Prismo Metals : 2023 Q4 Financial Statements

PRISMO METALS INC.

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2023 AND 2022

(EXPRESSED IN CANADIAN DOLLARS)

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of

Prismo Metals Inc.

Opinion

We have audited the accompanying consolidated financial statements of Prismo Metals Inc. (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.

Material Uncertainty Related to Going Concern

We draw attention to Note 1 of the consolidated financial statements, which indicates that the Company incurred losses since inception and had a working capital of $82,327 as at December 31, 2023. As stated in Note 1, these events and conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year ended. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined that the matter described below to be a key audit matter to be communicated in our auditor's report.

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

As described in Note 15 to the consolidated financial statements, the carrying amount of the Company's E&E Assets was $5,820,296 as of December 31, 2023. As more fully described in Notes 2 and 3 to the consolidated financial statements, management assesses E&E Assets for indicators of impairment whenever facts and circumstances suggest that the carrying amount exceeds the recoverable amount.

The principal considerations for our determination that the assessment of impairment indicators of the E&E Assets 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 Assets, 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 Assets.

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

• Evaluating management's assessment of impairment indicators.
• Evaluating the intent for the E&E Assets through discussion and communication with management.
• Reviewing the Company's recent expenditure activity.
• Assessing compliance with agreements and expenditure requirements including reviewing option agreements and vouching cash payments and share issuances.
• Assessing the Company's rights to explore E&E Assets including sending confirmation requests to optionors to ensure good standing of agreements.
• Obtaining, on a test basis, confirmation of title to ensure mineral rights underlying the E&E Assets 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 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 Peter Maloff.

Vancouver, Canada

Chartered Professional Accountants

April 25, 2024

Prismo Metals Inc.

Consolidated Statements of Financial Position

(Expressed in Canadian Dollars)

		As at		As at
		December 31,	December 31,
		2023		2022
ASSETS
Current assets	$	132,792
Cash	$	2,581,225
Marketable securities (Note 4)		1,267,500		-
Receivables		22,253		26,875
Prepaid expenses		51,053		176,058
Non-current assets		1,473,598		2,784,158
	5,820,296
Exploration and evaluation assets (Note 15)			2,038,015
Total assets	$	7,293,894	$	4,822,173
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities	$	1,150,825
Accounts payable and accrued liabilities (Note 5)	$	244,330
Short-term loans (Note 6)		177,090		1,090
Due to related parties (Note 14)		63,356		31,757
Total liabilities		1,391,271		277,177
Shareholders' equity		8,055,009
Share capital (Note 8)			5,819,192
Contributed reserves (Notes 10, 11, 12 and 13)		1,537,300		379,028
Shares to be issued (Note 7)		128,250		-
Deficit		(3,817,936)		(1,653,224)
Total shareholders' equity		5,902,623		4,544,996
Total liabilities and shareholders' equity	$	7,293,894	$	4,822,173

Nature of operations and going concern (Note 1)

Subsequent events (Note 20)

Approved on behalf of the Board:

(Signed) "Peter Craig Gibson ", Director

(Signed) "Louis Doyle", Director

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

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Prismo Metals Inc.

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in Canadian Dollars)

Year ended December 31,		2023		2022
Operating expenses	$	2,151,475
Office and administrative expenses (Note 16)	$	1,000,589
Realized loss on marketable securities (Note 4)		(65,737)		-
Fair value adjustment on marketable securities (Note 4)		52,500		-
Loss and comprehensive loss for the year	$	(2,164,712)	$	(1,000,589)
Basic and diluted loss per share	$	(0.05)	$	(0.03)
Weighted average number of common shares
outstanding - basic and diluted (Note 9)		40,410,583		28,770,366

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

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Prismo Metals Inc.

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

Year ended December 31,		2023		2022
Operating activities	$	(2,164,712)
Loss for the year	$	(1,000,589)
Fair value adjustment on marketable securities		(52,500)		-
Share-based payments		1,066,186		165,784
Realized loss on marketable securities		65,737		-
Changes in non-cash working capital items:		4,622
Receivables			(23,364)
Prepaid expenses		125,005		(176,058)
Accounts payable and accrued liabilities		46,329		61,856
Due to related parties		31,599		(43,390)
Net cash (used in) operating activities		(877,734)		(1,015,761)
Investing activities		(2,677,740)
Investment in exploration and evaluation assets			(1,110,715)
Proceeds from sale of marketable securities		339,263		-
Net cash used in investing activities		(2,338,477)		(1,110,715)
Financing activities		500,000
Shares issued for cash			3,166,000
Shares issued on exercise of warrants		-		890,582
Shares issued on exercise of stock options		-		63,601
Share issue costs		(36,472)		(367,279)
Short-term loans		176,000		(20,503)
Shares subscription received in advance		128,250		-
Net cash provided by financing activities		767,778		3,732,401
Net change in cash		(2,448,433)		1,605,925
Cash, beginning of year		2,581,225		975,300
Cash, end of year	$	132,792	$	2,581,225
Supplemental information
Non-cash financing activities:	$	120,000
Share issuance costs settled	$	-
Fair value of warrants exercised		-		101,264
Fair value of stock options exercised		-		46,072
Non-cash investing activities:	$	1,500,000
Marketable securities acquired through strategic investment	$	-
Shares issued for exploration and evaluation assets		244,375		-
Exploration and evaluation assets included in accounts payable		860,166		-

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

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Prismo Metals Inc.

