Quaterra Resources Inc.: Form 6-K - filed by newsfilecorp.com

0001062993-21-003162.txt : 20210330 0001062993-21-003162.hdr.sgml : 20210330 20210330172930 ACCESSION NUMBER: 0001062993-21-003162 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20201231 FILED AS OF DATE: 20210330 DATE AS OF CHANGE: 20210330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUATERRA RESOURCES INC CENTRAL INDEX KEY: 0001339688 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 STATE OF INCORPORATION: A1 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-55139 FILM NUMBER: 21788374 BUSINESS ADDRESS: STREET 1: 1100-1199 WEST HASTINGS STREET CITY: VANCOUVER STATE: A1 ZIP: V6E 3T5 BUSINESS PHONE: 604-681-9059 MAIL ADDRESS: STREET 1: 1100-1199 WEST HASTINGS STREET CITY: VANCOUVER STATE: A1 ZIP: V6E 3T5 6-K 1 form6k.htm FORM 6-K Quaterra Resources Inc.: Form 6-K - filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of December 2020

Commission File Number: 0-55139

QUATERRA RESOURCES INC.
(Translation of registrant's name into English)

1100-1199 West Hastings Street
Vancouver, BC V6E 3T5 Canada
(Address of principal executive offices)

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

[ x ] Form 20-F [ ] Form 40-F

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

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

SUBMITTED HEREWITH

Exhibits

Exhibit		Description

99.1		Consolidated Financial Statements for the year ended December 31, 2020
99.2		Management’s Discussion and Analysis for the year ended December 31, 2020
99.3		Form 52-109FV1 Certification of Annual Filings Venture Issuer Basic Certificate - Interim CEO
99.4		Form 52-109FV1 Certification of Annual Filings Venture Issuer Basic Certificate - CFO

SIGNATURES

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

	QUATERRA RESOURCES INC.
	(Registrant)

Date: March 30, 2021	By:	/s/ Lei Wang
		Lei Wang

	Title:	Chief Financial Officer

EX-99.1 2 exhibit99-1.htm EXHIBIT 99.1 Quaterra Resources Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

(An Exploration Stage Company)

Consolidated Financial Statements

For the year ended December 31, 2020

(In U.S. Dollars)

Management's Responsibility for Financial Reporting

The accompanying annual consolidated financial statements of Quaterra Resources Inc. have been prepared by management and are in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Management acknowledges its responsibility for the preparation and presentation of the annual consolidated financial statements; has established and maintained a system of internal accounting control designed to provide reasonable assurance that assets are safeguarded from loss or unauthorized use, financial information is reliable and accurate, and transactions are properly recorded and executed under management's authorization. This system includes established policies and procedures, the selection and training of qualified personnel, and an organization providing for appropriate delegation of authority and segregation of responsibilities. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance for financial statement preparation and presentation.

The Board of Directors oversees management's responsibility for financial reporting and internal control systems through an Audit Committee, which is composed entirely of independent directors. The Audit Committee meets periodically 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 and internal control matters before the consolidated financial statements are approved by the Board of Directors and submitted to the Company's shareholders.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the Company's consolidated financial statements under Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) and has expressed its opinion in the independent auditor's report.

"Thomas Patton" (signed)	"Lei Wang" (signed)
Thomas Patton	Lei Wang
Executive Chairman and Interim Chief Executive Officer	Chief Financial Officer

March 29, 2021

Vancouver, British Columbia, Canada

Page 2 of 20

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Quaterra Resources Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Quaterra Resources Inc. and its subsidiaries (together, the Company) as of December 31, 2020 and 2019, and the related consolidated statements of loss and comprehensive loss, cash flows and changes in equity for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

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

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants

Vancouver, Canada

March 30, 2021

We have served as the Company's auditor since 2016.

Page 3 of 20

Quaterra Resources Inc.
Consolidated Statements of Financial Position
(In thousands of U.S. Dollars)

	Note		December 31, 2020			December 31, 2019

Assets

Current assets:
Cash and cash equivalents		$	701		$	1,812
Other receivables			3			3
Marketable securities	3		641			165
Prepaid and deposit			5			4
			1,350			1,984
Non-current assets:
Mineral properties	4		28,236			28,679
Reclamation bonds			34			34
			28,270			28,713
Total Assets		$	29,620		$	30,697

Liabilities
Current liabilities:
Accounts payable and accrued liabilities		$	222		$	112
Convertible notes	5		-			402
Derivative liabilities - convertible	6		-			150
			222			664
Non-current liability
Derivative liabilities - warrants	6		51			26
Total Liabilities			273			690

Shareholders' Equity
Share capital			101,553			101,424
Contributed surplus			19,406			19,212
Deficit			(91,612	)		(90,629	)
			29,347			30,007
Total Liabilities and Shareholders' Equity		$	29,620		$	30,697

(See the accompanying notes to the consolidated financial statements)

Approved on behalf of the Board of Directors on March 29, 2021:

/s/ “Thomas Patton”	/s/“Terrence Eyton”
Director	Director

Page 4 of 20

Quaterra Resources Inc.
Consolidated Statements of Loss and Comprehensive Loss
(In thousands of U.S. Dollars, except for shares and per share amounts)

			Year ended December 31,
	Note		2020			2019			2018

General administrative expenses
General office		$	61		$	53			74
Insurance			47			63			46
Investor relations and corporate development			86			217			75
Professional fees			71			102			162
Rent			108			123			114
Salaries and benefits			713			823			838
Transfer agent and regulatory			44			66			38
Travel			13			29			50
			(1,143	)		(1,476	)		(1,397	)

Fair value gain on derivative liabilities	6		90			105			358
Foreign exchange gain (loss)			20			(43	)		11
General exploration			(167	)		(26	)		-
Loss on settlement of convertible notes			(26	)		(13	)		-
Unrealized gain (loss) on marketable securities	3		476			9			(130	)
Interest expense and other			(58	)		(150	)		(170	)
Share-based compensation	8(a)		(175	)		(117	)		(91	)
			160			(235	)		(22	)

Loss and comprehensive loss for the year		$	(983	)	$	(1,711	)	$	(1,419	)
Loss per share - basic and diluted		$	(0.00	)	$	(0.01	)	$	(0.01	)

Weighted average number of common shares outstanding			218,117,528			208,688,604			200,969,314

(See the accompanying notes to the consolidated financial statements)

Page 5 of 20

Quaterra Resources Inc.
Consolidated Statements of Cash Flows
(In thousands of U.S. Dollars)

		Year ended December 31,
		2020			2019			2018

Operating activities
Net loss for the year	$	(983	)	$	(1,711	)	$	(1,419	)
Items not involving cash:
Fair value gain on derivative liabilities		(90	)		(105	)		(358	)
Loss on settlement of convertible notes		26			13			-
Interest and convertible accretion		72			260			141
Unrealized (gain) loss on marketable securities		(476	)		(9	)		130
Share-based compensation		175			117			91
		(1,276	)		(1,435	)		(1,415	)
Changes in non-cash working capital
Other receivable		-			(1	)		1
Prepaid and deposit		(1	)		-			24
Accounts payable and accrued liabilities		96			(185	)		202
		(1,181	)		(1,621	)		(1,188	)
Financing activities
Shares issued for cash		19			132			-
Convertible notes		(381	)		-			973
Loan		-			(311	)		(295	)
Related party loan payable		-			(218	)		210
		(362	)		(397	)		888

