Prime Mining : Earnings Document

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023 and 2022

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of

Prime Mining Corp.

Opinion

We have audited the accompanying consolidated financial statements of Prime Mining Corp. (the "Company"), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of loss and comprehensive loss, cash flows, and changes in shareholders' equity for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of 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 IFRS Accounting Standards as issued by the International Accounting Standards Board.

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 are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

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 of the current year ended. 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.

Assessment of Impairment Indicators of Exploration and Evaluation Asset ("E&E Asset")

As described in Note 8 to the consolidated financial statements, the carrying amount of the Company's E&E Asset was $12,514,568 as of December 31, 2023. As more fully described in Note 3 and 4 to the consolidated financial statements, management assesses the Company's E&E Asset for indicators of impairment at each reporting period.

The principal considerations for our determination that the assessment of impairment indicators of the E&E Asset is a key audit matter are that there was judgment made by management when assessing whether there were indicators of impairment for the E&E Asset, specifically relating to the assets' carrying amount which is impacted by the Company's intent and ability to continue to explore and evaluate these assets. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate audit evidence relating to the judgments made by management in their assessment of indicators of impairment that could give rise to the requirement to prepare an estimate of the recoverable amount of the E&E Asset.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures included, among others:

• • Obtaining an understanding of the key controls associated with evaluating the E&E Asset for indicators of impairment.

• • Evaluating management's assessment of impairment indicators.

• • Evaluating the intent for the E&E Asset through discussion and communication with management.

• • Reviewing the Company's recent expenditure activity and expenditure budgets for future periods.

• • Obtaining, from legal counsel, confirmation of title to ensure mineral rights underlying the E&E Asset are in good standing.

Other Information

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

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

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

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

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS 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 year ended 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 Carmen Newnham.

Vancouver, Canada Chartered Professional Accountants

March 25, 2024

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION At December 31, 2023 and 2022

Note

2023

2022

ASSETS Current Cash Receivables Prepaid expenses Total current assets

$

33,811,215

$

23,811,434

40,818 82,592

150,973 168,996

34,003,006

24,063,022

Value added tax receivable Equipment

6 7 8

820,924 840,662

569,905 686,954

Exploration and evaluation asset Total assets

12,514,568

12,514,568

$

47,908,403

$

38,105,206

LIABILITIES Current

Trade payables and accruals Current portion of lease liabilities Total current liabilities

14 10

$

2,430,553 40,106 2,470,659

$

1,173,290 35,850 1,209,140

Long-term payable Lease liabilities Total liabilities

9 10

738,832 756,596

86,320 126,425

3,295,811

2,092,161

SHAREHOLDERS' EQUITY Share capital

11 11

• 151,158,664 120,115,589

  Reserves Deficit

• 19,481,048 17,535,146

(126,027,120)

(101,637,690)

Total shareholders' equity

44,612,592

36,013,045

Total liabilities and shareholders' equity

Nature and continuance of operations (note 1)

Subsequent events (note 19)

Approved by the Board of Directors on March 25, 2024:

"Scott Hicks"

$

47,908,403

Director

"Paul Sweeney"

$

38,105,206

Director

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS For the years ended December 31, 2023 and 2022

Note

2023

2022

Operating expenses Exploration and evaluation General and administrative Value added tax provision Depreciation

Financing

Foreign exchange gain

8 5 6 7

$

17,115,916 $ 17,732,405

6,790,482 7,381,989

2,575,666 2,686,907

171,112 176,242

14,586 19,727

(623,391)

(447,753)

Loss from operations

(26,044,371)

(27,549,517)

Interest income

1,654,941

177,257

Loss and comprehensive loss

$ (24,389,430)

$

(27,372,260)

Weighted average shares outstanding - basic and diluted Loss per share - basic and diluted

138,245,931

113,093,941

$

(0.18)

$

(0.24)

CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2023 and 2022 (In Canadian dollars)

2023	2022
OPERATING ACTIVITIES
Loss for the year	$	(24,389,430)	$ (27,372,260)
Items not affecting cash:
Depreciation	171,112	176,242
Interest income	(1,654,941)	(177,257)
Share-based compensation	2,391,282	4,143,316
Financing expense	14,586	19,727
Equipment disposal	-	31,606
Consulting services settled in common shares	265,414	139,144
Foreign exchange	1,974	8,826
Change in non-cash working capital items:
Receivables	41,774	(29,243)
VAT receivables	-	12,030
Prepaid expenses	18,023	(30,777)
Trade payables and accruals	1,336,234	(231,617)
Cash used in operating activities	(21,803,972)	(23,310,263)
FINANCING ACTIVITIES
Shares issued for cash	30,337,521	21,395,250
Share issuance costs	(84,211)	(1,528,026)
Lease liabilities payments	(50,435)	(58,008)
Cash provided by financing activities	30,202,875	19,809,216
INVESTING ACTIVITIES
Purchase of equipment	(54,063)	(278,483)
Interest received	1,654,941	177,257
Cash provided by (used in) investing activities	1,600,878	(101,226)
Increase (decrease) in cash	9,999,781	(3,602,273)
Cash, beginning of the year	23,811,434	27,413,707
Cash, end of the year	$	33,811,215
Supplemental disclosure with respect to cash flows (note 16)

