Minco Silver : Annual Audited Consolidated Financial Statements

Minco Silver Corporation

Consolidated Financial Statements

For the year ended December 31, 2021 and 2020 (Expressed in Canadian dollars, unless otherwise stated)

Management's Responsibility for Financial Reporting

The consolidated financial statements are the responsibility of the Board of Directors and management. The consolidated financial statements have been prepared by management in accordance with International

Financial Reporting Standards as issued by the International Accounting Standards Board and include certain estimates that reflect management's best judgments on information currently available. In the opinion of

management, the accounting practices utilized are appropriate in the circumstances and the consolidated financial statements fairly reflect the financial position, changes in equity, results of operations, and cash flow of the Company within reasonable limits of materiality.

The Audit Committee of the Board of Directors is composed of three Directors and meets with management and the independent auditors to review the scope and results of the annual audit and to review the consolidated financial statements and related financial reporting matters prior to submitting the consolidated financial statements to the Board of Directors for approval.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Professional Accountants, who were appointed by the shareholders. The auditors' report outlines the scope of their examination and their opinion on the consolidated financial statements.

Dr. Ken Cai President and CEOMelinda Hsu, CPA, CGA Chief Financial Officer

Vancouver, Canada March 29, 2022

To the Shareholders of Minco Silver Corporation

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Minco Silver Corporation and its subsidiaries (together, the Company) as at December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS).

What we have auditedomprise:

the consolidated statements of financial position as at December 31, 2021 and 2020; the consolidated statements of operations and net loss for the years then ended; the consolidated statements of comprehensive income (loss) for the years then ended; the consolidated statements of changes inequity for the years then ended; the consolidated statements of cash flows for the years then ended; and

the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in theaudit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

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. We have fulfilled our other ethical responsibilities in accordance with these requirements.

PricewaterhouseCoopers LLP

PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7

T: [phone], F: [phone]

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2021. The matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on the matter.

Key audit matter

How our audit addressed the key audit matter

Allowance for expected credit loss of the note receivable

Our approach to addressing the matter included the following procedures, among others:

Refer to note 3 - Summary of significant accounting policies and note 7 - Note receivable to the consolidated financial statements.

Note receivable amounted to $11.1 million principal and interest receivable amounted to $1.95 million as at December 31, 2021 and is accounted for at amortized cost. The note receivable is secured by a variety of assets including: land, real estate and cash security owned by the entity controlled by Longxin Mining Corp., and other related defendants (the borrowers). No incremental expected credit loss was recorded beyond the success fee payable to counsel as the value of the collateral exceeds the carrying value of the principal and interest of the note receivable.

During the year, the Company initiated court proceedings and as a result of the court verdict and failure by the borrowers to pay the outstanding amounts, the Company seized some of the collateral and remains entitled to the remaining collateral. The borrowers filed an appeal to the verdict, which remains unresolved but the Company expects the court verdict to be upheld.

Financial assets at amortized cost are initially recognized at fair value plus or minus transaction costs, and are subsequently carried at amortized cost less any expected credit loss. For note receivable, the Company applies the simplified

Evaluated how management determined the expected credit losses related to the note receivable, which included the following:

Read the court proceeding documents;

Agreed the securities collateralized in favour of the Company to the court verdict;

fair value of the seized real estate by comparing to market prices of recently sold similar properties;

Inquired with legal counsel responsible for the matter as to the expected outcome of the appeal;

Assessed whether the fair value of the seized real estate and cash security exceeds the carrying value of the note receivable and interest receivable as at December 31, 2021; and

Tested the estimated success fee by agreeing the estimate to the terms of the legal contract.

Tested the disclosures made in the consolidated financial statements, particularly on the significant judgments made.

Key audit matter

How our audit addressed the key audit matter

approach, which requires loss allowance for a financial instrument at an amount equal to 12-month expected credit losses.

Management applied significant judgment in estimating the valuation of the collateral as part of their expected credit loss assessment related to the note receivable. To estimate expected credit losses, management considered the valuation of the security of the note receivable, the success fee and the probability that the court verdict would be upheld.

We considered this a key audit matter due to (i) the significance of the note receivable balance and (ii) the significant judgment made by management in assessing the valuation of the security. This in turn resulted in significant audit effort and subjectivity in performing audit procedures to test the expected credit losses determined by management.

Other information

Management is responsible for the otDiscussion 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 identified above 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.

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.