Torq Resources : Financial Statements

(An exploration stage company)

Torq Resources Inc.

Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars - Unaudited)

TORQ RESOURCES INC.

Condensed Interim Consolidated Statements of Financial Position

(Expressed in Canadian Dollars - Unaudited)

			September 30,		December 31,
	Note		2023		2022
Assets
Current assets
Cash		$	3,749,884	$	12,470,543
Amounts receivable			37,277		65,899
Prepaid expenses and deposits	8		526,854		466,094
			4,314,015		13,002,536
Non-current assets
Equity investment	3		107,297		127,024
Equipment	4		289,300		463,816
Mineral property interests	5		2,496,305		2,012,368
Total assets		$	7,206,917	$	15,605,744
Liabilities
Current liabilities
Accounts payable and accrued liabilities	8	$	1,323,453	$	1,637,551
Current loan facility	7		2,201,757		-
			3,525,210		1,637,551
Non-current liability
Loan facility	7		-		1,966,710
Total liabilities		$	3,525,210	$	3,604,261
Equity
Share capital	9	$	73,329,032	$	68,160,093
Shares to be issued			-		70,862
Share option and warrant reserves	10		13,151,269		10,547,271
Accumulated other comprehensive income			88,768		89,777
Deficit			(82,887,362)		(66,866,520)
Total equity		$	3,681,707	$	12,001,483
Total liabilities and equity		$	7,206,917	$	15,605,744

Going concern (Note 1(c)), Commitment (Note 3), Subsequent Events (Notes 7, 14)

Approved on behalf of the Board of Directors:
"Steve Cook"	"Jeffrey Mason"
Lead Independent Director	Director & Chair of the Audit Committee

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

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TORQ RESOURCES INC.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars, except number of shares - Unaudited)

Operating expenses Exploration and evaluation Fees, salaries and other employee

benefits

Legal and professional Marketing and investor relations Office and administration Project investigation Regulatory and transfer agent

Other expenses (income) Accretion expense Foreign exchange (gain) loss Interest income

Interest expense

Net loss from equity investment

Net loss for the period

Other comprehensive (income) loss Unrealized (gain) loss on translation of

foreign operations

Total comprehensive loss for the period

Basic and diluted loss per share Basic and diluted weighted average

number of shares

		Three months ended		Nine months ended
				September 30,			September 30,
Note		2023		2022		2023		2022
6	$	3,662,447	$	2,115,663	$	11,526,137	$	5,048,587
8		572,216		542,794		2,307,615		1,465,092
		111,457		49,833		385,628		192,628
		283,681		399,539		940,094		982,767
		178,032		164,808		517,370		512,013
		25,116		70,808		94,460		173,143
		27,637		11,490		90,138		48,502
		4,860,586		3,354,935		15,861,442		8,422,732
7		84,303		40,556		235,047		40,556
		(149,482)		(182,219)		92,194		(115,438)
		(76,440)		(41,849)		(354,069)		(58,485)
7		56,713		36,000		168,288		36,000
3		2,017		9,209		19,727		44,043
		(82,889)		(138,303)		161,187		(53,324)

• 4,777,697 $ 3,216,632 $ 16,022,629 $ 8,369,408

	147,509		(53,946)		(778)		(92,563)
$	4,925,206	$	3,162,686	$	16,021,851	$	8,276,845
$	0.04	$	0.04	$	0.15	$	0.10
	110,368,130		87,136,133		107,650,634		83,857,801

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

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TORQ RESOURCES INC.

Condensed Interim Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars, except number of shares - Unaudited)

Balance, December 31, 2021

Share and share purchase warrants issued pursuant to offering, net of share issue cost

Share-based compensation Shares issued as finders' fee Other comprehensive income for

the period

Net loss for the period Balance, September 30, 2022

Balance, December 31, 2022

Shares issued as finders' fee Units issued, net of share issue costs and cash finders' fees Warrants issued for finders' fees

Share-based compensation Reclassification of subsidiary other

comprehensive income upon dissolution

Other comprehensive income for the period

Net loss for the period

Balance, September 30, 2023

Number of						Share		Accumulated
	Share		Shares to		option and		other
common						Deficit		Total equity
	capital		be issued		warrant		comprehensive
shares
					reserves		income (loss)
77,515,414	$	49,124,432	$	99,031	$	9,284,921	$	(52,263)	$	(55,147,174)	$	3,308,947
22,033,400		19,007,492		-		812,792		-		-		19,820,284
-		-		-		407,529		-		-		407,529
141,667		28,169		(28,169)		-		-		-		-
-		-		-		-		92,563		-		92,563
-		-		-		-		-		(8,369,408)		(8,369,408)
99,690,481	$	68,160,093	$	70,862	$	10,505,242	$	40,300	$	(63,516,582)	$	15,259,915
99,690,481	$	68,160,093	$	70,862	$	10,547,271	$	89,777	$	(66,866,520)	$	12,001,483
243,750		70,862		(70,862)		-		-		-		-
10,433,899		5,217,791		-		521,695		-		-		5,739,486
-		(119,714)		-		119,714		-		-		-
-		-		-		1,962,589		-		-		1,962,589
-		-		-		-		(1,787)		1,787		-
-		-		-		-		778		-		778
-		-		-		-		-		(16,022,629)		(16,022,629)
110,368,130	$	73,329,032	$	-	$	13,151,269	$	88,768	$	(82,887,362)	$	3,681,707

