Equity Metals : Fourth Quarter Report -Jan 17, 2021

Equity Metals Corporation

(formerly New Nadina Explorations Limited)

(An Exploration Stage Company)

Consolidated Financial Statements

Years ended August 31, 2020 and 2019

(expressed in Canadian dollars)

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of

Equity Metals Corporation

Opinion

We have audited the accompanying consolidated financial statements of Equity Metals Corporation (the "Company"), which comprise the consolidated statements of financial position as at August 31, 2020 and 2019, and the consolidated statements of income (loss) and comprehensive income (loss), changes in equity, and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards ("IFRS").

Basis for Opinion

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

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred a net loss of $1,132,831 during the year ended August 31, 2020 with an accumulated deficit of $18,612,508 and, as of that date, the Company's current assets exceeded its current liabilities by $1,694,570. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other Information

Management is responsible for the other information. The other information obtained at the date of this auditor's report includes Management's Discussion and Analysis.

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

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

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

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

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

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

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

Auditor's Responsibilities for the Audit of the Consolidated Financial Statements

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

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

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

The engagement partner on the audit resulting in this independent auditor's report is Grant P. Block.

"DAVIDSON & COMPANY LLP"

Vancouver, Canada

Chartered Professional Accountants

December 18, 2020

Equity Metals Corporation

(An Exploration Stage Company)

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

		August 31,	August 31,
	Note	2020	2019
Assets
Current
Cash		1,790,432	35,583
Receivables and prepaids		188,849	79,628
		1,979,281	115,211
Non-current assets
Reclamation deposits	4	182,074	82,500
Property and equipment	6	69,624	82,653
Exploration and evaluation assets	7	38,415	38,415
		2,269,394	318,779
Liabilities
Current
Accounts payable and accrued liabilities		237,857	91,226
Amounts due to related parties	10	46,854	23,716
		284,711	114,942
Equity
Share capital	8	17,501,220	14,906,712
Subscriptions receivable	8	(21,000)	-
Reserves	8	3,220,771	2,918,312
Deficit		(18,612,508)	(17,517,387)
Accumulated other comprehensive loss		(103,800)	(103,800)
		1,984,683	203,837
		2,269,394	318,779

Nature of operations and Going concern (Note 1)

Subsequent events (Note 15)

Approved by the Board of Directors on December 18, 2020:

(signed) "Courtney Shearer"	(signed) "Joseph A. Kizis"

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

Equity Metals Corporation

(An Exploration Stage Company)

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

	Note	2020	2019
		$	$
Exploration Expenses
Exploration expenses, net of recoveries	7	304,802	364,008
Administration expenses
Consulting		110,536	-
Insurance		4,310	3,206
Legal, audit and accounting		201,869	83,024
Licences, fees and other		29,947	16,097
Office rent and building expenses	10	61,200	14,400
Printing, stationery and office		31,489	19,755
Payroll and management fees	10	41,159	52,771
Shared-based compensation	8,10	104,815	99,506
Telephone		10,353	5,530
Transfer agent fees		13,742	8,445
Travel and promotion		225,197	21,271
Interest income and miscellaneous		(10,064)	(5,004)
		(824,553)	(319,001)
Foreign exchange gain/(loss)		(3,476)	-
Net loss for the year		(1,132,831)	(683,009)
Other comprehensive income (loss)
Realized loss on sale of marketable securities	5	-	(46,129)
Transfer from unrealized to realized loss on sale
of marketable securities	5	-	34,180
Total other comprehensive loss for the year		-	(11,949)
Total comprehensive loss for the year		(1,132,831)	(694,958)
Basic and diluted net earnings per share		(0.04)	(0.05)
Weighted average number of shares outstanding		27,603,097	15,054,433

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

Equity Metals Corporation

(An Exploration Stage Company) Consolidated Statements of Changes in Equity For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

	Share	Share	Subscriptions
	Capital	Capital	Receivable	Reserves	AOCI(L)(1)	Deficit	Total
	Number	$	$	$	$	$	$
Balance, September 1, 2018	15,054,433	14,906,712	-	2,818,806	(91,851)	(16,834,378)	799,289
							-
Share-based payments	-	-	-	99,506	-	-	99,506
Realized loss on marketable securities	-	-	-	-	(11,949)	-	(11,949)
Comprehensive loss for the year	-	-	-	-	-	(683,009)	(683,009)
Balance, August 31, 2019	15,054,433	14,906,712	-	2,918,312	(103,800)	(17,517,387)	203,837
Shares issued on private placement	40,340,042	2,821,314	(21,000)	133,838	-	-	2,934,152
Less: Issue costs - cash	-	(125,290)	-	-	-	-	(125,290)
Less: Issue costs - warrants	-	(101,516)	-	101,516	-	-	-
Expiry of unexercised warrants	-	-	-	(37,710)	-	37,710	-
Share-based payments	-	-	-	104,815	-	-	104,815
Comprehensive loss for the year	-	-	-	-	-	(1,132,831)	(1,132,831)
Balance, August 31, 2020	55,394,475	17,501,220	(21,000)	3,220,771	(103,800)	(18,612,508)	1,984,683

1. Accumulated other comprehensive income (loss)

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

Equity Metals Corporation

(An Exploration Stage Company) Consolidated Statements of Cash Flows

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

	2020	2019
	$	$
Cash flows from operating activities
Net loss for the year	(1,132,831)	(683,009)
Items not affecting cash
Depreciation	15,474	20,600
Share-based payments	104,815	99,506
Foreign exchange (gain)/loss	3,476	-
	(1,009,066)	(562,903)
Changes in non-cash operating working capital
Change in receivables and prepaids	(109,221)	12,949
Change in reclamation provision	-	(30,206)
Change in accounts payable and accrued liabilities	143,351	50,987
Change in amounts due to related parties	23,138	23,716
Cash used in operating activities	(951,798)	(505,457)
Cash flows from investing activities
Mineral property bond security deposits	(99,574)	-
Purchase of equipment	(2,445)	(54,900)
Proceeds on sale of marketable securities	-	11,550
Cash from (used in) investing activities	(102,019)	(43,350)
Cash flows from financing activities
Proceeds from private placement	2,934,152	-
Share issue costs	(122,010)	-
Cash from (used in) financing activities	2,812,142	-
Increase (decrease) in cash and cash equivalents	1,758,325	(548,807)
Effects of foreign exchange on cash and cash equivalents	(3,476)	-
Cash - Beginning of year	35,583	584,390
Cash - End of year	1,790,432	35,583
Supplemental cash flow information:
Issue costs - warrants	101,516	-
Transfer of fair value of expired unexercised warrants	37,710	-
Share issuance costs included in accounts payable	3,280	-

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

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

1. Nature of operations and going concern
   Equity Metals Corporation ("Equity Metals Corporation" or the "Company") was incorporated pursuant to the laws of British Columbia on April 7, 1964. On September 12, 2019, the Company changed its name from New
   Nadina Explorations Limited to Equity Metals Corporation and changed its stock symbol to "EQTY" from
   "NNA". The Company is principally engaged in the acquisition, exploration, and development of mineral and diamond properties in British Columbia, Saskatchewan and the Northwest Territories. The Company's common shares trade on the TSX Venture Exchange under the trading symbol "EQTY" and, on June 17, 2020, the Company's common shares commenced trading on the OTCQB Venture Marketplace in the United States of America under the trading symbol "EQMEF". The Company is extra-provincially registered in the Province of Saskatchewan and extra-territorially registered in the Northwest Territories.
   These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months.
   During 2020, significant volatility in the stock market occurred for various reasons linked to the COVID-19 pandemic and other conditions effecting worldwide metal prices. However, increases in gold and silver prices are offsetting features to some of the negative conditions imposed by the pandemic. The impacts to the Company are not determinable at this date, but could be material to the Company's forecasted exploration work and the Company's financial position, results of operations and cash flows. The Company's liquidity and ability to continue as a going concern may also be impacted.
   The Company has incurred losses since inception and expects to incur further losses in the development of its business and at August 31, 2020, the Company had a working capital of $1,694,570 and at that date, the Company also had an accumulated deficit of $18,612,508, which has been funded primarily by the issuance of equity.
   The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its general operating expenses and to continue to explore its mineral properties. Although the Company has been successful in the past in obtaining financing, there is no assurance that it will be able to obtain adequate financing in the future or that such financing will be on terms advantageous to the Company. These factors may cast significant doubt upon the Company's ability to continue as a going concern and, therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. These consolidated financial statements do not reflect the adjustments to the carrying values of the assets and liabilities, the reported expenses and the statements of financial position classifications that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
2. Significant Accounting Policies
3. 1. Basis of presentation, statement of compliance and principles of consolidation
      The financial statements have been prepared in accordance with International Financial Reporting Standards
      ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").
      These financial statements have been prepared on a historical cost basis except for certain financial instruments carried at fair value. In addition, these financial statements have been prepared using the accrual

(1)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

basis of accounting except for cash flow information. The financial statements have been presented in Canadian dollars unless otherwise noted.

