Silver Storm Mining : Q4 Report as of December 31, 2023 Financials

SILVER STORM MINING LTD.

(FORMERLY GOLDEN TAG RESOURCES LTD.) CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

THREE AND TWELVE MONTHS ENDED

DECEMBER 31, 2023 AND 2022

(EXPRESSED IN CANADIAN DOLLARS)

(UNAUDITED)

Notice To Reader

The accompanying unaudited condensed interim consolidated financial statements of Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.) (the "Company") have been prepared by and are the responsibility of management. The unaudited condensed interim consolidated financial statements have not been reviewed by the Company's auditors.

Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian Dollars)

(Unaudited)

		As at		As at
	December 31,	December 31,
		2023		2022
ASSETS
Current assets	$	4,469,703
Cash and cash equivalents	$	6,605,991
Marketable securities (note 5)		35,000		49,000
Sales taxes receivable (note 6)		4,216,501		112,674
Prepaid expenses and other assets		622,565		326,568
Inventories (note 7)		1,218,745		-
Total current assets		10,562,514		7,094,233
Non-current assets		13,057,071
Property, plant and equipment (note 8)			-
Right-of-use assets (note 9)		1,151,512		-
Other long-term assets		96,537		-
Total assets	$	24,867,634	$	7,094,233
EQUITY AND LIABILITIES
Current liabilities	$	1,494,726
Trade payables	$	441,481
Balance due to First Majestic Silver Corp. (note 4)		4,149,591		-
Lease obligations (note 10)		237,624		-
Total current liabilities		5,881,941		441,481
Non-current liabilities		808,192
Lease obligations (note 10)			-
Decommissioning liabilities (note 11)		6,441,741		-
Total liabilities		13,131,874		441,481
Equity		49,414,142
Share capital (note 12)			28,821,512
Options reserves (note 13)		1,952,887		2,983,559
Warrant reserves (note 12)		2,362,386		762,151
Accumulated other comprehensive (loss) income		(335,373)		301,877
Deficit		(41,658,282)		(26,216,347)
Total equity		11,735,760		6,652,752
Total equity and liabilities	$	24,867,634	$	7,094,233

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

Contingencies and commitments (note 18)

Subsequent events (note 19)

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars)

(Unaudited)

		Three Months		Twelve Months
		Ended			Ended
		December 31,		December 31,
		2023		2022		2023		2022
Operating expenses	$	46,099			$	105,410
Administrative costs	$	15,719	$	69,213
Foreign exchange		603		38,458		96,545		(154,591)
Listing, filing and transfer agency fees (note 17)		28,436		18,679		107,669		81,778
Management, consulting fees and		335,560				1,142,427
directors' fees (note 17)			294,290			844,365
Mineral property expenses (note 15)		2,414,380		15,930		13,032,871		1,148,146
Professional fees (note 17)		84,500		28,004		553,172		339,951
Promotion costs		121,785		36,221		530,568		190,791
Rent		29,370		47,353		98,240		137,407
Salaries		39,019		38,784		124,462		259,660
Shareholder information		55,009		28,368		117,991		46,308
Costs related to the acquisition of		-				621,866
La Parrilla (note 4)			-			-
Total operating expenses		3,154,761		561,806		16,531,221		2,963,028
Finance income		(12,064)		(45,267)		(174,210)		(83,552)
Unrealized (gain) loss on change in fair value of		(7,000)				14,000
marketable securities (note 5)			(10,500)			-
Net loss for the period	$	(3,135,697)	$	(506,039)	$	(16,371,011)	$	(2,879,476)
Other comprehensive (loss) income
Items that will be reclassified subsequently to loss
Exchange differences on translating	$	(724,930)			$	(637,250)
foreign operations	$	40,893	$	(130,890)
Other comprehensive (loss) income for the period	(724,930)		40,893		(637,250)		(130,890)
Total comprehensive loss for the period	$	(3,860,627)	$	(465,146)	$	(17,008,261)	$	(3,010,366)
Basic and diluted net loss per share (note 14)	$	(0.01)	$	(0.00)	$	(0.06)	$	(0.01)
Weighted average number of common shares
outstanding - basic and diluted	397,146,339	216,538,265	285,460,018	210,936,292

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian Dollars)

(Unaudited)

