		-			-			-			-
Loss<br> for the year		-		-		-			-			-			(1,547,809	)		(1,547,809	)
Other<br> comprehensive loss		-		-		-			(64,516	)		-			-			(64,516	)
Balance,<br> December 31, 2019		100,280,929	$	30,055,890	$	4,988,492		$	93,686		$	-		$	(26,414,511	)	$	8,723,557
Private<br> placement, net of issuance costs	13(b)	21,562,500		15,832,946		618,044			-			-			-			16,450,990
Share-based<br> payments		-		-		2,420,447			-			-			-			2,420,447
Fair<br> value of warrants issued for mineral and royalty interests	9	-		-		4,680,384			-			-			-			4,680,384
Shares<br> issued on exercise of options	13(c)	1,675,000		384,000		-			-			-			-			384,000
Shares<br> issued on exercise of warrants	13(d)	24,634,957		6,857,638		-			-			-			-			6,857,638
Shares<br> issued for royalty asset	9,<br> 13(b)	12,798,413		11,439,587		-			-			-			-			11,439,587
Reallocation<br> of reserves of exercised options and warrants	13(c),<br> <br>13(d)	-		2,398,868		(2,398,868	)		-			-			-			-
Loss<br> for the year		-		-		-			-			-			(7,648,661	)		(7,648,661	)
Other<br> comprehensive loss		-		-		-			(2,265,219	)		-			-			(2,265,219	)
Balance,<br> December 31, 2020		160,951,799	$	66,968,929	$	10,308,499		$	(2,171,533	)	$	-		$	(34,063,172	)	$	41,042,723

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

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

1.	NATURE OF AND CONTINUANCE OF OPERATIONS

Ely Gold Royalties Inc. (the “Company” or “Ely Gold”) was incorporated under the Business Corporations Act (Alberta) on May 10, 1996. The Company was continued into British Columbia in 2002 where it is now domiciled and governed by the Business CorporationsAct (British Columbia). The Company is listed on the TSX Venture Exchange (“TSX-V”), under the symbol “ELY” and on the OTCQX under the symbol “ELYGF”.

The Company’s registered office is Suite 2833 - 595 Burrard Street, P.O. Box 49195, Vancouver, British Columbia, Canada, V7X 1J1.

The Company’s operations are focused on developing recurring cash flow streams through the acquisition, consolidation, enhancement, and resale of highly prospective, unencumbered North American precious metals properties. The Company seeks to acquire royalties and purchase agreements over development stage assets, advanced stage development projects or operating mines. In return for making an upfront payment to acquire royalties, the Company receives the right to purchase, at a fixed price per unit, a percentage of a mine’s production for the life of the mine.

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. The recoverability of the amounts shown as assets of the Company is dependent upon the discovery of economically recoverable reserves and future profitable operations.

Although the Company has taken steps to verify title to its royalties on 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, and non-compliance with regulatory, social 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.

The COVID-19 global health pandemic has had a significant impact on the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown. The adverse effects of the pandemic may continue for an extended and unknown period of time, particularly as variant strains of the virus are identified. The impact of the pandemic to date has included extreme volatility in financial markets, a slowdown in economic activity, and extreme volatility in commodity prices including gold. As well, as efforts have been undertaken to slow the spread of the COVID-19 pandemic, the operation and development of mining projects has been impacted. Many mining projects, including some of the properties in which Company holds a royalty, stream or other interest could be impacted by the pandemic resulting in the slowdown of operations, and other mitigation measures that impact production. If the operation or development of one or more of the properties in which the Company holds a royalty from which it receives or expects to receive significant revenue is slowed down or suspended as a result of the continuing COVID-19 pandemic or future pandemics or other public health emergencies, it may have a material adverse impact on the Company’s profitability, results of operations, financial condition and the trading price of the Company’s common shares on the TSX-V.

These consolidated financial statements were approved by the Board of Directors for issue on January 6, 2022.

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

2.	BASIS OF PREPARATION

Statementof Compliance

These consolidated financial, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board.

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments, which are stated at their fair values. These consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. All dollar amounts presented are in Canadian dollars, the Company’s functional currency, unless otherwise specified.

Basisof consolidation and presentation

These consolidated financial statements incorporate the financial statements of the Company and its controlled subsidiaries. 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 Company’s wholly owned subsidiaries include DHI Minerals Ltd. (a Canadian corporation), DHI Minerals (US) Ltd. (a Nevada corporation), Nevada Select Royalty, Inc. (“Nevada Select”) (a Nevada corporation), REN Royalties LLC (“REN”) (a Nevada corporation) and VEK Associates (“VEK”) (a Nevada corporation).

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Company. A subsidiary is consolidated from the date upon which control is acquired by the Company and all material intercompany transactions and balances have been eliminated on consolidation.

Useof estimates and judgments

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported revenues and expenses during the period. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

CriticalAccounting Estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, which could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Recoverabilityof receivables

Provisions are made against accounts that, in the estimation of management, may be uncollectible. The recoverability assessment of trade and other receivables is based on a range of factors, including the age of the receivable and the creditworthiness of the company owing the funds. The provision is assessed on a quarterly basis with a detailed formal review of balances and security being conducted annually. Determining the recoverability of an account involves estimation and judgment as to the likely financial condition and ability of the debtor to subsequently make payments. To the extent that future events impact the financial condition of the debtor these provisions could vary significantly.

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

2.	BASIS<br> OF PREPARATION (cont’d...)

Recoveryof deferred tax assets

The Company estimates the expected manner and timing of the realization or settlement of the carrying value of its assets and liabilities and applies the tax rates that are enacted or substantively enacted on the estimated dates of realization or settlement.

Share-basedpayments

The fair value of share-based payments is subject to the Black-Scholes option pricing model that incorporates market data and involves uncertainty in estimates used by management in certain assumptions. As the Black- Scholes option pricing model requires the input of highly subjective assumptions, including the volatility of share prices and expected forfeiture rate, changes in subjective input assumptions can materially affect the fair value estimate.

Amortizationof royalty assets

Royalty assets are carried at cost less any accumulated amortization. Amortization is calculated over the estimated mine life or over the period advance royalties are expected to be received using management’s best estimate of the mine’s production life. The expected production life of the asset is estimated based on expected quantities of proven and probable mineral reserves and mineral resources. These estimates are based on information obtain from the mine operator through preparation of technical reports on the property. The useful production lives are estimated based on such information and are reviewed annually.

Costallocation of royalty assets acquired

Management was required to estimate the allocation of cost of acquisition of the VEK assets. The allocation was determined by estimating the present value of expected future revenues. Such calculation required management to make estimates of expected production based on estimated reserves in the underlying assets.

CriticalAccounting Judgments

Management must make judgments given the various options available under IFRS for items included in the consolidated financial statements. Judgments involve a degree of uncertainty and could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual events differ from a judgment made.

Functionalcurrency

The functional currency for each of the Company’s subsidiaries is the currency of the primary economic environment in which the entity operates. Determination of functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

2.	BASIS<br> OF PREPARATION (cont’d...)

Impairmentof royalty assets and mineral property Interests

Assessment of impairment of royalty assets and mineral property interests at the end of each reporting period requires the use of judgments, assumptions and estimates when assessing whether there are any indicators that give rise to the requirement to conduct an impairment analysis on the Company’s royalty assets and mineral property interests. Indicators which could trigger an impairment analysis include, but are not limited to, a significant change in operator reserve and resource estimates, industry or economic trends, current or forecast commodity prices, and other relevant operator information. The assessment of fair values requires the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, reserve/resource conversion, foreign exchange rates, future capital expansion plans and the associated production implications. In addition, the Company may use other approaches in determining fair value which may include judgment and estimates related to (i) dollar value per ounce or pound of reserve/resource; (ii) cash-flow multiples; and (iii) market capitalization of comparable assets. Changes in any of the assumptions and estimates used in determining the fair value of the royalty and mineral property interests could impact the impairment analysis.

Assetacquisitions and business combinations

The assessment of whether an acquisition meets the definition of a business, or whether assets are acquired is an area of key judgment. The assessment required management to assess the inputs, processes, and ability of the acquired entity/assets to produce outputs at the time of the acquisition. The determination of the acquisition-date fair values often requires management to make assumptions and estimates about future events. The assumptions and estimates with respect to determining the fair value of royalty assets generally requires a high degree of judgment, and include estimates of mineral reserves and resources acquired, future metal prices, discount rates and reserve/resource conversion. Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets and liabilities.

3.	SIGNIFICANT ACCOUNTING POLICIES

Newaccounting standards issued but not yet effective

Certain new accounting standards and interpretations have been published that are not mandatory for the current period and have not been early adopted. These standards are not expected to have a material impact to the Company in the current or future reporting periods and have not been discussed or presented.

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Foreignexchange

The functional currency for the Company and for each of its subsidiaries is the currency of the primary economic environment in which the entity operates. Transactions in foreign currencies are translated to the functional currency of the entity at the exchange rate in existence at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the consolidated statement of financial position date are retranslated at the year-end exchange rates. Non-monetary items, measured using historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences on the translation is recorded in profit or loss.

The functional currency of the Company, DHI, and DHI US is the Canadian dollar. The functional currency of Nevada Select, REN and VEK is the US dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in International Accounting Standard (“IAS”) 21 The Effects of Changes in Foreign Exchange Rates.

Foreign operations are translated from their functional currencies into Canadian dollars on consolidation. Items in the consolidated statements of income (loss) and comprehensive income (loss) are translated using the weighted average exchange rates that reasonably approximate the exchange rate at the transaction date. Items in the consolidated statements of financial position are translated at the closing spot exchange rate. Exchange differences on the translation of the net assets of entities with functional currencies other than the Canadian dollar are recognized in a separate component of equity through other comprehensive income (loss).

On disposition or partial disposition of a foreign operation, the cumulative amount of related exchange differences recorded in a separate component of equity is recognized in profit or loss.

Cashequivalents

Cash equivalents include short-term liquid investments that are cashable or readily convertible into a known amount of cash and which are subject to insignificant risk of changes in value.

Mineralproperty interests

Pre-exploration costs are expensed as incurred.

Acquisition costs to obtain the legal right to explore a property are capitalized. Costs related to the exploration and evaluation of mineral properties, including general administrative overhead costs, are expensed in the period in which they occur.

Proceeds for option payments or shares received are recorded on receipt against capitalized exploration and evaluation assets. As related acquisition costs are reduced to $nil by the option payments received, any future option payments are recorded as revenues in profit or loss. When the optionee fulfills all option requirements and acquires interest in the property in which the Company retains an NSR, the property is transferred to Royalty assets.

An evaluation of the carrying values of each mineral interest is undertaken every reporting period to assess whether events or changes in circumstances indicate that the carrying values may not be recoverable. If it is determined that capitalized acquisition costs are not recoverable, or the property is abandoned or management has determined an impairment in value, the property is written down to its recoverable amount.

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Royaltyassets

Royalty assets consist of acquired royalty interests in producing, development and exploration and evaluation stage properties. Royalty interests are recorded at cost and capitalized as long-term assets. They are subsequently measured at cost less accumulated depletion and depreciation and accumulated impairment losses. The major categories of the Company’s interests are producing, development and exploration and evaluation. Producing assets are those that have generated revenue from steady-state operations for the Company. Development assets are interests in projects that are under development, in permitting or feasibility stage and that in management’s view, can be reasonably expected to generate steady-state revenue for the Company in the near future. Exploration and evaluation assets represent properties that are not yet in development, permitting or feasibility stage or that are speculative in nature and are expected to require several years to generate revenue, if ever, or are currently not active.

Producing and development royalty interests are recorded at cost and capitalized in accordance with IAS 16, Property, Plant and Equipment. Producing royalty interests are depleted on a straight-line basis over the expected life of the royalty or using the units-of production method over the life of the property to which the interest relates, which is estimated using available estimates of proven and probable mineral reserves specifically associated with the properties and may include a portion of resources expected to be converted into mineral reserves.

Acquisition of royalty interests for exploration and evaluation assets are recorded at cost and capitalized in accordance with IFRS 6, Exploration for and Evaluation of Mineral Resources (“IFRS 6”) and are not depleted until such time as revenue generating activities begin.

Income(loss) per share

Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares outstanding during the reporting period. Diluted income per share is computed similar to basic income (loss) per share, except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds from such exercises were used to acquire common stock at the average market price during the reporting periods. However, diluted loss per share does not include the increase to weighted average shares, as the effect of including additional shares would be anti-dilutive.

Impairmentof long-lived assets

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 less costs to sell 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 its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in profit or loss for the period. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

| 13 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d...)

Impairmentof long-lived assets (cont’d...)

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.

Provisionfor environmental rehabilitation

The Company recognizes liabilities for legal or constructive obligations associated with the retirement of exploration and evaluation assets. The net present value of future rehabilitation costs is capitalized to the related asset 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 Company’s estimates of reclamation costs could change as a result of changes in regulatory requirements, discount rates and assumptions regarding the amount and timing of the future expenditures. These changes are recorded directly to the related assets with a corresponding entry to the rehabilitation provision.

Unitofferings

Proceeds received on the issuance of units, consisting of common shares and warrants, are allocated to common shares using the market price on the date the common shares are priced and the residual, if any, is allocated to warrants.

Share-basedpayments

The Company grants stock options to directors, officers, employees and consultants. Share-based payments to employees are measured on the grant date at the fair value of the equity instruments issued, using the Black-Scholes option pricing model and are accrued and charged either to operations or exploration and evaluation assets, over the vesting periods. Share-based payments to non-employees are measured at the fair value of the goods or services received or at the fair value of the equity instruments issued (if it is determined the fair value of the goods or services cannot be reliably measured), and are recorded at the date the goods or services are received. The offset to the recorded cost is to share-based payment reserve. Consideration paid for the shares on the exercise of stock options or warrants is credited to share capital and the applicable amounts of share-based payment reserve are transferred to share capital. Charges for options that are forfeited before vesting are reversed from share-based payment reserve and transferred to deficit. For options that expire or are forfeited after vesting, the recorded value is transferred from the share-based payment reserve to deficit.

| 14 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

3.	SIGNIFICANT<br> ACCOUNTING POLICIES (cont’d...)

Revenue recognition

Revenue comprises the fair value of the consideration received or receivable arising from the use by others of the Company’s assets yielding royalties or option proceeds. The Company recognizes revenue pursuant to contractually agreed terms when the Company has met its performance obligations and the collectability of revenue if reasonably assured.

Royalties

Optionproceeds

Revenues from option proceeds is recognized when received. Option proceeds are initially recorded against the capitalized asset value and any excess is recognized as revenue.

Saleof Mineral Assets

Revenue from the sale of mineral properties is recognized upon the closing of the transaction and when the amount to be received can be reasonably measured and collection is reasonably assured.

Incometaxes

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

Deferred tax is recorded using the asset and liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences are not provided for relating to the initial recognition of assets or liabilities that affect neither accounting nor taxable loss and 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 amounts of assets and liabilities, using tax rates enacted or substantively enacted at the consolidated 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.

| 15 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

3.	SIGNIFICANT<br> ACCOUNTING POLICIES (cont’d...)

Financial instruments

Financialassets

Initial recognition and measurement

A financial asset is measured initially at fair value plus transaction costs that are directly attributable to its acquisition or issue. On initial recognition, a financial asset is classified as measured at amortized cost or fair value through profit or loss. A financial asset is measured at amortized cost if it meets the conditions that:

i)	the<br> asset is held within a business model whose objective is to hold assets to collect contractual cash flows;
ii)	the<br> contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest<br> on the principal amount outstanding; and
iii)	is<br> not designated as fair value through profit or loss.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows:

Financialassets at fair value through profit or loss

Financial assets measured at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value therein, recognized in profit or loss.

Financialassets measured at amortized cost

A financial asset is subsequently measured at amortized cost, using the effective interest method and net of any impairment allowance, if:

●	the<br> asset is held within a business whose objective is to hold assets in order to collect contractual cash flows; and
●	the<br> contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely payments of principal and interest.

Derecognition

A financial asset or, where applicable a part of a financial asset or part of a group of similar financial assets is derecognized when:

●	the<br> contractual rights to receive cash flows from the asset have expired; or
●	the<br> Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows<br> in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred<br> substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the<br> risks and rewards of the asset, but has transferred control of the asset.

●

the contractual rights to receive cash flows from the asset have expired; or

●

the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

| 16 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

3.	SIGNIFICANT<br> ACCOUNTING POLICIES (cont’d...)

Financial instruments (cont’d...)

Financialliabilities

Financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument. A financial liability is derecognized when it is extinguished, discharged, cancelled or when it expires. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or financial liabilities subsequently measured at amortized cost. All interest-related charges are reported in profit or loss within interest expense, if applicable.

Fairvalue hierarchy

Fair value measurements of financial instruments are required to be classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The levels of the fair value hierarchy are defined as follows:

Level<br> 1 -	Quoted<br> prices (unadjusted) in active markets for identical assets or liabilities.
Level<br> 2 -	Inputs<br> other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level<br> 3 -	Inputs<br> for assets or liabilities that are not based on observable market data.
4.	FINANCIAL<br> INSTRUMENTS
---	---

The Company’s principal financial liabilities comprise accounts payable and accrued liabilities, lease obligation and obligation under royalty acquisition. The Company’s principal financial assets are cash and cash equivalents, marketable securities, and receivables. The main purpose of these financial instruments is to manage short-term cash flow and working capital requirements and fund future acquisitions.

The Company is engaged in the business of acquiring, managing and creating resource royalties. Royalties are interests that provide the right to revenue or production from the various properties, after deducting specified costs, if any. These activities expose the Company to a variety of financial risks, which include direct exposure to market risks (which includes commodity price risk, foreign exchange risk and interest rate risk), credit risk, liquidity risk and capital risk management.

Management designs strategies for managing some of these risks, which are summarized below. The Company’s management oversees the management of financial risks. The Company’s management ensures that financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies.

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

The carrying value of cash and cash equivalent and receivables, and accounts payable and accrued liabilities approximated their fair value because of the short-term nature of these instruments. Marketable securities are classified within Level 1 of the fair value hierarchy. The fair value of the Company’s obligation under royalty acquisition and obligation under capital lease approximate their carrying values as their interest rates are comparable to market interest rates.

| 17 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)
(a)	Credit<br> risk
---	---

Credit risk refers to the potential that a counterparty to a financial instrument will fail to discharge its contractual obligations. The Company manages credit risk, in respect of cash and cash equivalents by placing its cash balances at major Canadian and American financial institutions.

Credit risk arises from cash and cash equivalents and receivables. The Company closely monitors its financial assets and maintains its cash deposits in several high-quality financial institutions and as such does not have any significant concentration of credit risk. As at December 31, 2020, the Company is unaware of any information which would cause it to believe that these financial assets are not fully recoverable.

The Company’s concentration of credit risk and maximum exposure thereto is as follows:

	December<br> 31, 2020		December<br> 31, 2019
Cash and cash<br> equivalents	$	7,381,784	$	2,973,520
Receivables		338,345		122,309
	$	7,720,129	$	3,095,829
(b)	Liquidity<br> risk
---	---

Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. At December 31, 2020, the Company has cash and cash equivalents of $7,381,784 (2019 - $2,973,520), current liabilities of $1,332,056 (2019 - $1,483,373), and non-current liabilities of $121,320 (2019 - $1,295,499).

The amounts listed below are the remaining contractual maturities for financial liabilities held by the Company:

As<br> at	December<br> 31, <br>2020		December<br> 31,<br><br> <br>2019
Due Date
0 - 90 days	$	1,072,506	$	899,845
90 - 365 days		256,116		591,487
More<br> than 1 year		138,378		1,307,132
	$	1,467,000	$	2,798,464
(c)	Market<br> risk
---	---

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and equity price risk.

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| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)
(c)	Market<br> risk (cont’d...)
---	---
(i)	Commodity<br> price risk
---	---

The Company’s royalties are subject to fluctuations from changes in market prices of the underlying commodities. The market prices of gold are the primary drivers of the Company’s profitability and ability to generate free cash flow. All of the Company’s future revenue is not hedged which results in the Company’s full exposure to changes in the market prices of these commodities.

(ii)	Interest<br> rate risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. As at December 31, 2020, the Company’s interest rate exposure arises mainly from the interest receipts on cash and cash equivalents, lease obligation and obligation under royalty acquisition.

Cash and cash equivalents consist of the following:

	December<br> 31, <br>2020		December<br> 31, <br>2019
Cash	$	6,356,784	$	2,198,520
Cashable<br> GIC*		1,025,000		775,000
	$	7,381,784	$	2,973,520

*The GIC will mature June 15, 2021, is cashable at any time without penalty and earns interest at an interest rate of 1.00% per annum.

(iii)	Foreign<br> currency risk

The Company incurs expenditures in Canada and the US. Foreign currency risk arises because the amount of the US dollar cash, intercompany balances and payables will vary in Canadian dollar terms due to changes in exchange rates.

As at December 31, 2020 and 2019, the Company has not hedged its exposure to currency fluctuations.

At December 31, 2020 and 2019, the Company is exposed to currency risk through the following assets and liabilities denominated in US dollars:

	December<br> 31, <br>2020			December<br> 31, <br>2019
Cash and cash equivalents	US$	2,830,820		US$	735,612
Accounts receivable		265,744			94,170
Accounts<br> payable and accrued liabilities		(582,132	)		(162,429	)
Net	US$	2,514,432		US$	667,353
Canadian<br> dollar equivalent	$	3,201,375		$	849,673

| 19 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)
(c)	Market<br> risk (cont’d...)
---	---
(iii)	Foreign<br> currency risk (cont’d...)
---	---

Based on the above net exposures as at December 31, 2020, a 5% (2019 - 5%) change in the Canadian/US exchange rate would impact the Company’s income (loss) and comprehensive income (loss) by approximately $160,000 (2019 - $43,000).

(iv)	Equity<br> price risk

Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets. The Company’s marketable securities consisting of common shares are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held.

Based on the marketable securities held as at December 31, 2020, a 10% (2019 - 10%) change in the market price of these securities would impact the Company’s income (loss) and comprehensive income (loss) by approximately $100,500 (2019 - $83,000).

(v)	Fair<br> value hierarchy

The following tables summarize the Company’s financial instruments under the fair value hierarchy, as at December 31, 2020 and 2019:

December<br> 31, 2020	Level<br> 1		Level<br> 2		Level<br> 3		Total
Cash and cash<br> equivalents	$	7,381,784	$	-	$	-	$	7,381,784
Marketable securities	$	1,192,572	$	-	$	-	$	1,192,572
Receivables	$	348,881	$	-	$	-	$	348,881
Accounts payable and accrued<br> liabilities	$	902,699	$	-	$	-	$	902,699
Lease obligation	$	-	$	97,977	$	-	$	97,977
Obligation<br> under royalty acquisition	$	-	$	394,789	$	-	$	394,789
December<br> 31, 2019	Level<br> 1		Level<br> 2		Level<br> 3		Total
---	---	---	---	---	---	---	---	---
Cash and cash<br> equivalents	$	2,973,520	$	-	$	-	$	2,973,520
Marketable securities	$	1,248,828	$	-	$	-	$	1,248,828
Receivables	$	348,881	$	-	$	-	$	348,881
Accounts payable and accrued liabilities	$	281,109	$	-	$	-	$	281,109
Lease obligation	$	-	$	54,120	$	-	$	54,120
Obligation under royalty acquisition	$	-	$	2,178,901	$	-	$	2,178,901

| 20 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

5.	CAPITAL MANAGEMENT

The Company’s primary objective when managing capital is to maximize returns for its shareholders by growing its asset base through acquisitions of royalties, and optioning out existing properties other interests and a Line of Credit as described in note 11. The Company may issue new shares or draw from its credit facility in order to meet its financial obligations. Management believes that the capital resources of the Company as at December 31, 2020 are sufficient for its present needs for at least the next twelve months. The Company is not subject to externally imposed capital requirements.

The Company defines its capital as equity. Capital requirements are driven by the Company’s exploration activities on its exploration and evaluation assets. To effectively manage the Company’s capital requirements, the Company has a planning and budgeting process in place to ensure that adequate funds are available to meet its strategic goals. The Company monitors actual expenses to budget on all exploration projects and overhead to manage costs, commitments and exploration activities.

The Company has in the past invested its capital in liquid investments to obtain adequate returns. The investment decision is based on cash management to ensure working capital is available to meet the Company’s short-term obligations while maximizing liquidity and returns of unused capital.

There have been no changes to the Company’s approach to capital management during the year ended December 31, 2020.

6.	MARKETABLE SECURITIES

The Company’s marketable securities comprise the following common shares and gold coins. The fair value of the marketable securities has been determined directly by reference to published price quotations in an active market.

	December<br> 31, 2020						December<br> 31, 2019
	Shares		Cost		Fair<br> Value		Shares		Cost		Fair<br> Value
Gold Resources
Corporation		56,966	$	444,956	$	211,060		104,811	$	818,668	$	754,152
Solitario Royalty &
Exploration Corp.		119,352		144,454		85,447		119,352		144,454		46,504
Bitterroot Resources Ltd.		-		-		-		200,000		30,000		7,000
VR Resources Ltd.		100,000		36,250		31,000		100,000		36,250		37,000
Valterra Resource Corp.		-		-		-		525,442		221,831		55,172
Fremont Gold Ltd.		-		-		-		500,000		80,000		39,000
Contact Gold Corp.		2,362,941		486,980		271,590		2,000,000		420,000		310,000
Sanatana Resources Inc.		1,666,666		500,000		308,333		-		-		-
Lahontan Gold Corp.		325,000		97,500		97,500		-		-		-
McEwen Mining Inc.		53,600		90,082		67,000		-		-		-
Gold American gold
(1<br> Oz) troy coins		50		135,898		120,642		-		-		-
			$	1,936,120	$	1,192,572			$	1,751,203	$	1,248,828

During the year ended December 31, 2020, the Company:

(a)	recorded<br> an unrealized loss in the change in fair value on marketable securities of $484,009 in the consolidated statements of loss and comprehensive<br> loss.

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| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

6.	MARKETABLE SECURITIES (cont’d...)
(b)	sold<br> shares of Valterra Resources Corp., Bitteroot Resources Ltd., Fremont Gold Ltd., and Gold Resources Corporation for net proceeds<br> of $275,416. As at December 31, 2019, these shares had a carrying value of $445,433, which resulted in a loss of $170,084.
---	---
(c)	as<br> part of the Watershed royalty acquisition (Note 9(g)), the Company agreed to participate in Sanatana Resources Inc. (“Sanatana”)<br> private placement for total proceeds of $500,000. As a result, the Company acquired a total of 1,666,666 common shares of Sanatana.
(d)	Received<br> 325,000 shares of Lahontan Gold Corp., valued at $97,500, as consideration of certain option payments and as reimbursement of BLM<br> fees.
(e)	Received<br> 53,600 shares of McEwen Mining Inc. valued at $90,082 as consideration for the sale of the old Gold Bar property.
(f)	Received<br> 362,941 shares of Contact Gold Corp. valued at $66,960 in leu of the option payment due to the Company for the first anniversary<br> option payment on Green Springs property.
During the year ended December 31, 2019, the Company:
(g)	recorded<br> an unrealized loss in the change in fair value on marketable securities of $81,941 in the statements of loss and comprehensive loss.
(h)	sold<br> 800,000 common shares of Colorado for net proceeds of $56,423. As at December 31, 2018, these shares had a carrying value of $44,000,<br> which resulted in a recovery of $12,423.
(i)	Received<br> 2,000,000 shares of Contact Gold Corp., valued at $420,000, as part of the consideration on the sale of the Green Springs property.
7.	RECEIVABLES
---	---

The Company’s receivables are as follows:

	December<br> 31, <br>2020		December<br> 31, <br>2019
Trade<br> receivables	$	338,345	$	122,309
Sales<br> taxes receivable		10,536		15,593
	$	348,881	$	137,902

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| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

8.	RIGHT-OF-USE LEASE ASSET

The Company’s right-of-use asset relates to the lease of office space.

On adoption of IFRS 16 Leases (“IFRS 16”), the Company recognized lease liabilities in relation to leases that had previously been classified as “operating leases” under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of January 1,2019. The weighted average lessee’s incremental borrowing rate applied to the lease liability on January 1, 2019 was 8%. The right-of-use asset is amortized over the lease term.

Cost:
Balance<br> at January 1, 2019, (IFRS 16 adoption) and December 31, 2019	$	92,972
Additions for the year		91,550
Balance,<br> December 31, 2020	$	184,522
Accumulated<br> amortization:
Balance<br> at January 1, 2019, on adoption of IFRS 16		-
Depreciation<br> for the year	$	42,777
Balance,<br> December 31, 2019		42,777
Depreciation<br> for the year		47,837
Balance,<br> December 31, 2019	$	90,614
Currency<br> translation adjustment at December 31, 2019	$	(1,646	)
Currency<br> translation adjustment at December 31, 2020	$	(1,586	)
Net<br> book value:
As<br> at December 31, 2019	$	48,549
As<br> at December 31, 2020	$	92,322

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| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS
Cost	Balance,<br><br>December 31,<br><br>2018		Acquisition		Disposition			Balance,<br><br>December 31,<br><br>2019		Acquisition		Balance,<br><br>December 31,<br><br>2020
---	---	---	---	---	---	---	---	---	---	---	---	---	---
Balmoral<br> Fenelon	$	716,836	$	-	$	(716,836	)	$	-	$	-	$	-
Devon<br> Fenelon		-		600,000		-			600,000		-		600,000
Isabella<br> Royalty		-		404,250		-			404,250		-		404,250
Jerritt<br> Canyon PTR		-		969,591		-			969,591		-		969,591
Jerritt<br> Canyon 0.5%		-		-		-			-		11,553,163		11,553,163
Lincoln<br> Hill		-		1,091,123		-			1,091,123		1,671,387		2,762,510
Rawhide		-		-		-			-		1,967,617		1,967,617
REN<br> NPI		-		-		-			-		708,950		708,950
REN<br> 1.5%		-		-		-			-		6,024,796		6,024,796
Marigold		-		-		-			-		1,618,343		1,618,343
Borden<br> Lake		-		-		-			-		583,089		583,089
Watershed		-		-		-			-		3,418,812		3,418,812
Raiload<br> - Pinon		-		-		-			-		2,002,806		2,002,806
Trenton		-		-		-			-		909,855		909,855
Other		-		36,371		-			36,371		780,279		816,650
	$	716,836	$	3,101,335	$	(716,836	)	$	3,101,335	$	31,239,097	$	34,340,432
Accumulated Amortization	Balance,<br><br>December<br>31,<br><br>2018		Amortization		Balance,<br><br>December 31,<br><br>2019		Amortization		Balance,<br><br>December 31,<br><br>2020
---	---	---	---	---	---	---	---	---	---	---
Isabella<br> Royalty	$	-	$	67,267	$	67,267	$	100,884	$	168,151
Jerritt<br> Canyon PTR		-		25,126		25,126		82,704		107,830
Jerritt<br> Canyon 0.5%		-		-		-		953,983		953,983
Lincoln<br> Hill		-		-		-		142,223		142,223
REN<br> 1.5%		-		-		-		361,341		361,341
Marigold		-		-		-		121,327		121,327
Other		-		-		-		54,742		54,742
	$	-	$	92,393	$	92,393	$	1,817,204	$	1,909,597
	Cumulative<br> Translation Adjustment						Net<br> Book Value
---	---	---	---	---	---	---	---	---	---	---
	December<br> 31,			December<br> 31,			December<br> 31,		December<br> 31,
	2019			2020			2019		2020
Devon<br> Fenelon	$	-		$	-		$	600,000	$	600,000
Isabella<br> Royalty		(13,530	)		(14,771	)		323,453		221,328
Jerritt<br> Canyon PTR		(10,915	)		(25,109	)		933,550		836,652
Jerritt<br> Canyon 0.5%		-			(1,090,092	)		-		9,509,088
Lincoln<br> Hill		(22,608	)		(33,342	)		1,068,515		2,586,945
Rawhide		-			(123,513	)		-		1,844,104
REN<br> NPI		-			(72,350	)		-		636,600
REN<br> 1.5%		-			(563,668	)		-		5,099,787
Marigold		-			(150,427	)		-		1,346,589
Borden<br> Lake		-			-			-		583,089
Watershed		-			-			-		3,418,812
Raiload<br> - Pinon		-			(5,802	)		-		1,997,004
Trenton		-			(8,775	)		-		901,080
Other		(754	)		(64,596	)		35,617		697,312
	$	(47,807	)	$	(2,152,445	)	$	2,961,135	$	30,278,390

| 24 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(a)	Royalty<br> revenue includes the following:
---	---
	2020		2019
---	---	---	---	---
Revenue<br> from producing royalties	$	1,896,198	$	-
Revenue<br> form Advance Minimum Royalties (“AMR”)		320,131		-
Total<br> royalty revenue	$	2,216,329	$	-
(b)	Rawhide<br> Royalty (15% Net Profit Interest (“NPI”))
---	---

On February 29, 2020, the Company acquired a 15% NPI from Liberty Gold Corp. and its subsidiary, Pilot Gold USA Inc. The NPI entitles the Company to 15% of the net profits from the recovery and sale of minerals from certain unpatented claims located in Mineral County, Nevada, known as the Regent Hill Property. The interest also includes the possibility of bonus payments for each gold equivalent (“AuEq”) ounce, from the Regent Hill Property placed on leach pads after the first 115,000 AuEq ounces. Quarterly bonus payments per AuEq ounce will be based on a pricing grid providing for payments coming into effect when the monthly average gold price per ounce for each applicable quarter are US $1,400 or more, commencing at US $5.775 per AuEq ounce and increasing to as much as US $29.05 per AuEq ounce if the monthly average exceeds US $1,800 per ounce.

Under the terms of the agreement the Company paid a cash consideration of US $800,000 (paid) and issued 2,000,000 share purchase warrants (issued). Each warrant entitles the holder to purchase one common share of the Company for a period of two years at an exercise price of $0.43. The warrants were valued at $818,325 using the Black-Scholes option pricing model with the following assumptions: volatility of 80.36%, expected life of 1.8 years, discount rate of 1.32% and dividend rate of 0.0%.

(c)	REN<br> Net Profit Interest (3.5% NPI)

On April 2, 2020, the Company closed an agreement to acquire a 3.5% NPI on the Ren Property in Elko, Nevada, for total proceeds of US $500,000 (paid). The Ren Property is part of the joint venture between Barrick Gold Corporation and Newmont Corp. forming Nevada Gold Mines.

(d)	Jerritt<br> Canyon (0.5% NSR)

On May 12, 2020, the Company completed the purchase agreement with Eric Sprott (“Sprott”) to acquire a 0.5% NSR royalty on the gold producing Jerritt Canyon Mine facility, located in Elko, Nevada, and currently operated by Jerritt Canyon Gold LLC, a private Nevada limited liability company.

As consideration, the Company issued 12,698,413 shares. In connection with its assistance with the transaction, the Company agreed to pay a finder’s fee to Medalist Capital Ltd. comprising a cash fee of 1% of the transaction price, plus 300,000 share purchase warrants, each exercisable over a three-year term to purchase, exercisable at a price of $0.63 per share. All of the securities issued in the transaction are subject to a four-month hold period pursuant to applicable TSX-V policies and applicable securities laws. The shares were valued at $11,301,588 representing the market value of the shares on the date of closing and the warrants were valued at $171,575 using the Black-Scholes option pricing model with the following assumptions: volatility of 90.83%, expected life of 3 years, discount rate of 0.29% and dividend rate of 0.0%.

| 25 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(e)	VEK<br> Properties
---	---

On May 15, 2020, the Company completed the acquisition of 100% of VEK (Note 18) for total consideration of US $5,000,000 and the issuance of 2,005,164 share purchase warrants exercisable at a price of $0.62 per share for a period of two years valued at $1,214,066 using the Black-Scholes option pricing model with the following assumptions: volatility of 91.78%, expected life of 2 years, discount rate of 0.30% and dividend rate of 0.0%. VEK owns 50% of the VEK/Andrus partnership, which holds five properties, all of which are currently leased. Four of the leases are with Nevada Gold Mines JV (Barrick 61.5%/Newmont 31.5%) and the other lease is with SSR Mining Inc. (“SSR Mining”). Four of the leases pay advance minimum royalty (“AMR”) payments and carry a 3.0% net smelter return (“NSR”) royalty (50% to VEK) with no buy-downs. Details on the properties are as follows:

●	REN<br> Property (1.5% NSR) - currently leased to Nevada Gold Mines, consists of 86 contiguous unpatented lode mining claims located in the<br> Northern Carlin trend. Under the terms of the lease agreement, VEK/Andrus is entitled to minimum royalty payments, which are adjusted<br> for inflation every year. During 2019, VEK/Andrus received US $458,712, of which VEK received 50%. These payments will continue until<br> production commences, at which time VEK will be entitled to a 1.5% royalty.
●	Marigold<br> Property (0.75% NSR) - currently leased to SSR Mining, consists of 205 unpatented lode mining claims within the SSR Mining operation<br> on the Battle Mountain-Eureka trend. Under the terms of the lease agreement, VEK/Andrus is entitled to minimum royalty payments,<br> which are adjusted for inflation every year. During 2019, VEK/Andrus received US $156,500, of which VEK received 50%. These payments<br> will continue until production commences; at which time the lessor will be entitled to a 0.75% royalty.
●	Lone<br> Tree Property (1.5% NSR) - currently leased to Nevada Gold Mines, consists of 38 unpatented lode mining claims along the Battle Mountain-Eureka<br> trend. Under the terms of the lease agreement, VEK/Andrus is entitled to minimum royalty payments. During 2019, VEK/Andrus received<br> US $15,000, of which VEK received 50%. These payments will continue until production commences, at which time VEK will be entitled<br> to a 1.5% royalty.
●	Pinson<br> Property (1.5% NSR) - currently leased to Nevada Gold Mines, consists of 53 unpatented lode mining claims along the Osgood Mountain<br> trend in sections 4, 8 and 16, Township 37N, Range 42E, in Humboldt County, Nevada. Under the terms of the lease agreement, VEK/Andrus<br> is entitled to minimum royalty payments, which are adjusted for inflation every year. During 2019, VEK/Andrus received US $21,780,<br> of which VEK received 50%. These payments will continue until production commences, at which time VEK will be entitled to 1.5% royalty.
●	Carlin<br> Trend Property (1.5% NSR) - currently leased to Nevada Gold Mines, of 84 unpatented lode mining claims along the Carlin trend in<br> sections 1, 2, 3, 10, 11, 12, 20, 21, 28, 34 and 35, Townships 35N and 36N, Ranges 49E and 50, in Eureka County, Nevada. Under the<br> terms of the lease agreement, VEK/Andrus is entitled to minimum royalty payments, which are adjusted for inflation every year. During<br> 2019, VEK/Andrus received US $43,560, of which VEK received 50%. These payments will continue until production commences, at which<br> time VEK will be entitled to a 1.5% royalty.

| 26 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(f)	Borden<br> Lake Royalty (0.4% NSR)
---	---

On August 26, 2020, the Company entered into an agreement with two individuals dealing at arm’s length to the Company (the “Borden Lake Vendors”) to purchase 0.4% of a 2% NSR royalty on the Borden Lake Gold Mine (the “Borden Lake Royalty”).

The Borden Lake Royalty is subject to a buy-down option pursuant to which Newmont Corp. (“Newmont”) is entitled to buy it down from 2% to 1% for a one-time cash payment of $1,000,000. Under the present transaction terms, if the buy-down right is exercised, the entire reduction will be applied to the Borden Lake Vendors’ 1.6% Borden Lake Royalty interest and the Company’s share will remain at 0.4%. In addition, the Borden Lake Vendors have granted a right of first refusal to the Company with respect to any proposed sale by the Borden Lake Vendors of their remaining 0.6% of the Borden Lake Royalty.

Under the terms of the transaction, in consideration for its 0.4% Borden Lake Royalty interest, the Company will pay $300,000 in cash, issue 100,000 common shares and 80,000 of the Company’s non-transferable common share purchase warrants, each exercisable to purchase one additional common share for a five-year term at an exercise price of $1.37. The warrants were valued at $138,089 using the Black-Scholes option pricing model with the following assumptions: volatility of 106.77%, expected life of 5 years, discount rate of 0.23% and dividend rate of 0.0%.

In connection with the transaction, the Company has agreed to pay a finder’s fee on closing to an arm’s length individual in the form of a $7,000 cash payment and 50,000 non-transferable warrants having the same terms as the consideration warrants issuable to Borden Lake Vendors.

The transactions closed on August 26, 2020. Subsequent to closing, the Company and the Borden Lake Vendors filed a complaint against Newmont claiming that the area of interest provided in the Borden Lake Royalty should apply to claims currently being mined by Newmont. Newmont has denied the claims and the complaint is proceeding to arbitration.

(g)	Watershed<br> Property (1.0%NSR)

On December 8, 2020, the Company acquired a 1% NSR on the Watershed Property from Sanatana Resources Inc. (“Sanatana”) for a total purchase price of $2,500,000 cash and 1,000,000 Common Share purchase warrants, each exercisable at a price of $1.31 until December 3, 2025 valued at $908,812 using the Black-Scholes option pricing model with the following assumptions: volatility of 103.14%, expected life of 5 years, discount rate of 0.41% and dividend rate of 0.0%. The warrants can be accelerated if the Common Shares trade at a 50% premium to the exercise price for a 10-day period. The Watershed Royalty was granted to Sanatana in connection with an asset purchase agreement between Sanatana and IAMGOLD Corporation, dated January 12, 2016, whereby IAMGOLD acquired a 100% interest in 46 mining claims in Chester and Yeo Counties, Ontario. The Watershed Property surrounds the Coté Gold Project, which is a joint venture between IAMGOLD and Sumitomo Metal Mining Company. The Watershed Royalty is subject to a buy-down provision where the royalty rate can be reduced to 0.5% for a payment of C$2,000,000 by IAMGOLD. Sanatana and Ely Gold also signed a definitive agreement where Sanatana assigned its rights and interest in the Watershed Purchase Agreement to Ely Gold for $10,000. The Company also purchased 1,666,666 Sanatana common shares at a price of C$0.30 per share through a non-brokered private placement. The Watershed Purchase Agreement provides for certain deferred payments to the Company as follows: (a) $1,500,000 upon a production decision by IAMGOLD on the Watershed Property; and (b) $1,500,000 upon the commencement of commercial production by IAMGOLD on the Watershed Property. In the event that either of the Deferred Payments are made to Ely Gold, it will pay 50% of any such Deferred Payments to Sanatana.

| 27 |

| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(h)	Trenton<br> (0.3% NSR)
---	---

On December 23, 2020, the Company acquired a 0.3% GR the (“Trenton Canyon Royalty”) on 52 unpatented mining claims on the Battle Mountain-Eureka trend in Nevada from a private seller, for a total purchase price of US$325,000 in cash and 1,000,000 Common Share purchase warrants, each exercisable at a price of $1.36 until December 23, 2022 valued at $492,036 using the Black-Scholes option pricing model with the following assumptions, volatility of 86.67%, expected life of 2 years, discount rate of 0.20% and dividend rate of 0.0%. The Company was also assigned a stock purchase agreement, dated October 13, 2005 (the “2005 Agreement”) between the private seller and Nevada Mine Properties II. The 2005 Agreement provides for a 0.5% NSR on several other properties.

(i)	Railroad-Pinion<br> Property (0.44% NSR)

On December 30, 2020, the Company completed the purchase of certain mineral interests and private fee ground in Elko County, Nevada (the “Mineral Interests”). All of the fee ground and the Mineral Interests are currently leased to Gold Standard Ventures Corp (“GSV”) and cover certain portions of GSV’s Railroad-Pinion Project that is currently being developed as a heap-leach mining operation. The Lease provides for a combined 0.436% NSR and annual lease payments to the Company of US$79,800. Ely Gold paid a total purchase price of US$1,300,000 in cash and issued 300,000 Common Share purchase warrants, each exercisable at a price of $1.15 until December 29, 2025 valued at $259,839 using the Black-Scholes option pricing model with the following assumptions: volatility of 101.37%, expected life of 5 years, discount rate of 0.41% and dividend rate of 0.0%. The Company also paid a US$65,000 cash finder’s fee. On November 2, 2020 the Company had also entered into purchase agreements with 11 other parties to acquire additional mineral interests and leases in the same area. These 11 other purchase agreements were terminated by the Company prior to closing, and the Company paid a US$134,000 cash break fee in connection with such termination.

(j)	Devon<br> Fenelon Royalty (2.0% NSR)

On April 18, 2019, the Company acquired from Devon Canada Corporation (“Devon”) 100% of all rights and interests in a 2% NSR royalty on the Fenelon Mine Property, the Devon Fenelon Royalty, operated by Wallbridge, and located in west-central, Quebec. This 2% NSR royalty is separate and distinct from the 1% NSR royalty acquired on October 17, 2018. Under the agreement, the Company acquired the additional 2% Fenelon royalty for cash consideration of $600,000 (paid).

On September 30, 2019, the Company and Wallbridge agreed to amend certain terms and conditions of the 2% NSR royalty in the property. Effective June 30, 2019, it was agreed that:

●	Wallbridge<br> will acknowledge the royalty and support its registration with the appropriate ministries in Quebec (the royalty is now registered<br> with Registre public des droits miniers, réels et immobiliers);
●	Payment<br> of the royalty on bulk samples at Fenelon will only apply after the effective date; and
●	Toll<br> milling will not be considered a deductible expense when calculating royalty payments.

Subsequent to the sale of the Balmoral Fenelon Royalty, Ely Gold holds a 2% NSR royalty on the Fenelon Mine Property from the purchase of the Devon Fenelon Royalty.

| 28 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(k)	Isabella<br> Pearl Royalty (0.75% - 2.5% NSR)
---	---
	On<br> April 27, 2019, the Company acquired from a private estate a 0.75% gross receipts royalty on the Isabella Pearl Mine, operated by<br> Gold Resources Corporation, and located in Mineral County, Nevada. Under the terms of the agreement, the Company acquired the 0.75%<br> gross receipts royalty for cash consideration of US $300,000.
(l)	Gold<br> Bar Royalty (1.0% NSR)
	On<br> September 6, 2019, the Company acquired a 1% NSR royalty covering two separate properties (the “Scoonover Royalty”),<br> located in Eureka County, Nevada. Ely Gold paid US $25,000 (paid) for the assignment of 100% of the Scoonover Royalty from an arm’s<br> length third-party.
(m)	Jerritt<br> Canyon (PTR Royalty)
	On<br> September 9, 2019, the Company entered into an agreement to acquire 100% of the rights and interests to a per ton royalty interest<br> (the “PTR Interest”) on the Jerritt Canyon Processing Facilities by paying the owner a total cash consideration of US<br> $650,000 and by issuing 500,000 common share purchase warrants. Each warrant entitles the holder to purchase one common share of<br> the Company for a period of three years from the closing date at an exercise price of $0.18.
	The<br> license agreement entitles the owner to receive a per ton royalty payment (the “PTR Payment”) based on overall throughput<br> from mining operations at the Jerritt Canyon Processing Facilities with increasing PTR Payments at higher gold prices.

Royalties are calculated, in US dollars, as follows:

●	$0.15<br> per ton if the gold price is less than or equal to $1,300 per ounce;
●	$0.225<br> per ton if the gold price is greater than $1,300, but less than or equal to $1,600 per ounce;
●	$0.30<br> per ton if the gold price is greater than $1,600, but less than or equal to $2,000 per ounce; and
●	$0.40<br> per ton if the gold price is greater than $2,000 per ounce.

As consideration, the Company will make the following payments:

●	US<br> $300,000 cash (paid) and issue 500,000 warrants valued at $106,518 (issued) at closing;
●	US<br> $150,000 cash on the first anniversary of closing; (paid)
●	US<br> $150,000 cash on the second anniversary of closing; and
●	US<br> $50,000 cash on the third anniversary of closing.

The deferred payments will accrue simple annual interest at 5% and be secured by the PTR Interest. If production or PTR Payments cease at the facility for two consecutive months or greater, deferred payments will be delayed by an amount equal to the time the production is halted. The warrants will be priced at $0.18 and have a term of three years.

| 29 |

| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(n)	Lincoln<br> Hill Royalty (2.0% NSR)
---	---

On September 10, 2019, the Company entered into an agreement with a private individual to acquire 100% of all rights and interests to a 1% NSR royalty on the Lincoln Hill Property, operated by Coeur Mining Inc., for cash consideration of US $750,000 and by issuing 500,000 common share purchase warrants entitling the holder to purchase one common share of the Company for a period of two years from the closing date at an exercise price of $0.17.

As consideration, the Company will make the following payments:

●	US<br> $400,000 at closing (paid) and 500,000 common share purchase warrants valued at $98,803 (issued); and
●	US<br> $350,000 by September 10, 2020 (paid).

The 2020 payment will accrue simple interest at 5% and be secured by the Lincoln Hill Royalty. Each purchase warrant issued will allow the seller to purchase one common share of Ely Gold at $0.17 for two years from the closing date. The purchase agreement includes a right of first refusal if the seller disposes of an additional 1% royalty they currently hold.

On December 31, 2020 the Company acquired an additional 1% NSR from a private family trust for US$1,000,000 cash and the issuance of 1,000,000 share purchase warrants valued at $398,187 using the Black-Scholes option pricing model with the following assumptions: volatility of 86.46%, expected life of 2 years, discount rate of 0.20% and dividend rate of 0.0%. Each warrant entitling the holder to acquire one common share of the Company at an exercise price of $1.69 for a two-year period. This acquisition increases the Company’s Lincoln Hill royalty interest to a 2% NSR.

(o)	Balmoral<br> Fenelon Royalty

On October 17, 2018, the Company acquired from Balmoral Resources Ltd. (“Balmoral”) 100% of all rights and interests in the 1% NSR royalty on the Fenelon Mine Property, operated by Wallbridge Mining Company Ltd. (“Wallbridge”). Under the agreement, the Company is to pay Balmoral cash consideration of $500,000 (paid), issue 1,000,000 common shares valued at $130,000 (issued) and grant Balmoral 1,000,000 share purchase warrants entitling Balmoral to acquire 1,000,000 common shares of the Company for a period of 18 months at an exercise price of $0.10 valued at $52,700 (issued). In connection with the transaction with Balmoral, the Company paid success fees of $25,000 in cash (paid), issued 50,000 common shares of the Company valued at $6,500 (issued) and 50,000 full share purchase warrants entitling the holder to acquire 50,000 common shares of the Company for a period of 18 months at an exercise price of $0.10 valued at $2,636 (issued).