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

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TORQ RESOURCES INC.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars - Unaudited)

		Three months ended		Nine months ended
				September 30,				September 30,
		2023		2022		2023		2022
Operating activities
Net loss for the period	$	(4,777,697)	$	(3,216,632)	$	(16,022,629)	$	(8,369,408)
Adjusted for:
Interest income		(76,440)		(41,849)		(354,069)		(58,485)
Non-cash transactions:
Accretion expense		84,303		40,556		235,047		40,556
Depreciation		68,438		90,818		215,930		129,939
Interest expense		56,713		36,000		168,288		36,000
Net loss from equity investment		2,017		9,209		19,727		44,043
Share-based compensation expense		358,157		160,370		1,962,589		407,529
Unrealized foreign exchange (gain) loss		(262,250)		(48,450)		(6,946)		1,091
Changes in working capital items other
than cash:
Amounts receivable		49,913		7,503		28,980		121,130
Prepaid expenses and deposits		26,584		80,237		(58,172)		101,952
Accounts payable and accrued liabilities		16,602		633,580		(251,236)		850,492
Cash used in operating activities		(4,453,660)		(2,248,658)		(14,062,491)		(6,695,161)
Investing activities
Acquisition of equity investment		-		-		-		(1,000)
Interest income received		76,440		41,849		354,069		58,485
Mineral properties additions		(406,560)		(421,723)		(487,764)		(652,213)
Purchase of equipment		-		-		(36,903)		(45,659)
Cash used in investing activities		(330,120)		(379,874)		(170,598)		(640,387)
Financing activities
Interest paid		(56,713)		(36,000)		(168,288)		(36,000)
Proceeds from the issuance of shares and		-		-		5,739,486		5,044,875
share purchase warrants, net of costs
Proceeds from loan and credit facility, net		-		1,951,968		-		1,951,968
of arrangement fee and costs
Proceeds from issue of shares to Gold		-		14,314,287		-		14,314,287
Fields Limited, net of costs
Cash provided by (used in) financing		(56,713)		16,230,255		5,571,198		21,275,130
activities
Effect of foreign exchange rate on		(74,552)		(22,857)		(58,768)		(57,212)
changes in cash
Change in cash		(4,915,045)		13,578,866		(8,720,659)		13,882,370
Cash, beginning of the period		8,664,929		2,202,828		12,470,543		1,899,324
Cash, end of the period	$	3,749,884	$	15,781,694	$	3,749,884	$	15,781,694

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

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TORQ RESOURCES INC.

Notes to the Condensed Interim Consolidated Financial Statements Three and nine months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated - Unaudited)

NOTE 1 - BUSINESS OVERVIEW

1. Corporate information
   Torq Resources Inc. (the "Company" or "Torq") is incorporated under the Business Corporations Act (British Columbia) and is listed on the TSX Venture Exchange (the "Exchange") as a Tier 2 mining issuer. The Company's shares trade under the symbol TORQ.V in Canada and on the OTCQX under the US symbol TRBMF. The head office and principal address of Torq is located at 1177 West Hastings Street, Suite 1630, Vancouver, British Columbia, Canada, V6E 2K3.
   These unaudited condensed interim consolidated financial statements (the "financial statements") were approved and authorized for issue by the Board of Directors of the Company on November 29, 2023.
2. Nature of operations
   The Company is principally engaged in the acquisition and exploration of mineral property interests with a focus in the Americas, particularly Chile.
3. Going concern
   These financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. As at September 30, 2023, the Company had working capital of $788,805 (December 31, 2022 - $11,364,985). For the nine months ended September 30, 2023, and 2022, the Company incurred a net loss of $16,022,629 and $8,369,408, respectively. The Company has incurred operating losses to date and does not generate revenue to support its operating activities. With no source of operating cash flows, there is no assurance that sufficient funding will be available to conduct further exploration of its mineral properties. The Company has had success raising capital in the past, and on March 10, 2023, the Company closed a non-brokered private placement for gross proceeds of $6,260,339 (Note 9(b)). Furthermore, on November 8, 2023, the Company commenced a public equity offering of units, comprised of common shares and share purchase warrants, to achieve minimum gross proceeds of $4 million (note 14). However, the ability to continue as a going concern remains dependent upon Torq's capacity to obtain the financing necessary to continue to fund its mineral properties, including two active exploration projects, the realization of future profitable production, proceeds from the disposition of its mineral interests, and/or other sources. These conditions create a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern.
   These financial statements do not give effect to adjustments to the carrying values and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.

