Karora Resources : FINANCIAL STATEMENTS DECEMBER 31, 2023

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2023 and 2022

(in thousands of Canadian dollars)

TABLE OF CONTENTS
Interim Consolidated Statements of Financial Position	3
Interim Consolidated Statements of Earnings and Comprehensive Earnings	4
Interim Consolidated Statements of Cash Flows	5
Interim Consolidated Statements of Changes in Equity	6
Notes to the Consolidated Financial Statements	7

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ANNUAL REPORT 2023

Management's Responsibility for Financial Reporting

The accompanying audited consolidated financial statements for Karora Resources Inc. (the "Corporation") are the responsibility of its management. The audited consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IFRS Accounting Standards"). The significant accounting policies are disclosed in the notes to the audited consolidated financial statements. Where necessary, management has made informed judgments and estimates in accounting for transactions that were complete at the audited consolidated statement of financial position date. In the opinion of management, the audited consolidated financial statements have been prepared within acceptable limits of materiality and are in accordance with IFRS Accounting Standards.

Management has established systems of internal control over the financial reporting process, which are designed to provide reasonable assurance that relevant and reliable financial information is produced. Management has established processes, which are in place to provide them sufficient knowledge to support management representations that they have exercised reasonable diligence that (i) the consolidated financial statements do not contain any untrue statement of 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 is made, as at the date of and for the periods presented by the consolidated financial statements, and (ii) the audited consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation as at the date of and for the periods presented by the audited consolidated financial statements.

The Board of Directors is responsible for reviewing and approving the audited consolidated financial statements together with other financial information of the Corporation and for ensuring that management fulfills its financial reporting responsibilities. The Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committee meets with management to review the financial reporting process and the audited consolidated financial statements together with other financial information of the Corporation. The Audit Committee reports its findings to the Board of Directors for its consideration in approving the audited consolidated financial statements together with other financial information of the Corporation for issuance to the shareholders.

Management recognizes its responsibility for conducting the Corporation's affairs in compliance with established financial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for its activities.

/s/ Paul Huet	/s/ Derek Humphry
Paul Huet	Derek Humphry
President and Chief Executive Officer	Chief Financial Officer
Toronto, Canada
March 21, 2024

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ANNUAL REPORT 2023

Independent auditor's report

To the Shareholders of Karora Resources Inc.

Our opinion

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Karora Resources Inc. and its subsidiaries (together, the Company) as at December 31, 2023 and 2022, 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 Accounting Standards).

What we have audited

The Company's consolidated financial statements comprise:

• the consolidated statements of financial position as at December 31, 2023 and 2022;
• the consolidated statements of earnings and comprehensive earnings as at December 31, 2023 and 2022;
• the consolidated statements of cash flows for the years then ended;
• the consolidated statements of changes in equity for the years then ended; and
• the notes to the consolidated financial statements, comprising material accounting policy information 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 the Auditor's responsibilities for the audit 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

PwC Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7 T.: [phone], F.: [phone], Fax to mail: [e-mail]

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

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, 2023. These matters were 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 these matters.

Key audit matter

Assessment of impairment indicators of property, plant and equipment and mineral property interests (PP&E)

Refer to note 4(ii) - Accounting policy judgments, estimates and assumptions and note 8 - Property, plant and equipment and mineral property interests to the consolidated financial statements.

The net book value of PP&E amounted to $409.1 million as at December 31, 2023. Management assesses at each reporting period- end whether there is an indication that the carrying value of PP&E may not be recoverable. Management applies significant judgment in assessing whether indicators of impairment exist that would necessitate impairment testing. Internal and external factors, such as (i) a significant decline in the market value of the Company's share price; (ii) changes in quantity of the recoverable resources and reserves; (iii) changes in metal prices, capital and operating costs; (iv) changes in foreign exchange and interest rates, are evaluated by management in determining whether there are any indicators of impairment. Management identified no impairment indicators for the Beta Hunt and Spargos Mines and the Higginsville Gold Operation (HGO) and Lakewood Mills with a total carrying value of $371 million. There were two satellite mines assets at HGO where management identified impairment indicators and completed an impairment test. An impairment charge of

$9.1 million was booked as a result of the test. The management also identified an impairment indicator relating to the nickel operation at the Beta

How our audit addressed the key audit matter

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

• Evaluated the reasonableness of management's assessment of impairment indicators, which included the following:
• • Assessed the completeness of external or internal factors that could be considered as indicators of impairment of the Company's PP&E, including consideration of evidence obtained in other areas of the audit.
  • Assessed significant declines in the market capitalization, which may indicate a decline in value of the Company's PP&E.
  • Assessed the changes in metal prices, quantity of the recoverable resources and reserves, capital and operating costs and foreign exchange and interest rates, by considering external economic and market data, current and past performance of the Company and evidence obtained in other areas of the audit, as applicable.