During the year ended December 31, 2019, the Company completed the sale of 100% of all rights and interests in its 1% NSR Balmoral Fenelon Royalty on the Fenelon Mine Property to 2176423 Ontario Ltd., a company controlled by Sprott. Under the terms of the agreement, Sprott paid Ely Gold a cash consideration of US $1,250,000 (received) for the Fenelon Royalty.

| 30 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

10.	MINERAL PROPERTY INTERESTS
(a)	Mineral property interests are as follows:
---	---
	Total
---	---	---	---
Balance,<br> December 31, 2018	$	1,078,744
Acquisition<br> costs		106,464
Option<br> payments received		(280,284	)
Cumulative<br> translation adjustment		(8,394	)
Balance,<br> December 31, 2019		896,530
Acquisition<br> costs		1,312,770
Option<br> payments received		(533,716	)
Amounts<br> transferred to royalty assets		(167,681	)
Cumulative<br> translation adjustment		(44,040	)
Balance,<br> December 31, 2020	$	1,463,863
(b)	Option payments received:
---	---

The Company has entered into various agreements whereby it granted an option to acquire an interest on the Company’s properties with various companies. As a result of these agreements the Company receives option payments related to these agreements on its properties. During the years ended December 31, 2020 and 2019, the Company received the following option payments:

	2020		2019
Antelope<br> Springs	US$	10,000	US$	10,000
Aurora<br> West		34,029		-
Butte<br> Valley Project		35,000		-
Castle<br> West Project		15,000		1,000
Cimarron<br> Project		-		25,000
Gold<br> Canyon		112,500		112,500
Liberty<br> Springs		24,000		-
Monitor<br> property		10,000		5,000
Musgrove<br> Property		250,000		-
Mustang<br> canyon		25,000		-
Nevada<br> Rand Project		25,000		25,000
Olympic		15,000		-
Platoro<br> West		6,000		-
Redlich,<br> Moho		51,227		50,000
Rodeo<br> Creek		50,000		100,000
Stateline		-		15,000
Tonopah<br> West		325,000		-
War<br> Eagle Property		30,000		60,000
Weepah<br> Project		72,540		110,000
White<br> Rock Property		10,000		-
	US$	1,100,296	US$	513,500

The Canadian value of the option proceeds was $1,527,677 (2019 - $1,444,699) of which $1,014,878 (2019 - $1,164,415) was recorded as revenue and $512,799 (2019 - $280,284) was recorded as a reduction of mineral interest.

| 31 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

10.	MINERAL PROPERTY INTERESTS (cont’d)
(c)	Future Option payments under agreement:
---	---

The agreements entered into by the Company require the optionees to make payments in order to exercise their option to acquire the interest in the property. In order for the optionees to keep the agreements in good standing, the optionees are required to make the following payments to the Company:

	2021		^^	2022		^^	2023		^^	2024		^^
Antelope<br> Springs	US$	10,000	^^	US$	10,000	^^	US$	10,000	^^	US$	12,500	^^
Aurora<br> West		50,000	^(5)^		135,000	^(5)^		200,000	^^		-	^^
Butte<br> Valley Project		50,000	^^		50,000	^^		50,000	^^		-	^^
Castle<br> West Project		40,000	^(6)^		40,000	^(6)^		40,000	^(6)^		105,000	^(6)^
Frost<br> Property		15,000	^^		25,000	^^		50,000	^^		50,000	^^
Gilbert<br> South		5,000	^^		10,000	^^		10,000	^^		10,000	^^
Green<br> Springs		50,000	^^		50,000	^^		100,000	^^		-	^^
Gold<br> Canyon		150,000	^^		300,000	^^		35,000	^(1)^		35,000	^^
HNT/Jam<br> Claims		12,000	^^		-	^^		-	^^		-	^^
Hurricane		25,000	^^		25,000	^^		25,000	^^		25,000	^^
Liberty<br> Springs		30,000	^^		30,000	^^		210,000	^^		-	^^
Monitor<br> property ^(2)^		15,000	^^		20,000	^^		25,000	^^		50,000	^^
Mustang<br> canyon		25,000	^^		50,000	^^		75,000	^^		-	^^
Nevada<br> Rand Project		25,000	^^		25,000	^^		150,000	^^		-	^^
Olympic		25,000	^^		35,000	^^		35,000	^^		40,000	^^
Redlich,<br> Moho		300,000	^^		30,000	^(1)^		30,000	^^		30,000	^^
Rodeo<br> Creek		50,000	^^		125,000	^^		125,000	^^		-	^^
Tonopah<br> West ^(4)^		325,000	^^		650,000	^^		700,000	^^		1,000,000	^^
War<br> Eagle Property		30,000	^^		30,000	^^		70,000	^^		5,000	^(1)^
Weepah<br> Project ^(3)^		100,000	^(7)^		200,000	^(7)^		250,000	^(7)^		400,000	^(7)^
White<br> Hill		15,000	^^		25,000	^^		45,000	^^		75,000	^^
White<br> Rock Property		25,000	^^		40,000	^^		50,000	^^		125,000	^^
	US$	1,372,000	^^	US$	1,905,000	^^	US$	2,285,000	^^	US$	1,962,500	^^

^(1)^	as<br> of this date, the optionee made all its required option payments to acquire the interest in the property and is now required to make<br> Advanced Minimum Royalty payments (“AMR”).
^(2)^	The<br> Optionee is required to make additional US$50,000 during 2025, 2026 and 2027 and one final US$400,000 in 2028.
^(3)^	in<br> addition to the above payments, the Company will also receive 100,000 shares of Navy Resources Corp., the optionee, during 2021,<br> 150,000 shares during 2022 and 200,000 shares during 2023.
^(4)^	The<br> US$1,000,000 is the last required payment for the optionee to acquire its interest in the property, starting 2025, the optionee is<br> required to make US$50,000 AMR every year thereafter.
^(5)^	The<br> Company is required to make payments of US$50,000 in 2021 and US$135,000 as option payments related to the Aurora West property which<br> will be paid from the proceeds received.
^(6)^	The<br> Company is required to yearly payments of US$15,000 related to the Castle West property which will be paid from the proceeds received.
^(7)^	The<br> Company is required to yearly payments of US$10,000 related to the Weepah project which will be paid from the proceeds received.

| 32 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

11.	PROMISSORY NOTE AND LINE OF CREDIT (“LOC”)

On November 29, 2019, the Company entered into an agreement with Sprott whereby Sprott will provide the Company with a $6,000,000 LOC. The LOC is available to the Company, as and when required, until November 29, 2021. Principal outstanding under the LOC will bear interest at 10% per annum, with undrawn amounts of the LOC carrying a stand-by fee of 2.5% per annum, compounded monthly and payable quarterly. The LOC is secured by a registered security interest over all of the Company’s assets, subordinate only to existing prior encumbrances.

In connection with the LOC, the Company issued Sprott 16,216,215 non-transferrable loan bonus warrants (the “Bonus Warrants”) at the fair value of $0.20 per share or $3,279,307 using the Black-Scholes option pricing model with the following assumptions: volatility of 95.45%, expected life of 2 years, discount rate of 1.60% and dividend rate of 0.0%. Each Bonus Warrant is exercisable, up to the maturity date of November 29, 2021, to purchase one common share of the Company at an exercise price of $0.37. Sprott has agreed not to exercise the Bonus Warrants if such exercise would result in Sprott’s direct and indirect holdings of the Company’s outstanding voting shares being in excess of 19.9% based on the then-current outstanding shares of the Company.

In connection with the LOC, the Company issued 300,000 non-transferrable finder’s purchase warrants (the “Finder’s Warrant”) to Medalist Capital Ltd., an arm’s length registered dealer. Each Finder’s Warrant will be exercisable to purchase one common share of the Company at an exercise price of $0.37 for a term of three years.

The Bonus Warrants were recorded as deferred charges and amortized in the consolidated statements of loss and comprehensive loss over the life of the LOC based on the straight-line method. The fair value of the Finder’s and Bonus Warrants was calculated at $3,279,306 using the Black-Scholes option pricing model and is recorded in the consolidated statements of financial position as deferred charge and is being amortized over a two-year period. For the year ended December 31, 2020, deferred charge amortization of $817,580 (2019 - $nil) was included in interest expense.

The Company drew $1,000,000 during the month of December 2019 and an additional $5,000,000 during the month of March 2020 to finance the acquisition of VEK. The Company repaid the full amount during the month of May 2020. The LOC remains available to the Company until its maturity.

12.	LEASE OBLIGATION
Balance<br> at January 1, 2019, on adoption of IFRS 16 (Note 8)	$	98,975
---	---	---	---
Interest<br> expense		6,211
Lease<br> payments		(48,668	)
Currency<br> translation adjustment		(2,398	)
Balance,<br> December 31, 2019		54,120
Additions		91,555
Interest<br> expense		8,131
Lease<br> payments		(56,272	)
Currency<br> translation adjustment		443
Balance,<br> September 30, 2020	$	97,977
Which<br> consists of:
Current<br> lease liability	$	48,192
Non-current<br> lease liability		49,785
	$	97,977

| 33 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

12.	LEASE OBLIGATION (cont’d...)

On March 1, 2017, the Company entered into a lease agreement for its Vancouver head office premises for three years, expiring February 28, 2020. Pursuant to this lease, the Company is obligated to pay basic rent of $2,250 and operating costs, including electricity and related taxes, on a monthly basis. The Company renewed the lease for a three-year term with monthly payments of $2,850.

On July 1, 2017, the Company entered into a lease agreement for its Reno office for five years, expiring June 30, 2022. Pursuant to this lease, the Company is obligated to pay basic rent of US $1,308 and operating costs, including electricity and related taxes, on a monthly basis. The basic rent commitment will increase to US $1,347 per month for the second year, US $1,388 in the third year, US $1,430 in the fourth year and US $1,472 in the final year.

13.	SHARE CAPITAL AND RESERVES
(a)	Authorized<br> share capital
---	---

As at December 31, 2020 and 2019, the authorized share capital of the Company is an unlimited number of common shares without par value.

(b)	Issued<br> share capital
●	On<br> May 21, 2020, the Company closed a brokered private placement offering of 21,562,500 units at a price of $0.80 per unit for gross<br> proceeds of $17,250,000.
---	---
	Each<br> unit comprises one common share and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one<br> additional common share at an exercise price of $1 for a period of three years from closing. The Company paid the agents cash commissions<br> and also issued compensation options to the agents entitling them to purchase an aggregate 731,250 common shares at an exercise price<br> of $0.80 for a period of three years from closing. The agent options were valued at $618,044 using the Black-Scholes option pricing<br> model. At the Company’s option, the original expiry date of the warrants may be accelerated if the volume weighted average<br> price of the common shares is greater than or equal to $1.60 for a period of five consecutive trading days. If the Company elects<br> to accelerate the expiry date of the warrants, holders of the warrants will have 30 calendar days to exercise their warrants after<br> receiving notice via press release from the Company. The Company paid agents fees of $737,500 and incurred legal costs of $53,000<br> in relation to the placement.
●	On<br> May 12, 2020, the Company issued 12,698,413 shares as consideration for acquisition of a 0.5% NSR royalty on the gold producing Jerritt<br> Canyon Mine facility, located in Elko, Nevada.
●	On<br> September 22, 2020 the Company issued 100,000 shares as consideration for acquisition of the Borden Lake royalty.
●	During<br> the year ended December 31, 2020, the Company issued 24,634,957 common shares on exercise of warrants for total proceeds of $6,857,638.
●	During<br> the year ended December 31, 2020, the Company issued 1,675,000 common shares on exercise of options for total proceeds of $384,000.

| 34 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

13.	SHARE CAPITAL AND RESERVES (cont’d...)
(b)	Issued<br> share capital (cont’d...)
---	---
●	On<br> July 2, 2019, the Company closed a private placement issuing 5,615,454 units at a price of $0.18 per unit for gross proceeds of $1,010,782.<br> Each unit consists of one common share and one-half of one non-transferable share purchase warrant. Each warrant entitles the holder<br> to purchase one additional common share for a period of three years at an exercise price of $0.30. The Company paid a finder’s<br> fee of $60,643 and issued 336,927 share purchase warrants. Included in share issue costs is the fair value of the finder’s<br> warrants calculated at $40,472 using the Black-Scholes option pricing model.
---	---
	On<br> January 17, 2019, the Company closed the second and final tranche of a non-brokered private placement issuing 3,000,000 units at<br> $0.11 per unit for gross proceeds of $330,000. Each unit comprised one common share of the Company and one non-transferrable share<br> purchase warrant. Each warrant entitles the holder to purchase one additional common share of the Company at an exercise price of<br> $0.22 for a period of five years, subject to an acceleration provision under which, if at any time after May 17, 2019 the daily volume<br> weighted average trading price of the Company’s common shares is higher than $0.60 per share on the TSXV for more than 20 consecutive<br> trading days, the Company may, within three trading days, issue a news release announcing that the Warrants will expire on the date<br> that is 30 calendar days after such 20^th^ trading day. The Company incurred shares issuance costs of $1,319. As at December<br> 31, 2018, the Company had received $47,315 in advanced subscription receipts. Included in share issue cost is the fair value of the<br> finder’s warrants calculated at $36,221 using the Black-Scholes option pricing model.
●	During<br> the year ended December 31, 2019, the Company issued 750,000 common shares on exercise of options for total proceeds of $79,500.
●	During<br> the year ended December 31, 2019, the Company issued 810,000 common shares on exercise of warrants for total proceeds of $129,850.
(c)	Stock<br> options
---	---

The Company has an incentive stock option plan (the “Plan”) in place under which it is authorized to grant options to directors and employees to acquire up to 10% of the Company’s issued and outstanding common shares. In addition, the aggregate number of shares reserved for issuance to any one person shall not exceed 5% of the issued and outstanding shares (2% if the participant is a consultant). Under the Plan, the exercise price of each option may not be less than the market price of the Company’s share capital as calculated on the date of grant less the applicable discount. The options can be granted for a maximum term of 10 years and vesting periods are determined by the Board of Directors.

| 35 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

13.	SHARE CAPITAL AND RESERVES (cont’d...)
(c)	Stock<br> options (cont’d...)
---	---

As at December 31, 2020 and 2019, the Company had outstanding stock options enabling the holders to acquire further common shares as follows:

Expiry<br> Date	Exercise<br> <br>Price
January<br> 5, 2021 *	$	0.06	300,000	500,000
September<br> 22, 2021	$	0.06	650,000	750,000
March<br> 19, 2022	$	0.57	500,000	-
June<br> 26, 2022	$	0.19	125,000	125,000
January<br> 30, 2023	$	0.14	175,000	175,000
July<br> 19, 2023	$	1.80	1,000,000	-
January<br> 28, 2024	$	0.12	500,000	500,000
November<br> 27, 2024	$	0.06	400,000	450,000
December<br> 24,2024	$	0.43	200,000	200,000
April<br> 2, 2025	$	0.68	1,450,000	-
March<br> 11, 2026	$	0.09	-	250,000
August<br> 18, 2026	$	0.15	900,000	1,050,000
June<br> 19, 2027	$	0.125	500,000	500,000
November<br> 22, 2027	$	0.10	1,275,000	1,500,000
February<br> 15, 2028	$	0.10	-	200,000
July<br> 26, 2029	$	0.27	2,000,000	2,050,000
Total<br> outstanding			9,975,000	8,250,000
Total<br> exercisable			9,875,000	8,250,000
●	Subsequent<br> to December 31, 2020, 300,000 options were exercised
---	---

The weighted average remaining contractual life for the outstanding options at December 31, 2020 is 4.86 years (2019 - 6.39 years).

Stock option transactions are summarized as follows:

	December<br> 31, 2020					December<br> 31, 2019
	Number<br><br> <br>of<br> Options			Weighted<br> <br>Average <br>Exercise <br>Price		Number<br><br> <br>of<br> Options			Weighted<br> <br>Average <br>Exercise <br>Price
Balance,<br> beginning of year		8,250,000		$	0.15		6,875,000		$	0.10
Granted		3,400,000		$	0.64		2,375,000		$	0.28
Expired		-		$	-		(250,000	)	$	0.10
Exercised		(1,675,000	)	$	0.23		(750,000	)	$	0.11
Options<br> exercisable, end of year		9,975,000		$	0.19		8,250,000		$	0.15

On July 19, 2020, the Company granted incentive stock options to consultants of the Company entitling them to purchase 1,000,000 common shares at a price of $1.80 per share for a period of three years vesting 25% every three months from the date of grant. The fair value of these options was calculated at $565,045 using the Black-Scholes option pricing model.

| 36 |

| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

13.	SHARE<br> CAPITAL AND RESERVES (cont’d...)
(c)	Stock<br> options (cont’d...)
---	---

On April 2, 2020, the Company granted incentive stock options to directors, consultants and an officer of the Company entitling them to purchase 1,500,000 common shares at a price of $0.68 per share for a period of five years vesting 100% on the grant date and expiring April 2, 2025. The fair value of these options was calculated at $827,492 using the Black-Scholes option pricing model.

On March 19, 2020, the Company granted incentive stock options to consultants of the Company entitling them to purchase 900,000 common shares at a price of $0.57 per share for a period of two years vesting 25% every three months from the date of grant and expiring March 19, 2022. The fair value of these options was calculated at $689,180 using the Black-Scholes option pricing model.

On December 25, 2019, the Company granted incentive stock options to a consultant of the Company entitling them to purchase 200,000 common shares at a price of $0.43 per share for a period of five years vesting 25% every three months from the date of grant and expiring December 24, 2024. The fair value of these options was calculated at $75,675 using the Black-Scholes option pricing model.

On July 26, 2019, the Company granted incentive stock options to directors, consultants and an officer of the Company entitling them to purchase 2,050,000 common shares at a price of $0.27 per share for a period of ten years vesting 100% on the grant date and expiring July 26, 2029. The fair value of these options was calculated at $533,482 using the Black-Scholes option pricing model.

On June 26, 2019, the Company granted incentive stock options to the CFO and a consultant of the Company entitling them to purchase 125,000 common shares at a price of $0.19 per share for a period of three years vesting 25% every three months from the date of grant and expiring June 26, 2022. The fair value of these options was calculated at $50,882 using the Black-Scholes option pricing model.

During the year ended December 31, 2020, nil (2019 - 250,000) options expired unexercised and the related fair value of $nil (2019 - $6,171) was transferred from share-based payment reserve to deficit.

(d)	Warrants

As at December 31, 2020 and 2019, the following share purchase warrants were outstanding:

Expiry<br> Date	Exercise<br> <br>Price
May<br> 1, 2020	$	0.10	-	1,050,000
June<br> 23, 2020	$	0.125	-	500,000
December<br> 31, 2020	$	0.135	-	500,000
June<br> 1, 2021	$	0.18	500,000	500,000
November<br> 29, 2021	$	0.37	12,216,215	16,516,215
December<br> 2, 2021	$	0.78	600,000	-
December<br> 18, 2021	$	0.43	900,000	-
February<br> 4, 2022	$	0.77	100,000	-
May<br> 11, 2022	$	0.62	1,905,164	-
June<br> 15, 2022	$	0.18	-	500,000
June<br> 28, 2022	$	0.24	-	3,144,654
Dec<br> 23, 2022	$	1.36	1,000,000	-
Dec<br> 31, 2022	$	1.69	1,000,000	-
May<br> 22, 2023	$	0.90	11,072,198	-
December<br> 31, 2024	$	0.22	-	10,000,000
January<br> 17, 2024	$	0.22	-	2,700,000
May<br> 28, 2025	$	1.37	130,000	-
December<br> 3, 2025	$	1.31	1,000,000	-
December<br> 29, 2025	$	1.15	300,000	-
Total			30,723,577	35,410,869

| 37 |

| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

13.	SHARE CAPITAL AND RESERVES (cont’d...)
(d)	Warrants<br> (cont’d...)
---	---

On November 29, 2019, the Company issued 16,216,215 warrants relating to the Line of Credit (Note 11) and 300,000 warrants as finder’s fee related to the Line of credit. Each share purchase warrant is exercisable to purchase one common share of the Company for $0.37 until November 29, 2021. The fair value of $3,279,306 is recorded as deferred financing cost and will be amortized over the term of the line of credit.

On September 9, 2019, the Company issued 500,000 warrants relating to the Jerritt Canyon Royalty acquisition (Note 9). Each share purchase warrant is exercisable to purchase one common share of the Company for $0.18 until September 9, 2022. The fair value of $106,518 is included as acquisition cost of royalty assets.

On September 10, 2019, the Company issued 500,000 warrants relating to the Lincoln Hill Royalty acquisition (Note 9). Each share purchase warrant is exercisable to purchase one common share of the Company for $0.17 until September 10, 2022. The fair value of $98,801 is included as acquisition cost of royalty assets.

On July 2, 2019, the Company issued 2,807,727 share purchase warrants relating to the non-brokered private placement (Note 13(b)). Each share purchase warrant is exercisable to purchase one common share of the Company for $0.30 for a period of three years. These warrants were determined to have a fair value of $nil. In addition, the Company issued 336,927 finders’ warrants related to the private placement.

On January 17, 2019, the Company issued 3,000,000 share purchase warrants relating to the non-brokered private placement (Note 13(b)). Each share purchase warrant is exercisable to purchase one common share of the Company for $0.22 for a period of five years. These warrants were determined to have a fair value of $nil. The Company also issued 10,000 finders’ warrants exercisable to purchase one common share at a price of $0.135 for a period of two years.

Share purchase warrant transactions are summarized as follows:

	December<br> 31, 2020					December<br> 31, 2019
	Number<br><br> <br>of<br> Warrants			Weighted<br> <br>Average <br>Exercise <br>Price		Number<br><br> <br>of<br> Warrants			Weighted<br> <br>Average <br>Exercise <br>Price
Balance,<br> beginning of year		35,410,869		$	0.29		12,050,000		$	0.20
Issued		19,947,665		$	0.86		24,170,869		$	0.33
Exercised		(24,634,957	)	$	0.28		(810,000	)	$	0.16
Balance,<br> end of year		30,723,577		$	0.65		35,410,869		$	0.29

As at December 31, 2020, the weighted average remaining contractual life for the outstanding warrants is 1.57 (2019 - 2.64) years.

| 38 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

13.	SHARE<br> CAPITAL AND RESERVES (cont’d...)
(d)	Warrants<br> (cont’d...)
---	---

The fair value of stock options and warrants are estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	December 31, 2020						December 31,2019
	Options			Warrants			Options			Warrants
Risk-free<br> interest rate		0.42	%		0.29	%		1.72	%		1.60	%
Expected<br> dividend yield		0.00			0.00			0.00			0.00
Expected<br> stock price volatility		105.77	%		92.52	%		127.93	%		95.45	%
Expected<br> life in years		3.49			3.00			9.52			2.05
Weighted<br> average fair value	$	0.66		$	0.62		$	0.26		$	0.19

The Company has estimated the dividend and forfeiture rate to be 0.00% based on historical dividend payments and historical forfeiture rates. Expected volatility was determined based on the historical movements in the closing price of the Company’s common shares for a length of time equivalent to the expected life of each option and warrant.

14.	RELATED PARTY TRANSACTIONS

Key management comprises directors and executive officers. The Company did not pay post-employment benefits and long-term benefits to key management. The following compensation was paid to key management:

	December<br> 31,<br><br> <br>2020		December<br> 31,<br><br> <br>2019
Short-term<br> employment benefits	$	1,421,813	$	880,220
Share-based<br> payments		705,141		397,442
Total	$	2,126,954	$	1,277,662

As at December 31, 2020, $569,654 (2019 - $21,695) is owing to directors and officers of the Company, which is included in accounts payable and accrued liabilities. A prepaid advance of $2,546 (2019 - $23,795) was made to an officer and director of the Company.

All other amounts due to related parties are payable on demand. Interest is not charged on outstanding balances.

The Company has in place termination clause agreements with officers and directors, whereby the officers and directors are entitled to a cumulative amount of $736,500 in the event they are terminated without cause, or $3,007,500 in the event there is a change of control.

| 39 |

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

15.	SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
For<br> the year ended December 31,	2020		2019
---	---	---	---	---
Significant<br> non-cash investing activities consisted of:
Marketable<br> securities received for mineral properties	$	254,542	$	420,000
Common<br> shares issued for royalty assets	$	11,439,587	$	-
Fair<br> value of warrants issued for mineral and royalty interests	$	4,680,384	$	205,321
Fair<br> value of warrants issued for deferred charges	$	-	$	3,279,306
Royalty<br> interests included in current and long-term debt	$	190,980	$	1,460,580
Interest<br> paid	$	230,533	$	185,372
Taxes<br> paid	$	-	$	-
16.	SEGMENT INFORMATION
---	---

The Company has one reportable operating segment, the acquisition and exploration of mineral properties and option of those assets, in one geographic location: North America.

17.	DEFERRED INCOME TAXES
(a)	A<br> reconciliation of income tax provision computed at Canadian statutory rates to the reported income tax provision is provided as follows<br> for the years ended December 31, 2020 and 2019:
---	---
	2020			2019
---	---	---	---	---	---	---
Income<br> (loss) for the year	$	(7,648,661	)	$	(1,547,809	)
Canadian<br> statutory tax rate		27	%		27	%
Income<br> tax recovery computed at statutory rates		(2,065,138	)		(417,908	)
Foreign<br> tax rates different from statutory rates		17,061			(3,601	)
Change<br> in timing differences		126,237			(6,357	)
Effect<br> of change in foreign exchange rates		(584,447	)		(121,034	)
Temporary<br> tax effect related acquisition of royalty assets		665,585			-
Temporary<br> tax effect deferred charges		-			846,600
Non-deductible<br> items		748,509			150,170
Under<br> provided in prior years		(261,620	)		278,965
Tax<br> losses and tax offsets not recognized (recognized)		1,353,813			(726,835	)
Income<br> tax recovery	$	-		$	-

The British Columbia corporate tax rate and the Canadian federal corporate tax rate remained at 11% and 16%, respectively (2019 - 11% and 16%, respectively) for a total statutory tax rate of 27% (2019 - 27%). Nevada Combined federal and state tax rate remained at 21% (2019

21%) during the year.

40

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

17.	DEFERRED INCOME TAXES (cont’d...)
(b)	The<br> tax effected items that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities at<br> December 31, 2020 and 2019 are presented below:
---	---
	2020		2019
---	---	---	---	---
Deferred<br> tax Asset:
Non-capital<br> losses	$	483,652	$	856,548
Total<br> deferred tax asset	$	483,652	$	856,548
Deferred<br> tax Liabilities:
Investments	$	58,104	$	-
Property<br> and equipment		22,867		9,948
Deferred<br> charges		402,681		846,600
Total<br> deferred tax liabilities		483,652		856,548
Net<br> deferred taxes assets and liabilities	$	-	$	-
(c)	The<br> Company recognizes tax benefits on losses or other deductible amounts generated in countries where it is probable the Company will<br> generate future taxable income. The Company’s unrecognized deductible temporary differences and unused tax losses for which<br> no deferred tax asset is recognized consist of the following amounts:
---	---
		2019
---	---	---	---
Non-capital<br> losses	15,790,946	$	14,002,239
Capital<br> losses	2,325,785		2,252,381
Share<br> issue costs	741,567		58,481
Tax<br> value over book value of equipment	48,465		50,724
Tax<br> value over book value of exploration and evaluation assets	6,456,388		4,704,281
Tax<br> value over book value of investments	1,213,154		751,702
Unrecognized<br> deductible temporary differences	26,576,305	$	21,819,808

All values are in US Dollars.

As at December 31, 2020, the Company has non-capital losses carried forward of approximately $14,456,505 (2019 - $13,148,252) and $2,289,533 (2019 - $3,772,948) that may be applied against future income for tax purposes in Canada and the United States, respectively. The non-capital losses expire between 2026 and 2040.

18.	ACQUISITION OF VEK

During the year ended December 31, 2020, the Company completed the acquisition of 100% of VEK. The agreement provided for the purchase of up to 100% of the outstanding shares of VEK for cash consideration of US $5,000,000, plus 2,005,164 Ely Gold share purchase warrants, each exercisable over a 24-month term to purchase one Ely Gold common share at an exercise price of $0.62.

The acquisition constituted an asset acquisition, rather than a business combination, as the net assets acquired did not meet the definition of a business, as defined in IFRS 3 Business Combinations. The Company applied IFRS 2 Share-based Payments in accounting for and assessing the transaction. The Company acquired VEK to gain access to its royalty assets.

| 41 |

| --- |

ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

18.	ACQUISITION<br> OF VEK (cont’d...)

The consideration paid on the acquisition of VEK was accounted for as a share-based payment with the fair value of the warrants issued valued using the Black-Scholes option pricing model with the following assumptions, volatility of 90.78%, expected life, 2 years, discount rate of 0.29% and dividend rate of 0.0%.

The acquisition of VEK was recorded in the accounts of the Company at its fair value determined as follows:

Consideration<br> paid for 100% interest is as follows:
Cash	$	7,047,002
Fair<br> value of warrants issued		1,214,066
Total<br> consideration paid	$	8,261,068
Assets<br> acquired:
---	---	---
REN<br> Property	$	6,024,796
Marigold		1,618,343
Pinson		164,396
Carlin<br> Trend		338,704
Lone<br> Tree		114,829
Net<br> assets acquired	$	8,261,068
19.	EVENTS AFTER THE REPORTING PERIOD
---	---
(a)	On<br> January 26, 2021, the Company entered into an option agreement with Navy Resources (“Navy”) whereby Navy will have the<br> option to acquire a 100% interest in the Spanish Moon Project with Ely Gold retaining a 3% NSR. Total consideration will be US$750,000<br> and 750,000 common shares of Navy payable as follows:
---	---
(i)	US$50,000<br> upon entering into the agreement;
---	---
(ii)	Issue<br> 150,000 Navy shares within 5 business after entering into the agreement;
(iii)	US$75,000<br> cash and 150,000 Navy shares on or before the first anniversary;
(iv)	US$125,000<br> cash and 200,000 Navy shares on or before the second anniversary;
(v)	US$250,000<br> cash and 250,000 Navy shares on or before the third anniversary;
(vi)	US$250,000<br> cash on or before the fourth anniversary;

Navy may reduce the 3% NSR to a 2% NSR for a one-time payment of US$1,000,000.

(b)	On<br> February 24, 2021 the Company entered into an option agreement with Crestview Exploration (“Crestview”) whereby Crestview<br> can acquire a 100% interest of the Company’s Cimarron property with the Company retaining a 2.5% NSR royalty. As consideration<br> Crestview will pay a total of US$200,000 as follows:
(i)	Initial<br> payment of $25,000
---	---
(ii)	Cash<br> payment of $35,000 on the 1^st^ anniversary
(iii)	Cash<br> payment of $50,000 on the 2^nd^ anniversary
(iv)	Cash<br> payment of $45,000 on the 3^rd^ anniversary
(v)	Cash<br> payment of $45,000 on the 4^th^ anniversary
(c)	On<br> March 26, 2021 the Company entered into a binding term sheet to acquire an additional 25% interest in its Hog Ranch Property which<br> will increase the Company’s NSR from 1.5% to 2.25% and its interest in the leased mining claims to 75.1% As consideration,<br> the Company will pay US$275,000 and issue 1,000,000 warrants exercisable at $0.90 for a period of four years.
---	---

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ELY GOLD ROYALTIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2020 and 2019

(Expressed in Canadian Dollars)

19.	EVENTS AFTER THE REPORTING PERIOD (cont’d...)
(d)	Subsequent to December 31, 2020, the Company issued 16,596,844 common shares on exercise of options and warrants for total proceeds<br>of $7,396,400.
---	---
(e)	Subsequent to December 31, 2020, 1,000,000 stock options with an exercise price of $1.80 expired unexercised
(f)	Subsequent to December 31, 2020, the Company completed the acquisition of three<br>NSR royalties from a prospector for US$350,000 cash (the “WR Royalty”). The WR Royalty package includes a 0.33% royalty on<br>the Sleeper Mine, 1% royalty on 38 unpatented mining claims in Pershing County, Nevada, and a 1% royalty on 40 acres of free ground in<br>White Pine County, Nevada.
(g)	Subsequent to December 31, 2020, the Company cancelled the line of credit and paid<br>stand-by fee to the day of cancellation of $18,082.
(h)	On August 23, 2021, the Company completed a business combination by way of a statutory<br>plan of arrangement under the Business Corporations Act (British Columbia) pursuant to which Gold Royalty Inc. (“GRC”) acquired<br>all of the issued and outstanding common shares of the Company (the “Ely Shares”) (the “Plan of Arrangement”). The<br>Company’s common shares were delisted from the TSX Venture Exchange (“TSX-V”) on August 23, 2021.
	Upon completion of the Plan of Arrangement on August 23, 2021, Ely Gold has become<br>an indirect wholly owned subsidiary of GRC. After pro-rationing and adjustments in accordance with the Plan of Arrangement, each Ely Share<br>was acquired by GRC in exchange for 0.2450 of a GRC common share (a “GRC Share”), plus $0.0001 for Ely Gold shareholders who<br>elected, or were deemed to have elected to receive the share alternative under the Plan of Arrangement; and 0.099166 of a GRC Share, plus<br>$0.869053 for Ely Gold shareholders who elected to receive the cash alternative under the Plan of Arrangement.
	The consideration paid by GRC on closing of the transaction consisted of an aggregate<br>of 30,902,176 GRC Shares and $84,008,748 in cash. Pursuant to the Plan of Arrangement, each of the 15,946,732 warrants to purchase Ely<br>Shares (an “Ely Warrant”) that were outstanding immediately prior to the effective time represent the right to acquire, on valid<br>exercise thereof (including payment of the applicable exercise price), 0.2450 of a GRC Share plus $0.0001.
	Pursuant to the Plan of Arrangement, the Ely Shares were ultimately acquired by<br>1310560 B.C. Ltd., a wholly owned subsidiary of GRC, which was amalgamated with Ely Gold, with Ely Gold being the surviving entity thereunder.

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Exhibit99.3

CONDENSEDINTERIM CONSOLIDATED FINANCIAL STATEMENTS

(Expressedin Canadian Dollars)

FORTHE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited)

| 1 |

| --- |

ELYGOLD ROYALTIES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in Canadian Dollars)

As<br> at		June<br> 30, <br>2021 <br>(unaudited)			December<br> 31, <br>2020 <br>(audited)
ASSETS<br> (Note 11)
Current
Cash<br> and cash equivalents		$	6,299,684		$	7,381,784
Marketable<br> securities	6		1,529,105			1,192,572
Receivables	7		501,227			348,881
Prepaid<br> expenses			222,114			218,974
			8,552,130			9,142,211
Non-Current
Reclamation<br> bond			27,161			27,902
Right-of-use<br> lease asset	8		67,865			92,322
Royalty<br> assets	9		30,541,458			30,278,390
Mineral<br> property interests	10		832,025			1,463,863
Deferred<br> charges	11		678,323			1,491,411
			40,698,962		$	42,496,099
LIABILITIES
Current
Accounts<br> payable and accrued liabilities	14	$	724,692		$	889,075
Current<br> portion of lease obligation	12		50,354			48,192
Current<br> portion of obligation under royalty acquisition	9		203,674			394,789
			978,720			1,332,056
Non-Current
Lease<br> obligation	12		22,558			49,785
Obligation<br> under royalty acquisition	9		68,146			71,535
			1,069,424			1,453,376
EQUITY
Share<br> capital	13		68,982,491			66,968,929
Share-based<br> payment reserve	13		9,362,638			10,308,499
Cumulative<br> translation adjustment			(2,909,427	)		(2,171,533	)
Deficit			(35,806,164	)		(34,063,172	)
			39,629,538			41,042,723
		$	40,698,962		$	42,496,099

Approved and authorized by the Board:

“David Garofalo”	Director	“Josephine Man”	Director
David<br> Garofalo		Josephine<br> Man

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

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ELYGOLD ROYALTIES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(Unaudited

Expressed in Canadian Dollars)

			Three<br> months ended						Six<br> months ended
	Notes		June<br> 30, 2021			June<br> 30, 2020			June<br> 30, 2021			June<br> 30, 2020
ROYALTY<br> AND MINERAL OPERATIONS
Revenue
Royalties			$	494,500		$	753,187		$	1,228,321		$	870,570
Option<br> proceeds				93,975			396,234			370,075			503,844
				588,475			1,149,421			1,598,396			1,374,414
Cost<br> of sales
Amortization<br> of royalty assets		9		686,435			362,252			1,366,297			408,035
Project<br> and royalty generation and maintenance<br> costs				120,718			41,923			162,644			73,493
				807,153			404,175			1,528,941			481,528
GROSS<br> PROFIT (LOSS)				(218,678	)		745,246			69,455			892,886
EXPENSES
Amortization		8		11,841			20,643			23,817			29,262
Consulting<br> fees				258,092			76,789			406,713			120,774
Management<br> fees		14		226,221			484,442			332,572			607,266
Office<br> and administration				34,632			49,255			71,928			85,604
Professional<br> fees				833,621			385,274			900,638			502,046
Share-based<br> payments		13,<br> 14		29,587			1,556,167			(116,016	)		1,685,546
Transfer<br> agent and filing fees				15,839			80,757			55,765			137,085
Travel<br> and promotion				70,603			359,760			168,973			628,276
				(1,480,436	)		(3,013,087	)		(1,844,390	)		(3,795,859	)
OTHER<br> INCOME (EXPENSE)
Interest<br> expense		11		(39,024	)		(109,633	)		(81,824	)		(213,977	)
Accretion<br> of deferred charges		11		(408,790	)		(408,790	)		(813,088	)		(817,580	)
Interest<br> income				4,569			5,166			7,069			10,351
Gain<br> (loss) on disposal of marketable securities		6		-			(25,223	)		70,329			(25,223	)
Change<br> in fair value of marketable securities				107,201			438,923			224,591			(168,516	)
Gain<br> (loss) on foreign exchange				(55,724	)		80,338			43,041			218,246
				(391,768	)		(19,219	)		(549,882	)		(996,699	)
Loss<br> for the period				(2,090,882	)		(2,287,060	)		(2,324,817	)		(3,899,672	)
Attributed<br> to:
Shareholders<br> of the Company				(2,090,882	)		(2,288,211	)		(2,324,817	)		(3,900,823	)
Non-controlling<br> interest				-			1,151			-			1,151
				(2,090,882	)		(2,287,060	)		(2,324,817	)		(3,899,672	)
Other<br> comprehensive loss for the period
Item subject to reclassification into statement of loss
Currency<br> translation adjustment				(360,997	)		(949,744	)		(737,894	)		(565,237	)
Comprehensive<br> loss for the period			$	(2,451,879	)	$	(3,236,804	)	$	(3,062,711	)	$	(4,464,909	)
Basic<br> and diluted loss per share			$	(0.01	)	$	(0.02	)	$	(0.02	)	$	(0.03	)
Weighted<br> average number of common shares<br> outstanding				162,031,022			138,075,448			161,662,233			123,115,674

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

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ELYGOLD ROYALTIES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited

Expressed in Canadian Dollars)

	For<br> the six months ended
	June<br> 30, 2021			June<br> 30, 2020
CASH<br> FLOWS FROM OPERATING ACTIVITIES
Loss<br> for the period	$	(2,324,817	)	$	(3,899,672	)
Items<br> not affecting cash
Interest<br> expense		7,346			15,177
Accretion<br> of deferred charges		813,088			817,580
Amortization		1,390,114			437,297
Change<br> in fair value of marketable securities		(224,591	)		168,516
Loss<br> (gain) on disposal of marketable securities		(70,329	)		25,223
Share-based<br> payments		(116,016	)		1,685,546
Option<br> payments received in shares		(191,392	)		-
Unrealized<br> foreign exchange		33,802			(29,752	)
		(682,795	)		(780,085	)
Changes<br> in non-cash working capital items
Receivables		(164,612	)		(466,269	)
Prepaid<br> expenses		(3,140	)		(122,462	)
Accounts<br> payable and accrued liabilities		(159,216	)		(76,497	)
Net<br> cash used in operating activities		(1,009,763	)		(1,445,313	)
CASH<br> FLOWS FROM INVESTING ACTIVITIES
Acquisition<br> of mineral rights and royalty assets		(1,403,039	)		(3,089,353	)
Payments<br> on acquisition of VEK		-			(6,646,383	)
Proceeds<br> on disposition of marketable securities		326,604			76,547
Acquisition<br> of marketable securities		(171,461	)		-
Proceeds<br> received from properties under option		429,959			517,826
Net<br> cash used in investing activities		(817,937	)		(9,141,363	)
CASH<br> FLOWS FROM FINANCING ACTIVITIES
Shares<br> issued for cash, net of issuance costs		-			16,450,990
Subscriptions<br> received		-			107,500
Proceeds<br> from line of credit		-			5,000,000
Repayment<br> of line of credit		-			(6,000,000	)
Lease<br> payments		(27,802	)		(27,402	)
Shares<br> issued on exercise of options and warrants		1,058,714			5,678,396
Payment<br> of royalty obligation		(194,950	)		(518,137	)
Net<br> cash provided by financing activities		835,962			20,691,347
Effect<br> on cash of foreign exchange		(90,362	)		43,890
Change<br> in cash and cash equivalents for the period		(1,082,100	)		10,148,561
Cash<br> and cash equivalents, beginning of period		7,381,784			2,973,520
Cash<br> and cash equivalents, end of period	$	6,299,684		$	13,122,081
Cash<br> and cash equivalents consist of:
Cash	$	6,274,684		$	3,097,081
Term<br> deposits		25,000			10,025,000
	$	6,299,684		$	13,122,081

Supplementaldisclosure with respect to cash flows (note 15)

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

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ELY GOLD ROYALTIES INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited

Expressed in Canadian Dollars)

		Share<br> capital		Share-based<br> Payment reserve			Cumulative<br> Translation adjustment			Subscriptions<br> received		Deficit			Shareholders’<br> equity			Non-<br><br> <br>Controlling interest		Total
Balance,<br> December 31, 2019	100,280,929	$	30,055,890	$	4,988,492		$	93,686		$	-	$	(26,414,511	)	$	8,723,557		$	-	$	8,723,557
Private<br> placement, net of issuance costs	21,562,500		15,832,946		618,044			-			-		-			16,450,990			-		16,450,990
Shares<br> issued on exercise of options and warrants	22,919,654		5,678,396		-			-			-		-			5,678,396			-		5,678,396
Reallocation<br> of reserves of exercised options and warrants	-		1,423,108		(1,423,108	)		-			-		-			-					-
Warrants<br> issued for mineral and royalty interests	-		-		2,363,279			-			-		-			2,363,279			-		2,363,279
Shares<br> issued on acquisition of royalty interest	12,698,413		11,301,588		-			-			-		-			11,301,588			-		11,301,588
Funds<br> received for exercise of warrants	-		-		-			-			107,500		-			107,500			-		107,500
Share-based<br> payments	-		-		1,685,546			-			-		-			1,685,546			-		1,685,546
Loss<br> for the period	-		-		-			-			-		(3,900,823	)		(3,900,823	)		1,151		(3,899,672	)
Non-controlling<br> interest on acquisition of VEK	-		-		-			-			-		-			-			471,073		471,073
Other<br> comprehensive loss	-		-		-			(565,237	)		-		-			(565,237	)		-		(565,237	)
Balance,<br> June 30, 2020	157,461,496	$	64,291,928	$	8,232,253		$	(471,551	)	$	107,500	$	(30,315,334	)	$	41,844,796		$	472,224	$	42,317,020
Balance,<br> December 31, 2020	160,951,799	$	66,968,929	$	10,308,499		$	(2,171,533	)	$	-	$	(34,063,172	)	$	41,042,723		$	-	$	41,042,723
Shares<br> issued on exercise of options and warrants	2,249,518		1,058,714		-			-			-		-			1,058,714			-		1,058,714
Reallocation<br> of reserves of exercised options and warrants	-		954,848		(954,848	)		-			-		-			-			-		-
Reallocation<br> of reserves of forfeited options	-		-		(581,825	)		-			-		581,825			-			-		-
Warrants<br> issued for mineral and royalty interests	-		-		706,828			-			-		-			706,828			-		706,828
Share-based<br> payments	-		-		(116,016	)		-			-		-			(116,016	)		-		(116,016	)
Loss<br> for the period	-		-		-			-			-		(2,324,817	)		(2,324,817	)		-		(2,324,817	)
Other<br> comprehensive loss	-		-		-			(737,894	)		-		-			(737,894	)		-		(737,894	)
Balance,<br> June 30, 2021	163,201,317	$	68,982,491	$	9,362,638		$	(2,909,427	)	$	-	$	(35,806,164	)	$	39,629,538		$	-	$	39,629,538

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

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

1.	NATURE<br> OF AND CONTINUANCE OF OPERATIONS

The Company’s registered office is 1000 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, Canada, V6C 3L2. The principal address of the Company is located at 1030 West Georgia Street, Suite 1830, Vancouver, British Columbia, V6E 2Y3, Canada.

The COVID-19 global health pandemic has had a significant impact on the global economy and commodity and financial markets. The full extent and impact of the COVID-19 pandemic is unknown. The adverse effects of the pandemic may continue for an extended and unknown period of time, particularly as variant strains of the virus are identified. The impact of the pandemic to date has included extreme volatility in financial markets, a slowdown in economic activity and extreme volatility in commodity prices, including gold. As well, as efforts have been undertaken to slow the spread of the COVID-19 pandemic, the operation and development of mining projects have been impacted. Many mining projects, including some of the properties in which the Company holds a royalty, stream or other interest, could be impacted by the pandemic resulting in the slowdown of operations and other mitigation measures that impact production. If the operation or development of one or more of the properties in which the Company holds a royalty from which it receives or expects to receive significant revenue is slowed down or suspended as a result of the continuing COVID-19 pandemic or future pandemics or other public health emergencies, it may have a material adverse impact on the Company’s profitability, results of operations and financial condition.

On August 23, 2021 the Company completed a business combination by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia) pursuant to which Gold Royalty Inc. (“GRC”) acquired all of the issued and outstanding common shares of the Company (the “Ely Shares”) (the “Plan of Arrangement”). The Company’s common shares were delisted from the TSX Venture Exchange (“TSX-V”) on August 23, 2021.

| 6 |

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

1.	NATURE<br> OF AND CONTINUANCE OF OPERATIONS (cont’d)

Upon completion of the Plan of Arrangement on August 23, 2021, Ely Gold has become an indirect wholly- owned subsidiary of GRC. After pro-rationing and adjustments in accordance with the Plan of Arrangement, each Ely Share was acquired by GRC in exchange for 0.2450 of a GRC common share (a “GRC Share”), plus $0.0001 for Ely Gold shareholders who elected, or were deemed to have elected to receive the share alternative under the Plan of Arrangement; and 0.099166 of a GRC Share, plus $0.869053 for Ely Gold shareholders who elected to receive the cash alternative under the Plan of Arrangement.

The consideration paid by GRC on closing of the transaction consisted of an aggregate of 30,902,176 GRC Shares and $84,008,748 in cash. Pursuant to the Plan of Arrangement, each of the 15,946,732 warrants to purchase Ely Shares (an “Ely Warrant”) that were outstanding immediately prior to the effective time represent the right to acquire, on valid exercise thereof (including payment of the applicable exercise price), 0.2450 of a GRC Share plus $0.0001.

Pursuant to the Plan of Arrangement, the Ely Shares were ultimately acquired by 1310560 B.C. Ltd., a wholly- owned subsidiary of GRC, which was amalgamated with Ely Gold, with Ely Gold being the surviving entity thereunder.

2.	BASIS<br> OF PREPARATION

Statementof Compliance

These condensed interim consolidated financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. Therefore, these condensed interim consolidated financial statements do not include all the information and note disclosures required by IFRS for annual financial statements and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020 (“Annual Financial Statements”), which have been prepared in accordance with IFRS.

The condensed interim consolidated financial statements have been prepared on a historical cost basis, except for financial instruments, which are stated at their fair values. These condensed interim consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information. All dollar amounts presented are in Canadian dollars, the Company’s functional currency, unless otherwise specified.

These condensed interim consolidated financial statements were approved by the Board of Directors for issue on September 24, 2021.

Basisof consolidation and presentation

These condensed interim consolidated financial statements incorporate the financial statements of the Company and its controlled subsidiaries. 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 Company’s wholly owned subsidiaries include DHI Minerals Ltd. (“DHI Minerals”) (a Canadian corporation), DHI Minerals (US) Ltd. (a Nevada corporation), Voyageur Gold Inc. (a Canadian corporation), Nevada Select Royalty, Inc. (a Nevada corporation), REN Royalties LLC (“REN”) (a Nevada corporation) and VEK Associates (“VEK”) (a Nevada corporation).

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

2.	BASIS<br> OF PREPARATION (cont’d...)

Subsequent to June 30, 2021, the Company incorporated a new subsidiary, 1320505 B.C. Ltd. (“1320505 BC”) (a Canadian corporation). All assets and liabilities of DHI Minerals were transferred to 1320505 BC and DHI Minerals was dissolved by way of voluntary dissolution on August 20, 2021.

Useof estimates and judgments

The preparation of these condensed interim consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed interim consolidated financial statements and the reported revenues and expenses during the period. Although management uses historical experience and its best knowledge of the amount, events or actions to form the basis for judgments and estimates, actual results may differ from these estimates.

CriticalAccounting Estimates

Recoverabilityof receivables

Share-basedpayments

| 8 |

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

2.	BASIS<br> OF PREPARATION (cont’d...)

CriticalAccounting Estimates (cont’d)

Amortizationof royalty assets

Royalty assets are carried at cost less any accumulated amortization. Amortization is calculated over the estimated mine life or over the period advance royalties are expected to be received using management’s best estimate of the mine’s production life. The expected production life of the asset is estimated based on expected quantities of proven and probable mineral reserves and mineral resources. These estimates are based on information obtained from the mine operator through preparation of technical reports on the property. The useful production lives are estimated based on such information and are reviewed annually.

Cost allocation of royalty assets acquired

CriticalAccounting Judgments

Management must make judgments given the various options available under IFRS for items included in the condensed interim consolidated financial statements. Judgments involve a degree of uncertainty and could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual events differ from a judgment made.

Impairmentof mineral and royalty interests

Assets or cash-generating units are evaluated at each reporting date to determine whether there are any indications of impairment. The Company considers both internal and external sources of information when making the assessment of whether there are indications of impairment for the Company’s mineral and royalty interests. In respect of costs incurred for its mineral properties, management has determined that exploratory drilling, evaluation and related costs incurred, which have been capitalized, continue to be appropriately recorded on the condensed interim consolidated statement of financial position at carrying value. Management uses several criteria in its assessments of economic recoverability and probability of future economic benefit, including geologic and metallurgic information, economic assessment/studies, accessible facilities and existing permits.

Functionalcurrency

Recovery of deferred tax assets

Judgment is required in determining whether deferred tax assets are recognized in the statement of financial position. Deferred tax assets, including those arising from unutilized tax losses, require management to assess the likelihood that the Company will generate taxable earnings in future periods, in order to utilize recognized deferred tax assets.

| 9 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

2.	BASIS<br> OF PREPARATION (cont’d...)

Impairmentof royalty assets and mineral property Interests

Assessment of impairment of royalty assets and mineral property interests at the end of each reporting period requires the use of judgments, assumptions and estimates when assessing whether there are any indicators that give rise to the requirement to conduct an impairment analysis on the Company’s royalty assets and mineral property interests. Indicators that could trigger an impairment analysis include, but are not limited to, a significant change in operator reserve and resource estimates, industry or economic trends, current or forecast commodity prices, and other relevant operator information. The assessment of fair values requires the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, reserve/resource conversion, foreign exchange rates, future capital expansion plans and the associated production implications. In addition, the Company may use other approaches in determining fair value which may include judgment and estimates related to (i) dollar value per ounce or pound of reserve/resource; (ii) cash-flow multiples; and (iii) market capitalization of comparable assets. Changes in any of the assumptions and estimates used in determining the fair value of the royalty and mineral property interests could impact the impairment analysis.

Assetacquisitions and business combinations

The assessment of whether an acquisition meets the definition of a business, or whether assets are acquired is an area of key judgment. The assessment requires management to assess the inputs, processes and ability of the acquired entity/assets to produce outputs at the time of the acquisition. The determination of the acquisition date fair values often requires management to make assumptions and estimates about future events. The assumptions and estimates with respect to determining the fair value of royalty assets generally requires a high degree of judgment, and include estimates of mineral reserves and resources acquired, future metal prices, discount rates and reserve/resource conversion. Changes in any of the assumptions or estimates used in determining the fair value of acquired assets and liabilities could impact the amounts assigned to assets and liabilities.

3.	SIGNIFICANT<br> ACCOUNTING POLICIES

These condensed interim consolidated financial statements have been prepared on the basis of accounting policies and methods of computation consistent with those applied in the Company’s audited Annual Financial Statements for the fiscal year ended December 31, 2020.