Investing activities
Expenditures on mineral properties		(1,411	)		(1,899	)		(1,518	)
Net proceeds from water rights sale		1,868			5,685			313
Reclamation bonds		-			28			2
		457			3,814			(1,203	)
Effect of foreign exchange on cash		(25	)		(31	)		(25	)

(Decrease) increase in cash and cash equivalents		(1,111	)		1,765			(1,528	)

Cash and cash equivalents, beginning of year		1,812			47			1,575

Cash and cash equivalents, end of year	$	701		$	1,812		$	47

Supplemental cash flow information	$	41
Exploration expenditures included in accounts payable				$	27		$	95
Interest paid in cash	$	76		$	46		$	45
Shares issued for interest	$	-		$	45		$	-

(See the accompanying notes to the consolidated financial statements)

Page 6 of 20

Quaterra Resources Inc.
Consolidated Statements of Changes in Equity
(In thousands of U.S. Dollars, except for shares)

					Contributed
	Number of shares		Share capital		surplus			Deficit			Total Equity
Balance, December 31, 2017	200,969,314	$	100,729	$	18,729		$	(87,499	)	$	31,959
Share-based compensation	-		-		91			-			91
Net loss for the year	-		-		-			(1,419	)		(1,419	)
Balance, December 31, 2018	200,969,314	$	100,729	$	18,820		$	(88,918	)	$	30,631
Shares issued for cash	3,000,000		113		-			-			113
Shares issued for convertible notes	12,846,296		547		291			-			838
Shares issued for stock options exercised	400,000		35		(16	)		-			19
Share-based compensation	-		-		117			-			117
Net loss for the year	-		-		-			(1,711	)		(1,711	)
Balance, December 31, 2019	217,215,610	$	101,424	$	19,212		$	(90,629	)	$	30,007
Shares issued for convertible notes	1,000,000		94		35			-			129
Shares issued for stock options exercised	500,000		35		(16	)		-			19
Share-based compensation	-		-		175			-			175
Net loss for the year	-		-		-			(983	)		(983	)
Balance, December 31, 2020	218,715,610	$	101,553	$	19,406		$	(91,612	)	$	29,347

(See the accompanying notes to the consolidated financial statements)

Page 7 of 20

Quaterra Resources Inc.
Notes to the Consolidated Financial Statements
For the year ended December 31, 2020
(In U.S. Dollars, tabular amounts in thousands of U.S. dollars except per share amount)

1. NATURE OF OPERATIONS AND LIQUIDITY RISK

Quaterra Resources Inc. (together with its subsidiaries, "Quaterra" or the "Company") is a copper exploration company working on its mineral properties located in Nevada and Alaska, United States. The Company is incorporated in British Columbia, Canada. Its head office is located at 1100 - 1199 West Hastings Street, Vancouver, British Columbia, Canada, V6E 3T5. The Company's common shares are listed on the TSX Venture Exchange ("TSXV") under the symbol "QTA" and trade on the OTCQB Market under the symbol "QTRRF."

The Company acquires its mineral properties through option or lease agreements and capitalizes all acquisition, exploration and evaluation costs related to the properties. The underlying value of the amounts recorded as mineral properties does not reflect current or future values. The Company's continued existence depends on the economic recoverability of mineral reserves and its ability to acquire new properties and obtain funding to complete exploration activities.

These consolidated financial statements are prepared on a going concern basis, which assumes that the Company will realize its assets and discharge its liabilities in the normal course of business. As of December 31, 2020, the Company had a working capital of $1,128,000. Along with the proceeds from its ongoing water rights sale (note 15(a)), the Company believes that it has sufficient funds to sustain its operations for at least the next 12 months.

2. SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared following International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

a) Basis of presentation and consolidation

These consolidated financial statements have been prepared on a historical cost basis, except for marketable securities and derivative financial liabilities, which are stated at their fair values.

The Company consolidates an entity when it has power over that entity, is exposed, or has rights, to variable returns from its involvement with that entity and can affect those returns through its control over that entity. All material intercompany transactions, balances and expenses are eliminated on consolidation.

These consolidated financial statements incorporate the financial statements of Quaterra and its wholly-owned subsidiaries: Quaterra Alaska Inc., Singatse Peak Services, LLC ("SPS"), and Six Mile Mining Company.

b) Accounting estimates and judgments

The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies reported amounts and disclosures. Actual results could differ from those estimates.

Judgment is required in assessing whether certain factors would be considered an indicator of impairment. Both internal and external information is considered to determine whether there is an indicator of impairment present and, accordingly, whether impairment testing is required.

There is no significant estimation uncertainty in relation to estimates included in the Company's financial statements.

Page 8 of 20

c) Translation of foreign currencies

The Company's presentation currency is the U.S. dollar ("$" or "USD"). The functional currency of the Company and its significant subsidiaries is the USD.

In preparing the financial statements, transactions in currencies other than an entity's functional currency ("foreign currencies") are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities are translated using the period-end foreign exchange rate. Non-monetary assets and liabilities are translated using the historical rate on the date of the transaction. All gains and losses on translation of these foreign currency transactions are included in the statement of loss.

d) Mineral properties

Direct costs related to the acquisition and exploration of mineral properties held or controlled by the Company are capitalized on an individual property basis until the property transitions to the development stage, is sold, abandoned, or determined to be impaired. Administration costs and general exploration costs are expensed as incurred.

The Company classifies its mineral properties as exploration and evaluation assets until the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. At this point, the mineral properties' carrying value is tested for impairment and subsequently transferred to property and equipment. The establishment of technical feasibility and commercial viability of a mineral property is assessed based on a combination of factors, such as the extent of established mineral reserves, the results of feasibility and technical evaluations, and the status of mineral leases or permits.

Proceeds from the sale of properties, property water rights or cash proceeds received from farm-out option agreements are recorded as a reduction of the related mineral property, with any excess proceeds accounted for in net income (loss).

e) Impairment

The Company's assets are reviewed for the indication of impairment at each reporting date in accordance with IFRS 6 - Exploration for and evaluation of mineral resources. If any such indication exists, an estimate of the recoverable amount of the asset is undertaken, being the higher of an asset's fair value, less costs of disposal and its value in use. If the asset's carrying amount exceeds its recoverable amount, an impairment loss is recognized in the statement of loss.

Impairment indicators are considered to exist if (i) the right to explore the area has expired or will expire in the near future with no expectation of renewal; (ii) Substantive expenditure on further exploration for and evaluation of mineral resources in the area is neither planned nor budgeted; (iii) No commercially viable deposits have been discovered, and the decision had been made to discontinue exploration in the area; and (iv) Sufficient work has been performed to indicate that the carrying amount of the expenditure carried as an asset will not be fully recovered.

An impairment loss is reversed if there is an indication that there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that this does not exceed the original carrying amount that if no impairment loss had been recognized.