Key audit matter	How our audit addressed the key audit matter

Hunt mine and conducted an impairment assessment. No impairment was recognized for the nickel operation.

We considered this a key audit matter due to (i) the significance of the PP&E balance and (ii) the significant audit effort and subjectivity in applying audit procedures to assess the internal and external factors evaluated by management in its assessment of impairment indicators, which required significant management judgment.

Other information

Management is responsible for the other information. The other information comprises the Management's Discussion and Analysis.

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

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information 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.

Responsibilities of management and those charged with governance for the consolidated financial statements

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

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

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

Auditor's responsibilities for the audit of the consolidated financial statements

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

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

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

statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Lana Kirk.

/s/PricewaterhouseCoopers LLP

Chartered Professional Accountants

Vancouver, British Columbia

March 21, 2024

Consolidated Statements of Financial Position

(Expressed in thousands of Canadian dollars)

As at				December 31, 2023		December 31, 2022
		Note	$	$
ASSETS
Current assets
Cash and cash equivalents			82,538	68,786
Trade and other receivables	5	5,085	8,530
Inventories	6	39,541	32,686
Prepaid expenses			2,755	4,338
Marketable securities	7	1,535	1,517
			131,454	115,857
Non-current assets
Property, plant and equipment and mineral property interests	8	465,509	426,962
Deferred tax asset	19	188	363
Inventories	6	-	12,628
Investment in associate	9	7,170	-
Other non-current assets			327	1,302
Total assets			604,648	557,112
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities	10	59,773	64,285
Share incentive plan liabilities	16	2,324	2,884
Lease obligations	12	9,825	4,240
Derivative financial liabilities	13	4,278	3,383
Asset retirement obligations	14	243	443
Other current liabilities			1,580	2,602
			78,023	77,837
Non-current liabilities
Debt	11	39,071	38,613
Lease obligations	12	14,259	5,797
Derivative financial liabilities	13	25,556	23,220
Asset retirement obligations	14	37,666	30,439
Deferred tax liability	19	42,378	31,919
Other non-current liabilities			-	644
Total liabilities			236,953	208,469
SHAREHOLDERS' EQUITY
Share capital	15	408,103	395,532
Contributed surplus			32,694	33,071
Accumulated other comprehensive income			533	2,595
Deficit			(73,635)	(82,555)
Total shareholders' equity			367,695	348,643
Total liabilities and shareholders' equity			604,648	557,112

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

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ANNUAL REPORT 2023

Consolidated Statements of Earnings and Comprehensive Earnings

(Expressed in thousands of Canadian dollars, except per share amounts)

For the years ended December 31,		2023	2022
	Note	$	$
Revenue	25	416,319	317,042
Cost of operations:
Production and processing costs	25	228,094	179,265
Royalty expense		24,016	17,987
General and administrative	17	34,529	26,723
General and administrative: share incentive plans	16	10,386	9,203
Depreciation and amortization		68,165	55,585
Rehabilitation cost adjustment for closed sites		(1,044)	-
Sustainability iniatives		1,330	1,181
Impairment charge	8	9,204	-
Operating earnings		41,639	27,098
Other expenses (income)
Finance expense, net	18	7,950	5,533
Loss on derivatives	13	7,841	4,405
Foreign exchange loss (gain)		5,521	(2,294)
Unrealized loss on revaluation of marketable securities	7	207	2,032
Other expense, net		3	772
Earnings before income tax		20,117	16,650
Income tax expense - current	19	-	215
Income tax expense - deferred	19	11,197	6,534
Net earnings		8,920	9,901
Currency translation adjustments		(2,062)	586
Comprehensive earnings		6,858	10,487
Net earnings attributable to common shareholders per share
Basic		0.05	0.06
Diluted		0.05	0.06
Weighted average number of shares
Basic	20	175,802,402	164,437,670
Diluted	20	179,437,087	167,978,693

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

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ANNUAL REPORT 2023