4.	FINANCIAL<br> INSTRUMENTS

The Company’s principal financial liabilities comprise accounts payable and accrued liabilities, lease obligation and obligation under royalty acquisition. The Company’s principal financial assets are cash and cash equivalents, marketable securities and receivables. The main purpose of these financial instruments is to manage short-term cash flow and working capital requirements and fund future acquisitions.

| 10 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)

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

The carrying value of cash and cash equivalents, receivables, and accounts payable and accrued liabilities approximated their fair value due to the short-term nature of these instruments. Marketable securities are classified within Level 1 of the fair value hierarchy. The fair value of the Company’s obligation under royalty acquisition and lease obligation approximate their carrying values, as their interest rates are comparable to market interest rates.

(a)	Credit<br> risk

Credit risk arises from cash and cash equivalents and receivables. The Company closely monitors its financial assets and maintains its cash deposits in several high-quality financial institutions, and as such, does not have any significant concentration of credit risk. As at June 30, 2021, the Company is unaware of any information that would cause it to believe that these financial assets are not fully recoverable.

The Company’s concentration of credit risk and maximum exposure thereto is as follows:

	June 30, <br>2021		December 31, <br>2020
Cash and cash equivalents	$	6,299,684	$	7,381,784
Receivables (Note 7)		421,163		338,345
	$	6,720,847	$	7,720,129
(b)	Liquidity<br> risk
---	---

Liquidity risk is the risk that the Company will encounter difficulty in satisfying financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. At June 30, 2021, the Company has cash and cash equivalents of $6,299,684 (December 31, 2020 - $7,381,784), current liabilities of $978,720 (December 31, 2020

$1,332,056) and non-current liabilities of $90,704 (December 31, 2020 - $121,320).

11

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)
(b)	Liquidity<br> risk (cont’d...)
---	---

The amounts listed below are the remaining undiscounted cash flow contractual maturities for financial liabilities held by the Company:

Due Date	June 30, <br>2021		December 31, <br>2020
0 - 90 days	$	942,389	$	1,072,506
91 - 365 days		37,402		256,116
More than 1 year		90,946		138,378
	$	1,070,737	$	1,467,000
(c)	Market<br> risk
---	---

(i)	Commodity<br> price risk

The Company’s royalties are subject to fluctuations from changes in market prices of the underlying commodities. The market price of gold is the primary driver of the Company’s profitability and ability to generate free cash flow. All of the Company’s future revenue is not hedged, which results in the Company’s full exposure to changes in the market prices of these commodities.

(ii)	Interest<br> rate risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. As at June 30, 2021, the Company’s interest rate exposure arises mainly from the interest receipts on cash and cash equivalents, lease obligation and obligation under royalty acquisition.

Cash and cash equivalents consist of the following:

	June<br> 30, <br>2021		December<br> 31, <br>2020
Cash	$	6,274,684	$	6,356,784
Cashable<br> guaranteed investment certificate(“GIC”)*		25,000		1,025,000
	$	6,299,684	$	7,381,784

* The GIC will mature June 15, 2021, is cashable at any time without penalty and earns interest at a rate of 1% per annum

(iii)	Foreign<br> currency risk

The Company incurs expenditures in Canada and the United States. Foreign currency risk arises as the amount of the U.S. dollar cash, intercompany balances and payables will vary in Canadian dollar due to changes in exchange rates.

| 12 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)
(c)	Market<br> risk (cont’d...)
---	---
(iii)	Foreign<br> currency risk (cont’d)
---	---

As at June 30, 2021 and December 31, 2020, the Company has not hedged its exposure to currency fluctuations.

At June 30, 2021 and December 31, 2020, the Company is exposed to currency risk through the following assets and liabilities denominated in US dollars:

	June 30, <br>2021			December 31, <br>2020
Cash and cash equivalents	US$	2,902,944		US$	2,830,820
Receivables		339,812			265,744
Liabilities		(93,978	)		(582,132	)
Net	US$	3,148,778		US$	2,514,432
Canadian dollar equivalent	$	3,902,595		$	3,201,375

Based on the above net exposures as at June 30, 2021, a 5% (December 31, 2020 - 5%) change in the Canadian/U.S. dollar exchange rate would impact the Company’s income (loss) and comprehensive income (loss) by approximately $195,000 (2020 - $160,000).

(iv)	Equity<br> price risk

Based on the marketable securities held as at June 30, 2021, a 10% (December 31, 2020 - 10%) change in the market price of these securities would impact the Company’s income (loss) and comprehensive income (loss) by approximately $100,500 (2020 - $83,000).

| 13 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

4.	FINANCIAL<br> INSTRUMENTS (cont’d...)
(c)	Market<br> risk (cont’d...)
---	---
(v)	Fair<br> value hierarchy
---	---

The following tables summarize the Company’s financial instruments under the fair value hierarchy, as at June 30, 2021 and December 31, 2020:

June 30, 2021	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	6,299,684			$	-	$	6,299,684
Marketable securities	$	1,529,105	$	-	$	-	$	1,529,105
Receivables	$	421,163	$	-	$	-	$	421,163
Accounts payable and accrued liabilities	$	724,692	$	-	$	-	$	724,690
Lease obligation	$	-	$	72,912	$	-	$	72,912
Obligation under royalty acquisition	$	-	$	271,820	$	-	$	271,820
December 31, 2020	Level 1		Level 2		Level 3		Total
---	---	---	---	---	---	---	---	---
Cash and cash equivalents	$	7,381,784			$	-	$	7,381,784
Marketable securities	$	1,192,572	$	-	$	-	$	1,192,572
Receivables	$	338,345	$	-	$	-	$	338,345
Accounts payable and accrued liabilities	$	889,075	$	-	$	-	$	889,075
Lease obligation	$	-	$	97,977	$	-	$	97,977
Obligation under royalty acquisition	$	-	$	466,324	$	-	$	466,324

| 14 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

5.	CAPITAL<br> MANAGEMENT

The Company’s primary objective when managing capital is to maximize returns for its shareholders by growing its asset base through acquisitions of royalties, and optioning out existing properties other interests and a line of credit (“LOC”), as described in note 11. The Company may issue new shares or draw from its credit facility in order to meet its financial obligations. Management believes that the capital resources of the Company as at June 30, 2021 are sufficient for its present needs for at least the next twelve months. The Company is not subject to externally imposed capital requirements.

In the past, the Company has invested its capital in liquid investments to obtain adequate returns. The investment decision is based on cash management to ensure working capital is available to meet the Company’s short-term obligations while maximizing liquidity and returns of unused capital.

There have been no changes to the Company’s approach to capital management during the six months ended June 30, 2021.

6.	MARKETABLE<br> SECURITIES

	June 30, 2021						December 31, 2020
	Shares		Cost		Fair Value		Shares		Cost		Fair Value
Gold Resources Corporation		-	$	-	$	-		56,966	$	444,956	$	211,060
Solitario Royalty & Exploration Corp.		119,352		144,454		99,110		119,352		144,454		85,447
VR Resources Ltd.		100,000		36,250		46,000		100,000		36,250		31,000
Fortitude Gold Corp.		74,946		231,764		636,283		-		-		-
Eminent Gold Corp.		200,000		131,000		201,000		-		-		-
Contact Gold Corp.		2,362,941		486,980		224,679		2,362,941		486,980		271,590
Sanatana Resources Inc.		1,666,666		500,000		133,333		1,666,666		500,000		308,333
Lahontan Gold Corp.		325,000		97,500		97,500		325,000		97,500		97,500
McEwen Mining Inc.		53,600		90,082		91,200		53,600		90,082		67,000
Gold American gold (1 oz) troy coins		-		-		-		50		135,898		120,642
			$	1,718,030	$	1,529,105			$	1,936,120	$	1,192,572

| 15 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

6.	MARKETABLE SECURITIES (cont’d...)

During the six months ended June 30, 2021, the Company:

(a)	Recorded<br> an unrealized gain in the change in fair value on marketable securities of $224,591 in the<br> condensed interim consolidated statements of loss and comprehensive loss.
(b)	Sold<br> shares of Gold Resources Corporation and gold coins for net proceeds of $342,220. As at December<br> 31, 2020, these shares and the coins had a carrying value of $271,399, which resulted in<br> a gain of $70,329.
(c)	Received<br> 29,946 shares of Fortitude Gold Corp., as a result of it being spun-out from Gold Resources<br> Corporation. The fair value on acquisition was US$47,363 (Can $60,303).
(d)	Received<br> 150,000 shares of Eminent Gold Corp. valued at $97,500, as related to the Spanish Moon option<br> agreement.
(e)	Received<br> 50,000 shares of Eminent Gold Corp. valued at $33,500, as related to the Weepah option agreement.
(f)	Purchased<br> an additional 45,000 shares of Fortitude Gold Corp. at a cost of $171,461.
7.	RECEIVABLES
---	---

The Company’s receivables are as follows:

	June 30, <br>2021		December 31, 2020
Trade receivables	$	421,163	$	338,345
Sales taxes receivable		80,064		10,536
	$	501,227	$	348,881
8.	RIGHT-OF-USE LEASE ASSET
---	---

The Company’s right-of-use asset relates to the lease of office space.

Cost:
Balance, December 31, 2020 and June 30, 2021	$	184,522
Accumulated amortization:
Balance, December 31, 2020	$	90,614
Depreciation for the period		23,817
Balance, June 30, 2021	$	114,431
Currency translation adjustment at June 30, 2021	$	(2,226	)
Net book value:
As at December 31, 2020	$	92,322
As at June 30, 2021	$	67,865

| 16 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS
Cost	Balance, <br>December 31, 2019		Acquisition		Balance, <br>December 31, 2020		Acquisition		Balance, June 30, 2021
---	---	---	---	---	---	---	---	---	---	---
Devon Fenelon	$	600,000	$	-	$	600,000	$	-	$	600,000
Isabella Royalty		404,250		-		404,250		-		404,250
Jerritt Canyon PTR		969,591		-		969,591		-		969,591
Jerritt Canyon 0.5%		-		11,553,163		11,553,163		-		11,553,163
Lincoln Hill		1,091,123		1,671,387		2,762,510		-		2,762,510
Rawhide		-		1,967,617		1,967,617		-		1,967,617
REN NPI		-		708,950		708,950		-		708,950
REN 1.5%		-		6,024,796		6,024,796		-		6,024,796
Marigold		-		1,618,343		1,618,343		-		1,618,343
Borden Lake		-		583,089		583,089		-		583,089
Watershed		-		3,418,812		3,418,812		-		3,418,812
Raiload - Pinon		-		2,002,806		2,002,806		-		2,002,806
Trenton		-		909,855		909,855		-		909,855
Hog Ranch		-		77,928		77,928		1,050,046		1,127,974
HNT/JAM claims		-		-		-		193,948		193,948
Other		36,371		702,351		738,722		1,059,825		1,798,547
	$	3,101,335	$	31,239,097	$	34,340,432	$	2,303,819	$	36,644,251
Accumulated Amortization	December 31, 2019		Amortization		December 31, 2020		Amortization		June 30, 2021
---	---	---	---	---	---	---	---	---	---	---
Isabella Royalty	$	67,267	$	100,884	$	168,151	$	14,958	$	183,109
Jerritt Canyon PTR		25,126		82,704		107,830		84,640		192,470
Jerritt Canyon 0.5%		-		953,983		953,983		688,596		1,642,579
Lincoln Hill		-		142,223		142,223		140,766		282,989
REN 1.5%		-		361,341		361,341		269,892		631,233
Marigold		-		121,327		121,327		90,621		211,948
Hog Ranch		-		7,793		7,793		57,379		65,172
Other		-		46,949		46,949		19,445		66,394
	$	92,393	$	1,817,204	$	1,909,597	$	1,366,297	$	3,275,894
	Cumulative Translation Adjustment						Net Book Value
---	---	---	---	---	---	---	---	---	---	---
	December 31, <br>2020			June 30, <br>2021			December 31, 2020		June 30, <br>2021
Devon Fenelon	$	-		$	-		$	600,000	$	600,000
Isabella Royalty		(14,771	)		(5,660	)		221,328		200,710
Jerritt Canyon PTR		(25,109	)		(20,993	)		836,652		731,019
Jerritt Canyon 0.5%		(1,090,092	)		(234,162	)		9,509,088		8,586,330
Lincoln Hill		(33,342	)		(64,946	)		2,586,945		2,381,233
Rawhide		(123,513	)		(51,468	)		1,844,104		1,792,636
REN NPI		(72,350	)		(16,900	)		636,600		619,700
REN 1.5%		(563,668	)		(128,381	)		5,099,787		4,701,514
Marigold		(150,427	)		(33,139	)		1,346,589		1,222,829
Borden Lake		-			-			583,089		583,089
Watershed		-			-			3,418,812		3,418,812
Raiload - Pinon		(5,802	)		(53,015	)		1,997,004		1,943,989
Trenton		(8,775	)		(23,921	)		901,080		877,159
Hog Ranch		(1,382	)		(7,593	)		68,753		1,053,827
HNT/JAM claims		-			-			-		193,948
Other		(63,214	)		(34,276	)		628,559		1,634,663
	$	(2,152,445	)	$	(674,454	)	$	30,278,390	$	30,541,458

| 17 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(a)	Royalty revenue<br> includes the following:
---	---
	June 30, <br>2021		June 30, <br>2020
---	---	---	---	---
Producing royalties	$	845,344	$	833,828
Advance minimum royalties (“AMR”)		382,977		36,742
Total royalty revenue	$	1,228,321	$	870,570
(b)	Rawhide Royalty (15% Net Profit Interest (“NPI”))
---	---

On February 29, 2020, the Company acquired a 15% NPI from Liberty Gold Corp. and its subsidiary, Pilot Gold USA Inc. The NPI entitles the Company to 15% of the net profits from the recovery and sale of minerals from certain unpatented claims located in Mineral County, Nevada, known as the Regent Hill Property. The interest also includes the possibility of bonus payments for each gold equivalent (“AuEq”) ounce, from the Regent Hill Property placed on leach pads after the first 115,000 AuEq ounces. Quarterly bonus payments per AuEq ounce will be based on a pricing grid providing for payments coming into effect when the monthly average gold price per ounce for each applicable quarter are US$1,400 or more, commencing at US$5.775 per AuEq ounce and increasing to as much as US$29.05 per AuEq ounce if the monthly average exceeds US$1,800 per ounce.

Under the terms of the agreement, the Company paid a cash consideration of US$800,000 (paid) and issued 2,000,000 share purchase warrants (issued). Each warrant entitles the holder to purchase one common share of the Company for a period of two years at an exercise price of $0.43. The warrants were valued at $818,325 using the Black-Scholes option pricing model with the following assumptions: volatility of 80.36%, expected life of 1.8 years, discount rate of 1.32% and dividend rate of 0.0%.

(c)	REN NPI (3.5%)

On April 2, 2020, the Company closed an agreement to acquire a 3.5% NPI on the Ren Property in Elko, Nevada, for total proceeds of US$500,000 (paid). The Ren Property is part of the joint venture (“JV”) between Barrick Gold Corporation and Newmont Corporation (“Newmont”), forming Nevada Gold Mines.

(d)	Jerritt Canyon (0.5% net smelter return (“NSR”)<br>royalty)

| 18 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(e)	VEK Properties
---	---

On May 15, 2020, the Company completed the acquisition of 100% of VEK for total consideration of US$5,000,000 and the issuance of 2,005,164 share purchase warrants exercisable at a price of $0.62 per share for a period of two years valued at $1,214,066 using the Black-Scholes option pricing model with the following assumptions: volatility of 91.78%, expected life of 2 years, discount rate of 0.30% and dividend rate of 0.0%.

VEK owns 50% of the VEK/Andrus partnership, which holds five properties, all of which are currently leased. Four of the leases are with Nevada Gold Mines JV (Barrick 61.5%/Newmont 31.5%) and the other lease is with SSR Mining Inc. (“SSR Mining”). Four of the leases pay AMR payments and carry a 3% NSR royalty (50% to VEK) with no buy-downs. Details on the properties are as follows:

●	REN<br> Property (1.5% NSR royalty) - currently leased to Nevada Gold Mines, consists of 86 contiguous<br> unpatented lode mining claims located in the Northern Carlin trend. Under the terms of the<br> lease agreement, VEK/Andrus is entitled to minimum royalty payments, which are adjusted for<br> inflation every year. During 2019, VEK/Andrus received US$458,712, of which VEK received<br> 50%. These payments will continue until production commences, at which time VEK will be entitled<br> to a 1.5% royalty.
●	Marigold<br> Property (0.75% NSR royalty) - currently leased to SSR Mining, consists of 205 unpatented<br> lode mining claims within the SSR Mining operation on the Battle Mountain-Eureka trend. Under<br> the terms of the lease agreement, VEK/Andrus is entitled to minimum royalty payments, which<br> are adjusted for inflation every year. During 2019, VEK/Andrus received US$156,500, of which<br> VEK received 50%. These payments will continue until production commences; at which time<br> the lessor will be entitled to a 0.75% royalty.
●	Lone<br> Tree Property (1.5% NSR royalty) - currently leased to Nevada Gold Mines, consists of 38<br> unpatented lode mining claims along the Battle Mountain-Eureka trend. Under the terms of<br> the lease agreement, VEK/Andrus is entitled to minimum royalty payments. During 2019, VEK/Andrus<br> received US$15,000, of which VEK received 50%. These payments will continue until production<br> commences, at which time VEK will be entitled to a 1.5% royalty.
●	Pinson<br> Property (1.5% NSR royalty) - currently leased to Nevada Gold Mines, consists of 53 unpatented<br> lode mining claims along the Osgood Mountain trend in sections 4, 8 and 16, Township 37N,<br> Range 42E, in Humboldt County, Nevada. Under the terms of the lease agreement, VEK/Andrus<br> is entitled to minimum royalty payments, which are adjusted for inflation every year. During<br> 2019, VEK/Andrus received US$21,780, of which VEK received 50%. These payments will continue<br> until production commences, at which time VEK will be entitled to a 1.5% royalty.
●	Carlin<br> Trend Property (1.5% NSR royalty) - currently leased to Nevada Gold Mines, of 84 unpatented<br> lode mining claims along the Carlin trend in sections 1, 2, 3, 10, 11, 12, 20, 21, 28, 34<br> and 35, Townships 35N and 36N, Ranges 49E and 50, in Eureka County, Nevada. Under the terms<br> of the lease agreement, VEK/Andrus is entitled to minimum royalty payments, which are adjusted<br> for inflation every year. During 2019, VEK/Andrus received US$43,560, of which VEK received<br> 50%. These payments will continue until production commences, at which time VEK will be entitled<br> to a 1.5% royalty.

| 19 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(f)	Borden Lake Royalty (0.4% NSR royalty)
---	---

The Borden Lake Royalty is subject to a buy-down option pursuant to which Newmont is entitled to buy it down from 2% to 1% for a one-time cash payment of $1,000,000. Under the present transaction terms, if the buy-down right is exercised, the entire reduction will be applied to the Borden Lake Vendors’ 1.6% Borden Lake Royalty interest and the Company’s share will remain at 0.4%. In addition, the Borden Lake Vendors have granted a right of first refusal to the Company with respect to any proposed sale by the Borden Lake Vendors of their remaining 0.6% of the Borden Lake Royalty.

Under the terms of the transaction, in consideration for its 0.4% Borden Lake Royalty interest, the Company paid $300,000 in cash, issued 100,000 common shares and 80,000 of the Company’s non-transferable common share purchase warrants, each exercisable to purchase one additional common share for a five-year term at an exercise price of $1.37. The warrants were valued at $138,089 using the Black-Scholes option pricing model with the following assumptions: volatility of 106.77%, expected life of 5 years, discount rate of 0.23% and dividend rate of 0.0%.

In connection with the transaction, the Company paid a finder’s fee on closing to an arm’s length individual in the form of a $7,000 cash payment and 50,000 non-transferable warrants having the same terms as the consideration warrants issuable to the Borden Lake Vendors.

(g)	Watershed Property (1% NSR royalty)

On December 8, 2020, the Company acquired a 1% NSR royalty on the Watershed Property from Sanatana Resources Inc. (“Sanatana”) (the “Watershed Royalty”) for a total purchase price of $2,500,000 cash and 1,000,000 common share purchase warrants, each exercisable at a price of $1.31 until December 3, 2025, valued at $908,812 using the Black-Scholes option pricing model with the following assumptions: volatility of 103.14%, expected life of 5 years, discount rate of 0.41% and dividend rate of 0.0%. The warrants can be accelerated if the common shares trade at a 50% premium to the exercise price for a 10-day period. The Watershed Royalty was granted to Sanatana in connection with an asset purchase agreement between Sanatana and IAMGOLD Corporation (“IAMGOLD”), dated January 12, 2016, whereby IAMGOLD acquired a 100% interest in 46 mining claims in Chester and Yeo counties, Ontario. The Watershed Property surrounds the Cote Gold Project, which is a joint venture between IAMGOLD and Sumitomo Metal Mining Company. The Watershed Royalty is subject to a buy-down provision whereby the royalty rate can be reduced to 0.5% for a payment of $2,000,000 by IAMGOLD. Sanatana and the Company also signed a definitive agreement (the “Watershed Purchase Agreement”) where Sanatana assigned its rights and interest in the Watershed Purchase Agreement to the Company for $10,000. The Company also purchased 1,666,666 Sanatana common shares at a price of $0.30 per share through a non-brokered private placement. The Watershed Purchase Agreement provides for certain deferred payments to the Company as follows: (a) $1,500,000 upon a production decision by IAMGOLD on the

| 20 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(g)	Watershed Property (1% NSR royalty) (cont’d...)
---	---

Watershed Property; and (b) $1,500,000 upon the commencement of commercial production by IAMGOLD on the Watershed Property. In the event that either of the deferred payments are made to the Company, the Company will pay 50% of any such deferred payments to Sanatana.

(h)	Trenton (0.3% NSR royalty)

On December 23, 2020, the Company acquired a 0.3% gross royalty on 52 unpatented mining claims on the Battle Mountain-Eureka trend in Nevada from a private seller, for a total purchase price of US$325,000 in cash and 1,000,000 common share purchase warrants, each exercisable at a price of $1.36 until December 23, 2022, valued at $492,036 using the Black-Scholes option pricing model with the following assumptions: volatility of 86.67%, expected life of 2 years, discount rate of 0.20% and dividend rate of 0.0%. The Company was also assigned a stock purchase agreement, dated October 13, 2005 (the “2005 Agreement”) between the private seller and Nevada Mine Properties II. The 2005 Agreement provides for a 0.5% NSR royalty on several other properties.

(i)	Railroad-Pinion Property (0.44% NSR royalty)

On December 30, 2020, the Company completed the purchase of certain mineral interests and private fee ground in Elko County, Nevada (the “Mineral Interests”). All of the fee ground and the Mineral Interests are currently leased to Gold Standard Ventures Corp. (“GSV”) and cover certain portions of GSV’s Railroad-Pinion Project that is currently being developed as a heap-leach mining operation. The lease provides for a combined 0.436% NSR royalty and annual lease payments to the Company of US$79,800. The Company paid a total purchase price of US$1,300,000 in cash and issued 300,000 common share purchase warrants, each exercisable at a price of $1.15 until December 29, 2025, valued at $259,839 using the Black-Scholes option pricing model with the following assumptions: volatility of 101.37%, expected life of 5 years, discount rate of 0.41% and dividend rate of 0.0%. The Company also paid a US$65,000 cash finder’s fee.

On November 2, 2020, the Company also entered into purchase agreements with 11 other parties to acquire additional mineral interests and leases in the same area. These 11 other purchase agreements were terminated by the Company prior to closing, and the Company paid a US$134,000 cash break fee in connection with such termination.

(j)	Hog Ranch (2.25% NSR royalty)

On March 26, 2021, the Company acquired an additional 25% interest in its Hog Ranch Property, which will increase the Company’s NSR royalty from 1.5% to 2.25% and its interest in the leased mining claims to 75.1% As consideration, the Company paid US$275,000 and issued 1,000,000 warrants exercisable at $0.90 for a period of four years.

(k)	Jerritt Canyon (PTR Royalty)

On September 9, 2019, the Company entered into an agreement to acquire 100% of the rights and interests to a per ton royalty interest (the “PTR Interest”) on the Jerritt Canyon Processing Facilities by paying the owner a total cash consideration of US$650,000 and by issuing 500,000 common share purchase warrants. Each warrant entitles the holder to purchase one common share of the Company for a period of three years from the closing date at an exercise price of $0.18.

| 21 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(k)	Jerritt Canyon (PTR Royalty) (cont’d...)
---	---

The license agreement entitles the owner to receive a per ton royalty payment (the “PTR Payment”) based on overall throughput from mining operations at the Jerritt Canyon Processing Facilities with increasing PTR Payments at higher gold prices.

Royalties are calculated, in U.S. dollars, as follows:

●	$0.15<br> per ton if the gold price is less than or equal to $1,300 per ounce;
●	$0.225<br> per ton if the gold price is greater than $1,300, but less than or equal to $1,600 per ounce;
●	$0.30<br> per ton if the gold price is greater than $1,600, but less than or equal to $2,000 per ounce;<br> and
●	$0.40<br> per ton if the gold price is greater than $2,000 per ounce.

As consideration, the Company will make the following payments:

●	US$300,000<br> cash (paid) and issue 500,000 warrants valued at $106,518 (issued) at closing;
●	US$150,000<br> cash on the first anniversary of closing (paid);
●	US$150,000<br> cash on the second anniversary of closing (paid subsequent to June 30, 2021); and
●	US$50,000<br> cash on the third anniversary of closing.

(l)	Lincoln Hill Royalty (2.0% NSR royalty)

The Company acquired 100% of all rights and interests to a 1% NSR royalty on the Lincoln Hill Property, operated by Coeur Mining Inc. The Company has a right of first refusal if the seller disposes of an additional 1% royalty they currently hold.

On December 31, 2020, the Company acquired an additional 1% NSR royalty from a private family trust for US$1,000,000 cash and the issuance of 1,000,000 share purchase warrants valued at $398,187 using the Black-Scholes option pricing model with the following assumptions: volatility of 86.46%, expected life of 2 years, discount rate of 0.20% and dividend rate of 0.0%. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of $1.69 for a two-year period. This acquisition increases the Company’s Lincoln Hill royalty interest to a 2% NSR royalty.

(m)	Briggs Royalty

The Company completed the purchase of a 1.5% net smelter returns royalty on certain unpatented mining claims in Inyo County, California known as the Briggs Mine. The seller was a private corporation and the purchase price was US$600,000.

| 22 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

9.	ROYALTY ASSETS (cont’d...)
(n)	WR Royalty
---	---

During the six months ended June 30, 2021 the Company completed the acquisition of three NSR royalties from a prospector for US$350,000 cash (the “WR Royalty”). The WR Royalty package includes a 0.33% royalty on the Sleeper Mine, 1% royalty on 38 unpatented mining claims in Pershing County, Nevada, and a 1% royalty on 40 acres of free ground in White Pine County, Nevada.

The Sleeper Gold Project is a former high-grade open pit gold producer located approximately 25 miles northwest of the town of Winnemucca, Nevada, producing 1.66 million ounces of gold and 2.3 million ounces of silver. Paramount Gold Nevada Corp. (“Paramount”) acquired the Sleeper Mine in August 2010 and filed a NI 43-101 Standards of Disclosure for Mineral Projects technical report titled Amended Preliminary Economic Assessment, Metal Mining Consultants, September 2017. Highlights of the Sleeper Report include: low initial capital of $175 million for a 30,000 tonnes per day operation, estimated annual production of 102,000 ounces of gold and 105,000 ounces of silver.

The WR Royalty covers 38 unpatented mining claims on the Lincoln Hill and Gold Ridge properties currently owned by Coeur Mining Inc. (“Coeur”). The Lincoln Hill property is adjacent to Coeur’s Rochester Mine. The Company currently holds a 2% NSR on separate claims at Lincoln Hill where Coeur is currently undertaking development drilling. The Watershed claims are adjacent to the Company’s 2% Lincoln Hill Royalty property.

(o)	HNT and JAM lease

On March 26, 2020, the Company closed an agreement to purchase eight unpatented mining claims in Eureka County, Nevada. The claims are currently leased to a subsidiary of McEwen Mining Inc. (“McEwen Mining”) and the agreement includes an assignment of the leases to the Company. Under the terms of the agreement, the Company will purchase two HNT Claims and assume the corresponding lease and six JAM Claims and assume the corresponding lease. As consideration, the Company paid the seller US$125,000 at closing and will issue 100,000 share warrants to the seller. The warrants will expire two years from closing and each warrant will allow the seller to purchase one share of the Company’s common stock at a price of $0.77. The annual lease payment covering the HNT Claims is US$5,000 and the annual lease payment covering the JAM Claims is US$7,000. Both leases provide for a 2% NSR at current gold prices.

| 23 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

10.	MINERAL PROPERTY INTERESTS
(a)	Mineral property interests are as follows:
---	---
		Total
---	---	---	---
Balance, December 31, 2019	$	896,530
Acquisition costs		1,312,770
Option payments received		(533,716	)
Amounts transferred to royalty assets		(167,681	)
Cumulative translation adjustment		(44,040	)
Balance, December 31, 2020		1,463,863
Reclassification to royalty assets		(193,948	)
Option payments received		(429,959	)
Cumulative translation adjustment		(7,931	)
Balance, June 30, 2021	$	832,025
(b)	Option payments received:
---	---

The Company has entered into various agreements whereby it granted an option to acquire an interest on the Company’s properties with various companies. As a result of these agreements, the Company receives option payments related to these agreements on its properties. During the six months ended June 30, 2021 and 2020, the Company received the following option payments:

	June 30,		June 30,
	2021		2020
Cimarron Project	US$	25,000	US$	-
Frost Claims		15,000		-
HNT/Jam Claims		12,000		-
Hurricane		25,000		20,000
Monitor property		15,000		10,000
Musgrove Property		25,000		250,000
Nevada Rand		25,000		25,000
Spanish Moon		127,535		-
Tonopah West		325,000		325,000
Olympic		-		15,000
Pilot Mountain		-		40,000
Weepah Project		26,640		-
White Rock		25,000		10,000
	US$	646,175	US$	695,000

The Canadian value of the option proceeds was $800,035 (2020 - $947,851) of which $370,075 (2020 - $503,844) was recorded as revenue and $429,959 (2020 - $533,716) was recorded as a reduction of mineral interest.

| 24 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

10.	MINERAL PROPERTY INTERESTS (cont’d...)
(c)	Future option payments under agreement
---	---

	2021		^^	2022		^^	2023		2024		^^
Antelope Springs	US$	10,000	^^	US$	10,000	^^		US 10,000	US$	12,500	^^
Aurora West		50,000	^(5)^		135,000	^(5)^		200,000		-	^^
Butte Valley Project		50,000	^^		50,000	^^		50,000		-	^^
Castle West Project		40,000	^(6)^		40,000	^(6)^		40,000		105,000	^(6)^
Cimarron Property		25,000	^^		35,000	^^		50,000		45,000	^^
Frost Property		15,000	^^		25,000	^^		50,000		50,000	^^
Gilbert South		5,000	^^		10,000	^^		10,000		10,000	^^
Gold Canyon		150,000	^^		300,000	^^		35,000		35,000	^^
Green Springs		50,000	^^		50,000	^^		100,000		-	^^
Hurricane		25,000	^^		25,000	^^		25,000		25,000	^^
Liberty Springs		30,000	^^		30,000	^^		210,000		-	^^
Monitor property ^(2)^		15,000	^^		20,000	^^		25,000		50,000	^^
Mustang canyon		25,000	^^		50,000	^^		75,000		-	^^
Nevada Rand Project		25,000	^^		25,000	^^		150,000		-	^^
Olympic		25,000	^^		35,000	^^		35,000		40,000	^^
Redlich, Moho		300,000	^^		30,000	^(1)^		30,000		30,000	^^
Rodeo Creek		50,000	^^		125,000	^^		125,000		-	^^
Spanish Moon		50,000	^(8)^		75,000	^(8)^		125,000		250,000	^(8)^
Tonopah West ^(4)^		325,000	^^		650,000	^^		700,000		1,000,000	^^
War Eagle Property		30,000	^^		30,000	^^		70,000		5,000	^(1)^
Weepah Project ^(3)^		100,000	^(7)^		200,000	^(7)^		250,000		400,000	^(7)^
White Hill		15,000	^^		25,000	^^		45,000		75,000	^^
White Rock Property		25,000	^^		40,000	^^		50,000		125,000	^^
	US$	1,435,000	^^	US$	2,015,000	^^	US$	2,460,000	US$	2,257,500	^^

All values are in US Dollars.

^(1)^	As<br> of this date, the optionee made all its required option payments to acquire interest in the property and is now required to make<br> AMR payments.
^(2)^	The<br> optionee is required to make additional payments of US$50,000 during 2025, 2026 and 2027 and one final payment of US$400,000 in 2028.
^(3)^	In<br> addition to the above payments, the Company will also receive 100,000 shares of Eminent Gold Corp., the optionee, during 2021, 150,000<br> shares during 2022 and 200,000 shares during 2023.
^(4)^	The<br> US$1,000,000 is the last required payment for the optionee to acquire its interest in the property. Starting in 2025, the optionee<br> is required to make US$50,000 AMR payments every year thereafter.
^(5)^	The<br> Company is required to make payments of US$50,000 in 2021 and US$135,000 as option payments related to the Aurora West property,<br> which will be paid from the proceeds received.

| 25 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

10.	MINERAL PROPERTY INTERESTS (cont’d...)

(c)	Future option payments under agreement (cont’d...)
^(6)^	The<br> Company is required to make yearly payments of US$15,000 related to the Castle West property, which will be paid from the proceeds<br> received.
---	---
^(7)^	The<br> Company is required to make yearly payments of US$10,000 related to the Weepah project, which will be paid from the proceeds received.
^(8)^	In<br> addition to the above payments, the Company also received 150,000 shares of Eminent on signing and will receive 150,000, 200,000<br> and 250,000 on the first, second and third anniversaries, respectively, and will receive one final payment of $250,000 on the fourth<br> anniversary.
11.	PROMISSORY NOTE AND LOC
---	---

On November 29, 2019, the Company entered into an agreement with Sprott whereby Sprott provided the Company with a $6,000,000 LOC. The LOC was available to the Company, as and when required, until November 29, 2021. Principal outstanding under the LOC was subject to an interest rate at 10% per annum, with undrawn amounts of the LOC carrying a stand-by fee of 2.5% per annum, compounded monthly and payable quarterly. The LOC was secured by a registered security interest over all of the Company’s assets, subordinate only to existing prior encumbrances.

In connection with the LOC, the Company issued Sprott 16,216,215 non-transferrable loan bonus warrants (the “Bonus Warrants”) at the fair value of $0.20 per share, or $3,279,307, using the Black-Scholes option pricing model with the following assumptions: volatility of 95.45%, expected life of 2 years, discount rate of 1.60% and dividend rate of 0.0%. Each Bonus Warrant is exercisable, up to the maturity date of November 29, 2021, to purchase one common share of the Company at an exercise price of $0.37. Sprott agreed not to exercise the Bonus Warrants if such exercise would result in Sprott’s direct and indirect holdings of the Company’s outstanding voting shares being in excess of 19.9% based on the then-current outstanding shares of the Company.

Subsequent to June 30, 2021 the Company cancelled the line of credit and paid stand-by fee accrued to the day of cancellation of $18,082. Subsequent to June 30, 2021 all Bonus Warrants held by Sprott were exercised.

12.	LEASE OBLIGATION
Balance at December 31, 2019	$	54,120
---	---	---	---
Additions		91,555
Interest expense		8,131
Lease payments		(56,272	)
Currency translation adjustment		443
Balance, December 31, 2020		97,977
Interest expense		3,475
Lease payments		(27,802	)
Currency translation adjustment		(738	)
Balance, June 30, 2021	$	72,912
Which consists of:
Current lease liability	$	50,354
Non-current lease liability		22,558
	$	72,912

| 26 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

12.	LEASE OBLIGATION (cont’d...)

On July 1, 2017, the Company entered into a lease agreement for its Reno office for five years, expiring June 30, 2022. Pursuant to this lease, the Company is obligated to pay basic rent of US$1,308 and operating costs, including electricity and related taxes, on a monthly basis. The basic rent commitment will increase to US$1,347 per month for the second year, US$1,388 in the third year, US$1,430 in the fourth year and US$1,472 in the final year.

13.	SHARE CAPITAL AND RESERVES
(a)	Authorized share capital
---	---

As at June 30, 2021 and December 31, 2020, the authorized share capital of the Company is an unlimited number of common shares without par value.

(b)	Issued share capital
●	During<br> the six months ended June 30, 2021, the Company issued 2,249,518 common shares on exercise<br> of options and warrants for total proceeds of $1,058,714.
---	---
●	On<br> May 21, 2020, the Company closed a brokered private placement offering of 21,562,500 units<br> at a price of $0.80 per unit for gross proceeds of $17,250,000.

Each unit comprises one common share and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one additional common share at an exercise price of $1 for a period of three years from closing. The Company paid the agents cash commissions and issued compensation options to the agents entitling them to purchase an aggregate 731,250 common shares at an exercise price of $0.80 for a period of three years from closing. The agent options were valued at $618,044 using the Black-Scholes option pricing model. At the Company’s option, the original expiry date of the warrants may be accelerated if the volume weighted average price of the common shares is greater than or equal to $1.60 for a period of five consecutive trading days. If the Company elects to accelerate the expiry date of the warrants, holders of the warrants will have 30 calendar days to exercise their warrants after receiving notice via press release from the Company. The Company paid agent’s fees of $737,500 and incurred legal costs of $53,000 in relation to the placement.

●	On<br> May 12, 2020, the Company issued 12,698,413 shares as consideration for acquisition of a<br> 0.5% NSR royalty on the gold producing Jerritt Canyon Mine facility, located in Elko, Nevada.
●	On<br> September 22, 2020, the Company issued 100,000 shares as consideration for acquisition of<br> the Borden Lake royalty.
●	During<br> the year ended December 31, 2020, the Company issued 24,634,957 common shares on exercise<br> of warrants for total proceeds of $6,857,638.
●	During<br> the year ended December 31, 2020, the Company issued 1,675,000 common shares on exercise<br> of options for total proceeds of $384,000.

| 27 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

13.	SHARE CAPITAL AND RESERVES (cont’d...)
(c)	Stock options
---	---

The Company had an incentive stock option plan (the “Plan”) in place under which it is authorized to grant options to directors and employees to acquire up to 10% of the Company’s issued and outstanding common shares. In addition, the aggregate number of shares reserved for issuance to any one person shall not exceed 5% of the issued and outstanding shares (2% if the participant is a consultant). Under the Plan, the exercise price of each option may not be less than the market price of the Company’s share capital as calculated on the date of grant less the applicable discount. The options can be granted for a maximum term of 10 years and vesting periods are determined by the Board of Directors.

As at June 30, 2021 and December 31, 2020, the Company had outstanding stock options enabling the holders to acquire further common shares as follows:

Expiry Date	Exercise <br>Price
January 5, 2021	$	0.06	-	300,000
September 22, 2021	$	0.06	650,000	650,000
March 19, 2022	$	0.57	500,000	500,000
June 26, 2022	$	0.19	125,000	125,000
January 30, 2023	$	0.14	175,000	175,000
July 19, 2023	$	1.80	-	1,000,000
January 28, 2024	$	0.12	500,000	500,000
November 27, 2024	$	0.06	350,000	400,000
December 24, 2024	$	0.43	200,000	200,000
April 2, 2025	$	0.68	1,280,000	1,450,000
August 18, 2026	$	0.15	900,000	900,000
June 19, 2027	$	0.125	500,000	500,000
November 22, 2027	$	0.10	1,275,000	1,275,000
July 26, 2029	$	0.27	1,700,000	2,000,000
Total outstanding			8,155,000	9,975,000
Total exercisable			8,155,000	9,875,000

The weighted average remaining contractual life for the outstanding options at June 30, 2021 is 4.6 (December 31, 2020 - 4.86) years.

Stock option transactions are summarized as follows:

	June 30, 2021					December 31, 2020
				Weighted					Weighted
				Average					Average
	Number			Exercise		Number			Exercise
	of Options			Price		of Options			Price
Balance, beginning of period		9,975,000		$	0.27		8,250,000		$	0.15
Granted		-		$	0.00		3,400,000		$	0.64
Expired / cancelled/ forfeited		(1,000,000	)	$	1.80		-		$	-
Exercised		(820,000	)	$	0.27		(1,675,000	)	$	0.23
Options exercisable, end of period		8,155,000		$	0.44		9,975,000		$	0.27

| 28 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

13.	SHARE CAPITAL AND RESERVES (cont’d...)
(c)	Stock options (cont’d...)
---	---

Subsequent to June 30, 2021, all outstanding options were exercised on a cashless basis as part of the Plan of Arrangement. The Plan was terminated on August 23, 2021.

(d)	Warrants

As at June 30, 2021 and December 31, 2020, the following share purchase warrants were outstanding:

Expiry Date	Exercise <br>Price
November 29, 2021	$	0.37	12,216,215	12,216,215
December 2, 2021	$	0.78	600,000	600,000
December 18, 2021	$	0.43	-	900,000
February 4, 2022	$	0.77	100,000	100,000
May 11, 2022	$	0.62	1,905,163	1,905,163
June 1, 2022	$	0.18	500,000	500,000
December 23, 2022	$	1.36	1,000,000	1,000,000
December 31, 2022	$	1.69	1,000,000	1,000,000
May 22, 2023	$	0.90	10,542,680	11,072,198
March 15, 2025	$	0.90	1,000,000	-
May 28, 2025	$	1.37	130,000	130,000
December 3, 2025	$	1.31	1,000,000	1,000,000
December 29, 2025	$	1.15	300,000	300,000
Total			30,294,058	30,723,576

On March 15, 2021, the Company issued 1,000,000 warrants relating to the Hog Ranch acquisition. Each share purchase warrant is exercisable to purchase one common share of the Company for $0.90 until March 15, 2025. The fair value of $706,828 is included as acquisition cost of royalty assets.

| 29 |

| --- |

ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

13.	SHARE CAPITAL AND RESERVES (cont’d...)
(d)	Warrants (cont’d...)
---	---

Share purchase warrant transactions are summarized as follows:

	June 30, 2021					December 31, 2020
				Weighted					Weighted
				Average					Average
	Number			Exercise		Number			Exercise
	of Warrants			Price		of Warrants			Price
Balance, beginning of period		30,723,576		$	0.65		35,410,869		$	0.29
Issued		1,000,000		$	0.90		19,947,664		$	0.86
Exercised		(1,429,518	)	$	0.43		(24,634,957	)	$	0.28
Balance, end of period		30,294,058		$	0.74		30,723,576		$	0.65

As at June 30, 2021, the weighted average remaining contractual life for the outstanding warrants is 1.57 (December 31, 2020 - 1.48) years.

The fair values of stock options and warrants are estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	June 30, 2021						December 31, 2020
	Options			Warrants			Option			Warrants
Risk-free interest rate		0.48	%		0.76	%		0.42	%		0.29	%
Expected dividend yield		0.00			0.00			0.00			0.00
Expected stock price volatility		86.60	%		95.10	%		105.77			92.52	%
Expected life in years		1.68			4.00			3.49			3.00
Weighted average fair value	$	0.43		$	0.71		$	0.66		$	0.62

Under the Plan of Arrangement, each of the Ely Warrant that were outstanding immediately prior to August 23, 2021 represent the right to acquire, on valid exercise thereof (including payment of the applicable exercise price), 0.2450 of a GRC share plus $0.0001. The expiration date of the Ely Warrant does not change.

| 30 |

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ELYGOLD ROYALTIES INC.

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited

Expressed in Canadian Dollars)

14.	RELATED PARTY TRANSACTIONS

	June 30,		June 30,
	2021		2020
Short-term employment benefits	$	332,572	$	607,266
Share-based payments		-		705,141
Total	$	332,572	$	1,312,407

As at June 30, 2021, $15,493 (December 31, 2020 - $569,654) is owing to directors and officers of the Company, which is included in accounts payable and accrued liabilities. A prepaid advance of $15,718 (December 31, 2020 - $2,546) was made to an officer and director of the Company.

All other amounts due to related parties are payable on demand. Interest is not charged on outstanding balances.

The Company has in place termination clause agreements with officers and directors, whereby the officers and directors are entitled to a lump sum payment in the event there is a change of control. Under the Plan of Arrangement, the Company paid change of control payments to certain officers of US$2,850,000 and $90,000 on August 23, 2021.

15.	SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
	June 30, <br>2021		June 30, <br>2020
---	---	---	---	---
Significant non-cash investing activities consisted of:
Shares issued for acquisition of Jerritt Canyon Royalty	$	-	$	11,301,588
Accounts payable settled with gold coins	$	120,642	$	-
Fair value of warrants issued for mineral and royalty interests	$	706,828	$	2,363,279
Interest paid	$	81,824	$	213,977
Income taxes paid	$	-	$	-
16.	SEGMENT INFORMATION
---	---

The Company has one reportable operating segment, the acquisition and exploration of mineral properties and option of those assets, in one geographic location: North America.

17.	EVENTS AFTER THE REPORTING PERIOD
a)	Subsequent<br> to June 30, 2021, the Company issued 14,347,326 common shares on exercise of warrants for<br> total proceeds of $6,337,686.
---	---
b)	On<br> August 23, 2021 the business combination between GRC and the Company was completed by way<br> of a Plan of Arrangement (Note 1).

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Exhibit99.4

AuditedConsolidated Financial Statements

Forthe Years Ended December 31, 2020 and 2019

(Expressedin Canadian Dollars)

| 1 |

| --- |

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Abitibi Royalties Inc.

Opinion

We have audited the accompanying consolidated financial statements of Abitibi Royalties Inc., which comprise the consolidated statements of financial position as at December 31 2020 and December 31, 2019, and the related consolidated statements of net income, statement of comprehensive income, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements including a summary of significant accounting policies.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Abitibi Royalties Inc. as of December 31 2020 and December 31, 2019, and consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basisfor Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 required to be independent of Abitibi Royalties Inc. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilitiesof Management for the consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Abitibi Royalties Inc. ’s ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.

Auditor’sResponsibilities for the Audit of the 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 absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. 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. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

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In performing an audit in accordance with generally accepted auditing standards, we:

●	Exercise professional judgment and maintain professional skepticism<br>throughout the audit.
●	Identify and assess the risks of material misstatement of the<br>consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.<br>Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
---	---
●	Obtain an understanding of internal control relevant to the<br>audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion<br>on the effectiveness of Abitibi Royalties Inc. ’s internal control. Accordingly, no such opinion is expressed.
---	---
●	Evaluate the appropriateness of accounting policies used and<br>the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial<br>statements.
---	---
●	Conclude whether, in our judgment, there are conditions or<br>events, considered in the aggregate, that raise substantial doubt about Abitibi Royalties Inc. ’s ability to continue as a going<br>concern for a reasonable period of time.
---	---

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

/s/ MNP LLP

Ottawa, Ontario

January 5, 2022

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ABITIBIROYALTIES INC.

ConsolidatedStatements of Financial Position

(Expressed in Canadian Dollars)

			As at		As at
			December 31,		December 31,
	Notes		2020		2019
ASSETS
Current
Cash			$	12,998,678	$	2,457,178
Restricted cash		9		385,415		-
Royalty receivable		8		425,180		999,252
Other receivables		6		108,926		54,924
Prepaid expenses				41,152		14,397
Total current assets				13,959,351		3,525,751
Non-current
Exploration and evaluation assets		7		151,701		-
Investments		9		49,501,916		50,636,738
TOTAL ASSETS			$	63,612,968	$	54,162,489
LIABILITIES
Current
Accounts payable and accrued liabilities		16	$	727,968	$	361,314
Income taxes payable		11		2,464,798		-
Derivative financial instruments		10		4,243,318		8,979,047
Total current liabilities				7,436,084		9,340,361
Non-current
Deferred tax liabilities		11		2,693,658		3,245,785
Total Liabilities				10,129,742		12,586,146
EQUITY
Capital stock		12		11,751,929		11,797,244
Retained earnings				41,731,297		29,779,099
Total Equity				53,483,226		41,576,343
TOTAL LIABILITIES AND EQUITY			$	63,612,968	$	54,162,489

Commitments (note 20)

Subsequent events (note 21)

“David Garofalo”	“Josephine Man”
(signed<br> David Garofalo)	(signed<br> Josephine Man)
Director	Director

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

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ABITIBIROYALTIES INC.

ConsolidatedStatements of Net Income and Comprehensive Income

(Expressed in Canadian Dollars)

			For the year ended December 31,
	Notes		2020			2019
Revenues
Royalties		8	$	685,698		$	3,037,260
Dividends				639,938			437,418
Mining option revenue		7		48,684			-
				1,374,320			3,474,678
Operating expenses
Salaries and employee benefits		16		1,587,507			1,260,375
Professional fees		14		559,351			549,280
Office expenses				88,786			78,070
Advertising and promotion				15,295			33,617
Travel and transport				8,028			44,024
Royalty interests		8		37,701			550
				2,296,668			1,965,916
Operating income (loss)				(922,348	)		1,508,762
Other income (costs)
Change in fair value of investments				7,150,480			16,942,272
Change in fair value of derivatives				7,881,792			(5,495,670	)
Change in fair value of derivatives resulting from foreign exchange				383,345			249,059
Foreign exchange gain (loss)				2,153,552			(76,625	)
Commissions				(120,154	)		(62,843	)
Interest expense				(3,804	)		(2,231	)
Interest income				71,375			10,189
				17,516,586			11,564,151
Net income before income tax				16,594,238			13,072,913
Current tax expense		11		2,464,798			-
Deferred tax expense (recovery)		11		(552,127	)		1,813,320
Income tax expense				1,912,671			1,813,320
Net income and comprehensive income for the year			$	14,681,567		$	11,259,593
Earnings per share
Basic		15	$	1.17		$	0.90
Diluted		15	$	1.17		$	0.90
Weighted average number of common shares
outstanding
Basic		15		12,497,653			12,513,118
Diluted		15		12,497,653			12,513,118

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

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ABITIBIROYALTIES INC.

ConsolidatedStatements of Changes in Equity

(Expressed in Canadian Dollars)

				Capital Stock			Contributed<br> <br>Surplus			Retained<br> <br>earnings			Total Equity
Balance as at January 1, 2020		12,522,411		$	11,797,244		$	-		$	29,779,099		$	41,576,343
Common shares repurchased and cancelled	12	(48,100	)		(45,315	)		-			(948,736	)		(994,051	)
Dividends paid	12	-			-			-			(1,780,633	)		(1,780,633	)
Net income and total comprehensive income		-			-			-			14,681,567			14,681,567
Balance as at December 31, 2020		12,474,311		$	11,751,929		$	-		$	41,731,297		$	53,483,226
Balance as at January 1, 2019		12,502,340		$	11,460,462		$	166,704		$	19,993,225		$	31,620,391
Common shares issued on exercise of options	12	81,171			393,417			(166,704	)		-			226,713
Common shares repurchased and cancelled		(61,100	)		(56,635	)		-			(722,014	)		(778,649	)
Dividends paid	12	-			-			-			(751,705	)		(751,705	)
Net income and total comprehensive income		-			-			-			11,259,593			11,259,593
Balance as at December 31, 2019		12,522,411		$	11,797,244		$	-		$	29,779,099		$	41,576,343

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

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ABITIBIROYALTIES INC.