These financial statements include the financial statements of the Company and its 100% controlled subsidiary. Subsidiaries are entities controlled by the Company and are included in the financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries are changed where necessary to align them with the policies adopted by the Company.

On March 19, 2018, the Company incorporated a wholly owned subsidiary, 1157274 B.C. Ltd.

1. Significant accounting estimates and judgments
   The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods if the revision affects both current and future periods.
   Management considers the following areas to be those where critical accounting policies affect the significant judgments and estimates used in the preparation of the Company's financial statements.
   Critical judgments
   The preparation of these consolidated financial statements requires management to make judgments regarding the going concern of the Company, as discussed in Note 1, as well as the determination of functional currency, which is defined as the primary economic environment in which an entity operates. The functional currency of the Company and its subsidiary has been determined to be the Canadian dollar.
   Significant Estimates
   Carrying value and recoverability of exploration and evaluation assets
   The carrying amount of the Company's exploration and evaluation assets does not necessarily represent present or future values, and the Company's exploration and evaluation assets have been accounted for under the assumption that the carrying amount will be recoverable. Recoverability is dependent on various factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development and upon future profitable production or proceeds from the disposition of the mineral properties themselves. Additionally, there are numerous geological, economic, environmental and regulatory factors and uncertainties that could impact management's assessment as to the overall viability of its properties or to the ability to generate future cash flows necessary to cover or exceed the carrying value of the Company's mineral properties.
   To the extent that any of management's assumptions change, there could be a significant impact on the Company's future financial position, operating results and cash flows.
   Fair value of stock options and warrants
   Charges for share-based compensation are based on the fair value at the date of the award. Stock options are valued using the Black-Scholes Option Pricing Model, and inputs to the model include assumptions on expected volatility, discount rates and expected term, dividend yield, and expected forfeitures. Any changes in the estimates or inputs utilized to determine fair value could result in a significant impact on the Company's future operating results or on other components of equity. Expected volatility is a measure for variation of a

(2)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

price of a financial instrument over time. Expected volatility is derived from a time series of past market prices therefore may not be an accurate representation of future volatility.

Income taxes

The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company's ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management's assessment of the Company's ability to utilize future tax deductions changes, the Company would be required to recognize more or fewer deferred tax assets, and future income tax provisions or recoveries could be affected.

1. Exploration and evaluation expenditures
   Once a permit to explore an area has been secured, expenditures on exploration and evaluation assets are expensed as incurred and charged to net loss. Costs to acquire the main property claims may be capitalized and costs to acquire claims peripheral to the main property claims are expensed.
   Exploration and evaluation expenditures are those related to the search for and evaluation of mineral resources incurred after the Company has obtained legal rights to explore a specific area and before the technical feasibility and commercial viability of a mineral reserve is demonstrable. Exploration and evaluation expenditures incurred prior to the determination of the feasibility of mining operations, a positive construction and production decision, and the securing of appropriate permits and financing, are expensed as incurred.
   Exploration expenditures relate to the initial search for mineral deposits with economic potential, and to detailed assessments of deposits or other projects that have been identified as having economic potential.
   Such expenditures include any cash consideration and advance earn-in payments and the fair market value of shares issued, if any, related to the mineral property interests.
   Properties acquired under option agreements, whereby payments are made at the sole discretion of the Company, are recorded in the accounts when the payments are made.
   Cost recoveries, including government assistance, are recorded as a reduction of exploration expense to the extent they are not directly related to capitalized acquisition costs.
2. Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded, from the date of acquisition, on the declining balance basis at the following rates:

Buildings	20%
Camp Equipment	20%
Office Equipment	20%
Mining Equipment	30%

Depreciation is allocated as a component of either exploration costs or general operating expenses based on the nature of the use of the underlying asset.

(3)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

1. Impairment ofnon-financial assets
   At each reporting period, management reviews all non-financial assets for indicators of impairment. If such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction. In assessing value in use, the estimated future cash flows are discounted to their present value. If the recoverable amount of the asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the profit or loss for that period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which that asset belongs.
2. Provision for closure and reclamation
   Provisions for closure and reclamation obligations are recognized when a legal or constructive obligation arises. The liability is recognized at the present value of management's best estimate of the closure and reclamation obligation. The estimate is discounted to the present value using a discount rate specific to the obligation. When the liability is initially recorded the Company capitalizes the cost by increasing the carrying amount of the related long-lived assets. Over time the liability is accreted to its present value each period, and the capitalized cost is amortized on the same basis as the related asset. Upon settlement of the liability, the Company may incur a gain or loss.
3. Income taxes
   Income tax on profit or loss for the year comprises current and deferred tax. Current tax is the expected tax paid or payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax paid or payable in respect of previous years.
   The Company records deferred tax assets and liabilities when the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets also result from unused loss carry forwards, resource related pools and other deductions. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
4. Flow-throughshares
   The Company has issued common shares as flow-through shares, whereby the investor may claim the tax deductions arising from the related resource expenditures. When flow-through shares are issued, the Company bifurcates the flow-through share into share capital and flow-through tax liability components. When resource expenditures are renounced to the investors and the Company has reasonable assurance that the expenditures will be completed, the liability is reversed, and a deferred income tax liability is recognized.
   Previous unrecognized deferred tax assets may be used to reduce this liability amount, and the Company will recognize a future income tax recovery to this extent. The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the look-back rule, in accordance with the Canadian government.

(4)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

1. Financial instrumentsRecognition and Classification
   The Company recognizes a financial asset or financial liability on the statement of financial position when it becomes party to the contractual provisions of the financial instrument.
   The Company classifies its financial instruments in the following categories: at fair value through profit and loss ("FVTPL"), at fair value through other comprehensive income (loss) ("FVTOCI") or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt 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 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 as at 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 if the Company has opted to measure them at FVTPL.
   Measurement
   Financial assets at FVTOCI
   Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses recognized in other comprehensive income (loss).
   Financial assets 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.
   Financial assets and liabilities at FVTPL
   Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the consolidated statements of net (loss) income. 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 consolidated statements of net (loss) income in the period in which they arise. Where management 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).
   Impairment of 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 the twelve

(5)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

month expected credit losses. The Company shall recognize in the consolidated statements of net (loss) income, 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.

Derecognition

Financial assets

The Company derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all of the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the consolidated statements of net (loss) income. However, gains and losses on derecognition of financial assets classified as FVTOCI remain within accumulated other comprehensive income (loss).

Financial liabilities

The Company derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. Generally, the difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

1. Share-basedpayments
   Common shares are classified as equity. Transaction costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects. Common shares issued for consideration other than cash, are valued based on their market value at the date the shares are issued.
   The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units. The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. The Company considers the fair value of common shares issued in a unit private placement to be the more easily measurable component and the common shares are valued at their fair value, as determined by the closing quoted bid price on the announcement date. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as a component of reserves.
   The Company's stock option plan allows employees and consultants to acquire shares of the Company. Share- based payments to employees are measured at the fair value of the instruments issued and amortized over the vesting periods on a graded basis. Share-based payments to non-employees are measured at the fair value of the goods or services received or 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 fair value of the share-based payments is measured using the Black-Scholes Option Pricing Model. The fair value of the share-based payments is recognized as an expense with a corresponding increase in reserves. Consideration received on the exercise of stock options is recorded as share capital and the related reserves amount is transferred to share capital.
2. Loss per share
   Basic loss per share is calculated by dividing the loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share is calculated whereby; the weighted average number of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase

(6)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

common shares at the average market price during the period. Where the effects of including all outstanding options and warrants would be anti-dilutive, no dilution is calculated and the diluted loss per share is presented as the same as basic loss per share.

3 Adoption of new accounting standards

1. New Accounting Standards Adopted During the Year

IFRS 16, Leases

The new standard eliminates the classification of leases as either operating or finance leases for a lessee. Instead all leases are capitalized by recognizing the present value of lease payments and recognizing an asset and a financial liability representing an obligation to make future lease payments. The principles in IFRS 16 provide a more consistent approach to acquiring the use of an asset whether by leasing or purchasing an asset. The new leasing standard is applicable to all entities and will supersede current lease accounting standards under IFRS. IFRS 16 is mandatory for the Company's annual period beginning on September 1, 2019. The adoption of this standard did not have a material measurement or disclosure impact on the Company's financial statements.