Page 9 of 20

f) Share-based compensation

The fair value of stock options granted to directors, officers, employees and consultants is calculated using the Black Scholes option pricing model and is expensed over the vesting periods. If and when the stock options are exercised, the value attributable to the stock options is transferred to share capital.

g) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank deposits and highly liquid investments with an original maturity of 90 days or less.

h) Financial instruments

Financial instruments are recognized in the statement of financial position when the Company becomes a party to a contractual obligation. At initial recognition, the Company classifies and measures its financial instruments as one of the following:

at amortized cost, if they are held to collect contractual cash flows which solely represent payments of principal and interest;
at fair value, through other comprehensive income ("FVOCI") if they are held to both collect contractual cash flows and to sell where those cash flows represent payments of principal and interest solely;
otherwise, they are classified at fair value through profit or loss ("FVPL").

Financial assets are classified and measured at fair value with subsequent changes in fair value recognized in either profit and loss as they arise unless restrictive criteria are met for classifying and measuring the asset at either amortized cost or FVOCI. Financial liabilities are measured at amortized costs unless they are elected to be or required to be measured at fair value through profit and loss.

Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Company has transferred all risks and rewards of ownership. Financial liabilities are derecognized when the obligations specified in the contract are discharged, cancelled, or expire.

At each reporting date, the Company uses the expected credit losses model to assess the impairment of its financial assets measured at amortized cost. The model represents possible outcomes and focuses on the risk of default rather than an actual occurrence. If there has been a significant increase in credit risk, an allowance would be recognized in the statement of loss.

The Company's accounts payable approximate fair value due to their short-term nature. The marketable securities are a Level 1 fair value measurement; the derivative warrants are a Level 2 fair value measurement.

The convertible note is classified as a liability at amortized cost, with the conversion feature classified as a derivative liability. The debt liability was initially recorded at fair value and is subsequently measured at amortized cost using the effective interest rate method and will be accreted to the face value over the term of the convertible debenture.

Page 10 of 20

i) Provisions

Provisions are recognized when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. The Company had no material provisions on December 31, 2020, and 2018.

j) Earnings (loss) per share

Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding during the year. The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings per share is calculated, presuming the exercise of in-the-money outstanding options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to repurchase common shares at the average market price during the year. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.

k) Income tax

Income tax comprises current and deferred tax. Income tax is recognized in net loss, except to the extent it is related to items recognized directly in equity or other comprehensive loss.

Deferred tax is recognized in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is determined on a non‐discounted basis using tax rates and laws that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax asset or liability is settled. Deferred tax assets are recognized to the extent that their recovery is probable.

3. MARKETABLE SECURITIES

At December 31, 2020, the Company held 1,942,795 common shares (2019 - 1,942,795) of Grande Portage Resources Ltd. resulting from the sale of the Company's 35% interest in the Herbert Gold project on July 29, 2016.

During 2020, a $476,000 gain (2019 - $9,000) was recognized in the consolidated statement of loss and comprehensive loss. As of December 31, 2020, the shares had a fair value of $641,000 (2019 - $165,000).

4. MINERAL PROPERTIES

The Company owns a 100% interest in the MacArthur and Yerington properties. It has an option to earn a 100% interest in the Bear, Wassuk, and Butte Valley properties in Nevada and a 90% interest in the Groundhog property in Alaska.

Total mineral property maintenance and exploration costs are listed in the table below:

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(In thousands of U.S. Dollars)		MacArthur		Yerington			Bear		Wassuk	Groundhog		Butte Valley			Total
Balance, December 31, 2017	$	17,888	$	10,572		$	320	$	1,004	$	1,511	$	-	$	31,295
Property maintenance		150		52			692		101		40		-		1,035
Geological & mapping		66		45			-		-		10		-		121
Geophysical & survey		113		13			-		-		12		-		138
Assay & labs		-					-		-				-		-
Environmental		-		196			-		-		6		-		202
Other		1		13			-		-		41		-		55
Technical consultant		-		-			-		-		-		-		-
		330		319			692		101		109		-		1,551
Proceeds from water rights sale		-		(313	)		-		-		-		-		(313	)
Balance, December 31, 2018		18,218		10,578			1,012		1,105		1,620		-		32,533
Property maintenance		159		90			238		110		64		168		829
Geological & mapping		17		-			17		-		65		-		99
Geophysical & survey		-		-			-		-		368		18		386
Assay & labs		-		-			-		-		5		-		5
Environmental		-		189			-		-		-		-		189
Field support & overhead		-		15			-		-		178		-		193
Technical study		110		-			-		-		20		-		130
		286		294			255		110		700		186		1,831
Proceeds from water rights sale		-		(5,685	)		-		-		-				(5,685	)
Balance, December 31, 2019		18,504		5,187			1,267		1,215		2,320		186		28,679
Property maintenance		159		73			193		255		61		201		942
Geological & mapping		4		-			-		-		3		-		7
Geophysical & survey		-		-			-		-		66		-		66
Assay & labs		3		-			-		-		-		-		3
Environmental		-		167			-		-		-		-		167
Overhead and community		-		10			-		-		58		-		68
Technical study		158		-			-		-		14		-		172
		324		250			193		255		202		201		1,425
Proceeds from water rights sale		-		(1,868	)		-		-		-		-		(1,868	)
Balance, December 31, 2020		18,828		3,569			1,460		1,470		2,522		387		28,236

a) MacArthur, Nevada

The Company earned its 100% interest in the MacArthur property by making payments of $2,200,000 over ten years. The property is subject to a 2% net smelter return royalty ("NSR"), which may be reduced to a 1% NSR royalty for a consideration of $1,000,000.

b) Yerington, Nevada

The Company acquired a 100% interest in the Yerington property from the Arimetco bankruptcy proceeding in April 2011 for $500,000 cash and 250,000 common shares. The property has a 2% NSR royalty capped at $7,500,000 payable following commencement of commercial production.

On December 19, 2019, the Company announced two separate agreements to sell certain primary groundwater rights associated with its Yerington property to Desert Pearl Farms LLC ("Desert Pearl") and Desert Hills Dairy, LLC. In July 2020, the Company closed these water rights sales and received total net proceeds of $1,868,117.

The proceeds were recognized as a reduction in the carrying value of the Yerington property in 2020.

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On September 17, 2018, the Company announced the first purchase and sale agreement to sell certain primary groundwater rights associated with its Yerington property to Desert Pearl for $6,260,000. The Company closed the sale on March 3, 2019, for a final value of $6,020,000 after adjusting for a small correction to one of the original permits. Total net proceeds of $5,685,000 and $313,000 were recognized as a reduction in the carrying value of the Yerington property in 2019 and 2018, respectively.

c) Bear, Nevada

The Company has five option agreements, entered from March 2013 to May 2015, to acquire a 100% interest in private land in Yerington, Nevada, known as the Bear deposit. Under the terms of these option agreements, as amended, the Company is required to make approximately $5,423,290 in cash payments over 11 years ($4,836,290 paid) to maintain the exclusive right to purchase the land, mineral rights and certain water rights and to conduct mineral exploration on these properties.

Aggregate payments to maintaining the five option agreements by year are as follows:

$1,458,774 March 20, 2013 to December 31, 2015 (paid);
$1,363,258 due in 2016 (paid);
$895,258 due in 2017 (paid);
$688,000 due in 2018 (paid);
$193,000 due in 2020 (paid);
$193,000 each due in 2021 and 2022;
$201,000 due in 2023, and
$50,000 in 2024.

d) Wassuk, Nevada

The Company has an option, as further amended, to earn a 100% interest in certain unpatented mining claims in Lyon County, Nevada, over ten years and is required to make $1,405,000 in cash payments ($1,155,000 paid) and incur a work commitment of $50,000 (nil incurred) by August 1, 2021. The final option payment of $250,000 is due by August 1, 2021.