		Twelve Months
		Ended
		December 31,
		2023		2022
Operating activities	$	(16,371,011)
Net loss for the period	$	(2,879,476)
Non-cash items:		516,158
Depreciation and accretion (notes 8, 9 and 11)			-
Foreign exchange		(20,684)		(111,364)
Mining property expenses (note 4)		9,578,060		-
Unrealized loss on change in fair value of marketable securities (note 5)		14,000		-
Remeasurement of right-of-use assets (note 9)		15,483		-
Finance cost (note 10)		38,272		-
Change in provision (note 11)		319,969		-
Changes in working capital items (note 16)		(2,977,210)		(573,403)
Net cash used in operating activities		(8,886,963)		(3,564,243)
Investing activities		(68,206)
Purchase of property, plant and equipment (note 8)			-
Net cash used in investing activities		(68,206)		-
Financing activities		7,078,522
Proceeds from private placements (note 12)			3,250,000
Share issue costs		(192,990)		(70,409)
Proceeds from options exercised		120,000		25,000
Proceeds from warrants exercised		-		667,606
Lease obligation payments (note 10)		(210,743)		-
Net cash provided by financing activities		6,794,789		3,872,197
Net change in cash and cash equivalents		(2,160,380)		307,954
Effect of exchange rate		24,092		(19,526)
Cash and cash equivalents, beginning of period		6,605,991		6,317,563
Cash and cash equivalents, end of period	$	4,469,703	$	6,605,991
Cash	$	1,227,225	$	567,896
Cash equivalents		3,242,478		6,038,095
Cash and cash equivalents	$	4,469,703	$	6,605,991

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Condensed Interim Consolidated Statements of Changes in Equity (Expressed in Canadian Dollars)

(Unaudited)

								Accumulated
									other
	Number of		Share		Options		Warrants	comprehensive
	shares		capital		reserves		reserves	income (loss)	Deficit		Total
Balance, December 31, 2021	194,325,157	$	25,431,648	$	3,017,631	$	2,318,071	$	432,767	$ (25,409,196)	$	5,790,921
Private placement (note 12(a))	13,000,000		3,250,000		-		-		-	-		3,250,000
Warrants (note 12(a))	-		(762,151)		-		762,151		-	-		-
Share issue costs (note 12(a))	-		(70,409)		-		-		-	-		(70,409)
Options exercised	500,000		42,036		(17,036)		-		-	-		25,000
Options expired	-		-		(17,036)		-		-	17,036		-
Warrants exercised	8,999,409		930,388		-		(262,782)		-	-		667,606
Warrants expired	-		-		-		(2,055,289)		-	2,055,289		-
Net loss and comprehensive loss
for the period	-		-		-		-		(130,890)	(2,879,476)		(3,010,366)
Balance, December 31, 2022	216,824,566	$	28,821,512	$	2,983,559	$	762,151	$	301,877	$ (26,216,347)	$	6,652,752
Balance, December 31, 2022	216,824,566	$	28,821,512	$	2,983,559	$	762,151	$	301,877	$ (26,216,347)	$	6,652,752
Private placement (note 12(a))	35,392,610		7,078,522		-		-		-	-		7,078,522
Warrants (note 12(a))	-		(1,589,149)		-		1,589,149		-	-		-
Share issue costs (note 12(a))	-		(204,076)		-		11,086		-	-		(192,990)
Options exercised	1,500,000		221,596		(101,596)		-		-	-		120,000
Acquisition - La Parrilla (note 4)	143,673,684		15,085,737		-		-		-	-		15,085,737
Options cancelled	-		-		(929,076)		-		-	929,076		-
Net loss and comprehensive loss
for the period	-		-		-		-		(637,250)	(16,371,011)		(17,008,261)
Balance, December 31, 2023	397,390,860	$	49,414,142	$	1,952,887	$	2,362,386	$	(335,373)	$ (41,658,282)	$	11,735,760

The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements.

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Notes to Condensed Interim Consolidated Financial Statements Three and Twelve Months Ended December 31, 2023 (Expressed in Canadian Dollars)

(Unaudited)