4 Reclamation Deposits
		August 31,	August 31,
	Property/ Bond Description	2020	2019	Date of Deposit
		$	$
	Silver Queen Property, BC
	GIC Bond (Security Agreement)	5,000	5,000	December 10, 1999
	Cash deposit (non-interest bearing)	4,500	4,500	December 1, 2004
	GIC Bond (Security Agreement)	5,000	5,000	August 5, 2010
	GIC Bond (Security Agreement)	5,000	5,000	August 8, 2012
	GIC Bond (Security Agreement)	4,000	4,000	December 3, 2012
	Cash deposit (non-interest bearing)	30,000	-	May 12, 2020
		53,500	23,500
	Monument Diamond Property, NWT
	Government of Northwest Territories	18,000	18,000	April 5, 2005
	Government of Northwest Territories	41,000	41,000	September 26, 2012
	Government of Northwest Territories	69,574	-	November 6, 2019
		128,574	59,000
	TOTAL	182,074	82,500

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Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

1. Marketable securities
   On February 15, 2017, the Company acquired 2,222,250 common shares in Golden Dawn Minerals Inc. ("Golden Dawn") pursuant to the disposition of Kettle River Resources Ltd. ("Kettle River") to Golden Dawn. The shares were valued at $0.27 on acquisition.
   During the year ended August 31, 2019, the Company sold its remaining holding of 213,625 common shares of Golden Dawn for proceeds of $11,550 (net of commissions), resulting in a cumulative loss of $46,129. The changes in fair value, to the date of sale, of the marketable securities for the year ended August 31, 2019 resulted in a loss of $11,949. In accordance with the Company's accounting policy under IFRS 9, the loss on the sale of the remaining shares was recognized in other comprehensive income as opposed to profit or loss.
   As at August 31, 2020, the Company has no marketable securities.
2. Property and equipment

		Equipment
	Building	& Vehicles	Total
	$	$	$
Cost
Balance at August 31, 2018	148,032	74,959	222,991
Additions	-	54,900	54,900
Balance as at August 31, 2019	148,032	129,859	277,891
Additions	-	2,445	2,445
Balance at August 31, 2020	148,032	132,304	280,336
Accumulated depreciation
Balance at August 31, 2018	112,383	62,255	174,638
Depreciation	6,613	13,987	20,600
Balance as at August 31, 2019	118,996	76,242	195,238
Depreciation	5,386	10,088	15,474
Balance at August 31, 2020	124,382	86,330	210,712
Net book value
Balance as at August 31, 2019	29,036	53,617	82,653
Balance at August 31, 2020	23,650	45,974	69,624

(8)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

7 Exploration and evaluation assets

Costs to acquire the main property claims are capitalized and costs to acquire claims peripheral to the main property claims and exploration expenditures relating to mineral properties are expensed as incurred. The carrying value of the Company's mineral properties does not reflect current or future value. Payments received for exploration rights on the Company's mineral properties are treated as cost recoveries and are credited to reduce the cost of exploration expenditures related to the mineral claims with any excess, on an aggregate basis, recorded as income. Option payments are recorded as incurred. Reclamation and site restoration costs including site maintenance and caretaking are expensed when incurred.

	August 31,	August 31,
Acquisition cost of exploration and evaluation assets	2020	2019
Silver Queen property (100% interest)	$	$
38,413	38,413
Monument Diamond property (57.49% interest)	1	1
DHK Diamonds Inc. - NWT (43.37% interest)	1	1
Saskatchewan property (100% interest)	-	-
	38,415	38,415

Silver Queen property, British Columbia - Omineca Mining Division (100%)

The Company has a 100% interest in the Silver Queen Property, located in the Omineca Mining Division, of British Columbia. The property includes 17 crown-granted titles, comprised of 2 surface and undersurface titles and 15 undersurface-only titles, and 45 tenure claims. As at August 31, 2020, a reclamation deposit of $53,500 (2019 - $23,500) is held in relation to the Silver Queen property.

Monument Diamond property, Lac de Gras NWT (57.49%)

In May 2002, the Company acquired from DHK Diamonds Inc. three claims and took them to lease in the Mackenzie District Mining Division, Northwest Territories. An Agreement provides for a 1% gross overriding royalty payable to each of DHK Diamonds Inc. and Royal Gold Inc. (Kennecott Canada Explorations Inc.). Equity Metals is the operator and retains 57.49% with two other parties holding the remaining participating interest in the mineral claims.

In July 2017, the Company acquired 2 staked claims adjacent to the northern boundary of the 3 mineral leases.

The Company currently holds a five-year Type "A" Land Use Permit by the Wek'eezhii Land and Water Board which was renewed in September 2019 and expires on September 1, 2024.

As at August 31, 2020, a reclamation deposit of $128,574 (2019 - $59,000) is held by the Government of Northwest Territories in relation to the Monument property.

(9)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

DHK Diamonds Inc. (property acquired through Kettle River)

The Company has acquired 43.37% of DHK Diamonds Inc. ("DHK") a private company incorporated and registered in the Northwest Territories, previously owned by Kettle River Resources Ltd.

Current DHK shareholder interest:

• Equity Metals Corporation 43.37%
• Dentonia Resources Ltd. 43.37%
• Cosigo Resources Ltd. (formerly Horseshoe Gold Mining Inc.) 13.26%

DHK is a partner in the WO claim block, a diamond property in the Northwest Territories. As of August 31, 2019, DHK has a 10.301% (August 31, 2018 - 10.301%) contributing interest in the WO Joint Venture which is operated by Peregrine Diamonds Ltd. Should DHK reduce to less than a 4% participating interest, they revert to a 0.25% gross overriding royalty.

Operations and funding provisions of DHK are governed by a 1992 Shareholders' Agreement where each shareholder appoints two directors to the board and certain activities require 75% board approval.

Through an agreement dated October 24, 2003, DHK holds a 1.0% gross overriding royalty on three leases within the Monument Diamond Property (see above) which is operated by, and owned 57.49% by, the Company.

Saskatchewan property (100%)

The Company holds a 100% interest in a silica quarrying mineral lease which expires in December 2024.

During the year ended August 31, 2020, the Company incurred the following exploration expenditures:

			Monument	DHK
	Saskatchewan	Silver Queen	Diamond	Diamonds
	property	property	property	properties	Total
	$	$	$	$	$
Assay analysis	-	-	-	-	-
Camp preparation	-	41,709	-	-	41,709
Depreciation	-	15,474	-	-	15,474
Drilling	-	88,372	-	-	88,372
General exploration	133	66,948	400	-	67,481
Geology	416	214,272	15,400	-	230,488
Property, assessment/
taxes	306	273	128,534	-	129,113
	855	427,048	144,734	-	572,637
Government
Assistance	-	(186,272)	-	-	(186,272)
Less: Recoveries
from JV participants	-	-	(81,563)	-	(81,563)
	855	240,776	63,171	-	304,802

(10)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

During the year ended August 31, 2019, the Company incurred the following exploration expenditures:

		Silver	Monument	DHK
	Saskatchewan	Queen	Diamond	Diamonds
	property	property	property	properties	Total
	$	$	$	$	$
Assay analysis	-	2,613	-	-	2,613
Camp preparation	-	5,218	-	-	5,218
Depreciation	-	20,600	-	-	20,600
Drilling	-	10,123	-	-	10,123
General exploration	151	295,468	62,252	-	357,871
Geology	-	2,925	-	-	2,925
Property, assessment/
taxes	206	1,304	-	-	1,510
	357	338,251	62,252	-	400,860
Less: Recoveries from JV
participants	-	-	(36,852)	-	(36,852)
	357	338,251	25,400	-	364,008

8 Share capital

Authorized

An unlimited number of common shares without par value.

Financings

During the year ended August 31, 2020 shares were issued for the following:

On August 10, 2020, the Company closed a private placement issuing 27,205,042 units at $0.07 per unit for gross proceeds of $1,904,353. Each unit consists of one common share and one share purchase warrant. Each warrant entitles the holder to purchase one common share at an exercise price of $0.10 per share for a period of 3 years. In addition, the Company incurred finders' fees of $41,573, other cash issuance costs of $22,267 and issued 593,901 finders' warrants with a fair value of $92,806, exercisable at a price of $0.10 per share for a period of 3 years. All of the proceeds from the financing were allocated to share capital.

On November 25, 2019, the Company closed the second and final tranche of a private placement issuing 4,212,500 units at $0.08 per unit for gross proceeds of $337,000. Each unit consists of one common share and one share purchase warrant. Each share warrant entitles the holder to purchase one common share at an exercise price of $0.12 per share for a period of 3 years. In addition, the Company incurred finders' fees of $25,020 and other cash issuance costs of $2,218. All of the proceeds from the financing were allocated to share capital.