Consolidated Statements of Changes in Shareholders' Equity

(Expressed in Canadian Dollars)

		Number of		Share	Contributed	Shares to be
		shares		capital		reserves		issued		Deficit		Total
Balance, December 31, 2021	21,228,723	$	1,976,962	$	302,570	$	-	$	(652,635)	$	1,626,897
Issuance of shares from exercise of warrants	7,383,947		991,836		(101,254)		-		-		890,582
Issuance of shares from exercise of options	508,810		109,673		(46,072)		-		-		63,601
Private placement	6,550,000		3,108,000		58,000		-		-		3,166,000
Share issue costs	-		(367,279)		-		-		-		(367,279)
Share-based payments	-		-		165,784		-		-		165,784
Loss for the year	-		-		-		-		(1,000,589)	(1,000,589)
Balance, December 31, 2022	35,671,480	$	5,819,192	$	379,028	$	-	$	(1,653,224)	$	4,544,996
Balance, December 31, 2022	35,671,480	$	5,819,192	$	379,028	$	-	$	(1,653,224)	$	4,544,996
Strategic investment	4,000,000		1,900,000		220,000		-		-		2,120,000
Shares issued to agent	240,000		114,000		6,000		-		-		120,000
Share issue costs	-		(156,472)		-		-		-		(156,472)
RSUs converted to shares	360,000		133,914		(133,914)		-		-		-
Shares issued for exploration and evaluation assets	575,000		244,375		-		-		-		244,375
Shares subscription received in advance	-		-		-		128,250		-		128,250
Share-based payments	-		-		1,066,186		-		-		1,066,186
Loss for the year	-		-		-		-		(2,164,712)	(2,164,712)
Balance, December 31, 2023	40,846,480	$	8,055,009	$	1,537,300		128,250	$	(3,817,936)	$	5,902,623

The accompanying notes are an integral part of these consolidated financial statements. - 4 -

Prismo Metals Inc.

Notes to Consolidated Financial Statements Years Ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, except where indicated)

1. Nature of operations and going concern

Prismo Metals Inc. (the "Company" or "Prismo") was incorporated under the provisions of the Canada Business Corporations Act on October 17, 2018, and registered as an extra-provincial corporation under the laws of British Columbia on November 6, 2018. The addresses of the Company's offices are:

• Administration: Suite 1100 - 1111 Melville St., Vancouver, BC V6E 3V6, Canada.
• Registry and Records: 800 Victoria Square, Suite 3700, Montreal, Quebec, H4Z 1E9.

The Company is in the business of acquisition and exploration of mineral properties, and is in one operating segment, namely mineral exploration in Mexico.

These consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

On October 1, 2020, the Company's shares started trading on the Canadian Securities Exchange (the "CSE") under the trading symbol PRIZ. On July 27, 2022, the Company commenced trading on the OTCQB ® under the symbol PMOMF. The Company's common shares continue to trade on the CSE under the symbol PRIZ.

The Company has incurred losses since inception, and had a working capital of $82,327 as at December 31, 2023. Continued operations of the Company are dependent on the Company's ability to obtain private and/or public equity financing or to receive continued financial support from its controlling shareholders and other investors. There can be no assurance the Company will be successful in achieving these goals and, accordingly, there are material uncertainties that may cast significant doubt about the Company's ability to continue as a going concern.

These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern, and these adjustments could be material.

2. Basis of preparation

1. Statement of compliance

These consolidated financial statements are prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

These consolidated financial statements were approved by the Board of Directors ("Board") for issue on April 25, 2024.

1. Basis of measurement

These consolidated financial statements have been prepared on the historical cost basis except for financial instruments classified as financial instruments at fair value through profit or loss which are stated at their fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash-flow information.

1. Basis of consolidation

These consolidated financial statement includes the accounts of the Company and its wholly-owned subsidiary, Prismo Metals (Arizona) Inc., which was incorporated by the Company on December 7, 2023.

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Prismo Metals Inc.

Notes to Consolidated Financial Statements Years Ended December 31, 2023 and 2022 (Expressed in Canadian Dollars, except where indicated)

2. Basis of preparation (continued)

1. Basis of consolidation (continued)

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of the subsidiary are included in the consolidated financial statements from the date that control commences until the date that control ceases. All inter-company balances and transactions have been eliminated in preparing the consolidated financial statements.

1. Functional and presentation currency

In management's judgment the functional currency of the Company is the Canadian dollar. The presentation currency used in preparing the consolidated financial statements of the Company is the Canadian dollar.

(e) Use of estimates and judgements

The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. On an ongoing basis, management evaluates its judgments and estimates in relation to assets, liabilities, revenue and expenses. Management uses historical experience and various other factors it believes to be reasonable under the given circumstances as the basis for its judgments and estimates. Actual results may differ from these estimates.

Critical accounting estimates

i. Share-based payments are subject to estimation of the value of the award at the date of grant using pricing models such as the Black-Scholes option valuation model. The option valuation model requires the input of highly subjective assumptions including the expected share price volatility. Because the Company's warrants have characteristics significantly different from those of traded options and because the subjective input assumptions can materially affect the calculated fair value, such value is subject to measurement uncertainty.

1. The carrying value and recoverability of exploration and evaluation assets requires management to make certain estimates, judgments and assumptions about each project. Management considers the economics of the project, including the latest resources prices and the long-term forecasts, and the overall economic viability of the project. Management has assessed these indicators and does not believe an impairment provision is required.
2. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
3. The determination of deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases ("temporary differences"), and losses carried forward. The determination of the ability of the Company to utilize tax loss carry- forwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess whether it is "probable" that the Company will benefit from these prior losses and other deferred tax assets. Changes in economic conditions, metal prices and other factors could result in revisions to the estimates of the benefits to be realized or the timing of utilizing the losses.

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