NOTE 2 - BASIS OF PREPARATION

1. Statement of compliance
   These financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting" using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The accounting policies followed in these financial statements are the same as those applied in the Company's most recent audited annual consolidated financial statements for the years ended December 31, 2022 and 2021 (the "annual financial statements").
2. Basis of presentation
   These financial statements have been prepared on a historical cost basis. In addition, except for cash flow information, these financial statements have been prepared using the accrual method of accounting.

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TORQ RESOURCES INC.

Notes to the Condensed Interim Consolidated Financial Statements Three and nine months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated - Unaudited)

1. Basis of consolidation
   Subsidiaries are consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. Control exists when the Company has power over an investee, exposure or rights, to variable returns from its involvement with the investee and the ability to use its power over the investee to affect the amount of the Company's returns.
   The Company's functional currency is the Canadian dollar ("CAD", "C$"), which is also the Company's presentation currency. These financial statements are presented in Canadian dollars, unless otherwise noted. Amounts denominated in United States dollars ("USD") are denoted as US$.
   The financial statements include the financial statements of the Company, and the following subsidiaries:

	Place of	Functional	Beneficial
Subsidiary	incorporation	Currency	Interest
Torq Resources Chile SpA	Chile	US$	100%
Minera Margarita SpA	Chile	US$	100%
Minera Andrea SpA	Chile	US$	100%
Minera Santa SpA	Chile	US$	100%
Torq Operaciones Chile SpA	Chile	US$	100%

Candelaria Minerals S.A.C., a dormant subsidiary of the Company, was dissolved in January 2023.

These financial statements include a 25% investment in Universal Mineral Services Ltd. ("UMS Canada") which is a shared service entity (Note 3).

1. Critical accounting judgments and estimates
   The preparation of the financial statements in conformity with IFRS requires management to select accounting policies and make estimates and judgments that may have a significant impact on the financial statements. Estimates are continuously evaluated and are based on management's experience and expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes may differ from these estimates. The Company's critical accounting judgements and estimates were presented in Note 3 of the annual financial statements and have been consistently applied in the preparation of these financial statements. No new estimates and judgements were applied for the period ended September 30, 2023.
2. Application of new and revised accounting standards
   On May 7, 2021, the IASB issued Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). The amendments narrow the scope of the initial recognition exemption ("IRE") so that it does not apply to transactions that give rise to equal and offsetting temporary differences. As a result, companies will need to recognize a deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning provision. The adoption of the new standard did not impact the financial statements of the Company.
   On February 12, 2021, the IASB issued Definition of Accounting Estimates (Amendments to IAS 8). The amendments, which became effective January 1, 2023, help to distinguish changes in accounting policies from changes in accounting estimates. The adoption of the new standard did not impact the financial statements of the Company.
   On February 12, 2021, the IASB issued Disclosure Initiative - Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements). The amendments require the disclosure of material accounting policy information rather than disclosing significant accounting policies and help companies provide useful accounting policy disclosures. The adoption of the new standard, effective January 1, 2023, did not impact the financial statements of the Company.

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TORQ RESOURCES INC.

Notes to the Condensed Interim Consolidated Financial Statements Three and nine months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated - Unaudited)

NOTE 3 - EQUITY INVESTMENT

Investment in associate - UMS Canada

UMS Canada is located in Vancouver, BC, and provides geological, financial and transactional advisory services as well as administrative services to the Company and three other companies on a cost recovery basis. On April 1, 2022, the Company acquired a 25% share interest in UMS Canada and accounts for this as an associate. UMS Canada is a party to an office lease agreement with a total term of ten years, for which certain rent expenses will be payable by the Company. As at September 30, 2023, the Company expects to incur approximately $1.5 million in respect of future lease rent for the remaining 7.75 years.

Summarized financial information of UMS Canada

The Company's share of net loss of UMS Canada for the three and nine months ended September 30, 2023 and 2022, was as follows:

		Three months ended		Nine months ended
			September 30,			September 30,
		2023		2022		2023		2022
Cost recoveries	$	(1,056,280)	$	(1,212,261)	$	(4,276,612)	$	(2,901,840)
Geological services		361,807		476,403		1,528,706		1,141,426
Administrative services		702,540		772,694		2,826,814		1,936,586
Net loss for the period		8,067		36,836		78,908		176,172
Company's share of net loss of associate	$	2,017	$	9,209	$	19,727	$	44,043

The carrying amount of the Company's investment in UMS Canada as at September 30, 2023 was as follows:

		Equity
		investment
Acquisition of equity investment	$	151,000
Company's share of net loss on investment		(23,976)
Carrying amount as at December 31, 2022		127,024
Company's share of net loss on investment for the period		(19,727)
Carrying amount as at September 30, 2023	$	107,297
The Company's equity interest in net assets of UMS Canada at September 30, 2023 was as follows:
		2023
Current assets	$	817,118
Non-current assets		2,538,898
Current liabilities		(1,552,219)
Non-current liabilities		(1,374,608)
Net assets - 100%		429,189
Company's equity interest in net assets	$	107,297

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TORQ RESOURCES INC.

