Vulcan Minerals : 2023 Q4 REPORT

Consolidated Financial Statements

For the Years Ended December 31, 2023 and 2022

VULCAN MINERALS INC.

December 31, 2023

Table of Contents

	PAGE
Consolidated Statements of Financial Position	1
Consolidated Statements of Loss	2
Consolidated Statements of Comprehensive Loss	3
Consolidated Statements of Changes in Equity	4
Consolidated Statements of Cash Flows	5
Notes to the Consolidated Financial Statements	6

Independent Auditor's Report

To the Shareholders of Vulcan Minerals Inc.:

Opinion

We have audited the consolidated financial statements of Vulcan Minerals Inc. and its subsidiaries (the "Company"), which comprise the consolidated statement of financial position as at December 31, 2023, and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2023, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

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 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 period. 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 mineral exploration and evaluation assets

Key Audit Matter Description

As described in Notes 4 and 7 to the consolidated financial statements, the total book value of mineral exploration and evaluation assets amounted to $2.055 million as at December 31, 2023. At the end of each reporting period, management assesses each of its mineral resource properties to determine whether any indication of impairment exists. Judgment is required in determining whether indicators of impairment exist, including factors such as, the period for which the Company has the right to explore, expected renewals of exploration rights, whether substantive expenditures on further exploration and evaluation of resource properties are budgeted and results of exploration and evaluation activities on the exploration and evaluation assets.

Where an indicator of impairment exists, a formal estimate of the recoverable amount is made to determine the extent of the impairment, if any. No indicators of impairment were identified during the year.

We considered this a key audit matter due to the significance of the mineral exploration and evaluation assets, and the judgments by management in their assessment of indicators of impairment related to the mineral exploration and evaluation assets, and these have resulted in a high degree of subjectivity in performing procedures related to these judgments applied by management.

MNP S.E.N.C.R.L., S.R.L./LLP
1155, boulevard René-Lévesque Ouest, 23e étage, Montréal (Québec) H3B 2K2	1.888.861.9724 Tél. : [phone] Téléc. : 514.861.9446

MNP.CA

Audit Response

We responded to this matter by performing audit procedures relating to the assessment of impairment indicators of mineral exploration and evaluation assets. Our audit work in relation to this included, but was not restricted to, the following:

• Assessed the judgments made by management in determining the impairment indicators, which included the following:
• • Obtained, for a sample of claims, by reference to a government registry, evidence to support the right to explore the area.
  • Read board of directors' resolutions and obtained budgets to evidence continued and planned substantive expenditures on further exploration and evaluation of resource properties are budgeted and the expected renewals of exploration rights.
  • Assessed the results of exploration and evaluation activities on the mineral exploration and evaluation assets and if facts and circumstances suggest that the carrying amount may exceed the recoverable amount based on evidence obtained in other areas of the audit.

Assessment of impairment indicators of investment in associates

Key Audit Matter Description

As described in Notes 4 and 6 to the consolidated financial statements, the total book value of the Company's investment in associates amounted to $38.57 million as at December 31, 2023. At the end of each reporting period, management assesses each of its investments to determine whether any indication of impairment exists. Judgment is required in determining whether indicators of impairment exist in accordance with IAS 28.

Where an indicator of impairment exists, a formal estimate of the recoverable amount is made to determine the extent of the impairment, if any. No indicators of impairment were identified during the year.

We considered this a key audit matter due to the significance of the investment in associates, and the judgments by management in their assessment of indicators of impairment related to these investments.

Audit Response

We responded to this matter by performing audit procedures relating to the assessment of impairment indicators of the investment in associates. Our audit work in relation to this included, but was not restricted to, the following:

• Assessed the judgments made by management in determining the impairment indicators, which included the following:
  - For each associate, reviewed management's accounting position relating to the assessment of impairment indicators and performed audit procedures on the underlying accounting records of the associates in order to obtain sufficient and appropriate audit evidence over management's judgment.

Other Matter

The consolidated financial statements of Vulcan Minerals Inc. for the year ended December 31, 2022 were audited by PricewaterhouseCoopers LLP of St. John's, Newfoundland and Labrador, Canada, prior to its merger with MNP LLP. PricewaterhouseCoopers LLP expressed an unmodified opinion on those statements on April 26, 2023.

Other Information

Management is responsible for the other information. The other information comprises 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 on this other information, 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 International Financial Reporting 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 Walter-Armando Gomez Figueroa.

Montréal, Québec

April 24, 2024

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• By CPA auditor, public accountancy permit No. A142237

VULCAN MINERALS INC.