The property is subject to a 3% NSR royalty upon commencing commercial production, which can be reduced to a 2% NSR royalty in consideration for $1,500,000.

e) Groundhog, Alaska

On April 25, 2017, the Company announced it signed a five-year lease agreement, amended to six years, with Chuchuna Minerals Company ("Chuchuna") to earn a 90% interest in the Groundhog copper prospect, located 200 miles southwest of Anchorage, Alaska. To earn the 90% interest, the Company must fund a total of $5,000,000 ($2,522,000 funded) of exploration expenditure and make a lump sum payment to Chuchuna of $3,000,000 by April 20, 2023.

The Company must fund a minimum of $500,000 each year with excess funding in any one year carried forward. The Company has met the annual work commitments to December 31, 2020. The Company can terminate the agreement at its discretion.

Page 13 of 20

f) Butte Valley, Nevada

On August 22, 2019, the Company entered into an option agreement with North Exploration, LLC, to earn a 100% interest in 600 unpatented mining claims in White Pine County, Nevada, for $600,000 over five years. North Exploration will retain a 2.5% NSR, of which 1% can be purchased for $1,000,000. A further 0.5% NSR can be purchased within the first ten years for $5,000,000.

On December 3, 2019, the Company entered another option agreement with Nevada Select Royalty, Inc., to purchase a 100% interest in 78 unpatented claims associated with the Butte Valley project for $250,000 over five years. Nevada Select Royalty will retain a 2% NSR, of which 1% can be purchased by Quaterra for $10,000,000.

Aggregate payments to maintaining the two option agreements by year are as follows:

$20,000 due 2019 (paid);
$80,000 due in 2020 (paid);
$100,000 due in 2021;
$150,000 due in 2022; and
$250,000 each due in 2023 and 2024.

5. CONVERTIBLE NOTES

On August 28, 2018, and September 20, 2018, the Company completed non-brokered private placements in tranches of convertible debentures for gross proceeds of $550,000 and CAD 550,000 each. The convertible debentures bore simple interest at a rate of 10% per annum, payable in arrears with maturities on August 28, 2022, and September 20, 2022, respectively. Interest was payable in cash or shares at the noteholders' option, subject to regulatory approvals in the case of share payments.

The principal amount was convertible into units at $0.05 or CAD 0.065 per unit in the first 12 months and $0.075 or CAD 0.10 thereafter until the maturity date. Each unit consisted of one common share and one warrant of the Company exercisable at $0.05 or CAD 0.065 per share, expiring August 28, 2022, and September 20, 2022. The convertible notes were secured against the assets of the Company.

In August 2019, $550,000 and CAD 50,000 notes were converted into units, comprising 11,769,230 shares and 11,769,230 warrants. Of the interest due, $44,507 was paid by issuing 1,077,066 common shares and $13,012 interest was paid in cash.

In July and August 2020, CAD 100,000 notes were converted into units at CAD 0.10, comprising 1,000,000 common share and 1,000,000 warrants. On August 28, 2020, the Company repaid the remaining CAD 400,000 and the related accrued interest of CAD 99,233 in cash.

The share capital for the CAD 100,000 conversion was valued as $94,000 using the Company's closing share price on the conversion dates.

Interest and accretion expense for the convertible notes was $72,000 during 2020 (2019 - $260,000).

The conversion feature was a derivative liability based on the fact the conversion into units could result in a variable number of shares to be issued.

Page 14 of 20

(In thousands of U.S. Dollars)		Convertible debenture
Cash received	$	973
Transaction costs		(11	)
Derivative liability		(343	)
Fair value of convertible debt component at date of issue		619
Interest expense and accretion		102
Balance, December 31, 2018		721
Settlement of convertible notes		(522	)
Interest payments		(57	)
Interest expense and accretion		260
Balance, December 31, 2019		402
Interest expense and accretion		72
Settlement of convertible notes		(398	)
Interest payment		(76	)
Balance, December 31, 2020	$	-

6. DERIVATIVE LIABILITIES

The Company has certain outstanding share purchase warrants that are exercisable in a different currency from the Company's functional currency. These warrants are classified as derivative liabilities and carried at fair value and revalued at each reporting date.

On December 31, 2020, the derivative liabilities were revalued using the weighted average assumptions: volatility of 106%, the weighted expected term of two years, a discount rate of 0.36% and a dividend yield of 0%.

(In thousands of U.S. Dollars)		Derivative liabilities
Balance, December 31, 2017	$	587
Derivative related to convertible notes		343
Change in fair value estimates		(358	)
Balance, December 31, 2018		572
Change in fair value estimates		(105	)
Fair value of warrants issued on conversion		(291	)
Balance, December 31, 2019		176
Change in fair value estimates		(90	)
Fair value of warrants issued on conversion		(35	)
Balance, December 31, 2020	$	51

7. SHARE CAPITAL

The Company is authorized to issue an unlimited number of common shares without par value.

In August 2020 and 2019, the Company issued 1,000,000 and 12,846,296 common shares, respectively, on converting certain of the convertible notes (note 5).

On January 21, 2019, the Company closed a non-brokered private placement by issuing 3,000,000 common shares at CAD 0.05 per share for gross proceeds of CAD 150,000.

Page 15 of 20

8. SHARE-BASED COMPENSATION

a) Stock options

The Company has a stock option plan under which the Company is authorized to grant stock options of up to 10% of the number of common shares issued and outstanding of the Company at any given time.

The following table presents changes in stock options outstanding and exercisable:

	December 31, 2020				December 31, 2019

			Weighted Average		Number of		Weighted Average
	Number of		Exercise Price		Options		Exercise Price
	Options		(CAD)				(CAD)
Outstanding, beginning of year	14,495,000		0.08		14,860,000		0.09
Granted	3,175,000		0.08		3,450,000		0.065
Expired	(2,480,000	)	(0.13	)	(3,415,000	)	(0.10	)
Exercised	(500,000	)	(0.05	)	(400,000	)	(0.0625	)
Outstanding, end of year	14,690,000		0.07		14,495,000		0.08
Exercisable, end of year	14,490,000		0.07		14,095,000		0.08

The following table summarizes stock options outstanding by expiry dates with an exercise price at the date of recording in Canadian dollars:

	Exercise Price	Number of Options Outstanding
Expiry Date	(CAD)	December 31, 2020	December 31, 2019
December 31, 2019*	0.05	-	400,000
March 26, 2020	0.05	-	200,000
July 16, 2020	0.13	-	2,380,000
April 14, 2021	0.065	2,795,000	2,795,000
June 23, 2022	0.095	2,900,000	2,900,000
September 20, 2023	0.06	2,370,000	2,370,000
June 21, 2024	0.065	2,950,000	2,950,000
August 8, 2024	0.06	500,000	500,000
June 20, 2025	0.08	3,175,000	-
		14,690,000	14,495,000

*400,000 stock options exercised at CAD 0.05 per share on December 31, 2019; shares were issued on January 3, 2020, due to the holiday season.