ConsolidatedStatements of Cash Flows

(Expressed in Canadian Dollars)

			For the year ended December 31,
	Notes		2020			2019
OPERATING ACTIVITIES
Net income for the year			$	14,681,567		$	11,259,593
Adjustment:
Change in fair value of investments				(7,150,480	)		(16,942,272	)
Change in fair value of derivatives				(8,265,137	)		5,246,611
Option revenue				(48,684	)		-
Royalty interests				37,701			550
Deferred tax expense		11		(552,127	)		1,813,320
Foreign exchange loss				429,173			76,625
Changes in working capital items:
Royalty receivable				574,072			(985,147	)
Other receivables				(29,002	)		(13,594	)
Prepaid expenses				(26,755	)		(2,397	)
Accounts payable and accrued liabilities				366,654			(70,724	)
Income taxes payable				2,464,798			-
Cash flows from operating activities				2,481,780			382,565
INVESTING ACTIVITIES
Proceeds from settlement of derivative financial instruments		9		31,770,315			781,613
Payment on settlement of derivative financial instruments		9		(23,566,713	)		-
Proceeds from sale of derivative financial instruments				3,582,525			1,267,608
Repurchase of derivative financial instruments				(53,116	)		(131,050	)
Increase in restricted cash				(385,415	)		-
Additions to investments				(484,624	)		(202,671	)
Acquisition of royalty interests				(37,701	)		(550	)
Proceeds from sale of other investments				638,825			50,418
Proceeds from mining option agreement				50,000			-
Acquisition of exploration and evaluation assets				(250,519	)		-
Cash flows from investing activities				11,263,577			1,765,368
FINANCING ACTIVITIES
Issuance of capital stock				-			226,713
Dividends paid				(1,780,633	)		(751,705	)
Capital stock repurchased and cancelled				(994,051	)		(778,649	)
Cash flows used by financing activities				(2,774,684	)		(1,303,641	)
Effect of foreign exchange rate changes on cash				(429,173	)		(76,625	)
Net increase in cash				10,541,500			767,667
Cash, beginning of year				2,457,178			1,689,511
Cash, end of year			$	12,998,678		$	2,457,178
Additional cash flow information
Cash transactions:
Interest received related to operating activities:			$	71,375		$	10,189
Dividends received related to investing activities:				614,306			416,339
Royalties received related to operating activities:				1,259,770			2,052,918

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

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

1)NATURE OF OPERATIONS

Abitibi Royalties Inc. (the “Company”) and its subsidiary are engaged in building a royalty company by acquiring royalties and by exploring, evaluating and promoting its mineral properties and other projects.

The Company was incorporated on February 18, 2010 under the Business Corporations Act of British Columbia.

The Company has a wholly-owned subsidiary, Abitibi Royalties (USA) Inc. (“Abitibi USA”), incorporated in the State of Nevada, USA on August 25, 2020. Abitibi USA’s principal office is located at 5441 Kietzke Lane, Reno, Nevada USA 89511.

As at December 31, 2020, Golden Valley Mines and Royalties Ltd., formerly Golden Valley Mines Ltd., (“Golden Valley”), a controlling shareholder, held a 44.93% (December 31, 2019 – 44.76%) interest in the Company.

As a result of the business combination completed on November 5, 2021 (see Note 21 “Subsequent Events”), the Company became a wholly-owned subsidiary of Gold Royalty Corp. (“Gold Royalty”), a company incorporated and domiciled in Canada with common shares and common share purchase warrants listed on the NYSE American under the symbols “GROY” and “GROY.WS”, respectively. An application was made for the Company to cease to be reporting issuers under applicable Canadian securities laws and to otherwise terminate the Company’s public reporting requirements, which application was accepted on November 22, 2021. Furthermore, the location of the registered office of the Company changed to 1000 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2, Canada. Similarly, the location of the principal address of the Company changed to 1030 West Georgia Street, Suite 1830, Vancouver, British Columbia, V6E 2Y3, Canada.

2)BASIS OF PRESENTATION

Statementof compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and have been prepared using the historical cost convention, as modified by revaluation of certain financial instruments, which are measured in accordance with the policy described in note 4. Accounting policies are consistently applied to all years presented, unless otherwise stated.

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company`s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 5.

Even though the Company holds significant investments in other entities, it does not qualify as an investment entity under IFRS 10 “ConsolidatedFinancial Statements”.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

2)BASIS OF PRESENTATION (continued)

Subsidiaries

These consolidated financial statements include the accounts of Abitibi Royalties Inc and its wholly-owned subsidiary, Abitibi Royalties (USA) Inc. Subsidiaries are consolidated where the Company has the ability to exercise control. Control of an investee exists when the Company is exposed to variable returns from the Company’s involvement with the investee and has the ability to affect those returns through its power over the investee. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the elements of control. All intercompany balances, transactions, income and expenses and gains or losses have been eliminated on consolidation.

Approvalof Financial Statements

These financial statements were approved for issuance by the Board of Directors on January 5, 2022.

3)ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE

At the date of authorization of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Company.

Management anticipates that all of the pronouncements will be adopted in the Company’s accounting policy for the first period beginning after the effective date of each pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial statements.

In May 2020, the IASB issued a package of narrow-scope amendments to three standards (IFRS 3 “Business Combinations”, IAS 16 “Property, Plant and Equipment” and IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”) as well as the IASB’s Annual Improvements to IFRS Standards 2018 - 2020. These amendments to existing IFRS standards are to clarify guidance and wording, or to correct for relatively minor unintended consequences, conflicts or oversights. These amendments are effective for annual periods beginning on or after January 1, 2022. The Company is assessing the potential impact of these narrow-scope amendments.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been applied in the preparation of these financial statements are summarized below.

a)Accounting standards issued and in effect during the year

IAS1 “Presentation of Financial Statements” (“IAS 1”)

IAS 1 sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.

IAS 1 has been revised to incorporate a new definition of “material” and IAS 8 Accounting Policies, Changes in AccountingEstimates and Errors (“IAS 8”) has been revised to refer to this new definition in IAS 1. The amendments are effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

On January 1, 2020, the Company adopted IAS 1 and concluded that, based on its current operations, the adoption of IAS 1 had no significant impact on the Company’s financial statements.

IAS8 Accounting Policies, Changes in Accounting Estimates and Errors (“IAS 8”)

IAS 8 is applied in selecting and applying accounting policies, accounting for changes in estimates and reflecting corrections of prior period errors. The standard requires compliance with any specific IAS applying to a transaction, event or condition, and provides guidance on developing accounting policies for other items that result in relevant and reliable information. Changes in accounting policies and corrections of errors are generally retrospectively accounted for, whereas changes in accounting estimates are generally accounted for on a prospective basis. The amendment is effective for annual reporting periods beginning on or after January 1, 2020. Earlier application is permitted.

On January 1, 2020, the Company adopted IAS 8 and concluded that, based on its current operations, the adoption of IAS 8 had no significant impact on the Company’s financial statements.

**b)Foreign currency translation

Functionaland presentation currency

These financial statements are presented in Canadian dollars, which is the Company and the subsidiary’s functional currency.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreigncurrency transactions and balances

Foreign currency transactions are translated into the functional currency, using the exchange rates prevailing at the dates of the transactions (spot exchange rates), except for sales and repurchases of option contracts which are translated at average rates of exchange prevailing during the period, which materially approximate the exchange rates on the transaction dates. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items denominated in foreign currency at year-end exchange rates recognized in profit or loss.

Non-monetary items are not re-translated at year-end and are measured at historical cost (translated using the exchange rates at the transaction date), except for non-monetary items measured at fair value which are translated using the exchange rates at the dates when fair value was determined.

c)Revenue recognition

Revenue comprises the fair value of the consideration received or receivable arising from the use by others of the Company’s assets yielding royalties, interest, dividends and option income when the amount received from mining option agreements exceeds the carrying costs of mineral properties under option. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and when the specific criteria have been met for each of the Company’s activities as described below.

Royalties

Royalties consist of revenues earned directly from royalty agreements. Revenue recognition generally occurs in the month of production from the royalty property. Revenue is measured at fair value of the consideration received or receivable when management can reliably estimate the amounts pursuant to the terms of the royalty agreement. In some instances, the Company will not have access to sufficient information to make a reasonable estimate of revenue and accordingly, revenue recognition is deferred.

Dividends

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably).

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Optionincome

Option income is recognized on an accrual basis in accordance with the substance of the relevant agreements. Shares received under option agreements are valued at fair value which is determined at quoted market prices if the shares are quoted on an active market. If the market for the shares is not active, fair value is established by using a valuation technique. Option income is initially recorded as a credit against the carrying costs of the mineral property and deferred exploration expenses until they are fully recovered.

d)Cash and restricted cash

Cash is comprised of cash in bank and demand deposits, which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

Restricted cash relates to funds held as collateral on the put option contracts referred to in the derivative

financial instruments section below. The funds will become unrestricted once the put option contracts are exercised, repurchased or expired.

e)Royalty interests

Royalty interests consist of acquired net smelter returns on exploration and evaluation stage properties. Royalty interests for exploration and evaluation assets are recorded at cost and capitalized in accordance with IFRS 6 “Exploration for and Evaluation of Mineral Resources” (“IFRS 6”). Acquisition costs of exploration and evaluation royalty interests are capitalized and are not depleted until such time as revenue generating activities begin. Royalty interests for exploration and evaluation assets are assessed for impairment in accordance with IFRS 6 and are measured for any impairment in accordance with IAS 36 “Impairment of Assets” (“IAS 36”). An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. An interest that has previously been classified as exploration and evaluation is also assessed for impairment before reclassification to development or production, and the impairment loss, if any, is recognized in net income.

f)Exploration and evaluation expenditures and exploration and evaluation assets

Exploration and evaluation expenditures are costs incurred in the course of initial search for mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Costs incurred before the legal right to undertake exploration and evaluation activities are recognized in profit or loss when they are incurred.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Explorationand evaluation expenditures and exploration and evaluation assets (continued)

Once the legal right to undertake exploration and evaluation activities has been obtained, all costs of acquiring mineral rights or options to acquire such rights (option agreement), expenses related to the exploration and evaluation of mining properties, less refundable tax credits related to these expenses, are recognized as exploration and evaluation assets. Expenses related to exploration and evaluation include topographical, geological, geochemical and geophysical studies, exploration drilling, trenching, sampling and other costs related to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource. The various costs are capitalized on a property-by-property basis pending determination of the technical feasibility and commercial viability of extracting a mineral resource. These assets are recognized as intangible assets and are carried at cost less any accumulated impairment losses. No depreciation expenses are recognized for these assets during the exploration and evaluation phase.

Whenever a mining property is considered no longer viable, or is abandoned, the capitalized amounts are written down to their recoverable amounts. The difference is then immediately recognized in profit or loss.

When technical feasibility and commercial viability of extracting a mineral resource are demonstrable, exploration and evaluation assets related to the mining property are transferred to property and equipment in Mining assets under construction. Before the reclassification, exploration and evaluation assets are tested for impairment and any impairment loss is recognized in profit or loss before reclassification.

Although the Company has taken steps to verify title to the mining properties in which it holds an interest in accordance with industry practices for the current stage of exploration and development of such properties, these procedures do not guarantee the validity of the Company’s titles. Title to property may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

To date, neither the technical feasibility nor the commercial viability of extracting a mineral resource has been demonstrated.

Impairmentof exploration and evaluation assets

For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at a cash-generating unit level. Whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, an asset or cash-generating unit is reviewed for impairment.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairmentof exploration and evaluation assets (continued)

Impairment reviews for exploration and evaluation assets are carried out on a project-by-project basis, with each project representing a potential single cash-generating unit. An impairment review is undertaken when indicators of impairment arise, but typically when one of the following circumstances apply:

a)	the right to explore the areas has expired or will expire in<br>the near future with no expectation of renewal;
b)	no further exploration or evaluation expenditures in the areas<br>are planned or budgeted;
c)	no commercially viable deposits have been discovered, and the<br>decision has been made to discontinue exploration in the area;
d)	sufficient work has been performed to indicate that the carrying<br>amount of the expenditure carried as an asset will not be fully recovered.

An impairment loss is recognized in profit or loss for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less cost to sell and its value in use. An impairment loss is reversed if the asset’s or cash-generating unit’s recoverable amount exceeds its carrying amount. The amount of such reversal is limited to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss previously been recognized.

g)Provisions

Provisions are recognized when present legal or constructive obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant.

The Company’s operations are governed by government environment protection legislation. Environmental consequences are difficult to identify in terms of amounts, timetable and impact.

As of the reporting date, management believes that the Company’s operations are in compliance with the current laws and regulations. Site restoration costs currently incurred are negligible.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Provisions(continued)

When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated, a restoration provision will be recognized in the cost of the mining property when there is constructive commitment that has resulted from past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be measured with sufficient reliability. No liability is recognized if an outflow of economic resources as a result of present obligations is not probable. Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. At December 31, 2020 and 2019, there is no provision in the consolidated statement of financial position.

h)Financial Instruments

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset is derecognized when its contractual rights to the cash flows that compose the financial asset expire or substantially all the risks and rewards of the asset are transferred. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Gains and losses on derecognition are recognized within financing income and financing expense, respectively. Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is an unconditional and legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Classification

Financial Assets/Liabilities	Classification
Cash	Financial<br> Asset at amortized cost
Restricted<br> cash	Financial<br> Asset at amortized cost
Royalty<br> and other receivables	Financial<br> Asset at amortized cost
Investments	Fair<br>value through profit and loss (“FVTPL”)
Accounts<br> payable and accrued liabilities	Financial<br>Liabilities at amortized cost
Derivative<br> financial instruments	FVTPL

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

h)Financial Instruments (continued)

Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them at fair value through other comprehensive income (“FVTOCI”). Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL.

Measurement

Financialassets and liabilities at amortized cost

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

Financialassets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of net income (loss) and comprehensive income (loss). Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of net income (loss) and comprehensive income (loss) in the period in which they arise. Where Company has opted to recognize a financial liability at FVTPL, any changes associated with the Company’s own credit risk will be recognized in other comprehensive income (loss).

Impairmentof financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to twelve month expected credit losses. The Company recognizes in the statements of net income (loss), as an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

Given the Company transacts exclusively with large international financial institutions and other organizations with strong credit ratings and the negligible historical level of dividends default, the loss allowance was $nil as at December 31, 2020 and 2019.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

i)Income taxes

Tax expense recognized in profit or loss comprises the sum of deferred and current tax not recognized in other comprehensive income or directly in equity.

Current tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and laws that have been enacted or substantively enacted by the end of the reporting period. The Company periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and associates is not provided if reversal of these temporary differences can be controlled by the Company and it is probable that the reversal will occur in the foreseeable future.

Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income.

Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognized as deferred tax expense in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

j)Equity

Capitalstock

Capital stock represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. If shares are issued when stock options and warrants are exercised, the capital stock account also comprised the compensation costs previously recorded as contributed surplus. In addition, if shares were issued as consideration for the acquisition of a mineral property or some other form of non-monetary assets, they are measured at their fair value according to the quoted price on the day of the conclusion of the agreement.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Unitplacements

Proceeds from unit placements are allocated between shares and warrants issued using the residual method. Proceeds are first allocated to shares according to the quoted price of existing shares at the time of issuance and any residual in the proceeds is allocated to warrants.

Otherelements of equity

Contributed surplus includes charges related to stock options and warrants until such stock options and warrants are exercised.

Retained earnings include all current and prior period retained profits and losses.

Purchasefor cancellation

When shares are purchased for cancellation, the carrying amount of the shares is recognized as a deduction of share capital. The difference between the purchase price and the carrying amount is charged to contributed surplus and then to retained earnings for any amounts in excess of total contributed surplus related to shares repurchased.

k)Share based remuneration

Stockoptions plan

The Company operates an equity-settled share-based payment plan for its eligible directors, officers, and employees. The Company’s plan does not feature any options for a cash settlement.

All goods and services received in exchange for the grant of any share-based payments are measured at their fair values, unless that fair value cannot be estimated reliably. If the Company cannot estimate reliably the fair value of the goods or services received, the Company measures their value indirectly by reference to the fair value of the equity instruments granted. For the transactions with employees and others providing similar services, the Company measures the fair value of the services received by reference to the fair value of the equity instruments granted.

All equity-settled share-based payments (except equity-settled share-based payments to brokers) are ultimately recognized as an expense in the profit or loss or capitalized as an exploration and evaluation asset, depending on the nature of the payment with a corresponding credit to contributed surplus, in equity. Equity-settled share-based payments to brokers, in respect of an equity financing are recognized as issuance costs of the equity instruments with a corresponding credit to contributed surplus, in equity.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

k)Stock option plan (continued)

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of stock options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of stock options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior period if stock options ultimately exercised are different to that estimated on vesting.

Upon exercise of stock options, the proceeds received net of any directly attributable transaction costs are recorded as capital stock. The accumulated charges related to the stock options recorded in contributed surplus are then transferred to capital stock.

l)Basic and diluted earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common equity holders of the Company by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive share equivalents, such as stock options warrants and restricted share units.

When a loss is incurred during a period, basic and diluted loss per share are the same because the exercise of share equivalents is then considered to be anti-dilutive.

To determine the dilutive impact of stock options, the Company uses the Treasury Stock Method which assumes that any proceeds from the exercise of in-the-money stock options would be used to purchase the maximum number of common shares of the Company at the average market price during the period. The assumption of exercise is not reflected in the calculation of earnings per share when the exercise price of the share equivalents considered individually exceeds the average market price for the period.

m)Segmental reporting

The Company presents and discloses segmental information based on information that is regularly reviewed by the Chief Executive Officer and the Board of Directors. The allocation of resources between the different operating segments and the assessment of the performance of the operating segments is the responsibility of the Chief Executive Officer.

The Company has determined that it has only one operating segment: the acquisition and management of royalties.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS

When preparing the financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.

a)Significant management judgments

The following are significant management judgements in applying the accounting policies of the Company that have the most significant effect on the financial statements.

Uncertaintydue to COVID-19

The duration and full financial effect of the COVID-19 pandemic is unknown at this time, as are the measures taken by governments, companies and others to attempt to reduce the spread of COVID-19. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 may materially and adversely affect the Company’s operations, financial results and condition in future periods are also subject to significant uncertainty. In properties where the Company holds royalty interests, there has been temporary operational restrictions due to the ongoing COVID-19 pandemic, including operations being previously placed under care and maintenance and thereafter the resumption of mining activities.

In the current environment, the assumptions and judgements made by the Company are subject to greater variability than normal, which could in the future significantly affect judgments, estimates and assumptions made by management as they relate to potential impact of the COVID-19 and could lead to a material adjustment to the carrying value of the assets or liabilities affected. The impact of current uncertainty on judgments, estimates and assumptions extends, but is not limited to, the Company’s valuation of its long-term assets, including the assessment for impairment and impairment reversal. Actual results may differ materially from these estimates

Classificationof financial instruments

All financial assets are classified in one of the following categories: fair value through profit or loss or financial assets at amortized costs. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets upon initial recognition.

Recognitionof deferred tax assets and measurement of income tax expense

Management continually evaluates the likelihood that its deferred tax assets could be realized. This requires management to assess whether it is probable that sufficient taxable income will exist in the future to utilize these losses within the carry-forward period. By its nature, this assessment requires significant judgement.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Functionalcurrency

These financial statements are presented in Canadian dollars, which is the Company and subsidiary’s functional currency. The determination of functional currency is determined based on management’s assessment of the economic environment in which it operates.

b)Estimation uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses is provided below. Actual results may be substantially different.

Impairmentof exploration and evaluation assets

Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgement and a number of estimates and interpretations in many cases.

When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset or the cash-generating units must be estimated. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash-generating unit to which the asset belongs must be determined.

In assessing impairment, the Company must make some estimates and assumptions regarding future circumstances, in particular, whether an economically viable extraction operation can be established, the probability that the expenses will be recovered from either exploitation or sale when the activities have not reached a stage that permits a reasonable assessment of the existence of reserves, the Company’s capacity to obtain financial resources necessary to complete the evaluation and development and to renew permits. Estimates and assumptions may change if new information becomes available. If, after expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in profit or loss in the period when the new information becomes available.

No impairment loss of the exploration and evaluation assets has been recognized in profit or loss in the year ended December 31, 2020 and 2019. No reversal of impairment losses has been recognized for the reporting periods.

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| --- |

ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Impairmentof royalty interests

The assessment of the fair values of royalty interests requires the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, mineral reserve/resource conversion, foreign exchange rates, future capital expansion plans and the associated production implications. These estimates and assumptions are, by their very nature, subject to interpretation and uncertainty. Changes in any of these estimates and assumptions, which certain estimates and assumptions are provided by the operators of the properties, used in determining the fair value of the royalty interests could impact the impairment analysis.

Share-basedpayments

The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has made estimates as to the expected volatility, the probable life of share options granted and the time of exercise of those share options. The model used by the Company is the Black-Scholes valuation model.

6)OTHER RECEIVABLES

	As<br> at		As at
	December<br> 31,		December 31,
	2020		2019
Dividend receivable	$	70,361		44,729
Mining option receivable (note<br> 7)		25,000		-
Sales taxes recoverable		13,565		10,195
	$	108,926	$	54,924

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

7)EXPLORATION AND EVALUATION ASSETS

The change in Exploration and Evaluation Assets for the years ended December 31, 2020 and 2019 is as follows:

	As<br> at							As<br> at			As<br> at
	January<br> 1,							December<br> 31,			December<br> 31,
Description	2020		Additions		Credits			2020			2019
Acquisition<br> and claims maintenance	$	-		241,959		-		$	241,959		$	-
Program<br> management and consultants		-		8,558		-			8,558			-
Option<br> payment received		-		-		(147,500	)		(147,500	)		-
		-		250,517		(147,500	)		103,017
Option<br> revenue									48,684
								$	151,701		$	-

The following table summarizes the carrying values of Exploration and Evaluations Assets by properties

as at December 31, 2020 and 2019:

	As<br> at		As at
Description	December<br> 31, 2020		December<br> 31, 2019
Bathurst Property	$	75,000	$	-
Hees Property		75,000		-
Bullfrog<br> South Property		1,701		-
	$	151,701	$	-

Bathurstproperty

On November 9, 2020, the Company entered into an agreement with two arm’s length parties to acquire the Bathurst property, a property consisting of 7 claims located in Ontario, for the purchase price of $75,000. Pursuant to the agreement, the Company also granted a 0.5% NSR royalty on the property.

Subsequent to year-end, on February 4, 2021, Abitibi Royalties signed an option agreement with Xplore Resources Corp. (“Xplore”) on the property. Xplore may earn a 100% interest in the project by completing the following: (a) Execution of Letter of Intent (“LOI”): Issue to Abitibi Royalties $62,500 in common shares of Xplore based on the daily volume weighted average (the “VWAP”) price of Xplore’s shares for the 14-day period preceding the execution of the LOI; and, issuance to Abitibi Royalties $125,000 in common shares of Xplore based on the VWAP price of Xplore’s shares for the 14-day period preceding the execution of the first anniversary date and issuance to Abitibi Royalties $150,000 in common shares of Xplore based on the VWAP price of Xplore’s shares for the 14-day period preceding the execution of the second anniversary date.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

7)EXPLORATION AND EVALUATION ASSETS (continued)

On completing the share issuance obligations, Abitibi Royalties will be granted a 1.5% NSR on the property. Xplore has also agreed to complete sufficient exploration work on the property to maintain the project in good standing during the time of the option agreement.

HeesProperty

On December 11, 2020, the Company entered into an agreement with two arm’s length parties to acquire the Hees property, a property consisting of 30 claims located in Ontario, for the purchase price of $75,000. Pursuant to the agreement, the Company also granted a 0.5% NSR royalty on the property.

BullfrogSouth Project

On September 17 2020, the Company staked the Bullfrog South Project, located in Nevada’s Bullfrog Gold District.

On December 9, 2020, the Company entered into a mining option agreement with Augusta Gold Inc. (“Augusta”) on the Bullfrog South property. In accordance with the option agreement, Augusta may earn a 100% interest in the project for $150,000 payable in cash or common shares over a period of two years. If Augusta exercises the option, Abitibi Royalties will be granted a 2% NSR on the optioned property, with Augusta retaining an option to purchase 0.5% of the NSR for $500,000 on or before December 9, 2030.

For the year ended December 31, 2020, the Company recognized a receivable of $25,000 relating to this mining option agreement which was recorded against the carrying value of the exploration and evaluation assets relating to the Bullfrog South property.

HammondReef South property

On June 2, 2020, the Company entered into an agreement with two arm’s length parties to acquire the Hammond Reef property, a property consisting of 49 claims located in Ontario, for the purchase price of $70,000. Pursuant to the agreement, the Company also granted one of the parties a 0.5% NSR royalty on the property. The Company incurred claim and other fees of $3,816 on completion of the transaction.

On July 27, 2020, the Company entered into a mining option agreement with Victory Resources Corporation (“Victory”) on the Hammond Reef South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Victory must: (i) issue to Abitibi Royalties, over a two-year period, cash consideration of $275,000 and share consideration of 2,750,000 common shares in its capital; and (ii) incur exploration expenditures in an aggregate amount of $550,000 over a three-year period, of which a minimum of $25,000 is to be spent in the first year of the option agreement. Once the option is exercised, the Company will retain a 2.0% NSR on the property.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

7)EXPLORATION AND EVALUATION ASSETS (continued)

For the year ended December 31, 2020, the Company received the cash consideration of $50,000 and share consideration of 500,000, with a fair value of $72,500, in the common shares of Victory relating to this mining option agreement. Both cash and share considerations have been recorded against the carrying value of the exploration and evaluation assets relating to the Hammond Reef South property, with the remaining difference of $48,684 being recognized as revenue.

As Victory has not fulfilled its obligations in order to extend the option agreement, on August 24, 2021, the option agreement was terminated with a final cash payment from Victory to the Company in the amount of $6,000.

8)ROYALTY INTERESTS

Mainroyalty interests

MalarticCHL 3% Royalty - Malartic, Québec

The area covered by the 3% NSR starts at the eastern edge of the Canadian Malartic Mine main open pit operated by Canadian Malartic GP (50% owned by Agnico Eagle Mines Limited (“Agnico Eagle”) and Yamana Gold Inc. (“Yamana”)). The 3% NSR also covers a number of known mineralized zones; the eastern part of the Barnat Extension, the Jeffrey Zone and portions of the East Malartic, Odyssey, Sladen and Sheehan. The various underground zones are known as the Odyssey Project.

For the year ended December 31, 2020, the Company earned royalties in the amount of $685,698 (or US$524,434) from this royalty interest, of which $425,180 (or US$333,946), representing the royalties earned for the fourth quarter of 2020, is a receivable as at December 31, 2020. For the year ended December 31, 2019, the Company earned royalties in the amount of $3,037,260 (or US$2,315,090) from this royalty interest, of which $999,252 (or US$769,366), representing the royalties earned for the fourth quarter of 2019, is a receivable as at December 31, 2019.

CanadianMalartic 2% Royalty - Malartic, Québec

The area covered by the 2% NSR is on a single claim located just to the south of the Canadian Malartic open pit, and covers the eastern portion of the Gouldie Zone and Charlie Zone.

Otherroyalty interests

The Company’s other royalty interest are as follows:

■	Revillard<br> Property 2% Royalty - Malartic, Québec
■	15% Net<br> Profit Interest (“NPI”) in the vicinity of Canadian Malartic Mine - Malartic, Québec
■	Midway<br> Project 1.5% Royalty - Malartic, Québec
■	1.5% Royalty<br> in the Abitibi region, Québec
■	1.0% NSR<br> on the New Alger Project in the Abitibi region, Québec

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

8)ROYALTY INTERESTS (continued)

In May 2020, the Company entered into a series of agreements to acquire, with a purchase price of $36,000, a package of royalties south of the Canadian Malartic Mine and also southeast of the Agnico Eagle’s Goldex Mine. The agreements also entitled the Company to 15% of the gross proceeds (cash and shares) should the underlying properties be sold or joint ventured. The royalties are located immediately south of the Canadian Malartic Mine and approximately three kilometres southeast of the Goldex Mine. The projects are owned and operated by Tamarack Gold Resources Inc. The Company incurred fees of $1,701 on completion of the transaction.

9)INVESTMENTS

	As<br> at December 31, 2020				As<br> at December 31, 2019
	Number<br> of shares		Fair<br> value		Number<br> of shares		Fair<br> value
Yamana Gold Inc.		2,105,895	$	15,309,857		3,443,895	$	17,701,620
Agnico<br> Eagle Mines Limited		375,897		33,676,612		408,597		32,679,588
				48,986,469				50,381,208
Other<br> investments				515,447				255,530
			$	49,501,916			$	50,636,738

For the year ended December 31, 2020, the Company was called to deliver 394,100 common shares of Agnico Eagle at share prices ranging from US$42.00 to US$55.00 per share and received, net of commissions, $25,633,349 (or US$19,551,262). The Company was also called to deliver 1,338,000 common shares of Yamana at share prices ranging from US$2.50 to US$5.00 per share and received, net of commissions, $6,104,262 (or US$4,704,309). In addition, the Company was called to purchase 361,400 common shares of Agnico Eagle at a share price of US$45.00 per share and paid, before commissions, $23,566,713 (or US$16,263,000).

For the year ended December 31, 2019, the Company was called to deliver 6,000 common shares of Agnico Eagle (2,500 at US$43.00, 2,500 at US$47.00 and 1,000 at US$49.00) and received, net of commissions, $358,619 (or US$270,922). The Company was also called to deliver 105,800 common shares of Yamana (47,600 at US$2.50, 6,900 at US$3.00 and 51,300 at US$3.50) and received, net of commissions, $415,032 (or US$316,287).

Restrictedcash

Restricted cash represents funds held as collateral on the put option contracts referred to in the Derivative financial instruments below. The funds will become unrestricted once the put option contracts are exercised, repurchased or expired. Restricted cash of $385,415 (or US$302,405) as at December 31, 2020 relates to funds held as collateral on the outstanding put option contracts of 99,300 shares of Agnico as at December 31, 2020. No cash is restricted as at December 31, 2019 as there are no outstanding put option contracts.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

10)DERIVATIVE FINANCIAL INSTRUMENTS

The total call/put options outstanding as at December 31, 2020 and 2019 are as follows:

	Expiry<br> date
Calls
Yamana	January 15, 2021	1,247,000	1,574,731
Yamana	April 16, 2021	320,000	52,329
Yamana	July 16, 2021	140,000	57,039
Yamana	January 21, 2022	367,700	522,730
Yamana	January 2, 2023	2,100	3,208
Agnico	January 15, 2021	118,300	761,259
Agnico	February 19, 2021	82,200	53,360
Agnico	May 21, 2021	57,400	83,013
Agnico	January 21, 2022	103,600	929,767
Agnico	January 20, 2023	8,000	83,420
Puts
Agnico	February 19, 2021	56,000	22,217
Agnico	January 21, 2022	43,300	100,245
		2,545,600	4,243,318

All values are in US Dollars.

	Expiry<br> date		Market<br> value as at December 31, 2019
Yamana	January 17, 2020	2,220,300	$	1,048,113
Yamana	January 15, 2021	1,165,800		1,135,729
Yamana	January 21, 2022	57,700		71,194
Agnico	January 17, 2020	350,800		5,528,316
Agnico	January 15, 2021	57,700		1,195,695
		3,852,300	$	8,979,047

All values are in US Dollars.

Refer to Note 21 “Subsequent Events”

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

10)DERIVATIVE FINANCIAL INSTRUMENTS

For fiscal year 2020, the Company sold 21,418 call contracts (3,701 calls on Agnico shares and 17,717 calls on Yamana shares) and 5,977 put contracts on Agnico shares for total proceeds of $3,582,525 (or US$2,665,886). In addition, 1,370 put contracts expired and 3,614 put contracts were exercised on Agnico shares. Furthermore, 7,050 contracts were repurchased before expiration (150 calls on Agnico and 6,900 calls on Yamana) for which the Company paid $53,116 (or US$40,740).

For fiscal year 2019, the Company sold 25,223 call contracts (1,573 calls on Agnico shares and 23,650 calls on Yamana Gold shares) for total proceeds of $1,232,964 (or US$935,160). In addition, 1,887 call contracts expired (460 calls on Agnico and 1,427 calls on Yamana). Furthermore, 19,600 contracts were repurchased before expiration (778 calls on Agnico and 18,822 calls on Yamana) for which the Company paid $131,050 (or US$97,093).

11)INCOME TAXES

Totalincome tax expense (recovery)

The components of income tax expense for the years ended December 31, 2020 and 2019 are as follows:

	2020			2019
Current tax expense	$	2,464,798		$	-
Deferred<br> tax expense (recovery)		(552,127	)		1,813,320
Total<br> tax expense	$	1,912,671		$	1,813,320

Relationshipbetween expected tax expense and accounting profit or loss

The relationship between the expensed tax expense based on the combined federal and provincial income tax rate in Canada and the reported tax expense is as follows:

For<br> the year ended December 31.	2020			2019
Net<br> income for the year before income taxes	$	16,594,238		$	13,072,913
Expected tax expense calculated<br> using the combined Federal and Provincial at combined statutory rate in Canada of 26.50% (26.60% in 2019)	$	4,397,473		$	3,477,395
Non-taxable portion of gain<br> on investments		(2,312,330	)		(1,557,615	)
Non-taxable dividends received		(169,584	)		(116,353	)
Tax benefits not recognized		3,017			-
Effect of tax rates in a foreign<br> jurisdiction		791			-
Other		(6,696	)		9,893
Income<br> tax expense	$	1,912,671		$	1,813,320

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

11)INCOME TAXES (continued)

The statutory tax rate for 2020 and 2019 were 26.50% and 26.60%, respectively. The Québec general corporate tax rate has decreased at a rate of 0.10% per year from 11.80% to 11.50% beginning January 1 of each year from 2017 to 2020.

Deferredtax assets (liabilities) and variation of recognized amounts

	As<br> at January 1,			Recognized<br> in			As at<br><br> <br>December 31,
	2020			profit<br> or loss			2020
Exploration and<br> evaluation assets	$	687,841		$	(367,828	)	$	320,013
Investments		(6,047,641	)		2,465,445			(3,582,196	)
Share issuance costs		8,389			(2,103	)		6,286
Non-capital losses		915,903			(915,903	)		-
Derivative<br> financial instruments		1,189,723			(627,484	)		562,239
	$	(3,245,785	)	$	552,127		$	(2,693,658	)
	As<br> at January 1,			Recognized<br> in			As<br> at<br><br> December 31,
---	---	---	---	---	---	---	---	---	---
	2019			profit<br> or loss			2019
Exploration and<br> evaluation assets	$	687,695		$	146		$	687,841
Investments		(3,898,056	)		(2,149,585	)		(6,047,641	)
Share issuance costs					8,389			8,389
Non-capital losses		1,433,943			(518,040	)		915,903
Derivative<br> financial instruments		343,953			845,770			1,189,723
	$	(1,432,465	)	$	(1,813,320	)	$	(3,245,785	)

12)EQUITY

a)Capital stock

The capital stock of the Company consists only of fully paid common shares.

Authorized

■	Unlimited<br> number of common shares, without par value, voting and participating.
■	Unlimited<br> number of preferred shares, without par value, non-participating. The directors will define the rights, privileges, restrictions<br> and conditions of these shares upon issuance.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EQUITY

b)Issued

Exerciseof incentive stock options

For the year ended December 31, 2020, there were no incentive stock options exercisable nor available under the stock option plan eligible for grant.

For the year ended December 31, 2019, the Company issued 81,171 of its common shares for a total consideration of $226,713 from the exercise of stock options at prices varying from $2.18 per share (47,733 stock options), $3.62 per share (13,438 stock options) and $3.70 per share (20,000 stock options).

c)Dividends

On January 20, 2020, the Company’s Board of Directors approved a 25% dividend increase from $0.12 to $0.15 per common share on an annualized basis. The payment of dividends has also changed from quarterly to monthly. The increased dividend amount and the payment of dividends from quarterly to monthly began in April 2020.

On December 7, 2020, the Company’s Board of Directors further approved a 20% dividend increase from $0.15 to $0.18 per common share on an annualized basis.

d)Normal Course Issuer Bid

On September 23, 2019, the Company announced it received conditional acceptance to renew its NCIB for another year until October 5, 2020. The approval allows the Company to purchase up to 626,695 (representing 5% of the Company’s total issued and outstanding common shares) of its common shares.

On September 24, 2020, the Company announced it received conditional acceptance to renew its NCIB for another year until October 5, 2021. This new approval allowed the Company to purchase up to 624,145 (representing 5% of the Company’s total issued and outstanding common shares) of its common shares.

For the year ended December 31, 2020, the Company repurchased and cancelled 48,100 shares at prices varying from $15.14 to $26.00 per share for a total of $994,051. For the year ended December 31, 2019, the Company repurchased and cancelled 61,100 of its common shares at prices varying from $9.40 to $16.15 for a total of $778,649.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

13)REMUNERATION

a)Salaries and employee benefits expense

The Company has implemented an Executive Compensation Policy (the “Policy”) which approved certain amounts being paid and accrued to directors and officers. The Company’s executives receive a salary in accordance with the amounts approved in the Policy and monthly accruals were being recorded to cover the total estimated meeting fee remuneration payable to directors. The directors and executive officers are also entitled to receive incentive stock options. The Company does not offer any other benefits or perquisites to its directors and executive officers. Refer below for the non-renewal of the stock option plan.

The Chairman of the Board, the President and CEO, and the Chief Financial Officer of the Company are subject to Executive Employment Agreements (“Employment Agreements”) which define their current remuneration and benefits. The Employment Agreements also provide for market standard payments on termination of employment without cause or following a change of control which could amount up to twice base salary and bonus, continuation of benefits and certain vesting acceleration clauses on restricted shares units and options.

b)Share-based payments

Stockoption plan

The Company has adopted a 20% fixed option plan (the “Plan”) in 2013. Pursuant to the Plan, options, for an aggregate total of 1,740,200 common shares, (representing 20% of the issued number of common shares outstanding at the time) may be granted to its directors, officers, employees, consultants or management companies employees from time to time. The exercise price of each option is fixed by the Board of Directors, but would not be less than the closing price of the Company’s share on the trading day immediately prior to the date of grant less any discount permitted by the TSX Venture Exchange (the “Exchange”); if no sales were reported, it would be the sales closing price on the last trading day immediately prior to the date of grant on which sales were reported. The vesting period of the options would be determined by the Board of Directors, in accordance with the rules and regulations of the Exchange.

The Company has not renewed its stock option plan and has not granted stock options under the current plan since 2014. There are no stock options available under the plan eligible for grant.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

14)PROFESSIONAL FEES

The following table shows professional fees for the year ended December 31, 2020 and 2019:

	2020		2019
Media relations<br> and other consultants	$	208,244	$	215,141
Legal fees	****	134,459		165,829
Exchange, regulatory and transfer<br> agent fees	****	124,325		98,691
Audit, tax and accounting<br> fees	****	92,323		69,619
	$	559,351	$	549,280

15)EARNINGS PER SHARE

Earnings per share has been calculated using the weighted average number of common shares outstanding for the year ended December 31, 2020 and 2019 as follows:

	For<br> the year ended December 31,
	2020		2019
Net<br> income for the year attributable to shareholders	$	14,681,567	$	11,259,593
Weighted average number of common shares outstanding<br> - Basic		12,497,653		12,513,118
Dilutive<br> effect of stock options		-		-
Weighted average number<br> of common shares outstanding - Diluted		12,497,653		12,513,118
Basic earnings per share	$	1.17	$	0.90
Diluted earnings per<br> share	$	1.17	$	0.90

Both the basic and diluted earnings per share have been calculated using the net income attributable to owners of the Company as the numerator, i.e. no adjustment to the net income was necessary in either of the years ended December 31, 2020 and 2019.

16)RELATED PARTY TRANSACTIONS

a)Transactions with the major shareholder

Effective July 1, 2020, the Company entered into a cost sharing arrangement (the “Sharing Arrangement”) with Golden Valley, pursuant to which Golden Valley will provide certain management and financial services such as office space and administrative support relating to the exploration offices located at 2864 Chemin Sullivan, Val-d’Or, Québec, J9P 0B9, in consideration of $21,404 per year (the “reimbursement”), payable on a monthly basis. The Sharing Arrangement provides for the reimbursement to be reviewed on an annual basis.

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ABITIBIROYALTIES INC.

Notesto the Consolidated Financial Statements

December31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

16)RELATED PARTY TRANSACTIONS (continued)

a)Transactions with the major shareholder (continued)

For the year ended December 31, 2020, Golden Valley recharged general and office expenses to the Company for a total amount of $35,944 (for the year ended December 31, 2019 - $51,600).

For efficiency reasons, where the Company and Golden Valley are dealing with the same suppliers one may pay for both and be reimbursed by the other. As at December 31, 2020, the Company had indebtedness of $10,956 to Golden Valley (December 31, 2019 - $6,577), which is included in accounts payable and accrued liabilities.

b)Transactions with related parties

For the year ended December 31, 2020, the Company was recharged general and office expenses of $1,059 (for the year ended December 31, 2019

$17,044) from Val-d’Or Mining Corporation (“Val-d’Or Mining”), an entity that has common key management personnel with the Company.

For efficiency reasons, where the Company and Val-d’Or Mining are dealing with the same suppliers one may pay for both and be reimbursed by the other. As at December 31, 2020, the Company had indebtedness of $nil (December 31, 2019 – payable of $1,408) to Val-d’Or Mining, which is included in accounts payable and accrued liabilities.

c)Transactions with key management

Key management personnel of the Company are the members of the Board of Directors, as well as the President and Chief Executive Officer and the Chief Financial Officer. For the years ended December 31, 2020 and 2019, the compensation paid to key management is presented below:

	2020		2019
Salaries and benefits	$	812,359	$	658,434
Bonus and other payments	****	521,600		306,072
Meeting fees	****	150,000		150,000
Payroll<br> levies	****	73,210		125,194
	$	1,557,169	$	1,239,700

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

16)RELATED PARTY TRANSACTIONS (continued)

Bonus and other payments include (a) fiscal year 2020 bonuses and other renumeration totaling performance-based bonuses of $311,600 (2019 - $241,525) for the Chairman of the Board, the President and Chief Executive Officer, and the Chief Financial Officer; (b) long-term incentive share purchase special allocations of $170,000 (2019 - $nil) for the officers and directors, of which the after-tax proceeds will be used by the recipients to purchase shares of the Company in the secondary market and are to retain such shares while serving as directors and officers of the Company and (c) vacation accruals of $40,000 (2019 -$64,547).

Payroll levies are the Company’s contributions to mandatory governmental benefits plans related to salaries, meetings fees and taxable benefits on exercise of incentive stock options.

■	At<br> the end of fiscal year 2020, some of the salaries, meeting fees and bonuses disclosed above had not been paid and were included in<br> current liabilities. At December 31, 2020, $559,100 (2019 - $286,165) was included in account payables and accrued liabilities.
■	The<br> President and Chief Executive Officer is using his Toronto property as an office for the Company and is being reimbursed the expenses<br> related to the premises (rent and municipal taxes representing about $2,000 per quarter). For the year ended December 31, 2020, the<br> Company has paid $7,362 (2019 - $8,196) for the Toronto office.

17)CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company’s objectives in managing capital are to safeguard its ability to continue its operations, to increase the value of the assets of the business and to provide an adequate return to owners. These objectives will be achieved by identifying and acquiring the right potential royalty rights. The Company’s capital is composed of its shareholders’ equity. There were no changes in the Company’s capital management approach for 2020.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares or repurchase shares under its Normal Course Issuer Bid to improve its financial performance and flexibility. The Company monitors capital on the basis of the carrying amount of equity. Capital for reporting period under review is summarized in the Statement of Changes in Equity. The Company is not subject to any externally imposed capital requirements.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18)FAIR VALUE MEASUREMENT

Financial assets and liabilities measured at fair value in the statement of financial position are grouped into three levels of fair value hierarchy.

The three levels are defined based on the observability of the significant inputs to the measurement, as follows:

■	Level<br> 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
■	Level<br> 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;<br> and,
■	Level<br> 3: unobservable inputs for the assets or liabilities.

The fair value of the investments and the derivative financial instruments have been estimated by reference to their quoted prices at the reporting date. The investments and the derivative financial instruments measured at fair value in the statement of financial position as at December 31, 2020 and 2019 are classified in Level 1.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18)FAIR VALUE MEASUREMENTS (continued)

The carrying amounts and fair value of financial instruments presented in the statement of financial position are as follows:

	December<br> 31, 2020				December<br> 31, 2019
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
Financial<br> assets	****	****	****	****
Financial<br> assets at amortized costs	****	****	****	****
Cash	$	12,998,678	$	12,998,678	$	2,457,178	$	2,457,178
Restricted<br> cash	****	385,415	****	385,415		-		-
Royalty<br> receivables	****	425,180	****	425,180		999,252		999,252
Other<br> receivables	****	95,361	****	95,361		44,729		44,729
Financial<br> assets at fair value through profit and loss	****	****	****	****
Investments<br> (level 1)	****	49,501,916	****	49,501,916		50,636,738		50,636,738
	$	63,406,550	$	63,406,550	$	54,137,897	$	54,137,897
Financial<br> liabilities	****	****	****	****
Financial<br> liabilities measured at amortized cost	****	****	****	****
Accounts<br> payable and accrued liabilities	$	727,968	****	727,968	$	361,314		361,314
Financial<br> liabilities measured at fair value through profit and loss	****	****	****	****
Derivatives<br> financial instruments (level 1)	****	4,243,318	****	4,243,318		8,979,047		8,979,047
	$	4,971,286	$	4,971,286	$	9,340,361	$	9,340,361

The carrying value of cash, restricted cash, royalty and other receivables and accounts payable and accrued liabilities (excluding payables related to salaries and employee benefits) is considered to be a reasonable expectation of fair value because of the short-term maturity of these instruments.

19)FINANCIAL INSTRUMENT RISKS

Financialrisk

The Company is exposed to various financial risks in relation to its financial instruments. The main types of risks the Company is exposed to are market risk, credit risk and liquidity risk. The Company focuses on actively securing short to medium-term cash flow by minimizing the exposure to financial markets.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

19)FINANCIAL INSTRUMENT RISKS (continued)

The Company’s main financial risk exposure and its financial risk management policies are as follows:

a) Credit risk

Credit risk relates to the risk that one party to a financial instrument will not fulfil some or all of its obligations, thereby causing the Company to sustain a financial loss.

As at December 31, 2020 and 2019, the Company maximum exposure to credit risk is limited to the carrying amount of the financial assets at the reporting date as summarized below:

	2020		2019
Cash	$	12,998,678	$	2,457,178
Restricted cash		385,415		-
Royalty receivable		425,180		999,252
Other<br> receivables		95,361		44,729
	$	13,904,634	$	3,501,159

The risk related to cash and restricted cash is considered negligible as the Company is dealing with a reputable financial institution whose credit rating is excellent. The Company’s management considers that the above financial assets is of good credit quality. The credit risk exposure for the Company’s royalty, dividends and other receivables is considered minimal as these receivables have since been received subsequent to year-end.

b) Liquidity risk

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

19)FINANCIAL INSTRUMENT RISKS (continued)

The following table presents contractual maturities of the Company’s financial liabilities:

	As<br> at December 31,
	2020		2019
Within three months
Accounts<br> payable and accrued liabilities	$	727,968	$	361,314
Derivative<br> financial instruments		2,411,567		6,576,429
	$	3,139,535	$	6,937,743
Three to six months
Derivative<br> financial instruments	$	135,341	$	-
	$	135,341	$	-
Twelve<br> to thirty six months
Derivative<br> financial instruments	$	1,696,410	$	2,402,618
	$	1,696,410	$	2,402,618

The Company’s existing cash resources significantly exceed the current cash outflow requirements.

c) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company is exposed to the following two types of market risk: foreign currency risk and other price risk:

Foreigncurrency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Most of the Company’s transactions are carried out in Canadian dollars. Currency risk arises from the Company’s cash, dividends and royalty revenues in foreign currency, which are primarily denominated in U.S. dollars. The Company does not enter into arrangements to hedge its foreign exchange risk.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

19)FINANCIAL INSTRUMENT RISKS (continued)

Foreign currency denominated financial assets and liabilities in U.S. dollars, and which expose the Company to the currency risk are as follows:

	As<br> at December 31,
	2020			2019
Cash	$	7,125,721		$	1,737,268
Restricted cash		302,405			-
Royalty receivable		333,946			769,366
Dividend receivables		54,251			35,497
Accounts payable and accrued<br> liabilities		(3,040	)		-
Derivative<br> financial instrument		(3,332,798	)		(6,913,341	)
	$	4,480,485		$	(4,371,210	)

A +/- 1% change in the Canadian /U.S. exchange rate as at December 31, 2020 would have had an impact of +/- $57,046 at December 31, 2020 on profit or loss of the period and equity.

Otherprice risk sensitivity

The Company is exposed to fluctuations in the market prices of its investments in quoted mining exploration companies and its derivative financial instruments. The fair value of those instruments represents the maximum exposure to price risk. If the quoted price for the investments and the derivative financial instruments had changed by +/- 1% as at December 31, 2020 other comprehensive income would have changed by +/- $495,019.

20)COMMITMENT

The Company has entered into agreements with officers that include termination and change of control clauses. In the case of termination, the officers are entitled to an amount equal to a multiple (ranging from one to two times) the annual base fee payable. In the case of a change of control, the officers are entitled to an amount equal to a multiple (ranging from one to two times) the sum of the annual base fee. As at December 31, 2020, total possible future payments relating to the officers’ base fees under these agreements amount to $1,433,000, which future payments increased to $1,545,000 effective January 1, 2021.

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ABITIBI ROYALTIES INC.

Notes to the Consolidated FinancialStatements

December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

21)SUBSEQUENT EVENTS

NCIBprogram

Subsequent to year end, the Company repurchased 11,600 of its common shares at prices between $21.70 and $25.98 per share for a total price of $269,391.

Derivativefinancial instruments

Subsequent to year end, the Company was called to deliver 37,700 common shares of Agnico Eagle at share prices ranging from US$50.00 to US$65.00 per share and received, net of commissions, $2,722,806 (or US$2,139,898) and 1,026,000 common shares of Yamana at share prices ranging from US$3.00 to US$5.00 per share and received, net of commissions, $6,971,111 (or US$5,484,388).

Acquisitionof Abitibi Royalties by Gold Royalty Corp.

On September 7, 2021, Golden Valley, Abitibi Royalties and Gold Royalty announced that they entered into definitive agreements dated September 6, 2021, pursuant to which Gold Royalty acquired all of the issued and outstanding common shares of each of Golden Valley and Abitibi Royalties by way of statutory plans of arrangement (the “Arrangements”). The Arrangements were completed on November 5, 2021 whereby Gold Royalty issued 4.6119 of its shares to Abitibi Royalties shareholders for each Abitibi Royalties common share; and Gold Royalty issued 2.1417 of its shares to Golden Valley shareholders for each Golden Valley common share.

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Exhibit99.5

Condensed Interim Consolidated Financial Statements

For the three and six months ended June 30, 2021 and 2020

(Expressed in Canadian Dollars)

(Unaudited)

| 1 |

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ABITIBIROYALTIES INC.