Consolidated Statements of Financial Position

As at

	December 31	December 31
(in Canadian dollars)	2023	2022
	$	$
Assets
Current assets
Cash and cash equivalents	4,453,493	6,148,762
Guaranteed investment certificate	2,013,485	-
Accounts receivable	52,426	154,130
Prepaid expenses	41,447	10,615
	6,560,851	6,313,507
Investments (Note 5)	244,969	650,893
Investment in associates (Note 6)	38,572,994	39,455,425
Exploration and evaluation assets (Note 7)	2,055,214	1,293,728
Capital assets (Note 8)	15,798	20,947
Total Assets	47,449,826	47,734,500
Liabilities
Current liabilities
Accounts payable and accrued liabilities	166,617	137,981
Loan (Note 9)	30,000	30,000
	196,617	167,981
Deferred income tax liability (Note 10)	3,586,288	3,957,119
Total Liabilities	3,782,905	4,125,100
Equity
Shareholders' equity (Note 11)	43,666,921	43,609,400
Total Equity	43,666,921	43,609,400
Total Liabilities and Equity	47,449,826	47,734,500
Contingencies (Note 17)
Subsequent events (Note 18)
Approved on Behalf of the Board of Directors
Patrick J. Laracy	Director
Carson Noel	Director

See accompanying notes to the consolidated financial statements

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VULCAN MINERALS INC.

Consolidated Statements of Loss

Years Ended December 31

(in Canadian dollars)	2023	2022
	$	$
Expenses
General and administrative (Note 13)	(557,533)	(578,979)
Director's fees	(20,000)	(20,000)
Depreciation (Note 8)	(6,435)	(5,834)
Share-based compensation (Note 12)	-	(843,927)
Loss from operations	(583,968)	(1,448,740)
Other income (expenses)
Interest income	251,514	94,352
Income from option payments (Note 7)	131,399	210,392
Dilution gain (loss) (Note 6)	760,126	(2,749,853)
Loss from equity accounted investments (Note 6)	(1,642,557)	(231,605)
Gain on sale of mineral property (Note 7)	-	1,051,400
Income from receipt of shares (Note 6)	-	367,498
Government assistance (Note 9)	-	(1,457)
	(499,518)	(1,259,273)
Loss before taxes	(1,083,486)	(2,708,013)
Deferred income tax (Note 10)	308,606	(47,239)
Net loss	(774,880)	(2,755,252)
Net loss per share - basic and diluted	(0.006)	(0.024)
Weighted-average number of common shares outstanding -
basic and diluted	121,575,607	113,261,050

See accompanying notes to the consolidated financial statements

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VULCAN MINERALS INC.

Consolidated Statements of Comprehensive Loss

Years Ended December 31

(in Canadian dollars)	2023	2022
	$	$
Net loss	(774,880)	(2,755,252)

Other comprehensive loss:

Items that may subsequently be reclassified to profit or loss Change in fair value on investments classified as FVOCI,

net of taxes (Note 5)(414,226)(931,789)

(414,226)(931,789)

Comprehensive loss

(1,189,106)

(3,687,041)

See accompanying notes to the consolidated financial statements

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VULCAN MINERALS INC.

Consolidated Statements of Changes in Equity

				Accumulated Other		Total
			Contributed	Comprehensive		Shareholders'
(in Canadian dollars)	Share Capital	Warrants	Surplus	Loss	Retained Earnings	Equity
	$	$	$	$	$	$
	(Note 11)	(Note 11)	(Note 11)
Balance December 31, 2021	23,149,820	2,234,614	3,237,906	(61,258)	16,545,883	45,106,965
Net loss and comprehensive loss
January 1, 2022 - December 31, 2022	-	-	-	(931,789)	(2,755,252)	(3,687,041)
Adjustment for change in ownership in associate	-	-	-	-	15,538	15,538
Exercise of options	232,555	-	(150,055)	-	-	82,500
Exercise of warrants	1,258,310	(47,361)	-	-	-	1,210,949
Issuance of shares for purchase of mineral exploration and
evaluation assets	30,000	-	-	-	-	30,000
Share issuance costs, net of taxes	(10,872)	-	-	-	-	(10,872)
Share-based compensation capitalized to exploration and
evaluation assets	-	-	17,434	-	-	17,434
Share-based compensation	-	-	843,927	-	-	843,927
Balance December 31, 2022	24,659,813	2,187,253	3,949,212	(993,047)	13,806,169	43,609,400
Net loss and comprehensive loss
January 1, 2023 - December 31, 2023	-	-	-	(414,226)	(774,880)	(1,189,106)
Exercise of options	3,725	-	(1,225)	-	-	2,500
Exercise of warrants	1,553,933	(298,933)	-	-	-	1,255,000
Share issuance costs, net of taxes	(10,873)	-	-	-	-	(10,873)
Expiry of warrants	-	(1,885,299)	1,885,299	-	-	-
Balance December 31, 2023	26,206,598	3,021	5,833,286	(1,407,273)	13,031,289	43,666,921

See accompanying notes to the consolidated financial statements

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