The Company used the following assumptions in the Black-Scholes option pricing model:

Page 16 of 20

	Year ended December 31,
	2020	2019	2018
Weighted average share price	CAD 0.07	CAD 0.065	CAD 0.05
Risk-free interest rate	0.36%	1.40%	1.32%
Expected share price volatility	100%	103%	103%
Expected option life in years	5.0	5.0	5.0
Forfeiture rate	0%	0%	0%
Expected dividend yield	0%	0%	0%

Share-based payment expenses were allocated as follows:

		Year ended December 31,
(In thousands of U.S. Dollars)		2020		2019		2018
Consultants	$	63	$	38	$	22
Directors and officers		85		60		53
Employees		27		19		16
	$	175	$	117	$	91

b) Share purchase warrants

	December 31, 2020			December 31, 2019

	Number of		Weighted Average	Number of			Weighted Average
	Warrants		Exercise Price	Warrants			Exercise Price
Outstanding, beginning of year	11,769,230	$	0.05	19,000,000		$	0.16
Issued	1,000,000		0.05	11,769,230			0.05
Expired	-		-	(19,000,000	)		(0.16	)
Outstanding, end of year	12,769,230	$	0.05	11,769,230		$	0.05

The following table summarizes warrants outstanding as of December 31, 2020 and 2019:

Expiry date	Exercise price		December 31, 2020	December 31, 2019
August 28, 2022	$	0.05	11,000,000	11,000,000
August 28, 2022	CAD	0.065	1,000,000	-
September 20, 2022	CAD	0.065	769,230	769,230
			12,769,230	11,769,230

Page 17 of 20

9. RELATED PARTY TRANSACTIONS

a) The Company's related parties include its directors and officers whose remuneration was as follows, subject to change of control provisions for officers:

		Year ended December 31,
(In thousands of U.S. Dollars)		2020		2019		2018
Salaries	$	391	$	410	$	432
Directors' fees		35		36		36
Share-based payments		85		60		53
	$	511	$	506	$	521

b) The Company has service agreements with two private companies owned by the Company's Corporate Secretary, Mr. Lawrence Page: Manex Resource Group Inc. ("Manex") and Advocate Services Ltd. ("Advocate"). Manex provides the Company with its Vancouver office space at CAD 7,500 per month, and Advocate provides investor communications at CAD 5,000 per month. Both agreements can be terminated at any time with advanced written notice from either party.

10. SEGMENTED INFORMATION

The Company has one business segment, the exploration of mineral properties. As of December 31, 2020, and 2019, all the Company's significant non-current assets are located in the United States.

11. COMMITMENTS

To acquire certain mineral property interests as per note 4, the Company must make optional acquisition expenditures to satisfy the terms of existing option agreements, failing which the rights to such mineral properties will revert to the property vendors.

12. DEFERRED INCOME TAXES

A reconciliation of income tax provision computed at Canadian statutory rates to the reported income tax provision is provided as follows:

		2020			2019			2018

The loss for the year	$	(983	)	$	(1,711	)	$	(1,419	)
Canadian statutory tax rate		27%			27%			27%
Income tax benefit computed at statutory rates		(265	)		(462	)		(383	)
Foreign tax rates different from statutory rates		8			31			14
Other		(26	)		2			89
Foreign exchange gains or losses		(180	)		55			225
Permanent differences		19			5			(43	)
Change in unused tax losses and tax offsets		444			369			98
	$	-		$	-		$	-

Page 18 of 20

The Company recognizes tax benefits on losses or other deductible amounts generated in countries where it is probable the deferred tax assets will be recovered. The Company's unrecognized deductible temporary differences and unused tax losses for which no deferred tax asset is recognized consist of the following amounts:

		2020			2019		2018

Non-capital losses	$	8,597		$	9,796	$	9,405
Capital loss		2,303			2,257		2,273
Tax value over book value of mineral properties		4,995			3,331		3,335
Tax value over book value of equipment		12			12		12
Tax value over (under) book value of investments and share issue costs		(59	)		41		43
Unrecognized deductible temporary differences	$	15,848		$	15,437	$	15,068

The Company's unused non-capital losses expire as follows:

		Canada		United States
2020 - 2026	$	549	$	-
2027 - 2040		20,718		19,595
Total	$	21,266	$	19,595

The Company's unused capital losses of $17,100,000 are available to carry forward indefinitely.

13. Capital Management

The Company considers its capital to be equity, comprising share capital, reserves and deficit. The Company's objectives are to ensure sufficient financial flexibility to achieve its ongoing business objectives, including the funding of future growth opportunities, the pursuit of accretive acquisitions, and to maximize shareholder return through enhancing the share value.

The Company manages capital through its budgeting and forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures and other investing and financing activities.

To maintain its objectives, the Company may issue new shares, adjust capital spending, acquire or dispose of assets. There is no assurance that these initiatives will be successful.

There was no change in the Company's approach to capital management during the year ended December 31, 2020. The Company is not subject to any externally imposed capital requirements.

14. Financial Instrument RISKs

The board of directors has overall responsibility for establishing and oversight of the Company's risk management framework. The Company examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. Financial instruments consist of cash and cash equivalents, marketable securities, accounts payable and derivative liabilities.

Page 19 of 20

a) Liquidity risk

Liquidity risk is the risk that the Company will not meet its financial obligations as they fall due. The Company manages liquidity risk by forecasting cash flows. Cash is invested in highly liquid investments that are available to discharge obligations when they come due.

b) Currency risk

Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates in the United States and Canada; therefore, it is exposed to currency risk from transactions denominated in CAD. Currently, the Company does not have any foreign exchange hedge programs and manages its operational CAD requirements through spot purchases in the foreign exchange markets. Based on CAD financial assets and liabilities' magnitude, the Company does not have material sensitivity to CAD to USD exchange rates.

c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company is exposed to the interest rate risk on its liabilities through its outstanding borrowings and the interest earned on cash balances. The Company monitors its exposure to interest rates and maintains an investment policy that focuses primarily on the preservation of capital and liquidity.

b) Credit risk

Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company is exposed to credit risk through its cash and cash equivalents. Cash and cash equivalents are held in large Canadian financial institutions that have high credit ratings assigned by international credit rating agencies.

c) Market risk

The Company is exposed to market risk because of the fluctuating values of its publicly traded marketable securities. The Company has no control over these fluctuations and does not hedge its investments. Marketable securities are adjusted to fair value at each reporting date.

15. SUBSEQUENT EVENTS

a) On February 24, 2021, the Company announced a purchase and sale agreement to sell certain primary groundwater rights to Desert Pearl for $2,910,000. $1,000,000 was received on March 5, 2021, and the balance of $1,910,000 will be received upon closing, expected in August 2021.

b) 2,310,000 stock options were exercised for total proceeds of CAD 157,500.

c) The lease with Chuchuna for the Groundhog project has been extended from six to seven years, providing the Company more time to make the required exploration expenditures and lump sum payment.