CondensedInterim Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

(unaudited)

			As at<br><br> <br>June 30,		As<br> at<br><br> <br>December<br> 31,
	Notes		2021		2020
ASSETS
Current
Cash			$	14,803,569	$	12,998,678
Restricted<br> cash		8		3,961,104		385,415
Royalty<br> receivable		7		450,564		425,180
Other<br> receivables		5		46,794		108,926
Prepaid<br> expenses				-		41,152
Total current assets				19,262,031		13,959,351
Non-current
Exploration<br> and evaluation assets		6		89,201		151,701
Investments		8		31,064,391		49,501,916
TOTAL<br> ASSETS			$	50,415,623	$	63,612,968
LIABILITIES
Current
Accounts<br> payable and accrued liabilities			$	125,611	$	727,968
Income<br> taxes payable				58,852		2,464,798
Derivative<br> financial instruments		9		1,566,138		4,243,318
Total current liabilities				1,750,601		7,436,084
Non-current
Deferred<br> tax liabilities		10		998,484		2,693,658
Total<br> Liabilities				2,749,085		10,129,742
EQUITY
Capital<br> stock		11		11,741,001		11,751,929
Retained<br> earnings				35,925,537		41,731,297
Total<br> Equity				47,666,538		53,483,226
TOTAL<br> LIABILITIES AND EQUITY			$	50,415,623	$	63,612,968

Commitments (note 18)

“Glenn J. Mullan”	“Ian J. Ball”
(signed<br> Glenn J. Mullan)	(signed<br> Ian J. Ball)
Director	Director

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

| 2 |

| --- |

ABITIBIROYALTIES INC.

CondensedInterim Consolidated Statements of Net Income (loss) and Comprehensive Income (loss)

(Expressed in Canadian Dollars)

(Unaudited)

			For the three<br> months ended June 30						For the six<br> months ended June 30,
	Notes		2021			2020			2021			2020
Revenues
Royalties		7	$	450,564		$	93,633		$	639,106		$	167,918
Dividends				174,925			169,400			355,009			232,565
				625,489			263,033			994,115			400,483
Operating expenses
Salaries<br> and employee benefits		15		247,761			280,876			553,909			590,219
Professional<br> fees		14		210,697			109,032			324,840			238,155
Office<br> expenses				28,802			15,947			59,432			29,821
Royalty<br> interests		7		34,000			37,701			58,800			37,701
Travel<br> and transport				224			-			441			584
Advertising<br> and promotion				-			-			700			-
				521,484			443,556			998,122			896,480
Operating income (loss)				104,005			(180,523	)		(4,007	)		(495,997	)
Other income (expenses)
Change<br> in fair value of investments				489,400			22,413,712			(9,160,304	)		8,603,228
Change<br> in fair value of derivatives				736,837			(3,641,315	)		4,269,228			3,382,139
Change<br> in fair value of derivatives resulting from foreign exchange				15,549			240,466			48,181			(167,275	)
Foreign<br> exchange gain (loss)				(248,420	)		(221,240	)		(475,155	)		2,584,905
Commissions				(28,496	)		66,315			(85,415	)		(71,929	)
Interest<br> expense				(917	)		(742	)		(2,181	)		(1,325	)
Interest<br> income				154			1,971			1,360			68,449
				964,107			18,859,167			(5,404,286	)		14,398,192
Net income<br> (loss) before income tax				1,068,112			18,678,644			(5,408,293	)		13,902,195
Current<br> tax expense (recovery)				(80,817	)		(371,701	)		712,159			1,965,913
Deferred<br> tax expense (recovery)		10		59,962			2,409,033			(1,695,174	)		(299,958	)
Income<br> tax expense (recovery)				(20,855	)		2,037,332			(983,015	)		1,665,955
Net<br> income (loss) and comprehensive income (loss) for the period			$	1,088,967		$	16,641,312		$	(4,425,278	)	$	12,236,240
Earnings<br> (loss) per share
Basic		13	$	0.09		$	1.33		$	(0.35	)	$	0.98
Diluted		13	$	0.09		$	1.33		$	(0.35	)	$	0.98
Weighted<br> average number of common shares outstanding
Basic		13		12,463,909			12,501,616			12,467,991			12,509,192
Diluted		13		12,463,909			12,501,616			12,467,991			12,509,192

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

| 3 |

| --- |

ABITIBIROYALTIES INC.

CondensedInterim Consolidated Statements of Changes in Equity

(Expressed in Canadian Dollars)

(Unaudited)

****			****	Capital Stock		****	Retained earnings		****	Total Equity		****
Balance<br> as at January 1, 2021		12,474,311		$	11,751,929		$	41,731,297		$	53,483,226
Common shares repurchased<br> and cancelled	11	(11,600	)		(10,928	)		(258,347	)		(269,275	)
Dividends paid		-			-			(1,122,135	)		(1,122,135	)
Net loss and total comprehensive<br> loss for the period		-			-			(4,425,278	)		(4,425,278	)
Balance as at June 30, 2021		12,462,711		$	11,741,001		$	35,925,537		$	47,666,538
Balance<br> as at January 1, 2020		12,522,411		$	11,797,244		$	29,779,099		$	41,576,343
Common shares repurchased<br> and cancelled	11	(25,700	)		(24,212	)		(457,203	)		(481,415	)
Dividends paid		-			-			(844,293	)		(844,293	)
Net income and total comprehensive<br> income for the period		-			-			12,236,240			12,236,240
Balance as at June 30, 2020		12,496,711		$	11,773,032		$	40,713,843		$	52,486,875

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

| 4 |

| --- |

ABITIBIROYALTIES INC.

CondensedInterim Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

(Unaudited)

			For the six<br> months ended June 30,
	Notes		2021			2020
OPERATING<br> ACTIVITIES
Net income<br> (loss) for the period			$	(4,425,278	)	$	12,236,240
Adjustment:
Royalty<br> interests				58,800			-
Change<br> in fair value of investments				9,160,304			(8,603,228	)
Change<br> in fair value of derivatives				(4,269,228	)		(3,382,139	)
Change<br> in fair value of derivatives resulting from foreign exchange				(48,181	)		167,275
Deferred<br> tax recovery				(1,695,174	)		(299,958	)
Foreign<br> exchange loss (gain)				418,492			(93,199	)
Changes in working capital<br> items:
Royalty<br> receivable				(25,384	)		905,619
Other<br> receivables				37,132			(29,546	)
Prepaid<br> expenses				41,152			11,850
Accounts<br> payable and accrued liabilities				(602,357	)		(263,412	)
Income<br> taxes payable				(2,405,946	)		1,965,913
Cash<br> flows from (used by) operating activities				(3,755,668	)		2,615,415
INVESTING<br> ACTIVITIES
Proceeds from settlement<br> of derivative financial instruments		8		9,314,033			26,057,132
Payment on settlement of<br> derivative financial instruments		8		-			(23,566,713	)
Repurchase of derivative<br> financial instruments				(10,276	)		(29,119	)
Proceeds from sale of derivative<br> financial instruments				1,650,504			1,426,901
Increase in restricted<br> cash				(3,575,689	)		-
Acquisition of royalty<br> interests				(58,800	)		-
Proceeds from mining option<br> agreement				25,000			-
Additions to exploration<br> and evaluation assets				-			(71,250	)
Proceeds from sale of other<br> investments				31,420			-
Additions<br> to other investments				(5,731	)		(12,754	)
Cash flows from investing<br> activities				7,370,461			3,804,197
FINANCING<br> ACTIVITIES
Capital stock repurchased<br> and cancelled		11		(269,275	)		(481,415	)
Dividends<br> paid				(1,122,135	)		(844,293	)
Cash<br> flows used by financing activities				(1,391,410	)		(1,325,708	)
Effect<br> of foreign exchange rate changes on cash				(418,492	)		93,199
Net<br> increase in cash				1,804,891			5,187,103
Cash,<br> beginning of period				12,998,678			2,457,178
Cash,<br> end of period			$	14,803,569		$	7,644,281
Cash transactions:
Interest<br> received related to operating activities:			$	1,360		$	68,449
Dividends<br> received related to investing activities:				392,943			219,969

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

| 5 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

1) NATURE OF OPERATIONS

Abitibi Royalties Inc. (the “Company”) and its subsidiary are engaged in building a royalty company by acquiring royalties and by exploring, evaluating and optioning/selling its mineral properties and other projects.

The Company was incorporated on February 18, 2010 under the Business Corporations Act of British Columbia. The head office of the Company is located at 152 Chemin de la Mine Ecole, Val-d’Or, Québec, J9P 7B6. The Company’s registered and records office is located at #530 - 355 Burrard Street, Vancouver, B.C. V6C 2G8. The Company also has administrative offices located at 2864 Chemin Sullivan, Val-d’Or, Québec, J9P 0B9.

The Company is trading on the TSX Venture Exchange under the trading symbol “RZZ” and is designated on the Nasdaq International Designation program under the ticker “ATBYF”.

As at June 30, 2021, Golden Valley Mines and Royalties Ltd. (“Golden Valley”), a controlling shareholder, held a 44.98% (December 31, 2020 - 44.93%) interest in the Company.

2) BASIS OF PRESENTATION

Statementof compliance

These condensed interim consolidated financial statements have been prepared in accordance with International Financing Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), under International Accounting Standard (“IAS”) 34 - Interim Financial Reporting and the basis of the going concern assumption, meaning the Company will be able to realize its assets and discharge its liabilities in the normal course of operations.

These interim financial consolidated statements were prepared using the same accounting policies, methods of computation and basis of presentation as outlined in Note 4 - Summary of Significant Accounting Policies, as described in the Company’s annual audited consolidated financial statements for the year ended December 31, 2020, except for any changes in accounting policies as described in note 3. Interim consolidated financial statements do not include all the notes required in annual consolidated financial statements and, accordingly, should be read in conjunction with the annual audited consolidated financial statements for the year ended December 31, 2020.

Even though the Company holds significant investments in other entities, it does not qualify as an investment entity under IFRS 10 “ConsolidatedFinancial Statements”.

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ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

2) BASIS OF PRESENTATION (continued)

Approvalof Financial Statements

These consolidated financial statements were approved for issuance by the Board of Directors on August 19, 2021.

3) RECENT ACCOUNTING PRONOUNCEMENTS

At the date of authorization of these consolidated financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective and have not been adopted early by the Company. Management anticipates that all of the pronouncements will be adopted in the Company’s accounting policy for the first period beginning after the effective date of each pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s financial statements.

4) JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of these condensed interim consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed interim consolidated financial statements and accompanying notes. Management believes that the estimates used in the preparation of the condensed interim consolidated financial statements are reasonable; however, actual results may differ materially from these estimates. The areas involving significant judgments, estimates and assumptions have been detailed in note 5 to the Company’s annual audited consolidated financial statements for the year ended December 31, 2020.

Uncertaintydue to COVID-19

The Company continues to actively monitor the impact of the COVID-19 pandemic, including the impact on economic activity and financial reporting. The duration and full financial effect of the COVID-19 pandemic is unknown at this time, as are the measures taken by governments, companies and others to attempt to reduce the spread of COVID-19.

| 7 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

4) JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Uncertaintydue to COVID-19 (continued)

Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 may materially and adversely affect the Company’s operations, financial results and condition in future periods are also subject to significant uncertainty.

In properties where the Company holds royalty interests, there previously has been temporary operational restrictions due to the ongoing COVID-19 pandemic, including operations being previously placed under care and maintenance and thereafter the resumption of mining activities. In the current environment, the assumptions and judgements made by the Company are subject to greater variability than normal, which could in the future significantly affect judgments, estimates and assumptions made by management as they relate to potential impact of the COVID-19 and could lead to a material adjustment to the carrying value of the assets or liabilities affected. The impact of current uncertainty on judgments, estimates and assumptions extends, but is not limited to, the Company’s valuation of its long-term assets, including the assessment for impairment and impairment reversal. Actual results may differ materially from these estimates.

5)OTHER RECEIVABLES

	As at<br> <br>June 30, 2021		As<br> at <br>December 31, 2020
Dividend receivable	$	32,427	$	70,361
Sales taxes recoverable		14,367		13,565
Mining<br> option receivable		-		25,000
	$	46,794	$	108,926

6) EXPLORATION AND EVALUATION ASSETS

The following table summarizes the carrying values of Exploration and Evaluations Assets by properties as at June 30, 2021 and December 31, 2020:

	As at<br> <br>June 30, 2021		As<br> at <br>December 31, 2020
Hees Property	$	75,000	$	75,000
Bathurst Property		12,500		75,000
Bullfrog<br> South Property		1,701		1,701
	$	89,201	$	151,701

| 8 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

6) EXPLORATION AND EVALUATION ASSETS (continued)

HeesProperty

UpperRed Lake (formerly “Bathurst property”) (Ontario)

On November 9, 2020, the Company entered into an agreement with two arm’s length parties to acquire the Upper Red Lake property, a property consisting of seven claims located in Ontario, for the purchase price of $75,000. Pursuant to the agreement, the Company also granted a 0.5% NSR royalty on the property.

On February 4, 2021, Abitibi Royalties signed an option agreement with Xplore Resources Corp. (“Xplore”) on the Upper Red Lake Project. Xplore may earn a 100% interest in the project by issuing to Abitibi Royalties $62,500 of Xplore’s common shares based on the daily volume weighted average (the “VWAP”) price of Xplore’s shares for the 14-day period preceding the date of the execution of the Letter of Intent (“LOI”) and by issuing to Abitibi Royalties $125,000 and $150,000 of Xplore’s common shares based on the VWAP price of Xplore’s shares for the 14-day period preceding the first and secondary anniversary date of the execution of the LOI, respectively. On March 5, 2021, the Company received 1,096,491 common shares of Xplore, with a fair value of $62,500, relating to this mining option agreement.

On Xplore completing its share issuance obligations, Abitibi Royalties will be granted a 1.5% NSR on the Upper Red Lake Project. Xplore has also agreed to complete sufficient exploration work on the property to maintain the project in good standing during the time of the option agreement.

BullfrogSouth Project

On September 17, 2020, the Company staked the Bullfrog South Project, located in Nevada’s Bullfrog Gold District.

On December 9, 2020, the Company entered into a mining option agreement with Bullfrog Mines LLC (“Bullfrog”) on the Bullfrog South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Bullfrog must issue to Abitibi Royalties, over a two-year period, consideration of $175,000 in cash or share in its capital and reimburse the Company for mining claims fees to be paid in 2021. Upon the option being exercised, the Company will retain a 2.0% NSR on the property, Bullfrog has the option to purchase 0.5% of the NSR for $500,000 on or before December 9, 2030. To date, the Company received cash consideration of $25,000 relating to this mining option agreement which was recorded against the carrying value of the exploration and evaluation assets relating to the Bullfrog South property.

| 9 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

6) EXPLORATION AND EVALUATION ASSETS (continued)

HammondReef South property

On June 2, 2020, the Company entered into an agreement with two arm’s length parties to acquire the Hammond Reef property. Pursuant to the agreement, the Company also granted one of the parties a 0.5% NSR royalty on the property.

On August 10, 2020, the Company entered into a mining option agreement with Victory Resources Corporation (“Victory”) on the Hammond Reef South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Victory must: (i) issue to Abitibi Royalties, over a two-year period, cash consideration of $250,000 and share consideration of 2,750,000 common shares in its capital; and (ii) incur exploration expenditures in an aggregate amount of $550,000 over a three-year period, of which a minimum of $25,000 is to be spent in the first year of the option agreement. Upon the option being exercised, the Company will retain a 2.0% NSR on the property. To date, the Company received cash and share consideration of $25,000 and $72,500, respectively relating to this mining option agreement which were recorded against the carrying value of the exploration and evaluation assets relating to the Hammond Reef property. As of the date of approval of these unaudited interim consolidated financial statements, Victory has not fulfilled its obligations to in order to extend the option agreement.

Explorationand Evaluation Assets by Expenditures

Exploration and Evaluation Assets as at June 30, 2021 and December 31, 2020 are as follows:

Description	As at<br> <br>January 1,<br> <br>2021			Additions		Credits			As at<br> <br>June 30, 2021
Acquisition and<br> claims maintenance	$	241,959		$	-	$	-		$	241,959	****
Program management and consultants		8,558		****	-		-		****	8,558	****
Option<br> payment received, net		(98,816	)	****	-		(62,500	)	****	(161,316	)
	$	151,701		$	-	$	(62,500	)	$	89,201	****
Description	As at<br><br> <br>January 1,<br><br> <br>2020		Additions		Credits			As at<br> <br>December 31, 2020
---	---	---	---	---	---	---	---	---	---	---
Acquisition and<br> claims maintenance	$	-	$	241,959	$	-		$	241,959
Program management and consultants		-		8,558		-			8,558
Option<br> payment received, net		-		-		(98,816	)		(98,816	)
	$	-	$	250,517	$	(98,816	)	$	151,701

| 10 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

7) ROYALTY INTERESTS

Mainroyalty interests

MalarticCHL 3% Royalty - Malartic, Québec

The area covered by the 3% NSR starts at the eastern edge of the Canadian Malartic Mine main open pit operated by Canadian Malartic GP (50% owned by Agnico Eagle Mines Limited (“Agnico Eagle”) and Yamana Gold Inc. (“Yamana”)). The 3% NSR also covers a number of mineralized zones; the eastern part of the Barnat Extension, the Jeffrey Zone and portions of the East Malartic, Odyssey, Sladen and Sheehan. The various underground zones are known as the Odyssey Project.

For the three and six months ended June 30, 2021, the Company earned royalties in the amount of $450,564 (or US$363,534) and $639,106 (or US$513,468) (for the three and six months ended June 30, 2020 - $93,633 (or US$68,707) and $167,918 (or US$121,068)) from this royalty interest.

CanadianMalartic 2% Royalty - Malartic, Québec

The area covered by the 2% NSR is on a single claim located just to the south of the Canadian Malartic open pit and covers the eastern portion of the Gouldie Zone and the historic Charlie Zone.

Otherroyalty interests

AuthierNorth Lithium Royalty & Perrigo Royalties

In January and March 2021, the Company acquired a 1% NSR and 15% of any proceeds from a sale or joint venture on the Authier North Lithium property located approximately 40 kilometers north of Malartic, Québec for $24,000 and acquired, in February 2021, a royalty of 1.25% NSR (0.25% can be repurchased for $250,000) on the Perrigo project located in Ontario’s Red Lake district for $8,300.

MalarticSouth

In May 2020, the Company entered into a series of agreements to acquire a package of royalties south of the Canadian Malartic Mine and also southeast of the Agnico Eagle’s Goldex Mine. The agreements also entitled the Company to 15% of the gross proceeds (cash and shares) should the underlying properties be sold or joint ventured. The projects are owned and operated by Eagle Ridge Mining Inc. (“Eagle Ridge”).

In May 2021, the Company further entered into two agreements with Eagle Ridge whereby the first agreement amends a previous royalty, increasing Abitibi Royalties’ interest in the Malartic South Property from a 2% to 3% NSR on certain claims and the second agreement expands Abitibi Royalties’ NSR to the south with a new 2.5% royalty and 15% of any gross proceeds (cash and shares) should the property be sold or joint ventured. The purchase price paid by the Company totaled $26,500.

| 11 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

7) ROYALTY INTERESTS (continued)

TheCompany’s other royalty interest are as follows:

■	Revillard<br> Property 2% Royalty - Malartic, Québec
■	15%<br> Net Profit Interest (“NPI”) in the vicinity of Canadian Malartic Mine - Malartic, Québec
■	Midway<br> Project 1.5% Royalty - Malartic, Québec
■	1.5%<br> Royalty in the Abitibi region, Québec
■	1.0%<br> NSR on the New Alger Project in the Abitibi region, Québec.

8)INVESTMENTS

	As at June 30, 2021				As<br> at December 31, 2020
	Number of shares		Fair value		Number<br> of shares		Fair<br> value
Yamana Gold Inc.		996,795	$	5,203,270		2,105,895	$	15,309,857
Agnico<br> Eagle Mines Limited		338,197		25,351,247		375,897		33,676,612
				30,554,517				48,986,469
Other<br> investments				509,874				515,447
			$	31,064,391			$	49,501,916

For the six months ended June 30, 2021, the Company was called to deliver 37,700 common shares of Agnico Eagle at share prices ranging from US$50.00 to US$65.00 per share and received, before commissions, $2,734,388 (or US$2,149,000) and 1,109,100 common shares of Yamana at share prices ranging from US$3.00 to US$5.00 per share and received, before commissions, $6,579,645 (or US$5,171,050) from call options it had sold.

For the six months ended June 30, 2020, the Company was called to deliver 350,800 common shares of Agnico Eagle at share prices ranging from US$43.00 to US$55.00 per share and received, before commissions, $22,892,404 (or US$17,453,800) and 751,800 common shares of Yamana at share prices ranging from US$2.50 to US$3.50 per share and received, before commissions, $3,163,907 (or US$2,412,250) from call options it had sold. In addition, the Company was called to purchase 361,400 common shares of Agnico Eagle at a share price of US$45.00 per share and paid before commissions, $23,566,713 (or US$16,263,000) from put options it had sold.

Restrictedcash

Restricted cash represents funds held as collateral on the put option contracts referred to in the Derivative financial instruments below. The funds will become unrestricted once the put option contracts are exercised, repurchased or expired. Restricted cash of $3,961,104 (or US$3,193,151) as at June 30, 2021 (December 31, 2020 - $385,415 (or US$302,405)) relates to funds held as collateral on the outstanding put option contracts of 180,300 shares (December 31, 2020 - 99,300 shares) of Agnico and of 1,695,500 shares (December 31, 2020 - nil shares) of Yamana as at June 30, 2021.

| 12 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

9) DERIVATIVE FINANCIAL INSTRUMENTS

The total call and put option contracts outstanding as at June 30, 2021 and December 31, 2020 are as follows:

	Expiry<br> date		As<br> at June 30, 2021
Calls
Yamana	Jul. 16, 2021	140,000	$	29,498
Yamana	Jan. 21, 2022	642,700		171,403
Yamana	Jan. 20, 2023	23,100		19,112
Agnico	Jan. 21, 2022	240,100		489,123
Agnico	Feb. 18, 2022	10,500		37,926
Agnico	Jan.<br> 20, 2023	21,500		132,256
		1,077,900	$	879,318
Puts
Yamana	Jul. 16, 2021	1,051,000		117,235
Yamana	Oct. 15, 2021	644,500		303,541
Agnico	Nov 19, 2021	81,000		155,607
Agnico	Jan<br> 21, 2022	99,300		110,437
		1,875,800	$	1,566,138

All values are in US Dollars.

	Expiry<br> date		As at December 30, 2020
Calls			****
Yamana	January 15, 2021	1,247,000	$	1,574,731
Yamana	April 16, 2021,	320,000		52,329
Yamana	July 16, 2021	140,000		57,039
Yamana	January 21, 2022	367,700		522,730
Yamana	January 2, 2023	2,100		3,208
Agnico	January 15, 2021	118,300		761,259
Agnico	February 19, 2021	82,200		53,360
Agnico	May 5, 2021	57,400		83,013
Agnico	January 21, 2022	103,600		929,767
Agnico	January 20, 2023	8,000		83,420
Puts
Agnico	February 19, 2021	56,000		22,217
Agnico	January<br> 21, 2022	43,300		100,245
		2,545,600	$	4,243,318

All values are in US Dollars.

| 13 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

9) DERIVATIVE FINANCIAL INSTRUMENTS (continued)

For the three months ended June 30, 2021, the Company sold 2,315 call contracts (855 calls on Agnico Eagle shares and 1,460 calls on Yamana Gold shares) and sold 17,765 put contracts (810 puts on Agnico Eagle shares and 16,955 on Yamana Gold shares) for total cash proceeds of $716,086 (or US$582,374). In addition, 3,774 call option contracts expired (574 calls on Agnico Eagle shares and 3200 calls on Yamana Gold shares), 15,265 put options expired (810 on Agnico Eagle shares and 14,455 on Yamana Gold shares), and 2,500 put contracts on Yamana Gold shares were repurchased before expiration for $5,123 (or US$4,100).

For the six months ended June 30, 2021, the Company sold 4,565 call contracts (1,605 calls on Agnico Eagle shares and 2,960, calls on Yamana Gold shares) and sold 36,090 put contracts (2,180 puts on Agnico Eagle shares and 33,910 on Yamana Gold shares) for total cash proceeds of $1,650,504 (or US$1,318,041). In addition, 6,801 call option contracts expired (2,202 calls on Agnico Eagle shares and 4,599 calls on Yamana Gold shares), 15,265 put options expired (810 on Agnico Eagle shares and 14,455 on Yamana Gold shares), and 3,060 put contracts (560 on Agnico Eagle shares and 2,500 on Yamana Gold shares) were repurchased before expiration for $10,276 (or US$8,150). Also, 11,468 call contracts were exercised (377 calls on Agnico Eagle shares and 11,091 on Yamana Gold shares) as described in note 8.

For the three months ended June 30, 2020, the Company sold 3,630 call contracts (1,134 calls on Agnico Eagle shares and 2,496 calls on Yamana Gold shares) and sold 810 put contracts on Agnico Eagle shares for total cash proceeds of $830,685 (or US$601,440). In addition, 810 put option contracts on Agnico Eagle shares expired and 2 call contracts on Yamana shares were exercised before expiration.

For the six months ended June 30, 2020, the Company sold 10,703 call contracts (1,307 calls on Agnico Eagle shares and 9,396 calls on Yamana Gold shares) and sold 4,984 put contracts on Agnico Eagle shares for total cash proceeds of $1,426,901 (or US$1,051,105). In addition, 11,087 call option contracts on Yamana shares expired, 2 call contracts on Yamana shares were exercised before expiration and 3,600 call contracts on Yamana shares were repurchased before expiration for $29,119 (or US$22,250).

| 14 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

10) DEFERRED INCOME TAXES

Deferredtax assets (liabilities) and variation of recognized amounts

	As at January 1, 2021			Recognized<br> in profit or loss			As at June 30,<br> <br>2021
Exploration and<br> evaluation assets	$	320,013		$	(92,053	)	$	227,960
Investments		(3,582,196	)		2,144,049			(1,438,147	)
Share issuance costs		6,286			(2,096	)		4,190
Derivative<br> financial instruments		562,239			(354,726	)		207,513
	$	(2,693,658	)	$	1,695,174		$	(998,484	)
	As at January 1,<br> <br>2020			Recognized<br> in profit or loss			As at December 31,<br> <br>2020
---	---	---	---	---	---	---	---	---	---
Exploration and<br> evaluation assets	$	687,841		$	(367,828	)	$	320,013
Investments		(6,047,641	)		2,465,445			(3,582,196	)
Share issuance costs		8,389			(2,103	)		6,286
Non-capital losses		915,903			(915,903	)		-
Derivative<br> financial instruments		1,189,723			(627,484	)		562,239
	$	(3,245,785	)	$	552,127		$	(2,693,658	)

11) EQUITY

a)Capital stock

The capital stock of the Company consists only of fully paid common shares.

Authorized

■	Unlimited<br> number of common shares, without par value, voting and participating.
■	Unlimited<br> number of preferred shares, without par value, non-participating. The directors will define the rights, privileges, restrictions<br> and conditions of these shares upon issuance.

| 15 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

11) EQUITY (continued)

NormalCourse Issuer Bid

For the three months ended June 30, 2021, the Company repurchased and cancelled 4,400 of its common shares at prices varying from $22.53 to $23.00 per share for a total of $99,847.

For the six months ended June 30, 2021, the Company repurchased and cancelled 11,600 of its common shares at prices varying from $21.70 to $25.98 per share for a total of $269,275.

For the three months ended June 30, 2020, the Company repurchased and cancelled 10,000 common shares at prices varying from $15.14 to $22.25 per share for a total of $195,471.

For the six months ended June 30, 2020, the Company repurchased and cancelled 25,700 common shares at prices varying from $15.14 to $22.25 per share for a total of $481,415.

12) REMUNERATION

a) Salaries and employee benefits expense

The Company has implemented an Executive Compensation Policy (the “Policy”) which approved certain amounts being paid and accrued to directors and officers. The Company’s executives receive a salary in accordance with the amounts approved in the Policy and monthly accruals are being recorded to cover the total estimated meeting fee remuneration payable to directors. The directors and executive officers are also entitled to receive incentive stock options. The Company does not offer any other benefits or perquisites to its directors and executive officers. Refer below for non-renewal of the stock option plan.

| 16 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

12) REMUNERATION (continued)

b)Share-based payments

Stockoption plan

The Company has adopted a 20% fixed option plan (the “Plan”) in 2013. Pursuant to the Plan, options, for an aggregate total of 1,740,200 common shares, (representing 20% of the issued number of common shares \ outstanding at the time) may be granted to its directors, officers, employees, consultants or management companies from time to time. The exercise price of each option is fixed by the Board of Directors, but would not be less than the closing price of the Company’s share on the trading day immediately prior to the date of grant less any discount permitted by the TSX Venture Exchange (the “Exchange”); if no sales were reported, it would be the sales closing price on the last trading day immediately prior to the date of grant on which sales were reported. The vesting period of the options would be determined by the Board of Directors, in accordance with the rules and regulations of the Exchange.

The Company has not renewed its stock option plan and has not granted stock options under the current plan since 2014. There are no stock options available under the plan eligible for grant.

13) EARNINGS (LOSS) PER SHARE

Earnings (loss) per share has been calculated using the weighted average number of common shares outstanding for the three and six months ended June 30, 2021 and 2020 as follows:

	For<br> the three months ended<br><br> <br>June<br> 30,				For<br> the six months ended<br><br> <br>June<br> 30,
	2021		2020		2021			2020
Net<br> income (loss) for the period attributable to shareholders	$	1,088,967	$	16,641,312	$	(4,425,278	)	$	12,236,240
Weighted<br> average number of common shares outstanding – Basic		12,463,909		12,501,616		12,467,991			12,509,192
Dilutive effect of stock options		-		-		-			-
Weighted<br> average number of common shares outstanding - Diluted		12,463,909		12,501,616		12,467,991			12,509,192
Basic<br> earnings (loss) per share	$	0.09	$	1.33	$	(0.35	)	$	0.98
Diluted<br> earnings (loss) per share	$	0.09	$	1.33	$	(0.35	)	$	0.98

| 17 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

14) PROFESSIONAL FEES

The following table shows professional fees for the three and six months ended June 30, 2021 and 2020:

	For<br> the three months ended<br><br> <br>June<br> 30,				For<br> the six months ended<br><br> <br>June<br> 30,
	2021		2020		2021		2020
Exchange, regulatory<br> and transfer agent fees	$	81,956	$	15,467	$	127,807	$	73,189
Media relations and other<br> consultants		44,574		29,624		93,773		71,178
Professional<br> fees		84,167		63,941		103,260		93,788
	$	210,697	$	109,032	$	324,840	$	238,155

15) RELATED PARTY TRANSACTIONS

a)Transactions with the major shareholder

Starting on July 1, 2020, the Company entered into a Cost Sharing Arrangement (the “Sharing Arrangement “) with Golden Valley, pursuant to which Golden Valley will provide certain management and financial services such as office space and administrative support relating to the exploration offices located at 2864 Chemin Sullivan, Val-d’Or, Québec, J9P 0B9, in consideration of $21,404 per year (the “reimbursement”), payable on a monthly basis. The Sharing Arrangement provides for the reimbursement to be reviewed on an annual basis. For the three and six months ended June 30, 2021, the Company reimbursed Golden Valley the amount of $4,354 and $8,708 (for the three and six months ended June 30, 2020 - $nil) relating to this arrangement.

For the three and six months ended June 30, 2021, Golden Valley recharged office expenses to the Company for a total amount of $7,891 and $15,588 (for the three and six months ended June 30, 2020 - $5,278 and $10,495), respectively

For efficiency reasons, where the Company and Golden Valley are dealing with the same suppliers one may pay for both and be reimbursed by the other. As at June 30, 2021, the Company had indebtedness of $5,930 (December 31, 2020 - $10,956) to Golden Valley, which is included in accounts payable and accrued liabilities.

| 18 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

15) RELATED PARTY TRANSACTIONS (continued)

b) Transactions with key management

Key management personnel of the Company are the members of the Board of directors, as well as the President and Chief Executive Officer and the Chief Financial Officer. For the three and six months ended June 30, 2021 and 2020, the compensation paid to key management is presented below:

	For<br> the three months ended<br><br> <br>June<br> 30,				For<br> the six months ended<br><br> <br>June<br> 30,
	2021		2020		2021		2020
Salaries and<br> benefits	$	211,102	$	211,408	$	424,062	$	419,365
Meeting fees		42,500		37,500		85,000		75,000
Payroll<br> levies		8,314		16,862		46,397		55,583
	$	261,916	$	265,770	$	555,459	$	549,948
■	The<br> President and Chief Executive Officer is using his Toronto, Ontario property as an office for the Company and is being reimbursed<br> the expenses (rent and municipal taxes) related to the property. For the three and six months ended June 30, 2021, the Company has<br> paid $1,660 and $3,320 (for the three and six months ended June 30, 2020 - $1,660 and $3,320) for the Toronto, Ontario office.
---	---

16) CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company manages its capital structure and adjusts it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares or repurchase shares under its Normal Course Issuer Bid to improve its financial performance and flexibility. The Company monitors capital on the basis of the carrying amount of equity. Capital for reporting period under review is summarized in the consolidated Statement of Changes in Equity. The Company is not subject to any externally imposed capital requirements.

| 19 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

17) FINANCIAL INSTRUMENTS

Fairvalue

Financial assets and liabilities measured at fair value in the statement of financial position are grouped into three levels of fair value hierarchy. The three levels are defined based on the observability of the significant inputs to the measurement, as follows:

■	Level<br> 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
■	Level<br> 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;<br> and,
■	level<br> 3: unobservable inputs for the assets or liabilities.

The fair value of the investments and the derivative financial instruments have been estimated by reference to their quoted prices at the reporting date. The investments and the derivative financial instruments measured at fair value in the statements of financial position as at June 30, 2021 and December 31, 2020 are classified in Level 1. The carrying amounts and fair value of financial instruments presented in the statements of financial position are as follows:

	June 30, 2021				December<br> 31, 2020
	Carrying amount		Fair value		Carrying<br> amount		Fair<br> value
Financial<br> assets
Financial<br> assets at amortized costs
Cash	$	14,803,569	$	14,803,569	$	12,998,678	$	12,998,678
Restricted<br> cash		3,961,104		3,961,104		385,415		385,415
Royalty<br> receivable		450,564		450,564		425,180		425,180
Other<br> receivables		32,427		32,427		95,361		95,361
Financial<br> assets at fair value through profit<br> and loss
Investments<br> (level 1)		31,064,391		31,064,391		49,501,916		49,501,916
	$	50,312,055	$	50,312,055	$	63,406,550	$	63,406,550
Financial<br> liabilities
Financial<br> liabilities measured at amortized<br> cost
Accounts<br> payable and accrued liabilities	$	125,611		125,611	$	727,968		727,968
Financial<br> liabilities measured at fair value<br> through profit and loss
Derivatives<br> financial instruments (level 1)		1,566,138		1,566,138		4,243,318		4,243,318
	$	1,691,749	$	1,691,749	$	4,971,286	$	4,971,286

| 20 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

17) FINANCIAL INSTRUMENTS (continued)

Fairvalue (continued)

Financialrisk

The Company is exposed to various financial risks in relation to its financial instruments. The main type of risks the Company is exposed to are market risk, credit risk and liquidity risk. The Company focuses on actively securing short to medium-term cash flow by minimizing the exposure to financial markets. The Company’s main financial risk exposure and its financial risk management policies are as follows:

a) Credit risk

As at June 30, 2021 and December 31, 2020, the Company’s maximum exposure to credit risk is limited to the carrying amount of the financial assets at the reporting date as summarized below:

	As at<br><br> <br>June 30, 2021		As<br> at<br><br> <br>December<br> 31, 2020
Cash	$	14,803,569	$	12,998,678
Restricted cash	****	3,961,104		385,415
Royalty receivable	****	450,564		425,180
Other<br> receivables	****	32,427		95,361
	$	19,247,664	$	13,904,634

The risk related to cash and restricted cash is considered negligible as the Company is dealing with a reputable financial institution whose credit rating is excellent. The Company’s management considers that the above financial assets are of good credit quality. The credit risk exposure for the Company’s royalty, dividends and other receivables is considered minimal as these receivables have since been received subsequent to reporting-end.

| 21 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

17) FINANCIAL INSTRUMENTS (continued)

b) Liquidity risk

The following table presents contractual maturities of the Company’s financial liabilities:

	As at June 30,<br><br> <br>2021		As<br> at December 31, 2020
Within<br> three months	****
Accounts<br> payable and accrued liabilities	$ ****	125,611	$	727,968
Derivative<br> financial instruments		146,733		2,411,567
	$	272,344	$	3,139,535
Three to<br> twelve months	****	****
Derivative<br> financial instruments	$	1,268,037	$	192,381
	$	1,268,037	$	192,381
Beyond<br> twelve months	****	****
Derivative<br> financial instruments	$	151,368	$	1,639,370
	$	151,368	$	1,639,370

c) Market risk

Foreigncurrency risk

| 22 |

| --- |

ABITIBIROYALTIES INC.

Notesto the Condensed Interim Consolidated Financial Statements

June30, 2021 and 2020

(Unaudited

expressed in Canadian dollars unless otherwise noted)

17) FINANCIAL INSTRUMENTS (continued)

Foreigncurrency risk (continued)

Foreign currency denominated financial assets and liabilities in U.S. dollars, and which expose the Company to the currency risk are as follows:

	As at<br><br> <br>June 30, 2021			As<br> at <br>December 31, 2020
Cash	$	10,397,074		$	7,125,721
Restricted cash		3,193,151			302,405
Royalty receivable		363,534			333,946
Dividend receivable		25,137			54,251
Accounts payable and accrued<br> liabilities		(27,110	)		(3,040	)
Derivative<br> financial instruments		(1,263,625	)		(3,332,798	)
	$	12,688,161	****	$	4,480,485

A +/- 1% change in the Canadian /U.S. exchange rate would have had an impact of +/- $157,257 as at June 30, 2021 ($57,046 at December 31, 2020) on profit or loss of the period and equity.

Otherprice risk sensitivity

The Company is exposed to fluctuations in the market prices of its investments in quoted mining exploration companies and its derivative financial instruments. The fair value of those instruments represents the maximum exposure to price risk. If the quoted price for the investments and the derivative financial instruments had changed by +/- 1%, other comprehensive income would have changed by +/- $294,983 as at June 30, 2021 ($452,586 as at December 31, 2020).

18) COMMITMENTS

The Company has entered into agreements with officers that include termination and change of control clauses. In the case of termination, the officers are entitled to an amount equal to a multiple (ranging from one to two times) the annual base fee payable. In the case of a change of control, the officers are entitled to an amount equal to a multiple (ranging from one to two times) the sum of the annual base fee. As at June 30, 2021, total possible future payments relating to the officers’ base fees under these agreements amount to $1,545,000.

| 23 |

| --- |

Exhibit99.6

GoldenValley Mines and Royalties Ltd.

(FormerlyGolden Valley Mines Ltd.)

ConsolidatedFinancial Statements

Forthe year ended December 31, 2020 and 2019

(Expressedin Canadian dollars)

| 1 |

| --- | | INDEPENDENT AUDITOR’S REPORT | | --- |

To the Shareholders of Golden Valley Mines and Royalties Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Golden Valley Mines and Royalties Ltd., which comprise the consolidated statements of financial position as at December 31 2020 and December 31, 2019, and the related consolidated statements of net income, statement of comprehensive income, changes in equity and cash flows for the years then ended, and the related notes to the consolidated financial statements including a summary of significant accounting policies.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Golden Valley Mines and Royalties Ltd. as of December 31 2020 and December 31, 2019, and consolidated financial performance and its consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basisfor Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 required to be independent of Golden Valley Mines and Royalties Ltd. and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilitiesof Management for the consolidated Financial Statements

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Golden Valley Mines and Royalties Ltd. ‘s ability to continue as a going concern within one year after the date that the consolidated financial statements are available to be issued.

Auditor’sResponsibilities for the Audit of the Financial Statements

| 2 |

| --- |

In performing an audit in accordance with generally accepted auditing standards, we:

●	Exercise<br> professional judgment and maintain professional skepticism throughout the audit.
●	Identify<br> and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design<br> and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the<br> amounts and disclosures in the financial statements.
●	Obtain<br> an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,<br> but not for the purpose of expressing an opinion on the effectiveness of Golden Valley Mines and Royalties Ltd. ‘s internal<br> control. Accordingly, no such opinion is expressed.
●	Evaluate<br> the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as<br> well as evaluate the overall presentation of the financial statements.
●	Conclude<br> whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Golden<br> Valley Mines and Royalties Ltd ‘s ability to continue as a going concern for a reasonable period of time.

/s/ MNP LLP

Ottawa, Ontario

January 5, 2022

| 3 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(formerlyGolden Valley Mines Ltd.)

ConsolidatedStatements of Financial Position

(Expressed in Canadian Dollars)

		As at December 31,			As at December 31,
	Notes	2020			2019
ASSETS
Current
Cash and cash equivalents	6	$	13,703,034		$	3,003,083
Restricted cash	9		385,415			-
Accounts receivable			-			268,195
Other assets	7		406,280			534,774
Royalty receivable			425,180			999,252
Prepaids and other receivables	8		335,716			145,116
			15,255,625			4,950,420
Non-current
Investments	9		49,501,916			50,636,738
Investments in associates	11		2,127,431			1,343,033
Exploration and evaluation assets	12		463,429			1,497,170
Other assets	7		110,957			-
Property and equipment			-			1,027
TOTAL ASSETS		$	67,459,358		$	58,428,388
LIABILITIES
Current
Accounts payable and accrued liabilities	24	$	890,496		$	727,745
Income taxes payable			2,464,798			-
Derivative financial instruments	14		4,243,318			8,979,047
			7,598,612			9,706,792
Non-Current
Loan	15		60,000			-
Deferred tax liability	16		2,693,658			3,245,785
Total liabilities			10,352,270			12,952,577
EQUITY
Capital stock	17		28,636,185			28,420,603
Contributed surplus			6,324,653			6,033,488
Deficit			(7,304,410	)		(11,945,215	)
Total equity attributable to owners of the parent company			27,656,428			22,508,876
Non-controlling interest			29,450,660			22,966,935
Total equity			57,107,088			45,475,811
TOTAL LIABILITIES AND EQUITY		$	67,459,358		$	58,428,388

Approved by the Board of Directors on January 5, 2022.

“David Garofalo”	“Josephine Man”
(signed<br> David Garofalo)	(signed<br> Josephine Man)
Director	Director

Theaccompanying notes are an integral part of the consolidated financial statements.

| 4 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(formerlyGolden Valley Mines Ltd.)

ConsolidatedStatements of Net income and Statement of Comprehensive income

(Expressed in Canadian Dollars)

		For the year ended
		December 31,
	Notes	2020			2019
Revenues
Royalties		$	685,698		$	3,037,260
Dividends			639,938			437,418
Option income			209,586			67,505
Other fees			893			1,747
			1,536,115			3,543,930
Operating Expenses
Salaries and other employee benefits			1,950,476			1,660,461
Professional fees			871,819			775,916
Share-based compensation	18		255,904			405,468
General and administrative expenses	19		393,525			268,490
Management fees	24		166,200			110,800
Exploration and evaluation			86,538			65,357
Royalties	10		37,701			550
Depreciation of property and equipment			1,028			3,553
Impairment of exploration and evaluation assets			-			170,698
			3,763,191			3,461,293
Operating income (loss)			(2,227,076	)		82,637
Other income (loss)
Change in fair value of investments			7,150,480			16,942,272
Change in fair value of derivatives			7,881,792			(5,495,670	)
Change in fair value of derivatives resulting from foreign exchange			383,345			249,059
Change in fair value of other assets			93,700			128,692
Gain on sale of mineral property	12		139,367			-
Finance income			74,028			16,554
Foreign exchange gain (loss)			2,153,552			(76,625	)
Finance cost			(128,784	)		(68,389	)
Share of loss of associates	11		(507,269	)		(465,377	)
			17,240,211			11,230,516
Net income before income taxes			15,013,135			11,313,153
Income tax expense
Current tax expense			2,464,798			-
Deferred tax expense (recovery)			(552,127	)		1,813,320
Income tax expense	16		1,912,671			1,813,320
Net income and total comprehensive income for the year		$	13,100,464		$	9,499,833
Net income and total comprehensive income attributable to:
Shareholders of Golden Valley Mines			5,005,946			3,282,652
Non-controlling interest			8,094,518			6,217,181
		$	13,100,464		$	9,499,833
Earnings per share attributable to Golden Valley Mines’ shareholders:
Basic earnings per share	22	$	0.371		$	0.245
Diluted earnings per share	22	$	0.351		$	0.245

Theaccompanying notes are an integral part of the consolidated financial statements.

| 5 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(formerlyGolden Valley Mines Ltd.)

ConsolidatedStatements of Changes in Equity

(Expressed in Canadian Dollars)

													Total attributable to
							Contributed						owners of the			Non-controlling			Total
		Capital Stock					Surplus			Deficit			parent company			interest			Equity
	Notes	Number
Balance at January 1, 2020			13,434,760	$	28,420,603		$	6,033,488		$	(11,945,215	)	$	22,508,876		$	22,966,935		$	45,475,811
Share-based payments			-		-			381,117			-			381,117			-			381,117
Shares issued by exercise of stock options	17		83,700		215,582			(89,952	)		-			125,630			-			125,630
Change in interest of subsidiaries			-		-			-			(365,141	)		(365,141	)		(1,610,793	)		(1,975,934	)
			13,518,460		28,636,185			6,324,653			(12,310,356	)		22,650,482			21,356,142			44,006,624
Net income and total comprehensive income for the year											5,005,946			5,005,946			8,094,518			13,100,464
Balance at December 31, 2020			13,518,460	$	28,636,185		$	6,324,653		$	(7,304,410	)	$	27,656,428		$	29,450,660		$	57,107,088
Balance at January 1, 2019			13,391,858	$	28,289,902		$	5,683,266		$	(15,150,387	)	$	18,822,781		$	17,639,604		$	36,462,385
Share-based payments			-		-			405,467			-			405,467			-			405,467
Shares issued by exercise of stock options	17		42,903		133,429			(55,245	)		-			78,184			-			78,184
Share issue expenses					(2,728	)		-			-			(2,728	)		-			(2,728	)
Change in interest of subsidiary			-		-			-			(77,480	)		(77,480	)		(889,850	)		(967,330	)
			13,434,760		28,420,603			6,033,488			(15,227,867	)		19,226,224			16,749,754			35,975,978
Net income and total comprehensive income for the year											3,282,652			3,282,652			6,217,181			9,499,833
Balance at December 31, 2019			13,434,760	$	28,420,603		$	6,033,488		$	(11,945,215	)	$	22,508,876		$	22,966,935		$	45,475,811

Refer to “Share Consolidation” section of Note 17 “Capital Stock”.

Theaccompanying notes are an integral part of the consolidated financial statements.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(formerlyGolden Valley Mines Ltd.)

ConsolidatedStatements of Cash Flows

(Expressed in Canadian Dollars)

	Note	2020			2019
OPERATING ACTIVITIES
Net income for the year		$	13,100,464		$	9,499,833
Adjustments:
Share-based payments	18		255,904			405,468
Depreciation of property and equipment			1,028			3,553
Option income			(209,586	)		(67,505	)
Foreign exchange gain			429,173			76,625
Share of loss in associates	11		507,269			465,377
Impairment of exploration and evaluation assets			-			170,698
Royalty interests			37,701			550
Deferred tax expense (recovery)			(552,127	)		1,813,320
Realized loss (gain) on sale of other financial assets			(32,056	)		2,655
Gain on sale of mineral properties			(139,367	)		-
Change in fair value of other assets			(61,644	)		(131,347	)
Change in fair value of investments			(7,150,480	)		(16,942,272	)
Change in fair value of derivatives			(8,265,137	)		5,246,611
			(2,078,858	)		543,566
Changes in working capital items	25		3,429,428			(921,653	)
Cash flows provided by (used for) operating activities			1,350,570			(378,087	)
INVESTING ACTIVITIES
Proceeds from settlement of derivative financial instruments	14		31,770,315			781,613
Payment from settlement of derivative financial instruments	14		(23,566,713	)		-
Proceeds from sale of derivative financial instruments			3,582,525			1,267,608
Repurchase of derivative financial instruments			(53,116	)		(131,050	)
Increase in restricted cash			(385,415	)		-
Acquisition of investments			(484,624	)		(202,671	)
Proceeds on sale of other investments			638,825			50,418
Disposal of other assets			220,281			385,204
Tax credits received			-			2,821
Proceeds from mining option agreements			135,000			-
Acquisition of royalty interest			(37,701	)		(550	)
Additions to exploration and evaluation assets			(250,519	)		(45,574	)
Cash flows provided by investing activities			11,568,858			2,107,819
FINANCING ACTIVITIES
Proceeds from exercise of stock options			125,630			78,184
Share issue expenses			-			(2,728	)
Proceeds from loan			60,000			-
Change in interest of subsidiary			(1,975,934	)		(967,330	)
Cash flows used for financing activities			(1,790,304	)		(891,874	)
Effect of foreign exchange rate changes on cash and cash equivalents			(429,173	)		(76,625	)
Net change in cash and cash equivalents		$	10,699,951		$	761,233
Cash and cash equivalents, beginning of year			3,003,083			2,241,850
Cash and cash equivalents, end of year		$	13,703,034		$	3,003,083

See Note 25 for additional information on cash flows.

Theaccompanying notes are an integral part of the consolidated financial statements.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

1)NATURE OF OPERATIONS

Golden Valley Mines and Royalties Ltd. (hereinafter “Golden Valley” or the “Company”) and its subsidiaries specialize in identifying, acquiring and developing exploration and evaluation of mineral properties in Canada as well as acquiring royalties.

At the Company’s Annual General and Special Meeting of Shareholders held on June 25, 2021, the shareholders passed a special resolution to change the Company’s name to “Golden Valley Mines and Royalties Ltd”.

Golden Valley was incorporated on August 15, 2000 under the Canada Business Corporations Act. Golden Valley has the following subsidiaries: Abitibi Royalties Inc. (“Abitibi Royalties”) and Calone Mining Ltd (“Calone Mining”) both incorporated under the British Columbia Business Corporations Act. Abitibi Royalties and Calone Mining were incorporated on February 18, 2010 and on February 23, 2010, respectively, pursuant to the British Columbia Business Corporations Act.

As a result of the business combinations completed on November 5, 2021 (see Note 28 “Subsequent Events”), Golden Valley and Abitibi Royalties became wholly-owned subsidiaries of Gold Royalty Corp. (“Gold Royalty”), a company incorporated and domiciled in Canada with common shares and common share purchase warrants listed on the NYSE American under the symbols “GROY” and “GROY.WS”, respectively. An application was made for Golden Valley and Abitibi Royalties to cease to be reporting issuers under applicable Canadian securities laws and to otherwise terminate Golden Valley’s and Abitibi Royalties’ public reporting requirements, which application was accepted on November 22, 2021. Furthermore, the location of the registered office of Golden Valley and Abitibi Royalties changed to 1000 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2, Canada. Similarly, the location of the principal address of Golden Valley and Abitibi Royalties changed to 1030 West Georgia Street, Suite 1830, Vancouver, British Columbia, V6E 2Y3, Canada.

The Company’s investments in associates include International Prospect Ventures Ltd. (“International Prospect”) and Val-d’Or Mining Corporation (“Val-d’Or Mining”), which are involved in the process of exploring, evaluating and promoting its mineral properties and other projects.

2)BASIS OF PRESENTATION

a)Statement of Compliance

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

2)BASIS OF PRESENTATION (continued)

b)Approval of Financial Statements

These consolidated financial statements were approved for issuance by the Board of Directors on January 5, 2022.

c)Basis of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when an investor is exposed, or has rights, to variable returns from its involvement with an investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the consolidated financial statements from the date control is obtained until the date control ceases. Where the Company’s interest in a subsidiary is less than 100%, the Company recognizes non-controlling interests. All intercompany balances, transactions, income, expenses, profits and losses, including unrealized gains and losses have been eliminated on consolidation. When the Company ceases to have control; any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset.