On October 22, 2019, the Company closed the first tranche of a private placement issuing 8,922,500 units at $0.08 per unit for gross proceeds of $713,800. Each unit consists of one common share and one share purchase warrant. Each share warrant entitles the holder to purchase one common share at an exercise price of $0.12 per share for a period of 3 years. In addition, the Company incurred finders' fees of $15,680, other cash issuance costs of $18,532 and issued 140,000 finders' warrants with a fair value of $8,710, exercisable at a price of $0.12 per share for a period of 3 years. The Company allocated $133,838 of the proceeds raised from the financing to

(11)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

reserves, representing the residual value of the unit price compared with the share price of $0.065 on closing which was allocated, per unit, to share capital.

There were no financings completed during the year ended August 31, 2019.

Stock options

The Company has established a share purchase option plan (the "Plan") whereby the Board of Directors may from time to time grant options to directors, officers, employees or consultants. The maximum term of the options granted under the Plan is ten years from the date of grant, however the normal term of the options is five years, or such lesser period as determined by the Company's Board of Directors. The exercise price of options is determined by the Board of Directors and shall not be lower than the allowable discounted closing market price of the shares on the business day immediately prior to the grant date.

The Company's stock options outstanding as at August 31, 2020 and the changes for the year then ended are as follows:

		Weighted average	Weighted average
	Number	exercise price	remaining life
	of options	($ per share)	(years)
Balance - August 31, 2018	900,000	0.16	4.52
Granted	1,100,000	0.09
Rescinded	(1,100,000)	0.15
Balance - August 31, 2019	900,000	0.09	4.36
Granted	1,500,000	0.085
Balance - August 31, 2020	2,400,000	0.087	3.92

During the year ended August 31, 2020, the Company recorded share-based payments of $104,815 (2019 - $99,506) in respect of newly granted options, all of which vested upon grant. The fair value of the options granted was estimated using Black-Scholesoption-pricing model. Weighted average assumptions used in the pricing model were as follows: share price - $0.07; expected life - 5 years; risk-free rate - 1.62%; expected volatility - 281.02%; expected forfeitures - nil; and expected dividends - nil.

The balance of options outstanding as at August 31, 2020 is as follows:

		Number of
Expiry date	Exercise price	options	Number of options
$	outstanding	exercisable
October 25, 2023	0.10	500,000	500,000
March 3, 2024	0.08	300,000	300,000
July 25, 2024	0.08	100,000	100,000
December 5, 2024	0.085	1,500,000	1,500,000
		2,400,000	2,400,000

(12)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

Options outstanding at August 31, 2020 are anti-dilutive as they would reduce the loss per share, and are therefore excluded from the calculation of diluted loss per share. Accordingly, the loss per share and diluted loss per share are the same amounts.

Share purchase warrants

The Company's warrants outstanding as at August 31, 2020 and the changes for the year then ended are as follows:

		Weighted average	Weighted average
	Number of	exercise price	remaining life
	warrants	($ per share)	(years)
Balance - August 31, 2018	1,143,751	0.41	3.87
Issued	-	-
Expired	-	-
Balance - August 31, 2019	1,143,751	0.41	2.87
Issued	41,073,943	0.11
Expired	(81,251)	4.20
Balance - August 31, 2020	42,136,443	0.11	2.68

Warrants to acquire common shares are outstanding at August 31, 2020 as follows:

		Number of
	Exercise price	warrants
Expiry date	$	outstanding
September 25, 2022	0.12	1,062,500
October 22, 2022	0.12	9,062,500
November 25, 2022	0.12	4,212,500
August 10, 2023	0.10	27,798,943
		42,136,443

Reserves

Reserve includes items recognized as stock-based compensation expense and the fair value of warrants issued until such time that the stock options and warrants are exercised, at which time the corresponding amount will be transferred to share capital. If the options and warrants expire unexercised, the amount recorded is transferred to deficit. During the year-ended August 31, 2020, a total of $37,710 was transferred to deficit upon the expiration of 81,251 warrants.

(13)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

9 Income Taxes

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

	August 31,	August 31,
	2020	2019
Statutory income tax rate	27%	27%
	$	$
Loss for the year	(1,132,831)	(683,009)
Expected income tax (recovery)	(306,000)	(184,000)
Permanent differences	28,000	27,000
Impact of BCMETC	(17,000)	25,000
Share issue cost	(34,000)	-
Adjustment to prior years provision versus statutory tax returns	(18,000)	54,000
Change in unrecognized deductible temporary differences	347,000	78,000
Total income tax expense (recovery)	-	-

The relevant deferred tax balances have been measured to reflect the Company's combined Federal and Provincial (BC) general corporate income tax rate at 27%.

The significant components of the Company's deferred tax assets that have not been included on the consolidated statement of financial position are as follows:

	August 31,	August 31,
	2020	2019
	$	$
Deferred tax assets (liabilities)
Exploration and evaluation assets	3,456,000	3,355,000
Property and equipment	76,000	72,000
Share issue costs	33,000	8,000
Marketable securities	-	-
Allowable capital losses	14,000	6,000
Non-capital losses available for future period	582,000	373,000
	4,161,000	3,814,000
Unrecognized deferred tax assets	(4,161,000)	(3,814,000)
Net deferred tax assets	-	-

The significant components of the Company's temporary differences, unused tax credits and unused tax losses that have not been included on the consolidated statement of financial position are as follows:

(14)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

	August 31,	Expiry Date	August 31,	Expiry Date
	2020	Range	2019	Range
Temporary Differences	$		$
Exploration and evaluation assets	11,490,000	No expiry date	11,114,000	No expiry date
Investment tax credit	485,000	2025 to 2034	485,000	2025 to 2034
Property and equipment	282,000	No expiry date	267,000	No expiry date
Share issue costs	121,000	2041 to 2044	31,000	2040 to 2042
Allowable capital losses	52,000	No expiry date	23,000	No expiry date
Non-capital losses available for future
periods	2,153,000	2029 to 2040	1,379,000	2029 to 2039

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

10 Related party transactions and commitments

Key management includes the President, the Chief Financial Officer, the VP Exploration and the directors. The compensation paid or payable to key management for services during the year ended August 31, 2020 and 2019 is as follows:

	August 31,	August 31,
	2020	2019
	$	$
Management and wages to related parties	87,337	10,650
Management and wages to former related parties	21,000	45,500
General exploration to related parties	68,865	6,000
General exploration to former related parties	-	40,900
Share-based payments to related parties	69,876	15,153
Share-based payments to former related parties	-	76,524
	247,078	194,727

During the year ended August 31, 2020, $28,482 (2019 - $10,225) in accounting support services was charged by Malaspina Consultants Inc., a company controlled by Killian Ruby, the CFO and director of the Company. Further, during the year ended August 31, 2020, the following amounts were charged to the Company by Manex Resource Group Inc. and Page Law Corporation, companies controlled by Larry Page, the Chairman: (i) $102,617 (2019 - $nil), respectively, being costs for general exploration services; (ii) $60,000 (2019 - $nil), being costs for office rent services; (ii) $7,444 (2019 - $nil) being costs for general office and administration support services; (iii) $87,814 (2019 - $nil), being costs for legal support services; (iv) $73,716 (2019 - $nil), being costs for investor relation and promotion services and (v) $45,854 (2019 - $nil), being costs for corporate finance and associated services.

During the year ended August 31, 2019, $25,525 was charged by Helen Jewitt, the spouse of John Jewitt, the former Chief Executive Officer and former director of the Company with respect to accounting and administrative services provided during the period. Further, office rent of $14,400 was charged by Foxy Creek Services Ltd., a company controlled by Ellen Clements, a former CEO and former director of the Company for consulting and use

(15)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

of equipment services. In addition, during the year ended August 31, 2019, the Company acquired equipment from Foxy Creek Services Ltd. of $54,900.

Included in current liabilities at August 31, 2020 is (i) $46,854 (2019 - $23,716) due to related parties and (ii) $5,783 (2019 - $12,337) due to former related parties of the Company. These amounts are unsecured and due under normal business terms.

At August 31, 2020 a total of $5,487 (2019 - $5,487) was owing from a company with officers and Directors in common has been included in receivables and prepaids.