$

23,811,434

PRIME MINING CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the years ended December 31, 2023 and 2022

(In Canadian dollars)

Common	Shareholders'
Note	shares	Share capital	Reserves	Deficit	equity
At December 31, 2022	127,154,718 $	120,115,589	$ 17,535,146	$ (101,637,690)	$	36,013,045
Shares issued for consulting services	11b)	145,745	265,414	-	-	265,414
Stock options exercised	11b)	150,000	438,797	(172,047)	-	266,750
Warrants exercised	11b)	15,861,729	30,070,771	-	-	30,070,771
RSUs exercised	11b)	133,333	273,333	(273,333)	-	-
Share issuance costs	-	(5,240)	-	-	(5,240)
Share-based compensation	11d), 11e), 11f)	-	-	2,391,282	-	2,391,282
Loss for the year	-	-	-	(24,389,430)	(24,389,430)
At December 31, 2023	143,445,525 $	151,158,664	$ 19,481,048	$ (126,027,120)	$	44,612,592
Common	Shareholders'
Note	shares	Share capital	Reserves	Deficit	equity
At December 31, 2021	112,573,205 $	100,113,471	$ 13,466,551	$	39,314,592
Private placement, net of share issuance costs	11b)	14,030,000	19,438,003	-	19,438,003
Shares issued for consulting services	11b)	74,013	139,144	-	139,144
Stock options exercised	11b)	250,000	174,721	(74,721)	100,000
Warrants exercised	11b)	227,500	250,250	-	250,250
Share-based compensation	11d)	-	-	4,143,316	4,143,316
Loss for the year	-	-	-	(27,372,260)
At December 31, 2022	127,154,718 $	120,115,589	$ 17,535,146	$	36,013,045

$

$ (101,637,690)The accompanying notes are an integral part of these consolidated financial statements.

(74,265,430)

- - - - -

(27,372,260)

1.

Nature and continuance of operations

Prime Mining Corp. ("Prime" or "the Company") was incorporated on May 14, 1981, under the laws of the Province of British Columbia, Canada. The Company acquires, explores, and develops interests in mineral projects in Mexico.

The Company's wholly owned subsidiaries are as follows:

Subsidiary	Jurisdiction	Operating status
Minera Amari SA de CV ("Minera Amari")	Mexico	Los Reyes Project
ePower Metals SA de CV	Mexico	Holding mineral claims
Argus Metals (BGI) Inc. (1)	Barbados	Inactive
ePower Metalen	Suriname	Inactive

(1)

Argus Metals (BGI) Inc. was dissolved during the year ended December 31, 2022.

The Company is listed for trading on the Toronto Stock Exchange ("TSX" or the "Exchange") under the symbol PRYM. The Company was listed on the TSX Venture Exchange ("TSX-V") until December 6, 2023. The Company's head office and principal place of business is located at Suite 710, 1030 West Georgia Street, Vancouver, BC, V6E 2Y3. The Company's registered and records office is located at Suite 2200, 885 West Georgia Street, Vancouver, BC, V6C 3E8.

The business of exploring for and mining of minerals involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations.

The Company has not generated revenue from operations. The Company recorded a loss of $24,389,430 during the year ended December 31, 2023 and, as of that date, the Company's deficit was $126,027,120. As the

Company is in the exploration stage, the recoverability of the costs incurred to date on exploration properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its properties and upon future profitable production or proceeds from the disposition of the properties and deferred exploration expenditures. The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future. The Company had cash of $33,811,215 at December 31, 2023 that the Company estimates will be sufficient to maintain operations for at least the next twelve months.

There are many external factors that can adversely affect general workforces, economies and financial markets globally such as global health conditions and political conflict in other regions. It is not possible for the Company to predict the duration or magnitude of the adverse results of these factors and its effects on the Company's business or ability to raise funds.

• 2. Basis of preparation

  Statement of Compliance

  These consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IASB") effective for the year ended December 31, 2023.

  These consolidated financial statements were approved by the Board of Directors and authorized for issue on March 25, 2024.

  Basis of measurement

  The consolidated financial statements have been prepared using the historical cost basis, except for certain financial instruments carried at fair value. The measurement bases are fully described in the accounting policies below. The consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

  Functional currency and presentation currency

  The consolidated financial statements are presented in Canadian dollars, which is the functional currency of the Company and its subsidiaries. All references to "US$" or "USD" are to United States dollars and references to "MXN" are to Mexican pesos.

• 3. Material accounting policy information

  The material accounting policy information used in the preparation of these consolidated financial statements are as follows:

  Basis of consolidation

  These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Minera Amari, ePower Metals SA de CV, Argus Metals (BGI) Inc. until dissolved, and ePower Metalen. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All significant intercompany transactions and balances have been eliminated upon consolidation.

  Foreign currency transaction

  Foreign currency amounts are translated into each entity's functional currency as follows:

  At the transaction date, each asset, liability, revenue and expense denominated in a foreign currency is translated into the entity's functional currency by the use of the exchange rate in effect at that date. At the period-end date, unsettled monetary assets and liabilities are translated into the functional currency by using the exchange rate in effect at the period-end date and the related translation differences are recognized in profit or loss.