1. Nature of operation
   Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.) (the "Company" or "Silver Storm") is incorporated under the Canada Business Corporations Act and holds advanced stage silver projects located in Durango, Mexico. The address of the Company's registered office and its principal place of business are 22 Adelaide Street West, Suite 2020, Bay Adelaide Centre, Toronto, Ontario, Canada.
   On November 5, 2020, the Company announced that after successfully completing the application process, the Company was approved for quotation on the OTCQB operated by the OTC Market Groups. The Company's common shares started trading on the OTCQB November 5, 2020 at the opening of the market under the stock symbol "GTAGF" and remains listed on the TSX Venture Exchange ("TSXV") under the ticker symbol "GOG".
   On May 9, 2023, the Company announced the listing of the Company's common share on the Frankfurt Stock Exchange under the trading symbol "GTD".
   On August 14, 2023, the Company completed the acquisition of a 100% interest in the La Parrilla Silver Mine Complex ("La Parrilla") located in San Jose de La Parrilla, Durango, Mexico. Refer to note 4.
   Certificate of amendment was filed on October 30, 2023 to change the name of the Company to "Silver Storm Mining Ltd.". On November 7, 2023, the Company's common shares started trading on the TSXV under the new trading symbol "SVRS", on the OTCQB under the new trading symbol "SVRSF" and on the Frankfurt Stock Exchange under the new trading symbol "SVR".
   These unaudited condensed interim consolidated financial statements comprise the financial statements of Silver Storm Mining Ltd. and its wholly-owned subsidiaries, Golden Tag Mexico SA de CV and Parilla Plata Mining, S.A. de C.V., incorporated in Mexico.
   These unaudited condensed interim consolidated financial statements have been prepared on the basis of the going concern assumption, meaning the Company will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company has not yet determined whether its mineral properties contain mineral deposits that are economically recoverable, and the Company has not yet generated income or cash flows from its operations.
   Effective in 2023, the Company changed its financial year-end from December 31 to March 31, 2024 to better align its financial reporting and tax planning with its business planning. The change in year-end resulted in the Company's filing a one-time,fifteen-month transition year covering the period of January 1, 2023 to March 31, 2024. The information presented in these unaudited condensed interim consolidated financial statements is for the twelve-months ended December 31, 2023, compared to the twelve months ended December 31, 2022.
2. Basis of presentation Statement of compliance
   These unaudited condensed interim consolidated financial statements have been prepared in compliance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") under international Accounting Standard 34 - Interim Financial Reporting. These unaudited condensed interim consolidated financial statements do not include all the notes required in annual financial statements and accordingly, should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2022.

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Notes to Condensed Interim Consolidated Financial Statements Three and Twelve Months Ended December 31, 2023 (Expressed in Canadian Dollars)

(Unaudited)

1. Basis of presentation (continued) Approval of financial statements
   The Company's Board of Directors approved these unaudited condensed interim consolidated financial statements on February 29, 2024.
   Basis of measurement
   These unaudited condensed interim consolidated financial statements have been prepared on the historical cost basis, unless otherwise stated.
   Functional and presentation currency
   These unaudited condensed interim consolidated financial statements are presented in Canadian dollars, unless otherwise stated, which is the Company's functional currency. The functional currency of the Company's Mexican subsidiaries is the US dollar. The Company has adopted the Canadian dollar as its presentation currency.
2. Summary of significant accounting policies
   These unaudited condensed interim consolidated financial statements were prepared using the same accounting policies, methods of computation and basis of presentation as outlined in note 3 - Summary of Significant Accounting Policies, as described in the Company's annual audited consolidated financial statements for the year ended December 31, 2022, except for the changes in accounting policies resulting from the adoption of new standards as described below.
   Inventories and cost of sales
   Mineral inventories, including stockpiled ore, work in process and finished goods, are valued at the lower of weighted average cost and estimated net realizable value. Cost includes all direct costs incurred in production including direct labour and materials, freight, depreciation and amortization and directly attributable overhead costs. Net realizable value is calculated as the estimated price at the time of sale based on prevailing and future metal prices less estimated future production costs to convert the inventories into saleable form.
   Any write-downs of inventory to net realizable value are recorded as cost of sales. If there is a subsequent increase in the value of inventories, the previous write-downs to net realizable value are reversed to the extent that the related inventory has not been sold.
   Stockpiled ore inventory represents ore that has been extracted from the mine and is available for further processing. Costs added to stockpiled ore inventory are valued based on current mining cost per ounce incurred up to the point of stockpiling the ore and are removed at the weighted average cost per ounce. Stockpiled ore tonnage and head grades are verified by periodic surveys and physical counts.
   Work in process inventory includes precipitates, inventories in tanks and in the milling process. Finished goods inventory includes metals in their final stage of production prior to sale, including primarily doré, bullion and dried concentrates at our operations and finished goods in-transit.
   Materials and supplies inventories are valued at the lower of weighted average cost and net realizable value. Costs include acquisition, freight and other directly attributable costs.

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Notes to Condensed Interim Consolidated Financial Statements Three and Twelve Months Ended December 31, 2023 (Expressed in Canadian Dollars)

(Unaudited)

3. Summary of significant accounting policies (continued) Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. This includes the purchase price, any other costs directly attributable to bringing the assets to a working condition for intended use and the costs of dismantling and removing the items and restoring the site on which they are located.

Where an item of equipment comprises significant parts with useful lives that are significantly different from that of the asset as a whole, the parts are accounted for as separate items of equipment and depreciated accordingly. An item of equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising from derecognizing an asset determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized through profit or loss.

Property, plant and equipment is depreciated over its estimated useful life. Costs for normal repairs and maintenance that do not extend economic life or improve service potential are expensed as incurred. Costs of improvements that extend economic life or improve service potential are capitalized and depreciated over the estimated remaining useful life.