1. Capital management
   The Company's objectives for the management of capital are to safeguard the Company's ability to continue as a going concern, including the preservation of capital, and to achieve reasonable returns on invested cash after satisfying the objective of preserving capital.
   The Company considers its equity to be its manageable capital. The Company's policy is to maintain sufficient cash and deposit balances to cover operating and exploration costs over a reasonable future period. The Company accesses capital markets as necessary and may also acquire additional funds where advantageous circumstances arise.
   The Company currently has no externally imposed capital requirements. There have been no changes to the
   Company's approach to capital management during the year ended August 31, 2020.
2. Financial instruments
   The Company's financial instruments, which are comprised of cash, receivables, reclamation deposits, accounts payable and accrued liabilities and amounts due to related parties, are exposed to the following risks:
   Credit Risk
   Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company's primary exposure to credit risk is from cash and cash equivalents and reclamation deposits, all of which are held at Schedule 1 Canadian banks, accordingly, the credit risk is considered by management to be negligible.
   Liquidity Risk
   Liquidity risk is the risk that the Company will not be able to pay its financial liabilities as they come due. The
   Company's liquidity risk from financial instruments is its need to meet accounts payable and accrued liabilities and related party balance obligations.
   As at August 31, 2020, the Company has a working capital of $1,694,570 (2019 - $269). The Company recognizes that to meet its obligations depends on management's ability to raise the funds required through future equity financings. If such funds cannot be raised, the Company would be required to postpone or curtail its operating and investing activities.

(16)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

Interest Rate Risk

The Company is exposed to interest rate risk on cash and cash equivalents. As at August 31, 2020, the Company maintained all of its cash balance in a redeemable guaranteed investment certificate and on deposit in chequing accounts with Schedule 1 Canadian banks. Interest risk is a risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Management believes that the Company is not exposed a significant amount of interest rate risk.

Price Risk

The Company is not exposed to significant price risk.

Foreign currency risk

The Company conducts its business in Canada, and its expenditures are primarily incurred in Canadian dollar, and is therefore not exposed to significant foreign currency risk.

Fair Value of Financial Instruments

The fair value of the Company's financial assets and liabilities approximates their carrying amounts.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

• Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
• Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
• Level 3 - Inputs that are not based on observable market data.

All of the Company's financial instruments, excluding cash and reclamation deposits, have a fair value approximating their carrying value due to their short-term nature. Cash is carried at fair value and is measured using level 1 inputs.

1. Segmental information
   The Company operates in one reportable segment, being the acquisition and exploration of exploration and evaluation assets in Canada.
2. Contingencies
   During the year ended August 31, 2018, the Company received notice of a civil claim filed against the Company and the prior President of the Company by Intrepid Mines Limited. While the outcome of this matter is uncertain, no additional provision has been accrued in respect of the claim as the Company believes the claim to be without merit and intends to vigorously defend itself should further legal action be required. As at August 31, 2020, no updates have occurred in respect of this claim.
3. Subsequent events
   Subsequent to the year end 2,633,500 warrants were exercised for gross proceeds of $308,020.
   On October 19, 2020 the Company granted a consultant 100,000 stock options to acquire 100,000 common shares of the Company at an exercise price of $0.20 on or before October 19, 2025.
   On November 27, 2020, the Company closed a private placement issuing 13,144,567 flow through units at $0.18 per flow through unit for gross proceeds of $2,366,022. Each flow through unit consists of one flow through common share and one half of a non-flow through share purchase warrant. Each full share warrant entitles the

(17)

Equity Metals Corporation

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the years ended August 31, 2020 and 2019

(Expressed in Canadian dollars)

holder to purchase one non-flow through common share at an exercise price of $0.25 per share for a period of 3 years. In addition, the Company incurred cash finders' fees of $163,151 and issued 906,392 non-flow through finders' warrants, exercisable at a price of $0.25 per share for a period of 3 years.

(18)

MANAGEMENT DISCUSSION & ANALYSIS

For the Years Ended

August 31, 2020 and 2019

Introduction

The following Management's Discussion and Analysis ("MD&A") is dated December 18, 2020 and should be read in conjunction with the Company's annual consolidated financial statements (the "financial statements") of Equity Metals Corporation (the "Company" or "Equity Metals") for the years ended August 31, 2020 and 2019 which have been prepared in accordance with International Financial Reporting Standards ("IFRS").

Unless expressly stated otherwise, all financial information is presented in Canadian dollars.

Business Description and Change in Management

Equity Metals has continued its efforts to date with a sole business objective to identify, evaluate and explore mineral properties having high potential for the discovery of economic mineral deposits. The Company is a publicly traded company without any substantive operations, and thus, has realized no significant mining revenues to date. Equity Metals has a year end of August 31stand was incorporated on April 7, 1964 under the Company Act of British Columbia. On September 12, 2019, the Company changed its name from New Nadina Explorations Limited to Equity Metals Corporation and changed its stock symbol to "EQTY" from "NNA".

The Company is principally engaged in the acquisition, exploration and development of metal and diamond properties in British Columbia, Saskatchewan, and Northwest Territories, and accordingly has no revenue from any of its properties to date. The Company's common shares trade on the TSX Venture Exchange under the trading symbol "EQTY" and, on June 17, 2020, the Company's common shares commenced trading on the OTCQB Venture Marketplace in the U.S. under the trading symbol "EQMEF". The Company is extra-provincially registered in the Province of Saskatchewan and extra-territorially registered in the Northwest Territories.

Effective August 23, 2019, the Directors approved a reorganization of its Board of Directors and management and agreed to join the Manex Resource Group ("Manex") (refer to NR August 29, 2019) and, subsequently, appointed Mr. John Kerr to the Board of Directors (refer to NR December 5, 2019). Mr. Fred Sveinson, recently deceased, no longer serves as a Director.

Forward-Looking Information

This MD&A contains certain forward-looking statements and information relating to the Company that are based on the beliefs of its management as well as assumptions made by and information currently available to the Company as of the reporting period under this disclosure. When used in this document, the words "anticipate", "believe", "estimate", "expect", "significant" and similar expressions, as they relate to the Company or its management are intended to identify forward-looking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital, the estimated costs and availability of funding for the continued exploration and development of the Company's exploration properties. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievement of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward- looking statements.

Page 2

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

Mineral Project Activity

Silver Queen Property - Central British Columbia (100%)

The Company owns a 100% interest in 17 crown-granted titles, comprised of two surface and undersurface titles (40.47 ha) and 15 undersurface only titles, and 45 tenure claims covering 18,852 hectares in the Omineca Mining Division, near Owen Lake, British Columbia. The Silver Queen property is a past- producing Au/Ag/Zn epithermal vein system that currently has a significant high-grade resource on four of the more extensively drilled veins. Importantly, much of the well-drilled shallow mineralization is open to depth. The Company received approval in May 2020 from the Ministry of Mines for its multi-year Notice of Work ("NOW") for the property. The five-year plan includes drilling from up to 50 surface sites and the construction of up to 6 kilometres of additional exploration trails. The focus of the upcoming work program remains the resource expansion in the vein deposits.

The Silver Queen property is within the Wet'suwet'en land claim, and they are included in the Notice of Work and permitting consultation process. The Company uses First Nations' employees and contractors in all activities where appropriate and First Nation involvement is encouraged.

On August 29, 2019, the Company filed on SEDAR a National Instruments 43-101 ("NI 43-101") compliant Technical Report entitled "Initial Mineral Resource Estimate and Technical Report on the Number 3 Vein, Silver Queen Property, Omineca Mining District, British Columbia, Canada", which was prepared by P&E Mining Consultants.

In addition to the size and quality of the current Mineral Resource Estimate and the now-enhanced exploration potential, the property has several other important attractive features, including: a) the property is wholly owned by the Company with no underlying option payments and no royalty burdens; b) logistics are excellent with good road access from the town of Houston, B.C., a small camp exists on site, topography being moderate, and location in a snow shadow; c) abundant mining activity occurs in the region; and d) power and water are available, while access issues to portions of the property are being addressed.

The Company's Phase I drilling program began in August 2020 and focused on 10 initial holes to test three known high-grade zones below current resource blocks. Five core holes totaling 864.8 metres were drilled to test the Camp Vein system and five core holes totaling 2,178.9 metres were drilled to test the No. 3 Vein system. Drilling results from these holes returned positive results while the step-out drilling from the Camp Vein intersected bonanza-grade silver mineralization. Additional assay results are pending. The Company commenced its Phase II drilling program on the property in December 2020, totaling 1,500 metres to target high-grade mineralization in the Camp Vein, and is proposing a Phase III drill program totaling ~4,000 metres to target the No. 3 Vein in January - March 2021, which will test exploration targets down dip and along strike from known historic higher-grade results and our own earlier Phase I drilling results. The goal is to ultimately increase the high-grade vein resource to +1.5million ounces of gold-equivalent.