Page 20 of 20

EX-99.2 3 exhibit99-2.htm EXHIBIT 99.2 Quaterra Resources Inc.: Exhibit 99.2 - Filed by newsfilecorp.com

Management's Discussion and Analysis ("MD&A")

For the year ended December 31, 2020

Dated: March 29, 2021

(In U.S. dollars)

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

This Management's Discussion and Analysis ("MD&A") of Quaterra Resources Inc. and its wholly-owned subsidiaries (collectively, "Quaterra" or the "Company"), dated March 29, 2021, should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020, and related notes thereto which have been prepared under International Financial Reporting Standards issued by the International Accounting Standards Board ("IFRS"). All dollar amounts in this MD&A are United States dollars unless otherwise noted.

Additional information about Quaterra, including the Company's press releases, quarterly and annual reports, and Form 20-F, is available through the Company's filings with the securities regulatory authorities in Canada at www.sedar.com or the United States Securities Exchange Commission at www.sec.gov/edgar. Information about mineral resources, as well as risks associated with investing in the Company's securities is contained in the Company's most recently filed 20-F.

2020 PERFORMANCE HIGHLIGHTS

Completion of further water rights sales for $1,880,000

On December 19, 2019, the Company announced its wholly-owned subsidiary, Singatse Peak Services LLC ("SPS"), had entered into a second purchase and sale agreements to sell certain primary groundwater rights associated with its Yerington, Nevada, copper project to Desert Pearl Farms LLC ("Desert Pearl") and Desert Hills Dairy, LLC, for combined gross proceeds $1,880,000.

In July 2020, the Company closed the water rights sales and received the net proceeds of $1,868,000.

On February 24, 2021, the Company announced a third water rights sale to Desert Pearl for $2,910,000. $1,000,000 was received on March 5, 2021, and the balance of $1,910,000 will be received upon closing, expected in August 2021.

Funds from the sale will be used to advance the Company's MacArthur copper project, assess exploration opportunities, and for general corporate purposes.

Conversion of convertible notes

On August 31, 2020, the Company announced the settlement of the remaining convertible notes by issuing 1,000,000 units and Canadian dollar ("CAD") 499,233 cash payments, including accrued interest. No convertible notes remain outstanding.

Filing of a technical report on the Groundhog copper-gold project

On May 26, 2020, the Company filed a Technical Report on the Groundhog Project prepared under National Instrument 43-101. The report supports the Company's assessment of the Groundhog as a possible copper-gold porphyry system hosting mineralization similar to the Pebble project owned by Northern Dynasty Minerals Ltd. It provides the path for exploration in the future.

Page 2 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

ABOUT QUATERRA

Quaterra was incorporated in British Columbia, Canada, under the Business Corporation Act (British Columbia) on May 11, 1993. The Company's common shares are listed on the TSX Venture Exchange ("TSX-V") under the symbol "QTA" and on the OTCQB Markets under the symbol "QTRRF."

Quaterra is a copper exploration company currently focused on exploring and advancing its copper properties in Nevada and Alaska, United States. The Company also looks for opportunities to acquire copper projects on reasonable terms that can host large mineral deposits attractive to major mining companies.

The Company's 51-square-mile Yerington District, Nevada land package is located in a mining-friendly jurisdiction with a history of copper production and excellent infrastructure. The Yerington Assets include the MacArthur, Yerington, Bear projects and several untested exploration targets. As of December 31, 2020, the Company had about 6,000 acre-feet of primary groundwater rights permitted for mining worth approximately $18,000,000 based on previous sales.

The Company has a recently amended seven-year lease agreement dated April 24, 2017, with Chuchuna Minerals Company ("Chuchuna") providing it with an option to acquire a 90% interest in the Groundhog project, a 54,880-acre property situated on an established copper porphyry belt 300 kilometers southwest of Anchorage, Alaska. $5,000,000 exploration funding is required over the lease period ($2,522,000 funded), and an additional lump sum of $3,000,000 is payable to Chuchuna by the end of the final year. Quaterra can terminate the lease agreement at its discretion annually without penalties.

The Company also has the right to earn a 100% interest in the large, partially explored Butte Valley copper-gold prospect in eastern Nevada. Butte Valley has not been explored since the mid-1970s and is prospective for primary and secondary copper deposits as well as skarn mineralization. Most of the historical exploration data has been recovered and will be important in attracting a joint venture partner.

CORPORATE STRATEGY

Quaterra is currently focused on advancing its MacArthur oxide copper deposit in the Yerington District of Nevada. The Company continues to identify and evaluate projects capable of becoming world-class assets. Where possible, the Company tries to partner with local teams and experts who have demonstrated exploration success and good relationships with surrounding communities and government authorities.

OUTLOOK

The demand for copper is growing. Several long-term trends are driving copper demand growth and are expected to do so over the coming decades. These trends include increased consumption in electronics, accelerating growth of electric vehicles and the ongoing drive towards renewable sources of energy - all of which require a significant amount of copper to function.

The fundamentals of copper supply have remained unchanged with declining copper grades. In 2021, the copper price has risen to over $4.00 per pound on low inventories and an anticipated rebound of the global economy combined with worldwide attention on decarbonization.

Quaterra continues to perform work required to complete MacArthur's pre-feasibility study, currently focusing on further understanding the deposit geology, mine plan design, metallurgical recoveries, acid usage and the path to permitting. The Company plans to maintain its extensive Yerington land position, including water rights, and meet its minimum exploration funding obligations at the Groundhog property.

Up to December 31, 2020, the Company had sold 3,584 acre-feet water rights for total gross proceeds of $10,802,920.

Page 3 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

These funds were used to maintain mineral properties, progress MacArthur's pre-feasibility, conduct Groundhog's geophysical surveys, assess exploration opportunities, and for general corporate purposes. In 2021, it expects to raise an additional $2,910,000 upon closing the third sale of water rights, $1,000,000 of which has already been received.

After the third sale announced on February 24, 2021, the Company retains about 5,000 acre-feet per year of primary ground water permitted for mining on its 51-square-mile Yerington property. In addition, the Company also has decree, supplemental and storage water rights associated with options it holds on private land over the property's Bear deposit.

REVIEW OF OPERATIONS AND FINANCIAL RESULTS

Mineral Properties

The Company has built a strategic copper property portfolio and invested approximately $47,655,000 in the Yerington District, Nevada. From early 2018, the Company has engaged independent technical consulting firms to update the MacArthur mineral resource estimate, re-evaluate the 2012 Preliminary Economic Assessment's assumptions, and identify additional opportunities to enhance the mine plan. The Company is currently preparing a plan to complete MacArthur's pre-feasibility study.

In 2020, the Company paid $942,000 for mineral claims and options, $167,000 in Yerington environmental-related legal and consulting fees and $158,000 in relation to MacArthur's pre-feasibility study. The Company also completed a geophysical survey on Groundhog and funded $202,000 in exploration. With the excess expenditures carried forward from prior years, the Company has met the minimum work commitment and maintained Groundhog project good standing on December 31, 2020.

In July 2020, the Company closed its second water rights sale and received net proceeds of $1,868,000. Quaterra has never recorded the fair value of its water rights. As per the Company's accounting policy, proceeds from the water rights sale are recorded to reduce the carrying value of the related mineral properties.

As of December 31, 2020, the Company had recorded $28,236,000 for its mineral properties. These amounts represent accumulated net acquisition and exploration costs and do not necessarily represent present or future values. The Company assesses for any indication of impairment at each reporting date or upon a triggering event that may identify impairment of a property's value. With the remaining water rights and anticipated high copper price, the Company believes it will recover its mineral properties' carrying value.