For Abitibi Royalties, the Company has control through its own percentage holdings in Abitibi Royalties combined with interest of certain members of Golden Valley’s Board of Directors in Abitibi as well as its ability to appoint members of the Board of Directors and key management who have the ability to direct its activities.

Associates

Associates are entities, including unincorporated entities such as partnerships, over which the Company has significant influence and that are neither subsidiaries nor interests in joint arrangements. Significant influence is the ability to participate in the financial and operating policy decisions of the investee without having control or joint control over those policies. In general, significant influence is presumed to exist when the Company has between 20% and 50% of voting power. Significant influence may also be evidenced by factors such as the Company’s representation on the Board of Directors, participation in policy-making of the investee, material transactions with the investee, interchange of managerial personnel, or the provision of essential technical information.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

2)BASIS OF PRESENTATION (continued)

Associates(continued)

Associates are equity accounted for from the effective date of commencement of significant influence to the date that the Company ceases to have significant influence. Results of associates are equity accounted for using the results of their most recent annual financial statements or interim financial statements, as applicable. Losses from associates are recognized in the consolidated financial statements until the interest in the associate is written down to nil. Thereafter, losses are recognized only to the extent that the Company is committed to providing financial support to such associates.

The carrying value of the investment in an associate represents the cost of the investment, including goodwill, a share of the post-acquisition retained earnings and losses, accumulated other comprehensive income (“AOCI”) and any impairment losses. At the end of each reporting period, the Company assesses whether there is any objective evidence that its investment in associate is impaired. No impairment was required for the years ended December 31, 2020 and 2019.

The significant subsidiaries and investments in associates of the Company are listed below. Principal activities of these entities, which are all incorporated in Canada, are mineral exploration and acquisition of royalties and have a reporting date of December 31:

	As at December 31,
Percentage of ownership	2020			2019
Subsidiaries (consolidated)
Abitibi Royalties Inc.		44.93	%		44.76	%
Calone Mining Ltd.		100.00	%		100.00	%
Investment in associates (equity method)
International Prospect Ventures Ltd.		13.44	%		16.50	%
Val-d’Or Mining Corporation		39.57	%		37.15	%

3)NEW AND REVISED IFRS

Accountingstandards issued and in effect during the year

IAS1 “Presentation of Financial Statements” (“IAS 1”)

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

3)NEW AND REVISED IFRS (continued)

IAS1 “Presentation of Financial Statements” (“IAS 1”) (continued)

IAS 1 has been revised to incorporate a new definition of “material” and IAS 8 has been revised to refer to this new definition in IAS 1. The amendments are effective for annual reporting periods beginning on or after January 1, 2020.

On January 1, 2020, the Company has adopted IAS 1 and has concluded that, based on its current operations, the adoption of IAS 1 had no significant impact on the Company’s financial statements.

IAS8 “Accounting Policies, Changes in Accounting Estimates and Errors” (“IAS 8”)

On January 1, 2020, the Company has adopted IAS 8 and has concluded that, based on its current operations, the adoption of IAS 8 had no significant impact on the Company’s financial statements.

Standardsand interpretations issued but not yet effective

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies that have been applied in the preparation of these consolidated financial statements are summarized below:

a)Foreign Currency

Functionaland presentation

The consolidated financial statements are presented in Canadian dollars, which is also the functional currency of the parent company and all subsidiaries.

Foreign currency transactions are translated into the functional currency, using the exchange rates prevailing at the dates of the transactions (spot exchange rates). Foreign exchange gains and losses resulting from the settlement of such transactions and from the premeasurement of monetary items denominated in foreign currency at year-end exchange rates are recognized in profit or loss.

b)Revenue recognition

Revenue comprises the fair value of the consideration received or receivable arising from rendering of services, the use by others of the Company’s assets yielding option income and royalties, and the results on investments in financial instruments which yield interest and dividends. The Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company and when the specific criteria have been met for each of the Company’s activities as described below:

Royalties

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Dividends

Optionincome

Geologicalfees

The geological fees are measured by reference to the fair value of consideration received or receivable by the Company for services provided. They are recognized when there is reasonable evidence that an agreement has occurred, that the services were rendered, that the amount of the fees is fixed or measurable and that the collection is reasonably assured.

Interestincome

Interest income is recorded on an accrual basis.

c)Cash and cash equivalents

Cash and cash equivalents comprise cash in bank and demand deposits, which are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. It also includes highly liquid short-term investments initially maturing within three months of their acquisition date.

Restricted cash relates to funds held as collateral on the put option contracts referred to in the derivative financial instruments section below. The funds will become unrestricted once the put option contracts are exercised, repurchased or expired.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

d)Tax credit receivable

The Company is entitled to a refundable tax credit on qualified exploration expenditures incurred and a refundable credit on duties for losses under the Mining Tax Act. These tax credits are recognized against the exploration and evaluation expenditures incurred, based on estimates made by management. The Company records these tax credits when there is reasonable assurance with regards to collections and assessments and that the Company will comply with the conditions associated to them.

e)Property and equipment

Property and equipment are recognized at cost less accumulated depreciation. Cost includes all costs incurred initially to acquire or construct an item of property and equipment, costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and costs incurred subsequently to add to or replace part of it. Recognition of costs in the carrying amount of an item of property and equipment ceases when the asset is in the location and condition necessary for it to be capable of operating in the manner intended by management. Upon the transfer of exploration and evaluation assets to property and equipment under mining assets under construction, all subsequent expenditures on the construction, installation or completion of equipment and infrastructure facilities are capitalized within mining assets under construction. When development stage is completed, all assets included in the mining assets under construction category are then transferred to mining assets.

Depreciation is recognized on a straight-line basis to write down the cost to its estimated residual value, with a constant charge over the useful life of the asset. The periods generally applicable are as follows:

	Useful<br> life
Office<br> furniture	5<br> years
Computer<br> equipment	3<br> years
Leasehold<br> improvement	5<br> years
Exploration<br> and evaluation equipment	3<br> years

The depreciation expense for each period is recognized in profit or loss except for certain items of property and equipment related to exploration and evaluation activities where the depreciation expense is included in the carrying amount of an exploration and evaluation asset when it relates to a specific exploration and evaluation project. The residual value, depreciation method and the useful life of each asset are reviewed at least at each financial year-end.

The carrying amount of an item of property and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition of an item of property and equipment is included in profit or loss when the item is derecognized.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f)Exploration and evaluation expenditures and Exploration and evaluation assets

Once the legal right to undertake exploration and evaluation activities has been obtained, the costs of acquiring mineral rights, expenses related to the exploration and evaluation of mining properties less refundable tax credits related to these expenses are recognized as exploration and evaluation assets. Expenses related to exploration and evaluation include topographical, geological, geochemical and geophysical studies, exploration drilling, trenching, sampling and other costs related to the evaluation of the technical feasibility and commercial viability of extracting a mineral resource. The various costs are capitalized on a property-by-property basis pending determination of the technical feasibility and commercial viability of extracting a mineral resource. These assets are recognized as intangible assets and are carried at cost less any accumulated impairment losses. No depreciation expense is recognized for these assets during the exploration and evaluation phase.

Whenever a mining property is considered no longer viable, or is abandoned, the capitalized amounts are written down to their recoverable amounts; the difference is then immediately recognized in profit or loss.

When technical feasibility and commercial viability of extracting a mineral resource are demonstrable, exploration and evaluation assets related to the mining property are transferred to property and equipment in mining assets under construction. Before the reclassification, exploration and evaluation assets are tested for impairment and any impairment loss is recognized in profit or loss before reclassification. To date, neither the technical feasibility nor the commercial viability of a mineral resource has been demonstrated.

Although the Company has taken steps to verify title to the mining properties in which it holds an interest, in accordance with industry practices for the current stage of exploration and development of such properties, these procedures do not guarantee the validity of the Company’s titles. Property titles may be subject to unregistered prior agreements and non-compliance with regulatory requirements.

g)Disposal of interest in connection with option agreement

On the disposal of interest in connection with an option agreement, the Company does not recognize expenses related to the exploration and evaluation performed on the property by the acquirer. In addition, the cash or the share consideration received directly from the acquirer is credited against the costs previously capitalized to the property, and the surplus is recognized as a gain on the disposal of exploration and evaluation asset in Consolidated Statements of Net income and Comprehensive income.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

h)Royalty interests

Royalty interests consists of acquired net smelter returns on exploration and evaluation stage properties. Royalty interests for exploration and evaluation assets are recorded at cost and capitalized in accordance with IFRS 6 “Exploration for and Evaluation of Mineral Resources” (“IFRS 6”). Acquisition costs of exploration and evaluation royalty interests are capitalized and are not depleted until such time as revenue generating activities begin. Royalty interests for exploration and evaluation assets are assessed for impairment in accordance with IFRS 6 and are measured for any impairment in accordance with IAS 36 “Impairment of Assets” (“IAS 36”). An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use. An interest that has previously been classified as exploration and evaluation is also assessed for impairment before reclassification to development or production, and the impairment loss, if any, is recognized in net income.

i)Leases

Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Company’s incremental borrowing rate is used, being the rate that the Company would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Payments associated with short-term leases (12 months or less) and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss.

j)Impairment of exploration and evaluation assets

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at a cash-generating unit level. Whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, an asset or cash-generating unit is reviewed for impairment. Impairment reviews for exploration and evaluation assets are carried out on a project-by-project basis with each project representing a potential single cash generating unit.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

j)Impairment of exploration and evaluation assets (continued)

An impairment review is undertaken when indicators of impairment arise but typically when one of the following circumstances apply:

a)	the<br> right to explore the area has expired or will expire in the near future with no expectation of renewal;
b)	no<br> further exploration or evaluation expenditures in the area are planned or budgeted;
c)	no<br> commercially viable deposits have been discovered, and the decision has been made to discontinue exploration in the area;
d)	sufficient<br> work has been performed to indicate that the carrying amount of the expenditure carried as an asset will not be fully recovered.

Additionally, when technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the exploration and evaluation assets of the related mining property are tested for impairment before these items are transferred to property and equipment. An impairment loss is recognized in profit or loss for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less cost to sell and its value in use. An impairment charge is reversed if the asset’s or cash-generating unit’s recoverable exceeds its carrying amount. The amount of such reversal is limited to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined had no impairment loss previously been recognized.

k)Provisions

Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant.

The Company’s operations are governed by government environment protection legislation. Environmental consequences are difficult to identify in terms of amounts, timetable and impact. As of the reporting date, management believes that the Company’s operations are in compliance with current laws and regulations. Site restoration costs currently incurred are negligible.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l)Provisions (continued)

When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated, a restoration provision will be recognized in the cost of the mining property when there is a constructive commitment that has resulted from past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be measured with sufficient reliability. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized, unless it was assumed in the course of a business combination. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. As at December 31, 2020 and 2019, there was no provision recognized in the consolidated statement of financial position.

l)Income taxes

Tax expense recognized in profit or loss comprises the sum of deferred and current tax not recognized in other comprehensive loss or directly in equity.

Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority.

| 18 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

l)Income taxes (continued)

Changes in deferred tax assets or liabilities are recognized as deferred tax expense or recovery in profit or loss, except where they relate to items that are recognized in other comprehensive income or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.

According to the provisions of tax legislation relating to flow-through placements, the Company has to transfer its right to tax deductions for expenses related to exploration activities to the benefit of the investors. When the Company has fulfilled its obligation to transfer its right, which happens when the Company has incurred, eligible expenditures and has renounced (or has the intention to renounce) its right to tax deductions, a deferred tax liability is recognized for taxable temporary difference that arises from the difference between the carrying amount of eligible expenditures capitalized as an asset and its tax basis.

m)Equity

Capitalstock

Capital stock represents the amount received on the issue of shares, less issuance costs, net of any underlying income tax benefit from these issuance costs. If shares are issued when stock options, warrants and conversion of convertible unsecured debenture are exercised, the capital stock account also comprises the compensation costs and the fair value of the options, warrants and equity of convertible debenture previously recorded as contributed surplus and warrants.

Unitplacements

Flow-throughplacements

Issuance of flow-through shares units represents in substance an issue of common shares, warrants and the sale of a right to tax deduction to the investors. When the flow-through share units are issued, the sale of the right to tax deductions is deferred and presented as other liabilities in the consolidated statement of financial position.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

m)Equity (continued)

Flow-throughplacements (continued)

The proceeds received from flow-through unit placements are allocated between common shares, warrants and other liabilities using the residual method. Proceeds are first allocated to shares according to the quoted price of existing shares at the time of issuance then to warrants according to their fair value at the time of issuance and the residual proceeds are allocated to the other liabilities. The fair value of warrants is determined using the Black-Scholes evaluation model. The other liabilities component recorded initially on the issuance of shares is reversed on the renouncement or the intention of renouncement of the right to tax deductions to the investors and when eligible expenses are incurred and recognized in profit or loss in reduction of deferred tax expense.

Otherelements of equity

Contributed surplus includes charges related to stock options until such stock options are exercised.

Conversion option of convertible unsecured debenture represent the equity component of convertible debenture. Retained earnings include all current and prior period retained profits or losses.

n)Equity-settled share-based payments

The Company operates equity-settled share-based remuneration plans (stock options plans) for its eligible directors, officers, employees and consultants. The Company’s plans do not feature any options for a cash settlement.

All goods and services received in exchange for the grant of any share-based payments are measured at their fair values unless that fair value cannot be estimated reliably. If the Company cannot estimate reliably the fair value of the goods or services received, the Company measures their value indirectly by reference to the fair value of the equity instruments granted.

For the transactions with employees and others providing similar services, the Company measures the fair value of the services received by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions.

All equity-settled share-based payments (except compensation warrants) are ultimately recognized as an expense or capitalized as an exploration and evaluation asset, depending on the nature of the payment with a corresponding credit to contributed surplus, in equity. Compensation warrants, in respect of an equity financing, are recognized as shares issue expenses of the equity instruments with a corresponding credit to warrants, in equity.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

n)Equity-settled share-based payments (continued)

If vesting periods or other vesting conditions apply, the expense is allocated over the vesting year, based on the best available estimate of the number of stock options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of stock options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior period if stock options ultimately exercised are different to that estimated on vesting.

o)Segment reporting

The Company presents and discloses segmented information based on information that is regularly reviewed by the Executive Chairman and the Board of Directors. The Company has determined that it has only one operating segment, the sector of identifying, acquiring and developing exploration and evaluation minerals and acquisition of royalties. The Company’s significant exploration and evaluation assets and royalty projects are located in Canada.

p)Basic and diluted earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing the net loss attributable to common equity holders of the Company by the weighted average number of common shares outstanding during the reporting period. Diluted loss per share is calculated by adjusting the weighted average number of shares outstanding to assume conversion of all potentially dilutive share equivalents, such as stock options and warrants.

When a loss is incurred during a period, basic and diluted loss per share are the same because the exercise of share equivalents is then considered to be anti-dilutive. To determine the dilutive impact of stock options, the Company uses the Treasury Stock Method which assumes that any proceeds from the exercise of in-the-money stock options would be used to purchase the maximum number of common shares of the Company at the average market price during the period. The assumption of exercise is not reflected in the calculation of earnings per share when the exercise price of the share equivalents considered individually exceeds the average market price for the period.

q)Financial Instruments

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q)Financial Instruments (continued)

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Gains and losses on derecognition are recognized within financing income and financing expense, respectively. Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is an unconditional and legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Classification

Financial<br> Assets	Classification
Cash<br> and cash equivalents	Financial<br> Assets at amortized costs
Restricted<br> cash	Financial<br> Assets at amortized costs
Accounts<br> Receivable	Financial<br> Assets at amortized costs
Other<br> assets	FVTPL
Royalty<br> receivable	Financial<br> Assets at amortized costs
Investments	FVTPL
Financial<br> Liabilities	Classification
---	---
Accounts<br> payable and accrued liabilities	Financial<br>Liabilities at amortized costs
Derivative<br> financial instruments	Financial<br> Liabilities at FVTPL
Loans	Financial<br> Liabilities at amortized costs

The Company determines the classification of financial assets at initial recognition. The classification of its instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading (including all equity derivative instruments) are classified as fair value through profit and loss (“FVTPL”). For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them at fair value through other comprehensive income (“FVTOCI”). Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the Company has opted to measure them at FVTPL.

Measurement

Financialassets and liabilities at amortized cost

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

4)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

q)Financial Instruments (continued)

Financialassets and liabilities at FVTPL

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of net income (loss). Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of net income (loss) in the period in which they arise. Where Company has opted to recognize a financial liability at FVTPL, any changes associated with the Company’s own credit risk will be recognized in other comprehensive income (loss).

Impairmentof financial assets at amortized cost

The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to twelve month expected credit losses. The Company recognizes an impairment gain or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized.

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS

When preparing the consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.

Significantmanagement judgments

The following are significant management judgments in applying the accounting policies of the Company that have the most significant effect on the consolidated financial statements.

Uncertaintydue to COVID-19

The duration and full financial effect of the COVID-19 pandemic is unknown at this time, as are the measures taken by governments, companies, and others to attempt to reduce the spread of COVID-19. Any estimate of the length and severity of these developments is therefore subject to significant uncertainty, and accordingly estimates of the extent to which the COVID-19 may materially and adversely affect the Company’s operations, financial results and condition in future periods are also subject to significant uncertainty.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Uncertaintydue to COVID-19 (continued)

In properties where the Company holds royalty interests, there has been temporary operational restrictions due to the ongoing COVID-19 pandemic, including operations being previously placed under care and maintenance and thereafter the resumption of mining activities.

Controlover Abitibi Royalties

As described in note 2, Abitibi Royalties is accounted for as a subsidiary of the Company even though the Company only has a 44.93 % (2019 – 44.76%) ownership interest in Abitibi Royalties. The Company assessed whether or not the Company has control over Abitibi Royalties based on whether the Company has the practical ability to direct the relevant activities of Abitibi Royalties unilaterally. In making this judgment, the Company considers its own percentage holding in Abitibi Royalties combined with interest of certain members of its Board of Directors as well as its ability to appoint members of the Board of Directors and key management who have the ability to direct activities. The Company concluded that it has a sufficiently dominant voting interest to direct the relevant activities of Abitibi Royalties and have de-facto control.

Significantinfluence over International Prospect and Val-d’Or Mining

As described in note 2, International Prospect and Val-d’Or Mining are associates of the Company although the Company only owns a 13.44% and 39.57% ownership interest in each of these companies, respectively.

The Company has significant influence over International Prospect and Val-d’Or Mining by virtue of ownership interest, representation on the board of directors, interchange of managerial personnel and intercompany transactions in each of these companies.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Classificationof financial instruments

All financial assets are classified in one of the following categories: fair value through profit or loss or financial assets at amortized cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets upon initial recognition.

Recognitionof deferred tax assets and measurement of income tax expense

Management continually evaluates the likelihood that its deferred tax assets could be realized. The assessment of availability of future taxable profits involves significant judgment. A deferred tax asset is recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilized. To date, management has not recognized any deferred tax assets in excess of existing temporary differences expected to reverse within the carry-forward period.

Operatingsegment

The ability to aggregate the Company’s operating segments based on similar economic characteristics requires judgment to be applied and is dependent on entity-specific facts and circumstances.

Estimationuncertainty

Impairmentof exploration and evaluation assets

Determining if there are any facts and circumstances indicating impairment loss or reversal of impairment losses is a subjective process involving judgment and a number of estimates and assumptions in many cases. When an indication of impairment loss or a reversal of an impairment loss exists, the recoverable amount of the individual asset or the cash-generating units must be estimated.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Impairmentof exploration and evaluation assets (continued)

Estimates and assumptions may change if new information becomes available. If, after expenditure is capitalized, information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalized is written off in profit or loss in the period when the new information becomes available.

Impairmentof royalty interests

Impairmentof investments in associates

The Company follows the guidance of IAS 28 Investments in Associates and Joint Ventures to assess whether there are impairment indicators which may lead to the recognition of an impairment loss with respect to its net investment in an associate. This determination requires significant judgement in evaluating if a decline in fair value is significant or prolonged, which triggers a formal impairment test. In making this judgement, the Company’s management evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its carrying amount, the volatility of the investment and the financial health and business outlook for the investee, including factors such as the current and expected status of the investee’s exploration projects and changes in financing cash flows.

Valuationof investments in private entities

The Company values its investments in private entities at fair value at each reporting date. When the fair values of these financial instruments cannot be measured based upon quoted prices in active markets, their fair value is based on estimates made by management using valuation techniques. The inputs to these valuation models are taken from observable market data where possible, including concurrent third-party investments, but where this is not feasible, a degree of judgement is required in establishing fair value. Changes in assumptions related to these inputs could affect the reported fair value of the financial instruments.

| 26 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

5)JUDGMENTS, ESTIMATES AND ASSUMPTIONS (continued)

Share-basedpayments

The estimation of share-based payment costs requires the selection of an appropriate valuation model and consideration as to the inputs necessary for the valuation model chosen. The Company has made estimates as to the volatility of its own shares, levels of forfeiture, the probable life of share options and compensation warrants granted and the time of exercise of those share options and compensation warrants. The model used by the Company is the Black-Scholes valuation model.

Taxcredits receivable

The calculation of the Company’s refundable tax credit on qualified exploration expenditure incurred and refundable tax credit involves a degree of estimation and judgment in respect of certain items whose tax treatment cannot be finally determined until a notice of assessment has been issued by the relevant taxation authority and payment has been received. Difference arising between the actual results following final resolution of some of these items and the assumptions made could necessitate adjustments to the refundable tax credit, exploration and evaluation assets, and income tax expense in future periods.

6)CASH AND CASH EQUIVALENTS

	As at December 31,
	2020		2019
Cash	$	13,102,329	$	2,573,894
Demand deposits, redeemable at any time		600,705		429,189
	$	13,703,034	$	3,003,083

Demand deposits represent money market mutual funds earning income at an annual rate of 0.30% (December 31, 2019 – 0.15%) that are cashable at any time.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

7)OTHER ASSETS

	As at December 31,			As at December 31,
	2020			2019
Marketable securities	$	406,280		$	427,861
Private company investments		106,913			106,913
Warrants (note 12)		4,044			-
Other assets		517,237			534,774
Less: current portion of Other assets		(406,280	)		(534,774	)
Long-term portion of Other assets	$	110,957		$	-

Marketable securities of $406,280 (December 31, 2019 - $427,861) represent shares of publicly traded mining exploration companies and are recorded at fair value using quoted market prices. Investment of $106,913 (December 31, 2019 - $106,913) represent shares in private companies do not have a quoted market price in an active market. The Company has assessed a fair value on these shares based on techniques and assumptions that emphasize both qualitative and quantitative information. Special warrants of $4,044 (December 31, 2019 - $nil) represents 80,880 special warrants received from a mining option agreement with Val-d’Or Mining as further described in note 12.

8)PREPAIDS AND OTHER RECEIVABLES

	As at December 31,		As at December 31,
	2020		2019
Prepaid expenses	$	102,427	$	22,299
Dividend receivable		70,361		44,729
Due from related party (note 20)		59,517		45,750
Sales taxes recoverable		31,757		21,570
Payroll levies receivable		26,133		-
Mining option receivable		25,000		-
Advances for claim management		20,521		10,768
	$	335,716	$	145,116

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

9)INVESTMENTS

	As at December 31, 2020				As at December 31, 2019
	Number of shares		Fair value		Number of shares		Fair value
Yamana Gold Inc.		2,105,895	$	15,309,857		3,443,895	$	17,701,620
Agnico Eagle Mines Limited		375,897		33,676,612		408,597		32,679,588
			$	48,986,469			$	50,381,208
Other investments				515,447				255,530
			$	49,501,916			$	50,636,738

For the year ended December 31, 2020, Abitibi Royalties was called to deliver 394,100 common shares of Agnico Eagle at share prices ranging from US$42.00 to US$55.00 per share and received, net of commissions, $25,582,744 (or US$19,551,262). The Company was also called to deliver 1,338,000 common shares of Yamana at share prices ranging from US$2.50 to US$5.00 per share and received, net of commissions, $6,096,022 (or US$4,704,309). In addition, Abitibi Royalties was called to purchase 361,400 common shares of Agnico Eagle at a share price of US$45.00 per share and paid, before commissions, $23,566,713 (or US$16,263,000).

For the year ended December 31, 2019, Abitibi Royalties was called to deliver 6,000 common shares of Agnico Eagle (2,500 at US$43.00, 2,500 at US$47.00 and 1,000 at US$49.00) and received, net of commissions, $358,619 (or US$270,922). Abitibi Royalties was also called to deliver 105,800 common shares of Yamana (47,600 at US$2.50, 6,900 at US$3.00 and 51,300 at US$3.50) and received, net of commissions, $415,032 (or US$316,287).

Restrictedcash

Restricted cash represents funds held as collateral on the put option contracts referred to in the Derivative financial instruments below. The funds will become unrestricted once the put option contracts are exercised, repurchased or expired. Restricted cash of $385,415 (or US$302,405) as at December 31, 2020 relates to funds held as collateral on the outstanding put option contracts of 99,300 shares of Agnico as at December 31, 2020. No cash was restricted as at December 31, 2019 as there were no outstanding put option contracts.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

10)INVESTMENTS IN SUBSIDIARIES

The Company owns 5,605,246 (2019 -5,605,246 common shares) or 44.93% (44.76% in 2019) of Abitibi Royalties; the change in percentage of ownership resulted in a decrease in interest of subsidiaries under non-controlling interest on the statement of changes in equity in the amount of $1,610,793 (decrease of $889,850 in 2019).

	As at December 31,
Abitibi Royalties Inc.	2020		2019
Current assets	$	13,959,351	$	3,525,751
Non-current Assets		49,653,617		50,636,738
Current liabilities		7,436,084		9,340,361
Non-current liabilities		2,693,658		3,245,785
Total equity attributable to non-controlling interest		29,450,660		22,966,935

	For the year ended December 31,
Abitibi Royalties Inc.	2020			2019
Net income and comprehensive income	$	14,681,567		$	11,259,593
Net income and comprehensive income attributable to non-
controlling interest		8,094,518			6,217,181
Cash flows from operating activities	$	2,481,780		$	382,565
Cash flows from investing activities		11,263,577			1,765,368
Cash flows used by financing activities		(2,774,684	)		(1,303,641	)

CaloneMining Ltd.

The Company owns 10,000,001 common shares (2019 - 10,000,001 common shares) or 100% (100% in 2019) of Calone Mining. There are no significant operations in Calone Mining.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

11)INVESTMENTS IN ASSOCIATES

The investments in associates relate to the Company’s investments in International Prospect and Val-d’Or Mining.

As at December 31, 2020, the Company held 4,470,910 common shares (2019 - 4,470,910 common shares) or 13.44% (December 31, 2019 - 16.50%) interest in International Prospect. The shares of International Prospect were trading at $0.105 per share on that date.

As at December 31, 2020, the Company held 25,687,444 common shares (2019 -17,354,110 common shares) or 39.57% (December 31, 2019 – 37.15%) interest in Val-d’Or Mining. The shares of Val-d’Or Mining were trading at $0.18 per share on that date.

The Company has no contingent liabilities relating to its interest in the associates.

The following table summarizes the changes to investments in associates for the years ended December 31, 2020 and 2019:

	International			Val-d’Or
	Prospect			Mining			Total
As at January 1, 2020	$	356,655		$	986,378		$	1,343,033
Shares from mining option agreement		-			1,291,667			1,291,667
Share of net loss from associates		(52,015	)		(455,254	)		(507,269	)
As at December 31, 2020	$	304,640		$	1,822,791		$	2,127,431
	International			Val-d’Or
---	---	---	---	---	---	---	---	---	---
	Prospect			Mining			Total
As at January 1, 2019	$	405,748		$	1,152,662		$	1,558,410
Shares for mining option agreement		-			250,000			250,000
Share of net loss from associates		(49,093	)		(416,284	)		(465,377	)
As at December 31, 2019	$	356,655		$	986,378		$	1,343,033

Sharesfor mining option agreement

For fiscal year 2020, the Company received a total of 8,333,334 common shares, fair valued at $1,291,667, from Val-d’Or Mining in accordance with the Amended Mining Option Agreement as described in note 12.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

11)INVESTMENTS IN ASSOCIATES (continued)

Financialinformation

The following table summarizes financial information of International Prospect:

	As at December 31,
International Prospect Ventures Ltd	2020		2019
Current assets	$	485,932	$	362,821
Non-current Assets		625,780		552,303
Current liabilities		96,595		103,147
Total equity		1,015,045		811,977
	For the year ended December 31,
---	---	---	---	---	---	---
International Prospect Ventures Ltd	2020			2019
Net loss and comprehensive loss	$	377,920		$	297,531
Cash flows used by operating activities	$	(299,507	)	$	(185,407	)
Cash flows used by investing activities		(87,320	)		(85,794	)
Cash flows from (used by) financing activities		518,140			(9,169	)

The following table summarizes financial information of Val-d’Or Mining:

	As at December 31,
Val-d’Or Mining Corporation	2020		2019
Current assets	$	744,403	$	951,144
Non-current Assets		1,643,181		186,678
Current liabilities		210,586		85,776
Non-current liabilities		40,708		2,356
Total equity		2,136,290		1,049,690
	For the year ended December 31,
---	---	---	---	---	---	---
Val-d’Or Mining Corporation	2020			2019
Net loss and comprehensive loss		1,190,209			1,167,616
Cash flows used by operating activities	$	(413,576	)	$	(419,392	)
Cash flows from (used by) investing activities		148,793			(346,432	)
Cash flows from financing activities		873,672			168,982

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS

	Balance at<br><br> <br>January 1,										Balance at<br><br> <br>December 31,
	2020			Additions		Recovery		Credits			2020
Golden Valley Mines and Royalties Ltd.
Acquisition and claims maintenance	$	3,312,610			-		-		-		$	3,312,610
Property option payments		312,500			-		-		-			312,500
Drilling, excavation and related costs		3,257,961			-		-		-			3,257,961
Technical and field staff		4,624,395			-		-		-			4,624,395
Airborne geophysics		791,822			-		-		-			791,822
Geophysics		2,319,401			-		-		-			2,319,401
Line cutting		1,108,235			-		-		-			1,108,235
Sampling and testing		744,773			-		-		-			744,773
Travel and transport		1,683,141			-		-		-			1,683,141
Program management and consultants		441,560			-		-		-			441,560
Professional Fees		5,215			-		-		-			5,215
Depreciation, insurance and office expenses		581,588			-		-		-			581,588
Communications		45,897			-		-		-			45,897
Option payments received		(1,971,145	)		-		-		-			(1,971,145	)
Write-off of exploration and evaluation assets		(4,213,235	)		-		-		-			(4,213,235	)
Impairment of exploration and evaluation assets		(7,525,064	)		-		-		-			(7,525,064	)
Shares for mining rights		(666,666	)		-		106,858		(1,291,667	)		(1,851,475	)
Government assistance		(1,641,978	)		-		-		-			(1,641,978	)
Net expenditures incurred during the period		3,211,010			-		106,858		(1,291,667	)		2,026,201
Exploration and evaluation assets sold to third parties		(1,713,840	)		-		-		(633	)		(1,714,473	)
Balance, end of the period	$	1,497,170			-		106,858		(1,292,300	)	$	311,728
Abitibi Royalties Inc
Acquisition and claims maintenance	$	-			241,959		-		-		$	241,959
Program management and consultants		-			8,558		-		-			8,558
Option payments received		-			-		48,684		(147,500	)		(98,816	)
		-			250,517		48,684		(147,500	)		151,701
TOTAL	$	1,497,170			250,517		155,542		(1,439,800	)	$	463,429

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

	As at<br><br> <br>January 1,											Impairment			As at<br><br> <br>December 31,		****
****	2019		****	Additions		Recoveries		****	Credits		****	Write-off		****	2019
Golden Valley Mines and Royalties Ltd.
Acquisition and claims maintenance	$	3,298,296		$	14,514	$	(200	)	$	-		$	-		$	3,312,610
Property option payments		312,500			-		-			-			-			312,500
Drilling, excavation and related costs		3,241,938			16,023		-			-			-			3,257,961
Technical and field staff		4,615,618			8,777		-			-			-			4,624,395
Airborne geophysics		791,822			-		-			-			-			791,822
Geophysics		2,319,401			-		-			-			-			2,319,401
Line cutting		1,108,235			-		-			-			-			1,108,235
Sampling and testing		823,818			-		(79,045	)		-			-			744,773
Travel and transport		1,689,127			104		(6,090	)		-			-			1,683,141
Program management and consultants		501,621			6,156		(66,217	)		-			-			441,560
Professional Fees		5,215			-		-			-			-			5,215
Depreciation, insurance and office expenses		582,713			-		(1,125	)					-			581,588
Communications		45,897			-		-			-			-			45,897
Option payments received		(1,963,650	)		-		-			(7,495	)		-			(1,971,145	)
Write-off of exploration and evaluation assets		(4,213,235	)		-		-			-			-			(4,213,235	)
Impairment of exploration and evaluation assets		(7,265,328	)		-		(89,038	)		-			(170,698	)		(7,525,064	)
Shares for mining rights		(416,666	)		-		-			(250,000	)		-			(666,666	)
Government assistance		(1,639,157	)		-		-			(2,821	)		-			(1,641,978	)
Net expenditures incurred during the year		3,838,165			45,574		(241,715	)		(260,316	)		(170,698	)		3,211,010
Exploration and evaluation assets sold to third parties		(1,606,927	)		-		-			(106,913	)		-			(1,713,840	)
Balance, end of the year	$	2,231,238			45,574		(241,715	)		(367,229	)		(170,698	)	$	1,497,170

| 34 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

The following table summarizes the carrying values of Exploration and Evaluations Assets by properties as at December 31, 2020 and 2019:

	Properties<br><br> <br>optioned to<br><br> <br>Eldorado Gold		Properties<br><br> <br>optioned to<br><br> <br>BonTerra<br><br> <br>Resources		Balance as at<br><br> <br>December 31,<br><br> <br>2020			Balance as at<br><br> <br>December 31,<br><br> <br>2019
Golden Valley Mines Properties
Abitibi Greenstone Belt (“AGB”)
Kirkland Lake / Matachewan (Ontario)	$	817,555	$	-	$	817,555		$	818,188
Lebel-sur-Quevillon (Québec)		-		359,496		359,496			366,017
Matachewan, Kirkland Lake (Ontario)		-		-		-			843,108
Val d’Or - Malartic (Québec)		143,181		-		143,181			354,017
Rouyn-Noranda-Cadillac (Québec)		168,405		-		168,405			168,405
Rouyn-Noranda-Cadillac (Québec)		-		-		-			45,544
Chibougamau (Québec)		-		-		-			65,671
Matagami (Québec)		-		-		-			13,129
Total AGB		1,129,141		359,496		1,488,637			2,674,079
Total other						22,069			22,069
Investment tax credit						(1,198,978	)		(1,198,978	)
Balance, end of the year					$	311,728		$	1,497,170
Abitibi Royalties Properties
Bathurst (Ontario)		-		-		75,000			-
Hees (Ontario)		-		-		75,000			-
Bullfrog South (Nevada, USA)		-		-		1,701			-
Balance, end of the year					$	463,429		$	1,497,170

| 35 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

GOLDENVALLEY PROPERTIES

a)Mining Option Agreement with Val-d’Or Mining

On April 18, 2017, the Company granted to Val-d’Or Mining an option to acquire a 100% interest in 61 of its grassroots properties. On November 28, 2019, the Option agreement was amended to document, among other things, a waiver of expenditure requirements required in order to maintain the option, acceleration of vesting of the option as well as changes to the buyback provisions of the royalty on Net Smelter Returns granted to the Company. In accordance with the terms of the Amended Mining Option Agreement, Val-d’Or Mining has agreed to issue to Golden Valley an aggregate 16,666,668 common shares of Val-d’Or Mining, issuable as to 25% on each of December 31, 2018, December 31, 2019, June 30, 2020 and December 31, 2020.

In addition, the properties are subject to a royalty in favour of Golden Valley equal to 1.25% of net smelter returns, which is subject to certain partial buyback provisions. he partial buyback right pertains to each individual property, whereby 1% may be bought for $500,000 on a property-by-property basis with a maximum total consideration of $5,000,000 at which point in time the NSR royalty on all the properties would be reduced by 1.0%. Golden Valley will also receive 20% of the proceeds of all third-party transactions pertaining to the properties that Val-d’Or Mining enters into and announces on or before December 31, 2022. On December 5, 2019, Val-d’Or Mining exercised its option to acquire a 100% interest in the properties in accordance with the terms of the amended and restated mining option agreement between Val-d’Or Mining and Golden Valley dated November 28, 2019.

On October 6, 2020, Val-d’Or Mining entered into an agreement with respect to the sale of several properties referred to as the Ducros Group of Properties. The purchaser of the property is privately-owned Québec Nickel Corp. (“QNC”). In consideration for a 100% interest in the properties, QNC issued 3,589,341 special warrants, with a fair value of $179,467, to Val-d’Or Mining (of which Golden Valley received 80,880 special warrants, with a fair value of $4,044 in accordance with the terms of an amended and restated option agreement between d’Or Mining and Golden Valley dated November 28, 2019).

b)Lac Barry Prospect - BonTerra Resources Inc. – Level-sur-Quevillon, Québec

On March 16, 2016, the Company granted an option to BonTerra Resources Inc. (“BonTerra”) on the Lac Barry Prospect located in the Abitibi Greenstone Belt, northeast of Val-d’Or, Québec. BonTerra issued to Golden Valley 519,480 common shares in the capital of BonTerra having an aggregate value of $200,000, and incurred expenditures in an aggregate amount of $2,000,000 over a three-year period. Upon BonTerra exercising the option on June 4, 2019, it earned an 85% interest in the property and, the Company retained a 15% free carried interest and a 3% NSR, with 1% of the NSR being subject to a buyback in favour of BonTerra for $1.0 million payable by BonTerra to Golden Valley.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

b)Lac Barry Prospect - BonTerra Resources Inc. – Level-sur-Quevillon, Québec (continued)

The Company is to enter into a joint venture agreement with BonTerra and therefore the Company is to retain its 15% free carried interest and a 3% NSR, with 1% of the NSR being subject to a buyback as discussed above. For accounting purposes, no cost has been assigned to the royalty, as the project is still at an early stage of exploration and future cash flow cannot be reliably estimated.

c)Centremaque Prospect – Alexandria Minerals Corporation - Val-d’Or Québec

On April 13, 2017, the Company entered into a mining option agreement with Alexandria Minerals Corporation (“Alexandria”) on the Centremaque Prospect located in the AGB, northeast of Val-d’Or, Québec. In accordance with the option agreement, in order to acquire an 80% interest in the property, Alexandria must: (i) issue, over a four year period from the date of signing, to Golden Valley such number of common shares in its capital having an aggregate value of $250,000 based on the closing price of Alexandria’s shares on the Exchange the day prior to the date of issuance of each tranche of payment shares, of which shares and/or cash in the amount of $150,000 have been received to date;$50,000 on or before the third anniversary; and, $100,000 on or before the fourth anniversary; and, (ii) incur exploration expenditures in an aggregate amount of $4,000,000 over the same four-year period. Once the option is exercised, the Company will retain a 20% free carried interest and a 1.5% NSR, with 0.5% of the NSR being subject to a buyback in favour of Alexandria for $1 million payable to Golden Valley.

In accordance with the terms of the option agreement, Alexandria agreed to a $2,000,000 work commitment on or before April 20, 2020. On April 3, 2020, O3 Mining provided a notice of force majeure and extension of delay as a result of the government of Québec’s decision, relating to COVID-19, to close all non-essential businesses. On May 28, 2020, the option agreement with 03 Mining was amended to provide that the payment date of the remaining cash consideration of $100,000 and the date to incur the remaining exploration expenditures commitment of $3,250,000 have been extended to June 9, 2021.

On February 7, 2021, the option agreement was further amended such that the remaining exploration expenditures commitment of $2,000,000 to be incurred on or before June 9, 2021 can also be satisfied through payment of shares in O3 Mining, provided that O3 Mining commits to complete a drilling program of least 5,000 metres on the Centremaque Prospect in the winter of 2021.

Refer to note 28 “Subsequent Events”).

| 37 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

d)Sharks and Cheechoo Joint Venture - Sirios Resources Ltd. - - James Bay Northern Quebec

On October 23, 2013, Golden Valley granted Sirios Resources Ltd. (“Sirios”) an option to acquire Golden Valley’s remaining 55% interest in the Cheechoo prospect. Sirios completed all its obligations under the agreement to earn a 100% interest in the Cheechoo prospect and therefore holds 100% of the Cheechoo prospect. As additional consideration for the grant of the option, Sirios granted to Golden Valley a royalty equal to 4% of the net returns from all mineral products mined or removed from the Cheechoo gold project. Notwithstanding the foregoing, the royalty relevant to gold mineral products mined or removed from the Cheechoo gold prospect may vary between 2.5% and 3.5% depending on the market price of gold at the time of the payment. For accounting purposes, no cost has been assigned to the royalty, as the project is still at an early stage of exploration and future cash flow cannot be reliably estimated.

e)AGB Properties – Eldorado Gold Corporation – Québec and Ontario

On December 8, 2008, the Company earned a 70% interest in the group of 9 properties (8 gold and 1 copper-zinc-silver) located in the AGB (Québec and Ontario) and a 70:30 joint venture (the “GZZ-I JV”) was formed between Golden Valley and Eldorado Gold Corporation (“Eldorado”), with the latter having acquired its interest through the acquisition of Integra Gold Corporation. Golden Valley is the operator for the joint venture. The GZZ-I JV is subject to underlying royalties ranging between 3.0% and 3.5% in favour of the original vendors, one of whom is a director and an officer of the Company.

On October 20, 2020, the Company and Eldorado entered into an agreement with Epica Gold Inc (“Epica”) in respect to the sale of the Denovo property. Pursuant to the agreement, Company and Eldorado received cash consideration of $50,000 (of which Golden Valley received $35,000) and share consideration of $150,000 (of which Golden Valley received 38,043 common shares) in the common shares of HighGold Mining Inc (“HighGold”), the parent company of Epica, based on the volume weighted average trading price per share of HighGold’s shares for the 20-day period ending on October 20, 2020. Pursuant to the agreement, Epica also granted a 3.5% NSR on the property to an officer and a director of the Company on the portion of the property covered by legacy claims. For the year ended December 31, 2020, the Company recognized a gain on sale of $139,367 relating to this transaction.

Refer to note 28 “Subsequent Events”).

| 38 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

ABITIBIROYALTIES’ PROPERTIES

BullfrogSouth Project

On September 17, 2020, Abitibi Royalties staked the Bullfrog South Project, located in Nevada’s Bullfrog Gold District.

On December 9, 2020, Abitibi Royalties entered into a mining option agreement with Bullfrog Mines LLC (“Bullfrog”) on the Bullfrog South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Bullfrog must: (i) issue to Abitibi Royalties, over a two-year period, consideration of $175,000 in cash or share in its capital; reimburse mining claims fees to be paid in 2021 and (ii) incur exploration expenditures in an aggregate amount of $550,000 over a three-year period, of which a minimum of $25,000 is to be spent in the first year of the option agreement. Once the option is exercised, the Company will retain a 2.0% NSR on the property, Bullfrog has the option to purchase 0.5% of the NSR for $500,000 on or before December 9, 2030.

For the year ended December 31, 2020, Abitibi Royalties recognized a receivable of $25,000 relating to this mining option agreement. The cash consideration has been recorded against the carrying value of the exploration and evaluation assets relating to the Bullfrog South property.

Bathurstproperty

On November 9, 2020, Abitibi Royalties entered into an agreement with two arm’s length parties to acquire the Bathurst property, a property consisting of 7 claims located in Ontario, for the purchase price of $75,000. Pursuant to the agreement, Abitibi Royalties also granted a 0.5% NSR royalty on the property.

On March 5, 2021, Abitibi Royalties received 1,096,491 common shares of Xplore, with a fair value of $62,500, relating to this mining option agreement.

| 39 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

12)EXPLORATION AND EVALUATION ASSETS (continued)

HeesProperty

On December 11, 2020, Abitibi Royalties entered into an agreement with two arm’s length parties to acquire the Hees property, a property consisting of 30 claims located in Ontario, for the purchase price of $75,000. Pursuant to the agreement, Abitibi Royalties also granted a 0.5% NSR royalty on the property.

HammondReef South property

On June 2, 2020, Abitibi Royalties entered into an agreement with two arm’s length parties to acquire the Hammond Reef property, a property consisting of 49 claims located in Ontario, for the purchase price of $70,000. Pursuant to the agreement, the Company also granted one of the parties a 0.5% NSR royalty on the property. The Company incurred claim and other fees of $3,816 on completion of the transaction.

On July 27, 2020, Abitibi Royalties entered into a mining option agreement with Victory Resources Corporation (“Victory”) on the Hammond Reef South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Victory must: (i) issue to Abitibi Royalties, over a two-year period, cash consideration of $250,000 and share consideration of 2,750,000 common shares in its capital; and (ii) incur exploration expenditures in an aggregate amount of $550,000 over a three-year period, of which a minimum of $25,000 is to be spent in the first year of the option agreement. Once the option is exercised, the Company will retain a 2.0% NSR on the property.

For the year ended December 31, 2020, Abitibi Royalties received the cash consideration of $50,000 and share consideration of 500,000, with a fair value of $84,000, in the common shares of Victory relating to this mining option agreement. Both cash and share considerations have been recorded against the carrying value of the exploration and evaluation assets relating to the Hammond Reef South property,

with the remaining difference of $48,684 being recognized as revenue. Refer to note 28 “Subsequent Events”).

| 40 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

13)ROYALTY INTERESTS OF ABITIBI ROYALTIES

Mainroyalty interests

MalarticCHL 3% Royalty - Malartic, Québec

The area covered by the 3% net smelter royalty (“NSR”) is located immediately east of the current Canadian Malartic Mine open pit operated by Canadian Malartic GP (50% owned by Agnico Eagle Mines Limited (“Agnico Eagle”) and Yamana Gold Inc. (“Yamana”). The 3% NSR covers a number of known mineralized zones.

For the year ended December 31, 2020, Abitibi Royalties earned royalties in the amount of $685,698 (or US$524,434) from this royalty interest, of which $425,180 (or US$333,946), representing the royalties earned for the fourth quarter of 2020, is a receivable as at December 31, 2020.

For the year ended December 31, 2019, Abitibi Royalties earned royalties in the amount of $3,307,260 (or US$2,315,090 from this royalty interest, of which $999,252 (or US$769,366) remains outstanding as at December 31, 2019 and subsequently received on January 15, 2020.

CanadianMalartic 2% Royalty - Malartic, Québec

The area covered by the 2% NSR is on a single claim located just to the south of the Canadian Malartic open pit, and covers the eastern portion of the Gouldie Zone and the historic Charlie Zone. Production on this 2% NSR area started in 2014 and stopped in 2015.

Otherroyalty interests

On May 23, 2020, Abitibi Royalties entered into a series of agreements to acquire, with a purchase price of $36,000, a package of royalties south of the Canadian Malartic Mine and also southeast of the Agnico Eagle’s Goldex Mine. The agreements also entitled the Company to 15% of the gross proceeds (cash and shares) should the underlying properties be sold or joint ventured. The royalties are located immediately south of the Canadian Malartic Mine and approximately three kilometres southeast of the Goldex Mine. The projects are owned and operated by Tamarack Gold Resources Inc. Abitibi Royalties incurred fees of $1,701 on completion of the transaction.

Abitibi Royalties’ other royalty interest are as follows:

■	Revillard<br> Property 2% Royalty - Malartic, Québec
■	15%<br> Net Profit Interest (“NPI”) in the vicinity of Canadian Malartic Mine -Malartic, Québec
■	Midway Project 1.5% Royalty -Malartic, Québec
■	1.5% Royalty in the Abitibi region, Québec
■	1.0%<br> NSR on the New Alger Project in the Abitibi region, Québec

| 41 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

14)DERIVATIVE FINANCIAL INSTRUMENTS

Abitibi Royalties’ total call options outstanding as at December 31, 2020 and 2019 are as follows:

	Expiry<br> date
Calls
Yamana	January 15, 2021	1,247,000	1,574,731
Yamana	April 16, 2021	320,000	52,329
Yamana	July 16, 2021	140,000	57,039
Yamana	January 21, 2022	367,700	522,730
Yamana	January 2, 2023	2,100	3,208
Agnico	January 15, 2021	118,300	761,259
Agnico	February 19, 2021	82,200	53,360
Agnico	May 21, 2021	57,400	83,013
Agnico	January 21, 2022	103,600	929,767
Agnico	January 20, 2023	8,000	83,420
Puts
Agnico	February 19, 2021	56,000	22,217
Agnico	January 21, 2022	43,300	100,245
		2,545,600	4,243,318

All values are in US Dollars.

	Expiry<br> date		Market<br> value as at December 31, 2019
Calls
Yamana	January<br> 17, 2020	2,220,300	$	1,048,113
Yamana	January<br> 15, 2021	1,165,800		1,135,729
Yamana	January<br> 17, 2022	57,700		71,194
Agnico	January<br> 17, 2020	350,800		5,528,316
Agnico	January<br> 15, 2021	57,700		1,195,695
		3,852,300	$	8,979,047

All values are in US Dollars.

For fiscal year 2020, Abitibi Royalties sold 21,418 call contracts (3,701 calls on Agnico shares and 17,717 calls on Yamana shares) and 5,977 put contracts on Agnico shares for total proceeds of $3,582,525 (or US$2,665,886). In addition, 1,370 put contracts expired and 3,641 put contracts were exercised on Agnico shares. Furthermore, 7,050 contracts were repurchased before expiration (150 calls on Agnico and 6,900 calls on Yamana) for which the Company paid $53,116 (or US$40,740).

| 42 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

14)DERIVATIVE FINANCIAL INSTRUMENTS (continued)

For fiscal year 2019, Abitibi Royalties sold 25,223 call contracts (1,573 calls on Agnico shares and 23,650 calls on Yamana Gold shares) for total proceeds of $1,232,964 (or US$935,160). In addition, 1,887 call contracts expired (460 calls on Agnico and 1,427 calls on Yamana). Furthermore, 19,600 contracts were repurchased before expiration (778 calls on Agnico and 18,822 calls on Yamana) for which the Company paid $131,050 (or US$97,093).

The liability associated with derivative financial instruments can be settled, if required, through the Abitibi Royalties’ investments in the common shares of Agnico Eagle and Yamana.

Subsequent to year end, the Company was called to deliver 37,700 common shares of Agnico Eagle at share prices ranging from US$50.00 to US$65.00 per share and received, net of commissions, $2,722,806 (or US$2,139,898) and 1,109,100 common shares of Yamana at share prices ranging from US$3.00 to US$5.00 per share and received, net of commissions, $6,552,852 (or US$5,149,994).

15)LONG-TERM LOAN

The Company applied and received the $60,000 Canada Emergency Business Account loan which is an interest-free loan to cover operating costs. Repaying the balance of the loan on or before December 31, 2022 will result in a loan forgiveness of $20,000.