Further information on the Silver Queen project, resource updates and related news releases is available on the Company's website at https://equitymetalscorporation.com/.

Monument Diamond Property - Lac de Gras, Northwest Territories (57.49%)

The Company holds a 57.49% working interest and is operator of the Monument Diamond Project, in the Mackenzie District Mining Division, NWT, a property comprising 3 mining leases and 2 staked claims covering, in aggregate, approximately 3,581 ha and located about 40km from both the Diavik and Ekati diamond mines and some 300 km north of Yellowknife. The property hosts 12 different diamond-bearing kimberlites with a total of 2,437 microdiamonds recovered from past drilling; the largest discovered to date

Page 3

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

being 0.445 carats. Carbon has been identified in some of the kimberlite pipes on the property, indicating a near surface, eruptive level of the kimberlite pipe.

The property is subject to 2% gross overriding royalty, a portion of which is held by the Company. Equity Metals is the operator of the joint venture where two parties hold the remaining 42.51%. The Company has a five-year Type "A" Land Use Permit from the Wek'èezhìi Land and Water Board, which expires September 1, 2024. The partners have posted the increased cash bond to cover additional reclamation costs, which were incurred in Q3 2020 for minor remediation. Although the diamond market currently is very soft, experts note that several mines are expected to be depleted over the next several years; thus, we consider Monument to be a valuable asset that does not need to be aggressively pursued at this time.

WO Diamond Property - operated by DeBeers Canada Inc.

Equity Metals owns a 43.37% interest in DHK Diamonds Inc. ("DHK") a private company incorporated and registered in the Northwest Territories. The Company, through its ownership of DHK, holds a minority interest in the WO Diamond property, a property comprising eight leases and approximately 5,816 ha, which immediately adjoins the Diavik Diamond Mine claims, some 300 km north of Yellowknife. The WO Diamond property is a joint venture ownership consisting of DeBeers Canada Inc. ("De Beers") (72.13%), Archon Minerals Limited (17.57%) and DHK Diamonds Inc. (10.30%), with DeBeers being the project operator.

DHK has not recently contributed to the joint venture and has accepted dilution. DHK as of August 31, 2020 has a 10.3013% (2019 - 10.3013%) contributing interest in the WO Diamond property. Should DHK reduce to less than a 4% participating interest, the joint venture interest will revert to a 0.25% Gross Overriding Royalty.

An encouraging 2007 bulk sample produced individual rough diamonds up to 9.45 carats. DHK has not received proposed work plans for 2020 from DeBeers.

Greenwood Royalty

Equity Metals (formerly New Nadina) sold its interest in a large group of claims in the Greenwood district in B.C. to Golden Dawn Minerals Inc in 2017 for shares and a retained royalty. The shares were subsequently sold, but the Company retains the 1% NSR royalty on this past-producing precious- and base- metal property. Golden Dawn has the right to purchase half of the royalty from the Company for $1.0 million in the first 5 years and for $1.2 milling in the following 5 years. Equity's royalty claims include the Phoenix open pit mine, where Golden Dawn's website reports that approximately 25.5 million tons were produced at an average grade of 0.9% copper and 1.1g/t gold between 1959 and 1976. Additional production of approximately 1.7 million tons were reported from other mines on the royalty claims. Golden Dawn holds a land package immediately to the south of the royalty claims that includes the Greenwood metal- processing mill and has announced plans to re-open the mill with feed from mines on its property and potentially from toll mill-feed from others. It reports that it intends to explore the Company's royalty ground for additional mill feed. The Company is evaluating the potential value of this royalty to Equity.

Saskatchewan Silica Sand Lease (100%)

The Company owns a 100% interest in this property. The silica Quarrying Mineral Lease covers an area of 54 acres and its term was recently extended until December 2024. The cost to extend the lease was $306. Although silica has many industrial uses, in most cases the value is strongly influenced by shipping costs to a specific market; further evaluation is necessary to determine potential value to the Company. To date, no income has been received from the lease.

Page 4

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

Qualified Person

Robert Macdonald, MSc. P.Geo, is VP Exploration of Equity Metals and a Qualified Person as defined by National Instrument 43-101. He is responsible for the supervision of the exploration on the Silver Queen project and has reviewed the technical information in this MD&A.

Exploration and Evaluation Expenditures

Exploration and evaluation expenditures incurred for the years ended August 31, 2020 and 2019 were as follows:

					Monument
	Saskatchewan	Silver Queen	Diamond	DHK Diamonds
	property	property	property	properties		Total	Total
	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
	$	$	$	$	$	$	$		$	$	$
Assay analysis	-	-	-	2,613	-	-	-		-	-	2,613
Camp preparation	-	-	41,709	5,218	-	-	-		-	41,709	5,218
Depreciation	-	-	15,474	20,600	-	-	-		-	15,474	20,600
Drilling	-	-	88,372	10,123	-	-	-		-	88,372	10,123
General	133	151	66,948	213,482	400	62,252	-		-
exploration		67,481	275,885
Geology	416	-	214,272	84,911	15,800	-	-		-	230,488	84,911
Property,	306	206	273	1,304	128,534	-	-		-
assessment/taxes		129,113	1,510
	855	357	427,048	338,251	144,734	62,252	-		-	572,637	400,860
Government
Assistance	-	-	(186,272)	-	-	-	-		-	(186,272)	-
Less: Recoveries
from JV
participants	-	-	-	-	(81,563)	(36,852)	-		-	(81,563)	(36,852)
	855	357	240,776	338,251	63,171	25,400	-		-	304,802	364,008

Selected Annual Information

The table below provides selected financial information derived from the audited consolidated financial statements of the Company for each of the past three years ended August 31.

August 31	2020	2019	2018
$	$	$
Total revenues	nil	nil	nil
Income (loss) from continued operations and net
income (loss)	(1,132,831)	(683,009)	(1,345,581)
Net income (loss) per share (basic & diluted)	(0.04)	(0.05)	(0.09)
Total assets	2,269,394	318,779	869,734
Total liabilities	284,711	114,942	70,445
Dividends declared	nil	nil	nil

The losses in the years-ended 2020 and 2019 arise from exploration and evaluation expenses and also administration expenses. The increase in losses for the year-ended August 31, 2020 compared with the year- ended August 31, 2019 arise from the increased level of exploration and evaluation activity as well as increased levels of administrative costs of the Company as a result of advancement of the Company's operational activities as a result of available financing and the change in management. The decrease in losses for the year-ended August 31, 2019 compared with the year-ended August 31, 2018 arises from the

Page 5

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

decreased level of exploration and evaluation activity of the Company as a result of a reduction in cash resources and no financings having been completed in fiscal 2019.

The increase in total assets arises from financing completed during the fiscal year ended 2020. The total assets at August 31, 2020 includes cash of $1,790,432 compared to $35,583 at August 31, 2019, arising from the closing, on August 10, 2020, of a private placement of 27,205,042 units at $0.07 per unit for gross proceeds of $1,904,353.

Results of Operations:

Year Ended August 31, 2020

During year ended August 31, 2020, the Company reported a net loss of $1,132,831 or $0.04 loss per share (2019- $683,009 or $0.05 loss per share).

For the years ended	Aug 31, 2020	Aug 31, 2019
	$	$
Exploration and evaluation expenses, net of recoveries	(304,802)	(364,008)
Administration expenses	(824,553)	(319,001)
Foreign exchange gain/(loss)	(3,476)	-
Net loss for the year	(1,132,831)	(683,009)
Unrealized loss on marketable securities - OCI	-	(11,949)
Total comprehensive loss for the year	(1,132,831)	(694,958)

The total comprehensive loss for the year ended August 31, 2020 increased compared to the comparable period in the prior year mainly due to the increase in the Company's exploration activity, the change in management team and relocation of the Company's head office, as well as incurring property remediation costs. The increase in cash reserves during the year, arising from the closing of private placements during the year, enabled the Company to attend to a number of administrative and regulatory matters which had been deferred due to the prior lack of funding available to the Company. Such matters included dealing with on-going litigation and related regulatory matters, revamping the Company's website, promoting awareness of the Company and its exploration program for the future. The administrative costs were incurred to provide the Company with a solid management base and enable future activity to be focused on drilling programs and enhancement of it core exploration projects. Accordingly, the prior lack of funding and the timing of closing of the private placements did not permit significant exploration and evaluation expenditure during 2019.