The Company commences recording depreciation when the assets are in a working condition ready for use using the straight-line method, based on the expected useful life of the asset. Should the expected life and associated depreciation rate differ from the initial estimate, the change in estimate would be made prospectively in the statement of earnings or loss.

Lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of- use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset on the site on which it is located, less any lease incentives received. The assets are depreciated to the earlier of the end of the useful life of the right-of- use asset or the lease term. Judgment is applied to determine the lease term where a renewal option exists. Right-of-use assets are depreciated using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. In addition, the right-of-use assets may be reduced by impairment losses or adjusted for certain remeasurements of the lease liability.

The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of twelve months or less. The lease payments are recognized as an expense when incurred over the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Lease payments include fixed payments, and variable payments that are based on an index or rate.

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Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Notes to Condensed Interim Consolidated Financial Statements Three and Twelve Months Ended December 31, 2023 (Expressed in Canadian Dollars)

(Unaudited)

4. Acquisition

On August 14, 2023, the Company completed its previously announced acquisition of First Majestic Silver Corp. ("First Majestic") to acquire a 100% interest in the La Parrilla in the locality of San Jose de la Parrilla, Durango, Mexico (the "Transaction") through its wholly-owned subsidiary Parilla Plata Mining, S.A. de C.V.

Under the terms of the Transaction, the Company funded the acquisition through:

• the issuance of 143,673,684 common shares of Silver Storm (valued at $15,085,737 based on the closing price of August 14, 2023);
• aggregate cash payments of $3,634,470 (approximately US$2.7 million) (unpaid as at September 30, 2023);
• US$5.75 million when either (a) 5 million ounces of Ag.Eq reserves are declared from the La Parrilla claims, or (b) 22 million ounces of Ag.Eq of measured and indicated resources are declared, from the La Parrilla claims; and
• US$5.05 million when a new zone is discovered on the La Parrilla claims inclusive of a NI 43-101 resource of 12.5 million ounces of Ag.Eq.

The Transaction does not constitute a business combination and there are no intangible assets identified that meet the recognition criteria under IFRS. The Transaction is accounted for as an equity-settledshare-based payment transaction under IFRS 2.

The Company will pay cash of US$10.8 million, as contingent consideration for the acquisition if certain milestones are met. Under IFRS, a Company makes a probabilistic estimate of the fair value of contingent consideration on the grant-date based on the probability of achieving each respective milestone. Based on management's assessment at the Transaction date, the probability of achieving the milestones is negligible, therefore, no fair value has been attributed to the contingently cash owing. The assessment is not re-evaluated or remeasured at any reporting period or when the cash is paid.

The Company recorded a total of $621,866 in transaction costs to the unaudited condensed interim statement of loss and comprehensive loss related to the Transaction as outlined in the following purchase price acquisition.

The following table summarizes the total consideration paid and the fair value of the identifiable net assets assumed as of the date of acquisition:

Consideration paid:	$	15,085,737
143,673,684 common shares
Cash payment			3,634,470
Less fair value of net assets:		$	18,720,207
$	1,230,905
Inventories
Prepaid expenses and other assets			33,491
Property, plant and equipment			13,580,348
Right-of-use assets			1,229,497
Deposits on long-term assets			97,731
Trade payables			(191,403)
Lease obligations			(1,229,497)
Decommissioning liabilities			(5,608,925)
Total fair value of net assets acquired		$	9,142,147
Mining property expenses		$	9,578,060
Transaction costs expensed	$	621,866
	- 8 -

Silver Storm Mining Ltd. (formerly Golden Tag Resources Ltd.)

Notes to Condensed Interim Consolidated Financial Statements Three and Twelve Months Ended December 31, 2023 (Expressed in Canadian Dollars)

(Unaudited)

1. Acquisition (continued)
   As at December 31, 2023, the balance due to First Majestic of $4,149,591 included the cash payment of $3,634,470 (approximately US$2.7 million) from the acquisition price and recovery of costs of $515,121.
2. Marketable securities

Balance as at January 1,		2023		2022
$	49,000	$	49,000
Unrealized loss on change in fair value of marketable securities		(14,000)		-
Balance as at December 31, 2023 and December 31, 2022	$	35,000	$	49,000
Marketable securities include the following components at fair value:
			December 31,		December 31,
Sirios Resources Inc. - 700,000 shares (700,000 shares 2022)			2023		2022
	$	35,000	$	49,000
6. Sales taxes receivable
		December 31,		December 31,
Aging analysis		2023		2022
Current		$	158,338	$	4,609
30-90 days		405,118		32,236
Over 90 days		3,653,045		75,829
Total		$	4,216,501	$	112,674

7. Inventories

Inventories consist of raw materials. The following is a breakdown of inventories:

	December 31,		December 31,
Raw materials	2023		2022
$ 1,218,745	$	-

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