16)INCOME TAXES

Majorcomponents of tax expense (recovery)

The major components of tax expense (recovery) are outlined below:

	For the year ended December 31,
	2020			2019
Current tax expense	$	2,464,798		$	-
Deferred tax recovery
Origination and reversal of temporary differences	$	(772,145	)	$	1,579,401
Deferred tax assets not recognized		220,018			233,919
		(552,127	)		1,813,320
Total income tax expense	$	1,912,671		$	1,813,320

| 43 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

16)INCOME TAXES (continued)

Relationshipbetween expected tax expense and accounting profit or loss

The relationship between the expected tax expense based on the combined tax rate in Canada and the reported tax expense in the consolidated statement of net loss and comprehensive loss can be reconciled as follows:

	For<br> the year ended December 31,
	2020			2019
Net<br> income for the year before income taxes	$	15,013,135		$	11,313,153
Expected<br> tax expense calculated using the combined Federal and Provincial at combined statutory rate in Canada of 26.50% (26.60% in 2019)	$	3,978,481		$	3,009,299
Change<br> in tax rates		-			(1,036	)
Change<br> in deferred tax assets not recognized		231,575			233,919
Share<br> of loss of associates		135,082			123,790
Non-taxable<br> dividends received		(169,584	)		(116,353	)
Share-based<br> payments		67,815			110,582
Non-taxable<br> portion of gain on investments		(2,325,282	)		(1,554,992	)
Other		(5,416	)		8,111
Total<br> tax expense	$	1,912,671		$	1,813,320

The statutory tax rate declined from 26.6% to 26.50% due to a reduction in the Québec general corporate tax rate on January 1, 2020.

| 44 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

16)INCOME TAXES (continued)

Deferredtax assets (liabilities) and variation of recognized amounts

	As at January 1,			Recognized in			As at December 31,
	2020			profit or loss			2020
Exploration and evaluation assets	$	687,841		$	(367,828	)	$	320,013
Investments		(6,047,641	)		2,465,445			(3,582,196	)
Share issuance costs		8,389			(2,103	)		6,286
Non-capital losses		915,903			(915,903	)		—
Derivative financial instruments		1,189,723			(627,484	)		562,239
	$	(3,245,785	)	$	552,127		$	(2,693,658	)
****	As at January<br><br> <br>1, 2019		****	Recognized in profit or loss		****	As at December 31, 2019		****
---	---	---	---	---	---	---	---	---	---
Exploration<br> and evaluation assets	$	687,695		$	146		$	687,841
Investments		(3,898,056	)		(2,149,585	)		(6,047,641	)
Share issuance costs		-			8,389			8,389
Non-capital<br> losses		1,433,943			(518,040	)		915,903
Derivative<br> financial instruments		343,953			845,770			1,189,723
	$	(1,432,465	)	$	(1,813,320	)	$	(3,245,785	)

As at December 31, 2020 and 2019, the Company had deductible temporary differences which it did not record in deferred tax assets:

	As at December 31,
	2020		2019
Exploration and evaluation assets	$	4,079,730	$	2,835,206
Other assets		719,572		796,761
Property and equipments		425,805		424,778
Share issue costs		4,957		11,667
Capital losses		8,453		29,007
Loan		10,000		-
Non-capital losses		7,164,226		7,534,940
	$	12,412,743	$	11,632,359

| 45 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

(FormerlyGolden Valley Mines Ltd.)

Notesto the consolidated financial statements

Forthe years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

16)INCOME TAXES (continued)

The Company has an amount of $319,859 in 2020 (2019 - $319,859) in investment tax credits that has not been recorded. These credits can be used to reduce federal income tax and will expire between 2025 and 2033.

As at December 31, 2020 and 2019, the Company has the following non-capital losses in Canada available to reduce future year’s taxable income which expires as follows:

	Federal		Quebec
2029	$	570,056	$	350,017
2030		1,389,166		1,368,264
2031		41,350		41,350
2032		1,090,175		1,079,112
2033		393,100		390,172
2034		378,137		373,289
2035		863,064		860,246
2036		476,992		450,305
2037		987,998		963,527
2038		842,706		842,706
2039		129,319		122,679
2040		2,163		2,163
	$	7,164,226	$	6,843,830

17) CAPITAL STOCK

CapitalStock

The capital stock of the Company consists of fully paid common shares.

Authorized

Unlimited number of common shares without par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote each at the shareholders’ meeting of the Company.

Unlimited number of preferred shares, issuable in series with rights and restrictions to be determined by the directors.

| 46 |

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

17)CAPITAL STOCK (continued)

Shareconsolidation

On July 27, 2020, the Company received conditional approval from the TSX Venture Exchange regarding a security consolidation on the basis of ten old shares for one new share. The common shares of Golden Valley have commenced trading on a consolidated basis at open of market on July 31, 2020. Following the consolidation, a total of approximately 13,518,459 common shares of Golden Valley are issued and outstanding, and incentive stock options to acquire an aggregate of approximately 1,423,691 common shares are outstanding. The number of common shares entitled to be purchased pursuant to the terms of the outstanding options and the per share exercise price for such shares were adjusted accordingly, in accordance with the terms of the respective options. All fractional common shares remaining as a result of the proposed consolidation have been cancelled. All historical information presented in the financial statements has been adjusted to reflect the share consolidation.

Issuedshare capital

Refer to “Share Consolidation” section of Note 17 “Capital Stock”.

The change in issued share capital for the years ended December 31, 2020 and 2019 was as follows:

	2020				2019
	Number		Stated		Number		Stated
	of shares		Value		of shares		Value
Balance, as at January 1,		13,434,760	$	28,420,603		13,391,858	$	28,289,902
Shares issued by exercise of stock options		83,700		215,582		42,903		133,429
Share issue expenses		-		-		-		(2,728	)
Balance, as at December 31,		13,518,460	$	28,636,185		13,434,760	$	28,420,603

Sharecapital issued from exercise of incentive stock options

For fiscal 2020, the Company issued 83,700 of its common shares from the exercise of incentive stock options of 83,700 at prices ranging from $1.10 per share to $3.50 per share for a total consideration of $125,630.

For fiscal, 2019, the Company issued 42,903 of its common shares from the exercise of incentive stock options of 37,903 at a price of $1.70 per share and of 5,000 at a price of $2.75 per share for a total consideration of $78,184.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18) SHARE-BASED PAYMENTS

The Company has a stock option incentive plan in place under which directors, officers, employees, and consultants are eligible to receive incentive stock options for the purchase of common shares of the Company. Under the terms of the plan, the aggregate number of shares issuable upon the exercise of options may not exceed 1,900,673, which represents 20% of the Company’s issued and outstanding common shares on May 25, 2015, the date of adoption of the option plan by the Company’s Board of Directors. The option plan was approved by the Company’s disinterested shareholders on June 25, 2015, and subsequently accepted by the TSX Venture Exchange.

The exercise price of each option is fixed by the Board of Directors at the time of grant and shall not be less than the closing price of the Company’s shares on the trading day immediately prior to the date of grant less any discount permitted by the TSX Venture Exchange; if no sales were reported on such day, the exercise price shall be based on the closing sales price on the last trading day prior to the time of determination on which sales were reported.

The term of any options granted under the option plan will be fixed by the Board of Directors and may not exceed ten years and the vesting period of options granted under the plan, if any, shall be determined by the Board of Directors at the time of grant. All options granted under the option plan will be in accordance with the rules and regulations of the TSX Venture Exchange.

The summary of changes in the number of incentive stock options issued by the Company for years ended December 31, 2020 and 2019 is presented as follows:

	2020					2019
				Weighted					Weighted
	Number of			average		Number of			average
	options			exercise price		options			exercise price
Outstanding, beginning of year		1,405,916		$	3.20		1,409,819		$	3.10
Granted		101,475			5.44		39,000			3.40
Expired		(1,800	)		3.40		-			-
Exercised		(83,700	)		1.50		(42,903	)		1.70
Outstanding, end of year		1,421,891		$	3.43		1,405,916		$	3.20
Exercisable, end of year		1,415,225		$	3.43		1,317,583		$	3.20

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18)SHARE-BASED PAYMENTS (continued)

The table below summarizes the information related to outstanding share options as at December 31, 2020:

Outstanding options
					Weighted
			Weighted		average
	Number of		average exercise		remaining contractual life		Exercisable
Expiry date	options		price		(years)		options
January 1, 2021		10,000		1.00		0.00		10,000
June 27, 2021		225,000		3.00		0.49		225,000
February 3, 2022		10,000		4.65		1.09		10,000
June 21, 2023		222,000		2.75		2.47		222,000
June 18, 2024		31,500		3.40		3.47		24,833
March 3, 2025		76,475		5.00		4.17		76,475
June 26, 2025		25,000		6.80		4.49		25,000
September 30, 2026		821,916		3.50		5.75		821,916
		1,421,891	$	3.43				1,415,225

The table below summarizes the information related to outstanding share options as at December 31, 2019:

Outstanding options
					Weighted
			Weighted		average
	Number of		average exercise		remaining contractual life		Exercisable
Expiry date	options		price		(years)		options
July 24, 2020		67,500		1.10		0.56		67,500
January 1, 2021		10,000		1.00		1.01		10,000
June 27, 2021		230,000		3.00		1.49		230,000
February 3, 2022		10,000		4.65		2.10		10,000
June 21, 2023		225,000		2.75		3.47		150,000
June 18, 2024		39,000		3.40		4.47		25,667
September 30, 2026		824,416		3.50		6.75		824,416
		1,405,916	$	3.17				1,317,583

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18)SHARE-BASED PAYMENTS (continued)

Share-basedcompensation expense

Refer to “Share Consolidation” section of Note 17 “Capital Stock”.

The table below summarizes share-based compensation expense for the years ended December 31, 2020 and 2019:

	For the year ended December 31,
	2020		2019
Golden Valley
June 2020 option grant ^(a)^	$	90,495	$	-
March 2020 option grant ^(b)^		60,203		-
June 2019 option grant ^(c)^		18,832		55,702
June 2018 option grant ^(d)^		86,374		198,050
September 2016 option grant ^(e)^		-		151,716
Share-based compensation expense	$	255,904	$	405,468
a)	On<br> June 26, 2020, the Company granted to its officers, directors and consultants incentive stock options entitling the purchase of an<br> aggregate 25,000 common shares at an exercise price of $6.80 per share. The options are exercisable for a period of 5 years until<br> June 26, 2025, subject to earlier termination in accordance with the terms of the Company’s stock option plan. The options<br> vest immediately on date of grant. The fair value of the 25,000 stock options granted has been estimated using the Black-Scholes<br> option pricing model at $90,495. For the year ended December 31, 2020, an amount of $90,495 has been expensed relating to this incentive<br> stock option.
---	---
b)	On<br> March 3, 2020, the Company granted to its officers and directors incentive stock options entitling the purchase of an aggregate 76,475<br> common shares (22,500 to directors and 53,975 to officers, at an exercise price of $5.00 per share). The options are exercisable<br> for a period of 5 years until March 3, 2025, subject to earlier termination in accordance with the terms of the Company’s stock<br> option plan. The options vest immediately on date of grant. The fair value of the 22,500 stock options granted has been estimated<br> using the Black-Scholes option pricing model at $60,203. For the year ended December 31, 2020, an amount of $60,203 has been expensed<br> relating to this incentive stock options. The fair value of the 53,975 stock options granted has been determined to be $125,213,<br> representing share-based payment equating to the cash portion of the 2018 and 2019 performance bonus to officers.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18)SHARE-BASED PAYMENTS (continued)

Share-basedcompensation expense (continued)

c)	On<br> June 18, 2019, the Company granted to its officers, and consultants incentive stock options entitling the purchase of an aggregate<br> 39,000 common shares at an exercise price of $3.40 per share. The options are exercisable for a period of 5 years until June 18,<br> 2024, subject to earlier termination in accordance with the terms of the Company’s stock option plan. Except for 20,000 options<br> which vest over a period of 3 years unless there is a change of control event, in which case the options will vest immediately on<br> occurrence of the change of control, all of the other options vest immediately on grant.
	The<br> fair value of the 39,000 stock options granted has been estimated using the Black-Scholes option pricing model at $84,980 of which<br> to date $74,534 has been expensed. 5,700 incentive stock options have been exercised relating to this grant. For the year ended December<br> 31, 2020, an amount of $18,832 (2019 -$55,702) has been expensed.
d)	On<br> June 21, 2018, the Company granted to its directors, officers, and consultants incentive stock options entitling the purchase of<br> an aggregate 230,000 common shares at an exercise price of $2.75 per share. The options are exercisable for a period of 5 years until<br> June 21, 2023, subject to earlier termination in accordance with the terms of the Company’s Stock Option Plan. All the options<br> vest equally over a period of 3 years unless there is a change of control event, in which case the options will vest immediately<br> on occurrence of the change of control.
	The<br> fair value of the stock options granted has been estimated using the Black-Scholes option-pricing model at $455,441 of which to date<br> $431,594 has been expensed. 8,000 incentive stock options have been exercised relating to this grant. For the year ended December<br> 31, 2020, an amount of $86,374 (2019 -$198,050) has been expensed.
e)	On<br> September 30, 2016, the Company granted to its directors, officers, employees, and consultants incentive stock options entitling<br> the purchase of an aggregate 930,593 common shares at an exercise price of $3.50 per share. The options are exercisable for a period<br> of 10 years until September 30, 2026, subject to earlier termination in accordance with the terms of the Company’s Stock Option<br> Plan. All the options vest equally over a period of 3 years unless there is a change of control event, in which case the options<br> will vest immediately on occurrence of the change of control.
	The<br> fair value of the stock options granted has been estimated using the Black-Scholes option-pricing model at $2,427,448 of which to<br> date $2,393,622 has been expensed and $33,826 has been capitalized to exploration and evaluation assets. 106,177 incentive stock<br> options have been cancelled and 2,500 incentive stock options have been exercised relating to this grant. For the year ended December<br> 31, no amount has been expensed as incentive stock options under this grant have fully vested in 2019.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

18)SHARE-BASED PAYMENTS (continued)

Fairvalue of options granted

Refer to “Share Consolidation” section of Note 17 “Capital Stock”.

The fair value of the granted options was determined using the Black-Scholes option pricing model and based on the following assumptions:

Date of Grant	June 26, 2020		March 3, 2020		June 18, 2019		June 21, 2018		September 30, 2016
Share price at date of grant	$	6.80	$	5.00	$	3.40	$	2.75	$	3.50
Expected dividends yield		0%		0%		0%		0%		0%
Expected weighted volatility		70.44%		69.59%		79.95%		105.67%		125.00%
Risk-free interest average rate		0.31%		1.10%		1.33%		2.00%		1.00%
Expected average life		5 years		5 years		5 years		5 years		10 years
Exercise price at date of grant	$	6.80	$	5.00	$	3.40	$	2.75	$	3.50

19) GENERAL AND ADMINISTRATIVE EXPENSES

The following table summarizes general and administrative expenses:

	For the year ended
	December 31,
	2020		2019
Office expenses	$	167,659	$	109,486
Advertising and exhibitions		154,434		81,390
Travelling and other		71,432		77,614
	$	393,525	$	268,490

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

20) EQUITY TRANSACTIONS OF ABITIBI ROYALTIES

Dividendspaid

On January 20, 2020, Abitibi Royalties’ Board of Directors approved a 25% dividend increase from $0.12 to $0.15 per common share on an annualized basis. The payment of dividends also changed from quarterly to monthly. The increased dividend amount and the payment of dividends from quarterly to monthly began in April 2020. On December 7, 2020, Abitibi Royalties’ Board of Directors further approved a 20% dividend increase from $0.15 to $0.18 per common share on an annualized basis.

For the year ended December 31, 2020, Golden Valley earned dividends of $798,748 (2019 - $336,315) from Abitibi Royalties. As at December 31, 2020, Golden Valley holds 5,605,246 common shares in Abitibi Royalties.

NormalCourse Issuer Bid

On September 23, 2019, Abitibi Royalties announced it received conditional acceptance to renew its NCIB for another year until October 5, 2020. This new approval allows the Company to purchase up to 626,695 (representing 5% of the Company’s total issued and outstanding common shares) of its common shares.

On September 24, 2020, Abitibi Royalties announced it received conditional acceptance to renew its NCIB for another year until October 5, 2021. This new approval allowed the Company to purchase up to 624,145 (representing 5% of the Company’s total issued and outstanding common shares) of its common shares.

For fiscal year 2020, Abitibi Royalties repurchased and cancelled 48,100 shares at prices varying from $15.14 to $26.00 per share for a total of $994,051. For fiscal year 2019, Abitibi Royalties repurchased and cancelled 61,100 of its common shares at prices varying from $9.40 to $16.15 for a total of $778,649.

Incentivestock option

Abitibi Royalties adopted a 20% fixed option plan in 2013. Pursuant to the fixed option plan, options, for an aggregate total of 1,740,200 common shares, may be granted to its directors, officers, employees, consultants, or management companies employees from time to time. Abitibi Royalties has not renewed its stock option plan and has not granted stock options under the current plan since 2014. There are no stock options available under the plan.

For the year ended December 31, 2019, Abitibi Royalties issued 81,171 of its common shares for a total consideration of $226,713 from the exercise of stock options at prices varying from $2.18 per share (47,733 stock options), $3.62 per share (13,438 stock options) and $3.70 per share (20,000 stock options).

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

21) FAIR VALUE MEASUREMENT

Fairvalue measurement of financial instrument

▪	Level<br> 1:	quoted prices (unadjusted) in active markets for identical assets or liabilities
▪	Level<br> 2:	inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;<br> and
▪	Level<br> 3:	inputs for the assets or liabilities that are not based on observable market data.

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

Cash and cash equivalent (Level 1), accounts receivable (Level 3), royalty receivable (Level 3), other assets (Level 3) and accounts payable and accrued liabilities (Level 3) are carried at amortized costs which approximate their fair value due to their short-term nature.

Short-term other assets consisting of money-market investment funds and marketable securities in the consolidated statement of financial position at December 31, 2020 and 2019 are classified in Level 1 and are recorded at fair value by reference to their quoted prices at the reporting date. The Company’s short-term other assets relating to the investments in the common shares of a private company do not have a quoted market price in an active market and the Company has assessed a fair value of the investment based on their unobservable net assets. As a result, the fair value is classified within Level 3 of the fair value hierarchy. The process of estimating the fair value of these investments is based on inherent measurement uncertainties and is based on techniques and assumptions that emphasize both qualitative and quantitative information. There is no reasonable quantitative basis to estimate the potential effect of changing the assumptions to reasonably possible alternative assumptions on the estimated fair value of these investments.

Investments relating to the common shares of Agnico Eagle and Yamana held by Abitibi Royalties and the liability relating to the derivative financial instruments are classified as Level 1.

The method and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting periods. There has been no movement between levels during the year.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

21)FAIR VALUE MEASUREMENT (continued)

The carrying amounts and fair value of financial instruments presented in the statement of financial position are as follows:

	December 31, 2020				December 31, 2019
	Carrying				Carrying
	amount		Fair value		amount		Fair value
Financial assets
Financial Assets at amortized costs
Cash and cash equivalents	$	13,703,034	$	13,703,034	$	3,003,083	$	3,003,083
Restricted cash		385,415		385,415		-		-
Account receivables		-		-		268,195		268,195
Royalty receivables		425,180		425,180		999,252		999,252
Dividend receivable		70,361		70,361		44,729		44,729
Other receivables		51,133		51,133		-		-
Due from related parties		59,517		59,517		45,750		45,750
Financial assets at fair value through
profit and loss
Short-term-term financial assets		406,280		406,280		534,774		534,774
Investments		49,501,916		49,501,916		50,636,738		50,636,738
	$	64,602,836	$	64,602,836	$	55,532,521	$	55,532,521
Financial liabilities
Financial liabilities measured at
amortized cost
Accounts payable and accrued liabilities	$	890,496		890,496	$	727,745		727,745
Financial liabilities measured at fair
value through profit and loss
Derivatives financial instruments<br><br> <br>(level 1)		4,243,318		4,243,318		8,979,047		8,979,047
	$	5,133,814	$	5,133,814	$	9,706,792	$	9,706,792

| 55 |

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

22) EARNINGS PER SHARE

Refer to “Share Consolidation” section of Note 17 “Capital Stock”.

Both the basic and diluted earnings per share have been calculated using the net income attributable to owners of the Company as the numerator, i.e., no adjustment to the net income were necessary in either years ended December 31, 2020 and 2019.

	For the year ended December 31,
	2020		2019
Net income attributable to shareholders of Golden Valley Mines Ltd.	$	5,005,946	$	3,282,652
Weighted average number of shares in circulation - basic		13,494,205		13,415,455
Dilutive effect of stock options and warrants		774,889		169,530
Weighted average number of shares		14,269,094		13,584,985
Basic earnings per share	$	0.371	$	0.245
Diluted earnings per share	$	0.351	$	0.245

For the year ended December 31, 2020, no stock options (10,000 stock options in 2019) were excluded from the calculation of diluted earnings per share attributable to shareholders of the Company as their exercise price was higher than the Company’s average share price for the respective periods.

23) COMMITMENTS AND CONTINGENCIES

The Company has entered into agreements with officers and consultants that include termination and change of control clauses. In the case of termination, the officers and consultants are entitled to an amount equal to a multiple (ranging from one to two times) the annual base fee payable. In the case of a change of control, the officers and consultants are entitled to an amount equal to a multiple (ranging from one to three times) the sum of the annual base fee. As at December 31, 2020, the total annual base fee of the officers and consultants under the agreements is $765,000. As a triggering event has not taken place, the contingent payments have not been reflected in the consolidated financial statements.

24) RELATED PARTY TRANSACTIONS

The Company’s related parties comprise of its joint key management and related companies, as described below. Unless otherwise stated, none of the transactions incorporated special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. Other than the related party transactions disclosed below, there were no other direct transactions with related parties other than routine payments for management and exploration services and grants of stock options.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

24)RELATED PARTY TRANSACTIONS (continued)

For the year ended December 31, 2020 and 2019, the compensation paid to key management for employee and consulting services for Golden Valley and its subsidiaries is presented below:

	For the year ended
	December 31,
	2020		2019
Short-term employee benefits
Salaries and bonuses ^(1)^	$	1,501,458	$	1,179,719
Directors’ fees		280,000		280,000
Benefits		160,133		154,371
Total short-term employee benefits		1,941,591		1,614,090
Other transactions with key management
Rent^(2)^		16,362		8,196
Management fees^(3)^		166,200		166,200
Legal fees^(4)^		-		13,851
Fees relating to exploration and evaluation activities^(5)^		72,190		69,958
Total other transactions with key management		254,752		258,205
Share-based payments^(6)^		234,187		367,723
Total remuneration	$	2,430,530	$	2,240,018
1)	Salaries<br> and bonuses for the year ended December 31, 2020 include (a) fiscal year 2020 performance-based bonuses of $77,500 (2019 - $58,275)<br> for the Company’s officers, (b) fiscal year 2020 performance-based bonuses of $311,600 (2019 - $241,525) for Abitibi Royalties’<br> Chairman of the Board, the President and Chief Executive Officer, and the Chief Financial, (b) long-term incentive share purchase<br> special allocations of $170,000 (December 31, 2019 - $nil) for Abitibi Royalties’ Board of directors, the President and Chief<br> Executive Officer, and the Chief Financial Officer, of which the after-tax proceeds will be used by the recipients to purchase shares<br> of Abitibi Royalties in the secondary market and are to retain such shares while serving as directors and officers of Abitibi Royalties.
---	---
	Salaries<br> and bonuses for the year ended December 31, 2019 include cash performance bonus of $299,800 of which $241,525 and $58,275 were declared<br> by Abitibi Royalties and the Company, respectively; and 2018 bonuses of $66,938 and 2019 bonuses of $58,275 to officers settled by<br> the Company through the issuance of 539,750 incentive stock options.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

24)RELATED PARTY TRANSACTIONS (continued)

2)	For<br> the year ended December 31, 2020, rent of $7,362 (2019 -$8,196) was paid by Abitibi Royalties to its President for use of Toronto<br> Property as an office for Abitibi Royalties and rent of $9,000 (2019 -$nil) was paid to 2973090 Canada Inc., a company controlled<br> by an officer and a director of the Company.
3)	Management<br> fees paid by Golden Valley to 2973090 Canada Inc. a company controlled by an officer and a director of the Company.
4)	Legal<br> fees paid to a company with one of its principals being also a director of Golden Valley relating to claim and settlement in favour<br> of the Company.
5)	For<br> the year ended December 31, 2020, fees relating to exploration and evaluation activities include $58,800 (2019 -$58,800) paid to<br> 2973090 Canada Inc and of $13,390 (2019 -$11,158) paid to Rosatelli Exploration Services, a company controlled by an officer of the<br> Company. 4)Share-based compensation relating to the incentive stock option program for officers and directors of the Company.
6)	Share-based<br> compensation relating to the incentive stock option program for officers and directors of the Company.

At the end of the year, some of the salaries, meeting fees and bonuses disclosed above had not been paid and were included in current liabilities. At December 31, 2020, $669,100 (2019 - $619,786) was included in account payables and accrued liabilities.

Transactionswith related companies

Effective July 1, 2020, the Company entered into a Cost Sharing Arrangement (the “Sharing Arrangement”) with companies related by common management, pursuant to which Golden Valley will provide certain management and financial services such as office space and administrative support relating to the exploration offices located at 2864 Chemin Sullivan, Val-d’Or, Québec, J9P 0B9, in consideration of $71,348 per year (the “reimbursement”), payable on a monthly basis. The Sharing Arrangement provides for the reimbursement to be reviewed on an annual basis. For the year ended December 31, 2020, reimbursement of $29,409 was received from related companies relating to this Sharing Agreement,

| 58 |

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

24)RELATED PARTY TRANSACTIONS (continued)

Val-d’OrMining

For the year ended December 31, 2020, Golden Valley also recharged general and administrative expenses to Val-d’Or Mining, a company related by common management, for a total amount of $9,907.

For the year ended December 31, 2020, no consultant (2019 - $15,000) was recharged to Val-d’Or Mining relating to the services of the Company’s CFO.

For efficiency reasons, where the Company and Val-d’Or Mining are dealing with the same suppliers one may pay for both and be reimbursed by the other. As at December 31, 2020, the Company had a net payable of $6,064 (December 31, 2019 -$21,687) due from Val-d’Or Mining, which is netted of due from related parties.

InternationalProspect

For the year ended December 31, 2020, no consulting fees (2019 - $75,000) was recharged to International Prospect for the services provided by the Company’s President and no consultant fees (2019 -$12,000) was recharged to International Prospect relating to the services of the Company’s CFO.

As at December 31, 2020, Golden Valley has a receivable of $65,782 (December 31, 2019 -$68,520) with International Prospect relating to consulting fees recharged to International Prospect for the services provided by the Company’s President in 2019.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

25) ADDITIONAL INFORMATION - CASH FLOWS

Cashtransactions

	For the year ended December 31,
	2020		2019
Interest received related to operating activities	$	71,375	$	10,189
Dividends received related to investing activities		615,525		416,339
Royalties received related to operating activities		1,259,770		2,052,918

Changesin non-cash working capital items

	For<br> the year ended December 31,
	2020			2019
Royalty<br> receivable	$	574,072		$	(985,147	)
Accounts<br> receivable	****	268,195			(42,260	)
Prepaids<br> and other receivables	****	(165,600	)		(154	)
Accounts<br> payable and accrued liabilities	****	287,963			105,908
Income<br> taxes payable	****	2,464,798			-
	$	3,429,428		$	(921,653	)

Non-cashtransactions

Non-cash transactions included in the statement of financial position are as follows:

	For the year ended
	December 31,
	2020		2019
Options on exploration and evaluation assets received as shares of quoted mining<br> exploration companies included in short-term other assets	$	72,500	$	67,505
Common shares received in Exploration and evaluation assets		1,291,667		356,913

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

26) FINANCIAL INSTRUMENTS

The Company is exposed to various risks in relation to financial instruments. The main types of risks are market risk, credit risk and liquidity risk. The Company focuses on actively securing short-to medium-term cash flows by minimizing the exposure to financial markets. The most significant financial risks to which the Company is exposed are described below.

a)Market risk

Foreigncurrency risk sensitivity

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Most of the Company’s transactions are carried out in Canadian dollars. Currency risk arises from the Company’s cash, dividends, and royalty revenues in foreign currency, which are primarily denominated in U.S. dollars. The Company does not enter into arrangements to hedge its foreign exchange risk. As at December 31, 2020 and 2019, foreign currency denominated financial assets and liabilities in U.S. dollars and which expose the Company to the currency risk are as follows:

	As at December 31,
	2020			2019
Cash and cash equivalents	$	7,125,721			1,737,268
Restricted cash		302,405			-
Royalty receivable		333,946			769,366
Dividends receivable		54,251			35,497
Accounts payable and accrued liabilities		(3,040	)		-
Derivative financial instruments		(3,332,798	)		(6,913,341	)
	$	4,480,485			(4,371,210	)

A 1% change in the Canadian /U.S. exchange rate as at December 31, 2020 would have had an impact of $57,046 (2019- $56,774) on net income and comprehensive income of the year.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

26)FINANCIAL INSTRUMENTS (continued)

Otherprice risk sensitivity

The Company is exposed to fluctuations in the market prices of its investments in quoted mining companies, derivative financial instrument, marketable securities in quoted mining exploration companies. The fair value of these financial instruments represents the maximum exposure to price risk.

If the quoted price of these instruments had changed by 1% as at December 31, 2020 (1% as at December 31, 2019), net income and comprehensive income for the year would have changed by $489,865 (2019 - $421,925).

b)Credit risk

Credit risk is the risk that another party to a financial instrument fails to discharge its obligation and, thus, leads the Company to incur a financial loss. The Company’s maximum exposure to credit risk is limited to the carrying amount of financial assets at the reporting date, as summarized below:

	As at December 31.
	2020		2019
Cash and cash equivalents	$	13,703,034	$	3,003,083
Restricted cash		385,415		-
Account receivables		-		268,195
Royalty receivables		425,180		999,252
Prepaids and other receivables		303,959		123,546
Carrying amounts	$	14,817,588	$	4,394,076

The risk related to cash and restricted cash is considered negligible as the Company is dealing with a reputable financial institution whose credit rating is excellent. The Company’s management considers that the above financial asset is of good credit quality. The credit risk exposure for the Company’s accounts, royalty and dividends receivables and other assets is considered minimal as these receivables have since been received subsequent to year-end. The Company continuously monitors defaults of counterparties. No impairment loss has been recognized in the years presented.

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

26)FINANCIAL INSTRUMENTS (continued)

c)Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk management serves to maintain a sufficient amount of cash and cash equivalents and to ensure that the Company has financing sources such as private and public investments for a sufficient amount. Over the past years, the Company has financed its exploration and evaluation programs, its working capital requirements and acquisitions of mining properties through private and flow-through placements and through dividends received from the shares it holds on Abitibi Royalties.

The Company’s objective is to maintain cash and cash equivalents and short-term investments to meet its liquidity requirements. This objective was met for the reporting periods. The Company considers cash flows from financial assets in assessing and managing liquidity risk, in particular its cash and cash equivalents and short-term investments. The Company’s existing cash and cash equivalents and short-term investments significantly exceeds the current cash outflow requirements.

The following table presents contractual maturities (including interest payments where applicable) of the Company’s liabilities:

	As at December 31.
	2020		2019
Within 3 months
Accounts payable and accrued liabilities	$	890,496	$	727,745
Income taxes payable		2,464,798		-
Derivative financial instruments		2,411,567		6,576,429
	$	5,766,861	$	7,304,174
3 to 12 months
Derivative financial instruments	$	135,341	$	-
	$	135,341	$	-
12 to 36 months
Derivative financial instruments	$	1,696,410	$	2,402,618
	$	1,696,410	$	2,402,618

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

27) CAPITAL MANAGEMENT POLICIES AND PROCEDURES

These objectives will be achieved by identifying the right exploration projects, adding value to these projects and ultimately taking them through to production or sale and cash flow, either with partners or by the Company’s own means and by identifying and acquiring the right potential royalty rights. The Company monitors capital on the basis of the carrying amount of equity. Capital for the reporting periods under review is comprised of share capital, warrants and contributed surplus. The Company is not exposed to any externally imposed capital requirements as at December 31, 2020 and 2019. The Company sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may return capital to shareholders, issue new shares, or sell assets to reduce payables. When financing conditions are not optimal, the Company may enter into option agreements or other solutions to continue its exploration and evaluation activities or may slow its activities until conditions improve. No changes were made in the objectives, policies and processes for managing capital during the year.

28) SUBSEQUENT EVENTS

Acquisitionof Golden Valley and Abitibi Royalties by Gold Royalty Corp.

On September 7, 2021, Golden Valley, Abitibi Royalties and Gold Royalty announced that they entered into definitive agreements dated September 6, 2021, pursuant to which Gold Royalty acquired all of the issued and outstanding common shares of each of Golden Valley and Abitibi Royalties by way of statutory plans of arrangement (the “Arrangements”). The Arrangements were completed on November 5, 2021 whereby Gold Royalty issued 2.1417 of its shares to Golden Valley shareholders for each Golden Valley common share; and Gold Royalty issued 4.6119 of its shares to Abitibi Royalties shareholders for each Abitibi Royalties common share. Additionally, pursuant to the Golden Valley Arrangement, each of its 1,166,389 options that were outstanding immediately prior to the business combination were exchanged for 2,498,045 options to purchase Gold Royalty shares.

Derivativefinancial instruments

Subsequent to year end, Abitibi Royalties was called to deliver 37,700 common shares of Agnico Eagle at share prices ranging from US$50.00 to US$65.00 per share and received, net of commissions, $2,722,806 (or US$2,139,898) and 1,026,000 common shares of Yamana at share prices ranging from US$3.00 to US$5.00 per share and received, net of commissions, $6,971,111 (or US$5,484,388).

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GOLDEN VALLEY MINES AND ROYALTIES LTD.

(Formerly Golden Valley Mines Ltd.)

Notes to the consolidated financial statements

For the years ended December 31, 2020 and 2019

(Expressed in Canadian dollars unless otherwise noted)

28)SUBSEQUENT EVENTS (continued)

Miningoption agreement on the Centremaque Prospect

On September 9, 2021, the Company was informed by Alexandria, that it was exercising its option to acquire an 80% interest in the Centremaque property pursuant to the terms of a mining option agreement between Golden Valley and Alexandria dated April 20, 2017, as amended. Upon the exercise of the option by Alexandria, Golden Valley and Alexandria will form a joint venture to further explore, and if warranted, develop the property. Golden Valley will have a 20% free-carried interest in the property, such that Golden Valley will not be responsible for any project costs, including without limitation, construction costs, exploration costs, mine costs and operating costs on the property, until the commencement of commercial production. In addition, Golden Valley retains a 1.5% royalty on Net Smelter Returns, of which a 0.5% royalty on Net Smelter Returns may be purchased by Alexandria for $1,000,000.

Miningoption agreement on the AGB Properties

On October 8, 2021, the Company entered into an option agreement (the “Option Agreement”) with Eldorado, enabling Eldorado to earn up to an additional 50% interest in the Claw Lake Gold Prospect, the Cook Lake Prospect, the Murdock Creek Prospect, all located in Ontario and the Perestroika Prospect, located in Québec (the “Properties”). Under the new Option Agreement, GZZ-I JV will be terminated upon the satisfaction of certain conditions precedent (including the amendment of certain historical royalty agreements pertaining to the Properties), which were satisfied concurrently with the execution of the Option Agreement. Furthermore, Golden Valley has the option to be assigned, from Eldorado for nominal consideration, all of the right, title and interest of Eldorado in and to five of the remaining Existing Properties (Munro Prospect, Recession Larder Prospect, Matachewan Prospect all in Ontario, and the Bogside Prospect in Quebec; Denovo Prospect in Ontario was previously dealt with in a transaction with Highgold Mining Inc.), other than the Properties.

Eldorado may earn an additional 40% in the Properties (the “40% Option”) by funding expenditures on the Properties for a minimum of $10,500,000 over a period of 5 years from the termination of the GZZ-I JV and making annual payments to $50,000 per annum to Golden Valley (“Annual Payment”) with the first Annual Payment being made on termination of the GZZ-I JV and each subsequent Annual Payment being made on the anniversary thereof until Eldorado exercises the 40% Option. Upon exercise of the 40% Option by Eldorado, the parties will be deemed to have formed a joint venture in accordance with the terms set out in the Option Agreement and will use commercially reasonable efforts to enter into a formal joint venture agreement within 60 business days of the exercise of the 40% Option.

In order to earn and acquire an additional 10% undivided interest in the Properties (the “Additional Option”), Eldorado will contribute all joint venture expenditures on behalf of the parties, and deliver to Golden Valley, a preliminary economic assessment (PEA) report in respect of the Properties. Upon the exercise of the Additional Option by Eldorado, Golden Valley will have a 20% undivided beneficial interest in the Properties and Eldorado will have an 80% undivided beneficial interest in the Properties.

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Exhibit99.7

(Previously Golden Valley Mines Ltd.)

Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2021 and 2020

(Expressed in Canadian dollars)

(UNAUDITED)

| 1 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

CondensedConsolidated Interim Statements of Financial Position

(Expressed in Canadian Dollars)

(unaudited)

			As at September 30,			As at December 31,
	Notes		2021			2020
ASSETS
Current
Cash and cash equivalents		3	$	14,371,226		$	13,703,034
Restricted cash		3		5,561,189			385,415
Other assets		4		438,247			406,280
Income tax recoverable				208,825			-
Royalty receivable		11		150,187			425,180
Prepaids and other receivables		5		294,690			335,716
				21,024,364			15,255,625
Non-current
Investments		6		27,654,951			49,501,916
Investments in associates		7		1,823,342			2,127,431
Exploration and evaluation assets		8		400,929			463,429
Other assets		4		737,700			110,957
TOTAL ASSETS			$	51,641,286		$	67,459,358
LIABILITIES
Current
Accounts payable and accrued liabilities			$	176,875		$	890,496
Income taxes payable				-			2,464,798
Derivative financial instruments		10		1,322,945			4,243,318
				1,499,820			7,598,612
Non-Current
Loan		11		60,000			60,000
Deferred taxes		16		584,377			2,693,658
Total liabilities				2,144,197			10,352,270
EQUITY
Capital stock		12		29,832,917			28,636,185
Contributed surplus				5,833,752			6,324,653
Deficit				(10,947,191	)		(7,304,410	)
Total equity attributable to owners of the parent company				24,719,478			27,656,428
Non-controlling interest				24,777,611			29,450,660
Total equity				49,497,089			57,107,088
TOTAL LIABILITIES AND EQUITY			$	51,641,286		$	67,459,358

Theaccompanying notes are an integral part of the condensed consolidated interim financial statements.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

CondensedConsolidated Interim Statements of Net Income (loss) and Statement of Comprehensive Income (loss)

(Expressed in Canadian Dollars)

(unaudited)

****	****		For the three months ended					****	For the nine months ended					****
****	****		September 30,					****	September 30,					****
	Notes		2021			2020			2021			2020
Revenues
Royalties		9	$	150,187		$	92,600		$	789,294		$	260,518
Dividends				187,338			171,361			542,347			403,926
Option revenue				223,145			60,184			323,145			110,184
				560,670			324,145			1,654,786			774,628
Operating Expenses
Salaries and other employee benefits				396,653			295,651			1,079,088			1,060,222
Professional fees		14		727,400			164,596			1,235,160			596,880
General and administrative expenses		15		106,037			84,419			254,701			306,693
Management fees		19		41,550			41,550			124,650			124,650
Royalty interests		9		(391	)		-			58,409			37,701
Exploration and evaluation				53,388			17,461			89,483			68,041
Share-based compensation		13		1,220			15,807			30,831			240,098
Depreciation of property and equipment				-			-			-			1,028
				1,325,857			619,484			2,872,322			2,435,313
Operating loss				(765,187	)		(295,339	)		(1,217,536	)		(1,660,685	)
Other income (loss)
Change in fair value of investments				(3,382,694	)		8,661,402			(12,542,998	)		17,264,630
Change in fair value of derivatives				1,004,598			(2,625,341	)		5,273,826			756,798
Change in fair value of derivatives resulting from foreign exchange				(41,859	)		537,336			6,322			370,061
Change in fair value of other assets				(125,286	)		92,121			(266,097	)		102,465
Foreign exchange gain (loss)				483,802			(102,395	)		8,647			2,482,510
Share of gain (loss) of associates		7		108,094			(2,857	)		(86,074	)		(454,205	)
Gains on dilution of equity investments		7		-			-			113,212			-
Gain on loss of significant influence		7		-			-			384,119			-
Finance income				413			2,660			2,361			72,294
Finance cost				(40,705	)		(17,242	)		(130,790	)		(93,685	)
				(1,993,637	)		6,545,684			(7,237,472	)		20,500,868
Net income (loss) before income taxes				(2,758,824	)		6,250,345			(8,455,008	)		18,840,183
Income tax expense (recovery)
Current tax				62,419			134,136			774,578			2,100,049
Deferred tax		16		(414,107	)		673,092			(2,109,281	)		373,134
				(351,688	)		807,228			(1,334,703	)		2,473,183
Net income (loss) and total comprehensive income (loss) for the period			$	(2,407,136	)	$	5,443,117		$	(7,120,305	)	$	16,367,000
Net income (loss) and total comprehensive income (loss) attributable to:
Shareholders of Golden Valley Mines and Royalties Ltd.			$	(1,265,741	)	$	3,022,675		$	(3,543,076	)	$	6,081,378
Non-controlling interest				(1,141,395	)		2,420,442			(3,577,229	)		10,285,622
			$	(2,407,136	)	$	5,443,117		$	(7,120,305	)	$	16,367,000
Earnings (loss) per share attributable to shareholders of Golden Valley Mines and Royalties Ltd:
Basic earnings (loss) per share		18	$	(0.092	)	$	0.224		$	(0.260	)	$	0.451
Diluted earnings (loss) per share		18	$	(0.092	)	$	0.214		$	(0.260	)	$	0.427

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

CondensedConsolidated Interim Statements of Changes in Equity

Forthe nine months ended September 30, 2021 and 2020

(Expressed in Canadian Dollars)

(unaudited)

****	****		Capital Stock				Contributed Surplus		****	Deficit		****	Total attributable to owners of the parent company		****	Non-controlling interest		****	Total Equity		****
	Notes		Number
Balance at January 1, 2021				13,518,460	$	28,636,185	$	6,324,653		$	(7,304,410	)	$	27,656,428		$	29,450,660		$	57,107,088
Shares issued on exercise of stock options		12		225,000		1,196,732		(521,732	)		-			675,000			-			675,000
Share-based payments		13		-		-		30,831			-			30,831			-			30,831
Change in interest of subsidiaries				-		-		-			(99,705	)		(99,705	)		(1,095,820	)		(1,195,525	)
				13,743,460		29,832,917		5,833,752			(7,404,115	)		28,262,554			28,354,840			56,617,394
Net loss and total comprehensive loss for the period											(3,543,076	)		(3,543,076	)		(3,577,229	)		(7,120,305	)
Balance at September 30, 2021				13,743,460	$	29,832,917	$	5,833,752		$	(10,947,191	)	$	24,719,478		$	24,777,611		$	49,497,089
Balance at January 1, 2020				13,434,760	$	28,420,603	$	6,033,488		$	(11,945,215	)	$	22,508,876		$	22,966,935		$	45,475,811
Share-based payments				-		-		365,310			-			365,310			-			365,310
Shares issued on exercise of stock options		12		83,700		215,582		(89,952	)		-			125,630			-			125,630
Change in interest of subsidiaries				-		-		-			(286,518	)		(286,518	)		(1,219,376	)		(1,505,894	)
				13,518,460		28,636,185		6,308,846			(12,231,733	)		22,713,298			21,747,559			44,460,857
Net income and total comprehensive income for the period											6,081,378			6,081,378			10,285,622			16,367,000
Balance at September 30, 2020				13,518,460	$	28,636,185	$	6,308,846		$	(6,150,355	)	$	28,794,676		$	32,033,181		$	60,827,857

Theaccompanying notes are an integral part of the condensed consolidated interim financial statements.

| 4 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

CondensedConsolidated Interim Statements of Cash Flows

Forthe nine months ended September 30, 2021 and 2020

(Expressed in Canadian Dollars)

(unaudited)

		2021			2020
OPERATING ACTIVITIES
Net income (loss) for the period		$	(7,120,305	)	$	16,367,000
Adjustments:
Mining option revenue			(215,066	)		(110,184	)
Share-based payments	13		30,831			240,098
Foreign exchange loss (gain)			(54,085	)		5,995
Share of gain (loss) in associates	7		86,074			454,205
Gains on dilution of equity investments			(113,212	)		-
Gain on loss of significant influence			(384,119	)		-
Deferred tax recovery			(2,109,281	)		373,134
Royalty interests	9		58,409			-
Change in fair value of investments			12,542,998			(17,264,630	)
Change in fair value of derivatives			(5,273,826	)		(756,798	)
Change in fair value of derivatives resulting from foreign exchange			(6,322	)		(370,061	)
Realized gain on sale of other assets			-			(32,055	)
Change in fair value of other assets			266,097			(70,410	)
Depreciation of property and equipment			-			1,028
			(2,291,807	)		(1,162,678	)
Changes in working capital items:
Accounts receivable			-			268,195
Royalty receivable			274,993			906,652
Prepaids and other receivables			16,026			(150,219	)
Accounts payable and accrued liabilities			(713,621	)		(557,691	)
Income taxes payable			(2,673,623	)		2,100,049
			(3,096,225	)		2,566,986
Cash flows from (used by) operating activities			(5,388,032	)		1,404,308
INVESTING ACTIVITIES
Proceeds from settlement of derivative financial instruments	10		9,314,033			26,162,425
Payment on settlement of derivative financial instruments			-			(23,566,713	)
Repurchase of derivative financial instruments			(43,231	)		(29,119	)
Proceeds from sale of derivative financial instruments	10		2,403,006			2,820,389
Increase in restricted cash			(5,175,774	)		-
Acquisition of investments			(5,731	)		(25,286	)
Acquisition of royalty interests			(58,409	)		-
Proceeds from mining option agreement			25,000			100,000
Proceeds from sale of investments			63,770			261,300
Additions to exploration and evaluation expenses			-			(73,816	)
Cash flows from investing activities			6,522,664			5,649,180
FINANCING ACTIVITIES
Proceeds from exercise of stock options			675,000			125,630
Proceeds from loan			-			40,000
Change in interest of subsidiaries			(1,195,525	)		(1,505,894	)
Cash flows used by financing activities			(520,525	)		(1,340,264	)
Effect of foreign exchange rate changes on cash and cash equivalents			54,085			(5,995	)
Net change in cash and cash equivalents		$	668,192		$	5,707,229
Cash and cash equivalents, beginning of period			13,703,034			3,003,083
Cash and cash equivalents, end of period		$	14,371,226		$	8,710,312

Theaccompanying notes are an integral part of the condensed consolidated interim financial statements.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

1) NATURE OF OPERATIONS

As a result of the business combinations completed on November 5, 2021 (see Note 25 “Subsequent Events”), Golden Valley and Abitibi Royalties became wholly-owned subsidiaries of Gold Royalty Corp. (“Gold Royalty”), a company incorporated and domiciled in Canada with common shares and common share purchase warrants listed on the NYSE American under the symbols “GROY” and “GROY.WS”, respectively. An application was made for Golden Valley and Abitibi Royalties to cease to be reporting issuers under applicable Canadian securities laws and to otherwise terminate Golden Valley’s and Abitibi Royalties’ public reporting requirements, which application was accepted on November 22, 2021. Furthermore, the location of the registered office of Golden Valley and Abitibi Royalties changed to 1000 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2, Canada. Similarly, the location of the principal address of Golden Valley and Abitibi Royalties changed to 1030 West Georgia Street, Suite 1830, Vancouver, British Columbia, V6E 2Y3, Canada.

2) BASIS OF PRESENTATION

a)Statement of Compliance

These condensed consolidated interim financial statements have been prepared in accordance with International Financing Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), under International Accounting Standard (IAS 34 - “Interim Financial Reporting”. These condensed consolidated interim financial statements were prepared using the same accounting policies, methods of computation and basis of presentation as outlined in Note 4 - Summary of Accounting Policies, as described in the Company’s annual audited financial statements for the year ended December 31, 2020. The interim financial statements do not include all the notes required in annual financial statements and, accordingly, should be read in conjunction with the annual financial statements for the year ended December 31, 2020.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

2) BASIS OF PRESENTATION (continued)

b)Approval of Financial Statements

These condensed consolidated interim financial statements were approved for issuance by the Board of Directors on April 11, 2022.

c)Basis of consolidation

The Company’s condensed financial statements consolidate the accounts of Golden Valley and its subsidiaries until September 30, 2021.

Subsidiaries

Associates

Associates are entities, including unincorporated entities such as partnerships, over which the Company has significant influence and that are neither subsidiaries nor interests in joint arrangements. Significant influence is the ability to participate in the financial and operating policy decisions of the investee without having control or joint control over those policies. In general, significant influence is presumed to exist when the Company has between 20% and 50% of voting power. Significant influence may also be evidenced by factors such as the Company’s representation on the board of directors, participation in policy-making of the investee, material transactions with the investee, interchange of managerial personnel, or the provision of essential technical information. Associates are equity accounted for from the effective date of commencement of significant influence to the date that the Company ceases to have significant influence.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

2) BASIS OF PRESENTATION (continued)

Associates(continued)

Results of associates are equity accounted for using the results of their most recent annual financial statements or interim financial statements, as applicable. Losses from associates are recognized in the consolidated financial statements until the interest in the associate is written down to nil. Thereafter, losses are recognized only to the extent that the Company is committed to providing financial support to such associates.

	As at September 30,			As at December 31,
Percentage of ownership	2021			2020
Subsidiaries (consolidated)	****
Abitibi Royalties Inc.		44.98	%		44.93	%
Calone Mining Ltd.		100.00	%		100.00	%
Investment in associates (equity method)
International Prospect Ventures Ltd. (note 9)		-			13.44	%
Val-d’Or Mining Corporation		37.96	%		39.57	%

As at September 30, 2021, the Company’s investment in associates relate to Val-d’Or Mining Corporation (“Val- d’Or Mining”), which is involved in exploring, evaluating and promoting its mineral properties and other projects.

Until June 15, 2021 (note 7), the Company’s investment in associates included International Prospect Ventures Ltd. (“International Prospect”), which is involved in exploring, evaluating and promoting its mineral properties and other projects.

| 8 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

3) CASH AND CASH EQUIVALENTS

	As at September 30,		As at December 31,
	2021		2020
Cash	$	13,970,157	$	13,102,329
Demand deposits, redeemable at any time		401,069		600,705
	$	14,371,226	$	13,703,034

Demand deposits represent money market mutual funds earning income at an annual rate of 0.30% (December 31, 2020 - 0.30%) that are cashable at any time.

Restrictedcash

Restricted cash represents funds held as collateral on the put option contracts referred to in the Derivative financial instruments below.

Restricted cash of $5,561,189 (or US$4,396,197) as at September 30, 2021 (December 31, 2020 - $385,415 (or US$302,405)) relates to funds held as collateral on the outstanding put option contracts of 180,300 shares (December 31, 2020 – 99,300 shares) of Agnico and of 1,694,600 shares (December 31, 2020 – nil shares) of Yamana as at September 30, 2021. The funds will become unrestricted once the put option contracts are exercised, repurchased or expired.

4) OTHER ASSETS

Other assets comprise of the Company’s equity interests in various public and non-public entities:

	As at September 30,			As at December 31,
	2021			2020
Equity investments	$	737,700		$	-
Marketable securities		438,247			406,280
Private company investment		-			106,913
Warrants		-			4,044
Other assets		1,175,947			517,237
Less: current portion of Other assets		(438,247	)		(406,280	)
Long-term portion of Other assets	$	737,700		$	110,957

| 9 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

4) OTHER ASSETS (continued)

Equity investments of $737,700 (December 31, 2020 -$nil) representing the fair value of common shares of International Prospect and recorded at fair value using quoted market prices (note 7).

Marketable securities of $438,247 (December 31, 2020 -$406,280) represent shares of publicly traded exploration companies and are recorded at fair value using quoted market prices.