The most significant expenses, during the year ended August 31, 2020, with respect to the exploration and evaluation expenses relate to drilling costs of $88,372 (2019 - $10,123), geology costs of $230,488 (2019

• $84,911), general exploration expense of $67,481 (2019 - $275,885), camp preparation costs of $41,709 (2019 - $nil) and property remediation costs of $128,534 (2019 - $nil), offset by recoveries from the Company's joint venture partners of $81,563 (2019 - $36,852) and government assistance of $186,272 (2019- $nil) arising from receipt of BC Mining Exploration Tax Credits.

The significant categories in administration expenses for the year ended August 31, 2020 includes consulting costs of $110,536 (2019 - $nil); legal, audit and accounting costs of $201,869 (2019- $83,024); office rent and building expenses of $61,200 (2019 - $14,400) non-cashshare-based compensation of $104,815 (2019- $99,506) and travel and promotion costs of $225,197 (2019 - $21,271).

Page 6

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

Quarterly Information

The following table sets forth selected financial information from the Company's unaudited quarterly financial statements for the last eight quarters ending with the most recently completed quarter, being the three months ended August 31, 2020. No cash dividends were declared in any of the reported periods.

Three months ended	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019
	$	$	$	$
Total revenues	nil	nil	nil	nil
Net income (loss)	(386,562)	(106,867)	(385,492)	(253,910)
Net income (loss) per share	(0.01)	(0.01)	(0.01)	(0.01)

Three months ended	Aug 31, 2019	May 31, 2019	Feb 28, 2019	Nov 30, 2018
	$	$	$	$
Total revenues	nil	nil	nil	nil
Net income (loss)	(148,817)	(221,764)	(168,902)	(143,526)
Net income (loss) per share	(0.01)	(0.01)	(0.01)	(0.01)

The changes in quarterly net income (loss) from fiscal 2019 to fiscal 2020 is primarily driven by the increase in the Company's exploration activityand administrative activity supporting the advancement of the Company's operations during fiscal 2020.

Fourth Quarter

During the three months ended August 31, 2020, the Company reported net loss for the period of $386,562 or $0.01 loss per share (2019 - $148,817 or $0.01 loss per share).

For the three months ended	Aug 31, 2020	Aug 31, 2019
	$	$
Exploration and evaluation expenses, net of recoveries	(244,085)	(94,566)
Administration expenses	(140,056)	(54,251)
Foreign exchange gain/(loss)	(2,421)	-
Net loss for the period	(386,562)	(148,817)
Total comprehensive loss for the period	(386,562)	(148,817)

The total comprehensive loss for the three months ended August 31, 2020 increased compared to the comparable period in the prior year mainly due to the increase in the Company's exploration activityand administrative activity supporting the advancement of the Company's operations.The most significant expense with respect to the exploration and evaluation expenses relates to drilling costs of $88,372 (2019 - $nil), geology costs of $120,351 (2019 - $1,164), general exploration costs of $22,405 (2019 - $75,628) and camp preparation costs of $40,995 (2019 - $103), offset by recoveries from the Company's joint venture

Page 7

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

partners of $nil (2019 - $18,361) and government assistance of $43,747 (2019- $nil) arising from receipt of BC Mining Exploration Tax Credits.

Administration expenses increased during the three months ended August 31, 2020 compared to the comparable period in the prior year mainly due to increases in legal, audit and accounting to $47,013 compared with $21,916 for the same period in 2019, arising from legal costs of resolving historic compliance and regulatory matters, office rent of $15,000 (2019 - $3,600) as well as travel and promotion costs of $59,325 (2019 - $3,879) related to increases in marketing and promotion of the Company.

Financing

Year Ended August 31, 2020

During the year ended August 31, 2020 shares were issued for the following:

On August 10, 2020, the Company closed a private placement issuing 27,205,042 units at $0.07 per unit for gross proceeds of $1,904,353. Each unit consists of one common share and one share purchase warrant. Each warrant entitles the holder to purchase one common share at an exercise price of $0.10 per share for a period of 3 years. In addition, the Company incurred finders fees of $41,573, other cash issuance costs of $22,267 and issued 593,901 finders' warrants with a fair value of $92,806, exercisable at a price of $0.10 per share for a period of 3 years. All of the proceeds from the financing were allocated to share capital.

On November 25, 2019, the Company closed the second and final tranche of a private placement issuing 4,212,500 units at $0.08 per unit for gross proceeds of $337,000. Each unit consists of one common share and one share purchase warrant. Each share warrant entitles the holder to purchase one common share at an exercise price of $0.12 per share for a period of 3 years. In addition, the Company incurred finders' fees of $25,020 and other cash issuance costs of $2,218. All of the proceeds from the financing were allocated to share capital.

On October 22, 2019, the Company closed the first tranche of a private placement issuing 8,922,500 units at $0.08 per unit for gross proceeds of $713,800. Each unit consists of one common share and one share purchase warrant. Each share warrant entitles the holder to purchase one common share at an exercise price of $0.12 per share for a period of 3 years. In addition, the Company incurred finders' fees of $15,680, other cash issuance costs of $18,532 and issued 140,000 finders' warrants with a fair value of $8,710, exercisable at a price of $0.12 per share for a period of 3 years. The Company allocated $133,838 of the proceeds raised from the financing to reserves, representing the residual value of the unit price compared with the share price of $0.065 on closing which was allocated, per unit, to share capital.

Year Ended August 31, 2019

During the year ended August 31, 2019, the Company did not complete any equity or debt financings.

Liquidity and Capital Resources

The consolidated financial statements for the year ended August 31, 2020 have been prepared on the basis of accounting principles applicable to a going concern. This assumes that Equity Metals will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. Equity Metals has incurred operating losses over the last several fiscal years, has limited financial resources, no source of operating cash flow and no assurances that sufficient funding, including adequate financing, will be available to further explore its mineral property projects and to cover the overhead costs necessary to maintain a public company in good standing. At August 31, 2020, Equity

Page 8

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

Metals had cash on hand of $1,790,432 and a current working capital of $1,694,570 compared to cash on hand of $35,583 and a working capital of $269 at August 31, 2019. The net increase in cash for the year is due to the Company's net cash provided from issuance of shares of $2,812,142, offset by cash used in operations of $951,798 and cash used in investing activities of $102,019 for an increase in mineral property bond security deposits.

Working Capital

As at	Aug 31, 2020	Aug 31, 2019
	$	$
Current Assets	1,979,281	115,211
Current Liabilities	284,711	114,942
Current Working Capital	1,694,570	269

Critical accounting estimates

Carrying value and recoverability of exploration and evaluation assets

The carrying amount of the Company's exploration and evaluation assets does not necessarily represent present or future values, and the Company's exploration and evaluation assets have been accounted for under the assumption that the carrying amount will be recoverable. Recoverability is dependent on various factors, including the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development and upon future profitable production, or proceeds from the disposition of the mineral properties themselves. Additionally, there are numerous geological, economic, environmental and regulatory factors and uncertainties that could impact management's assessment as to the overall viability of its properties or to the ability to generate future cash flows necessary to cover or exceed the carrying value of the Company's mineral properties.

To the extent that any of management's assumptions change, there could be a significant impact on the Company's future financial position, operating results and cash flows.

Fair value of stock options and warrants

Charges for share-based compensation are based on the fair value at the date of the award. Stock options are valued using the Black-Scholes Option Pricing Model, and inputs to the model include assumptions on expected volatility, discount rates and expected term, dividend yield, and expected forfeitures. Any changes in the estimates or inputs utilized to determine fair value could result in a significant impact on the Company's future operating results or on other components of equity. Expected volatility is a measure for variation of a price of a financial instrument over time. Expected volatility is derived from a time series of past market prices therefore may not be an accurate representation of future volatility.

Income taxes

The estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of the Company's ability to utilize the underlying future tax deductions against future taxable income prior to expiry of those deductions. Management assesses whether it is probable that some or all of the deferred income tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income, which in turn is dependent upon the successful discovery, extraction, development and commercialization of mineral reserves. To the extent that management's assessment of the Company's ability to utilize future tax deductions changes, the Company would be required to

Page 9

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

recognize more or fewer deferred tax assets, and future income tax provisions or recoveries could be affected.

Off-balance sheet arrangements

The Company has no off-balance sheet arrangements.

Additional Disclosure for Venture Issuers without Significant Revenue

Additional disclosure concerning Equity Metal's general and administrative expenses and resource property costs is provided in the Company's audited consolidated financial statements for the years-ended August 31, 2020 and 2019 available on its SEDAR at www.sedar.com.

Transactions with Related Parties

Related party transactions are negotiated in the best interest of the Company.