Notes to the Condensed Interim Consolidated Financial Statements Three and nine months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated - Unaudited)

NOTE 4 - EQUIPMENT
		Total
Balance as at December 31, 2021	$	383,270
Additions		196,330
Depreciation		(174,073)
Disposals		(7,576)
Foreign currency translation		65,865
Balance as at December 31, 2022		463,816
Additions		36,903
Depreciation		(215,930)
Foreign currency translation		4,511
Balance as at September 30, 2023	$	289,300

During the three and nine months ended September 30, 2023, the Company recorded $63,097 and $199,497, respectively (2022 - $86,283 and $116,444, respectively) of depreciation in exploration and evaluation expense in the condensed interim consolidated statements of loss and comprehensive loss. Depreciation expense was also included within Office and administration expenses relating to office equipment.

NOTE 5 - MINERAL PROPERTY INTERESTS

The Company's mineral property interests are composed of the following:

		Margarita		Andrea	Santa Cecilia
		Project		Project		Project		Total
As at December 31, 2021	$	453,886	$	165,826	$	268,486	$	888,198
Additions		3,435		-		-		3,435
Option payments		477,841		170,937		409,470		1,058,248
Foreign currency translation		35,977		21,000		5,510		62,487
As at December 31, 2022	$	971,139	$	357,763	$	683,466	$	2,012,368
Option payments		406,560		81,204		-		487,764
Foreign currency translation		(2,207)		(660)		(960)		(3,827)
As at September 30, 2023	$	1,375,492	$	438,307	$	682,506	$	2,496,305

1. Margarita project
   Pursuant to the execution of the Margarita Project option agreement, the Company incurred finders' fees to be paid in shares of the Company and issued in separate tranches; on March 31, 2023, the final tranche of shares was issued in final settlement of the agreement with the finders.

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TORQ RESOURCES INC.

Notes to the Condensed Interim Consolidated Financial Statements Three and nine months ended September 30, 2023 and 2022 (Expressed in Canadian Dollars, unless otherwise stated - Unaudited)

Margarita Claims

Under the option agreement, the Company may acquire a 100% interest in the Margarita claims by making cash payments totaling US$6,200,000 over 66 months. To maintain the option, the Company is also required to incur work expenditures totaling US$3,050,000 within 30 months of the signing date of the definitive agreement (February 22, 2021), which have been fully incurred as at September 30, 2023.

		Cash		Work expenditures
		payments		requirement
		(US$)		(US$)
April 20, 2021 (paid $62,445)	$	50,000	$	-
August 22, 2021 (paid $64,280 and work requirements met)		50,000		400,000
August 22, 2022 (paid $155,013 and work requirements met)		100,000		1,150,000
August 18, 2023 (paid $406,560 and work requirements met)		300,000		1,500,000
August 22, 2024		1,200,000		-
August 22, 2025		2,000,000		-
August 22, 2026		2,500,000		-
	$	6,200,000	$	3,050,000

La Cototuda Claim

Under the La Cototuda option agreement, the Company can acquire a 100% interest in the La Cototuda claim by making cash payments totaling US$900,000 over 36 months as follows:

February 23, 2021 (paid $63,065)

February 23, 2022 (paid $31,745)

August 23, 2022 (paid $291,083)

October 23, 2023 (paid subsequent to the period end) February 23, 2024

Cash payments (US$)

• 50,000
  25,000

225,000

250,000

350,000

• 900,000

Two legal claims arose in 2022 regarding the mineral exploration rights over a non-material section (approximately 10 metres wide) at the edge of the Margarita southern property. While the outcome of these legal claims is uncertain, management, after review with legal counsel, believes the claims have no merit. As of September 30, 2023, the issuance of the final court decision is pending.

1. Andrea project
   On May 12, 2023, the Company amended the timing of the option payments to acquire 100% of the Andrea project, and the updated table of payments is as follows:

		Cash payments
		(US$)
July 23, 2021 (paid $132,038)	$	105,000
May 24, 2022 (paid $170,937)		135,000
May 12, 2023 (paid $81,204)		60,000
May 24, 2024		195,000
May 24, 2025		310,000
May 24, 2026		1,035,000
May 24, 2027		4,160,000
	$	6,000,000

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