Investment of $106,913 as at December 31, 2020 represents shares in a private company that do not have a quoted market price in an active market. The Company has assessed the fair value of these shares based on techniques and assumptions that emphasize both qualitative and quantitative information.

5) PREPAIDS AND OTHER RECEIVABLES

	As at September 30,		As at December 31,
	2021		2020
Prepaid expenses	$	131,828	$	102,427
Sales taxes recoverable		104,294		31,757
Dividend receivable		38,047		70,361
Advances for claim management		20,521		20,521
Due from related party (note 21)		-		59,517
Payroll levies receivable		-		26,133
Mining option receivable		-		25,000
	$	294,690	$	335,716

6) INVESTMENTS

	As at September 30, 2021				As at December 31, 2020
	Number of<br><br> shares		Fair value		Number of<br><br> shares		Fair value
Yamana Gold Inc.		996,795	$	4,983,975		2,105,895	$	15,309,857
Agnico Eagle Mines Limited		338,197		22,222,925		375,897		33,676,612
			$	27,206,900			$	48,986,469
Other investments				448,051		-		515,447
			$	27,654,951			$	49,501,916

For the nine months ended September 30, 2021, Abitibi Royalties was called to deliver 37,700 common shares of Agnico Eagle at share prices ranging from US$50.00 to US$65.00 per share and received, before commissions, $2,734,388 (or US$2,149,000) and 1,109,100 common shares of Yamana at share prices ranging from US$3.00 to US$5.00 per share and received, before commissions, $6,579,645 (or US$5,171,050) from call options it had sold.

| 10 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

7) INVESTMENTS IN ASSOCIATES

The following table summarizes the changes to investments in associates for the nine months ended September 30, 2021 and for the year ended December 31, 2020:

	International<br><br> Prospect			Val-d’Or <br><br>Mining			Total
As at January 1, 2021	$	304,640		$	1,822,791		$	2,127,431
Share of net gain (loss) from associates		(30,885	)		(55,189	)		(86,074	)
Gains on dilution of equity investments		57,472			55,740			113,212
Gain on loss of significant influence		384,119			-			384,119
Net		715,346			1,823,342			2,538,688
Reclassified to Other Assets		(715,346	)		-			(715,346	)
As at September 30, 2021	$	-		$	1,823,342		$	1,823,342
	International<br><br> Prospect			Val-d’Or <br><br>Mining			Total
---	---	---	---	---	---	---	---	---	---
As at January 1, 2020	$	356,655		$	986,378		$	1,343,033
Shares from mining option agreement		-			1,291,667			1,291,667
Share of net loss from associates		(52,015	)		(455,254	)		(507,269	)
As at December 31, 2020	$	304,640		$	1,822,791		$	2,127,431

Val-d’OrMining Corporation (“Val-d’Or Mining”)

As at September 30, 2021, the Company held 25,687,444 or 37.96% (December 31, 2020 - 39.57%) interest in Val-d’Or Mining. The shares of Val-d’Or Mining were trading at $0.14 per share on that date. The Company has no contingent liabilities relating to its interest in the associates.

InternationalProspect Ventures Ltd (“International Prospect”)

As at September 30, 2021, the Company held 4,470,910 common shares or 11.45% (December 31, 2020 - 13.44%) interest in International Prospect. The shares of International Prospect were trading at $0.165 per share on that date.

On June 15, 2021, International Prospect completed a private placement of $800,250 which resulted in an issuance of 5,334,999 Units at a price of $0.15 per Unit, with each Unit comprising of one common share in the capital of International Prospect and one-half of one non-transferable share purchase warrant. As a result of the private placement, the Company’s ownership in International Prospect decreased to 11.45% of the issued and outstanding common shares of International Prospect.

| 11 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

7)INVESTMENTS IN ASSOCIATES (continued)

As a result of the change in ownership interest and other indicators, the Company concluded that it no longer had significant influence over International Prospect and classified its investment in International Prospect as financial asset at fair value through other comprehensive income and; presented as part of  Equity investments in Other Assets as at September 30, 2021.

Up to the date of loss of significant influence (for the period from January 1, 2021 to June 15, 2021), the Company recognized its share of the net loss in International Prospect totaling $30,885. Upon concluding that the Company no longer had significant influence over International Prospect, the Company recorded its investment in International Prospect at fair value, using the quoted market price on June 15, 2021, of $0.15 per share for a total of $715,346 and recognized a gain on loss of significant influence in associate of $384,119.

8) EXPLORATION AND EVALUATION ASSETS

The following table summarizes the carrying values of Exploration and Evaluations Assets by properties as at September 30, 2021 and December 31, 2020:

	As at September 30,			As at December 31,
	2021			2020
Golden Valley Mines Properties
Abitibi Greenstone Belt (“AGB”)
Kirkland Lake / Matachewan (Ontario)	$	817,555		$	817,555
Lebel-sur-Quevillon (Québec)		359,496			359,496
Val d’Or - Malartic (Québec)		143,181			143,181
Rouyn-Noranda-Cadillac (Québec)		168,405			168,405
Total AGB	$	1,488,637		$	1,488,637
Total other		22,069			22,069
Investment tax credit		(1,198,978	)		(1,198,978	)
Balance, end of the period	$	311,728		$	311,728
Abitibi Royalties Properties
Bathurst (Ontario)	$	12,500		$	75,000
Hees (Ontario)		75,000			75,000
Bullfrog South (Nevada, USA)		1,701			1,701
Balance, end of the period	$	89,201		$	151,701
TOTAL	$	400,929		$	463,429

| 12 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8) EXPLORATION AND EVALUATION ASSETS (continued)

GOLDENVALLEY PROPERTIES

a)Mining Option Agreement with Val-d’Or Mining

On April 18, 2017, the Company granted to Val-d’Or Mining an option to acquire a 100% interest in 61 of its grassroots properties, which option was amended and restated as of November 28, 2019 and exercised on December 5, 2019. Pursuant to the option, Val-d’Or Mining issued 8,333,334 shares to Golden Valley in 2020. In addition, Golden Valley is eligible to receive 20% of the proceeds of all third- party transactions pertaining to the properties that Val-d’Or Mining enters into and announces on or before December 31, 2022.

a) Mining Option Agreement withVal-d’Or Mining (continued)

Furthermore, the properties are subject to a royalty in favour of Golden Valley equal to 1.25% of the net smelter returns, whereby Val-d’Or Mining has a partial buyback right. The partial buyback right pertains to each individual property, whereby 1% may be bought for $500,000 on a property-by-property basis with a maximum total consideration of $5,000,000 at which point in time the NSR royalty on all the properties would be reduced by 1.0%.

On October 6, 2020, Val-d’Or Mining entered into an agreement with respect to the sale of several properties referred to as the Ducros Group of Properties. The purchaser of the property is privately-owned Québec Nickel Corp. (“QNC”). In consideration for a 100% interest in the properties, QNC issued 3,589,341 special warrants, with a fair value of $179,467, to Val-d’Or Mining (of which Golden Valley received 80,880 special warrants, with a fair value of $4,044, in accordance with the terms of an amended and restated option agreement between Val-d’Or Mining and Golden Valley dated November 28, 2019).

***b)***Centremaque Prospect - AlexandriaMinerals Corporation - Val-d’Or Québec

On April 13, 2017, the Company entered into a mining option agreement with Alexandria Minerals Corporation (“Alexandria”) on the Centremaque Prospect located in the AGB, northeast of Val-d’Or, Québec. In accordance with the option agreement, in order to acquire an 80% interest in the property, Alexandria must: (i) issue, over a four year period from the date of signing, to Golden Valley such number of common shares in its capital having an aggregate value of $250,000 based on the closing price of Alexandria’s shares on the Exchange the day prior to the date of issuance of each tranche of payment shares, of which shares and/or cash in the amount of $150,000 have been received to date; $50,000 on or before the third anniversary; and, $100,000 on or before the fourth anniversary; and,(ii) incur exploration expenditures in an aggregate amount of $4,000,000 over the same four-year period. Once the option is exercised, the Company will retain a 20% free carried interest and a 1.5% NSR, with 0.5% of the NSR being subject to a buyback in favour of Alexandria for $1 million payable to Golden Valley.

| 13 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8) EXPLORATION AND EVALUATION ASSETS (continued)

***b)***Centremaque Prospect - AlexandriaMinerals Corporation - Val-d’Or Québec (continued)

On May 28, 2020, the option agreement with O3 Mining Inc (“O3 Mining”), which acquired Alexandria in 2019, was amended to provide that the payment date of the remaining cash consideration of $100,000 and the date to incur the remaining exploration expenditure commitment of $3,250,000 to be extended to June 9, 2021.

On February 7, 2021, the option agreement was further amended such that the remaining exploration expenditure commitment of $2,000,000 to be incurred on or before June 9, 2021 can also be satisfied through payment of shares in O3 Mining. In order to reach the minimum expenditures set out in the Agreement, O3 Mining issued 98,570 shares (equivalent to $209,460) to Golden Valley.

On September 9, 2021, the Company was informed by Alexandria (“Alexandria”), that it was exercising its option to acquire an 80% interest in the Centremaque property (the “Property”) pursuant to the terms of a mining option agreement between Golden Valley and Alexandria dated April 20, 2017, as amended. Upon the exercise of the option by Alexandria, Golden Valley and Alexandria will form a joint venture to further explore, and if warranted, develop the Property. Golden Valley will have a 20% free-carried interest in the Property, such that Golden Valley will not be responsible for any project costs, including without limitation, construction costs, exploration costs, mine costs and operating costs on the Property, until the commencement of commercial production.

In addition, Golden Valley retains a 1.5% royalty on Net Smelter Returns, of which a 0.5% royalty on Net Smelter Returns may be purchased by Alexandria for $1,000,000.

***c)***AGB Properties - Eldorado Gold Corporation- Québec and Ontario

On December 8, 2008, the Company earned a 70% interest in the group of nine properties (eight gold and one copper-zinc-silver) located in the AGB (Québec and Ontario) and a 70:30 joint venture (the “GZZ-I JV”) was formed between Golden Valley and Eldorado Gold Corporation (“Eldorado”), with the latter having acquired its interest through the acquisition of Integra Gold Corporation. Golden Valley is the operator for the joint venture. The GZZ-I JV is subject to underlying royalties ranging between 3.0% and 3.5% in favour of the original vendors, one of whom is a director and an officer of the Company.

| 14 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8)EXPLORATION AND EVALUATION ASSETS (continued)

c)AGB Properties - Eldorado Gold Corporation - Québec and Ontario (continued)

Furthermore, Golden Valley has the option to be assigned, from Eldorado for nominal consideration, all of the right, title and interest of Eldorado in and to five of the remaining Existing Properties (Munro Prospect, Recession Larder Prospect, Matachewan Prospect all in Ontario, and the Bogside Prospect in Quebec; Denovo Prospect in Ontario was previously dealt with in a transaction with Highgold Mining Inc.), other than the Properties.

d)Sharks and Cheechoo Joint Venture - Sirios Resources Ltd. - James Bay Northern Quebec

| 15 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8)EXPLORATION AND EVALUATION ASSETS (continued)

e) Lac Barry Prospect - BonTerra Resources Inc. - Level-sur-Quevillon, Québec

Upon BonTerra exercising the option on June 4, 2019, it earned an 85% interest in the property and, the Company retained a 15% free carried interest and a 3% NSR, with 1% of the NSR being subject to a buyback in favour of BonTerra for $1.0 million payable by BonTerra to Golden Valley.

On February 9, 2020, the Company and BonTerra entered into a joint venture agreement on the Lac Barry Prospect.

ABITIBI ROYALTIES’ PROPERTIES

UpperRed Lake (formerly “Bathurst property”) (Ontario)

On November 9, 2020, Abitibi Royalties entered into an agreement with two arm’s length parties to acquire the Upper Red Lake property, a property consisting of seven claims located in Ontario, for the purchase price of $75,000. Pursuant to the agreement, Abitibi Royalties also granted a 0.5% NSR royalty on the property.

On February 4, 2021, Abitibi Royalties signed an option agreement with Xplore Resources Corp. (“Xplore”) on the Upper Red Lake property. Xplore may earn a 100% interest in the project by issuing to Abitibi Royalties $62,500 of Xplore’s common shares based on the daily volume weighted average (the “VWAP”) price of Xplore’s shares for the 14-day period preceding the date of the execution of the Letter of Intent (“LOI”) and by issuing to Abitibi Royalties $125,000 and $150,000 of Xplore’s common shares based on the VWAP price of Xplore’s shares for the 14-day period preceding the first and secondary anniversary date of the execution of the LOI, respectively. On Xplore completing its share issuance obligations, Abitibi Royalties will be granted a 1.5% NSR on the Upper Red Lake Project.

On March 5, 2021, Abitibi Royalties received 1,096,491 common shares of Xplore, with a fair value of $62,500, relating to this mining option agreement.

| 16 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8)EXPLORATION AND EVALUATION ASSETS (continued)

ABITIBIROYALTIES’ PROPERTIES (continued)

HeesProperty

BullfrogSouth Project

On September 17, 2020, Abitibi Royalties staked the Bullfrog South Project, located in Nevada’s Bullfrog Gold District.

On December 9, 2020, Abitibi Royalties entered into a mining option agreement with Bullfrog Mines LLC (“Bullfrog”) on the Bullfrog South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Bullfrog must issue to Abitibi Royalties, over a two-year period, consideration of $175,000 in cash or share in its capital and reimburse Abitibi Royalties for mining claims fees to be paid in 2021. Upon the option being exercised, the Company will retain a 2.0% NSR on the property, Bullfrog has the option to purchase 0.5% of the NSR for $500,000 on or before December 9, 2030.

HammondReef South property

On August 10, 2020, Abitibi Royalties entered into a mining option agreement with Victory Resources Corporation (“Victory”) on the Hammond Reef South property. In accordance with the option agreement, in order to acquire a 100% interest in the property, Victory must: (i) issue to Abitibi Royalties, over a two- year period, cash consideration of $250,000 and share consideration of 2,750,000 common shares in its capital; and (ii) incur exploration expenditures in an aggregate amount of $550,000 over a three-year period, of which a minimum of $25,000 is to be spent in the first year of the option agreement. Upon the option being exercised, the Company will retain a 2.0% NSR on the property.

As Victory has not fulfilled its obligations in order to extend the option agreement, on August 24, 2021 the option agreement was terminated with a final cash payment from Victory to Abitibi Royalties in the amount of $6,000.

| 17 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8) EXPLORATION AND EVALUATION ASSETS (continued)

	Balance at January 1, 2021							Balance at September 30, 2021
Golden Valley Mines
Acquisition and claims maintenance	$	3,312,610		-	-	-		$	3,312,610
Property option payments		312,500		-	-	-			312,500
Drilling, excavation and related costs		3,257,961		-	-	-			3,257,961
Technical and field staff		4,624,395		-	-	-			4,624,395
Airborne geophysics		791,822		-	-	-			791,822
Geophysics		2,319,401		-	-	-			2,319,401
Line cutting		1,108,235		-	-	-			1,108,235
Sampling and testing		744,773		-	-	-			744,773
Travel and transport		1,683,141		-	-	-			1,683,141
Program management and consultants		441,560		-	-	-			441,560
Professional Fees		5,215		-	-	-			5,215
Depreciation, insurance and office expenses		581,588		-	-	-			581,588
Communications		45,897		-	-	-			45,897
Option payments received		(1,971,145	)	-	-	-			(1,971,145	)
Write-off of exploration and evaluation assets		(4,213,235	)	-	-	-			(4,213,235	)
Impairment of exploration and evaluation assets		(7,525,064	)	-	-	-			(7,525,064	)
Shares for mining rights		(1,851,475	)	-	-	-			(1,851,475	)
Government assistance		(1,641,978	)	-	-	-			(1,641,978	)
Net expenditures incurred during the period		2,026,201		-	-	-			2,026,201
Exploration and evaluation assets sold to third parties		(1,714,473	)	-	-	-			(1,714,473	)
Balance, end of the period	$	311,728		-	-			$	311,728
Abitibi Royalties
Acquisition and claims maintenance	$	241,959		-	-	-		$	241,959
Program management and consultants		8,558		-	-	-			8,558
Option payments received		(98,816	)	-	-	(62,500	)		(161,316	)
		151,701		-	-	(62,500	)		89,201
TOTAL	$	463,429		-	-	(62,500	)	$	400,929

| 18 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

8)EXPLORATION AND EVALUATION ASSETS (continued)

	Balance at January 1, 2020							Balance at December 31, 2020
Golden Valley Mines
Acquisition and claims maintenance	$	3,312,610		-	-	-		$	3,312,610
Property option payments		312,500		-	-	-			312,500
Drilling, excavation and related costs		3,257,961		-	-	-			3,257,961
Technical and field staff		4,624,395		-	-	-			4,624,395
Airborne geophysics		791,822		-	-	-			791,822
Geophysics		2,319,401		-	-	-			2,319,401
Line cutting		1,108,235		-	-	-			1,108,235
Sampling and testing		744,773		-	-	-			744,773
Travel and transport		1,683,141		-	-	-			1,683,141
Program management and consultants		441,560		-	-	-			441,560
Professional Fees		5,215		-	-	-			5,215
Depreciation, insurance and office expenses		581,588		-	-	-			581,588
Communications		45,897		-	-	-			45,897
Option payments received		(1,971,145	)	-	-	-			(1,971,145	)
Write-off of exploration and evaluation assets		(4,213,235	)	-	-	-			(4,213,235	)
Impairment of exploration and evaluation assets		(7,525,064	)	-	-	-			(7,525,064	)
Shares for mining rights		(666,666	)	-	106,858	(1,291,667	)		(1,851,475	)
Government assistance		(1,641,978	)	-	-	-			(1,641,978	)
Net expenditures incurred during the period		3,211,010		-	106,858	(1,291,667	)		2,026,201
Exploration and evaluation assets sold to third parties		(1,713,840	)	-	-	(633	)		(1,714,473	)
Balance, end of the period	$	1,497,170		-	106,858	(1,292,300	)	$	311,728
Abitibi Royalties
Acquisition and claims maintenance	$	-		241,959	-	-		$	241,959
Program management and consultants		-		8,558	-	-			8,558
Option payments received		-		-	48,684	(147,500	)		(98,816	)
		-		250,517	48,684	(147,500	)		151,701
TOTAL	$	1,497,170		250,517	155,542	(1,439,800	)	$	463,429

| 19 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

9) ROYALTY INTERESTS OF ABITIBI ROYALTIES

Mainroyalty interests

MalarticCHL 3% Royalty - Malartic, Québec

For the three and nine months ended September 30, 2021, Abitibi Royalties earned royalties in the amount of $150,187 (or US$117,877) and $789,294 (or US$631,345) (for the three and nine months ended September 30, 2020

$92,600 (or US$69,420) and $260,518 (or US$190,488) from this royalty interest.

CanadianMalartic 2% Royalty - Malartic, Québec

The area covered by the 2% NSR is on a single claim located just to the south of the Canadian Malartic open pit and covers the eastern portion of the Gouldie Zone and the historic Charlie Zone.

Otherroyalty interests

Perrigo Royalties

In February 2021, Abitibi Royalties acquired, from a group of arm’s length, third party sellers, a royalty of 1.25% NSR (0.25% can be repurchased for $250,000) on the Perrigo project located in Ontario’s Red Lake district for $8,300.

AuthierNorth Lithium Royalty

In January and March 2021, the Company acquired, from Eagle Ridge Mining Ltd (“Eagle Ridge”), a 1% NSR and 15% of any proceeds from a sale or joint venture on the Authier North Lithium property located approximately 40 kilometers north of Malartic, Québec for $24,000. In addition to the 1% NSR Abitibi Royalties holds on the property, the Company is entitled to 15% of the net sales proceeds received by Eagle Ridge. During the two-year option, Abitibi Royalties is entitled to approximately $35,000 in cash and shares, plus an additional 0.1875% NSR (for a combined 1.1875% NSR). A total of 0.075% of Abitibi Royalties’ NSR can be repurchased by Power Metals for $75,000.

During the second quarter of 2021, Abitibi Royalties assisted Eagle Ridge in identifying possible partners for the Authier North Lithium Project. On July 16, 2021, it was announced that Eagle Ridge had entered into an agreement with Power Metal Resources plc (“Power Metals”). Abitibi Royalties received as consideration 159,584 common shares of Power Metal, fair valued at $5,604, which has been recorded as mining option revenue.

| 20 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

9) ROYALTY INTERESTS OF ABITIBI ROYALTIES (continued)

MalarticSouth

In May 2020, Abitibi Royalties entered into a series of agreements to acquire a package of royalties south of the Canadian Malartic Mine and also southeast of the Agnico Eagle’s Goldex Mine. The agreements also entitled Abitibi Royalties to 15% of the gross proceeds (cash and shares) should the underlying properties be sold or joint ventured. The projects are owned and operated by Eagle Ridge Mining Inc. (“Eagle Ridge”).

In May 2021, Abitibi Royalties further entered into two agreements with Eagle Ridge whereby the first agreement amends a previous royalty, increasing Abitibi Royalties’ interest in the Malartic South Property from a 2% to 3% NSR on certain claims and the second agreement expands Abitibi Royalties’ NSR to the south with a new 2.5% royalty and 15% of any gross proceeds (cash and shares) should the property be sold or joint ventured. The purchase price paid by Abitibi Royalties totaled $26,109.

AbitibiRoyalties’ other royalty interest are as follows:

■	Revillard Property 2% Royalty - Malartic, Québec
■	15% Net Profit Interest (“NPI”) in the vicinity of Canadian Malartic Mine -Malartic, Québec
■	Midway Project 1.5% Royalty -Malartic, Québec
■	1.5% Royalty in the Abitibi region, Québec
■	1.0% NSR on the New Alger Project in the Abitibi region, Québec

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

10) DERIVATIVE FINANCIAL INSTRUMENTS

Abitibi Royalties’ call and put option contracts outstanding as at September 30, 2021 are as follows:

	Expiry date		As at September 30, 2021
Calls
Yamana	Jan. 21, 2022	529,700	$	70,128
Yamana	Apr. 14, 2022	126,000		39,242
Yamana	Jan. 20, 2023	147,100		71,181
Agnico	Jan. 21, 2022	157,600		89,894
Agnico	Feb. 18, 2022	100,500		78,453
Agnico	Jun.17, 2022	1,500		2,867
Agnico	Sept. 16, 2022	10,500		36,599
Agnico	Jan. 20, 2023	42,500		140,329
		1,115,400	$	528,693
Puts
Yamana	Oct. 1, 2021	83,100		13,764
Yamana	Oct. 15, 2021	1,611,500		410,642
Agnico	Nov 19, 2021	81,000		206,404
Agnico	Jan 21, 2022	99,300		163,442
		1,874,900	$	1,322,945

All values are in US Dollars.

For the three months ended September 30, 2021, the Company sold 4,250 call contracts (1,230 calls on Agnico Eagle shares and 3,020 calls on Yamana Gold shares) and sold 21,833 put contracts (all on Yamana Gold shares) for total cash proceeds of $752,502 (or US$597,437). In addition, 1,400 call option contracts on Yamana Gold shares expired, 21,842 put options expired on Yamana Gold shares, and 2,475 put contracts on were repurchased before expiration (825 on Agnico Eagle shares and 1,650 on Yamana Gold shares) for $32,955 (or US$26,129).

For the nine months ended September 30, 2021, the Company sold 8,815 call contracts (2,835 calls on Agnico Eagle shares and 5,980 calls on Yamana Gold shares) and sold 57,293 put contracts (2,180 puts on Agnico Eagle shares and 55,473 on Yamana Gold shares) for total cash proceeds of $2,403,006 (or US$1,915,477). In addition, 8,201 call option contracts expired (2,202 calls on Agnico Eagle shares and 15,499 calls on Yamana Gold shares), 37,107 put options expired (810 on Agnico Eagle shares and 26,797 on Yamana Gold shares). 2,475 call options (825 on Agnico Eagle shares and 1,650 on Yamana Gold shares) and 3,060 put contracts (560 on Agnico Eagle shares and 2,500 on Yamana Gold shares) were repurchased before expiration for $43,231 (or US$34,278). Also, 11,448 call contracts were exercised (377 calls on Agnico Eagle shares and 11,091 on Yamana Gold shares) as described in note 8.

| 22 |

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

10)DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Abitibi Royalties’ call and put option contracts outstanding as at December 31, 2020 are as follows:

	Expiry date		As at December 31, 2020
Calls
Yamana	January 15, 2021	1,247,000	$	1,574,731
Yamana	April 16, 2021,	320,000		52,329
Yamana	July 16, 2021	140,000		57,039
Yamana	January 21, 2022	367,700		522,730
Yamana	January 2, 2023	2,100		3,208
Agnico	January 15, 2021	118,300		761,259
Agnico	February 19, 2021	82,200		53,360
Agnico	May 5, 2021	57,400		83,013
Agnico	January 21, 2022	103,600		929,767
Agnico	January 20, 2023	8,000		83,420
Puts
Agnico	February 19, 2021	56,000		22,217
Agnico	January 21, 2022	43,300		100,245
		2,545,600	$	4,243,318

All values are in US Dollars.

For the three months ended September 30, 2020, the Company sold 5,720 call contracts (4,100 calls on Agnico Eagle shares and 1,620 calls on Yamana Gold shares) and sold 560 put contracts on Agnico Eagle shares for total cash proceeds of $1,393,488 (or US$1,045,529).

For the nine months ended September 30, 2020, the Company sold 16,423 call contracts (2,927 calls on Agnico Eagle shares and 13,496 calls on Yamana Gold shares) and sold 5,544 put contracts on Agnico Eagle shares for total cash proceeds of $2,820,389 (or US$2,082,432).

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

11) LONG-TERM LOAN

The Company applied and received the $60,000 Canada Emergency Business Account Program (“CEBA Loan”), which provided financial relief during the COVID-19 pandemic. The CEBA Loan has a maturity date of December 31, 2022 and may be extended to December 31, 2025. The CEBA Loan is unsecured, non-revolving and non-interest bearing prior to December 31, 2022. The CEBA Loan is subject to an interest rate of 5% per annum during any extended term, and is repayable at any time without penalty. If $40,000 of the CEBA Loan is repaid prior to December 31, 2022, which has been extended to December 31, 2023 by the Government of Canada as announced on January 12, 2022, the remaining balance of $20,000 will be forgiven.

12) CAPITAL STOCK

Capital Stock

The capital stock of the Company consists of fully paid common shares.

Authorized

Unlimited number of preferred shares, issuable in series with rights and restrictions to be determined by the directors.

ShareConsolidation

In July 2020, the Company completed its security consolidation on the basis of ten old shares for one new share. The common shares of Golden Valley commenced trading on a consolidated basis at open of market on July 31, 2020. Following the consolidation, a total of approximately 13,518,459 common shares of Golden Valley were issued and outstanding, and incentive stock options to acquire an aggregate of approximately 1,423,691 common shares were outstanding. The number of common shares entitled to be purchased pursuant to the terms of the outstanding options and the per share exercise price for such shares were adjusted accordingly, in accordance with the terms of the respective options. All fractional common shares remaining as a result of the proposed consolidation were cancelled. All historical information presented in the financial statements has been adjusted to reflect the share consolidation.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

12) CAPITAL STOCK (continued)

Issued share capital

The change in issued share capital for the nine months ended September 30, 2021 and 2020 was as follows:

	2021				2020
	Number		Stated		Number		Stated
	of shares		Value		of shares		Value
Balance, as at January 1,		13,518,460	$	28,636,185		13,434,760	$	28,420,603
Shares issued by exercise of stock options		225,000		675,000		83,700		125,630
Value allocation on options exercised		-		521,732		-		89,952
Balance, as at September 30,		13,743,460	$	29,832,917		13,518,460	$	28,636,185

Refer to “Share Consolidation” section of Note 12 “Capital Stock”.

Sharecapital issued from exercise of incentive stock options

For the nine months ended September 30, 2021, the Company issued 225,000 of its common shares from the exercise of incentive stock options at a price of $3.00 per share for a total consideration of $675,000.

For the nine months ended September 30, 2020, the Company issued 83,700 of its common shares from the exercise of incentive stock options at prices ranging from $1.10 to $3.50 per share for a total consideration of $125,630.

| 25 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

13) SHARE-BASED PAYMENTS

Incentivestock options

Refer to “Share Consolidation” section of Note 12 “Capital Stock”.

The summary of changes in the number of incentive stock options issued by the Company for the nine months ended September 30, 2021 and for the year ended December 31, 2020 is presented as follows:

	For the nine months ended						For the year ended
	September 30, 2021						December 31, 2020
	Number of options			Weighted average exercise price			Number of options			Weighted average exercise price
Outstanding, beginning of period		1,421,891		$	3.43			1,405,917		$	3.20
Granted		-			-			101,474			5.44
Exercised		(225,000	)		(3.00	)		(83,700	)		1.50
Expired		(10,000	)		(1.00	)		(1,800	)		3.40
Outstanding, end of period		1,186,891		$	3.53			1,421,891		$	3.43
Exercisable, end of period		1,180,224		$	3.53			1,415,224		$	3.43

The table below summarizes the information related to outstanding share options as at September 30, 2021:


Expiry date	Number of options		Weighted average exercise price	Weighted average remaining contractual life (years)	Exercisable options
February 3, 2022	10,000		4.65	0.35	10,000
June 21, 2023	222,000		2.75	1.72	222,000
June 18, 2024	31,500		3.40	2.72	24,833
March 3, 2025	76,475		5.00	3.42	76,475
June 26, 2025	25,000		6.80	3.74	25,000
September 30, 2026	821,916		3.50	5.00	821,916
	1,186,891	$	3.53		1,180,224

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| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

13) SHARE-BASED PAYMENTS (continued)

Incentivestock options (continued)

The table below summarizes the information related to outstanding share options as at December 31, 2020:


Expiry date	Number of options		Weighted average exercise price	Weighted average remaining contractual life (years)	Exercisable options
January 1, 2021	10,000		1.00	0.00	10,000
June 27, 2021	225,000		3.00	0.49	225,000
February 3, 2022	10,000		4.65	1.09	10,000
June 21, 2023	222,000		2.75	2.47	222,000
June 18, 2024	31,500		3.40	3.47	24,833
March 3, 2025	76,475		5.00	4.17	76,475
June 26, 2025	25,000		6.80	4.49	25,000
September 30, 2026	821,916		3.50	5.75	821,916
	1,421,891	$	3.43		1,415,224

Share-basedcompensation expense

Refer to “Share Consolidation” section of Note 12 “Capital Stock”.

The table below summarizes share-based compensation expense for the three and nine months ended September 30, 2021 and 2020:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Golden Valley
June 2020 option grant ^(a)^	$	-	$	-	$	-	$	90,495
March 2020 option grant ^(b)^		-		-		-		60,203
June 2019 option grant ^(c)^		1,220		3,052		6,984		15,780
June 2018 option grant ^(d)^		-		12,755		23,847		73,620
Share-based compensation expense	$	1,220	$	15,807	$	30,831	$	240,098

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| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

**13)**SHARE-BASED PAYMENTS (continued)

Share-basedcompensation expense (continued)

a)	On<br> June 26, 2020, the Company granted to its officers, directors and consultants incentive stock options entitling the purchase of an<br> aggregate 25,000 common shares at an exercise price of $6.80 per share. The options are exercisable for a period of 5 years until<br> June 26, 2025, subject to earlier termination in accordance with the terms of the Company’s stock option plan. The options<br> vest immediately on date of grant.
	The<br> fair value of the 25,000 stock options granted has been estimated using the Black-Scholes option pricing model at $90,495. For the<br> three and nine months ended September 30, 2020, an amount of $nil and $90,495 has been expensed relating to this incentive<br> stock options.
b)	On<br> March 3, 2020, the Company granted to its officers and directors incentive stock options entitling the purchase of an aggregate 76,475<br> common shares (22,500 to directors and 53,975 to officers), at an exercise price of $5.00 per share. The options are exercisable<br> for a period of 5 years until March 3, 2025, subject to earlier termination in accordance with the terms of the Company’s stock<br> option plan. The options vest immediately on date of grant.
	The<br> fair value of the 22,500 stock options granted has been estimated at $60,203, using the Black-Scholes option pricing model, which<br> has been expensed for the nine months ended September 30, 2020. The fair value of the 53,975 stock options granted<br> has been determined to be $125,213, representing share-based payment, equating to the cash portion of the 2018 and 2019 performance<br> bonuses to officers.

Fairvalue of options granted

The fair value of the granted options was determined using the Black-Scholes option pricing model and based on the following assumptions:

Date of Grant	June 26, 2020			March 3, 2020			June 18, 2019			June 21, 2018
Share price at date of grant	$	6.80		$	5.00		$	3.40		$	2.75
Expected dividends yield		0	%		0	%		0	%		0	%
Expected weighted volatility		70.44	%		69.59	%		79.95	%		105.67	%
Risk-free interest average rate		0.31	%		1.10	%		1.33	%		2.00	%
Expected average life		5 years			5 years			5 years			5 years
Exercise price at date of grant	$	6.80		$	5.00		$	3.40		$	2.75

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| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

14) PROFESSIONAL FEES

The following table shows professional fees for the three and nine months ended September 30, 2021 and 2020:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Transaction costs (note 23(a))	$	534,782	$	-	$	534,782	$	-
Exchange, regulatory and transfer agent fees		82,464		31,734		257,187		170,719
Professional fees		73,449		78,008		302,213		280,130
Media relations and other consultants		36,705		54,854		140,978		146,031
	$	727,400	$	164,596	$	1,235,160	$	596,880

**15)**GENERAL AND ADMINISTRATIVE EXPENSES

The following table summarizes general and administrative expenses for the three and nine months ended September 30, 2021 and 2020.

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Insurance expenses	$	33,129	$	24,752	$	99,677	$	40,622
Office expenses		19,730		19,436		60,024		73,362
Advertising and exhibitions		48,474		30,194		89,676		127,602
Travelling		4,704		10,037		5,324		65,107
	$	106,037	$	84,419	$	254,701		306,693

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

16) DEFERRED TAXES

Deferredtax assets (liabilities) and variation of recognized amounts

	As at January 1,			Recognized in			As at September 30,
	2021			profit or loss			2021
Exploration and evaluation assets	$	320,013		$	(92,125	)	$	227,888
Investments		(3,582,196	)		2,590,451			(991,745
Share issuance costs		6,286			(2,096	)		4,190
Derivative financial instruments		562,239			(386,949	)		175,290
	$	(2,693,658	)	$	2,109,281		$	(584,377
	As at January 1,			Recognized in			As at December 31,
---	---	---	---	---	---	---	---	---	---
	2020			profit or loss			2020
Exploration and evaluation assets	$	687,841			(367,828	)	$	320,013
Investments		(6,047,641	)		2,465,445			(3,582,196	)
Share issuance costs		8,389			(2,103	)		6,286
Non-capital losses		915,903			(915,903	)		-
Derivative financial instruments		1,189,723			(627,484	)		562,239
	$	(3,245,785	)	$	552,127		$	(2,693,658	)

17) EQUITY TRANSACTIONS OF ABITIBI ROYALTIES

Dividends

On December 7, 2020, Abitibi Royalties’ Board of Directors approved a 20% dividend increase from $0.15 to $0.18 per common share on an annualized basis.

For the three and nine months ended September 30, 2021, Golden Valley earned dividends of $252,236 (2020 - $210,197) and $756,708 (2020 - $588,551) from Abitibi Royalties, respectively. Golden Valley holds 5,605,246 common shares in Abitibi Royalties as at September 30, 2021 and December 31, 2020.

Incentivestock option

Abitibi Royalties adopted a 20% fixed option plan (the “New Plan”) in 2013. Pursuant to the New Plan, options, for an aggregate total of 1,740,200 common shares, may be granted to its directors, officers, employees, consultants or management companies from time to time. Abitibi Royalties has not renewed its stock option plan and has not granted stock options under the current plan since 2014. There are no stock options available for grant under the plan.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

17)EQUITY TRANSACTIONS OF ABITIBI ROYALTIES (continued)

NormalCourse Issuer Bid (“NCIB”)

On October 5, 2021, the Company did not renew its NCIB pending the completion of the plan of arrangement discussed in Note 25 “Subsequent Event”.

For the three months ended September 30, 2021, Abitibi Royalties did not repurchase any of its common shares.

For the nine months ended September 30, 2021, Abitibi Royalties repurchased and cancelled 11,600 of its common shares at prices varying from $21.70 to $25.98 per share for a total of $269,391.

For the three months ended September 30 2020, Abitibi Royalties repurchased and cancelled common 13,800 shares at prices varying from $20.48 to $22.75 per share for a total of $300,400. For the nine months ended September 30, 2020, Abitibi Royalties repurchased and cancelled 39,500 shares at prices varying from $15.14 to $22.75 per share for a total of $781,815.

18) EARNINGS (LOSS) PER SHARE

Both the basic and diluted earnings (loss) per share have been calculated using the net income (loss) attributable to owners of the Company as the numerator, i.e., no adjustment to the net income (loss) were necessary in either three and nine months ended September 30, 2021 and 2020.

	For the three months ended					For the nine months ended
	September 30,					September 30,
	2021			2020		2021			2020
Net income (loss) attributable to shareholders of Golden Valley Mines Ltd.	$	(1,265,741	)	$	3,022,675	$	(3,543,076	)	$	6,081,378
Weighted average number of shares in circulation - basic		13,743,460			13,518,460		13,602,795			13,486,061
Dilutive effect of stock options		-			617,427		-			743,067
Weighted average number of shares		13,743,460			14,135,887		13,602,795			14,229,128
Basic earnings (loss) per share	$	(0.092	)	$	0.224	$	(0.260	)	$	0.451
Diluted earnings (loss) per share	$	(0.092	)	$	0.214	$	(0.260	)	$	0.427

Refer to “Share Consolidation” section of Note 12 “Capital Stock”.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

18)EARNINGS (LOSS) PER SHARE (continued)

For the three and nine months ended September 30, 2021, 1,186,889 incentive stock options have not been included in the loss per share calculation as they would result in a reduction of the loss per share.

For the three and nine months ended September 30, 2020, 25,000 stock options and nil stock options, respectively, were excluded from the calculation of diluted earnings per share attributable to shareholders of the Company as their exercise price was higher than the Company’s average share price.

19) RELATED PARTY TRANSACTIONS

The Company’s related parties include its joint key management and related companies, as described below. Unless otherwise stated, none of the transactions incorporated special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash. Other than the related party transactions disclosed below, there were no other direct transactions with related parties other than routine payments for management and exploration services and grants of stock options. Key management includes directors and senior executives.

For the three and nine months ended September 30, 2021 and 2020, the compensation paid to key management for employee and consulting services for Golden Valley and its subsidiaries is presented below:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Short-term employee benefits
Salaries including bonuses	$	234,231	$	209,042	$	703,082	$	677,034
Directors’ fees		75,000		70,000		225,000		210,000
Benefits		52,697		30,955		131,158		147,141
Total short-term employee benefits		361,928		309,997		1,059,240		1,034,175
Other transactions with key management
Rent ^(1)^		7,104		4,902		16,424		11,222
Management fees ^(2)^		41,550		41,550		124,650		124,650
Fees relating to exploration and evaluation activities ^(3)^		18,048		18,048		54,143		54,144
Total other transactions with key management		66,702		64,500		195,217		190,016
Share-based payments ^(4)^		1,220		68,776		30,831		202,571
Total remuneration	$	429,850	$	443,273	$	1,285,288	$	1,426,762

| 32 |

| --- |

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

19) RELATED PARTY TRANSACTIONS (continued)

1)	For<br> the three and nine months ended September 30, 2021, rent of $4,104 (2020 -$1,902) and $7,424 (2020-$5,222) was paid by Abitibi Royalties<br> to its President for use of Toronto, Ontario property as an office for Abitibi Royalties and rent of $3,000 (2020 -$3,000) and $9,000<br> (2020 -$6,000) was paid to 2973090 Canada Inc., a company controlled by an officer and a director of the Company, for use of a Val-d’Or,<br> Québec property as an administrative and exploration offices for Golden Valley, respectively.
2)	For<br> the three and nine months ended September 30, 2021, management fees of $41,550 (2020 -$41,550) and $124,650 (2020 -$124,650) paid<br> to 2973090 Canada Inc, respectively. As at September 30, 2021, the Company had a net receivable of $834 (December 31, 2020 –<br> net payable of $201) due from 2973090 Canada Inc, which is netted against accounts payable and accrued liabilities.
3)	For<br> the three and nine months ended September 30, 2021, fees relating to exploration and evaluation activities include $14,700 (2020<br> -$14,700) and $44,100 (2020 -$44,100) paid to 2973090 Canada Inc and of $3,348 (2020 -$3,348) and $10,044 (2020 -$10,044) paid to<br> Rosatelli Exploration Services, a company controlled by an officer of the Company, respectively.
---	---
4)	Share-based<br> compensation relating to the incentive stock option program for officers and directors of the Company.

Transactionswith related companies

For the three and nine months ended September 30, 2021, reimbursement of $19,250 (2020 - $19,250) and $39,567 (2020

$19,250) was received from related companies relating to this Sharing Arrangement, respectively.

33

GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

19)RELATED PARTY TRANSACTIONS (continued)

Val-d’OrMining

For the three and nine months ended September 30, 2021, Golden Valley was recharged general expenses from Val-d’Or Mining, a company related by common management, for a total amount of $2,866 and $6,736, respectively.

For the three and nine months ended September 30, 2020, Golden Valley recharged general and exploration and evaluation expenses to Val-d’Or Mining for a total amount of $7,344 and $9,907, respectively

As at September 30, 2021, the Company had no indebtedness (December 31, 2020 - net payable of $6,064) due to Val-d’Or Mining.

20) COMMITMENTS AND CONTINGENCIES

The Company has entered into agreements with officers and consultants that include termination and change of control clauses. In the case of termination, the officers and consultants are entitled to an amount equal to a multiple (ranging from one to two times) the annual base fee payable. In the case of a change of control, the officers and consultants are entitled to an amount equal to a multiple (ranging from one to three times) the sum of the annual base fee. As at September 30, 2021, the total annual base fee of the officers and consultants under the agreements is $765,000. As a triggering event has not taken place as at September 30, 2021 (see note 25 “Subsequent Events”), the contingent payments have not been reflected in the consolidated financial statements.

21) FINANCIAL INSTRUMENTS

Fairvalue measurement of financial instrument

Financial assets and liabilities measured at fair value in the statements of financial position are grouped into three levels of fair value hierarchy. The three levels are defined based on the observability of the significant inputs to the measurement, as follows:

●	Level<br> 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
●	Level<br> 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly;<br> and
●	Level<br> 3: inputs for the assets or liabilities that are not based on observable market data.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

21) FINANCIAL INSTRUMENTS (continued)

Fair value measurement of financialinstrument (continued)

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement. Cash and cash equivalent (Level 1), royalty and other receivables (Level 3), other assets (Level 3) and accounts payable and accrued liabilities (Level 3) are carried at amortized costs which approximate their fair value due to their short-term nature.

Short-term other assets in the consolidated statements of financial position consisting of marketable securities at September 30, 2021 and December 31, 2020 are classified in Level 1 and are recorded at fair value by reference to their quoted prices at the reporting date.

The Company’s other assets relating to the investments in the common shares of a private company do not have a quoted market price in an active market and the Company has assessed a fair value of the investment based on their unobservable net assets. As a result, the fair value is classified within Level 3 of the fair value hierarchy. The process of estimating the fair value of these investments is based on inherent measurement uncertainties and is based on techniques and assumptions that emphasize both qualitative and quantitative information. There is no reasonable quantitative basis to estimate the potential effect of changing the assumptions to reasonably possible alternative assumptions on the estimated fair value of these investments.

Investments relating to the common shares of Agnico Eagle and Yamana held by Abitibi Royalties and the liability relating to the derivative financial instruments are classified as Level 1.

The method and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting periods. There has been no movement between levels during the year.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

**21)**FINANCIAL INSTRUMENTS (continued)

The carrying amounts and fair value of financial instruments presented in the consolidated statements of financial position are as follows:

	As at September 30, 2021				As at December 31, 2020
	Carrying amount		Fair value		Carrying amount		Fair value
Financial assets
Financial Assets at amortized costs
Cash and cash equivalents	$	14,371,226	$	14,371,226	$	13,703,034	$	13,703,034
Restricted cash		5,561,189		5,561,189		385,415		385,415
Royalty receivables		150,187		150,187		425,180		425,180
Dividend receivable		38,047		38,047		70,361		70,361
Other receivables		-		-		25,000		25,000
Due from related parties		-		-		59,517		59,517
Financial assets at fair value through profit and loss
Other assets		1,175,947		1,175,947		406,280		406,280
Investments		27,654,951		27,654,951		49,501,916		49,501,916
	$	48,951,547	$	48,951,547	$	64,576,703	$	64,576,703
Financial liabilities
Financial liabilities measured at amortized cost
Accounts payable and accrued liabilities	$	176,875		176,875	$	890,496		890,496
Loan		60,000		60,000		60,000		60,000
Financial liabilities measured at fair value through profit and loss
Derivatives financial instruments (level 1)		1,322,945		1,322,945		4,243,318		4,243,318
	$	1,559,820	$	1,559,820	$	5,193,814	$	5,193,814

FinancialRisk

The Company is exposed to various risks in relation to financial instruments. The main types of risks are market risk, credit risk and liquidity risk. The Company focuses on actively securing short-to medium term cash flows by minimizing the exposure to financial markets. The most significant financial risks to which the Company is exposed are described below.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

21) FINANCIAL INSTRUMENTS (continued)

a) Market risk

Foreigncurrency risk sensitivity

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Most of the Company’s transactions are carried out in Canadian dollars. Currency risk arises from the Company’s cash, dividends, and royalty revenues in foreign currency, which are primarily denominated in U.S. dollars. The Company does not enter into arrangements to hedge its foreign exchange risk. As at September 30, 2021 and December 31, 2020, foreign currency denominated financial assets and liabilities in U.S. dollars and which expose the Company to the currency risk are as follows:

	As at September 30,			As at December 31,
	2021			2020
Cash and cash equivalents	$	9,152,673		$	7,125,721
Restricted cash		4,396,197			302,405
Royalty receivable		117,877			333,946
Dividends receivable		28,728			54,251
Accounts payable and accrued liabilities		(27	)		(3,040	)
Derivative financial instruments		(1,038,337	)		(3,332,798	)
	$	12,657,111		$	4,480,485

A 1% change in the Canadian /U.S. exchange rate as at September 30, 2021 would have had an impact of $161,264 (December 31, 2020 - $57,046) on net loss and comprehensive loss for the period.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

21) FINANCIAL INSTRUMENTS (continued)

Otherprice risk sensitivity

The Company is exposed to fluctuations in the market prices of its investments in quoted mining companies and marketable securities in quoted mining exploration companies. The fair value of these financial instruments represents the maximum exposure to price risk.

If the quoted price of these instruments had changed by 1% as at September 30, 2021 (1% as at December 31, 2020), net income (loss) and comprehensive income (loss) for the three months then ended would have changed by $279,010 (for the year ended December 31, 2020 - $489,865).

b) Credit risk

	As at September 30,		As at December 31,
	2021		2020
Cash and cash equivalents	$	14,371,226	$	13,703,034
Restricted cash		5,561,189		385,415
Royalty receivables		150,187		425,180
Other receivables		38,047		181,011
Carrying amounts	$	20,120,649	$	14,694,640

The risk related to cash and restricted cash is considered negligible as the Company is dealing with a reputable financial institution whose credit rating is excellent. The Company’s management considers that the above financial asset is of good credit quality. The credit risk exposure for the Company’s accounts, royalty and dividends receivables and other assets is considered minimal as these receivables have since been received subsequent to year-end. The Company continuously monitors defaults of counterparties. No impairment loss has been recognized in the periods presented.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

**21)**FINANCIAL INSTRUMENTS (continued)

c) Liquidity risk

The following table presents contractual maturities (including interest payments where applicable) of the Company’s consolidated liabilities:

	As at September 30,		As at December 31,
	2021		2020
Within 3 months
Accounts payable and accrued liabilities	$	176,875	$	890,496
Income taxes payable		-		2,464,798
Derivative financial instruments		630,810		2,411,567
	$	807,685	$	5,766,861
Three to twelve months
Derivative financial instruments	$	480,625	$	135,341
	$	480,625	$	135,341
Beyond twelve months
Derivative financial instruments	$	211,510	$	1,696,410
Loan		60,000		60,000
	$	271,510	$	1,756,410

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

22) CAPITAL MANAGEMENT POLICIES AND PROCEDURES

The Company’s capital management objectives are: to ensure the Company’s ability to continue as a going concern; to increase the value of the assets of the business; and to provide an adequate return to owners. These objectives will be achieved by identifying the right exploration projects, adding value to these projects and ultimately taking them through to production or sale and cash flow, either with partners or by the Company’s own means and by identifying and acquiring the right potential royalty rights. The Company monitors capital on the basis of the carrying amount of equity. Capital for the reporting periods under review is comprised of share capital, warrants and contributed surplus. The Company is not exposed to any externally imposed capital requirements as at September 30, 2021 and December 31, 2020. The Company sets the amount of capital in proportion to its overall financing structure, i.e., equity and financial liabilities. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may return capital to shareholders, issue new shares, or sell assets to reduce payables. When financing conditions are not optimal, the Company may enter into option agreements or other solutions to continue its exploration and evaluation activities or may slow its activities until conditions improve. No changes were made in the objectives, policies and processes for managing capital during the quarter.

23)S****UBSEQUENT EVENTS

a) Acquisition of Golden Valleyand Abitibi Royalties by Gold Royalty Corp.

On September 7, 2021, Golden Valley, Abitibi Royalties and Gold Royalty announced that they entered into definitive agreements dated September 6, 2021, pursuant to which Gold Royalty acquired all of the issued and outstanding common shares of each of Golden Valley and Abitibi Royalties by way of statutory plans of arrangement (the “Arrangements”). The Arrangements were completed on November 5, 2021 whereby Gold Royalty issued 2.1417 of its shares to Golden Valley shareholders for each Golden Valley common share; and Gold Royalty issued 4.6119 of its shares to Abitibi Royalties shareholders for each Abitibi Royalties common share. Additionally, pursuant to the Golden Valley Arrangement, each of its 1,166,389 options that were outstanding immediately prior to the business combination were exchanged for 2,498,045 options to purchase Gold Royalty shares.

b) Subscription of 3,277,606 Unitsin Val-d’Or Mining Corporation’s non-brokered private placement offering

On March 18, 2022, Val-d’Or Mining announced that it completed a non-brokered private placement offering (the “Offering”) for gross proceeds of $1,396,473 by issuing 8,727,954 Units under the Offering at a per Unit price of $0.16, each Unit comprised of one common share in the capital of Val-d’Or Mining and one-half of one non-transferable common share purchase warrant, each whole warrant (a “Warrant”) exercisable for the purchase of one common share of Val-d’Or Mining at a per share price of $0.20 until March 18, 2024. Golden Valley subscribed for 3,277,606 Units for the subscription price of $524,417.

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GOLDENVALLEY MINES AND ROYALTIES LTD.

Notesto the Condensed Consolidated Interim Financial Statements

September30, 2021 and 2020

(unaudited)

(Expressed in Canadian dollars unless otherwise noted)

23)SUBSEQUENT EVENTS (continued)

c) Mining option agreement on theAGB Properties

d)Derivative financial instruments

●	529,700<br> call option contracts on Yamana Gold shares that were outstanding as at September 30, 2021<br> expired on January 21, 2022.
●	The<br> 1,694,600 put options on Yamana Gold shares, and 180,300 put options on Agnico Eagle shares<br> that were outstanding as at September 30, 2021 expired at their respective date of expiry<br> as summarized in note 10.

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