General Administrative and Other Expenses

For the year ended December 31, 2020, the Company incurred a loss of $983,000 compared to $1,711,000 for the prior year. Significant differences in the comparative amounts were mainly caused by the changes in interest and accretion expense on convertible notes, the non-cash share-based compensation, and an unrealized gain (loss) on the marketable securities.

General administrative costs mainly comprise salaries, rent, investor relations, insurance, regulatory and general office costs required to maintain a publicly listed company in Canada. The scale and nature of the Company's corporate and administrative activity have remained relatively consistent over the periods presented.

The Company also spent $167,000 on the preliminary evaluation of several exploration prospects.

Interest expense was primarily related to the convertible notes in 2020 and 2019.

The Company holds 1,942,795 common shares of Grande Portage Resources Ltd. (trading symbol "GPG" at TSX-V). These shares are revalued at each reporting date based on the market closing price. The Company recorded an unrealized gain of $476,000 in 2020 compared to a $9,000 gain in 2019. Subsequent to year-end, these shares have been traded lower compared to the CAD 0.42 at year-end 2020.

Page 4 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

In August 2020, the Company settled CAD 500,000 (2019 - $550,000 and CAD 50,000) of the convertible notes by issuing 1,000,000 units (2019 - 11,769,300 units) and by making a CAD 499,233 cash payment, including interest. Each unit consisted of one common share and one share purchase warrants exercisable at CAD 0.065 until August 28, 2022. A $26,000 loss (2019 - $13,000 loss), resulting from the difference between the market price of the shares issued and the conversion rate, was recorded in the consolidated statements of loss and comprehensive loss.

Three months ended December 31, 2020

On September 23, 2020, the Company announced a non-brokered private placement at CAD 0.10 per unit for gross proceeds of up to CAD 3,000,000. Each unit consisted of one common share and one-half share purchase warrant exercisable at CAD 0.15 for three years. On November 9, 2020, the Company extended the private placement and amended the unit price at CAD 0.08. On December 23, 2020, the Company cancelled the private placement due to the market conditions at that time.

Selected Annual Information

(In thousands of U.S. dollars except for per share amounts)		Year ended December 31,
(In thousands of U.S. dollars except for per share amounts)		2020			2019			2018
Financial performance
Total income	$	-		$	-		$	-
Net loss for the year		(983	)		(1,711	)		(1,419	)
Basic and diluted loss per share		(0.00	)		(0.01	)		(0.01	)
Financial position
Working capital (deficiency)		1,128			1,320			(671	)
Total assets		29,620			30,697			32,804
Non-current liabilities		51			26			1,293
Cash dividends declared		-			-			-

The following table sets out the quarterly financial information for each of the last eight quarters:

(In thousands of U.S. dollars except for per share amount)
(In thousands of U.S. dollars except for per share amount)	Q4'20		Q3'20		Q2'20		Q1'20		Q4'19		Q3'19		Q2'19		Q1'19
	$		$		$		$		$		$		$		$
General administration	(298	)	(326	)	(216	)	(303	)	(302	)	(364	)	(379	)	(457	)
Fair value gain (loss) on derivative liabilities	11		(1	)	28		52		(50	)	135		341		(321	)
Foreign exchange (loss) gain	(2	)	24		-		(2	)	(20	)	(9	)	(4	)	(10	)
Other expenses	(51	)	(127	)	(31	)	(16	)	(12	)	(14	)	(44	)	(80	)
Loss on settlement of convertible notes	-		(26	)	-		-		(15	)	2		-		-
Share-based compensation	-		(3	)	(168	)	(4	)	-		(7	)	(110	)	-
Gain (loss) on marketable securities	(87	)	222		273		68		(77	)	64		62		(40	)
Net loss	(427	)	(237	)	(114	)	(205	)	(476	)	(193	)	(134	)	(908	)
Basic loss per share	(0.00	)	(0.00	)	(0.00	)	(0.00	)	(0.00	)	(0.00	)	(0.00	)	(0.00	)

Page 5 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

Quarterly Information Trends

The Company's results have been primarily driven by non-cash fair value gains or losses on derivative liabilities and share-based compensation subject to the timing, amount and tenure of options granted.

General administration comprises personnel, rent, professional fees, and regulatory expenses to maintain the Company's publicly listed status in Canada. The annual costs are consistent with quarterly fluctuation based on the timing of individual transactions incurred, such as the exchange listing fees, insurance renewals and investor relations conferences.

Interest expenses and financing costs vary based on the timing, type and amount of debt and equity placements and resultant fluctuations in cash.

LIQUIDITY AND CAPITAL RESOURCES

The Company is an exploration stage company that has not earned any production revenue. Its operations have been dependent mainly on proceeds from the sale of water rights in the last few years without diluting shareholders' value.

The Company had cash and cash equivalents of $701,000 on December 31, 2020 (2019 - $1,812,000). The $1,111,000 decrease was mainly due to the $1,411,000 cash invested in mineral properties, $1,181,000 spent on general administration costs and $381,000 to repay the convertible notes, net of $1,868,000 received from the water rights sale announced on December 19, 2019, and closed during 2020.

In 2020, the Company made mineral property option payments and paid all mineral claim fees, focused on the MacArthur pre-feasibility study and Groundhog geophysical survey plus ongoing environmental monitoring at Yerington. The Company is required to pay a combined $753,000 in mineral property options and work commitment in 2021 (Bear $193,000, Wassuk $300,000, Butte Valley $100,000, and Groundhog $160,000), plus mineral claim fees, to maintain its mineral properties in good standing.

During the first quarter of 2020, 500,000 stock options were exercised at CAD 0.05, and after year-end, a further 2,310,000 options were exercised at an average price of CAD 0.068 for proceeds of CAD 157,500.

On February 24, 2021, the Company announced a third water rights sale for expected gross proceeds of $2,910,000, of which $1,000,000 was received on March 5, 2021. Proceeds from the sale will be used to advance the MacArthur project and for general corporate purposes.

As of March 29, 2021, the Company has cash and cash equivalents of $1,320,000 and no outstanding debt. With existing working capital and expected additional proceeds from the third water rights sale, the Company believes it can sustain its operations for the next 12 months.

RELATED PARTY TRANSACTIONS

According to a 2007 service agreement, amended, with Manex Resources Group ("Manex"), a private company controlled by the Company's Corporate Secretary, the Company paid $67,071 (CAD 90,000) to Manex for the Vancouver office premises in 2020. Either party can terminate the service agreement at any time with 60-days written notice.

On June 1, 2019, The Company entered into an investor communication service agreement with Advocate Services Ltd. ("Advocate"), another private company controlled by the Corporate Secretary. The monthly rate was CAD 4,000 for the first three months and CAD 5,000 thereafter. The Company paid $44,726 (CAD 60,000) for such services in 2020. Either party can terminate this service agreement at any time with 30-days written notice.

Page 6 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

On February 2, 2021, the Company announced the resignation of Gerald Prosalendis as President, CEO and Director. Thomas Patton, Chairman and Founder of the Company, has assumed the role of interim President and CEO.