Related party transactions and commitments

Key management includes the President, the Chief Financial Officer, the VP Exploration and the directors. The compensation paid or payable to key management for services during the year ended August 31, 2020 and 2019 is as follows:

	August 31,	August 31,
	2020	2019
	$	$
Management and wages to related parties	87,337	10,650
Management and wages to former related parties	21,000	45,500
General exploration to related parties	68,865	6,000
General exploration to former related parties	-	40,900
Share-based payments to related parties	69,876	15,153
Share-based payments to former related parties	-	76,524
	247,078	194,727

During the year ended August 31, 2020, $28,482 (2019 - $10,225) in accounting support services was charged by Malaspina Consultants Inc., a company controlled by Killian Ruby, the CFO and director of the Company. Further, during the year ended August 31, 2020, the following amounts were charged to the Company by Manex Resource Group Inc. and Page Law Corporation, companies controlled by Larry Page, the Chairman: (i) $102,617 (2019 - $nil), being costs for general exploration services; (ii) $60,000 (2019 - $nil), being costs for office rent services; (ii) $7,444 (2019 - $nil), being costs for general office and administration support services; (iii) $87,814 (2019 - $nil), being costs for legal support services; (iv) $73,716 (2019 - $nil), being costs for investor relation and promotion services and (v) $45,854 (2019 - $nil), being costs for corporate finance and associated services.

During the year ended August 31, 2019 $25,525, was charged by Helen Jewitt, the spouse of John Jewitt, the former Chief Executive Officer and former director of the Company with respect to accounting and administrative services provided during the period. Further, office rent of $14,400, for the year ended August 31, 2019 was charged by Foxy Creek Services Ltd., a company controlled by Ellen Clements, a former CEO and former director of the Company for consulting and use of equipment services. In addition, during the year ended August 31, 2019, the Company acquired equipment from Foxy Creek Services Ltd. Of $54,900.

Page 10

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

Included in current liabilities at August 31, 2020 is (i) $46,854 (2019 - $23,716) due to related parties and

1. $5,783 (2019 - $12,337) due to prior related parties of the Company. These amounts are unsecured and due under normal business terms.

At August 31, 2020 a total of $5,487 (2019 - $5,487) was owing from a company with officers and Directors in common has been included in receivables and prepaids.

Adoption of new accounting standards during the year

New Accounting Standards Adopted During the Period

IFRS 16, Leases

The new standard eliminates the classification of leases as either operating or finance leases for a lessee. Instead all leases are capitalized by recognizing the present value of lease payments and recognizing an asset and a financial liability representing an obligation to make future lease payments. The principles in IFRS 16 provide a more consistent approach to acquiring the use of an asset whether by leasing or purchasing an asset. The new leasing standard is applicable to all entities and will supersede current lease accounting standards under IFRS. IFRS 16 is mandatory for the Company's annual period beginning on September 1, 2019. The adoption of this standard did not have a material measurement or disclosure impact on the Company's financial statements.

Financial Instruments and Other Instruments

The Company's financial assets and liabilities are cash, receivables, reclamation deposits, accounts payable and accrued liabilities and amounts due to related parties. The fair values of these financial instruments are estimated to be their carrying values due to their short-term nature. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments. The fair value of these financial instruments approximates their carrying value due to their short-term maturity, receipt of market interest rates on interest bearing assets or capacity of prompt liquidation.

Outstanding share data

The Company has authorized share capital consisting of common shares without par value. The number of shares authorized is unlimited. The Company has issued warrants for the purchase of common shares and also a stock option plan. The table below summarizes the Company's common shares, stock options and warrants that are convertible into common shares as of December 18, 2020:

	Number
Issued and outstanding common shares	71,172,542
Share options with a weighted average exercise price of $0.092	2,500,000
Share purchase warrants with a weighted average exercise price of $0.13	46,981,618
Fully Diluted	120,654,160

Page 11

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

Disclosure controls and procedures

In connection with National Instrument 52-109 (Certificate of Disclosure in Issuer's Annual and Interim Filings) ("NI 52-109"), the Chief Executive Officer and Chief Financial Officer of the Company have filed a Venture Issuer Basic Certificate with respect to the financial information contained in the financial statements for the year ended August 31, 2020 and this accompanying MD&A (together, the "Filings").

In contrast to the full certificate under NI 52-109, the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures and internal control over financial reporting, as defined in NI 52-109.

For further information, and other information relating to the Company, the reader should refer to the Venture Issuer Basic Certificates filed by the Company with its filings on SEDAR at www.sedar.com.

Risks

The Company is engaged in the exploration, development and exploitation of mineral resources for base metals, precious metals and diamonds. The properties of the Company are without a known body of commercial ore. The exploration programs undertaken and proposed constitute an exploratory search and there is no assurance that the Company will be successful in its search. 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, and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current exploration programs planned by the Company will result in a profitable commercial mining operation. The amounts shown as property acquisition costs represent acquisition and holding cost, less amounts written off, and do not necessarily represent present or future values.

Acquisition of rights to the mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral properties may be disputed. Although the Company has investigated the title to all of the properties for which it holds concessions or in respect of which it has a right to earn an interest, the Company cannot give any assurance that title to such properties will not be challenged or impugned. The Company's properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects or governmental actions. The Company can never be certain that it or its option partners will have valid title to its mineral properties. Mineral properties sometimes contain claims or transfer histories that examiners cannot verify, and transfers under foreign law are often complex. The Company does not carry title insurance on its properties. A successful claim that the Company or its option partner does not have title to a property could cause the Company to lose its rights to that property, perhaps without compensation for its prior expenditures relating to the property. The occurrence of any such event could have a material adverse effect on the Company and its prospects.

The Company requires licenses and permits from various governmental authorities to carry out exploration and development of its projects. Obtaining permits can be a complex, time consuming process. There can be no assurance that the Company will be able to obtain the necessary licences and permits on acceptable terms, in a timely manner or at all. The costs and delays associated with obtaining permits and complying with these permits and applicable laws and regulations could stop or materially delay or restrict the Company from continuing or proceeding with existing or future operations or projects. Any failure to comply with permits and applicable laws and regulations, even if inadvertent, could result in the interruption or closure of operations or material fines, penalties or other liabilities. In addition, the requirements applicable to sustain existing permits and licenses may change or become more stringent over time and there is no assurance that the Company will have the resources or expertise to meet its obligations under such licenses and permits.

Page 12

EQUITY METALS CORPORATION

MANAGEMENT DISCUSSION AND ANALYSIS

For the years August 31, 2020 and 2019

The Company has experienced losses in operations in prior years and has an accumulated deficit position. The Company expects to incur losses for the foreseeable future. The continuation of the Company's operations is subject to its ability to continue to be able to raise funding to support its operations. While the Company has been successful to date in raising funding there is no guarantee that it will continue to do so in the future.

The profitability of the Company's operations, if ever established, will be dependent upon the market price of mineral commodities. Mineral prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The level of interest rates, the rate of inflation, world supply of mineral commodities, consumption patterns, sales of copper, gold and silver by central banks, forward sales by producers, production, industrial and jewellery demand, speculative activities and stability of exchange rates can all cause significant fluctuations in prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The prices of mineral commodities have fluctuated widely in recent years. Current and future price declines could cause commercial production to be impracticable. The Company's revenues and earnings also could be affected by the prices of other commodities such as fuel and other consumable items, although to a lesser extent than by the price of copper, gold, silver or molybdenum. The prices of these commodities are affected by numerous factors beyond the Company's control.

The Company is dependent upon share issuances to provide the funding necessary to meet its general operating expenses and will require additional financing to continue to explore its mineral properties. Issuances of additional securities will result in dilution of the equity interests of the Company's shareholders. The Company may issue additional common shares in the future as further capital is required and on the exercise of outstanding options or other convertible securities issued from time to time. Sales or issuances of substantial amounts of additional securities, or the availability of such securities for sale, could adversely affect the market prices for the Company's securities. A decline in the market prices of securities of the Company could impair the Company's ability to raise additional capital through the sale of new common shares should it desire to do so. In addition, if additional common shares or securities convertible into common shares are sold or issued, such sales or issuances may substantially dilute the equity interests of the Company's holders of common shares.

Companies in all industries, including the mining industry, are subject to legal claims from time to time, some of which have merit and others of which do not. Defence and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding to which the Company may become subject could have a material effect on the Company's financial position, results of operations or the Company's property development.

COVID-19

The continuation of the COVID-19 pandemic has resulted in social and economic disruption and had a resultant effect on the mining and exploration industries and capital markets. However, increases in gold and silver prices are offsetting features to some of the negative conditions imposed by the pandemic. The impacts to the Company are not determinable at this date, but these could be material to the Company's forecasted exploration work and the Company's financial position, results of operations and cash flows. The Company's liquidity and ability to continue as a going concern may also be impacted.

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