OUTSTANDING SHARE DATA

As of March 29, 2021, 221,025,610 common shares are issued and outstanding; 12,769,230 warrants are outstanding at a weighted exercise price of $0.05 until August/September 2022; 12,380,000 stock options are outstanding with exercise prices ranging from CAD 0.06 to CAD 0.13.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance arrangements, no lease agreements and no long-term obligations. The Company does have property option commitments as described in note 4, Mineral Properties in the consolidated financial statements for the year ended December 31, 2020.

DISCLOSURE ON INTERNAL CONTROLS

Management is responsible for designing, establishing, and maintaining a system of internal control over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in Canada.

Because of its inherent limitations, ICFR may not prevent or detect all misstatements. Furthermore, projections of any evaluation of effectiveness to future years are subject to the risk that may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

The Chief Executive Officer and the Chief Financial Officer assessed the effectiveness of the Company's ICFR as of December 31, 2020. In making this assessment, the Company's management used the Committee of Sponsoring Organizations of the Treadway Commission's criteria in its 2013 Internal Control-Integrated Framework. Based on its assessment, management has concluded that, as of December 31, 2020, the Company's internal control over financial reporting was effective.

The Audit Committee of the Company has reviewed this MD&A and the audited consolidated financial statements for the period ended December 31, 2020. The Board of Directors approved these documents before their release.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period.

Significant estimates and assumptions about the future and other sources of estimation uncertainty that management has made could result in a material adjustment to the carrying amounts of assets and liabilities in the event actual results differ from assumptions made. These assumptions relate to but are not limited to: the recoverability of the carrying value of the mineral properties and the successful completion of the third water rights sale.

Page 7 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

FINANCIAL INSTRUMENTS

The Company's cash and cash equivalents, marketable securities, accounts payable and accrued liabilities, and derivative liabilities are financial instruments. The cash and cash equivalents and accounts payable, and accrued liabilities are measured at amortized cost.

The marketable securities are measured at fair value and categorized in Level 1 of the fair value hierarchy. The derivative liability is measured at fair value and categorized in Level 2. The fair value of the derivative liability is based on the Black-Scholes option pricing model, as determined at the reporting date. The Company's other financial instruments approximate their fair values due to their short-term nature.

The carrying values of the reclamation bonds approximate their fair values, as these balances are redeemable on demand.

Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments.

RISKS AND UNCERTAINTIES

The Company is subject to many risks and uncertainties, each of which could have an adverse effect on the results, business prospects or financial position.

The Company's securities should be considered a highly speculative investment, and investors should carefully consider all of the information disclosed in the Company's regulatory filings before investing in the Company. For a comprehensive list of the risks and uncertainties applicable to the Company, please refer to the section entitled "Risk Factors" in the Company's most recent Form 20-F, which is available on the Sedar website at www.sedar.com and SEC website at www.sec.gov.

FORWARD-LOOKING STATEMENTS

Certain statements made and information contain "forward-looking statements" within the meaning of the United States Private Securities Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation (collectively, "Forward-Looking Statements").

All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will, may, could or might occur in the future are Forward-Looking Statements. The words such as "believe," "anticipate," "expect," "estimate," "strategy," "plan," "intend," "may," "could," "would," "should," or similar expressions are intended to identify Forward-Looking Statements.

These Forward-Looking Statements include, but are not limited to:

planned exploration drilling and geological and geophysical related activities;
the potential impact of future exploration results on copper projects in Yerington district;
mineral resource estimates;
preliminary economic assessments of mineral projects including assumptions and estimates used therein;
future metal prices and foreign exchange rates;
the Company's ability to obtain additional financing on satisfactory terms;
the future source of liquidity, cash flows and their uses; and
potential changes in the ownership structures of the Company's projects.

Forward-looking statements are subject to risks and uncertainties which could cause actual events or results, such as, among other things, results of exploration, reclamation, capital costs, and the Company's financial condition and prospects to differ from those reflected in Forward-Looking Statements. These risks and uncertainties include without limitation:

Page 8 of 9

Quaterra Resources Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2020

the Company's ability to finance the continued exploration of mineral properties;
the Company's history of losses and ability to continue as a going concern;
the lack of proven mineral reserves or probable mineral reserves;
the uncertainty that there will be any production at the Company's mineral exploration properties;
decreases in resource estimates and preliminary economic assessments resulting from updated testing; changes in methodology in modelling resources, and technical analysis;
failure of the Company or its joint venture partners to fund their pro-rata share of funding obligations;
the impact of governmental regulations, including environmental regulations; and
commodity price fluctuations.

This list is not exhaustive of the factors that may affect the Company's Forward-Looking Statements.

Although the Company has attempted to identify risks and uncertainties that may cause actual actions, events or results to differ materially from those described in Forward-Looking Statements, there may be other factors that cause actual results, performances, achievements or events to not be as anticipated, estimated or intended. Also, many factors are beyond the Company's control. As actual results and future events could differ materially from those anticipated in Forward-Looking Statements, readers should not place undue reliance on such statements.

The forward-looking statements contained in this MD&A are based on the beliefs, expectations, and opinions of management on the date the statements are made. The Company undertakes no obligation to update any forward-looking statement should circumstances or estimates or opinions change, except following applicable securities laws.

NOTE TO U.S. READERS

The Company uses the Canadian Institute of Mining, Metallurgy and Petroleum definitions for the terms "measured resources," "indicated resources," and "inferred resources." U.S. investors are advised that while the terms "measured resources," "indicated resources" and "inferred resources" are recognized and required by Canadian regulations, including National Instrument 43-101 ("NI43-101"), the SEC does not recognize these terms. Accordingly, the information contained in this MD&A contains descriptions of mineral deposits that may not be comparable to similar information made public by U.S. companies that are not required to comply with NI43-101 and that are subject to the reporting requirements under the U.S. federal securities laws and the rules and regulations thereunder. The SEC permits U.S. companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. U.S. readers are cautioned not to assume that any part or all of the material in these categories will be converted into reserves. It should not be assumed that any part of an inferred mineral resource will ever be upgraded to a higher category.

TECHNICAL INFORMATION

The technical information contained in this MD&A has been reviewed and approved by Thomas Patton, Ph.D., President and CEO of the Company, and a non-independent "qualified person" as defined in NI 43-101.

Page 9 of 9

EX-99.3 4 exhibit99-3.htm EXHIBIT 99.3 Quaterra Resources Inc.: Exhibit 99.3 - Filed by newsfilecorp.com

Form 52-109FV1

Certification of Annual Filings

Venture Issuer Basic Certificate

I, Thomas Patton, Interim Chief Executive Officer of QUATERRA RESOURCES INC., certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of QUATERRA RESOURCES INC. (the "issuer") for the financial year ended December 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

Date: March 30, 2021

"Thomas Patton"

Thomas Patton

Interim Chief Executive Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

EX-99.4 5 exhibit99-4.htm EXHIBIT 99.4 Quaterra Resources Inc.: Exhibit 99.4 - Filed by newsfilecorp.com

Form 52-109FV1

Certification of Annual Filings

Venture Issuer Basic Certificate

I, Lei Wang, Chief Financial Officer of QUATERRA RESOURCES INC., certify the following:

Date: March 30, 2021

"Lei Wang"

Lei Wang

Chief Financial Officer

NOTE TO READER

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

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